Williams Partners Reports 2017 Financial Results

TULSA, Okla.–(BUSINESS WIRE)–Williams Partners L.P. (NYSE: WPZ) today announced its financial results
for the three and 12 months ended Dec. 31, 2017.

Fourth-Quarter and Full-Year 2017 Highlights

• 4Q 2017 Net Income (Loss) of ($342) Million – Impacted by $713 million
  of Non-Cash Charges Related to Tax Cuts and Jobs Act of 2017
• Increased 4Q & Full-Year 2017 Adjusted EBITDA to $1.150 Billion and
  $4.472 Billion Respectively, Despite over $3 Billion in Asset Sales
  Since September 2016
• Cash Distribution Coverage Ratio of 1.22x for 4Q 2017; 1.23x for
  Full-Year 2017
• Placed Transco Expansions New York Bay and Virginia Southside II into
  Service in 4Q 2017 – Completing Transco's 2017 "Big 5" Expansion
  Projects
• Williams Partners Improved Credit Profile, Reducing Net Debt by $2.8
  Billion from Jan. 1, 2017 through Dec. 31, 2017
• Williams Partners Exceeded Midpoint of Financial Guidance Targets for
  2017, Guidance for 2018 DCF, Distribution Growth (5 to 7%) and
  Coverage Remain on Target

Fourth-Quarter and Full-Year 2017 Financial Results

Williams Partners reported unaudited fourth-quarter 2017 net income
(loss) attributable to controlling interests of ($342) million, a $487
million decrease from fourth-quarter 2016. The unfavorable change was
driven primarily by the impact of $713 million of non-cash charges at
Transco and Northwest Pipeline primarily related to regulatory
liabilities established as a result of the recently enacted Tax Cuts and
Jobs Act of 2017 ("Tax Reform Act"). Some of the rates charged to
customers of our regulated natural gas pipelines are subject to periodic
FERC rate case filings, which permit the recovery of an income tax
allowance that includes a deferred income tax component in our recourse
rates. As a result of the reduced income tax rate from the Tax Reform
Act and the resulting regulatory liabilities, we expect that any future
rate case settlements or proceedings before the FERC will be impacted by
this lower income tax allowance. However, the actual amount and timing
of any return of this regulatory liability to customers will be subject
to negotiations in future rate proceedings. We expect that the
amortization of the regulatory liability will be over an extended period
of time (as much as 20 years or more). Considering all of these recourse
rate-making elements, Transco still expects to file for increased
cost-of-service rates in its upcoming initial rate filing in 2018.
Fourth-quarter 2017 results were positively impacted by the absence of
an impairment on equity method investments in fourth-quarter 2016.

For the year, Williams Partners reported unaudited net income
attributable to controlling interests of $871 million, a $440 million
improvement compared to full-year 2016 results. The favorable change was
driven primarily by gains on the sale of assets, the absence of
impairments of equity-method investments, and higher revenues for the
Atlantic-Gulf segment. Partially offsetting the increases was the impact
of the non-cash charges related to the Tax Reform Act as described in
the previous paragraph, a net increase in impairments of certain assets,
and the absence of results associated with the Geismar olefins facility,
which was sold July 6, 2017.

Williams Partners reported fourth-quarter 2017 Adjusted EBITDA of $1.150
billion, a $37 million increase over fourth-quarter 2016. Williams
Partners' current businesses increased Adjusted EBITDA by $84 million in
fourth-quarter 2017 vs. fourth-quarter 2016, driven by $117 million
increased fee-based revenues, due primarily to the growth in fee-based
revenues in the Atlantic-Gulf and West segments partially offset by $30
million in higher operating and maintenance (O&M) expenses. The $84
million improvement from the current businesses was partially offset by
the absence of $47 million Adjusted EBITDA earned in fourth-quarter 2016
from the NGL & Petchem Services segment primarily as a result of the
sale of the Geismar olefins facility on July 6, 2017.

For the year, Williams Partners reported Adjusted EBITDA of $4.472
billion, a $45 million increase over full-year 2016 results. Williams
Partners' current businesses increased Adjusted EBITDA by $202 million
in 2017 compared to 2016. The improvement was due primarily to a $147
million increase in fee-based revenues driven primarily from new assets
brought online by the Atlantic-Gulf segment. The partnership's full-year
2017 results also benefited from $51 million increased commodity margins
and $28 million higher EBITDA from joint ventures, partially offset by
$63 million higher O&M expenses. The $202 million improvement from the
current businesses was partially offset by the absence of $157 million
Adjusted EBITDA earned in 2016 from the NGL & Petchem Services segment
primarily as a result of the sale of the Geismar olefins facility on
July 6, 2017.

Distributable Cash Flow and Distributions

For fourth-quarter 2017, Williams Partners generated $702 million in
distributable cash flow (DCF) attributable to partnership operations,
compared with $699 million in DCF attributable to partnership operations
for fourth-quarter 2016. DCF was favorably impacted by the partnership's
change in Adjusted EBITDA and a $31 million decrease in interest
expense. DCF for fourth-quarter 2017 was reduced by $58 million for the
removal of deferred revenue amortization associated with the
fourth-quarter 2016 contract restructurings and prepayments in the
Barnett Shale and Mid-Continent region. For fourth-quarter 2017, the
cash distribution coverage ratio was 1.22x.

For the year, Williams Partners generated $2.821 billion in DCF
attributable to partnership operations, an unfavorable change of $149
million compared with full-year 2016 DCF results. For 2017, DCF was
reduced by $233 million for the deferred revenue amortization associated
with the previously described contract restructurings and prepayments.
Also impacting DCF for full-year 2017 was $42 million increased
maintenance capital expenditures. Partially offsetting these unfavorable
changes were a $114 million decrease in interest expense and a $45
million improvement in Adjusted EBITDA. As described above, the
partnership's Adjusted EBITDA from current businesses increased $202
million, but was partially offset by $157 million lower Adjusted EBITDA
from assets sold. For full-year 2017, the cash distribution coverage was
1.23x. Both DCF and coverage exceeded the midpoint of financial guidance
provided in January 2017.

Williams Partners recently announced a regular quarterly cash
distribution of $0.60 per unit, payable Feb. 9, 2018, to its common
unitholders of record at the close of business on Feb. 2, 2018.

CEO Perspective

Alan Armstrong, chief executive officer of Williams Partners’ general
partner, made the following comments:

"I am pleased with the organization's strong execution in 2017. Our
organization has been working hard to keep its promises to our
customers, shareholders, and other stakeholders with timely and safe
delivery of our projects, including Transco’s ‘Big 5’ projects (Gulf
Trace, Hillabee Phase 1, Dalton, New York Bay and Virginia Southside
II). This is reflected in our financial results where we exceeded the
midpoint of our guidance range for Adjusted EBITDA, DCF and Cash
Coverage ratios.

"We achieved these impressive results, which include improvement in
year-over-year Adjusted EBITDA for both fourth-quarter and full-year
2017, in spite of the impact of multiple hurricanes and more than $3
billion in asset sales since September 2016. Our stable foundation of
demand-driven expansions continues to grow our business. In 2018, we
look forward to a full year of revenue from our ‘Big 5’ as well as
contributions from our Atlantic Sunrise project later this year and the
associated growth in Northeast gathering volumes.

"We also carried out our financial repositioning in January of 2017 in a
way that positioned the company to fund an attractive slate of
large-scale expansion projects without accessing public equity markets,
strengthened distribution coverage, enhanced our credit profile,
improved our cost of capital and underpinned our growth outlook. As a
result of a full year of executing on the key aspects of our plan, we
reduced WPZ Net Debt for the year by 15 percent and also dramatically
reduced our commodity exposure.

"As the Atlantic Sunrise project construction continues, the
debottlenecking of the Northeast is starting to occur as other pipelines
in the Northeast have also been placed in service recently or will be
brought online in the near future. We are beginning to see some of the
key fundamentals of our strategy take shape in the Northeast where we
have a leading market share and a path to deliver long-term sustainable
shareholder value. Volumes are increasing and our focus on executing the
company’s natural gas-focused business strategy is producing predictable
fee-based revenue growth backed by long-term commitments."

Business Segment Results

For full-year 2017 results, Williams Partners' operations are comprised
of the following reportable segments: Atlantic-Gulf, West, Northeast
G&P, and NGL & Petchem Services. As of July 7, 2017, following the
completed sale of Williams Partners' ownership interest in the Geismar
olefins plant on July 6, 2017, the partnership's NGL & Petchem Services
segment no longer contained any operating assets.

Atlantic-Gulf

This segment includes the partnership’s interstate natural gas pipeline,
Transco, and significant natural gas gathering and processing and crude
oil production handling and transportation assets in the Gulf Coast
region, including a 51 percent interest in Gulfstar One (a consolidated
entity), which is a proprietary floating production system, and various
petrochemical and feedstock pipelines in the Gulf Coast region, as well
as a 50 percent equity-method investment in Gulfstream, a 41 percent
interest in Constitution (a consolidated entity) which is developing a
pipeline project, and a 60 percent equity-method investment in Discovery.

The Atlantic-Gulf segment reported Modified EBITDA of ($96) million for
fourth-quarter 2017, compared with $456 million for fourth-quarter 2016.
Adjusted EBITDA decreased by $21 million to $433 million for the same
time period. The unfavorable change in Modified EBITDA was due primarily
to the impact of $493 million of non-cash charges at Transco primarily
related to regulatory liabilities resulting from the Tax Reform Act and
previously described in this news release. The Tax Reform Act also led
to non-cash charges of $11 million of proportional Modified EBITDA of
joint-ventures from Transco's investments. The non-cash charges
associated with the Tax Reform Act did not impact 2017 Adjusted EBITDA.
The segment benefited from a $57 million increase in fee-based revenues
from Transco expansion projects brought online. Partially offsetting the
improvement were $32 million increased O&M expenses primarily associated
with Transco's integrity and pipeline maintenance programs and $20
million decreased proportional EBITDA from the partnership's Discovery
joint venture, due to a significant decline in volumes from the Hadrian
field. Results for fourth-quarter 2017 also reflect the absence of $22
million in fee-based revenues and commodity margins from volumes
transported and processed by Williams Partners on a short-term basis due
to an unplanned outage on another company's system in 2016.

For the year, Atlantic-Gulf reported Modified EBITDA of $1.238 billion,
a decrease of $383 million from full-year 2016. Adjusted EBITDA
increased $118 million to $1.779 billion. The unfavorable change in
Modified EBITDA was due primarily to the impact of the non-cash charges
associated with the Tax Reform Act referenced in the previous paragraph.
Adjusted EBITDA benefited from $132 million increased fee-based revenues
primarily from Transco expansion projects brought online, and a $104
million improvement from Gulfstar One. Partially offsetting the
increases were $90 million higher O&M expenses primarily associated with
Transco's integrity and pipeline maintenance programs. Results for
full-year 2017 also reflect the absence of $42 million in fee-based
revenues and commodity margins from volumes transported and processed by
Williams Partners on a short-term basis due to an unplanned outage on
another company's system in 2016.

West

This segment includes the partnership’s interstate natural gas pipeline,
Northwest Pipeline, and natural gas gathering, processing, and treating
operations in New Mexico, Colorado, and Wyoming, as well as the Barnett
Shale region of north-central Texas, the Eagle Ford Shale region of
south Texas, the Haynesville Shale region of northwest Louisiana, and
the Mid-Continent region which includes the Anadarko, Arkoma, Delaware
and Permian basins. This reporting segment also includes an NGL and
natural gas marketing business, storage facilities, and an undivided 50
percent interest in an NGL fractionator near Conway, Kansas, and a 50
percent equity-method investment in OPPL. The partnership completed the
sale of its 50 percent equity-method investment in a Delaware Basin gas
gathering system in the Mid-Continent region during first-quarter 2017.

The West segment reported Modified EBITDA of $286 million for
fourth-quarter 2017, compared with $542 million for fourth-quarter 2016.
Adjusted EBITDA increased by $87 million to $481 million. The
unfavorable change in Modified EBITDA was due primarily to the impact of
$220 million of non-cash charges at Northwest Pipeline primarily related
to regulatory liabilities resulting from the Tax Reform Act and
previously described in this press release. Adjusted EBITDA, which is
not impacted by the non-cash charges associated with the Tax Reform Act,
benefited from $54 million higher fee-based revenues due to increased
volumes primarily in the Haynesville, other rate changes, and a $24
million positive impact from the 2016 Barnett contract restructuring and
prepayment. The year-over-year comparison for the quarter also benefited
from $16 million improved commodity margins and $20 million in lower O&M
and selling, general and administrative (SG&A) expenses. Partially
offsetting these improvements was $10 million decreased proportional
EBITDA from joint ventures, due in part to the partnership's sale of its
interests in certain non-operated Delaware Basin assets in first-quarter
2017.

For the year, the West segment reported Modified EBITDA of $412 million,
a decrease of $1.132 billion from full-year 2016 results. Adjusted
EBITDA increased by $17 million to $1.668 billion. The unfavorable
change in Modified EBITDA is due primarily to a $1.019 billion
impairment of certain gathering operations in the Mid-Continent region
and the non-cash charges associated with the Tax Reform Act described in
the previous paragraph. Adjusted EBITDA excludes the impairment charge
and is not impacted by the non-cash charges associated with the Tax
Reform Act. The favorable change in Adjusted EBITDA reflects $73 million
lower O&M and SG&A expenses and $54 million improved commodity margins.
Revenues were also impacted by lower rates associated with 2016 contract
restructurings and lower volumes driven by natural declines, partially
offset by the amortization of deferred revenue from those 2016 contract
restructurings and prepayments. As a result, Adjusted EBITDA reflects
$87 million of lower fee-based revenues. When compared to full-year 2016
results, the segment was also negatively impacted by $31 million in
decreased proportional EBITDA of joint ventures, due in part to the
partnership’s sale of its interests in certain non-operated Delaware
Basin assets in first-quarter 2017.

Northeast G&P

This segment includes the partnership’s natural gas gathering and
processing, compression and NGL fractionation businesses in the
Marcellus Shale region primarily in Pennsylvania, New York, and West
Virginia and Utica Shale region of eastern Ohio, as well as a 66 percent
interest in Cardinal (a consolidated entity), a 62 percent equity-method
investment in UEOM, a 69 percent equity-method investment in Laurel
Mountain, a 58 percent equity-method investment in Caiman II, and
Appalachia Midstream Services, LLC, which owns an approximate average 66
percent equity-method investment in multiple gas gathering systems in
the Marcellus Shale (Appalachia Midstream Investments).

The Northeast G&P segment reported Modified EBITDA of $231 million for
fourth-quarter 2017, compared with $197 million for fourth-quarter 2016.
Adjusted EBITDA increased by $19 million to $238 million. The current
year benefited from a $25 million increase in proportional EBITDA of
joint ventures due largely to the partnership's increase in ownership in
two Marcellus shale gathering systems in first-quarter 2017. Fee-based
revenues were stable between the two periods due to increases in the
Susquehanna and Ohio River systems that offset decreases in the Utica.

For the year, the Northeast G&P segment reported Modified EBITDA of $819
million, a decrease of $34 million compared with full-year 2016 results.
Adjusted EBITDA increased by $73 million to $959 million. The
unfavorable change in Modified EBITDA reflected a $115 million
impairment of certain gathering operations in the Marcellus South. The
impairment charge is excluded from Adjusted EBITDA, which benefited from
a $71 million increase in proportional EBITDA of joint ventures due
largely to the partnership's increase in ownership in two Marcellus
shale gathering systems in first-quarter 2017. Fee-based revenues were
stable between the two periods due to increases in the Susquehanna and
Ohio River systems that offset decreases in the Utica.

NGL & Petchem Services

On Jan. 1, 2017, this segment included the partnership’s 88.46 percent
undivided interest in an olefins production facility in Geismar,
Louisiana, along with a refinery grade propylene splitter. On July 6,
2017, the partnership announced that it had completed the sale of all of
its membership interest in the Geismar olefins production facility and
associated complex. On June 30, 2017 the partnership completed the sale
of the refinery grade propylene splitter. Prior to September 2016, this
reporting segment also included an oil sands offgas processing plant
near Fort McMurray, Alberta, and an NGL/olefin fractionation facility,
which were subsequently sold. As of July 7, 2017, this segment no longer
contained any operating assets.

For the year, the NGL & Petchem Services segment reported Modified
EBITDA of $1.161 billion, an improvement of $1.306 billion compared with
full-year 2016 results. Adjusted EBITDA decreased $157 million to $72
million. The improvement in Modified EBITDA was driven primarily by the
$1.095 billion gain resulting from the sale of the partnership's
interest in the Geismar olefins facility on July 6, 2017, and the
absence of a $341 million impairment of our former Canadian operations
in 2016. These items are excluded from Adjusted EBITDA. The current year
was also impacted by the absence of EBITDA associated with the
previously described assets that were sold by the partnership.

Notable Accomplishments

On Dec. 5, 2017, the partnership announced that it had successfully
placed into service its Virginia Southside II expansion project, the
fifth of Transco’s “Big 5” expansions to be placed into service in 2017.
These five, fully-contracted expansion projects (Gulf Trace, Hillabee
Phase 1, Dalton, New York Bay and Virginia Southside II) combined to add
more than 2.8 million dekatherms per day (Dth/d) of firm transportation
capacity to the Transco pipeline system in 2017, contributing to the
increase of Transco’s design capacity by approximately 25 percent.

Williams Partners' Credit Profile Update

The partnership continued to maintain its strengthened balance sheet and
credit profile with nearly $2.1 billion of Total Debt reduction and more
than $700 million increase in cash, year-to-date, resulting in a $2.8
billion reduction in Net Debt (long-term debt plus commercial paper less
cash). As of the end of fourth-quarter 2017, the partnership had Total
Debt of $16.5 billion and cash and cash equivalents of $881 million,
which the partnership intends to use to fund growth capital expenditures
and long-term investments.

2018 Guidance

Current guidance for 2018 is set out in the following table. As noted in
the table below, Williams Partners' Adjusted EBITDA and Distributable
Cash Flow estimates for 2018 have recently been impacted by non-cash
adjustments related to the new GAAP revenue recognition standard and Tax
Reform Act. For Williams Partners' Adjusted EBITDA, the unfavorable
non-cash impacts of these two items were approximately $120 million for
the new GAAP revenue recognition standard and approximately $30 million
for tax reform primarily due to Northwest Pipeline even though rates on
Northwest Pipeline remain unchanged until the next rate case cycle
expected to occur in 2021.

The main effect of the new GAAP revenue recognition standard was to
extend the amortization of deferred revenue associated with certain 2016
contract restructurings and pre-payments by approximately 10 years
resulting in lower 2018 and 2019 revenue and then higher revenue amounts
through 2029. Furthermore, as a result of the extended revenue
amortization period under the new GAAP revenue standard, we have
prospectively discontinued the adjustment which removed the DCF
associated with these 2016 contract restructuring prepayments.

Contacts

Williams Partners L.P.
Media Contact:
Keith Isbell,
918-573-7308
or
Investor Contact:
Brett Krieg,
918-573-4614

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