Williams Energy Partners Reports 52 Percent Profit Growth in Fourth Quarter

Provides 2003 Earnings Guidance

TULSA, Okla. — Williams Energy Partners L.P. (NYSE:WEG) today announced fourth-quarter 2002 operating profit of $37.3 million compared with $24.6 million in 2001, representing a 52 percent increase.

The growth in fourth-quarter operating profit was partially due to significantly higher transportation and terminals revenues on Williams Pipe Line. These revenues grew due to higher rates resulting from longer haul shipments, higher tariff and ancillary service rates and increased volumes. Williams Pipe Line profits were further improved by decreased operating expenses due to lower maintenance costs.

Higher operating profit from the partnership’s independent petroleum products terminals, which are connected to third-party pipelines, was offset by lower profit from the ammonia pipeline system. These results were due to increased rates at the Gulf Coast terminals and higher expenses associated with the ammonia pipeline.

Although the Williams Pipe Line system was acquired April 11, 2002, the acquisition is treated similar to a pooling of interest under accounting rules requiring that historical financial statements be restated to include the results from Williams Pipe Line for all periods.

Net income for the fourth-quarter 2002 was $27.6 million compared with $13.8 million for 2001. This increase was attributable to higher operating profit and the elimination of income taxes due to the partnership structure, partially offset by debt placement fees and increased interest expense associated with the Williams Pipe Line acquisition.

Diluted earnings per unit increased to 95 cents for the fourth-quarter 2002 compared with 42 cents in the 2001 fourth quarter. Per unit numbers are not restated to include Williams Pipe Line results prior to the partnership’s ownership.

“Efforts to improve operating efficiency made a substantial contribution during the fourth quarter,” said Don Wellendorf, chief executive officer. “During 2003, we plan to continue to focus on our strategy of improving cash flow from our current businesses while pursuing accretive acquisitions.”

For the year ended Dec. 31, 2002, operating profit was $137.1 million compared with $109.3 million for the same period in 2001, representing an increase of 25 percent. Net income for the 2002 period was $99.2 million compared with $67.9 million for the 2001 period. Diluted earnings per unit for 2002 increased to $3.67 compared with $1.87 in 2001.

The average number of limited partner units outstanding on a diluted basis was 27.3 million units for fourth-quarter 2002 and 22 million units for the year, compared with 11.4 million units for both periods during 2001.

Management currently anticipates earnings per unit between 65 and 70 cents for first-quarter 2003 and between $3.25 and $3.35 for the full-year 2003. Current analyst expectations for 2003 average $3.22. The partnership’s first-quarter earnings typically reflect lower volumes transported on Williams Pipe Line due to seasonally lower refined products demand.

Earnings per unit for the year 2003 are currently predicted to be lower than 2002 results due to increased costs from system integrity work and higher interest costs from the Williams Pipe Line long-term debt financing.

In addition, earnings per unit will decline due to a higher number of units outstanding during 2003 compared with 2002. Absent future equity issuances, the average number of units outstanding for 2003 will be 27.3 million on a diluted basis, which is higher than the 22 million average units for 2002 due to the partnership’s May 2002 equity issuance.

These decreases in 2003 will be partially offset by the reflection of a full year of Williams Pipe Line ownership in 2003 earnings per unit results.

An investor call with management regarding fourth-quarter 2002 earnings is scheduled today at 1:30 p.m. Eastern. To participate, dial (800) 479-9001 and provide code 739873. International callers should dial (719) 457-2618 and provide the same code. A webcast also will be available at www.williamsenergypartners.com/calendar.jsp.

Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on Feb. 3. To access the replay, dial (888) 203-1112. International callers should dial (719) 457-0820. The access replay code is 739873.

Webcast replays also will be available at www.williamsenergypartners.com/calendar.jsp beginning at 4:30 p.m. Eastern today.

About Williams Energy Partners L.P. 

Williams Energy Partners L.P. was formed to own, operate and acquire a diversified portfolio of energy assets. The partnership primarily transports, stores and distributes refined petroleum products and ammonia. The general partner of WEG is a subsidiary of Williams, which moves, manages and markets a variety of energy products, including natural gas, liquid hydrocarbons, petroleum and electricity.


Portions of this document may constitute “forward-looking statements” as defined by federal law. Such statements are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Examples of such uncertainties and risk factors include, but are not limited to, changes in the price for crude oil, changes in demand for refined petroleum products, adverse developments affecting our ammonia pipeline customers, changes in federal government policies affecting farm subsidies, changes to cost estimates relating to specific acquisitions, changes in economic and industry conditions and changes in regulatory requirements (including changes in environmental requirements). These and other factors are set forth in the Partnership’s filings with the Securities and Exchange Commission.  


Contact Information:

Paula Farrell Williams Energy Partners Investor Relations 918-573-9233 paula.farrell@williams.com 
Susie Hereden Williams Energy Partners Media Relations 918-573-2278 susie.hereden@williams.com 

Contact Information:

Paula Farrell Investor Relations 918-574-7650 paula.farrell@magellanlp.com