##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from to
 Commission file number 1-32599
 WILLIAMS PARTNERS L.P.
  DELAWARE
    
    20-2485124(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)ONE WILLIAMS CENTERTULSA, OKLAHOMA
    
    74172-0172(Address of Principal Executive Offices)
    
    (Zip Code)
 (Registrants Telephone Number, Including Area Code)
 (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
 þ o
 o o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



WILLIAMS PARTNERS L.P.
 INDEX
 PagePart I. Financial InformationItem 1. Financial StatementsConsolidated Statements of Income  Three and Six Months Ended June 30, 2009 and 2008
    
    5Consolidated Balance Sheets  June 30, 2009 and December 31, 2008
    
    6Consolidated Statements of Cash Flows  Six Months Ended June 30, 2009 and 2008
    
    7Consolidated Statement of Partners Capital from January 1, 2009 to June 30, 2009
    
    8Notes to Consolidated Financial Statements
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    22Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    42Item 4. Controls and Procedures
    
    43Part II. Other Information
    
    44Item 1. Legal Proceedings
    
    44Item 1A. Risk Factors
    
    44Item 6. Exhibits
    
    46EX-10.1EX-10.3EX-31.1EX-31.2EX-32
  2




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##### Table of Contents



FORWARD-LOOKING STATEMENTS
   
    
    Amounts and nature of future capital expenditures;
 
    
    Expansion and growth of our business and operations;
 
    
    Financial condition and liquidity;
 
    
    Business strategy;
 
    
    Cash flow from operations and results of operations;
 
    
    The levels of cash distributions to unitholders;
 
    
    Seasonality of certain business segments; and
 
    
    Natural gas and natural gas liquids prices and demand.
  
    
    Whether we have sufficient cash from operations to enable us to maintain current levels
of cash distributions or to pay the minimum quarterly distribution following establishment
of cash reserves and payment of fees and expenses, including payments to our general
partner;
 
    
    Availability of supplies (including the uncertainties inherent in assessing and
estimating future natural gas reserves), market demand, volatility of prices, and the
availability and cost of capital;
 
    
    Inflation, interest rates and general economic conditions (including the current economic
slowdown and the disruption of global credit markets and the impact of these events on our
customers and suppliers);
 
    
    The strength and financial resources of our competitors;
 3




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##### Table of Contents




    
    Development of alternative energy sources;
 
    
    The impact of operational and development hazards;
 
    
    Costs of, changes in, or the results of laws, government regulations (including proposed
climate change legislation), environmental liabilities, litigation and rate proceedings;
 
    
    Changes in maintenance and construction costs;
 
    
    Changes in the current geopolitical situation;
 
    
    Our exposure to the credit risks of our customers;
 
    
    Risks related to strategy and financing, including restrictions stemming from our debt
agreements, future changes in our credit ratings and the availability and cost of credit;
 
    
    Risks associated with future weather conditions;
 
    
    Acts of terrorism; and
 
    
    Additional risks described in our filings with the Securities and Exchange Commission
(SEC).
    4




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 WILLIAMS PARTNERS L.P.
 
 CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per-unit amounts)
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenues:Product sales:Affiliate
    
    $
    32,886
    
    
    $
    94,134
    
    
    $
    63,758
    
    
    $
    172,256Third-party
    
    
    5,178
    
    
    
    9,741
    
    
    
    7,469
    
    
    
    13,962Gathering and processing:Affiliate
    
    
    10,826
    
    
    
    9,847
    
    
    
    21,436
    
    
    
    18,637Third-party
    
    
    44,462
    
    
    
    49,548
    
    
    
    91,717
    
    
    
    95,758Storage
    
    
    8,101
    
    
    
    7,102
    
    
    
    16,462
    
    
    
    14,435Fractionation
    
    
    2,619
    
    
    
    4,804
    
    
    
    5,176
    
    
    
    8,096Other
    
    
    2,255
    
    
    
    3,069
    
    
    
    5,777
    
    
    
    5,463Total revenues
    
    
    106,327
    
    
    
    178,245
    
    
    
    211,795
    
    
    
    328,607Costs and expenses:Product cost and shrink replacement:Affiliate
    
    
    7,446
    
    
    
    27,686
    
    
    
    16,312
    
    
    
    49,719Third-party
    
    
    13,092
    
    
    
    38,323
    
    
    
    24,388
    
    
    
    68,388Operating and maintenance expense (excluding
depreciation):Affiliate
    
    
    10,615
    
    
    
    16,548
    
    
    
    22,374
    
    
    
    39,681Third-party
    
    
    31,766
    
    
    
    29,984
    
    
    
    59,913
    
    
    
    53,935Depreciation, amortization and accretion
    
    
    11,164
    
    
    
    11,002
    
    
    
    22,348
    
    
    
    22,228General and administrative expense:Affiliate
    
    
    11,879
    
    
    
    12,385
    
    
    
    23,466
    
    
    
    22,261Third-party
    
    
    643
    
    
    
    749
    
    
    
    1,536
    
    
    
    1,677Taxes other than income
    
    
    2,325
    
    
    
    2,167
    
    
    
    4,761
    
    
    
    4,672Other (income) expense  net
    
    
    (18
    )
    
    
    (2,811
    )
    
    
    1,661
    
    
    
    (2,478
    )Total costs and expenses
    
    
    88,912
    
    
    
    136,033
    
    
    
    176,759
    
    
    
    260,083Operating income
    
    
    17,415
    
    
    
    42,212
    
    
    
    35,036
    
    
    
    68,524Equity earnings-Wamsutter
    
    
    18,975
    
    
    
    37,480
    
    
    
    34,296
    
    
    
    58,674Discovery investment income
    
    
    4,151
    
    
    
    8,570
    
    
    
    4,963
    
    
    
    22,191Interest expense
    
    
    (15,200
    )
    
    
    (16,683
    )
    
    
    (30,316
    )
    
    
    (34,356
    )Interest income
    
    
    27
    
    
    
    243
    
    
    
    61
    
    
    
    418Net income
    
    $
    25,368
    
    
    $
    71,822
    
    
    $
    44,040
    
    
    $
    115,451Allocation of net income:Net income
    
    $
    25,368
    
    
    $
    71,822
    
    
    $
    44,040
    
    
    $
    115,451Allocation of net income (loss) to general partner
    
    
    (137
    )
    
    
    7,811
    (a)
    
    
    (509
    )
    
    
    13,792
    (a)Allocation of net income to limited partners
    
    $
    25,505
    
    
    $
    64,011
    (a)
    
    $
    44,549
    
    
    $
    101,659
    (a)Basic and diluted net income per limited partner
common unit
    
    $
    0.48
    
    
    $
    1.21
    (a)
    
    $
    0.84
    
    
    $
    1.92
    (a)Weighted average number of common units outstanding
    
    
    52,777,452
    
    
    
    52,774,728
    
    
    
    52,777,452
    
    
    
    52,774,728
 
 (a)
    
    Retrospectively adjusted as discussed in Note 2.  5




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WILLIAMS PARTNERS L.P.
 
 CONSOLIDATED BALANCE SHEETS
 June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    90,235
    
    
    $
    116,165Accounts receivable:Trade
    
    
    15,048
    
    
    
    16,279Affiliate
    
    
    12,967
    
    
    
    11,652Other
    
    
    1,392
    
    
    
    2,919Product imbalance
    
    
    7,241
    
    
    
    6,344Prepaid expense
    
    
    9,708
    
    
    
    4,102Other current assets
    
    
    4,887
    
    
    
    3,642Total current assets
    
    
    141,478
    
    
    
    161,103Investment in Wamsutter
    
    
    277,216
    
    
    
    277,707Investment in Discovery Producer Services
    
    
    193,189
    
    
    
    184,466Gross property, plant and equipment
    
    
    1,275,794
    
    
    
    1,265,153Less accumulated depreciation
    
    
    (641,348
    )
    
    
    (624,633
    )Property, plant and equipment, net
    
    
    634,446
    
    
    
    640,520Other noncurrent assets
    
    
    26,507
    
    
    
    28,023Total assets
    
    $
    1,272,836
    
    
    $
    1,291,819LIABILITIES AND PARTNERS CAPITALCurrent liabilities:Accounts payable:Trade
    
    $
    22,270
    
    
    $
    22,348Affiliate
    
    
    13,837
    
    
    
    11,122Product imbalance
    
    
    5,791
    
    
    
    8,926Deferred revenue
    
    
    14,459
    
    
    
    4,916Accrued interest
    
    
    18,702
    
    
    
    18,705Other accrued liabilities
    
    
    6,581
    
    
    
    6,172Total current liabilities
    
    
    81,640
    
    
    
    72,189Long-term debt
    
    
    1,000,000
    
    
    
    1,000,000Environmental remediation liabilities
    
    
    2,085
    
    
    
    2,321Other noncurrent liabilities
    
    
    13,973
    
    
    
    13,699Commitments and contingent liabilities (Note 9 )Partners capital
    
    
    175,138
    
    
    
    203,610Total liabilities and partners capital
    
    $
    1,272,836
    
    
    $
    1,291,819
  6




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##### Table of Contents



WILLIAMS PARTNERS L.P.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months EndedJune 30,2009
    
    
    2008(In thousands)OPERATING ACTIVITIES:Net income
    
    $
    44,040
    
    
    $
    115,451Adjustments to reconcile to cash provided by operating activities:Depreciation, amortization and accretion
    
    
    22,348
    
    
    
    22,228(Gain)/reversal of gain on involuntary conversion
    
    
    966
    
    
    
    (3,266
    )Equity earnings of Wamsutter
    
    
    (34,296
    )
    
    
    (58,674
    )Equity earnings of Discovery Producer Services
    
    
    (776
    )
    
    
    (22,191
    )Distributions related to equity earnings of Wamsutter
    
    
    34,296
    
    
    
    49,307Distributions related to equity earnings of Discovery Producer Services
    
    
    776
    
    
    
    22,191Cash provided (used) by changes in assets and liabilities:Accounts receivable
    
    
    1,443
    
    
    
    (32,860
    )Prepaid expense
    
    
    (5,606
    )
    
    
    (612
    )Other current assets
    
    
    (1,170
    )
    
    
    5,679Accounts payable
    
    
    2,637
    
    
    
    16,751Product imbalance
    
    
    (4,032
    )
    
    
    (13,529
    )Deferred revenue
    
    
    9,380
    
    
    
    6,428Accrued liabilities
    
    
    93
    
    
    
    (1,272
    )Derivative assets and liabilities
    
    
    79
    
    
    
    377Other, including changes in non current assets and liabilities
    
    
    1,521
    
    
    
    1,925Net cash provided by operating activities
    
    
    71,699
    
    
    
    107,933INVESTING ACTIVITIES:Capital expenditures
    
    
    (16,952
    )
    
    
    (30,065
    )Cumulative distributions in excess of equity earnings of Discovery Producer Services
    
    
    2,764
    
    
    
    10,209Cumulative distributions in excess of equity earnings of Wamsutter
    
    
    1,392
    
    
    
    Insurance proceeds
    
    
    
    
    
    
    6,190Proceeds from sale of property, plant and equipment
    
    
    162
    
    
    
    Contributions to Wamsutter
    
    
    (736
    )
    
    
    (820
    )Contributions to Discovery Producer Services
    
    
    (11,486
    )
    
    
    (437
    )Net cash used by investing activities
    
    
    (24,856
    )
    
    
    (14,923
    )FINANCING ACTIVITIES:Quarterly
distributions
    
    
    (75,814
    )
    
    
    (73,204
    )Proceeds from sale of common units
    
    
    
    
    
    
    28,992Redemption of common units from general partner
    
    
    
    
    
    
    (28,992
    )Contributions per omnibus agreement
    
    
    3,041
    
    
    
    1,636Other
    
    
    
    
    
    
    76Net cash used by financing activities
    
    
    (72,773
    )
    
    
    (71,492
    )Increase (decrease) in cash and cash equivalents
    
    
    (25,930
    )
    
    
    21,518Cash and cash equivalents at beginning of period
    
    
    116,165
    
    
    
    36,197Cash and cash equivalents at end of period
    
    $
    90,235
    
    
    $
    57,715
  7




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##### Table of Contents



WILLIAMS PARTNERS L.P.
 
 CONSOLIDATED STATEMENT OF PARTNERS CAPITAL
(In thousands)
 (Unaudited)
 Accumulated Other
    
    
    TotalGeneral
    
    
    Comprehensive
    
    
    PartnersCommon
    
    
    Partner
    
    
    Income
    
    
    CapitalBalance  January 1, 2009
    
    $
    1,619,954
    
    
    $
    (1,416,344
    )
    
    $
    
    
    
    $
    203,610Net income
    
    
    37,277
    
    
    
    6,763
    
    
    
    
    
    
    
    44,040Other comprehensive income:Net unrealized gains on cash flow hedges
    
    
    
    
    
    
    
    
    
    
    76
    
    
    
    76Net unrealized gains on cash flow
hedges  Wamsutter
    
    
    
    
    
    
    
    
    
    
    165
    
    
    
    165Total other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    241Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,281Cash distributions
    
    
    (67,026
    )
    
    
    (8,788
    )
    
    
    
    
    
    
    (75,814
    )Contributions pursuant to the omnibus
agreement
    
    
    
    
    
    
    3,041
    
    
    
    
    
    
    
    3,041Other
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    20Balance  June 30, 2009
    
    $
    1,590,225
    
    
    $
    (1,415,328
    )
    
    $
    241
    
    
    $
    175,138
  8




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##### Table of Contents



WILLIAMS PARTNERS L.P.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 Note 1. Organization and Basis of Presentation
     9




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##### Table of Contents



Note 2. Recent Accounting Standards
 Earnings per Share,
  TM
 Note 3. Allocation of Net Income and Distributions
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Allocation to general partner:Net income
    
    $
    25,368
    
    
    $
    71,822
    
    
    $
    44,040
    
    
    $
    115,451Reimbursable general and administrative costs charged
directly to general partner
    
    
    658
    
    
    
    398
    
    
    
    1,418
    
    
    
    796Income subject to 2% allocation of general partner interest
    
    
    26,026
    
    
    
    72,220
    
    
    
    45,458
    
    
    
    116,247General partners share of net income
    
    
    2.0
    %
    
    
    2.0
    %
    
    
    2.0
    %
    
    
    2.0
    %General partners allocated share of net income before
items directly allocable to general partner interest
    
    
    521
    
    
    
    1,444
    
    
    
    909
    
    
    
    2,325Incentive distributions paid to general partner*
    
    
    
    
    
    
    5,499
    
    
    
    7,272
    
    
    
    9,730Direct charges to general partner
    
    
    (658
    )
    
    
    (398
    )
    
    
    (1,418
    )
    
    
    (796
    )Net income (loss) allocated to general partner*
    
    $
    (137
    )
    
    $
    6,545
    
    
    $
    6,763
    
    
    $
    11,259Net income
    
    $
    25,368
    
    
    $
    71,822
    
    
    $
    44,040
    
    
    $
    115,451Net income (loss) allocated to general partner*
    
    
    (137
    )
    
    
    6,545
    
    
    
    6,763
    
    
    
    11,259Net income allocated to limited partners
    
    $
    25,505
    
    
    $
    65,277
    
    
    $
    37,277
    
    
    $
    104,192
 
 *
    
    In the calculation of basic and diluted net income per limited partner unit, the net income
allocated to the general partner includes IDRs pertaining to the current reporting period, but
paid in the subsequent period. The net income allocated to the general partners capital
account reflects IDRs paid during the current reporting period. In April 2009, The Williams
Companies, Inc. 10




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##### Table of Contents



General PartnerIncentivePer Unit
    
    Common
    
    Subordinated
    
    
    
    
    
    Distribution
    
    Total CashPayment Date
    
    Distribution
    
    Units
    
    Units
    
    2%
    
    Rights
    
    Distribution2/14/2008
    
    $
    0.5750
    
    
    $
    26,321
    
    
    $
    4,025
    
    
    $
    706
    
    
    $
    4,231
    
    
    $
    35,2835/15/2008
    
    $
    0.6000
    
    
    $
    31,665
    
    
    
    
    
    
    $
    758
    
    
    $
    5,498
    
    
    $
    37,9218/14/2008
    
    $
    0.6250
    
    
    $
    32,984
    
    
    
    
    
    
    $
    811
    
    
    $
    6,765
    
    
    $
    40,56011/14/2008
    
    $
    0.6350
    
    
    $
    33,513
    
    
    
    
    
    
    $
    832
    
    
    $
    7,272
    
    
    $
    41,6172/13/2009
    
    $
    0.6350
    
    
    $
    33,513
    
    
    
    
    
    
    $
    832
    
    
    $
    7,272
    
    
    $
    41,6175/15/2009
    
    $
    0.6350
    
    
    $
    33,513
    
    
    
    
    
    
    $
    684
    
    
    $
    
    
    
    $
    34,1978/14/2009 (a)
    
    $
    0.6350
    
    
    $
    33,513
    
    
    
    
    
    
    $
    684
    
    
    $
    
    
    
    $
    34,197
 
 (a)
    
    The board of directors of our general partner declared this cash distribution on July
27, 2009 to be paid on August 14, 2009 to unitholders of record at the close of business on
August 7, 2009. 11




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Note 4. Related Party Transactions
  Note 5. Equity Investments
 Wamsutter
   June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Current assets
    
    $
    19,224
    
    
    $
    17,147Property, plant and equipment, net
    
    
    360,230
    
    
    
    318,072Non-current assets
    
    
    774
    
    
    
    468Current liabilities
    
    
    (18,150
    )
    
    
    (16,960
    )Non-current liabilities
    
    
    (4,476
    )
    
    
    (4,353
    )Members capital
    
    $
    357,602
    
    
    $
    314,374
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)Revenues:Product sales:Affiliate
    
    $
    18,212
    
    
    $
    40,903
    
    
    $
    36,589
    
    
    $
    85,918Third-party
    
    
    5,524
    
    
    
    8,851
    
    
    
    8,549
    
    
    
    13,886Gathering and processing services
    
    
    20,664
    
    
    
    18,331
    
    
    
    40,048
    
    
    
    33,345Other revenues
    
    
    777
    
    
    
    2,137
    
    
    
    3,222
    
    
    
    4,698Costs and expenses excluding depreciation and accretion:Affiliate
    
    
    11,010
    
    
    
    17,277
    
    
    
    23,621
    
    
    
    50,491Third-party
    
    
    9,636
    
    
    
    10,251
    
    
    
    19,488
    
    
    
    18,240Depreciation and accretion
    
    
    5,556
    
    
    
    5,214
    
    
    
    11,003
    
    
    
    10,442Net income
    
    $
    18,975
    
    
    $
    37,480
    
    
    $
    34,296
    
    
    $
    58,674Williams Partners interest  equity earnings
    
    $
    18,975
    
    
    $
    37,480
    
    
    $
    34,296
    
    
    $
    58,674
 12




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##### Table of Contents



Discovery Producer Services LLC
  June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)Current assets
    
    $
    63,400
    
    
    $
    50,978Non-current restricted cash and cash equivalents
    
    
    
    
    
    
    3,470Property, plant and equipment, net
    
    
    370,704
    
    
    
    370,482Current liabilities
    
    
    (39,734
    )
    
    
    (45,234
    )Non-current liabilities
    
    
    (21,718
    )
    
    
    (19,771
    )Members capital
    
    $
    372,652
    
    
    $
    359,925
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Unaudited)Revenues:Affiliate
    
    $
    26,300
    
    
    $
    71,911
    
    
    $
    39,091
    
    
    $
    149,917Third-party
    
    
    12,387
    
    
    
    10,972
    
    
    
    19,630
    
    
    
    20,122Costs and expenses:Affiliate
    
    
    11,814
    
    
    
    32,222
    
    
    
    18,884
    
    
    
    70,468Third-party
    
    
    20,241
    
    
    
    36,559
    
    
    
    38,397
    
    
    
    63,179Interest income
    
    
    (14
    )
    
    
    (186
    )
    
    
    (22
    )
    
    
    (450
    )Loss on sale of operating assets
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Foreign exchange loss (gain)
    
    
    
    
    
    
    4
    
    
    
    168
    
    
    
    (143
    )Net income
    
    $
    6,646
    
    
    $
    14,282
    
    
    $
    1,294
    
    
    $
    36,983Discovery investment income:Williams Partners interest  equity earnings
    
    $
    3,987
    
    
    $
    8,570
    
    
    $
    776
    
    
    $
    22,191Business interruption proceeds
    
    
    164
    
    
    
    
    
    
    
    4,187
    
    
    
    Discovery investment income
    
    $
    4,151
    
    
    $
    8,570
    
    
    $
    4,963
    
    
    $
    22,191
  Note 6. Long-Term Debt and Credit Facilities
 Long-Term Debt
  Interest
    
    
    June 30,
    
    
    December 31,Rate
    
    
    2009
    
    
    2008(In millions)Credit agreement term loan, adjustable rate, due 2012
    
    
    (a
    )
    
    $
    250
    
    
    $
    250Senior unsecured notes, fixed rate, due 2017
    
    
    7.25
    %
    
    
    600
    
    
    
    600Senior unsecured notes, fixed rate, due 2011
    
    
    7.50
    %
    
    
    150
    
    
    
    150Total Long-term debt
    
    
    
    
    
    $
    1,000
    
    
    $
    1,000
 
 (a)
    
    1.3075% at June 30, 2009. 13




---



##### Table of Contents



Credit Facilities
   
    
    We are required to maintain a ratio of consolidated indebtedness to consolidated EBITDA
(each as defined in the Credit Agreement) of no greater than 5.00 to 1.00 as of the last day
of any fiscal quarter. This ratio may be increased in the case of an acquisition of $50.0
million or more, in which case the ratio will be 5.50 to 1.00 for the fiscal quarter in
which the acquisition occurs and three fiscal quarter-periods following such acquisition. At
June 30, 2009, our ratio of consolidated indebtedness to consolidated EBITDA, as calculated
under this covenant, of approximately 3.83 is in compliance with this covenant.
 
    
    Our ratio of consolidated EBITDA to consolidated interest expense (each as defined in the
Credit Agreement) must be not less than 2.75 to 1.00 as of the last day of any fiscal
quarter, unless we obtain an investment grade rating from Standard and Poors Ratings
Services or Moodys Investors Service and the rating from the other agency is not less than
Ba1 or BB+, as applicable. At June 30, 2009, our ratio of consolidated EBITDA to
consolidated interest expense, as calculated under this covenant, of approximately 4.26 is
in compliance with this covenant.
   Note 7. Financial Instruments and Fair Value Measurements
 Financial Instruments
  Cash and cash equivalents.
 14




---



##### Table of Contents



Long-term debt.
 Energy commodity swap agreements.
 Carrying amounts and fair values of our financial instruments
 June 30, 2009
    
    December 31, 2008Carrying
    
    Fair
    
    Carrying
    
    FairAsset (Liability)
    
    Amount
    
    Value
    
    Amount
    
    Value(In thousands)Cash and cash equivalents
    
    $
    90,235
    
    
    $
    90,235
    
    
    $
    116,165
    
    
    $
    116,165Long-term debt
    
    
    (1,000,000
    )
    
    
    (934,869
    )
    
    
    (1,000,000
    )
    
    
    (825,289
    )Energy commodity derivative assets
    
    
    76
    
    
    
    76
    
    
    
    
    
    
    
    Energy commodity derivative liabilities
    
    
    (79
    )
    
    
    (79
    )
    
    
    
    
    
    
    
 Fair Value Measurements
   
    
    Level 1  Quoted prices in active markets for identical assets or liabilities that we
have the ability to access. Active markets are those in which transactions for the asset or
liability occur in sufficient frequency and volume to provide pricing information on an
ongoing basis.
 
    
    Level 2  Inputs are other than quoted prices in active markets included in Level 1,
that are either directly or indirectly observable. These inputs are either directly
observable in the marketplace or indirectly observable through corroboration with market
data for substantially the full contractual term of the asset or liability being measured.
 
    
    Level 3  Includes inputs that are not observable for which there is little, if any,
market activity for the asset or liability being measured. These inputs reflect managements
best estimate of the assumptions market participants would use in determining fair value.
Our Level 3 consists of instruments valued with valuation methods that utilize unobservable
pricing inputs that are significant to the overall fair value.
   15




---



##### Table of Contents



Level 3 Fair Value Measurements Using Significant Unobservable Inputs
Three and Six Months Ended June 30, 2009 and 2008
(In thousands)
 Net Derivative Asset (Liability)Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Beginning balance
    
    $
    
    
    
    $
    (33
    )
    
    $
    
    
    
    $
    (2,487
    )Realized and unrealized gains (losses):Included in net income
    
    
    (79
    )
    
    
    (1,621
    )
    
    
    (79
    )
    
    
    (1,616
    )Included in other comprehensive income
    
    
    76
    
    
    
    (11,568
    )
    
    
    76
    
    
    
    (9,114
    )Purchases, issuances, and settlements
    
    
    
    
    
    
    1,244
    
    
    
    
    
    
    
    1,239Transfers in/(out) of Level 3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ending balance
    
    $
    (3
    )
    
    $
    (11,978
    )
    
    $
    (3
    )
    
    $
    (11,978
    )Unrealized gains (losses) included in
net income relating to instruments still
held at June 30
    
    $
    (79
    )
    
    $
    (377
    )
    
    $
    (79
    )
    
    $
    (377
    )
  Note 8. Energy Commodity Derivatives
 Risk Management Activities
    16




---



##### Table of Contents



Volumes
  Period
    
    VolumesDesignated as hedging instruments:NGL sales  ethane (million gallons)
    
    July-September 2009
    
    
    16.4Not designated as hedging instruments:Natural gas
purchases (million British thermal units per day)
    
    July-September 2009
    
    
    12,500
  Financial Statement Presentation
  Assets
    
    Liabilities(In thousands)NGL swaps
    
    $
    76
    
    
    $
    79
  Three months
    
    Six monthsended
    
    endedJune 30, 2009
    
    June 30, 2009
    
    Classification(In thousands)Net gain recognized in other comprehensive income (effective portion)
    
    $
    76
    
    
    $
    76Net (loss) reclassified from accumulated other comprehensive income into
income (effective portion)
    
    $
    
    
    
    $
    (Gain) recognized in income (ineffective portion)
    
    $
    
    
    
    $
    Other unrealized loss included in income
    
    $
    (79
    )
    
    $
    (79
    )
    
    Revenues
  17




---



##### Table of Contents



Credit-Risk-Related Features
  Note 9. Commitments and Contingencies
 Environmental Matters-Four Corners.
    Environmental Matters-Conway.
  Will Price.
 18




---



##### Table of Contents



Grynberg.
 GEII Litigation.
 Other.
 Summary.
 19




---



##### Table of Contents



Note 10. Segment Disclosures
  Gathering &Gathering &
    
    
    Processing -
    
    
    NGLProcessing - West
    
    
    Gulf
    
    
    Services
    
    
    Total(In thousands)Three Months Ended June 30, 2009:Segment revenues
    
    $
    91,664
    
    
    $
    459
    
    
    $
    14,204
    
    
    $
    106,327Product cost and shrink replacement
    
    
    19,054
    
    
    
    
    
    
    
    1,484
    
    
    
    20,538Operating and maintenance expense
    
    
    35,963
    
    
    
    575
    
    
    
    5,843
    
    
    
    42,381Depreciation, amortization and accretion
    
    
    10,278
    
    
    
    60
    
    
    
    826
    
    
    
    11,164Direct general and administrative expense
    
    
    2,300
    
    
    
    
    
    
    
    764
    
    
    
    3,064Other, net
    
    
    2,194
    
    
    
    
    
    
    
    113
    
    
    
    2,307Segment operating income (loss)
    
    
    21,875
    
    
    
    (176
    )
    
    
    5,174
    
    
    
    26,873Investment income
    
    
    18,975
    
    
    
    4,151
    
    
    
    
    
    
    
    23,126Segment profit
    
    $
    40,850
    
    
    $
    3,975
    
    
    $
    5,174
    
    
    $
    49,999Reconciliation to the Consolidated Statements of Income:Segment operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    26,873General and administrative expenses:Allocated-affiliate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,935
    )Third party-direct
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (523
    )Combined operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    17,415Three Months Ended June 30, 2008:Segment revenues
    
    $
    158,563
    
    
    $
    546
    
    
    $
    19,136
    
    
    $
    178,245Product cost and shrink replacement
    
    
    61,144
    
    
    
    
    
    
    
    4,865
    
    
    
    66,009Operating and maintenance expense
    
    
    36,677
    
    
    
    519
    
    
    
    9,336
    
    
    
    46,532Depreciation, amortization and accretion
    
    
    10,136
    
    
    
    151
    
    
    
    715
    
    
    
    11,002Direct general and administrative expense
    
    
    2,058
    
    
    
    
    
    
    
    700
    
    
    
    2,758Other, net
    
    
    (750
    )
    
    
    
    
    
    
    106
    
    
    
    (644
    )Segment operating income (loss)
    
    
    49,298
    
    
    
    (124
    )
    
    
    3,414
    
    
    
    52,588Equity earnings
    
    
    37,480
    
    
    
    8,570
    
    
    
    
    
    
    
    46,050Segment profit
    
    $
    86,778
    
    
    $
    8,446
    
    
    $
    3,414
    
    
    $
    98,638Reconciliation to the Consolidated Statements of Income:Segment operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    52,588General and administrative expenses:Allocated-affiliate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,846
    )Third party-direct
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (530
    )Combined operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    42,212
 20




---



##### Table of Contents



Gathering &Gathering &
    
    
    Processing -
    
    
    NGLProcessing - West
    
    
    Gulf
    
    
    Services
    
    
    Total(In thousands)Six Months Ended June 30, 2009:Segment revenues
    
    $
    182,442
    
    
    $
    945
    
    
    $
    28,408
    
    
    $
    211,795Product cost and shrink replacement
    
    
    37,515
    
    
    
    
    
    
    
    3,185
    
    
    
    40,700Operating and maintenance expense
    
    
    68,977
    
    
    
    1,150
    
    
    
    12,160
    
    
    
    82,287Depreciation, amortization and accretion
    
    
    20,622
    
    
    
    92
    
    
    
    1,634
    
    
    
    22,348Direct general and administrative expense
    
    
    4,461
    
    
    
    
    
    
    
    1,520
    
    
    
    5,981Other, net
    
    
    6,003
    
    
    
    
    
    
    
    419
    
    
    
    6,422Segment operating income (loss)
    
    
    44,864
    
    
    
    (297
    )
    
    
    9,490
    
    
    
    54,057Investment income
    
    
    34,296
    
    
    
    4,963
    
    
    
    
    
    
    
    39,259Segment profit
    
    $
    79,160
    
    
    $
    4,666
    
    
    $
    9,490
    
    
    $
    93,316Reconciliation to the Consolidated Statements of Income:Segment operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    54,057General and administrative expenses:Allocated-affiliate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,817
    )Third party-direct
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,204
    )Combined operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    35,036Six Months Ended June 30, 2008:Segment revenues
    
    $
    290,896
    
    
    $
    1,113
    
    
    $
    36,598
    
    
    $
    328,607Product cost and shrink replacement
    
    
    108,590
    
    
    
    
    
    
    
    9,517
    
    
    
    118,107Operating and maintenance expense
    
    
    77,570
    
    
    
    1,043
    
    
    
    15,003
    
    
    
    93,616Depreciation, amortization and accretion
    
    
    20,435
    
    
    
    304
    
    
    
    1,489
    
    
    
    22,228Direct general and administrative expense
    
    
    3,988
    
    
    
    
    
    
    
    1,244
    
    
    
    5,232Other, net
    
    
    1,804
    
    
    
    
    
    
    
    390
    
    
    
    2,194Segment operating income (loss)
    
    
    78,509
    
    
    
    (234
    )
    
    
    8,955
    
    
    
    87,230Equity earnings
    
    
    58,674
    
    
    
    22,191
    
    
    
    
    
    
    
    80,865Segment profit
    
    $
    137,183
    
    
    $
    21,957
    
    
    $
    8,955
    
    
    $
    168,095Reconciliation to the Consolidated Statements of Income:Segment operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    87,230General and administrative expenses:Allocated-affiliate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,508
    )Third party-direct
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,198
    )Combined operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    68,524
 21




---



##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Please read the following discussion of our financial condition and results of operations in
conjunction with the consolidated financial statements included in Item 1 of Part I of this
quarterly report.
 Overview
  
    
    Gathering and Processing  West (West).Our West segment includes Four Corners and
ownership interests in Wamsutter, consisting of (i) 100% of the Class A limited liability
company membership interests and (ii) 65% of the Class C limited liability company
membership interests (together, the Wamsutter Ownership Interests). We account for the
Wamsutter Ownership Interests as an equity investment.
 
    
    Gathering and Processing  Gulf (Gulf).Our Gulf segment includes (1) our 60%
ownership interest in Discovery and (2) the Carbonate Trend gathering pipeline off the
coast of Alabama. We account for our ownership interest in Discovery as an equity
investment.
 
    
    NGL Services.Our NGL Services segment includes three integrated NGL storage facilities
and a 50% undivided interest in a fractionator near Conway, Kansas.
 Executive Summary
  Recent Events
    22




---



##### Table of Contents



Results of Operations
 Consolidated Overview
  Three months ended
    
    
    
    
    
    
    Six months endedJune 30,
    
    
    % Change from
    
    
    June 30,
    
    
    % Change from2009
    
    
    2008
    
    
    2008(1)
    
    
    2009
    
    
    2008
    
    
    2008(1)(Thousands)
    
    
    
    
    
    
    (Thousands)Financial Results:Revenues
    
    $
    106,327
    
    
    $
    178,245
    
    
    
    -40
    %
    
    $
    211,795
    
    
    $
    328,607
    
    
    
    -36
    %Costs and expenses:Product cost and shrink
replacement
    
    
    20,538
    
    
    
    66,009
    
    
    
    +69
    %
    
    
    40,700
    
    
    
    118,107
    
    
    
    +66
    %Operating and maintenance
expense
    
    
    42,381
    
    
    
    46,532
    
    
    
    +9
    %
    
    
    82,287
    
    
    
    93,616
    
    
    
    +12
    %Depreciation, amortization
and accretion
    
    
    11,164
    
    
    
    11,002
    
    
    
    -1
    %
    
    
    22,348
    
    
    
    22,228
    
    
    
    -1
    %General and administrative
expense
    
    
    12,522
    
    
    
    13,134
    
    
    
    +5
    %
    
    
    25,002
    
    
    
    23,938
    
    
    
    -4
    %Taxes other than income
    
    
    2,325
    
    
    
    2,167
    
    
    
    -7
    %
    
    
    4,761
    
    
    
    4,672
    
    
    
    -2
    %Other (income) expense  net
    
    
    (18
    )
    
    
    (2,811
    )
    
    
    -99
    %
    
    
    1,661
    
    
    
    (2,478
    )
    
    NMTotal costs and expenses
    
    
    88,912
    
    
    
    136,033
    
    
    
    +35
    %
    
    
    176,759
    
    
    
    260,083
    
    
    
    +32
    %Operating income
    
    
    17,415
    
    
    
    42,212
    
    
    
    -59
    %
    
    
    35,036
    
    
    
    68,524
    
    
    
    -49
    %Equity earnings  Wamsutter
    
    
    18,975
    
    
    
    37,480
    
    
    
    -49
    %
    
    
    34,296
    
    
    
    58,674
    
    
    
    -42
    %Discovery investment income
    
    
    4,151
    
    
    
    8,570
    
    
    
    -52
    %
    
    
    4,963
    
    
    
    22,191
    
    
    
    -78
    %Interest expense
    
    
    (15,200
    )
    
    
    (16,683
    )
    
    
    +9
    %
    
    
    (30,316
    )
    
    
    (34,356
    )
    
    
    +12
    %Interest income
    
    
    27
    
    
    
    243
    
    
    
    -89
    %
    
    
    61
    
    
    
    418
    
    
    
    -85
    %Net income
    
    $
    25,368
    
    
    $
    71,822
    
    
    
    -65
    %
    
    $
    44,040
    
    
    $
    115,451
    
    
    
    -62
    %
 
 (1)
    
    + = Favorable Change;  = Unfavorable Change; NM = A percentage calculation is not
meaningful due to change in signs, a zero-value denominator or a percentage change greater
than 200. Three months ended June 30, 2009 vs. three months ended June 30, 2008
 Revenues
 Product cost and shrink replacement
 Operating and maintenance expense
 Other (income) expense net
 23




---



##### Table of Contents



Operating income
 Equity earnings from Wamsutter
 Discovery investment income
 Interest expense
 Six months ended June 30, 2009 vs. six months ended June 30, 200
 Revenues
 Product cost and shrink replacement
 Operating and maintenance expense
 Other (income) expense net
 Operating income
 Equity earnings from Wamsutter
 Discovery investment income
 Interest expense
 24




---



##### Table of Contents



Results of operations  Gathering and Processing  West
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Thousands)Financial Results:Revenues
    
    $
    91,664
    
    
    $
    158,563
    
    
    $
    182,442
    
    
    $
    290,896Costs and expenses, including interest:Product cost and shrink replacement
    
    
    19,054
    
    
    
    61,144
    
    
    
    37,515
    
    
    
    108,590Operating and maintenance expense
    
    
    35,963
    
    
    
    36,677
    
    
    
    68,977
    
    
    
    77,570Depreciation and amortization
    
    
    10,278
    
    
    
    10,136
    
    
    
    20,622
    
    
    
    20,435General and administrative expense  direct
    
    
    2,300
    
    
    
    2,058
    
    
    
    4,461
    
    
    
    3,988Taxes other than income
    
    
    2,210
    
    
    
    2,061
    
    
    
    4,339
    
    
    
    4,281Other (income) expense  net
    
    
    (16
    )
    
    
    (2,811
    )
    
    
    1,664
    
    
    
    (2,477
    )Total costs and expenses, including interest
    
    
    69,789
    
    
    
    109,265
    
    
    
    137,578
    
    
    
    212,387Segment operating income
    
    
    21,875
    
    
    
    49,298
    
    
    
    44,864
    
    
    
    78,509Equity earnings  Wamsutter
    
    
    18,975
    
    
    
    37,480
    
    
    
    34,296
    
    
    
    58,674Segment profit
    
    $
    40,850
    
    
    $
    86,778
    
    
    $
    79,160
    
    
    $
    137,183
 Four Corners
 Three months ended
    
    Six months endedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Operating Statistics:Gathering volumes (billion British thermal units per day (BBtu/d))
    
    
    1,321
    
    
    
    1,410
    
    
    
    1,338
    
    
    
    1,363Plant inlet natural gas volumes (BBtu/d)
    
    
    554
    
    
    
    680
    
    
    
    603
    
    
    
    614NGL equity sales (million gallons)
    
    
    39
    
    
    
    43
    
    
    
    78
    
    
    
    79NGL margin ($/gallon)
    
    $
    0.40
    
    
    $
    0.78
    
    
    $
    0.36
    
    
    $
    0.76NGL production (million gallons)
    
    
    123
    
    
    
    140
    
    
    
    246
    
    
    
    252
 Three months ended June 30, 2009 vs. three months ended June 30, 2008
 Four Corners segment operating income
 Revenues
  
    
    $29.6 million related to a 57% decrease in average NGL sales prices realized on sales of
NGLs which we received under keep-whole and percent-of-liquids processing contracts (NGL
equity sales). This decrease resulted from general decreases in market prices for these
commodities between the two periods;
 
    
    $21.9 million lower sales of NGLs on behalf of third-party producers. Under these
arrangements, we purchase the NGLs from the third-party producers and sell them to an
affiliate. This decrease was related to both lower market prices and lower volumes purchased
and is offset by lower associated product costs of $21.8 million discussed below;
 
    
    $5.9 million lower condensate and liquefied natural gas (LNG) sales on decreased average
per-unit condensate prices and lower condensate and LNG volumes; and
 25




---



##### Table of Contents




    
    $5.0 million related to a 9% decrease in NGL volumes that Four Corners received
under keep-whole and percent-of-liquids processing contracts. The volumes were reduced
primarily by the 17-day Ignacio plant outage caused by the pipe rupture in June 2009.
  Product cost and shrink replacement
 
    
    $21.8 million decrease from third-party producers who have us purchase their NGLs, which
was offset by the corresponding decrease in product sales discussed above;
 
    
    $14.4 million decrease from 69% lower average natural gas prices;
 
    
    $3.5 million decrease in condensate and LNG related product cost; and
 
    
    $2.3 million decrease from 10% lower natural gas volumes purchased for shrink
replacement.
 Operating and maintenance expense
 Other (income) expense net
 Six months ended June 30, 2009 vs. six months ended June 30, 2008
 Four Corners segment operating income
 Revenues
 
    
    $58.2 million related to a 58% decrease in average NGL sales prices realized on sales of
NGLs which we received under keep-whole and percent-of-liquids processing contracts (NGL
equity sales). This decrease resulted from general decreases in market prices for these
commodities between the two periods;
 
    
    $37.8 million lower sales of NGLs on behalf of third-party producers. Under these
arrangements, we purchase the NGLs from the third-party producers and sell them to an
affiliate. This decrease was related to both lower market prices and lower volumes and is
offset by lower associated product costs of $37.6 million discussed below; and
 
    
    $11.4 million lower condensate and LNG sales resulting from decreased average per-unit
condensate prices and lower condensate and LNG volumes.
 Product cost and shrink replacement
 
    
    $37.6 million decrease from third-party producers who have us purchase their NGLs, which
was offset by the corresponding decrease in product sales discussed above;
 
    
    $24.8 million decrease from 64% lower average natural gas prices; and
 
    
    $6.1 million decrease in condensate and LNG related product cost.
 26




---



##### Table of Contents



Operating and maintenance expense
 Other (income) expense net
 Outlook
 
    
    NGL and natural gas commodity prices.Because NGL prices, especially ethane, have
declined, we expect significantly lower per-unit NGL margins to continue in 2009 compared to
2008. As evidenced by current market conditions, NGL, crude and natural gas prices are
highly volatile. Natural gas prices in the San Juan Basin have been lower than other areas
of the country, and we expect this trend to continue. Because natural gas cost is a
component of our NGL margins, we expect that per-unit NGL margins may be higher in the Four
Corners area than some other areas of the country. Four Corners may experience periods when
it is not economical to recover ethane, which will reduce our margins. Please see the
Commodity Derivatives table below for information about our current energy commodity
derivative portfolio.
 
    
    Gathering and plant inlet volumes.Despite the Ignacio pipeline rupture and lower
projected well connects in 2009, which result in lower projected maintenance capital
expenditures, we expect average gathering and plant inlet volumes for 2009 to be only
slightly below 2008. Drilling activity by producers is expected to decline in 2009 due to
the current weak economy, together with the low commodity price environment. However, when
drilling activity increases, we anticipate that recent capital investments will support
producer customers drilling activity, expansion opportunities and production enhancement
activities.
 
    
    Operating costs.We expect and will continue to pursue reductions in costs as demand for
contractors, equipment and supplies decline.
 
    
    Assets on Jicarilla land.We concluded our negotiations with the Jicarilla Apache Nation
(JAN) during February 2009 with the execution of a 20-year right-of-way agreement. We expect
our total-year 2009 right-of-way expense to be approximately $8.7 million, which is
significantly higher than the total-year 2008 cost of $3.5 million for our special business
licenses with the JAN.
 Commodity Derivatives
  Volumes
    
    AveragePeriod
    
    Hedged
    
    Price/UnitDesignated as hedging instruments:NGL sales  ethane (million gallons)
    
    July  September, 2009
    
    
    16.4
    
    
    $0.475/gallonNGL sales  natural gasoline
(million gallons)
    
    August  December, 2009
    
    
    1.7
    
    
    $1.404/gallonNatural gas purchases (million
British thermal units per day
(MMBtu/d))
    
    August  December, 2009
    
    
    1,961
    
    
    $3.670/MMBtuNot designated as hedging instruments:Natural gas purchases (MMBtu/d)
    
    July  September, 2009
    
    
    12,500
    
    
    $3.032/MMBtu
  27




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##### Table of Contents



Wamsutter
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Thousands)Financial Results:Revenues
    
    $
    45,177
    
    
    $
    70,222
    
    
    $
    88,408
    
    
    $
    137,847Costs and expenses, including interest:Product cost and shrink replacement
    
    
    9,911
    
    
    
    26,426
    
    
    
    22,339
    
    
    
    52,456Operating and maintenance expense
    
    
    6,498
    
    
    
    (2,585
    )
    
    
    12,363
    
    
    
    9,052Depreciation and accretion
    
    
    5,556
    
    
    
    5,214
    
    
    
    11,003
    
    
    
    10,442General and administrative expense
    
    
    3,795
    
    
    
    3,621
    
    
    
    7,399
    
    
    
    6,840Taxes other than income
    
    
    453
    
    
    
    419
    
    
    
    1,019
    
    
    
    903Other income, net
    
    
    (11
    )
    
    
    (353
    )
    
    
    (11
    )
    
    
    (520
    )Total costs and expenses
    
    
    26,202
    
    
    
    32,742
    
    
    
    54,112
    
    
    
    79,173Net income
    
    $
    18,975
    
    
    $
    37,480
    
    
    $
    34,296
    
    
    $
    58,674Williams Partners interest  equity
earnings per our Consolidated
Statements of Income
    
    $
    18,975
    
    
    $
    37,480
    
    
    $
    34,296
    
    
    $
    58,674
 Three months ended
    
    Six months endedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Operating Statistics:Gathering volumes (BBtu/d)
    
    
    545
    
    
    
    521
    
    
    
    540
    
    
    
    477Plant inlet natural gas volumes (BBtu/d)
    
    
    419
    
    
    
    427
    
    
    
    428
    
    
    
    416NGL equity sales (million gallons)
    
    
    35
    
    
    
    36
    
    
    
    71
    
    
    
    77NGL margin ($/gallon)
    
    $
    0.39
    
    
    $
    0.63
    
    
    $
    0.32
    
    
    $
    0.60NGL production (million gallons)
    
    
    109
    
    
    
    114
    
    
    
    214
    
    
    
    220
 Three months ended June 30, 2009 vs. three months ended June 30, 200
 Wamsutters net income
 Revenues
  
    
    $26.0 million related to a 55% decrease in average NGL sales prices realized on sales of
NGLs which Wamsutter received under keep-whole processing contracts. This decrease resulted
from general decreases in market prices for these commodities between the two periods.
 
    
    $1.9 million related to a 4% decrease in NGL volumes that Wamsutter received under
keep-whole processing contracts. The decrease in NGL volumes was primarily due to scheduled
plant maintenance performed in the second quarter of 2009. Similar maintenance in 2008 was
not performed until the third quarter.
 28




---



##### Table of Contents



Product cost and shrink replacement
 Operating and maintenance expense
 Six months ended June 30, 2009 vs. six months ended June 30, 200
 Wamsutters net income
 Revenues
  
    
    $47.9 million related to a 55% decrease in average NGL sales prices realized on sales of
NGLs which Wamsutter received under keep-whole processing contracts. This decrease resulted
from general decreases in market prices for these commodities between the two periods.
 
    
    $8.0 million related to an 8% decrease in NGL volumes that Wamsutter received under
keep-whole processing contracts. Severe winter weather conditions in the first quarter of
2008 lowered volumes received under some of Wamsutters larger fee-based processing
agreements thus allowing Wamsutter to process greater volumes under keep-whole processing
arrangements. In addition, volumes were lower due to scheduled plant maintenance performed
in the second quarter of 2009. Similar maintenance in 2008 was not performed until the third
quarter.
 
    
    $3.1 million related to favorable adjustments to the margin-sharing provisions of one of
Wamsutters significant contracts in the first quarter of 2008.
   Product cost and shrink replacement
 
    
    $29.4 million decrease from 63% lower average natural gas prices; and
 29




---



##### Table of Contents




    
    $5.6 million decrease from 11% lower volumetric shrink requirements due to lower volumes
processed under Wamsutters keep-whole processing contracts.
  Operating and maintenance expense
 Outlook
 
    
    NGL margins.We expect significantly lower cash distributions from Wamsutter in 2009 as
compared to 2008, primarily as a result of lower per-unit NGL margins. As evidenced by
current market conditions, NGL, crude and natural gas prices are highly volatile. Natural
gas prices in the Rockies basins have been lower than other areas of the country, and we
expect this trend to continue. Because natural gas cost is a component of Wamsutters NGL
margins, Wamsutter expects that per-unit NGL margins may be higher at Wamsutter than some
other areas of the country. However, Wamsutter may still experience periods when it is not
economical to recover ethane which will reduce its margins. Please see the Commodity
Derivatives table below for information about Wamsutters current energy commodity
derivative portfolio.
 
    
    Gathering and processing volumes.We anticipate that our 2009 average gathering volumes
will increase slightly over 2008 levels as a result of our well connect activity, producers
sustained drilling activity, expansion opportunities and production enhancement activities
that should be sufficient to more than offset the historical production decline. Gathering
volumes reached record levels in April 2009 and have remained approximately at this level
throughout the second quarter.
 
    
    Third-party processing.In 2008, we executed a new agreement that extended our ability to
send excess unprocessed gas to Colorado Interstates Rawlins natural gas processing plant
through October 2010. This agreement provides Wamsutter with third-party processing capacity
of 80 MMcf/d. We expect a full year of natural gas processing in 2009 under this agreement.
As a result, total gas processed will increase, Wamsutter will be able to sell higher
volumes of NGLs, and operating costs will increase approximately $2.0 million. The increased
operating costs will be more than offset by the sale of increased volumes of NGLs.
 
    
    Operating costs.We expect and will continue to pursue reductions in costs as demand for
contractors, equipment and supplies decline.
 Commodity Derivatives
  Volumes
    
    AveragePeriod
    
    Hedged
    
    Price/UnitDesignated as hedging instruments:NGL sales  ethane (million gallons)
    
    July  September, 2009
    
    
    7.6
    
    
    $
    0.465NGL sales  propane (million gallons)
    
    July  September, 2009
    
    
    4.4
    
    
    $
    0.869Not designated as hedging instruments:Natural gas purchases (MMBtu/d)
    
    July  September, 2009
    
    
    10,000
    
    
    $
    2.93
  30




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##### Table of Contents



Results of Operations  Gathering and Processing  Gulf
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Thousands)Financial Results:Segment revenues
    
    $
    459
    
    
    $
    546
    
    
    $
    945
    
    
    $
    1,113Costs and expenses:Operating and maintenance expense
    
    
    575
    
    
    
    519
    
    
    
    1,150
    
    
    
    1,043Depreciation
    
    
    60
    
    
    
    151
    
    
    
    92
    
    
    
    304Total costs and expenses
    
    
    635
    
    
    
    670
    
    
    
    1,242
    
    
    
    1,347Segment operating loss
    
    
    (176
    )
    
    
    (124
    )
    
    
    (297
    )
    
    
    (234
    )Discovery investment income
    
    
    4,151
    
    
    
    8,570
    
    
    
    4,963
    
    
    
    22,191Segment profit
    
    $
    3,975
    
    
    $
    8,446
    
    
    $
    4,666
    
    
    $
    21,957
 Carbonate Trend
 Segment operating loss
 Discovery Producer Services  100%
 Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Thousands)Financial Results:Revenues
    
    $
    38,687
    
    
    $
    82,883
    
    
    $
    58,721
    
    
    $
    170,039Costs and expenses, including interest:Product cost and shrink replacement
    
    
    18,090
    
    
    
    51,359
    
    
    
    28,321
    
    
    
    103,599Operating and maintenance expense
    
    
    6,579
    
    
    
    8,411
    
    
    
    15,050
    
    
    
    15,419Depreciation and accretion
    
    
    4,765
    
    
    
    6,802
    
    
    
    8,694
    
    
    
    13,785General and administrative expense
    
    
    1,500
    
    
    
    1,750
    
    
    
    3,000
    
    
    
    3,500Interest income
    
    
    (14
    )
    
    
    (186
    )
    
    
    (22
    )
    
    
    (450
    )Other (income) expense, net
    
    
    1,121
    
    
    
    465
    
    
    
    2,384
    
    
    
    (2,797
    )Total costs and expenses, including interest
    
    
    32,041
    
    
    
    68,601
    
    
    
    57,427
    
    
    
    133,056Net income
    
    $
    6,646
    
    
    $
    14,282
    
    
    $
    1,294
    
    
    $
    36,983Williams Partners interest  equity earnings
    
    $
    3,987
    
    
    $
    8,570
    
    
    $
    776
    
    
    $
    22,191Business interruption proceeds
    
    
    164
    
    
    
    
    
    
    
    4,187
    
    
    
    Discovery investment income
    
    $
    4,151
    
    
    $
    8,570
    
    
    $
    4,963
    
    
    $
    22,191
 Three months ended
    
    Six months endedJune 30,
    
    June 30,2009
    
    2008
    
    2009
    
    2008Operating Statistics:Plant inlet natural gas volumes (BBtu/d)
    
    
    470
    
    
    
    614
    
    
    
    398
    
    
    
    621Gross processing margin ($/MMBtu)
    
    $
    0.20
    
    
    $
    0.36
    
    
    $
    0.16
    
    
    $
    0.41NGL equity sales (million gallons)
    
    
    25
    
    
    
    23
    
    
    
    37
    
    
    
    60NGL production (million gallons)
    
    
    56
    
    
    
    58
    
    
    
    86
    
    
    
    128
 Three months ended June 30, 2009 vs. three months ended June 30, 2008
 Net income
 31




---



##### Table of Contents



Revenues
 
    
    $25.7 million from 60% lower average per-unit NGL prices on volumes recovered under
keep-whole and percent-of-liquids arrangements (NGL equity sales). These price decreases
resulted from general decreases in market prices for these commodities between the two
periods.
 
    
    $22.5 million lower sales of NGLs on behalf of third-party producers resulting from both
lower volumes and lower NGL sales prices. The lower volumes are due primarily to the absence
of gas volumes processed from the Texas Eastern Transmission Company (TETCO) system and
other third-party producers. These decreases are offset by lower associated product costs of
$22.5 million discussed below.
    Product cost and shrink replacement
 Operating and maintenance expense
 Depreciation and accretion
 Six months ended June 30, 2009 vs. Six months ended June 30, 2008
 Net income
 Revenues
 
    
    $43.2 million lower sales of NGLs on behalf of third-party producers resulting from both
lower volumes and lower NGL sales prices. The lower volumes are due primarily to the absence
of gas volumes processed from the TETCO system and other third-party producers. These
decreases are offset by lower associated product costs of $43.2 million discussed below.
 
    
    $34.5 million from 38% lower NGL volumes from gas processed under keep-whole and
percent-of-liquids arrangements. NGL volumes recovered declined due primarily to reduced
first-quarter 2009 volumes as a result of 2008 hurricane damages and the absence of volumes
from the TETCO system after our processing arrangement with them expired in June 2008.
 32




---



##### Table of Contents




    
    $31.6 million from 56% lower average per-unit NGL prices on volumes recovered under
keep-whole and percent-of-liquids arrangements. These price decreases resulted from general
decreases in market prices for these commodities between the two periods.
  Product cost and shrink replacement
 Depreciation and accretion
 Other (income) expense, net
 Outlook
 
    
    Gross processing margins.We expect significantly lower cash distributions from Discovery
in 2009 compared to 2008 primarily as a result of lower per-unit NGL margins. As evidenced
by recent events, NGL, crude and natural gas prices are highly volatile. As NGL prices,
especially ethane, have declined, Discovery is experiencing significantly lower gross
processing margins in 2009 compared to 2008. Discovery may experience periods when it is not
economical to recover ethane, which would reduce Discoverys margins.
    
    Ethane sales.During June 2009, Discoverys ethane production was curtailed by
50% due to lower customers requirements. Discovery has reached an agreement with its
customer to accept a larger quantity of ethane in July, but Discoverys ethane production in
August will be curtailed to approximately 50% of current production levels for three weeks
due to maintenance on the downstream pipeline. Discovery is working to resume to normal
ethane deliveries for the remainder of 2009.
    
    Plant inlet volumes.Discoverys Larose gas processing plant is currently processing
approximately 530 BBtu/d from all sources and Discovery expects this volume to increase
through the second half of 2009 to approximately 580 BBtu/d. The increase will be from both
new and existing supplies. This forecasted volume represents a slight decrease from the 600
BBtu/d being processed prior to Hurricanes Gustav and Ike in 2008.
    
    Tahiti Production.Discovery began receiving volumes from the Tahiti spar in May 2009 and
received approximately 55 BBtu/d in June. Discovery expects volumes of approximately 60
BBtu/d to 75 BBtu/d from Tahiti by the end of the third quarter once the production system
stabilizes.
    
    Other new supplies.In the second half of 2009, Discovery expects to receive
approximately 45 BBtu/d of new gas production from W&T Offshore, Inc.s Daniel Boone
prospect and the completion to a higher zone from ATPs Gomez field. First production from
ATPs Clipper prospect is expected mid-year 2010.
    
    Uninsured hurricane cost recovery.Under Discoverys current FERC approved tariff,
Discovery is permitted to recover certain natural disaster related costs, including property
damage insurance deductibles, through a transportation rate surcharge. Discovery received
FERC approval to increase its hurricane mitigation relief surcharge effective April 1, 2009
to its maximum allowable rate of $0.05/MMBtu to expedite Discoverys recovery of any
Hurricane Ike-related expenses which should contribute approximately $3.4 million to
Discoverys net income for the remainder of 2009.
    
    Insurance coverage.Discoverys previous property damage insurance policies expired in June
2009. The availability of named windstorm insurance has been significantly reduced as a
result of higher industry-wide damage claims in past years. Additionally, the named windstorm insurance that is available comes at
significantly higher premium amounts, higher deductibles and lower coverage limits.
Consequently, Discovery elected to not purchase offshore named windstorm coverage for the
2009-2010 insurance year. Despite excluding this coverage, total property damage
 33




---



##### Table of Contents



insurance premiums for the 2009  2010 insurance year remained essentially unchanged from the
prior year as a result of other premium increases. Additionally,
under the new policies, certain deductibles are higher and certain coverage
limits are lower than under the previous policies.
 Results of Operations  NGL Services
  Three months ended
    
    
    Six months endedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008(Thousands)Financial Results:Segment revenues
    
    $
    14,204
    
    
    $
    19,136
    
    
    $
    28,408
    
    
    $
    36,598Costs and expenses:Product cost
    
    
    1,484
    
    
    
    4,865
    
    
    
    3,185
    
    
    
    9,517Operating and maintenance expense
    
    
    5,843
    
    
    
    9,336
    
    
    
    12,160
    
    
    
    15,003Depreciation and accretion
    
    
    826
    
    
    
    715
    
    
    
    1,634
    
    
    
    1,489General and administrative expense  direct
    
    
    764
    
    
    
    700
    
    
    
    1,520
    
    
    
    1,244Other expense, net
    
    
    113
    
    
    
    106
    
    
    
    419
    
    
    
    390Total costs and expenses
    
    
    9,030
    
    
    
    15,722
    
    
    
    18,918
    
    
    
    27,643Segment profit
    
    $
    5,174
    
    
    $
    3,414
    
    
    $
    9,490
    
    
    $
    8,955Operating Statistics:Conway storage revenues
    
    $
    8,101
    
    
    $
    7,102
    
    
    $
    16,462
    
    
    $
    14,435Conway fractionation volumes (barrels per day (bpd))  our 50%
    
    
    40,688
    
    
    
    38,173
    
    
    
    38,716
    
    
    
    35,638
 Three months ended June 30, 2009 vs. three months ended June 30, 2008
 NGL Services segment profit
 Segment revenues
 
    
    Product sales decreased $3.4 million due to a 51% decrease in average price per barrel
and lower sales volumes of propane and normal butane. The decrease in sales prices and
volumes was offset by the related decrease in product cost discussed below.
 
    
    Fractionation revenues decreased $2.2 million due primarily to a 50% decrease in average
fractionation price per barrel on higher volumes. The decrease in the average fractionation
price per barrel results from the decline in natural gas prices.
 
    
    Storage revenues increased $1.0 million due primarily to new storage leases.
 Product cost
 Operating and maintenance expense
 Six months ended June 30, 2009 vs. six months ended June 30, 2008
 NGL Services segment profit
 34




---



##### Table of Contents



Segment revenues
 
    
    Product sales decreased $6.4 million due to a 46% decrease in average prices per barrel
and lower sales volumes of ethane, propane and normal butane. The decrease in sales prices
and volumes was offset by the related decrease in product cost discussed below.
 
    
    Fractionation revenues decreased $2.9 million due primarily to a 42% decrease in average
fractionation price per barrel on higher volumes. The decrease in the average fractionation
price per barrel results from the decline in natural gas prices.
 
    
    Storage revenues increased $2.0 million due primarily to higher new storage leases and
overstorage revenue.
 Product cost
 Operating and maintenance expense
 Outlook
 
    
    We expect 2009 storage revenues will increase over 2008 levels. Conway storage is sold
out for the remainder of the 2009 season; however, incremental revenue opportunities will be
evaluated as physical inventories and facility logistics continue to evolve.
 
    
    We continue to perform a large number of storage cavern workovers and wellhead
modifications to comply with Kansas Department of Health and Environment regulatory
requirements. We expect outside service costs to continue at current levels throughout 2009
to ensure that we meet the regulatory compliance requirements.
 Financial Condition and Liquidity
  sources of liquidity
 
    
    Cash and cash equivalents on hand;
 
    
    Cash generated from operations, including cash distributions from Wamsutter and
Discovery;
 
    
    Insurance recoveries;
 
    
    Capital contributions from Williams pursuant to the omnibus agreement; and
 
    
    Use of credit facilities, as needed and available.
 uses of cash
 
    
    Maintenance and expansion capital expenditures for our Four Corners and Conway assets;
 35




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##### Table of Contents




    
    Contributions we must make to Wamsutter LLC to fund certain of its expansion capital
expenditures as defined by Wamsutters limited liability company (LLC) agreement;
 
    
    Interest on our long-term debt; and
 
    
    Quarterly distributions to our unitholders and/or general partner. Our general partner
has waived its IDRs with respect to 2009 distribution periods which will reduce our 2009 use
of cash.
  (in millions):
 Cash and cash equivalents
    
    $
    90.2Available capacity under our $450 million five-year senior unsecured credit facility(1)
    
    
    188.0Available capacity under our $20 million revolving credit facility with Williams as lender
    
    
    20.0Total
    
    $
    298.2
 
 (1)
    
    The original amount has been reduced by $12.0 million due to the bankruptcy of the parent
company and certain affiliates of Lehman. See Note 6, Long-Term Debt and Credit Facilities, of
our Notes to Consolidated Financial Statements. The committed amounts of other participating
banks remain in effect and are not impacted by this reduction. Additionally, availability of
our capacity under this credit facility in future periods could be constrained by compliance
with required covenants.  Wamsutter Distributions
  Total Distribution
    
    Our ShareDate of Distribution
    
    to Members
    
    Class A
    
    Class C
    
    Other Class C3/30/09
    
    $
    13,500
    
    
    $
    13,500
    
    
    $
    
    $6/30/09
    
    $
    17,500
    
    
    $
    17,500
    
    
    $
    
    $
  36




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##### Table of Contents



Discovery Distributions
   Total Distribution toDate of Distribution
    
    Members
    
    Our 60% Share(Thousands)6/30/09
    
    $
    5,900
    
    
    $
    3,540
  Insurance Recoveries
  Modification of Omnibus Agreement with Williams
  37




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##### Table of Contents



Credit Facilities
   
    
    We are required to maintain a ratio of consolidated indebtedness to consolidated EBITDA
(each as defined in the Credit Agreement) of no greater than 5.00 to 1.00 as of the last day
of any fiscal quarter. This ratio may be increased in the case of an acquisition of $50.0
million or more, in which case the ratio will be 5.50 to 1.00 for the fiscal quarter in
which the acquisition occurs and three fiscal quarter-periods following such acquisition. At
June 30, 2009, our ratio of consolidated indebtedness to consolidated EBITDA, as calculated
under this covenant, of approximately 3.83 is in compliance with this covenant.
 
    
    Our ratio of consolidated EBITDA to consolidated interest expense (each as defined in the
Credit Agreement) must be not less than 2.75 to 1.00 as of the last day of any fiscal
quarter, unless we obtain an investment grade rating from Standard and Poors Ratings
Services or Moodys Investors Service and the rating from the other agency is not less than
Ba1 or BB+, as applicable. At June 30, 2009, our ratio of consolidated EBITDA to
consolidated interest expense, as calculated under this covenant, of approximately 4.26 is
in compliance with this covenant.
    38




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##### Table of Contents



Credit Ratings
  Senior UnsecuredRating Agency
    
    Date of Last Change
    
    Outlook
    
    Debt RatingStandard & Poors
    
    November 9, 2007
    
    Stable
    
    BBB-Moodys Investor Service
    
    November 6, 2008
    
    Negative
    
    Ba2Fitch Ratings
    
    June 9, 2009
    
    Stable
    
    BB
      39




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##### Table of Contents



Capital Expenditures
  
    
    Maintenance capital expenditures, which are capital expenditures made to replace
partially or fully depreciated assets in order to maintain the existing operating capacity
of our assets and to extend their useful lives, include certain well connection expenditures
and expenditures which are mandatory and/or essential for maintaining the reliability of our
operations; and
 
    
    Expansion capital expenditures, which tend to be more discretionary than maintenance
capital expenditures, include expenditures to acquire additional assets to grow our
business, to expand and upgrade plant or pipeline capacity and to construct new plants,
pipelines and storage facilities.
  Maintenance
    
    Expansion
    
    TotalThrough
    
    
    
    
    
    Through
    
    
    
    
    
    ThroughCompany
    
    Total Year Estimate
    
    June 30, 2009
    
    Total Year Estimate
    
    June 30, 2009
    
    Total Year Estimate
    
    June 30, 2009Four Corners
    
    $
    1520
    
    
    $
    10.0
    
    
    $
    58
    
    
    $
    1.3
    
    
    $
    2028
    
    
    $
    11.3Conway
    
    
    36
    
    
    
    2.3
    
    
    
    812
    
    
    
    3.4
    
    
    
    1118
    
    
    
    5.7Wamsutter  (our share)
    
    
    1822
    
    
    
    11.5
    
    
    
    12
    
    
    
    0.8
    
    
    
    1924
    
    
    
    12.3Discovery  (our share)
    
    
    13
    
    
    
    0.7
    
    
    
    57
    
    
    
    3.5
    
    
    
    610
    
    
    
    4.2
     40




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##### Table of Contents



Cash Distributions to Unitholders
  Results of Operations  Cash Flows
 Six months endedJune 30,Williams Partners L.P.
    
    2009
    
    2008(Thousands)Net cash provided by operating activities
    
    $
    71,699
    
    
    $
    107,933Net cash used by investing activities
    
    
    (24,856
    )
    
    
    (14,923
    )Net cash used by financing activities
    
    
    (72,773
    )
    
    
    (71,492
    )
 Net cash provided by operating activities
 Net cash used by investing activities
 Net cash used by financing activities
 Six months endedJune 30,Wamsutter 100 percent
    
    2009
    
    
    2008(Thousands)Net cash provided by operating activities
    
    $
    45,055
    
    
    $
    64,935Net cash used by investing activities
    
    
    (53,822
    )
    
    
    (11,792
    )Net cash provided (used) by financing activities
    
    
    8,767
    
    
    
    (53,143
    )
 Net cash provided by operating activities
 Net cash used by investing activities
 Net cash provided by financing activities
 41




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##### Table of Contents



Six months endedJune 30,Discovery 100%
    
    2009
    
    2008(Thousands)Net cash provided (used) by operating activities
    
    $
    (14,362
    )
    
    $
    55,377Net cash used by investing activities
    
    
    (8,963
    )
    
    
    (4,505
    )Net cash provided (used) by financing activities
    
    
    11,433
    
    
    
    (51,672
    )
 Net cash provided (used) by operating activities
 Net cash used by investing activities
 Net cash provided (used) by financing activities
 Contractual Obligations
  2009
    
    2010-2011
    
    2012-2013
    
    2014+
    
    Total(in thousands)Operating leases(a)
    
    $
    7,340
    
    
    $
    15,056
    
    
    $
    15,056
    
    
    $
    112,920
    
    
    $
    150,372
 
 (a)
    
    Each year from 2010 through 2029 will also include an additional annual payment, which varies
depending on the prior years per-unit NGL margins and the volume of gas gathered by Four
Corners gathering facilities subject to the agreement. The table above does not include any
such variable amounts related to this agreement. Off-Balance Sheet Arrangements
  
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
  Commodity Price Risk
  42




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##### Table of Contents



Interest Rate Risk
  
 Item 4.
    
    Controls and Procedures
  Evaluation of Disclosure Controls and Procedures
  43




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##### Table of Contents



Second-Quarter 2009 Changes in Internal Controls
  
 PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  We are subject to risks associated with climate change.
  Our operations are subject to governmental laws and regulations relating to the protection of the
environment, which may expose us to significant costs and liabilities and could exceed current
expectations.
    44




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##### Table of Contents



Our assets and operations can be affected by weather and other natural phenomena.
   45




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##### Table of Contents



Item 6.
    
    Exhibits
 Exhibit 3.1
    
    Certificate of Limited Partnership of Williams Partners L.P. (filed on May 2,
2005 as Exhibit 3.1 to Williams Partners L.P.s registration statement on Form
S-1 (File No. 333-124517)) and incorporated herein by reference.Exhibit 3.2
    
    Certificate of Formation of Williams Partners GP LLC (filed on May 2, 2005 as
Exhibit 3.3 to Williams Partners L.P.s registration statement on Form S-1
(File No. 333-124517)) and incorporated herein by reference.Exhibit 3.3
    
    Amended and Restated Agreement of Limited Partnership of Williams Partners L.P.
(including form of common unit certificate), as amended by Amendments Nos.
1,2,3,4 and 5 (filed on April 30, 2009 as Exhibit 3.3 to Williams Partners
L.P.s quarterly report on Form 10-Q) (File No. 001-32599)) and incorporated
herein by reference.Exhibit 3.4
    
    Amended and Restated Limited Liability Company Agreement of Williams Partners
GP LLC (filed on August 26, 2005 as Exhibit 3.2 to Williams Partners L.P.s
current report on Form 8-K (File No. 001-32599)) and incorporated herein by
reference.Exhibit 10.1
    
    Director Compensation Policy dated November 29, 2005, as revised May 28, 2009.*#Exhibit 10.2
    
    Amendment No. 1 to Omnibus Agreement among Williams Partners L.P., Williams
Energy Services, LLC, Williams Energy, L.L.C., Williams Partners Holdings LLC,
Williams Discovery Pipeline LLC, Williams Partners GP LLC, Williams Partners
Operating LLC and (for purposes of Articles V and VI thereof only) The Williams
Companies, Inc. (filed on April 20, 2009 as Exhibit 10.1 to Williams Partners
L.P.s current report on Form 8-K (File No. 001-32599)) and incorporated herein
by reference.Exhibit 10.3
    
    Amendment No. 2 to Third Amended and Restated Limited Liability Company
Agreement for Discovery Producer Services LLC.*Exhibit 31.1
    
    Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and
15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended,
and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.*Exhibit 31.2
    
    Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and
15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended,
and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.*Exhibit 32
    
    Certification of Principal Executive Officer and Principal Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*
 
 *
    
    Filed herewith#
    
    Management contract or compensatory arrangement. 46




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##### Table of Contents



SIGNATURES
  WILLIAMS PARTNERS L.P.(Registrant)By: Williams Partners GP LLC, its general partner/s/ Ted T. TimmermansTed. T. TimmermansController (Duly Authorized Officer and Principal Accounting Officer)
  47




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    DescriptionExhibit 3.1
    
    Certificate of Limited Partnership of Williams Partners L.P. (filed on May 2, 2005
as Exhibit 3.1 to Williams Partners L.P.s registration statement on Form S-1
(File No. 333-124517)) and incorporated herein by reference.Exhibit 3.2
    
    Certificate of Formation of Williams Partners GP LLC (filed on May 2, 2005 as
Exhibit 3.3 to Williams Partners L.P.s registration statement on Form S-1 (File
No. 333-124517)) and incorporated herein by reference.Exhibit 3.3
    
    Amended and Restated Agreement of Limited Partnership of Williams Partners L.P.
(including form of common unit certificate), as amended by Amendments Nos. 1,2,3,4
and 5 (filed on April 30, 2009 as Exhibit 3.3 to Williams Partners L.P.s
quarterly report on Form 10-Q) (File No. 001-32599)) and incorporated herein by
reference.Exhibit 3.4
    
    Amended and Restated Limited Liability Company Agreement of Williams Partners GP
LLC (filed on August 26, 2005 as Exhibit 3.2 to Williams Partners L.P.s current
report on Form 8-K (File No. 001-32599)) and incorporated herein by reference.Exhibit 10.1
    
    Director Compensation Policy dated November 29, 2005, as revised May 28, 2009.*#Exhibit 10.2
    
    Amendment No. 1 to Omnibus Agreement among Williams Partners L.P., Williams Energy
Services, LLC, Williams Energy, L.L.C., Williams Partners Holdings LLC, Williams
Discovery Pipeline LLC, Williams Partners GP LLC, Williams Partners Operating LLC
and (for purposes of Articles V and VI thereof only) The Williams Companies, Inc.
(filed on April 20, 2009 as Exhibit 10.1 to Williams Partners L.P.s current
report on Form 8-K (File No. 001-32599)) and incorporated herein by reference.Exhibit 10.3
    
    Amendment No. 2 to Third Amended and Restated Limited Liability Company Agreement for Discovery Producer Services LLC.*Exhibit 31.1
    
    Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and
15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and
Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*Exhibit 31.2
    
    Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and
15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and
Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.*Exhibit 32
    
    Certification of Principal Executive Officer and Principal Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.*
 
 *
    
    Filed herewith#
    
    Management contract or compensatory arrangement. 48