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Williams Partners L.P. (WPZ - Snapshot Report) registered first-quarter 2013 earnings of 50 cents per limited partner unit, in line with the Zacks Consensus Estimate. Earnings deteriorated 41.2% from the year-ago profit level of 85 cents.

Lower natural gas liquid (NGL) margins in the partnership’s business during the first quarter of 2013 and related ethane rejection led to the year-over-year deterioration.

Total revenue in the reported quarter decreased 10.8% year over year to $1,756.0 million and failed to meet the Zacks Consensus Estimate of $1,989.0 million.

Notably, Williams Partners' distributable cash flow (DCF) attributable to partnership operations in the reported quarter was $497 million as against $475 million recorded in the year-ago period. Recently, the partnership increased its quarterly cash distribution by 9% year over year to 84.75 cents per unit.

Segment Performance

Consolidated adjusted segment profit was $450.0 million, down approximately 18.5% from the year-ago level of $552.0 million.

Northeast G&P: The segment reported a loss of $9.0 million versus profits of $4.0 million in the year-ago quarter. The downside came primarily from higher costs for the Ohio Valley Midstream system.

Atlantic-Gulf: The segment reported profits of $159.0 million, down 3.6% year over year. The downside was due to lower NGL margins in the Gulf processing facilities and lower equity earnings from the Discovery investment.

West: Segmental profit cascaded to $186 million from $311 million in the year-ago quarter. This was due to lower NGL prices and fee-based revenue which declined due to severe winter weather.

NGL & Petchem Services: The segment reported profits of $120 million, a rise of 69% year over year. The upside came from higher olefin product margins, primarily ethylene.


Williams Partners lowered its outlook for adjusted segment profit and distributable cash flow (DCF) for 2013 and 2014. The results would be adversely affected by lower NGL processing margins and lower ethane transportation volumes.

Williams Partners expects DCF of $1,675 million for 2013 and $2,350 million for 2014.

Total adjusted segment profits are expected to be $1,675 million for 2013 and $2,390 million for 2014.

The capital expenditures are estimated at $3,745 million for 2013 and $2,465 million for 2014.

In Conclusion

Williams Partners is an energy master limited partnership engaged in gathering, transportation, treating and processing of natural gas as well as fractionation and storage of NGLs. The general partner of the partnership is owned and managed by Williams Companies Inc. (WMB - Analyst Report).

Williams Partners retains a Zacks Rank #3, which is equivalent to a short-term Hold rating. However, there are other stocks in the oil and gas sector – InterOil Corporation (IOC - Snapshot Report), and EPL Oil & Gas, Inc. – which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.

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