Williams and Williams Partners Fourth Quarter 2017 Earnings Call

Transcription

1 WE MAKE ENERGY HAPPEN Williams and Williams Partners Fourth Quarter 2017 Earnings Call February 15, 2018 NYSE: WMB NYSE: WPZ williams.com Atlantic Sunrise Expansion Project

2 FOURTH QUARTER 2017 EARNINGS CALL 4Q Q 2017 Fourth Quarter 2017 Results GAAP Measures: 4Q Net Income and Modified EBITDA > 2017 Net Income/(Loss) attributable to WMB of $1.687 billion vs. $(15) million for 2016; up $1.7 billion $1.9 billion gain due to Tax Reform, absence of 2016 impairments of equity method investments $713 million regulatory charge resulting from Tax Reform at WPZ s Transco and Northwest Pipeline > 2017 Net Income/(Loss) attributable to WPZ of $(342) million vs. $145 million for 2016; down $487 million $713 million regulatory charge resulting from Tax Reform at Transco and Northwest Pipeline Absence of 2016 impairments of equity method investments > WPZ 2017 Segment Modified EBITDA ($MM): Atlantic-Gulf $(96); West $286; Northeast G&P $231; NGL-Petchem $(4) WPZ Non-GAAP Measures (1) : Continued growth in WPZ Adjusted EBITDA at Continuing Businesses WPZ Adjusted EBITDA ($MM): 4Q 2016 vs. 4Q 2017 > WPZ 4Q 2017 Adjusted EBITDA $1,150 million Up $84 million or 8% vs. 4Q 2016 excluding NGL-Petchem $117 million increase in fee-based revenue driven by Transco expansion projects in Atlantic-Gulf, and contract restructures and higher volumes in the West $30 million in higher operating maintenance (O&M) primarily due to increases at Transco; decreases in West offset increases at Northeast G&P (1) This slide contains non-gaap financial measures. A reconciliation of all non-gaap financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation The Williams Companies, Inc. All rights reserved. Williams and Williams Partners Fourth Quarter Earnings Call 2/15/18 2

3 FOURTH QUARTER 2017 EARNINGS CALL Full Year 2017 Results GAAP Measures: > 2017 Net Income/(Loss) attributable to WMB of $2.174 billion vs. $(424) million for 2016; up $2.6 billion $1.9 billion gain due to Tax Reform, $1.3 billion gain on the sale of Geismar and Permian JV $713 million regulatory charge resulting from Tax Reform at WPZ s Transco and Northwest Pipeline > 2017 Net Income/(Loss) attributable to WPZ of $871 million vs. $431 million for 2016; up $440 million $1.3 billion gain on the sale of Geismar and Permian JV $713 million regulatory charge resulting from Tax Reform at WPZ s Transco and Northwest Pipeline; Net Increase in impairments of certain assets and equity method investments > WPZ 2017 Segment Modified EBITDA ($MM): Atlantic-Gulf $1,238; West $412; Northeast G&P $819; NGL-Petchem $1,161 WPZ Non-GAAP Measures (1) : Continued Growth in WPZ Adjusted EBITDA > WPZ 2017 Adjusted EBITDA $4,472 million Up $202 million vs excluding NGL-Petchem > WPZ 2017 Adjusted EBITDA by segment Atlantic-Gulf: Increased fee-based revenue from growth projects; partially offset by higher costs West: Lower costs and higher commodity margins; partially offset by lower revenues due to 2016 contract restructures and volume declines, and the DBJV sale Northeast G&P: Increased Bradford ownership (DBJV sale); Marcellus area volume growth offset by lower Utica volumes NGL-Petchem: Completed sale of Geismar July 6; No operations in segment following Geismar sale Adjusted EBITDA by Segment ($MM): 2016 vs Atlantic-Gulf West Northeast G&P ,779 1,661 1,668 1,651 $118 $17 $73 (1) This slide contains non-gaap financial measures. A reconciliation of all non-gaap financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation The Williams Companies, Inc. All rights reserved. Williams and Williams Partners Fourth Quarter Earnings Call 2/15/18 3

4 FOURTH QUARTER 2017 EARNINGS CALL Strong Execution Across Transmission and G&P Businesses Contributed During 4Q'17 Transco Big 5 Expansions In-Service West Volumes Northeast Gathering Volumes Big 5 expansions increased pipeline capacity by ~25%; 4Q expansions: ~115 MMcf/d New York Bay in-service Oct. 9; ~250 MMcf/d Virginia Southside II in-service Dec. 1 Gathering volumes up in 8 of 10 franchises in 4Q 17 led by Haynesville with gathered volumes averaging ~1.4 Bcf/d 2017 operated gathering volumes up nearly 600 MMcf/d in 4Q 17 vs. 4Q 16 Northeast Oak Grove Processing Expect to expand Oak Grove processing complex by 400 MMcf/d based on new commitments from customers Other Achievements Transco Atlantic Sunrise Transco Gulf Connector Transco Gateway West Volumes Transco Southeastern Trail Targeting mid-2018 in-service; overall project construction >30% complete Construction underway on ~475 MMcf/d Gulf Coast LNG delivery expansion; target ISD 1H 2019 FERC application filed Nov. 15; another demand-driven expansion serving Northeast markets; target ISD Q Additional Chain Lake compression in-service January 2018 on Wamsutter system Binding shipper commitments fully underwrite attractive project; discussions ongoing to increase scope and scale 2018 The Williams Companies, Inc. All rights reserved. Williams and Williams Partners Fourth Quarter Earnings Call 2/15/18 4

5 FOURTH QUARTER 2017 EARNINGS CALL Delivering on Our Promises: 2017 Results Exceeded Guidance Midpoint Adjusted EBITDA $4.472 Bn $4.35 Low $4.45 Mid $4.55 High DCF $2.6 Low $2.821 Bn $2.7 Mid $2.8 High WPZ Cash Coverage Ratio 1.23x 1.13x Low 1.175x Mid 1.22x High Growth Capex 2017 Total WPZ 2017 Transco Guidance $2.1 - $2.8 Bn $1.4 - $1.9 Bn $2.3 Bn $1.5 Bn Leverage Guidance 2017 Debt / EBITDA < 4.50x 1 See footnote 2 WMB Cash Coverage Ratio Consolidated Leverage 2017 Dividend Coverage Ratio 2017 Debt / EBITDA Guidance ~1.4x Guidance <5.25x x See footnote 2 Note: This slide contains non-gaap financial measures. A reconciliation of all non-gaap financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation. 1 Rating agency adjusted Debt / EBITDA. 2 Actual Net Debt (Long-term debt plus commercial paper, less cash) divided by Adjusted EBITDA was 3.49x and 4.42x for WPZ and WMB, respectively. Rating agencies typically publish their credit metrics upon review of our audited financial statements. We expect our leverage ratio to be below 4.50x for WPZ and 5.25x for WMB on a Rating Agency Adjusted basis 2018 The Williams Companies, Inc. All rights reserved. Williams and Williams Partners Fourth Quarter Earnings Call 2/15/18 5

6 FOURTH QUARTER 2017 EARNINGS CALL Strong, Stable, and Growing: 2018 Key Guidance Metrics Net Income Adjusted EBITDA 2018 Guidance $1.5 - $1.7 Bn $ $4.65 Bn WPZ WMB 2 Distributable Cash Flow Expected Distribution Growth Rate Cash Distribution Coverage Ratio Growth Capex $2.9 - $3.2 Bn 5-7% annual growth for 2018 and 2019 (quarterly distribution increases) ~ 1.2x Total WPZ: $2.7 Bn Transco: $1.7 Bn Debt / EBITDA 1 < 4.5x Expected Dividend Growth Rate Dividend Coverage Ratio 10-15% annual growth for 2018 and 2019 (annual dividend increases) ~ 1.35x Consolidated Debt / EBITDA 1 < 5.25x Economic Coverage Ratio ~ 1.75x Midpoint of guidance Midpoint of guidance Midpoint of guidance Note: This slide contains non-gaap financial measures. A reconciliation of all non-gaap financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation. 1 Estimate of rating agency adjusted Debt / EBITDA 2 Williams does not expect to be a U.S. Federal cash income taxpayer through at least 2021, excluding taxes on any potential asset monetizations The Williams Companies, Inc. All rights reserved. Williams and Williams Partners Fourth Quarter Earnings Call 2/15/18 6

7 FOURTH QUARTER 2017 EARNINGS CALL Expected WPZ 2018 Adjusted EBITDA Growth Driven by Increase in Transco and Northeast G&P Fee Revenues Adjusted EBITDA ($ in millions) $4,750 $4,625 $4,500 $4,375 $4,250 $4,125 $4,000 $4, Actual Adjusted EBITDA -$72 Atl-Gulf Growth WPZ NGL & Petchem Services 2017 Adjusted EBITDA (Geismar sold in mid-2017) ~ +$300 Increase in Adjusted EBITDA at Continuing Business 1 +$180 Increase in Atlantic-Gulf Fee Revenues driven by increases in Transco fee revenues (partial year of new 2018 projects and additional contribution of 2017 Big 5 Projects), partially offset by lower Discovery +$160 NE Growth Increase in Northeast Fee Revenues driven by increases in fee revenues at Susquehanna Supply Hub, Ohio River -$40 Primarily higher operating expenses associated with Atlantic-Gulf and Northeast growth projects, partially offset by higher West Fee Revenues $4, Adjusted EBITDA before impacts of New Rev. Rec. Accounting Standard and Tax Reform ~ -$150 Non-cash impact of new revenue recognition standard (Barnett and Mid-Con prepayments) and modest 2018 impact of tax reform (primarily Northwest Pipeline) 2,3 Notes: A more detailed schedule reconciling this non-gaap measure is provided in this presentation. 1 Excludes WPZ NGL & Petchem Services. 2 ~$120 million non-cash impact from updated revenue recognition standard due primarily to the extension of time period over which Barnett and Mid-Con prepayments from 2016 are amortized into revenue. This extension reduces the amount of revenue to be recognized in 2018 and 2019 and increases the amount of revenue being recognized beyond 2019 versus revenue recognition under prior standard. 3 ~$30 million non-cash 2018 impact from tax reform is primarily the result of Northwest pipeline s 2017 rate settlement agreement, which included provisions related to non-cash deferral of revenue in the event of corporate tax rate reductions. $4, Midpoint of Guidance 2018 Adjusted EBITDA Guidance Midpoint 2018 The Williams Companies, Inc. All rights reserved. Williams and Williams Partners Fourth Quarter Earnings Call 2/15/18 7

8 FOURTH QUARTER 2017 EARNINGS CALL Transco Expansion Projects Poised to Contribute Strong Future Growth Transco Contribution to Atlantic-Gulf Adjusted EBITDA ($ in millions) $1,800 $1,600 $1,400 $1,200 $1, Drivers > $140 million partial-year contribution from Big 5 expansion projects > Higher expenses $1,033 $ Drivers > Additional ~$110 million contribution from Big 5 ($250 million full-year contribution) > ~$140 million partial-year revenue contribution from Atlantic Sunrise and Garden State > ~$33 million negative impact from increased O&M and other items $140 $33 $1, Drivers > Additional ~$285 million contribution from Atlantic Sunrise and Garden State (~$425 million full-year contribution) > ~$35 million partial year contribution from 2019 expansion projects > August rate case filing (+) Increased expenses (+) Maintenance capital (+) Tax reform (-) $800 $ Adjusted EBITDA Contribution Actual 2018 Adjusted EBITDA Contribution Estimate Based on Guidance Midpoint 2018 The Williams Companies, Inc. All rights reserved. Williams and Williams Partners Fourth Quarter Earnings Call 2/15/18 8

9 FOURTH QUARTER 2017 EARNINGS CALL Attractive Growth Outlook in 2019 and Beyond Growth opportunities emerging across Williams advantaged assets > Interstate Gas Transmission Transco growth continues beyond Atlantic Sunrise Backlog of seven fully-contracted projects that would go into service after Atlantic Sunrise Opportunity set growing: LNG, Power, Utility / LDCs, Industrial, Gas producers Three projects moved from potential to customer committed since May 2017 Analyst Day New opportunities evolve: ~20 additional potential projects being pursued; expect new project FIDs in 2018 > Marcellus and Utica volumes to grow with infrastructure build-out Further expansions of Oak Grove processing complex based on strong customer demand Finalizing negotiations for an additional major expansion of Susquehanna Supply Hub Dry Utica growth continuing > Deepwater Gulf of Mexico contributes to growth in 2019 and beyond Construction underway to serve new contracted volumes from Shell Norphlet play Williams assets in close proximity to major new discoveries Actively bidding additional large-scale opportunities across Deepwater portfolio > Developing West opportunities demonstrate long-term value of competitive positions Drilling activity in Wamsutter and Niobrara to drive growth in gathering and processing volumes Continued growth in Eagle Ford and Haynesville 2018 The Williams Companies, Inc. All rights reserved. Williams and Williams Partners Fourth Quarter Earnings Call 2/15/18 9

10 FOURTH QUARTER 2017 EARNINGS CALL Executing and Expanding to Generate Shareholder Value > Delivered Big 5 Transco expansion projects > Exceeded target for asset sale proceeds Keeping Commitments > Beat financial guidance midpoint on all metrics > Invested healthy WPZ cash distribution coverage into attractive growth projects > Improved balance sheet significantly: WMB consolidated net debt reduced by $3.3 billion > Disciplined capital investing drove improved ROCE > No WMB or WPZ equity issuance for forecast growth projects > 2018 Guidance consistent with previously announced growth trajectory Positioning for Attractive Growth > Strong coverage to continue > Tax reform benefits WMB shareholders: cash tax deferral period extended through at least 2021; $1.9 billion reduction in deferred tax liability > Fully-contracted growth projects contribute EBITDA growth in 2018, 2019, and beyond > Medium to long-term growth opportunities continue emerging across portfolio (1) This slide contains non-gaap financial measures. A reconciliation of all non-gaap financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation The Williams Companies, Inc. All rights reserved. Williams and Williams Partners Fourth Quarter Earnings Call 2/15/18 10

11 Questions 2018 The Williams Companies, Inc. All rights reserved. Williams and Williams Partners Fourth Quarter Earnings Call 2/15/18 11

12 Forward-looking statements 12

13 Forward-looking Statements > The reports, filings, and other public announcements of The Williams Companies, Inc. (Williams) and Williams Partners L.P. (WPZ) may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to anticipated financial performance, management s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of All statements, other than statements of historical fact, included in this document that address activities, events or developments that we expect, believe or anticipate will exist or may occur in the future, are forward-looking statements. Forward-looking statements can be identified by various forms of words such as anticipates, believes, seeks, could, may, should, continues, estimates, expects, forecasts, intends, might, goals, objectives, targets, planned, potential, projects, scheduled, will, assumes, guidance, outlook, in-service date and other similar expressions. These forward-looking statements are based on management s beliefs and assumptions and on information currently available to management and include, among others, statements regarding: Levels of cash distributions by WPZ with respect to limited partner interests; Levels of dividends to Williams stockholders; Future credit ratings of Williams, WPZ, and their affiliates; Amounts and nature of future capital expenditures; Expansion and growth of Williams business and operations; Expected in-service dates for capital projects; Financial condition and liquidity; Business strategy; Cash flow from operations or results of operations; Seasonality of certain business components; Natural gas and natural gas liquids prices, supply, and demand; Demand for our services. > Forward-looking statements are based on numerous assumptions, uncertainties and risks that could cause future events or results to be materially different from those stated or implied in this document. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following: Whether WPZ will produce sufficient cash flows to provide expected levels of cash distributions; Whether Williams is able to pay current and expected levels of dividends; Whether WPZ elects to pay expected levels of cash distributions and Williams elects to pay expected levels of dividends; Whether we will be able to effectively execute our financing plan; Whether Williams will be able to effectively manage the transition in its board of directors and management as well as successfully execute its business restructuring; Availability of supplies, including lower than anticipated volumes from third parties served by our business, and market demand; Volatility of pricing including the effect of lower than anticipated energy commodity prices and margins; Inflation, interest rates, and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on customers and suppliers); The strength and financial resources of our competitors and the effects of competition; Whether we are able to successfully identify, evaluate and timely execute capital projects and other investment opportunities in accordance with our forecasted capital expenditures budget; Our ability to successfully expand our facilities and operations; Development and rate of adoption of alternative energy sources; 13

14 Forward-looking Statements (cont'd) The impact of operational and developmental hazards, unforeseen interruptions, and the availability of adequate insurance coverage; The impact of existing and future laws (including but not limited to the Tax Cuts and Jobs Act of 2017), regulations, the regulatory environment, environmental liabilities, and litigation, as well as our ability to obtain necessary permits and approvals, and achieve favorable rate proceeding outcomes; Williams costs and funding obligations for defined benefit pension plans and other postretirement benefit plans; WPZ s costs for defined benefit pension plans and other postretirement benefit plans sponsored by its affiliates; Changes in maintenance and construction costs; Changes in the current geopolitical situation; Our exposure to the credit risk of our customers and counterparties; Risks related to financing, including restrictions stemming from debt agreements, future changes in credit ratings as determined by nationally-recognized credit rating agencies and the availability and cost of capital; The amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate; Risks associated with weather and natural phenomena, including climate conditions and physical damage to our facilities; Acts of terrorism, including cybersecurity threats, and related disruptions; Additional risks described in our filings with the Securities and Exchange Commission (SEC). > Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments. > In addition to causing our actual results to differ, the factors listed above may cause our intentions to change from those statements of intention set forth in this document. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise. > Because forward-looking statements involve risks and uncertainties, we caution that there are important factors, in addition to those listed above, that may cause actual results to differ materially from those contained in the forward-looking statements. For a detailed discussion of those factors, see Part I, Item 1A. Risk Factors in Williams and WPZ s Annual Reports on Form 10-K filed with the SEC on February 22,

15 Non-GAAP Reconciliations 15

16 Non-GAAP Disclaimer > This presentation may include certain financial measures adjusted EBITDA, adjusted income ( earnings ), adjusted earnings per share, cash available for dividends, dividend coverage ratio, distributable cash flow and cash distribution coverage ratio that are non-gaap financial measures as defined under the rules of the Securities and Exchange Commission. > Our segment performance measure, modified EBITDA is defined as net income (loss) before income (loss) from discontinued operations, income tax expense, net interest expense, equity earnings from equity-method investments, other net investing income, remeasurement gain on equity-method investment, impairment of equity investments and goodwill, depreciation and amortization expense, and accretion expense associated with asset retirement obligations for nonregulated operations. We also add our proportional ownership share (based on ownership interest) of modified EBITDA of equity-method investments. > Adjusted EBITDA further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Management believes this measure provides investors meaningful insight into results from ongoing operations. > For Williams, cash available for dividends is defined as cash received from its ownership in WPZ and adjusted EBITDA from our Other segment, less interest, taxes and maintenance capital expenditures with our Other segment. We also calculate the ratio of cash available for dividends to the total cash dividends paid (dividend coverage ratio). This measure reflects Williams cash available for dividends relative to its actual cash dividends paid. We further adjust these metrics to include Williams proportionate share of WPZ s distributable cash flow in excess of distributions paid, resulting in Williams Economic DCF and Economic Coverage Ratio. > For Williams Partners L.P., we define distributable cash flow as adjusted EBITDA less maintenance capital expenditures, cash portion of interest expense, income attributable to noncontrolling interests and cash income taxes, plus WPZ restricted stock unit non-cash compensation and certain other adjustments that management believes affects the comparability of results. Adjustments for maintenance capital expenditures and cash portion of interest expense include our proportionate share of these items of our equity-method investments. > For Williams Partners L.P., we also calculate the ratio of distributable cash flow to the total cash distributed (cash distribution coverage ratio). This measure reflects the amount of distributable cash flow relative to our cash distribution. We have also provided this ratio calculated using the most directly comparable GAAP measure, net income. > This presentation is accompanied by a reconciliation of these non-gaap financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of assets and the cash that the business is generating. > Neither adjusted EBITDA, adjusted income, cash available for dividends, nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles. 16

17 WPZ NON-GAAP RECONCILIATION Reconciliation of Non-GAAP Adjusted EBITDA and Distributable Cash Flow to GAAP Net Income (Dollars in millions, except coverage ratios) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year Williams Partners L.P. Reconciliation of "Net Income (Loss)" to "Modified EBITDA", Non-GAAP "Adjusted EBITDA" and "Distributable cash flow" Net income (loss) $ 79 $ (77) $ 351 $ 166 $ 519 $ 660 $ 348 $ 284 $ (317) $ 975 Provision (benefit) for income taxes 1 (80) (6) 5 (80) 3 1 (1) 3 6 Interest expense Equity (earnings) losses (97) (101) (104) (95) (397) (107) (125) (115) (87) (434) Impairment of equity-method investments Other investing (income) loss - net (1) (28) (29) (271) (2) (4) (4) (281) Proportional Modified EBITDA of equity-method investments Depreciation and amortization expenses , ,700 Accretion expense associated with asset retirement obligations for nonregulated operations Modified EBITDA ,070 1,235 3,864 1,132 1,076 1, ,616 Adjustments Estimated minimum volume commitments (194) (48) Severance and related costs Potential rate refunds associated with rate case litigation Settlement charge from pension early payout program Regulatory charges resulting from Tax Reform Share of regulatory charges resulting from Tax Reform for equity-method investments ACMP Merger and transition costs Constitution Pipeline project development costs Share of impairment at equity-method investment Geismar Incident adjustment (7) (7) (9) 2 8 (1) Gain on sale of Geismar Interest (1,095) (1,095) Impairment of certain assets , ,151 Ad valorem obligation timing adjustment 7 7 Organizational realignment-related costs Loss related to Canada disposition (3) (1) Gain on asset retirement (11) (11) (5) 5 Gains from contract settlements and terminations (13) (2) (15) Accrual for loss contingency 9 9 Gain on early retirement of debt (30) 3 (27) Gain on sale of RGP Splitter (12) (12) Expenses associated with Financial Repositioning 2 2 Expenses associated with strategic asset monetizations Total EBITDA adjustments (122) 563 (15) Adjusted EBITDA 1,060 1,065 1,189 1,113 4,427 1,117 1,104 1,101 1,150 4,472 17

18 WPZ NON-GAAP RECONCILIATION Reconciliation of Non-GAAP Adjusted EBITDA and Distributable Cash Flow to GAAP Net Income (cont d) (Dollars in millions, except coverage ratios) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year Williams Partners L.P. Reconciliation of "Net Income (Loss)" to "Modified EBITDA", Non-GAAP "Adjusted EBITDA" and "Distributable cash flow" Adjusted EBITDA 1,060 1,065 1,189 1,113 4,427 1,117 1,104 1,101 1,150 4,472 Maintenance capital expenditures (1) (58) (75) (121) (147) (401) (53) (100) (136) (154) (443) Interest expense (cash portion) (2) (241) (245) (244) (239) (969) (224) (216) (207) (208) (855) Cash taxes (3) (3) (5) (1) (4) (2) (12) Income attributable to noncontrolling interests (3) (29) (13) (31) (27) (100) (27) (32) (27) (27) (113) WPZ restricted stock unit non-cash compensation Amortization of deferred revenue associated with certain 2016 contract restructurings (58) (58) (59) (58) (233) Distributable cash flow attributable to Partnership Operations (4) , ,821 Total cash distributed (5) $ 725 $ 725 $ 734 $ 762 $ 2,946 $ 567 $ 574 $ 574 $ 574 $ 2,289 Coverage ratios: Distributable cash flow attributable to partnership operations divided by Total cash distributed Net income (loss) divided by Total cash distributed 0.11 (0.11) (0.55) 0.43 (1) Includes proportionate share of maintenance capital expenditures of equity investments. (2) Includes proportionate share of interest expense of equity investments. (3) Excludes allocable share of certain EBITDA adjustments. (4) The fourth quarter of 2016 includes income of $183 million associated with proceeds from the contract restructuring in the Barnett Shale and Mid-Continent region as the cash was received during (5) In order to exclude the impact of the IDR waiver associated with the WPZ merger termination fee from the determination of coverage ratios, cash distributions have been increased by $10 million in the first quarter of Cash distributions for the third quarter of 2016 have been increased to exclude the impact of the $150 million IDR waiver associated with the sale of our Canadian operations. Cash distributions for the fourth quarter of 2016 and the first quarter of 2017 have been decreased by $50 million and $6 million, respectively, to reflect the amount paid by WMB to WPZ pursuant to the January 2017 Common Unit Purchase Agreement. 18

19 WPZ NON-GAAP RECONCILIATION Reconciliation of Modified EBITDA to Non-GAAP Adjusted EBITDA (Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year Modified EBITDA: Northeast G&P $ 220 $ 222 $ 214 $ 197 $ 853 $ 226 $ 247 $ 115 $ 231 $ 819 Atlantic-Gulf , (96) 1,238 West , (615) NGL & Petchem Services 26 (290) (145) ,084 (4) 1,161 Other (9) (9) 20 (11) (14) (9) (14) Total Modified EBITDA $ 955 $ 604 $ 1,070 $ 1,235 $ 3,864 $ 1,132 $ 1,076 $ 1,000 $ 408 $ 3,616 Adjustments: Total Northeast G&P adjustments Total Atlantic-Gulf adjustments (2) Total West adjustments (148) , ,256 Total NGL & Petchem Services adjustments (3) 374 (2) (7) (1,083) 3 (1,089) Total Other adjustments 9 9 (21) Total Adjustments $ 105 $ 461 $ 119 $ (122) $ 563 $ (15) $ 28 $ 101 $ 742 $ 856 Adjusted EBITDA: Northeast G&P $ 225 $ 222 $ 220 $ 219 $ 886 $ 227 $ 248 $ 246 $ 238 $ 959 Atlantic-Gulf , ,779 West , ,668 NGL & Petchem Services (1) 72 Other (1) (1) (3) (1) (6) Total Adjusted EBITDA $ 1,060 $ 1,065 $ 1,189 $ 1,113 $ 4,427 $ 1,117 $ 1,104 $ 1,101 $ 1,150 $ 4,472 19

20 WPZ NON-GAAP RECONCILIATION Adjustments to Modified EBITDA by Segment (Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year Adjustments: Northeast G&P Severance and related costs $ 3 $ $ $ $ 3 $ $ $ $ Share of impairment at equity-method investments ACMP Merger and transition costs 2 2 Impairment of certain assets Ad valorem obligation timing adjustment 7 7 Settlement charge from pension early payout program 7 7 Organizational realignment-related costs Total Northeast G&P adjustments Atlantic-Gulf Potential rate refunds associated with rate case litigation Severance and related costs 8 8 Constitution Pipeline project development costs Settlement charge from pension early payout program Regulatory charges resulting from Tax Reform Share of regulatory charges resulting from Tax Reform for equity-method investments Organizational realignment-related costs Gain on asset retirement (11) (11) (5) 5 Total Atlantic-Gulf adjustments (2) West Estimated minimum volume commitments (194) (48) Severance and related costs ACMP Merger and transition costs 3 3 Impairment of certain assets , ,030 Settlement charge from pension early payout program Regulatory charge associated with Tax Reform Organizational realignment-related costs Gains from contract settlements and terminations (13) (2) (15) Total West adjustments (148) , ,256 20

21 WPZ NON-GAAP RECONCILIATION Adjustments to Modified EBITDA by Segment (cont.) (Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year Adjustments: NGL & Petchem Services Impairment of certain assets Loss related to Canada disposition (3) (1) Severance and related costs 4 4 Expenses associated with strategic asset monetizations Geismar Incident adjustments (7) (7) (9) 2 8 (1) Gain on sale of Geismar Interest (1,095) (1,095) Gain on sale of RGP Splitter (12) (12) Accrual for loss contingency 9 9 Total NGL & Petchem Services adjustments (3) 374 (2) (7) (1,083) 3 (1,089) Other Severance and related costs ACMP Merger and transition costs Expenses associated with Financial Repositioning 2 2 Gain on early retirement of debt (30) 3 (27) Total Other adjustments 9 9 (21) Total Adjustments $ 105 $ 461 $ 119 $ (122) $ 563 $ (15) $ 28 $ 101 $ 742 $

22 WPZ NON-GAAP RECONCILIATION WPZ 2018 Guidance: Reconciliation of Non-GAAP Adjusted EBITDA and DCF to GAAP Net Income 22

23 WMB NON-GAAP RECONCILIATION WMB 2018 Guidance: Dividend Illustration and Economic Coverage Calculation 23