The Williams Companies, Inc. (WMB) 8-K Williams Reports Third-Quarter 2008 Financial Results

Exhibit 99.1

News Release

NYSE: WMB

Date:     Nov. 6, 2008

Williams Reports Third-Quarter 2008 Financial Results

• Net Income is $366 Million for 3Q 2008, $1.3 Billion Year-to-date

• Key Measure — Recurring Adjusted EPS is 57 Cents — Up 46% in 3Q

• Effect of Hurricanes, Unusual Items Reduced 3Q Results

• 18-percent Natural Gas Production Growth, Higher Prices Drive 3Q Results

• Company’s Liquidity is Strong — $3.5 Billion as of Oct. 31, No Significant Debt Maturities Until 2011

• Earnings, Capital Expenditure Outlook Lowered to Reflect Global Credit Crisis

Quarterly Summary Financial Information	3Q 2008						3Q 2007
Per share amounts are reported on a fully diluted basis	millions			per share			millions			per share
Income from continuing operations	$	369		$	0.62		$	228		$	0.38
Income (loss) from discontinued operations		(3	)		—			(30	)		(0.05	)
Net income	$	366		$	0.62		$	198		$	0.33
Recurring income from continuing operations*	$	370		$	0.63		$	219		$	0.36
After-tax mark-to-market adjustments		(38	)		(0.06	)		20			0.03
Recurring income from continuing operations — after mark-to-market adjustments*	$	332		$	0.57		$	239		$	0.39

Year-To-Date Summary Financial Information	YTD 2008						YTD 2007
Per share amounts are reported on a fully diluted basis	millions			per share			millions		per share
Income from continuing operations	$	1,204		$	2.02		$	641	$	1.05
Income (loss) from discontinued operations		99			0.17			124		0.20
Net income	$	1,303		$	2.19		$	765	$	1.25
Recurring income from continuing operations*	$	1,110		$	1.87		$	606	$	0.99
After-tax mark-to-market adjustments		(30	)		(0.05	)		87		0.15
Recurring income from continuing operations — after mark-to-market adjustments*	$	1,080		$	1.82		$	693	$	1.14

* A schedule reconciling income from continuing operations to recurring income from continuing operations and mark-to-market adjustments (non-GAAP measures) is available at www.williams.com and as an attachment to this press release.

     TULSA, Okla. — Williams (NYSE:WMB) announced third-quarter 2008 unaudited net income of $366 million, or $0.62 per share on a diluted basis, compared with net income of $198 million, or $0.33 cents per share on a diluted basis, for third-quarter 2007.

     A strong performance in the company’s exploration and production business was the driver of the increase in the third-quarter results. Key factors were higher net realized average natural gas prices and strong

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008 Page 1 of 10

natural gas production growth. Lower natural gas liquid (NGL) sales volumes, due to a number of factors discussed in the Midstream section of this release, partially offset the improved results in Exploration & Production. The effect of two hurricanes in the Gulf of Mexico and other unusual items also negatively impacted the third-quarter results.

     Year-to-date through Sept. 30, Williams reported net income of $1,303 million, or $2.19 per share on a diluted basis, compared with net income of $765 million, or $1.25 per share on a diluted basis for the first three quarters of 2007.

     Higher net realized average natural gas prices and strong natural gas production drove the year-to-date improvement in net income. The year-to-date results also benefited from a gain on the sale of certain international interests. The effect of the lower NGL sales volumes in the third quarter partially offset these benefits.

Recurring Results Adjusted for Effect of Mark-to-Market Accounting

     Recurring income from continuing operations, after adjustments to remove the effect of mark-to-market accounting for certain hedges and other derivatives in Gas Marketing Services, was $332 million, or $0.57 per share for third-quarter 2008. On the same adjusted basis, recurring income from continuing operations was $239 million, or $0.39 per share, for third-quarter 2007.

     The increases in the recurring adjusted results in the third-quarter reflect strong performances in the company’s exploration and production business, partially offset by the effect of the lower NGL sales volumes in the midstream business.

     For the first nine months of 2008, recurring income from continuing operations after mark-to-market adjustments was $1,080 million, or $1.82 per share, compared with $693 million, or $1.14 per share for the same period in 2007.

     The year-to-date increases reflect strong performances in the company’s natural gas businesses, including higher net realized average prices and natural gas production in the exploration and production business as well as higher per-unit NGL margins and fee-based revenues in the midstream business.

     A reconciliation of the company’s income from continuing operations to recurring income from continuing operations and mark-to-market adjustments is available atwww.williams.com and as an attachment to this news release.

Liquidity Strong, No Significant Debt Payments Until 2011

     As of Oct. 31, 2008, Williams’ total liquidity was approximately $3.5 billion, which included approximately $1.8 billion in cash and cash equivalents and $2.4 billion in unused revolving credit facilities from a group of 19 banks. The cash and cash equivalents balance includes approximately $600 million being utilized by international operations and certain subsidiaries, with the remainder comprised primarily of government-backed securities.

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008 Page 2 of 10

     Williams’ cash flow from operations has also remained strong. Year-to-date through Sept. 30, Williams generated $2.6 billion in cash flow from operations.

     The company also does not have any significant debt maturities until June 2011. To view Williams’ complete debt maturity schedule, please go to www.williams.com/investors.

     Williams’ risk from its net credit exposure to the company’s derivative counterparties, considering master netting agreements and collateral support, was $384 million as of Sept. 30. “A” rated or better counterparties represent more than 97 percent of this total.

CEO Perspective

     “Williams achieved another quarter of strong earnings growth, highlighted by an 18 percent increase in natural gas production,” said Steve Malcolm, chairman, president and chief executive officer. “We now face a much more challenging environment, as the global financial crisis and economic recession have driven energy prices much lower.

     “While we have changed our earnings and capital spending outlook in light of current conditions, Williams’ strong liquidity and balance sheet provide us with firm footing and the flexibility to perform in a difficult market.

     “We will continue our disciplined approach to growth, funding our capital projects with cash on hand, cash flow from operations and existing credit facilities,” Malcolm said.

Lower Commodity Assumptions, Earnings, Capital Expenditure Guidance

     The recent instability in financial markets has created global concerns about the liquidity of financial institutions and is having overarching impacts on the economy as a whole. In this volatile economic environment, many financial markets, institutions and other businesses remain under considerable stress. In addition, oil and gas prices have recently experienced significant declines.

     Given these market conditions, Williams is updating its outlook for commodity price assumptions and its earnings and capital expenditure outlook for 2008 and 2009 based on these new assumptions.

Un-hedged Commodity	Nov. 6 Outlook		Aug. 7 Outlook
Price Assumptions	2008	2009	2008	2009
Natural Gas:
Basin Prices
Average Rockies	$6.10 - $6.35	$4.00 - $5.75	$7.30 - $8.10	$6.60 - $8.10
Average San Juan/Mid-Continent	$7.00 - $7.40	$5.00 - $7.00	$7.70 - $9.00	$7.00 - $9.00
NYMEX (reference only)	$8.90 - $9.10	$6.00 - $8.00	$9.00 - $10.50	$8.00 - $10.50
Crude Oil: WTI (reference only)	$104 - $106	$60 - $90	$100 - $120	$80 - $120
Average NGL Margins: ($/gallon)	$0.56 - $0.63	$0.29 - $0.57	$0.57 - $0.68	$0.43 - $0.71

     Guidance for consolidated segment profit includes results for Exploration & Production, Midstream and Gas Pipeline, as well as Gas Marketing and the Other segment. All consolidated segment profit and earnings per share ranges are presented on a recurring basis adjusted to remove the effect of mark-to-market accounting.

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008 Page 3 of 10

     For 2008, Williams has lowered its consolidated segment profit guidance to a range of $2,900 million to $3,150 million and earnings per share of $2.10 to $2.30. The previous ranges were $3,150 million to $3,650 million in consolidated segment profit and earnings per share of $2.35 to $2.80. The updated range for 2008 reflects lower expected natural gas prices and NGL margins, as well as the effect of two hurricanes in the Gulf of Mexico.

     For 2009, Williams has lowered its consolidated segment profit guidance to a range of $1,950 million to $2,900 million and earnings per share of $1.25 to $2.05. The previous ranges were $2,925 million to $3,825 million for consolidated segment profit and earnings per share of $2.10 to $2.95. The updated range for 2009 reflects lower expected natural gas prices, lower expected NGL margins and a slower expected growth rate of natural gas production, reflecting lower expected capital spending in Exploration & Production.

     Williams is lowering its previous capital expenditure guidance for 2008. The new range is $3,375 million to $3,575 million. The previous range was $3,300 million to $3,850 million, inclusive of potential future projects.

     Williams is also lowering its capital expenditure guidance for 2009. The new range is $2,800 million to $3,100 million. The previous range was $2,925 million to $3,625 million, inclusive of potential future projects.

     The reduction in the company’s total potential capital spending for 2009 is primarily based the company’s expectation for lower spending in Exploration & Production and Midstream based on lower energy prices, a slower economy and difficult financial markets.

Business Segment Performance: Exploration & Production Drives Strong 3Q Segment Profit Growth

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008 Page 4 of 10

Consolidated Segment Profit (Loss)	3Q						YTD
Amounts in millions	2008			2007			2008			2007
Exploration & Production	$	361		$	169		$	1,287		$	566
Midstream Gas & Liquids		254			300			810			705
Gas Pipeline		173			183			532			513
	$	788		$	652		$	2,629		$	1,784
Gas Marketing Services		16			(67	)		(9	)		(160	)
Other		(2	)		—			(2	)		—
Consolidated Segment Profit	$	802		$	585		$	2,618		$	1,624

Recurring Consolidated Segment Profit (Loss)
After Mark-to-Market Adjustments*

	3Q						YTD
Amounts in millions	2008			2007			2008			2007
Exploration & Production	$	379		$	169		$	1,162		$	566
Midstream Gas & Liquids		248			300			802			697
Gas Pipeline		163			171			513			478
	$	790		$	640		$	2,477		$	1,741
Gas Marketing after MTM Adjustments		(45	)		(35	)		(58	)		(20	)
Other		(2	)		—			(2	)		—
Recurring Consolidated Segment Profit After Mark-to-Market Adjustments	$	743		$	605		$	2,417		$	1,721

* A schedule reconciling income from continuing operations to recurring income from continuing operations and mark-to-market adjustments (non-GAAP measures) is available at www.williams.com and as an attachment to this press release.

     For third-quarter 2008, Williams’ businesses reported consolidated segment profit of $802 million, compared with $585 million for third-quarter 2007. A strong performance in Exploration & Production drove the 37 percent improvement in the consolidated results.

     Year-to-date through Sept. 30, Williams’ businesses reported consolidated segment profit of $2,618 million, compared with $1,624 million for the same period in 2007. Strong results in Exploration & Production, Midstream and Gas Pipeline drove the 61 percent increase in year-to-date consolidated segment profit. The year-to-date period also benefited from the previously noted gain on the sale of certain international interests.

     On a basis adjusted to remove the effect of nonrecurring items and mark-to-market accounting, Williams’ recurring consolidated segment profit was $743 million in third-quarter 2008, compared with $605 million for third-quarter 2007, an increase of 23 percent.

     For the first nine months of 2008 on the same basis, Williams’ recurring consolidated segment profit was $2,417 million, compared with $1,721 million for the first nine months of 2007.

Exploration & Production: Higher Prices, Strong Production Growth Drives Segment Profit Increases

     Exploration & Production includes natural gas production and development in the U.S. Rocky Mountains, San Juan Basin and Mid-Continent, and oil and gas development in South America.

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008 Page 5 of 10

     The business reported segment profit of $361 million for third-quarter 2008, compared with third-quarter 2007 segment profit of $169 million, an increase of 114 percent. Year-to-date through Sept. 30, Exploration & Production reported segment profit of $1,287 million, compared with $566 million for the first nine months of 2007, an increase of 127 percent.

     Higher net realized average prices and strong growth in domestic natural gas production volumes were the primary drivers of the significant increases in segment profit for both the third-quarter and year-to-date periods. Results for the year-to-date 2008 period also benefited from the previously noted pre-tax gain on the sale of certain international interests.

     Increased development within the Piceance, Powder River and Fort Worth basins drove the 18 percent growth in domestic production volumes. In the Piceance Basin of western Colorado — the company’s cornerstone for production and reserves growth — average daily production increased 15 percent for the third quarter. In the Powder River Basin in Wyoming, the company’s second-largest production area, average daily production increased 37 percent for the quarter.

Quarterly Average Daily Production
Amounts in million cubic feet equivalent of natural	3Q
gas (MMcfe)	2008		2007		Growth rate
Piceance Basin		657		570		15	%
Powder River Basin		225		164		37	%
Other Basins		214		192		11	%
U.S. Interests only		1,096		926		18	%
U.S. & International Interests		1,146		974		18	%

     During third-quarter 2008, Williams’ net realized average price for U.S. production was $6.97 per thousand cubic feet of natural gas equivalent (Mcfe), which was 52 percent higher than the $4.59 per Mcfe realized in third-quarter 2007.

     The benefits of higher net realized average prices and higher production volumes in the third-quarter and year-to-date periods were partially offset by increased depreciation, depletion and amortization, higher operating taxes, higher lease operating expenses, and an impairment of certain producing properties.

Midstream Gas & Liquids: Solid Year-to-date Growth, Despite Third-Quarter Obstacles

     Midstream provides natural gas gathering and processing, NGL fractionation and storage services and olefins production. For third-quarter 2008, the business reported segment profit of $254 million, compared with segment profit of $300 million for third-quarter 2007.

     The decline in Midstream’s third-quarter segment profit is primarily because of lower NGL sales volumes. Higher per-unit NGL margins partially offset the decline in sales volumes.

     A lack of third-party NGL pipeline transportation capacity in the West Region was the primary driver of the lower sales volumes during the quarter. These restrictions were alleviated early in the fourth quarter, as the company began delivering NGL volumes from one of its Wyoming plants into the new Overland Pass NGL

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008 Page 6 of 10

pipeline. Williams expects its remaining NGL volumes from its Wyoming facilities to begin flowing into Overland Pass by the end of the year.

     Two major hurricanes in the Gulf of Mexico also negatively affected Midstream’s third-quarter results. Hurricane-related disruptions not only contributed to lower sales volumes in the Gulf Region, but also affected sales volumes in the West Region when operations were suspended at a third-party fractionation facility at Mont Belvieu, Texas. As a result, a portion of Midstream’s West Region NGL equity volumes produced during the third quarter was placed in storage. The company expects to sell most of this excess inventory in fourth-quarter 2008 and in early 2009. In addition, hurricane-related repairs and property insurance deductibles drove higher operating costs for the quarter.

     Williams estimates that the hurricane-related downtime and reserves for repairs and property insurance deductibles reduced Midstream’s third-quarter 2008 segment profit by $50 million to $65 million.

     Higher fee-based revenues partially offset the lower sales volumes and the negative effect of the hurricanes, when comparing third-quarter 2008 with third-quarter 2007.

     For the first nine months of 2008, Midstream’s segment profit was $810 million, compared with $705 million for the same time period in 2007.

     Higher per-unit NGL margins, higher fee-based revenues across all regions and increased olefins sales drove the increase in the year-to-date period. The acquisition of an additional interest in the Geismar plant in July 2007 helped drive the increase in olefins sales.

Gas Pipeline: Expansion Projects, New Rates Drive Year-to-date Recurring Segment Profit Growth

     Gas Pipeline, which primarily delivers natural gas to markets along the Eastern Seaboard, in Florida and in the Pacific Northwest, reported third-quarter 2008 segment profit of $173 million, compared with $183 million for third-quarter 2007.

     Year-to-date through Sept. 30, Gas Pipeline reported segment profit of $532 million, compared with $513 million for the same period in 2007.

     On a recurring basis, Gas Pipeline’s segment profit for third-quarter 2008 was $163 million, compared with $171 million for third-quarter 2007.

     This decrease on a recurring basis was due primarily to an increase in project development costs and costs associated with a pipeline rupture in Appomattox County, Virginia. Increased revenues from expansion projects placed in service during fourth-quarter 2007 partially offset these items.

     Year-to-date through Sept. 30, Gas Pipeline’s recurring segment profit was $513 million, compared with $478 million on a recurring basis for the same time frame in 2007.

     The increase in year-to-date recurring segment profit was primarily a result of increased revenues from new rates on the Transco system, revenues from expansion projects placed in service during fourth-quarter 2007,

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008 Page 7 of 10                    

increased earnings from the company’s 50 percent interest in Gulfstream Natural Gas Systems, and lower operating costs.

     This increase was partly offset by higher project development costs along with higher selling, general and administrative expenses.

Gas Marketing Services: Supporting Natural Gas Businesses with Marketing, Risk Management

     Gas Marketing Services is responsible for supporting Williams’ natural gas businesses by providing marketing and risk management services. These services primarily include marketing and hedging the gas produced by Exploration & Production, and procuring fuel and shrink gas and hedging natural gas liquids for Midstream.

     In addition, Gas Marketing manages various natural-gas related contracts, such as transportation, storage, and related hedges, and proprietary trading positions. It also provides marketing services to third-parties, such as producers. The segment also manages certain legacy natural gas contracts and positions that previously were reported in the former power business, which have been reduced to a minimal level.

Gas Marketing Recurring Segment Profit (Loss)
Adjusted for Mark-to-Market Effect*

	3Q						YTD
Amounts in millions	2008			2007			2008			2007
Segment profit (loss)	$	16		$	(67	)	$	(9	)	$	(160	)
Nonrecurring adjustments		—			—			—			—
Recurring segment profit (loss)	$	16		$	(67	)	$	(9	)	$	(160	)
Mark-to-market adjustments		(61	)		32			(49	)		140
Recurring segment loss after MTM adjustments	$	(45	)	$	(35	)	$	(58	)	$	(20	)

* A schedule reconciling income from continuing operations to recurring income from continuing operations and mark-to-market adjustments (non-GAAP measures) is available at www.williams.com and as an attachment to this press release.

     The $45 million recurring segment loss after mark-to-market adjustments is comprised primarily of a $24 million write-down of storage inventory to market prices and $18 million of realized losses associated with certain proprietary and legacy positions, which were recognized in earnings in prior periods.

     Although not significant for third-quarter or year-to-date 2008 results, the company expects in the future to have some level of mark-to-market volatility in Gas Marketing Services, primarily from natural gas storage hedging.

Evaluation of Structural Changes to Enhance Shareholder Value

     As separately announced today, Williams’ management and board of directors are evaluating a variety of structural changes in the company to enhance shareholder value. The company expects to announce a specific direction in the first quarter next year. Among the potential changes is the separation of one or more of the company’s principal business units. The company noted that there can be no assurance as to the timing or that the evaluation announced today will result in any changes to the company’s current structure.

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008 Page 8 of 10                    

Today’s Analyst Call

     Management will discuss third-quarter 2008 results during a live webcast beginning at 9:30 a.m. EST today. Participants are encouraged to access the webcast and access slides for viewing, downloading and printing at www.williams.com.

     A limited number of phone lines also will be available at (877) 558-9190. International callers should dial (706) 902-3248. Replays of the third-quarter webcast, in both streaming and downloadable podcast formats, will be available for two weeks at www.williams.com following the event.

Form 10-Q

     The company will file its Form 10-Q with the Securities and Exchange Commission today. The document will be available on both the SEC and Williams websites.

About Williams (NYSE: WMB)

Williams, through its subsidiaries, finds, produces, gathers, processes and transports natural gas. Williams’ operations are concentrated in the Pacific Northwest, Rocky Mountains, Gulf Coast, and Eastern Seaboard. More information is available at http://www.williams.com. Go to http://www.b2i.us/irpass.asp?BzID=630&to=ea&s=0 to join our e-mail list.

Contact:	Jeff Pounds
	Williams (media relations)
	(918) 573-3332
	Travis Campbell
	Williams (investor relations)
	(918) 573-2944
	Richard George
	Williams (investor relations)
	(918) 573-3679
	Sharna Reingold
	Williams (investor relations)
	(918) 573-2078

# # #

Williams’ reports, filings, and other public announcements might contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. You typically can identify forward-looking statements by the use of forward-looking words, such as “anticipate,” believe,” “could,” “continue,” “estimate,” “expect,” “forecast,” “may,” “plan,” “potential,” “project,” “schedule,” “will,” and other similar words. These statements are based on our intentions, beliefs, and assumptions about future events and are subject to risks, uncertainties, and other factors. Actual results could differ materially from those contemplated by the forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with such statements, other factors could cause our actual results to differ materially from the results expressed or implied in any forward-looking statements. Those factors include, among others: changes in general economic conditions and changes in the industries in which Williams conducts business; changes in federal or state laws and regulations to which Williams is subject, including tax, environmental and employment laws and regulations; the cost and outcomes of legal and administrative claims proceedings, investigations, or inquiries; the results of financing efforts, including our ability to obtain financing on favorable terms, which can be affected by various factors, including our credit ratings and general economic conditions; the level of creditworthiness of counterparties to our transactions; the amount of collateral required to be posted from time to time in our transactions; the effect of changes in accounting policies; the ability to control costs; the ability of each business

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008 Page 9 of 10                    

unit to successfully implement key systems, such as order entry systems and service delivery systems; the impact of future federal and state regulations of business activities, including allowed rates of return, the pace of deregulation in retail natural gas market, and the resolution of other regulatory matters; changes in environmental and other laws and regulations to which Williams and its subsidiaries are subject or other external factors over which we have no control; changes in foreign economies, currencies, laws and regulations, and political climates, especially in Canada, Argentina and Venezuela, where Williams has direct investments; the timing and extent of changes in commodity prices, interest rates, and foreign currency exchange rates; the weather and other natural phenomena; the ability of Williams to develop or access expanded markets and product offerings as well as their ability to maintain existing markets; the ability of Williams and its subsidiaries to obtain governmental and regulatory approval of various expansion projects; future utilization of pipeline capacity, which can depend on energy prices, competition from other pipelines and alternative fuels, the general level of natural gas and petroleum product demand, decisions by customers not to renew expiring natural gas transportation contracts; the accuracy of estimated hydrocarbon reserves and seismic data; and global and domestic economic repercussions from terrorist activities and the government’s response to such terrorist activities. In light of these risks, uncertainties, and assumptions, and the additional risks described in the risk factors sections of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

In regard to the company’s reserves in Exploration & Production, the SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves. We have used certain terms in this news release, such as “probable” reserves and “possible” reserves and “new opportunities potential” reserves that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. The SEC defines proved reserves as estimated quantities that geological and engineering data demonstrate with reasonable certainty to be recoverable in the future from known reservoirs under the assumed economic conditions. Probable and possible reserves are estimates of potential reserves that are made using accepted geological and engineering analytical techniques, but which are estimated with reduced levels of certainty than for proved reserves. Possible reserve estimates are less certain than those for probable reserves. New opportunities potential is an estimate of reserves for new areas for which we do not have sufficient information to date to raise the reserves to either the probable category or the possible category. New opportunities potential estimates are even less certain than those for possible reserves.

Reference to “total resource portfolio” includes proved, probable and possible reserves as well as new opportunities potential.

Investors are urged to closely consider the disclosures and risk factors in our annual report on Form 10-K filed with the Securities and Exchange Commission on Feb. 26, 2008, and our quarterly reports on Form 10-Q available from our offices or from our website atwww.williams.com

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008 Page 10 of 10                    

Financial Highlights and Operating Statistics
(UNAUDITED)

Final

September 30, 2008

Reconciliation of Income from Continuing Operations to Recurring Earnings
(UNAUDITED)

	2007															2008
(Dollars in millions, except per-share amounts)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr			2nd Qtr			3rd Qtr			Year
Income from continuing operations available to common stockholders	$	170		$	243		$	228		$	206		$	847		$	416		$	419		$	369		$	1,204
Income from continuing operations — diluted earnings per common share	$	0.28		$	0.40		$	0.38		$	0.34		$	1.40		$	0.70		$	0.70		$	0.62		$	2.02
Nonrecurring items:
Exploration & Production
Accrual for royalty litigation contingency	$	—		$	—		$	—		$	4		$	4		$	—		$	—		$	—		$	—
Gain on sale of Peru interests		—			—			—			—			—			(118	)		(30	)		—			(148	)
Reserve for receivables from bankrupt counterparty		—			—			—			—			—			—			5			4			9
Impairment of certain natural gas producing properties		—			—			—			—			—			—			—			14			14
Total Exploration & Production nonrecurring items		—			—			—			4			4			(118	)		(25	)		18			(125	)
Gas Pipeline
Change in estimate related to a regulatory liability — NWP		—			(17	)		—			—			(17	)		—			—			—			—
Payments received for terminated firm transportation agreement — NWP		—			(6	)		(12	)		—			(18	)		—			—			—			—
Gain on sale of excess inventory gas — TGPL		—			—			—			—			—			—			(9	)		—			(9	)
Gain on sale of certain south Texas assets — TGPL		—			—			—			—			—			—			—			(10	)		(10	)
Total Gas Pipeline nonrecurring items		—			(23	)		(12	)		—			(35	)		—			(9	)		(10	)		(19	)
Midstream Gas & Liquids
Reversal of a maintenance accrual		(8	)		—			—			—			(8	)		—			—			—			—
Income from a favorable litigation outcome		—			—			—			(12	)		(12	)		—			—			—			—
Reserve for international receivables		—			—			—			9			9			—			—			—			—
Impairment of Carbonate Trend pipeline		—			—			—			10			10			—			—			—			—
Involuntary conversion gain related to Ignacio gas processing plant		—			—			—			—			—			—			(3	)		(6	)		(9	)
Reserve for receivables from bankrupt counterparty		—			—			—			—			—			—			1			—			1
Final earnout payment from 2005 Gulf Liquids asset sale		—			—			—			—			—			—			—			(8	)		(8	)
Charges from Hurricanes Gustav & Ike		—			—			—			—			—			—			—			8			8
Total Midstream Gas & Liquids nonrecurring items		(8	)		—			—			7			(1	)		—			(2	)		(6	)		(8	)
Gas Marketing Services
Accrual for litigation contingencies		—			—			—			20			20			—			—			—			—
Total Gas Marketing Services nonrecurring items		—			—			—			20			20			—			—			—			—
Nonrecurring items included in segment profit (loss)		(8	)		(23	)		(12	)		31			(12	)		(118	)		(36	)		2			(152	)
Nonrecurring items below segment profit (loss)
Early debt retirement costs (Corporate)		—			—			—			19			19			—			—			—			—
Interest related to Gulf Liquids litigation contingency ( Interest accrued — Midstream)		1			1			1			—			3			—			—			—			��
Interest income related to contract termination gain noted above (Investing income — Gas Pipeline — NWP)		—			—			(2	)		—			(2	)		—			—			—			—
Interest related to royalty litigation contingency noted above (Interest accrued — E&P)		—			—			—			1			1			—			—			—			—
Rounding		—			1			(1	)		—			—			—			—			—			—
		1			2			(2	)		20			21			—			—			—			—
Total nonrecurring items		(7	)		(21	)		(14	)		51			9			(118	)		(36	)		2			(152	)
Tax effect for above items(1)(2)		(3	)		1			(5	)		13			6			(45	)		(14	)		1			(58	)
Adjustment for nonrecurring tax-related items(3)		—			—			—			23			23			—			—			—			—
Recurring income from continuing operations available to common stockholders	$	166		$	221		$	219		$	267		$	873		$	343		$	397		$	370		$	1,110
Recurring diluted earnings per common share	$	0.27		$	0.36		$	0.36		$	0.44		$	1.44		$	0.57		$	0.67		$	0.63		$	1.87
Weighted-average shares — diluted (thousands)		611,470			613,172			610,651			604,243			609,866			598,627			596,187			589,138			594,630

(1)	The tax rate applied to nonrecurring items for 2nd quarter 2007 has been adjusted to reverse the effect of certain previous adjustments for nondeductible expenses associated with securities litigiation and related costs, as these expenses are now considered deductible based on an IRS ruling.
(2)	The tax rate applied to nonrecurring items 4th quarter 2007 has been adjusted to reverse the effect of early debt retirement costs considered deductible in 2004 as these expenses are now considered nondeductible.
(3)	The 4th quarter of 2007 includes an adjustment for an income tax contingency.
Note:	The sum of earnings per share for the quarters may not equal the total earnings per share for the year due to changes in the weighted-average number of common shares outstanding.
	The sum of amounts for the quarters may not equal the totals for the year due to rounding.

Consolidated Statement of Income
(UNAUDITED)

	2007															2008
(Dollars in millions, except per-share amounts)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr			2nd Qtr			3rd Qtr			Year
Revenues	$	2,368		$	2,824		$	2,860		$	2,506		$	10,558		$	3,224		$	3,729		$	3,267		$	10,220
Segment costs and expenses:
Costs and operating expenses		1,843			2,180			2,222			1,834			8,079			2,373			2,747			2,386			7,506
Selling, general and administrative expenses		102			108			107			154			471			111			131			133			375
Other (income) expense — net		(18	)		(18	)		(2	)		20			(18	)		(117	)		(35	)		—			(152	)
Total segment costs and expenses		1,927			2,270			2,327			2,008			8,532			2,367			2,843			2,519			7,729
Equity earnings		21			23			52			41			137			36			37			54			127
Total segment profit		462			577			585			539			2,163			893			923			802			2,618
Reclass equity earnings		(21	)		(23	)		(52	)		(41	)		(137	)		(36	)		(37	)		(54	)		(127	)
General corporate expenses		(40	)		(36	)		(40	)		(45	)		(161	)		(42	)		(42	)		(34	)		(118	)
Operating income		401			518			493			453			1,865			815			844			714			2,373
Interest accrued		(172	)		(172	)		(171	)		(170	)		(685	)		(165	)		(165	)		(166	)		(496	)
Interest capitalized		5			7			9			11			32			8			16			16			40
Investing income		52			66			78			61			257			55			55			65			175
Early debt retirement costs		—			—			—			(19	)		(19	)		—			—			—			—
Minority interest in income of consolidated subsidiaries		(14	)		(25	)		(29	)		(22	)		(90	)		(39	)		(63	)		(55	)		(157	)
Other income (expense) — net		2			2			8			(1	)		11			5			—			2			7
Income from continuing operations before income taxes		274			396			388			313			1,371			679			687			576			1,942
Provision for income taxes		104			153			160			107			524			263			268			207			738
Income from continuing operations		170			243			228			206			847			416			419			369			1,204
Income (loss) from discontinued operations		(36	)		190			(30	)		19			143			84			18			(3	)		99
Net income	$	134		$	433		$	198		$	225		$	990		$	500		$	437		$	366		$	1,303
Diluted earnings (loss) per common share:
Income from continuing operations	$	0.28		$	0.40		$	0.38		$	0.34		$	1.40		$	0.70		$	0.70		$	0.62		$	2.02
Income (loss) from discontinued operations		(0.06	)		0.31			(0.05	)		0.03			0.23			0.14			0.03			—			0.17
Net income	$	0.22		$	0.71		$	0.33		$	0.37		$	1.63		$	0.84		$	0.73		$	0.62		$	2.19
Weighted-average number of shares used in computation (thousands)		611,470			613,172			610,651			604,243			609,866			598,627			596,187			589,138			594,630
Common shares outstanding at end of period (thousands)		598,492			599,781			593,016			586,148			586,148			584,025			579,117			578,641			578,641
Market price per common share (end of period)	$	28.46		$	31.62		$	34.06		$	35.78		$	35.78		$	32.98		$	40.31		$	23.65		$	23.65
Common dividends per share	$	0.09		$	0.10		$	0.10		$	0.10		$	0.39		$	0.10		$	0.11		$	0.11		$	0.32

Note: The sum of earnings (loss) per share for the quarters may not equal the total earnings (loss) per share for the year due to changes in the weighted-average number of common shares outstanding.

2

Reconciliation of Segment Profit to Recurring Segment Profit
(UNAUDITED)

	2007															2008
(Dollars in millions)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr			2nd Qtr				3rd Qtr			Year
Segment profit (loss):
Exploration & Production	$	188		$	209		$	169		$	190		$	756		$	430		$	496			$	361		$	1,287
Gas Pipeline		150			180			183			160			673			180			179				173			532
Midstream Gas & Liquids		154			251			300			367			1,072			261			295				254			810
Gas Marketing Services		(30	)		(63	)		(67	)		(177	)		(337	)		21			(46	)			16			(9	)
Other		—			—			—			(1	)		(1	)		1			(1	)			(2	)		(2	)
Total segment profit	$	462		$	577		$	585		$	539		$	2,163		$	893		$	923			$	802		$	2,618
Nonrecurring adjustments:
Exploration & Production	$	—		$	—		$	—		$	4		$	4		$	(118	)	$	(25	)		$	18		$	(125	)
Gas Pipeline		—			(23	)		(12	)		—			(35	)		—			(9	)			(10	)		(19	)
Midstream Gas & Liquids		(8	)		—			—			7			(1	)		—			(2	)			(6	)		(8	)
Gas Marketing Services		—			—			—			20			20			—			—				—			—
Other		—			—			—			—			—			—			—				—			—
Total segment nonrecurring adjustments	$	(8	)	$	(23	)	$	(12	)	$	31		$	(12	)	$	(118	)	$	(36	)		$	2		$	(152	)
Recurring segment profit (loss):
Exploration & Production	$	188		$	209		$	169		$	194		$	760		$	312		$	471			$	379		$	1,162
Gas Pipeline		150			157			171			160			638			180			170				163			513
Midstream Gas & Liquids		146			251			300			374			1,071			261			293				248			802
Gas Marketing Services		(30	)		(63	)		(67	)		(157	)		(317	)		21			(46	)			16			(9	)
Other		—			—			—			(1	)		(1	)		1			(1	)	��		(2	)		(2	)
Total recurring segment profit	$	454		$	554		$	573		$	570		$	2,151		$	775		$	887			$	804		$	2,466

Note: Segment profit (loss) includes equity earnings reported in Investing income in the Consolidated Statement of Income. Equity earnings results from investments accounted for under the equity method.

3

Exploration & Production
(UNAUDITED)

	2007															2008
(Dollars in millions)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr			2nd Qtr			3rd Qtr		Year
Revenues:
Production	$	413		$	449		$	399		$	464		$	1,725		$	617		$	826		$	715	$	2,158
Gas management		55			67			63			87			272			104			133			116		353
Net nonqualified hedge derivative income (loss)		(2	)		(5	)		8			(17	)		(16	)		(2	)		(14	)		18		2
International		15			16			16			17			64			17			19			18		54
Other		2			12			13			21			48			12			12			16		40
Total revenues		483			539			499			572			2,093			748			976			883		2,607
Segment costs and expenses:
Depreciation, depletion and amortization (including International)		114			131			139			151			535			166			182			187		535
Lease and other operating expenses		44			49			54			58			205			60			61			72		193
Operating taxes		34			35			30			22			121			49			69			65		183
Exploration expense		7			5			4			4			20			2			1			3		6
Third party gathering expense		9			7			9			8			33			10			13			12		35
Selling, general and administrative expenses (including International)		36			32			35			45			148			37			44			49		130
Gas management expenses		55			67			63			87			272			104			133			116		353
International (excluding DD&A and SG&A)		4			6			7			7			24			6			10			9		25
Other (income) expense — net		(3	)		3			(1	)		5			4			(113	)		(27	)		14		(126	)
Total segment costs and expenses		300			335			340			387			1,362			321			486			527		1,334
Equity earnings		5			5			10			5			25			3			6			5		14
Reported segment profit		188			209			169			190			756			430			496			361		1,287
Nonrecurring adjustments		—			—			—			4			4			(118	)		(25	)		18		(125	)
Recurring segment profit	$	188		$	209		$	169		$	194		$	760		$	312		$	471		$	379	$	1,162

Operating statistics

Domestic:

Total domestic net volumes (Bcfe)		76.1		81.7		85.2		90.1		333.1		92.2		101.0		100.8		294.0
Net domestic volumes per day (MMcfe/d)		845		898		926		979		913		1,013		1,110		1,096		1,073
Net domestic realized price ($/Mcfe) (1)	$	5.318	$	5.390	$	4.587	$	5.057	$	5.078	$	6.580	$	8.056	$	6.971	$	7.221
Production taxes per Mcfe	$	0.440	$	0.439	$	0.343	$	0.253	$	0.364	$	0.529	$	0.683	$	0.648	$	0.623
Lease and other operating expense per Mcfe	$	0.574	$	0.598	$	0.639	$	0.645	$	0.616	$	0.653	$	0.606	$	0.712	$	0.657

(1) Net realized price is calculated the following way:production revenues(including hedging activities and incremental margins related to gas management activities) lessthird party gathering expensedivided by net volumes.

International:

Total volumes including Equity Investee (Bcfe)	5.2	5.4	5.6	5.8	22.0	5.7	5.7	5.9	17.3
Volumes per day (MMcfe/d)	58	59	61	63	60	63	62	64	63
Volumes net to Williams (after minority interest) (Bcfe)	4.1	4.2	4.4	4.6	17.3	4.5	4.4	4.7	13.6
Volumes net to Williams per day (MMcfe/d)	46	46	48	50	47	49	49	50	50

Total Domestic and International:

Volumes net to Williams (after minority interest) (Bcfe)	80.2	85.9	89.7	94.6	350.4	96.7	105.4	105.4	307.5
Volumes net to Williams per day (MMcfe/d)	891	945	974	1,028	960	1,062	1,159	1,146	1,122

4

Gas Pipeline

(UNAUDITED)

	2007													2008
(Dollars in millions)	1st Qtr		2nd Qtr			3rd Qtr			4th Qtr		Year			1st Qtr		2nd Qtr			3rd Qtr			Year
Revenues:
Northwest Pipeline	$	103	$	103		$	106		$	110	$	422		$	107	$	107		$	108		$	322
Transcontinental Gas Pipe Line		268		312			286			321		1,187			306		298			300			904
Other		—		—			—			1		1			—		1			(1	)		—
Total revenues		371		415			392			432		1,610			413		406			407			1,226
Segment costs and expenses:
Costs and operating expenses		195		224			203			229		851			201		207			210			618
Selling, general and administrative expenses		35		38			37			51		161			36		40			42			118
Other (income) expense — net		—		(17	)		(10	)		3		(24	)		6		(5	)		3			4
Total segment costs and expenses		230		245			230			283		988			243		242			255			740
Equity earnings		9		10			21			11		51			10		15			21			46
Reported segment profit:
Northwest Pipeline		55		75	*		66			52		248			53		52			56			161
Transcontinental Gas Pipe Line		87		98			97			101		383			122		120			108			350
Other		8		7			20			7		42			5		7			9			21
Total reported segment profit		150		180			183			160		673			180		179			173			532
Nonrecurring adjustments:
Northwest Pipeline		—		(23)	*		(12	)		—		(35	)		—		—			—			—
Transcontinental Gas Pipe Line		—		—			—			—		—			—		(9	)		(10	)		(19	)
Total nonrecurring adjustments		—		(23	)		(12	)		—		(35	)		—		(9	)		(10	)		(19	)
Recurring segment profit:
Northwest Pipeline		55		52			54			52		213			53		52			56			161
Transcontinental Gas Pipe Line		87		98			97			101		383			122		111			98			331
Other		8		7			20			7		42			5		7			9			21
Total recurring segment profit	$	150	$	157		$	171		$	160	$	638		$	180	$	170		$	163		$	513

* Includes $6 million of income associated with payments received for a terminated firm transportation agreement on Gas Pipeline’s Grays Harbor lateral that was reclassified fromother income — netbelowoperating incometoother (income) expense — net withinsegment costs and expenses.

Operating statistics

Northwest Pipeline
Throughput (TBtu)	200.2	159.8	176.5	220.4	756.9	219.8	171.0	179.5	570.3
Average daily transportation volumes (TBtu)	2.2	1.8	1.9	2.4	2.1	2.4	1.9	2.0	2.1
Average daily firm reserved capacity (TBtu)	2.5	2.5	2.5	2.6	2.5	2.6	2.5	2.5	2.5
Transcontinental Gas Pipe Line
Throughput (TBtu)	525.2	427.6	477.4	473.2	1,903.4	536.5	443.0	448.5	1,428.0
Average daily transportation volumes (TBtu)	5.8	4.7	5.2	5.1	5.2	5.9	4.9	4.9	5.2
Average daily firm reserved capacity (TBtu)	6.8	6.4	6.4	6.7	6.6	7.0	6.7	6.6	6.8

5

Midstream Gas & Liquids
(UNAUDITED)

	2007															2008
(Dollars in millions)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr			2nd Qtr			3rd Qtr			Year
Revenues:
Gathering & processing	$	104		$	102		$	106		$	102		$	414		$	97		$	108		$	105		$	310
Venezuela fee revenue		37			38			38			35			148			40			44			43			127
NGL sales from gas processing		260			319			346			435			1,360			383			473			397			1,253
Production handling and transportation		29			28			26			25			108			27			29			24			80
Olefins sales (including Gulf and Canada)		131			176			287			321			915			325			335			319			979
Trading/marketing sales		792			1,007			1,063			1,297			4,159			1,178			1,372			1,094			3,644
Other revenues		33			40			31			33			137			51			57			50			158
		1,386			1,710			1,897			2,248			7,241			2,101			2,418			2,032			6,551
Intrasegment eliminations		(384	)		(467	)		(537	)		(673	)		(2,061	)		(544	)		(664	)		(596	)		(1,804	)
Total revenues		1,002			1,243			1,360			1,575			5,180			1,557			1,754			1,436			4,747
Segment costs and expenses:
NGL cost of goods sold		166			149			124			140			579			187			286			196			669
Olefins cost of goods sold		114			147			239			267			767			280			279			288			847
Trading/marketing cost of goods sold		787			996			1,058			1,285			4,126			1,180			1,357			1,118			3,655
Venezuela operating costs		19			19			20			20			78			21			22			20			63
Operating costs		141			128			139			146			554			168			157			165			490
Other
Selling, general and administrative expenses		27			29			32			49			137			34			39			36			109
Other (income) expense — net		(15	)		(1	)		6			(1	)		(11	)		(7	)		(1	)		(17	)		(25	)
Intrasegment eliminations		(384	)		(467	)		(537	)		(673	)		(2,061	)		(544	)		(664	)		(596	)		(1,804	)
Total segment costs and expenses		855			1,000			1,081			1,233			4,169			1,319			1,475			1,210			4,004
Equity earnings		7			8			21			25			61			23			16			28			67
Reported segment profit		154			251			300			367			1,072			261			295			254			810
Nonrecurring adjustments		(8	)		—			—			7			(1	)		—			(2	)		(6	)		(8	)
Recurring segment profit	$	146		$	251		$	300		$	374		$	1,071		$	261		$	293		$	248		$	802
Operating statistics
Domestic Gathering and Processing
Gathering volumes (TBtu)		269			259			266			251			1,045			234			268			254			756
Fee-based processing volumes (TBtu)		227			234			243			234			938			231			249			244			724
NGL equity sales (million gallons) *		345			359			358			356			1,418			308			366			272			946
NGL margin ($/gallon)	$	0.27		$	0.47		$	0.62		$	0.83		$	0.55		$	0.64		$	0.51		$	0.74		$	0.62
NGL production (million gallons) *		594			619			640			642			2,495			634			645			555			1,834
Olefins
Canadian NGL equity sales (million gallons)		35			33			35			33			136			33			22			20			75
Olefins sales (Ethylene & Propylene) (million lbs)		213			274			473			441			1,401			457			428			407			1,292
Discovery Producer Services L.L.C. (equity investment) - 100%
NGL equity sales (million gallons)		18			25			22			34			99			37			23			21			81
NGL production (million gallons)		56			66			61			69			252			70			58			43			171

* Excludes volumes associated with partially owned assets that are not consolidated for financial reporting purposes.

6

Gas Marketing Services
(UNAUDITED)

	2007															2008
(Dollars in millions)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr		2nd Qtr			3rd Qtr		Year
Revenues	$	1,288		$	1,394		$	1,247		$	704		$	4,633		$	1,650	$	2,010		$	1,716	$	5,376
Segment costs and expenses:
Costs and operating expenses		1,316			1,452			1,312			857			4,937			1,625		2,049			1,695		5,369
Selling, general and administrative expenses		2			5			2			4			13			4		7			4		15
Other expense — net		—			—			—			20			20			—		—			1		1
Total segment costs and expenses		1,318			1,457			1,314			881			4,970			1,629		2,056			1,700		5,385
Reported segment profit (loss)		(30	)		(63	)		(67	)		(177	)		(337	)		21		(46	)		16		(9	)
Nonrecurring adjustments		—			—			—			20			20			—		—			—		—
Recurring segment profit (loss)	$	(30	)	$	(63	)	$	(67	)	$	(157	)	$	(317	)	$	21	$	(46	)	$	16	$	(9	)

7

Capital Expenditures and Investments
(UNAUDITED)

	2007												2008
(Dollars in millions)	1st Qtr		2nd Qtr		3rd Qtr			4th Qtr		Year			1st Qtr		2nd Qtr			3rd Qtr			Year
Capital expenditures:
Exploration & Production	$	343	$	386	$	467		$	495	$	1,691		$	391	$	711		$	800		$	1,902
Gas Pipeline:
Northwest Pipeline		49		21		37			52		159			13		16			29			58
Transcontinental Gas Pipe Line		59		119		139			43		360			53		43			53			149
Other		—		—		—			—		—			1		(1	)		—			—
Total		108		140		176			95		519			67		58			82			207
Midstream Gas & Liquids		55		185		227			120		587			105		205			141			451
Gas Marketing Services		—		—		—			—		—			—		—			1			1
Other		4		6		4			5		19			16		8			8			32
Total	$	510	$	717	$	874		$	715	$	2,816		$	579	$	982		$	1,032		$	2,593
Purchase of investments:
Exploration & Production		—		—		(2	)		—		(2	)		—		3			3			6
Gas Pipeline		1		3		15			23		42			20		28			36			84
Other		19		1		—			—		20			—		16			(1	)		15
Total	$	20	$	4	$	13		$	23	$	60		$	20	$	47		$	38		$	105
Summary:
Exploration & Production	$	343	$	386	$	465		$	495	$	1,689		$	391	$	714		$	803		$	1,908
Gas Pipeline		109		143		191			118		561			87		86			118			291
Midstream Gas & Liquids		55		185		227			120		587			105		205			141			451
Gas Marketing Services		—		—		—			—		—			—		—			1			1
Other		23		7		4			5		39			16		24			7			47
Total	$	530	$	721	$	887		$	738	$	2,876		$	599	$	1,029		$	1,070		$	2,698
Cumulative summary:
Exploration & Production	$	343	$	729	$	1,194		$	1,689	$	1,689		$	391	$	1,105		$	1,908		$	1,908
Gas Pipeline		109		252		443			561	$	561			87		173			291		$	291
Midstream Gas & Liquids		55		240		467			587	$	587			105		310			451		$	451
Gas Marketing Services		—		—		—			—	$	—			—		—			1		$	1
Other		23		30		34			39	$	39			16		40			47		$	47
Total	$	530	$	1,251	$	2,138		$	2,876	$	2,876		$	599	$	1,628		$	2,698		$	2,698

8

Depreciation, Depletion and Amortization and Other Selected Financial Data
(UNAUDITED)

	2007															2008
(Dollars in millions)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr			2nd Qtr			3rd Qtr			Year
Depreciation, depletion and amortization:
Exploration & Production	$	114		$	131		$	139		$	151		$	535		$	165		$	180		$	190		$	535
Gas Pipeline:
Northwest Pipeline		23			22			21			22			88			22			21			21			64
Transcontinental Gas Pipe Line		54			58			58			57			227			55			59			59			173
Total		77			80			79			79			315			77			80			80			237
Midstream Gas & Liquids		53			54			52			55			214			55			55			58			168
Gas Marketing Services		1			1			2			3			7			1			—			—			1
Other		3			3			3			1			10			4			3			5			12
Total	$	248		$	269		$	275		$	289		$	1,081		$	302		$	318		$	333		$	953
Other selected financial data:
Cash and cash equivalents	$	1,811		$	1,739		$	1,455		$	1,699		$	1,699		$	2,240		$	1,937		$	1,524		$	1,524
Total assets	$	25,936		$	26,046		$	25,837		$	25,061		$	25,061		$	27,172		$	31,216		$	26,893		$	26,893
Capital structure:
Debt
Current	$	388		$	468		$	466		$	143		$	143		$	85		$	83		$	84		$	84
Noncurrent	$	7,507		$	7,443		$	7,425		$	7,757		$	7,757		$	7,799		$	7,869		$	7,827		$	7,827
Stockholders’ equity	$	6,192		$	6,423		$	6,456		$	6,375		$	6,375		$	7,801		$	7,652		$	8,574		$	8,574
Debt to debt-plus-equity ratio		56.0	%		55.2	%		55.0	%		55.3	%		55.3	%		50.3	%		51.0	%		48.0	%		48.0	%

9

Non-GAAP Measures:

     This press release includes certain financial measures, recurring earnings and recurring segment profit that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission. Recurring earnings exclude items of income or loss that the company characterizes as unrepresentative of its ongoing operations. Recurring earnings and recurring segment profit provide investors meaningful insight into the company’s results from ongoing operations. This press release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are widely accepted financial indicators used by investors to compare a company’s performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the company. Neither recurring earnings nor recurring segment profit are intended to represent an alternative to net income or segment profit. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.

     Certain financial information in this press release is also shown including Gas Marketing Services mark-to-market adjustments. This press release is accompanied by a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses the mark-to-market adjustments to better reflect Gas Marketing’s results on a basis that is more consistent with Gas Marketing’s portfolio cash flows and to aid investor understanding. The adjustments reverse forward unrealized mark-to-market gains or losses from derivatives and add realized gains or losses from derivatives for which mark-to-market income has been previously recognized, with the effect that the resulting adjusted segment profit is presented as if mark-to-market accounting had never been applied to Gas Marketing Services’ derivatives. The measure is limited by the fact that it does not reflect potential unrealized future losses or gains on derivative contracts. However, management compensates for this limitation since derivative assets and liabilities do reflect unrealized gains and losses of derivative contracts. Overall, management believes the mark-to-market adjustments provide an alternative measure that more closely matches realized cash flows for the Gas Marketing segment but does not substitute for actual cash flows. We also apply the mark-to-market adjustment and the recurring adjustments to present a measure referred to as recurring income from continuing operations after mark-to-market adjustments.

Adjustment to remove MTM effect

Dollars in millions except for per share amounts

	3rd Quarter						YTD
	2008			2007			2008			2007
Recurring income from cont. ops available to common shareholders	$	370		$	219		$	1,110		$	606
Recurring diluted earnings per common share	$	0.63		$	0.36		$	1.87		$	0.99
Mark-to-Market (MTM) adjustments for Gas Marketing		(61	)		32			(49	)		140
Tax effect of total MTM adjustments		23			(12	)		19			(53	)
After tax MTM adjustments	$	(38	)	$	20		$	(30	)	$	87
Recurring income from cont. ops available to common shareholders after MTM adjust.	$	332		$	239		$	1,080		$	693
Recurring diluted earnings per share after MTM adj.	$	0.57		$	0.39		$	1.82		$	1.14
weighted average shares — diluted (thousands)		589,138			610,651			594,630			611,761

Adjustments have been made to reverse estimated forward unrealized MTM gains/losses and add estimated realized gains/losses from MTM previously recognized, i.e. assumes MTM accounting had never been applied to designated hedges and other derivatives.

Some annual figures may differ from sum of quarterly figures due to rounding.

Reconciliation of Income from Continuing Operations to Recurring Earnings
(UNAUDITED)

	2007															2008
(Dollars in millions, except per-share amounts)	1st Qtr			2nd Qtr			3rd Qtr			4th Qtr			Year			1st Qtr			2nd Qtr			3rd Qtr				Year
Income from continuing operations available to common stockholders	$	170		$	243		$	228		$	206		$	847		$	416		$	419		$	369			$	1,204
Income from continuing operations — diluted earnings per common share	$	0.28		$	0.40		$	0.38		$	0.34		$	1.40		$	0.70		$	0.70		$	0.62			$	2.02
Nonrecurring items:
Exploration & Production
Accrual for royalty litigation contingency	$	—		$	—		$	—		$	4		$	4		$	—		$	—		$	—			$	—
Gain on sale of Peru interests		—			—			—			—			—			(118	)		(30	)		—		��		(148	)
Reserve for receivables from bankrupt counterparty		—			—			—			—			—			—			5			4				9
Impairment of certain natural gas producing properties		—			—			—			—			—			—			—			14				14
Total Exploration & Production nonrecurring items		—			—			—			4			4			(118	)		(25	)		18				(125	)
Gas Pipeline
Change in estimate related to a regulatory liability — NWP		—			(17	)		—			—			(17	)		—			—			—				—
Payments received for terminated firm transportation agreement — NWP		—			(6	)		(12	)		—			(18	)		—			—			—				—
Gain on sale of excess inventory gas — TGPL		—			—			—			—			—			—			(9	)		—				(9	)
Gain on sale of certain south Texas assets — TGPL		—			—			—			—			—			—			—			(10	)			(10	)
Total Gas Pipeline nonrecurring items		—			(23	)		(12	)		—			(35	)		—			(9	)		(10	)			(19	)
Midstream Gas & Liquids
Reversal of a maintenance accrual		(8	)		—			—			—			(8	)		—			—			—				—
Income from a favorable litigation outcome		—			—			—			(12	)		(12	)		—			—			—				—
Reserve for international receivables		—			—			—			9			9			—			—			—				—
Impairment of Carbonate Trend pipeline		—			—			—			10			10			—			—			—				—
Involuntary conversion gain related to Ignacio gas processing plant		—			—			—			—			—			—			(3	)		(6	)			(9	)
Reserve for receivables from bankrupt counterparty		—			—			—			—			—			—			1			—				1
Final earnout payment from 2005 Gulf Liquids asset sale		—			—			—			—			—			—			—			(8	)			(8	)
Charges from Hurricanes Gustav & Ike		—			—			—			—			—			—			—			8				8
Total Midstream Gas & Liquids nonrecurring items		(8	)		—			—			7			(1	)		—			(2	)		(6	)			(8	)
Gas Marketing Services
Accrual for litigation contingencies		—			—			—			20			20			—			—			—				—
Total Gas Marketing Services nonrecurring items		—			—			—			20			20			—			—			—				—
Nonrecurring items included in segment profit (loss)		(8	)		(23	)		(12	)		31			(12	)		(118	)		(36	)		2				(152	)
Nonrecurring items below segment profit (loss)
Early debt retirement costs (Corporate)		—			—			—			19			19			—			—			—				—
Interest related to Gulf Liquids litigation contingency ( Interest accrued — Midstream)		1			1			1			—			3			—			—			—				—
Interest income related to contract termination gain noted above (Investing income — Gas Pipeline — NWP)		—			—			(2	)		—			(2	)		—			—			—				—
Interest related to royalty litigation contingency noted above (Interest accrued — E&P)		—			—			—			1			1			—			—			—				—
Rounding		—			1			(1	)		—			—			—			—			—				—
		1			2			(2	)		20			21			—			—			—				—
Total nonrecurring items		(7	)		(21	)		(14	)		51			9			(118	)		(36	)		2				(152	)
Tax effect for above items(1)(2)		(3	)		1			(5	)		13			6			(45	)		(14	)		1				(58	)
Adjustment for nonrecurring tax-related items(3)		—			—			—			23			23			—			—			—				—
Recurring income from continuing operations available to common stockholders	$	166		$	221		$	219		$	267		$	873		$	343		$	397		$	370			$	1,110
Recurring diluted earnings per common share	$	0.27		$	0.36		$	0.36		$	0.44		$	1.44		$	0.57		$	0.67		$	0.63			$	1.87
Weighted-average shares — diluted (thousands)		611,470			613,172			610,651			604,243			609,866			598,627			596,187			589,138				594,630

(1)	The tax rate applied to nonrecurring items for 2nd quarter 2007 has been adjusted to reverse the effect of certain previous adjustments for nondeductible expenses associated with securities litigiation and related costs, as these expenses are now considered deductible based on an IRS ruling.
(2)	The tax rate applied to nonrecurring items 4th quarter 2007 has been adjusted to reverse the effect of early debt retirement costs considered deductible in 2004 as these expenses are now considered nondeductible.
(3)	The 4th quarter of 2007 includes an adjustment for an income tax contingency.
Note:	The sum of earnings per share for the quarters may not equal the total earnings per share for the year due to changes in the weighted-average number of common shares outstanding.
	The sum of amounts for the quarters may not equal the totals for the year due to rounding.