Williams Reports Second-Quarter 2013 Financial Results, Updates Guidance

Williams Reports Second-Quarter 2013 Financial Results, Updates Guidance

• Second-Quarter Net Income Is $142 Million, $0.21 per Share

• Adjusted Income $129 Million or $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 $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

TULSA, Okla.--(BUSINESS WIRE)-- Williams (NYS: WMB) :

* A schedule reconciling income from continuing operations to adjusted income from continuing operations (non-GAAP measures) is available at www.williams.com and as an attachment to this press release.

Williams (NYS: WMB) announced unaudited second-quarter 2013 net income attributable to Williams of $142 million, or $0.21 per share on a diluted basis, compared with net income of $132 million, or $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 $303 million, or $0.44 per share on a diluted basis, compared with net income of $555 million, or $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 $207 million of income in first-quarter 2012 associated with the sale of certain of the company's former Venezuela operations, of which $144 million was recorded within discontinued operations.

Adjusted Income from Continuing Operations

Adjusted income from continuing operations for second-quarter 2013 was $129 million, or $0.19 per share, compared with $138 million, or $0.22 per share for second-quarter 2012. Year-to-date through June 30, adjusted income from continuing operations was $281 million, or $0.41 per share, compared with $374 million, or $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. (NYS: 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. (NYS: ACMP) . Prior period segment results have been recast to reflect Williams Partners' acquisition of Williams' Gulf Olefins business, which was completed in November 2012.

* Segment results for Access Midstream Partners for 2Q and YTD 2013 includes $15 million and $32 million, respectively, of 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.

** A schedule reconciling segment profit to adjusted segment profit (non-GAAP measure) is available atwww.williams.comand as an attachment to this press release.

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 $403 million, compared with $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 $859 million in segment profit, compared with $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.

There is a more detailed description of Williams Partners' business results in the partnership's second-quarter 2013 financial results news release, also issued today.

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 $22 million for second-quarter 2013, compared with $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 $58 million, compared with $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 $18 million of equity earnings recognized from Access Midstream Partners, L.P., offset by $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 $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 $207 million, up 71.1 percent from second-quarter 2012. During second-quarter 2013, Williams received a regular quarterly distribution of $22 million from Access Midstream Partners, L.P.

For the first half of 2013, segment profit includes $35 million of equity earnings, offset by $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 $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 $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.

2Q Key Operational Achievements

Williams NGL & Petchem Services

• Williams and Boardwalk Pipeline Partners, LP executed a joint venture agreement to pursue development of the Bluegrass Pipeline as well as related NGL fractionation and storage. The Bluegrass Pipeline will transport natural gas liquids from the Marcellus and Utica shale plays to the rapidly expanding petrochemical and export complex on the U.S. Gulf Coast, as well as the developing petrochemical market in the Northeast U.S. In June, the Williams' board approved the project.

Williams Partners

Northeast G&P

• Steadily increased the Northeast gathered volumes reaching a new monthly average record of 1.83 Bcf/d in June 2013. Gathered volumes in second-quarter 2013 increased 76 percent from second-quarter 2012. As planned, we placed into service three condensate pump stations in the second quarter to maximize liquids to Moundsville and four central receipt points in the first half of 2013.

• Completed the expansion of TXP III, the third turbo-expander at the Fort Beeler facility, adding 200 MMcf/d of processing capacity during the second quarter of 2013.

• Expansions to the Susquehanna Supply Hub gathering system continues to keep pace with Cabot Oil & Gas Corporation, which recently announced it would add a sixth rig in the Marcellus in August 2013.

Atlantic-Gulf

• Reached an agreement in principle settling all issues in Transco's rate case.

• Executed another tie-back agreement for Devils Tower with strong potential for additional tie-back agreements.

• Placed into service the second phase of the Mid-South Expansion, adding 130,000 dekatherms per day of capacity from Transco's Station 85 to the Cardinal interconnection near Transco's Station 160 in North Carolina. The company placed into service the first phase of the expansion (95,000 dekatherms per day) in the fall of 2012. The expansion provides natural gas service to power generators in North Carolina and Alabama as well as a local distribution company in Georgia.

• Filed an application with the Federal Energy Regulatory Commission (FERC) seeking approval to construct the Constitution Pipeline, a 120-mile pipeline which will connect natural gas production in northeastern Pennsylvania with northeastern markets by 2015. The Constitution Pipeline has been designed to transport up to 650,000 dekatherms of natural gas per day (enough natural gas to serve approximately 3 million homes) from Williams Partners' gathering system in Susquehanna County, Pa., to the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in Schoharie County, N.Y.

West

• Achieved a new quarterly average daily inlet volume throughput record of 466 MMcf/d at Willow Creek in the second quarter.

Guidance

The company continues to expect to increase the full-year dividend it pays shareholders by 20 percent in each 2013, 2014 and 2015 - to per-share amounts of $1.44, $1.75 and $2.11, respectively. Williams' full-year dividend for 2012 was $1.20 per share. The expected quarterly increases in Williams' dividend are subject to quarterly approval of Williams' board of directors. Williams has paid a common stock dividend every quarter since 1974.

Williams expects strong cash flow growth from Williams Partners, Williams NGL & Petchem Services and Access Midstream Partners to drive 20 percent annual cash dividend growth.

Williams previously agreed to waive incentive distribution rights of up to $200 million. Williams' support is expected to boost Williams Partners cash coverage for 2013. Due to Williams Partners' strong second-quarter performance, none of the $200 million has been waived to-date; however, the guidance presented below assumes that the full $200 million will be utilized in conjunction with the upcoming Williams Partners cash distributions for the third and fourth quarters of 2013. The IDR waivers provide Williams Partners with short-term cash distribution support as a large platform of growth projects moves toward completion and as Geismar returns to operations.

Williams Partners' Geismar plant is expected to be out of service until April 2014 as a result of the incident on June 13, 2013. Williams Partners has $500 million of combined business interruption and property damage insurance related to this event (subject to deductibles and other limitations) that is expected to significantly mitigate the financial loss. The company's current estimate of uninsured business interruption loss, property damage loss and other losses totals $95 million. The company currently estimates $384 million of cash recoveries from insurers related to business interruption losses.

Under generally accepted accounting principles we expect to recognize insurance recovery amounts as income when agreed to in writing by insurers or paid in cash. As such, Williams Partners L.P.'s adjusted segment profit, distributable cash flow and cash coverage have been adjusted to accrue assumed business interruption insurance recoveries while unadjusted GAAP amounts reflect estimated timing of written agreements with or cash recoveries from insurers. GAAP financial guidance assumes a 60 day lag from period of business interruption loss to related income recognition.

Williams Partners' preliminary damage assessment and preliminary repair plan indicates an estimated cost of $102 million to repair the plant. The company expects to complete the plant repairs, turnaround and expansion and resume operations by April 2014. The assumed expanded plant restart date and repair cost estimate are subject to various uncertainties and risks that could cause the actual results to be materially different from these assumptions. The assumed property damage and business interruption insurance proceeds are also subject to various uncertainties and risks that could cause the actual results to be materially different from these assumptions.