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Description of Business and Basis of Presentation (Policies)
3 Months Ended
Mar. 31, 2014
Organization

Organization

Access Midstream Partners, L.P. (the “Partnership”), a Delaware limited partnership formed in January 2010, is principally focused on natural gas gathering, the first segment of midstream energy infrastructure that connects natural gas produced at the wellhead to third-party takeaway pipelines. The Partnership is the industry’s largest gathering and processing master limited partnership as measured by throughput volume. The Partnership’s assets are located in Arkansas, Kansas, Louisiana, Ohio, Oklahoma, Pennsylvania, Texas, West Virginia and Wyoming. The Partnership provides gathering, treating and compression services to Chesapeake Energy Corporation (“Chesapeake”), Total Gas and Power North America, Inc. and Total E&P USA, Inc., a wholly owned subsidiary of Total, S.A. (“Total”), Statoil ASA (“Statoil”), Anadarko Petroleum Corporation (“Anadarko”), Mitsui & Co., Ltd. (“Mitsui”) and other producers under long-term, fixed-fee contracts.

For purposes of these financial statements, the “GIP II Entities” refers to certain entities affiliated with Global Infrastructure Investors II, LLC, collectively. “Williams” refers to The Williams Companies, Inc. (NYSE: WMB).

Acquisition

Acquisition

On March 31, 2014, the Partnership acquired certain midstream compression assets from MidCon Compression, L.L.C. (“MidCon”), a wholly owned subsidiary of Chesapeake, for approximately $160 million. The acquisition added natural gas compression assets, historically leased from MidCon, in the rapidly growing Utica Shale and Marcellus Shale regions. The acquired assets include more than 100 compression units with a combined capacity of approximately 200,000 horsepower.

Equity Issuance

On August 2, 2013, the Partnership entered into an Equity Distribution Agreement (“ATM”) under which it may offer and sell common units, in amounts, at prices and on terms to be determined by market conditions and other factors, having an aggregate market value of up to $300 million. The Partnership is under no obligation to issue equity under the ATM. For the quarter ended March 31, 2014, the Partnership sold an aggregate of 136,400 common units under the ATM for net proceeds of approximately $7.6 million, net of approximately $0.1 million in commissions, plus an approximate $0.1 million capital contribution from the Partnership’s general partner to maintain its two percent general partner interest. The Partnership used the proceeds for general partnership purposes.  Please read Note 11 (Subsequent Events) to the condensed consolidated financial statements for information regarding ATM activity subsequent to March 31, 2014.

On April 2, 2013, the Partnership completed an equity offering of 10.35 million common units, including 1.35 million common units issued pursuant to the underwriters’ exercise of their option to purchase additional common units, at a price of $39.86 per common unit.

The Partnership received offering proceeds (net of underwriting discounts and commissions) of $399.8 million from the equity offering, including proceeds from the underwriters’ exercise of their option to purchase additional common units, plus an approximate $8.4 million capital contribution from the Partnership’s general partner to maintain its two percent general partner interest. The proceeds were used for general partnership purposes, including repayment of amounts outstanding under the Partnership’s revolving credit facility.   

Holdings of Partnership Capital

Holdings of Partnership Capital

At March 31, 2014, the GIP II Entities held 2,059,446 notional general partner units representing a one percent general partner interest in the Partnership, 50.0 percent of the Partnership’s incentive distribution rights, 48,742,361 common units and 6,276,661 Class B units. The GIP II Entities’ ownership represents an aggregate 26.7 percent limited partner interest in the Partnership. Williams held 2,059,446 notional general partner units representing a one percent general partner interest in the Partnership, 50.0 percent of the Partnership’s incentive distribution rights, 40,137,695 common units and 6,276,661 Class B units. Williams ownership represents an aggregate 22.6 percent limited partner interest in the Partnership. The public held 100,392,311 common units, representing a 48.7 percent limited partner interest in the Partnership.

Basis of Presentation

Basis of Presentation

The accompanying financial statements and related notes present the unaudited condensed consolidated balance sheets of the Partnership as of March 31, 2014 and December 31, 2013. They also include the unaudited condensed consolidated statements of operations for the three-month periods ended March 31, 2014 and 2013, the unaudited condensed consolidated statements of cash flows for the Partnership for the three-month periods ended March 31, 2014 and 2013, and the unaudited changes in partners’ capital of the Partnership for the three-month period ended March 31, 2014.

The accompanying condensed consolidated financial statements were prepared using accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). In the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary to a fair statement of the results for the interim periods. Certain footnote disclosures normally included in the financial statements prepared in accordance with GAAP have been appropriately condensed or omitted in this quarterly report on Form 10-Q (this “Form 10-Q”). Management believes the disclosures made are adequate to make the information presented not misleading. This Form 10-Q should be read together with the Partnership’s annual report on Form 10-K for the year ended December 31, 2013, as amended.

The results of operations for the three-month period ended March 31, 2014, are not indicative of results that may be expected for the full fiscal year.

Income Taxes

Income Taxes

As a master limited partnership, the Partnership is a pass-through entity and is not subject to federal income taxes and most state income taxes with the exception of Texas Franchise Tax. For federal and state income tax purposes, all income, expenses, gains, losses and tax credits generated flow through to the owners, and accordingly, do not result in a provision for income taxes.