1324518--2/26/2009--Williams_Partners

related topics

{debt, indebtedness, cash}

{tax, income, asset}

{gas, price, oil}

{operation, natural, condition}

{stock, price, operating}

{capital, credit, financial}

{acquisition, growth, future}

{regulation, change, law}

{cost, contract, operation}

{competitive, industry, competition}

{loss, insurance, financial}

{system, service, information}

{control, financial, internal}

{cost, operation, labor}

{cost, regulation, environmental}

{regulation, government, change}

Risks Inherent in Our Business We may not 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. We may not be able to grow or effectively manage our growth. Lower natural gas and oil prices could adversely affect our gathering, fractionation and storage businesses. Any decrease in NGL prices or a change in NGL prices relative to the price of natural gas could affect our processing, fractionation and storage businesses. Significant prolonged changes in natural gas prices could affect supply and demand, cause a reduction in or termination of the long-term transportation and storage contracts or throughput on Discovery s system, and adversely affect our cash available to make distributions. Any significant decrease in supplies of natural gas in our areas of operation could adversely affect our business and operating results. Our industry is highly competitive, and increased competitive pressure could adversely affect our business and operating results. We depend on certain key customers and producers for a significant portion of our revenues and supply of natural gas and NGLs. If we lost any of these key customers or producers, our revenues and cash available to pay distributions could decline. We are exposed to the credit risk of our customers, and our credit risk management may not be adequate to protect against such risk. The failure of counterparties to perform their contractual obligations could adversely affect our operating results, financial condition and cash available to pay distributions. If third-party pipelines and other facilities interconnected to our pipelines and facilities become unavailable to transport natural gas and NGLs or to treat natural gas, our revenues and cash available to pay distributions could be adversely affected. Events in the global financial crisis have made equity and debt markets less accessible, created a shortage in the availability of credit and have led to credit market volatility, which could disrupt our financing plans and limit our ability to grow. Williams public indentures and our debt agreements contain financial and operating restrictions that may limit our access to credit and affect our ability to operate our business. Restrictions in our debt agreements and our leverage may adversely affect our future financial and operating flexibility. A downgrade of our current credit rating could impact our liquidity, access to capital and our costs of doing business, and maintaining current credit ratings is within the control of independent third parties. In addition, Williams credit ratings affect our ability to obtain credit in the future. The financial condition and liquidity of Williams affects our access to capital, our credit standing and our financial condition. Our allocation from Williams for costs and funding obligations for its defined benefit pension plans and costs for other postretirement benefit plans are affected by factors beyond our and Williams control. Wamsutter and Discovery are not prohibited from incurring indebtedness, which may affect our ability to make distributions to unitholders. We do not own all of the interests in Wamsutter, the Conway fractionator or Discovery, which could adversely affect our ability to operate and control these assets in a manner beneficial to us. Our storage and fractionation operations depend on the demand for propane and other NGLs. A substantial decrease in this demand could adversely affect our business and operating results. Wamsutter and Discovery may reduce their cash distributions to us in some situations. Discovery s natural gas transportation operations are subject to regulation by FERC, which could have an adverse impact on its ability to establish transportation rates that would allow it to recover the full cost of operating its pipeline, including a reasonable return. Discovery could be subject to penalties and fines if it fails to comply with FERC regulations. Our operations are subject to operational hazards and unforeseen interruptions for which we may not be adequately insured. 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. Execution of our capital projects subjects us to construction risks, increases in labor costs and materials, and other risks that may adversely affect financial results. We do not operate all of our assets. This reliance on others to operate our assets and to provide other services could adversely affect our business and operating results. We do not own all of the land on which our pipelines and facilities are located, which could disrupt our operations. Our assets and operations can be affected by weather and other natural phenomena. Potential changes in accounting standards might cause us to revise our financial results and disclosures in the future. Institutional knowledge residing with current employees nearing retirement eligibility might not be adequately preserved. Failure of or disruptions to our outsourcing relationships might negatively impact our ability to conduct our business. Acts of terrorism could have a material adverse effect on our financial condition, results of operations and cash flows. Risks Inherent in an Investment in Us Williams controls our general partner, which has sole responsibility for conducting our business and managing our operations. Our general partner and its affiliates have conflicts of interest with us and limited fiduciary duties, and they may favor their own interests to the detriment of our unitholders. Our partnership agreement limits our general partner s fiduciary duties to unitholders and restricts the remedies available to unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty. Holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors, which could reduce the price at which the common units will trade. Cost reimbursements to our general partner and its affiliates will reduce cash available to pay distributions to unitholders. Even if unitholders are dissatisfied, they have little ability to remove our general partner without its consent. We have a holding company structure in which our subsidiaries conduct our operations and own our operating assets. This may affect our ability to make payments on our debt obligations and distributions on our common units. The control of our general partner may be transferred to a third party without unitholder consent. We may issue additional common units without unitholder approval, which would dilute unitholder ownership interests. Common units held by Williams eligible for future sale may adversely affect the price of our common units. Our general partner has a limited call right that may require unitholders to sell their common units at an undesirable time or price. Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units. Your liability may not be limited if a court finds that unitholder action constitutes control of our business. Unitholders may have liability to repay distributions that were wrongfully distributed to them. Our tax treatment depends on our status as a partnership for federal income tax purposes, as well as our not being subject to a material amount of entity-level taxation by states and localities. If the Internal Revenue Service (IRS) were to treat us as a corporation or if we were to become subject to a material amount of entity-level taxation for state or local tax purposes, then our cash available for distribution to unitholders would be substantially reduced. The tax treatment of publicly traded partnerships or an investment in our common units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis. We prorate our items of income, gain, loss and deduction between transferors and transferees of the common units each month based upon the ownership of the common units on the first day of each month, instead of on the basis of the date a particular common unit is transferred. An IRS contest of the federal income tax positions we take may adversely impact the market for the common units, and the costs of any contest will reduce our cash available for distribution to our unitholders and our general partner. Unitholders will be required to pay taxes on their share of our income even if unitholders do not receive any cash distributions from us. The tax gain or loss on the disposition of the common units could be different than expected. Tax-exempt entities and non-U.S. persons face unique tax issues from owning common units that may result in adverse tax consequences to them. We will treat each purchaser of common units as having the same tax benefits without regard to the actual common units purchased. The IRS may challenge this treatment, which could adversely affect the value of the common units. Unitholders will likely be subject to state and local taxes and return filing requirements as a result of investing in our common units. The sale or exchange of 50% or more of the total interest in our capital and profits within a 12-month period will result in the termination of our partnership for federal income tax purposes.

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1324518--2/26/2009--Williams_Partners_L.P.