As Williams Cos. reported a drop in second quarter earnings (see related story), Williams Energy Partners L.P. said it had an operating profit of $36.7 million for the quarter, a 9.6% increase compared with $33.5 million in 2001. The company also reported net income for the second-quarter 2002 of $24.6 million compared with $22.9 million for 2001. This increase was attributed to reduced income taxes due to the partnership structure, offset by transaction fees and increased interest expense associated with the Williams Pipe Line acquisition.

Williams Energy Partners posted the strong earnings on the heels of an impromptu investor conference call held last week to assure investors that the partnership would be fine no matter what happened to Williams Cos. (see Daily GPI, July 24). Although Williams Pipe Line was acquired April 11, Williams Energy Partners said 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.

The partnership said operating profit growth was primarily attributable to increased transportation revenues on Williams Pipe Line; the acquisition of the Gibson, LA, marine terminal facility in October 2001 and two inland terminals in Little Rock, AK, in June 2001; higher utilization at the Gulf Coast marine terminal facilities; and reduced general and administrative expenses.

“The Williams Pipe Line acquisition has added substantial growth to our per unit earnings, resulting in $1.05 earnings per limited partner unit for this quarter compared with 64 cents per limited partner unit for 2001,” Don Wellendorf, CEO of the general partner. The partnership said net income reflecting only the partnership’s actual ownership period for Williams Pipe Line grew to $23.8 million in 2002 from $7.4 million in 2001, a 221.6% increase.

“Our cash flows continue to be strong and the distribution increase announced last week emphasizes our confidence in the strength of Williams Energy Partners,” Wellendorf added. “This increase represents our fifth consecutive distribution increase, and we remain committed to providing cash flow growth for our unitholders.”

For the six months of the year, operating profit was $65.4 million compared with $56.4 million in 2001, an increase of 16%. Net income for the 2002 period was $45.8 million compared with $35.9 million in 2001. Earnings per limited partner unit for 2002 were $1.87 compared with 95 cents in 2001. The company noted that per unit numbers are not restated to reflect Williams Pipe Line results prior to the partnership’s ownership.1

The average number of common, subordinated and class B units outstanding on a fully-diluted basis was 21.7 million units for second-quarter 2002 and 16.6 million units for the year, compared with 11.4 million units for both periods during 2001.

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