Williams Partners announced unaudited first-quarter 2009 net income of $18.7 million, compared with first-quarter 2008 net income of $43.6 million. Net income per limited-partner unit for first-quarter 2009 was $0.36, compared with $0.71 per limited-partner unit for first-quarter 2008.
First-quarter 2008 net income per limited-partner unit has been revised pursuant to the adoption of an accounting rule change in 2009.
Lower natural gas liquid (NGL) margins were the primary reason for the decline in net income in the first quarter. Sharply lower NGL prices, which were somewhat offset by lower natural gas prices, were the primary drivers of the lower NGL margins. Lower operating and maintenance expenses and higher fee-based revenues partially offset the lower NGL margins.
For first-quarter 2009, the key measure of distributable cash flow per weighted-average limited partner unit was $0.56, compared with $0.74 for first-quarter 2008. Distributable cash flow for limited-partner unitholders was $29.4 million for first-quarter 2009, compared with $38.8 million for first-quarter 2008. The 2009 amounts were significantly, favorably impacted by Williams' waiver of its incentive distribution rights for 2009. The waiver, which is detailed in the partnership's April 15 press release, decreases the amount of distributable cash flow allocated to the general partner.
The declines in distributable cash flow in the first quarter are due to lower cash distributions from the Discovery and Wamsutter investments, as well as lower results from Four Corners. Lower NGL margins drove the decline in results at Four Corners and Wamsutter. Lower NGL margins and plant inlet volumes, including hurricane impacts, resulted in the partnership receiving no cash distribution from Discovery in the first quarter of 2009, compared with a $16.8 million distribution during first-quarter 2008.
Although first-quarter distributable cash flow and net income were sharply lower compared with first-quarter 2008, the results are consistent with the full-year 2009 guidance management previously provided.
Chief Operating Officer Perspective
"As expected much lower NGL prices reduced our distributable cash flow compared with the results from last year. These reported NGL margins are in line with the guidance we provided unitholders on April 15," said Alan Armstrong, chief operating officer of the general partner of Williams Partners.
"Operationally, we were very pleased with our fee-based business, as volumes were up at our gathering and processing facilities in the West, with Wamsutter achieving a record for gathered volumes in March. We also completed all repairs on the Discovery system and are expecting a significant amount of new fee-based deepwater business to come online in the second quarter," Armstrong said.
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