OREANDA-NEWS. Second-Quarter Net Income Is USD 142 Million, USD 0.21 per Share.
Adjusted Income USD 129 Million or USD 0.19 per Share; Down Slightly vs. Year-Ago, Driven by 44% Lower NGL Margins; Offset by Higher Fee Revenues and Olefin Margins at WPZ.
Adjusted Segment Profit USD 431 Million; Fee-Based Revenues Up 9% vs. Year-Ago.
Expecting 60% Growth in 2013 to 2015 Adjusted Segment Profit + DD&A Supporting 20% Annual Cash-Dividend Growth Guidance in Same Period.
Bluegrass Pipeline Project Added to Guidance.
Williams (NYSE: WMB) announced unaudited second-quarter 2013 net income attributable to Williams of USD 142 million, or USD 0.21 per share on a diluted basis, compared with net income of USD 132 million, or USD 0.21 per share on a diluted basis for second-quarter 2012.

 The increase in second-quarter 2013 net income was primarily due to an increase in fee revenues at Williams Partners that were substantially offset by lower commodity margins. Williams NGL & Petchem Services' results improved as a result of higher product sales volumes in Canada.

 For the first half of 2013, Williams reported net income of USD 303 million, or USD 0.44 per share on a diluted basis, compared with net income of USD 555 million, or USD 0.90 per share, for the same time period in 2012.

 The decline in net income for the first half of 2013 was primarily due to sharply lower NGL margins and ethane rejection at Williams Partners, as well as the absence of USD 207 million of income in first-quarter 2012 associated with the sale of certain of the company's former Venezuela operations, of which USD 144 million was recorded within discontinued operations.

Adjusted Income from Continuing Operations

 Adjusted income from continuing operations for second-quarter 2013 was USD 129 million, or USD 0.19 per share, compared with USD 138 million, or USD 0.22 per share for second-quarter 2012. Year-to-date through June 30, adjusted income from continuing operations was USD 281 million, or USD 0.41 per share, compared with USD 374 million, or USD 0.61 per share.

 During the second quarter and the first half of 2013, lower NGL margins at Williams Partners, including the effects of system-wide ethane rejection, drove the decline in adjusted income from continuing operations. Costs increased related to growth in the business and acquisitions in 2012. These were partially offset by higher fee-based revenues and higher olefins production margins.

 Adjusted income from continuing operations reflects the removal of items considered unrepresentative of ongoing operations and is a non-GAAP measure. A reconciliation to the most relevant GAAP measure is attached to this news release.

CEO Comment

Alan Armstrong, Williams' president and chief executive officer, made the following comments:

 "We're pleased to report a solid second quarter primarily due to continued growth in our fee-based business, which more than offset both lower commodity margins and the impact of downtime at the Geismar facility.

 "At Geismar, I'm extremely proud of the progress our people have made in a relatively short amount of time to assess the damage from the incident and begin mobilizing comprehensive repair and expansion plans to achieve our April 2014 target in-service date.

 "Elsewhere in our business, we continue to execute on our strategy to grow cash flow by developing a large portfolio of primarily fee-based projects at Williams Partners as demonstrated by major projects completed and brought into service on time and on budget in the second quarter. Those newly in-service projects include a major expansion of the Transco natural gas pipeline in the Southeast U.S. and the installation of our third train at our Fort Beeler gas-processing complex in the Northeast U.S."

Business Segment Results

 Williams' business segments for financial reporting are Williams Partners, Williams NGL & Petchem Services, Access Midstream Partners, and Other.

 The Williams Partners' segment includes the consolidated results of Williams Partners L.P. (NYSE:WPZ); Williams NGL & Petchem Services includes the results of Williams' Canadian midstream businesses; and Access Midstream Partners includes the company's equity earnings from its 50-percent interest in privately held Access Midstream Partners GP, L.L.C. and an approximate 23-percent limited-partner interest in Access Midstream Partners, L.P. (NYSE: ACMP). Prior period segment results have been recast to reflect Williams Partners' acquisition of Williams' Gulf Olefins business, which was completed in November 2012.
Williams Partners

 Williams Partners is focused on natural gas transportation, gathering, treating, processing and storage; natural gas liquids fractionation; olefins production; and oil transportation.

 For second-quarter 2013, Williams Partners reported segment profit of USD 403 million, compared with USD 391 million for second-quarter 2012.

 The increase in Williams Partners' segment profit during second-quarter 2013 is primarily due to an increase in transportation, gathering and processing fee revenues and higher olefin and marketing margins. Lower NGL margins substantially offset these gains.

 Year-to-date through June 30, Williams Partners reported USD 859 million in segment profit, compared with USD 942 million for the same period in 2012.

 The decline in Williams Partners' segment profit for the first half of the year is primarily due to a decline in NGL margins and increased operating costs. Higher fee revenues and higher olefin margins, particularly higher ethylene margins at Geismar, helped mitigate the impact of the lower NGL margins and the operating costs, despite the impact of Geismar downtime in June.
Williams NGL & Petchem Services

 Williams NGL & Petchem Services primarily includes Williams' midstream operations in Canada, including an oil sands offgas processing plant near Fort McMurray, Alberta and an NGL/olefins fractionation facility and butylene/butane splitter facility at Redwater, Alberta. Williams NGL & Petchem Services also includes Bluegrass Pipeline.

 Williams NGL & Petchem Services reported segment profit of USD 22 million for second-quarter 2013, compared with USD 16 million for second-quarter 2012.

 Segment profit increased primarily due to higher NGL product margins in Canada primarily from higher sales volumes, as a result of the absence of the impact of filling the Boreal Pipeline, which occurred in June 2012. This increase in segment profit was partially offset by higher operating and maintenance costs.

 For the first half of 2013, Williams NGL & Petchem Services reported segment profit of USD 58 million, compared with USD 56 million for the first half of 2012.

 The slight increase in segment profit for the first half of 2013 was primarily due to higher NGL product margins from higher sales volumes, offset by lower average per-unit margins and higher operating and maintenance costs.

Access Midstream Partners

 The segment results for Access Midstream Partners in the second quarter 2013 included USD 18 million of equity earnings recognized from Access Midstream Partners, L.P., offset by USD 15 million non-cash amortization of the difference between the cost of Williams' investment and the company's underlying share of the net assets of Access Midstream Partners, L.P.

 In addition, segment profit in the second quarter of 2013 includes a non-cash gain of USD 26 million resulting from Access Midstream Partners, L.P.'s equity issuance in April 2013. Access Midstream Partners, L.P. reported second-quarter adjusted EBITDA of USD 207 million, up 71.1 percent from second-quarter 2012. During second-quarter 2013, Williams received a regular quarterly distribution of USD 22 million from Access Midstream Partners, L.P.

 For the first half of 2013, segment profit includes USD 35 million of equity earnings, offset by USD 32 million noncash amortization of the difference between the cost of our investment and our underlying share of the net assets. The year-to-date 2013 results also include the USD 26 million gain resulting from Access Midstream Partners L.P.'s equity issuance.

Other

 The decline in segment profit for the first half of 2013 in the Other segment is primarily due to the absence of the gain of USD 53 million recognized in 2012 related to the 2010 sale of the company's Accroven investment in Venezuela. This gain has been excluded from the adjusted segment profit for Other.