Exhibit 99.1
NYSE: WMB
Date: April 30, 2009
Williams Reports First-Quarter 2009 Financial Results
| • | | Non-cash, Non-Recurring Venezuela Impairments Lead to Loss for 1Q 2009 |
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| • | | Recurring Adjusted Earnings of $128 Million, $0.22 Per Share in 1Q |
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| • | | Lower Energy Commodity Prices Impact 1Q Recurring Adjusted Results |
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| • | | Gas Pipeline Results Remain Steady |
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| • | | Guidance Updated to Reflect Lower Expected Natural Gas Prices, Unusual Items |
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| • | | Analyst Day Set for May 12 in New York |
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| Quarterly Summary Financial Information | | 1Q 2009 | | | 1Q 2008 | |
| Per share amounts are reported on a fully diluted basis. All | | | | | | | | | | | | |
| amounts are attributable to The Williams Companies, Inc. | | millions | | | per share | | | millions | | | per share | |
| Income (loss) from continuing operations | | | ($165 | ) | | | ($0.29 | ) | | $ | 416 | | | $ | 0.70 | |
| Income (loss) from discontinued operations | | | (7 | ) | | | (0.01 | ) | | | 84 | | | | 0.14 | |
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| Net income (loss) attributable to The Williams Companies, Inc. | | | ($172 | ) | | | ($0.30 | ) | | $ | 500 | | | $ | 0.84 | |
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| Recurring income from continuing operations* | | $ | 106 | | | $ | 0.18 | | | $ | 343 | | | $ | 0.57 | |
| After-tax mark-to-market adjustments | | | 22 | | | | 0.04 | | | | (2 | ) | | | — | |
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| Recurring income from continuing operations — after mark-to-market adjustments* | | $ | 128 | | | $ | 0.22 | | | $ | 341 | | | $ | 0.57 | |
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| * | | 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. |
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TULSA, Okla. — Williams (NYSE:WMB) announced an unaudited net loss attributable to Williams, for first-quarter 2009 of $172 million, or $0.30 per share on a diluted basis, compared with net income of $500 million, or $0.84 per share on a diluted basis for first-quarter 2008.
The drivers of the first-quarter loss attributable to Williams were non-cash charges of approximately $241 million related to the company’s operations and investments in Venezuela. These charges were detailed in the company’s April 29 news release on the topic.
Lower energy commodity prices in first-quarter 2009 impacted results in Exploration & Production and Midstream, as both businesses’ results were significantly lower than first-quarter 2008. The company also recorded $34 million in expenses associated with the early termination of rig contracts in the first quarter. There is more detail on each business in their respective sections of this news release.
Williams (NYSE: WMB) First-Quarter 2009 Financial Results — April 30, 2009 Page 1 of 9
Other factors that contributed to the lower first-quarter 2009 results were the absence of a $118 million pre-tax gain on the sale of certain international interests in first-quarter 2008, as well as higher income from discontinued operations in the 2008 period.
Gas Pipeline’s results, as expected, were steady despite the much lower commodity prices. Other factors that served to mitigate the effect of falling commodity prices include higher natural gas production; Exploration & Production’s hedge positions, which cover a significant portion of its production; and fee-based revenues from certain of Midstream’s gathering and processing services.
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 $128 million, or $0.22 per share for first-quarter 2009. On the same adjusted basis, recurring income from continuing operations was $341 million, or $0.57 per share, for first-quarter 2008.
The lower recurring adjusted results were due primarily to dramatically lower energy commodity prices in first-quarter 2009, compared with the relatively high prices during first-quarter 2008. The lower prices contributed to lower recurring results in the exploration and production and midstream businesses.
The steady results in Gas Pipeline, as well as Exploration & Production’s hedge positions and fee-based revenues in Midstream, partially offset some of negative effect of the lower commodity prices.
A reconciliation of the company’s income from continuing operations to recurring income from continuing operations and mark-to-market adjustments is available at www.williams.com and as an attachment to this news release.
2009 Updated Guidance
Williams has updated its outlook for commodity price assumptions and its earnings, cash flow and capital expenditure outlook for 2009. The table below illustrates the company’s current expectation for energy commodity prices and the corresponding effect on its results. Presented for comparison are the company’s previous expectations as of Feb. 19 when it reported year-end 2008 results.
Williams (NYSE: WMB) First-Quarter 2009 Financial Results — April 30, 2009 Page 2 of 9
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| | | 2009 Assumptions | | 2009 Assumptions |
| | | as of April 30, 2009 | | as of Feb. 19, 2009 |
Natural Gas ($/MMBtu) | | | | | | | | |
| NYMEX | | $ | 4.00 - $5.00 | | | $ | 4.50 - $6.00 | |
| Rockies | | $ | 2.50 - $3.50 | | | $ | 3.00 - $4.50 | |
| San Juan/Mid-Continent | | $ | 2.75 - $3.75 | | | $ | 3.75 - $5.00 | |
Crude Oil — WTI ($/barrell) | | $ | 45 - $60 | | | $ | 40 - $60 | |
Crude-to-Natural Gas Ratio | | | 11.3x - 12.0x | | | | 8.9x - 10.0x | |
Average NGL Margins ($/gallon) | | $ | 0.23 - $0.38 | | | $ | 0.22 - $0.35 | |
Capital Expenditures* | | $ | 2,250 - $2,550 | | | $ | 2,150 - $2,450 | |
Cash Flow from Operations* | | $ | 1,900 - $2,100 | | | $ | 1,900 - $2,200 | |
Recurring Adjusted EPS | | $ | 0.55 - $0.95 | | | $ | 0.60 - $1.10 | |
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| * | | Capital Expenditures and Cash Flow from Operations are in millions of dollars. |
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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.
For 2009, Williams has lowered its consolidated segment profit guidance to a range of $1,325 million to $1,850 million and earnings per share of $0.55 to $0.95. The previous ranges were $1,350 million to $1,925 million and earnings per share of $0.60 to $1.10. The updated expectations for 2009 reflect lower expected net realized average prices on the company’s natural gas production, the expected absence of segment profit from the Venezuela operations, the previously announced increased support for Williams Partners L.P. (NYSE: WPZ), and higher interest expense.
Williams is increasing its previous capital expenditure guidance for 2009 by $100 million. The new range is $2,250 million to $2,550 million. The previous range was $2,150 million to $2,450 million. The increase in the company’s total capital spending guidance for 2009 primarily reflects the company’s previously announced agreement to purchase a 51-percent ownership interest in a newly formed midstream joint venture with Atlas Pipeline Partners L.P. (NYSE: APL).
CEO Perspective
“First-quarter 2009 presented a dramatically different economic and energy commodity environment than first-quarter 2008,” said Steve Malcolm, chairman, president and chief executive officer. “While this year’s earnings were much lower compared with last year’s robust results, we are continuing to execute our 2009 priorities in a very tough environment.
“We are maintaining our strong balance sheet and liquidity — which totaled more than $3 billion at the end of the quarter — and we continue to drive down operating costs through rigorous execution and discipline,” Malcolm said.
Williams (NYSE: WMB) First-Quarter 2009 Financial Results — April 30, 2009 Page 3 of 9
“We also are employing a flexible capital spending plan. While it is significantly reduced from ’08 levels, we can still seize compelling and disciplined growth opportunities, such as our midstream joint venture in the Marcellus Shale and the new NGL pipeline in Canada.”
Business Segment Performance
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| Consolidated Segment Profit (Loss) | | 1Q | |
| Amounts in millions | | 2009 | | | 2008 | |
| Exploration & Production | | $ | 78 | | | $ | 430 | |
| Midstream Gas & Liquids | | | (291 | ) | | | 261 | |
| Gas Pipeline | | | 179 | | | | 180 | |
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| | | | ($34 | ) | | $ | 871 | |
| Gas Marketing Services | | | ($2 | ) | | $ | 21 | |
| Other | | | 1 | | | | 1 | |
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| Consolidated Segment Profit (Loss) | | | ($35 | ) | | $ | 893 | |
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| Recurring Consolidated Segment Profit After | | | |
| Mark-to-Market Adjustments* | | 1Q | |
| Amounts in millions | | 2009 | | | 2008 | |
| Exploration & Production | | $ | 117 | | | $ | 312 | |
| Midstream Gas & Liquids | | | 81 | | | | 261 | |
| Gas Pipeline | | | 179 | | | | 180 | |
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| | | $ | 377 | | | $ | 753 | |
| Gas Marketing after MTM Adjustments | | $ | 34 | | | $ | 18 | |
| Other | | | 1 | | | | 1 | |
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| Recurring Consolidated Segment Profit After Mark-to-Market Adjustments | | $ | 412 | | | $ | 772 | |
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| * | | 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. |
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Exploration & Production
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.
The business reported segment profit of $78 million for first-quarter 2009, compared with segment profit of $430 million in first-quarter 2008. The prior period includes a $118 million pre-tax gain on the sale of certain international interests.
The significant decline in segment profit during the first quarter was due to much lower net realized average prices for natural gas. Higher depletion, depreciation and amortization expenses based on a higher level of production volumes and increased capital costs also impacted the first-quarter segment profit. The company also recorded the previously referenced $34 million in expenses associated with the early termination of rig
Williams (NYSE: WMB) First-Quarter 2009 Financial Results — April 30, 2009 Page 4 of 9
contracts in the first quarter. These termination expenses were a result of reductions in 2009 drilling activities in the Piceance basin.
Higher natural gas production partially offset these negative impacts in the first quarter. Although natural gas production grew significantly from first-quarter 2008 to first-quarter 2009, production is expected to decline somewhat throughout 2009 because of the company’s reduced rig count.
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| Average Daily Production | | 1Q | | | | |
| Amounts in million cubic feet equivalent | | | | | | | | | |
| of natural gas (MMcfe) | | 2009 | | | 2008 | | | Growth rate | |
| Piceance Basin | | | 710 | | | | 607 | | | | 17 | % |
| Powder River Basin | | | 265 | | | | 209 | | | | 27 | % |
| Other Basins | | | 250 | | | | 197 | | | | 27 | % |
| U.S. Interests only | | | 1,225 | | | | 1,013 | | | | 21 | % |
| U.S. & International Interests | | | 1,278 | | | | 1,062 | | | | 20 | % |
During first-quarter 2009, Williams’ net realized average price for U.S. production was $4.21 per thousand cubic feet of natural gas equivalent (Mcfe), which was 36 percent lower than the $6.58 per Mcfe realized in first-quarter 2008.
Midstream Gas & Liquids
Midstream provides natural gas gathering and processing, deepwater production handling and oil transportation, natural gas liquids (NGL) fractionation and storage services and olefins production.
The business reported a segment loss of $291 million for first-quarter 2009, compared with segment profit of $261 million for first-quarter 2008.
The significant decline in segment profit for the year is primarily because of the non-cash charges related to the company’s Venezuela assets. As noted earlier, these charges were fully detailed in the company’s April 29 news release on the subject.
Midstream’s recurring segment profit for first-quarter 2009 was $81 million, compared with $261 million on a recurring basis in first-quarter 2008.
The decline on a recurring basis was primarily due to significantly lower NGL margins. Although decreases in gas prices and lower NGL transportation costs on Overland Pass Pipeline partially mitigated the unfavorable impact of lower NGL prices, per-unit margins were 69 percent lower and overall NGL margins were $138 million lower.
The Venezuela operating results also contributed to the decline in recurring segment profit in the first quarter, as the 2008 period included $26 million related to those operations. Beginning in 2009, the company ceased recognizing Venezuela-related revenue and began reporting the results of its Venezuela operations as non-recurring.
NGL equity volumes sold in first-quarter 2009 were slightly lower at 292 million gallons compared with 308 million gallons in the same period in 2008. NGL volumes were unfavorably impacted in the first-quarter
Williams (NYSE: WMB) First-Quarter 2009 Financial Results — April 30, 2009 Page 5 of 9
2008 primarily due to an increase in inventory as the company transitioned from selling at the plant to shipping volumes through a third-party pipeline for sale downstream.
During first-quarter 2009, volumes were unfavorably impacted primarily due to periods of reduced NGL recoveries, primarily in the Gulf Coast region. The reduced NGL recoveries were due to unfavorable NGL economics. Also, certain gas processing agreements converted from keep-whole to fee-based, which further reduced equity volumes during the quarter.
Gas Pipeline
Gas Pipeline, which primarily delivers natural gas to markets along the Eastern Seaboard, in Florida and in the Pacific Northwest, reported first-quarter 2009 segment profit of $179 million, compared with $180 million for first-quarter 2008.
During first-quarter 2009, Gas Pipeline had increased revenues from the Sentinel expansion, which was placed in service in December 2008, and Transco’s Park and Loan service. The business also had lower project development costs and increased earnings from the company’s 50-percent interest in Gulfstream Natural Gas Systems LLC.
These increases were offset by higher operating costs, resulting primarily from higher depreciation, operational and maintenance, and pension expenses.
Gas Marketing Services
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 NGLs for Midstream.
In addition, Gas Marketing manages various natural-gas related contracts, such as transportation, storage, and related hedges. It also provides marketing services to third-party customers and suppliers. 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.
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| Gas Marketing Recurring Segment Profit Adjusted for | | | |
| Mark-to-Market Effect* | | 1Q | |
| Amounts in millions | | 2009 | | | 2008 | |
| Segment profit (loss) | | | ($2 | ) | | $ | 21 | |
| Nonrecurring adjustments | | | — | | | | — | |
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| Recurring segment profit (loss) | | | ($2 | ) | | $ | 21 | |
| Mark-to-market adjustments | | | 36 | | | | (3 | ) |
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| Recurring segment profit after MTM adjustments | | $ | 34 | | | $ | 18 | |
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| * | | 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. |
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Williams (NYSE: WMB) First-Quarter 2009 Financial Results — April 30, 2009 Page 6 of 9
The increase in Gas Marketing’s recurring segment profit after mark-to-market adjustments was primarily the result of a $7 million increase in realized gains associated with risk management activities on contracted storage and a $13 million decrease in realized losses associated with certain proprietary and legacy positions.
These gains were offset by a $7 million write down of storage inventory to market prices at March 31, 2009.
Although not significant for the first-quarter 2009 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.
Williams’ Liquidity, Financial Strength Remain Strong
As of April 28, 2009, Williams had approximately $1.8 billion of cash and cash equivalents, which included approximately $1.2 billion in available U.S. unrestricted cash. The company also had approximately $1.8 billion of available credit capacity under the company’s credit facilities, excluding $500 million in credit facilities that expire in 2009. On that same basis, Williams’ total liquidity as of April 28 was in excess of $3.0 billion.
Williams has no significant debt maturities until 2011 and the company’s $1.43 billion primary credit facility does not expire until May 2012. Williams is rated investment grade by three of the major rating agencies.
Company to Host Analyst Meeting in New York City
Williams will host an analyst meeting in New York City on Tuesday, May 12. During the meeting, the company’s senior management will present highlights and an overview of Williams and the master limited partnerships Williams Partners L.P. (NYSE: WPZ) and Williams Pipeline Partners L.P. (NYSE: WMZ).
The meeting will begin at 8:30 a.m. EDT. The morning session will focus on Williams, while the afternoon session will focus on the two MLPs.
Both sessions will be broadcast live via webcast. Participants are encouraged to access the webcast at www.williams.com, www.williamslp.com, or www.williamspipelinepartners.com. Slides will be available the morning of May 12 on all three web sites for viewing, downloading and printing.
A replay of the analyst meeting webcast will be available for two weeks following the event at the web sites listed above.
Today’s Analyst Call
Management will discuss the first-quarter 2009 results and outlook for 2009 during a live webcast beginning at 9:30 a.m. EDT today. Participants are encouraged to access the webcast and corresponding slides for viewing, downloading and printing at www.williams.com.
Williams (NYSE: WMB) First-Quarter 2009 Financial Results — April 30, 2009 Page 7 of 9
A limited number of phone lines also will be available at (877) 548-7911. International callers should dial (719) 325-4928. Replays of the first-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 plans to 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.
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Contact: | | Jeff Pounds |
| | | Williams (media relations) |
| | | (918) 573-3332 |
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| | | Travis Campbell |
| | | Williams (investor relations) |
| | | (918) 573-2944 |
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| | | Richard George |
| | | Williams (investor relations) |
| | | (918) 573-3679 |
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| | | Sharna Reingold |
| | | Williams (investor relations) |
| | | (918) 573-2078 |
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Our reports, filings, and other public announcements may 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 present intentions and our assumptions about future events and are subject to risks, uncertainties, and other factors. In addition to any assumptions, risks, uncertainties or other factors referred to specifically in connection with such statements, other factors not specifically referenced could cause our actual results to differ materially from the results expressed or implied in any forward-looking statements. Those factors include, among others:
| | • | | availability of supplies (including the uncertainties inherent in assessing, estimating, acquiring and developing future natural gas reserves), market demand, volatility of prices, and the availability and cost of capital; |
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| | • | | inflation, interest rates, fluctuation in foreign exchange, 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); |
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| | • | | the strength and financial resources of our competitors; |
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| | • | | development of alternative energy sources; |
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| | • | | the impact of operational and development hazards; |
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| | • | | costs of, changes in, or the results of laws, government regulations (including proposed climate change legislation), environmental liabilities, litigation, and rate proceedings; |
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| | • | | our costs and funding obligations for defined benefit pension plans and other postretirement benefit plans; |
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| | • | | changes in maintenance and construction costs; |
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| | • | | changes in the current geopolitical situation; |
Williams (NYSE: WMB) First-Quarter 2009 Financial Results — April 30, 2009 Page 8 of 9
| | • | | 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; |
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| | • | | risks associated with future weather conditions; |
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| | • | | our exposure to the credit risks of our customers; |
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| | • | | acts of terrorism, and |
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| | • | | additional risks described in our filings with the Securities and Exchange Commission. |
Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. In addition to causing our actual results to differ, the factors listed above may cause our intentions to change. Such changes in our intentions may also cause our results to differ. We disclaim any obligation to and do not intend to publicly update or revise any forward-looking statements or changes to our intentions, whether as a result of new information, future events or otherwise.
Williams (NYSE: WMB) First-Quarter 2009 Financial Results — April 30, 2009 Page 9 of 9
Financial Highlights and Operating Statistics
(UNAUDITED)
Final
March 31, 2009
Reconciliation of Income (Loss) from Continuing Operations Attributable to The Williams Companies, Inc. to Recurring Earnings
(UNAUDITED)
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| | | 2008 | | | 2009 | |
| (Dollars in millions, except per-share amounts) | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | Year | | | 1st Qtr | |
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Income (loss) from continuing operations attributable to The Williams Companies, Inc. available to common stockholders | | $ | 416 | | | $ | 419 | | | $ | 369 | | | $ | 130 | | | $ | 1,334 | | | $ | (165 | ) |
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Income (loss) from continuing operations — diluted earnings per common share | | $ | 0.70 | | | $ | 0.70 | | | $ | 0.62 | | | $ | 0.23 | | | $ | 2.26 | | | $ | (0.29 | ) |
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Nonrecurring items: | | | | | | | | | | | | | | | | | | | | | | | | |
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Exploration & Production (E&P) | | | | | | | | | | | | | | | | | | | | | | | | |
| Gain on sale of Peru interests | | $ | (118 | ) | | $ | (30 | ) | | $ | — | | | $ | — | | | $ | (148 | ) | | $ | — | |
| Reserve for receivables from bankrupt counterparty | | | — | | | | 5 | | | | 4 | | | | — | | | | 9 | | | | — | |
| Impairments of property in the Arkoma basin | | | — | | | | — | | | | 14 | | | | 129 | | | | 143 | | | | 5 | |
| Accrual for Wyoming severance taxes | | | — | | | | — | | | | — | | | | 34 | | | | 34 | | | | — | |
| Penalties from early release of drilling rigs | | | — | | | | — | | | | — | | | | — | | | | — | | | | 34 | |
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Total Exploration & Production nonrecurring items | | | (118 | ) | | | (25 | ) | | | 18 | | | | 163 | | | | 38 | | | | 39 | |
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Gas Pipeline | | | | | | | | | | | | | | | | | | | | | | | | |
| Gain on sale of excess inventory gas — TGPL | | | — | | | | (9 | ) | | | — | | | | — | | | | (9 | ) | | | — | |
| Gain on sale of certain south Texas assets — TGPL | | | — | | | | — | | | | (10 | ) | | | — | | | | (10 | ) | | | — | |
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Total Gas Pipeline nonrecurring items | | | — | | | | (9 | ) | | | (10 | ) | | | — | | | | (19 | ) | | | — | |
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Midstream Gas & Liquids (MGL) | | | | | | | | | | | | | | | | | | | | | | | | |
| Impairment of Carbonate Trend pipeline | | | — | | | | — | | | | — | | | | 6 | | | | 6 | | | | — | |
| Involuntary conversion gain related to Ignacio gas processing plant | | | — | | | | (3 | ) | | | (6 | ) | | | (3 | ) | | | (12 | ) | | | 1 | |
| 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 | | | | 5 | | | | 13 | | | | — | |
| Involuntary conversion gain from hurricane damage at Cameron | | | — | | | | — | | | | — | | | | (5 | ) | | | (5 | ) | | | — | |
| Gulf Liquids litigation partial settlement | | | — | | | | — | | | | — | | | | (32 | ) | | | (32 | ) | | | — | |
| Loss associated with Venezuela operations and investments | | | — | | | | — | | | | — | | | | — | | | | — | | | | 371 | |
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Total Midstream Gas & Liquids nonrecurring items | | | — | | | | (2 | ) | | | (6 | ) | | | (29 | ) | | | (37 | ) | | | 372 | |
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| Nonrecurring items included in segment profit (loss) | | | (118 | ) | | | (36 | ) | | | 2 | | | | 134 | | | | (18 | ) | | | 411 | |
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Nonrecurring items below segment profit (loss) | | | | | | | | | | | | | | | | | | | | | | | | |
Interest related to Gulf Liquids litigation partial settlement — MGL | | | — | | | | — | | | | — | | | | (11 | ) | | | (11 | ) | | | — | |
Interest related to Wyoming severance taxes — E&P | | | — | | | | — | | | | — | | | | 4 | | | | 4 | | | | — | |
Loss associated with Venezuela operations and investments — MGL & E&P | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15 | |
Loss associated with Venezuela operations and investments attributable to noncontrolling interests — MGL | | | — | | | | — | | | | — | | | | — | | | | — | | | | (69 | ) |
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| | | | — | | | | — | | | | — | | | | (7 | ) | | | (7 | ) | | | (54 | ) |
Total nonrecurring items | | | (118 | ) | | | (36 | ) | | | 2 | | | | 127 | | | | (25 | ) | | | 357 | |
Tax effect for above items[1] | | | (45 | ) | | | (14 | ) | | | 1 | | | | 49 | | | | (9 | ) | | | 86 | |
| Adjustment for nonrecurring tax-related items | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Recurring income from continuing operations available to common stockholders | | $ | 343 | | | $ | 397 | | | $ | 370 | | | $ | 208 | | | $ | 1,318 | | | $ | 106 | |
| | | | | | | | | | | | | | | | | | | |
Recurring diluted earnings per common share | | $ | 0.57 | | | $ | 0.67 | | | $ | 0.63 | | | $ | 0.35 | | | $ | 2.23 | | | $ | 0.18 | |
| | | | | | | | | | | | | | | | | | | |
Weighted-average shares — diluted (thousands) | | | 598,627 | | | | 596,187 | | | | 589,138 | | | | 587,057 | | | | 592,719 | | | | 579,495 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | |
| [1] | | The tax effect for the first quarter of 2009 includes a benefit of $71 million related to Midstream’s impairments and write-offs associated with Venezuela operations. |
| |
| 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. |
Consolidated Statement of Operations
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2008 | | | 2009 | |
| (Dollars in millions, except per-share amounts) | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | Year | | | 1st Qtr | |
| |
| Revenues | | $ | 3,204 | | | $ | 3,701 | | | $ | 3,245 | | | $ | 2,202 | | | $ | 12,352 | | | $ | 2,128 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Segment costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
| Costs and operating expenses | | | 2,353 | | | | 2,719 | | | | 2,364 | | | | 1,720 | | | | 9,156 | | | | 1,668 | |
| Selling, general and administrative expenses | | | 112 | | | | 124 | | | | 128 | | | | 127 | | | | 491 | | | | 123 | |
| Provision for doubtful accounts and notes | | | (1 | ) | | | 7 | | | | 5 | | | | 2 | | | | 13 | | | | 50 | |
| Other (income) expense — net | | | (117 | ) | | | (35 | ) | | | — | | | | 70 | | | | (82 | ) | | | 270 | |
| | | | | | | | | | | | | | | | | | | |
| Total segment costs and expenses | | | 2,347 | | | | 2,815 | | | | 2,497 | | | | 1,919 | | | | 9,578 | | | | 2,111 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Equity earnings | | | 36 | | | | 37 | | | | 54 | | | | 10 | | | | 137 | | | | 23 | |
| Income (loss) from investments | | | — | | | | — | | | | — | | | | 1 | | | | 1 | | | | (75 | ) |
Total segment profit (loss) | | | 893 | | | | 923 | | | | 802 | | | | 294 | | | | 2,912 | | | | (35 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Reclass equity earnings | | | (36 | ) | | | (37 | ) | | | (54 | ) | | | (10 | ) | | | (137 | ) | | | (23 | ) |
| Reclass (income) loss from investments | | | — | | | | — | | | | — | | | | (1 | ) | | | (1 | ) | | | 75 | |
| General corporate expenses | | | (42 | ) | | | (42 | ) | | | (34 | ) | | | (31 | ) | | | (149 | ) | | | (40 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating income (loss) | | | 815 | | | | 844 | | | | 714 | | | | 252 | | | | 2,625 | | | | (23 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest accrued | | | (165 | ) | | | (165 | ) | | | (166 | ) | | | (157 | ) | | | (653 | ) | | | (166 | ) |
| Interest capitalized | | | 8 | | | | 16 | | | | 16 | | | | 19 | | | | 59 | | | | 20 | |
| Investing income (loss) | | | 55 | | | | 55 | | | | 65 | | | | 16 | | | | 191 | | | | (61 | ) |
| Early debt retirement costs | | | — | | | | — | | | | — | | | | (1 | ) | | | (1 | ) | | | — | |
| Other income (expense) — net | | | 5 | | | | — | | | | 2 | | | | (7 | ) | | | — | | | | (2 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations before income taxes | | | 718 | | | | 750 | | | | 631 | | | | 122 | | | | 2,221 | | | | (232 | ) |
| Provision (benefit) for income taxes | | | 263 | | | | 268 | | | | 207 | | | | (25 | ) | | | 713 | | | | (15 | ) |
| | | | | | | | | | | | | | | | | | | |
Income (loss) from continuing operations | | | 455 | | | | 482 | | | | 424 | | | | 147 | | | | 1,508 | | | | (217 | ) |
| Income (loss) from discontinued operations | | | 84 | | | | 18 | | | | (3 | ) | | | (15 | ) | | | 84 | | | | (7 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 539 | | | $ | 500 | | | $ | 421 | | | $ | 132 | | | $ | 1,592 | | | $ | (224 | ) |
| Less: Net income (loss) attributable to noncontrolling interests | | | 39 | | | | 63 | | | | 55 | | | | 17 | | | | 174 | | | | (52 | ) |
| | | | | | | | | | | | | | | | | | | |
Net income (loss) attributable to The Williams Companies, Inc. | | $ | 500 | | | $ | 437 | | | $ | 366 | | | $ | 115 | | | $ | 1,418 | | | $ | (172 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Amounts attributable to The Williams Companies, Inc.: | | | | | | | | | | | | | | | | | | | | | | | | |
| Income (loss) from continuing operations | | $ | 416 | | | $ | 419 | | | $ | 369 | | | $ | 130 | | | $ | 1,334 | | | $ | (165 | ) |
| Income (loss) from discontinued operations | | | 84 | | | | 18 | | | | (3 | ) | | | (15 | ) | | | 84 | | | | (7 | ) |
| | | | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 500 | | | $ | 437 | | | $ | 366 | | | $ | 115 | | | $ | 1,418 | | | $ | (172 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Diluted earnings (loss) per common share: | | | | | | | | | | | | | | | | | | | | | | | | |
Income (loss) from continuing operations | | $ | 0.70 | | | $ | 0.70 | | | $ | 0.62 | | | $ | 0.23 | | | $ | 2.26 | | | $ | (0.29 | ) |
| Income (loss) from discontinued operations | | | 0.14 | | | | 0.03 | | | | — | | | | (0.03 | ) | | | 0.14 | | | | (0.01 | ) |
| | | | | | | | | | | | | | | | | | | |
Net income (loss) | | $ | 0.84 | | | $ | 0.73 | | | $ | 0.62 | | | $ | 0.20 | | | $ | 2.40 | | | $ | (0.30 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted-average number of shares used in computation (thousands) | | | 598,627 | | | | 596,187 | | | | 589,138 | | | | 587,057 | | | | 592,719 | | | | 579,495 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Common shares outstanding at end of period (thousands) | | | 584,025 | | | | 579,117 | | | | 578,641 | | | | 579,052 | | | | 579,052 | | | | 580,072 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Market price per common share (end of period) | | $ | 32.98 | | | $ | 40.31 | | | $ | 23.65 | | | $ | 14.48 | | | $ | 14.48 | | | $ | 11.38 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Common dividends per share | | $ | 0.10 | | | $ | 0.11 | | | $ | 0.11 | | | $ | 0.11 | | | $ | 0.43 | | | $ | 0.11 | |
| | |
| 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. |
Reconciliation of Segment Profit (Loss) to Recurring Segment Profit (Loss)
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2008 | | | 2009 | |
| (Dollars in millions) | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | Year | | | 1st Qtr | |
| |
Segment profit (loss): | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Exploration & Production | | $ | 430 | | | $ | 496 | | | $ | 361 | | | $ | (27 | ) | | $ | 1,260 | | | $ | 78 | |
| Gas Pipeline | | | 180 | | | | 179 | | | | 173 | | | | 157 | | | | 689 | | | | 179 | |
| Midstream Gas & Liquids | | | 261 | | | | 295 | | | | 254 | | | | 153 | | | | 963 | | | | (291 | ) |
| Gas Marketing Services | | | 21 | | | | (46 | ) | | | 16 | | | | 12 | | | | 3 | | | | (2 | ) |
| Other | | | 1 | | | | (1 | ) | | | (2 | ) | | | (1 | ) | | | (3 | ) | | | 1 | |
| | | | | | | | | | | | | | | | | | | |
Total segment profit (loss) | | $ | 893 | | | $ | 923 | | | $ | 802 | | | $ | 294 | | | $ | 2,912 | | | $ | (35 | ) |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Nonrecurring adjustments: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Exploration & Production | | $ | (118 | ) | | $ | (25 | ) | | $ | 18 | | | $ | 163 | | | $ | 38 | | | $ | 39 | |
| Gas Pipeline | | | — | | | | (9 | ) | | | (10 | ) | | | — | | | | (19 | ) | | | — | |
| Midstream Gas & Liquids | | | — | | | | (2 | ) | | | (6 | ) | | | (29 | ) | | | (37 | ) | | | 372 | |
| Gas Marketing Services | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Other | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | |
Total segment nonrecurring adjustments | | $ | (118 | ) | | $ | (36 | ) | | $ | 2 | | | $ | 134 | | | $ | (18 | ) | | $ | 411 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Recurring segment profit (loss): | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Exploration & Production | | $ | 312 | | | $ | 471 | | | $ | 379 | | | $ | 136 | | | $ | 1,298 | | | $ | 117 | |
| Gas Pipeline | | | 180 | | | | 170 | | | | 163 | | | | 157 | | | | 670 | | | | 179 | |
| Midstream Gas & Liquids | | | 261 | | | | 293 | | | | 248 | | | | 124 | | | | 926 | | | | 81 | |
| Gas Marketing Services | | | 21 | | | | (46 | ) | | | 16 | | | | 12 | | | | 3 | | | | (2 | ) |
| Other | | | 1 | | | | (1 | ) | | | (2 | ) | | | (1 | ) | | | (3 | ) | | | 1 | |
| | | | | | | | | | | | | | | | | | | |
Total recurring segment profit | | $ | 775 | | | $ | 887 | | | $ | 804 | | | $ | 428 | | | $ | 2,894 | | | $ | 376 | |
| | | | | | | | | | | | | | | | | | | |
| | |
| Note: | | Segment profit (loss) includes equity earnings and income (loss) from investments reported in investing income (loss) in the Consolidated Statement of Operations. Equity earnings results from investments accounted for under the equity method. Income (loss) from investments results from the management of certain equity investments. |
Exploration & Production
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2008 | | | 2009 | |
| (Dollars in millions) | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | Year | | | 1st Qtr | |
| Revenues: | | | | | | | | | | | | | | | | | | | | | | | | |
| Production | | $ | 617 | | | $ | 826 | | | $ | 715 | | | $ | 486 | | | $ | 2,644 | | | $ | 479 | |
| Gas management | | | 86 | | | | 106 | | | | 95 | | | | 68 | | | | 355 | | | | 48 | |
| Net nonqualified hedge derivative income (loss) | | | (2 | ) | | | (14 | ) | | | 18 | | | | (1 | ) | | | 1 | | | | (2 | ) |
| International | | | 17 | | | | 19 | | | | 18 | | | | 18 | | | | 72 | | | | 17 | |
| Other | | | 10 | | | | 11 | | | | 15 | | | | 13 | | | | 49 | | | | 11 | |
| | | | | | | | | | | | | | | | | | | |
| Total revenues | | | 728 | | | | 948 | | | | 861 | | | | 584 | | | | 3,121 | | | | 553 | |
| Segment costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
| Depreciation, depletion and amortization (including International) | | | 166 | | | | 182 | | | | 187 | | | | 202 | | | | 737 | | | | 219 | |
| Lease and other operating expenses | | | 60 | | | | 61 | | | | 72 | | | | 73 | | | | 266 | | | | 71 | |
| Operating taxes | | | 49 | | | | 69 | | | | 65 | | | | 56 | | | | 239 | | | | 28 | |
| Exploration expense | | | 2 | | | | 1 | | | | 3 | | | | 21 | | | | 27 | | | | 12 | |
| Third party gathering expense | | | 10 | | | | 13 | | | | 12 | | | | 15 | | | | 50 | | | | 15 | |
| Selling, general and administrative expenses (including International) | | | 37 | | | | 44 | | | | 49 | | | | 46 | | | | 176 | | | | 43 | |
| Gas management expenses | | | 84 | | | | 105 | | | | 94 | | | | 65 | | | | 348 | | | | 47 | |
| International (excluding DD&A and SG&A) | | | 6 | | | | 10 | | | | 9 | | | | 11 | | | | 36 | | | | 7 | |
| Other (income) expense — net | | | (113 | ) | | | (27 | ) | | | 14 | | | | 128 | | | | 2 | | | | 37 | |
| | | | | | | | | | | | | | | | | | | |
| Total segment costs and expenses | | | 301 | | | | 458 | | | | 505 | | | | 617 | | | | 1,881 | | | | 479 | |
| Equity earnings | | | 3 | | | | 6 | | | | 5 | | | | 6 | | | | 20 | | | | 4 | |
| | | | | | | | | | | | | | | | | | | |
Reported segment profit | | | 430 | | | | 496 | | | | 361 | | | | (27 | ) | | | 1,260 | | | | 78 | |
| Nonrecurring adjustments | | | (118 | ) | | | (25 | ) | | | 18 | | | | 163 | | | | 38 | | | | 39 | |
| | | | | | | | | | | | | | | | | | | |
Recurring segment profit | | $ | 312 | | | $ | 471 | | | $ | 379 | | | $ | 136 | | | $ | 1,298 | | | $ | 117 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Operating statistics | | | | | | | | | | | | | | | | | | | | | | | | |
Domestic: | | | | | | | | | | | | | | | | | | | | | | | | |
| Total domestic net volumes (Bcfe) | | | 92.2 | | | | 101.0 | | | | 100.8 | | | | 106.4 | | | | 400.4 | | | | 110.3 | |
| Net domestic volumes per day (MMcfe/d) | | | 1,013 | | | | 1,110 | | | | 1,096 | | | | 1,156 | | | | 1,094 | | | | 1,225 | |
| Net domestic realized price ($/Mcfe) | | $ | 6.580 | | | $ | 8.056 | | | $ | 6.971 | | | $ | 4.428 | | | $ | 6.479 | | | $ | 4.205 | |
| Production taxes per Mcfe | | $ | 0.529 | | | $ | 0.683 | | | $ | 0.648 | | | $ | 0.525 | | | $ | 0.597 | | | $ | 0.254 | |
| Lease and other operating expense per Mcfe | | $ | 0.653 | | | $ | 0.606 | | | $ | 0.712 | | | $ | 0.685 | | | $ | 0.664 | | | $ | 0.649 | |
| | |
| (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) | | | 5.7 | | | | 5.7 | | | | 5.9 | | | | 6.0 | | | | 23.3 | | | | 6.1 | |
| Volumes per day (MMcfe/d) | | | 63 | | | | 62 | | | | 64 | | | | 66 | | | | 64 | | | | 67 | |
| Volumes net to Williams (after minority interest) (Bcfe) | | | 4.5 | | | | 4.4 | | | | 4.6 | | | | 4.8 | | | | 18.3 | | | | 4.7 | |
| Volumes net to Williams per day (MMcfe/d) | | | 49 | | | | 49 | | | | 50 | | | | 52 | | | | 50 | | | | 53 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Total Domestic and International: | | | | | | | | | | | | | | | | | | | | | | | | |
| Volumes net to Williams (after minority interest) (Bcfe) | | | 96.7 | | | | 105.4 | | | | 105.4 | | | | 111.2 | | | | 418.7 | | | | 115.0 | |
| Volumes net to Williams per day (MMcfe/d) | | | 1,062 | | | | 1,159 | | | | 1,146 | | | | 1,208 | | | | 1,144 | | | | 1,278 | |
4
Gas Pipeline
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2008 | | | 2009 | |
| (Dollars in millions) | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | Year | | | 1st Qtr | |
| Revenues: | | | | | | | | | | | | | | | | | | | | | | | | |
| Northwest Pipeline | | $ | 107 | | | $ | 107 | | | $ | 108 | | | $ | 113 | | | $ | 435 | | | $ | 112 | |
| Transcontinental Gas Pipe Line | | | 305 | | | | 299 | | | | 299 | | | | 296 | | | | 1,199 | | | | 290 | |
| Other | | | 1 | | | | — | | | | — | | | | (1 | ) | | | — | | | | (1 | ) |
| | | | | | | | | | | | | | | | | | | |
| Total revenues | | | 413 | | | | 406 | | | | 407 | | | | 408 | | | | 1,634 | | | | 401 | |
| Segment costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
| Costs and operating expenses | | | 201 | | | | 207 | | | | 210 | | | | 222 | | | | 840 | | | | 195 | |
| Selling, general and administrative expenses | | | 36 | | | | 40 | | | | 42 | | | | 39 | | | | 157 | | | | 42 | |
| Other (income) expense — net | | | 6 | | | | (5 | ) | | | 3 | | | | 3 | | | | 7 | | | | — | |
| | | | | | | | | | | | | | | | | | | |
| Total segment costs and expenses | | | 243 | | | | 242 | | | | 255 | | | | 264 | | | | 1,004 | | | | 237 | |
| Equity earnings | | | 10 | | | | 15 | | | | 21 | | | | 13 | | | | 59 | | | | 15 | |
| Reported segment profit: | | | | | | | | | | | | | | | | | | | | | | | | |
| Northwest Pipeline | | | 53 | | | | 52 | | | | 56 | | | | 57 | | | | 218 | | | | 58 | |
| Transcontinental Gas Pipe Line | | | 121 | | | | 118 | | | | 107 | | | | 91 | | | | 437 | | | | 106 | |
| Other | | | 6 | | | | 9 | | | | 10 | | | | 9 | | | | 34 | | | | 15 | |
| | | | | | | | | | | | | | | | | | | |
Total reported segment profit | | | 180 | | | | 179 | | | | 173 | | | | 157 | | | | 689 | | | | 179 | |
| Nonrecurring adjustments: | | | | | | | | | | | | | | | | | | | | | | | | |
| Northwest Pipeline | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Transcontinental Gas Pipe Line | | | — | | | | (9 | ) | | | (10 | ) | | | — | | | | (19 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | |
| Total nonrecurring adjustments | | | — | | | | (9 | ) | | | (10 | ) | | | — | | | | (19 | ) | | | — | |
| Recurring segment profit: | | | | | | | | | | | | | | | | | | | | | | | | |
| Northwest Pipeline | | | 53 | | | | 52 | | | | 56 | | | | 57 | | | | 218 | | | | 58 | |
| Transcontinental Gas Pipe Line | | | 121 | | | | 109 | | | | 97 | | | | 91 | | | | 418 | | | | 106 | |
| Other | | | 6 | | | | 9 | | | | 10 | | | | 9 | | | | 34 | | | | 15 | |
| | | | | | | | | | | | | | | | | | | |
Total recurring segment profit | | $ | 180 | | | $ | 170 | | | $ | 163 | | | $ | 157 | | | $ | 670 | | | $ | 179 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Operating statistics | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Northwest Pipeline | | | | | | | | | | | | | | | | | | | | | | | | |
| Throughput (TBtu) | | | 219.8 | | | | 171.0 | | | | 179.5 | | | | 211.1 | | | | 781.4 | | | | 224.0 | |
| Average daily transportation volumes (TBtu) | | | 2.4 | | | | 1.9 | | | | 2.0 | | | | 2.3 | | | | 2.1 | | | | 2.5 | |
| Average daily firm reserved capacity (TBtu) | | | 2.6 | | | | 2.5 | | | | 2.5 | | | | 2.5 | | | | 2.5 | | | | 2.5 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Transcontinental Gas Pipe Line | | | | | | | | | | | | | | | | | | | | | | | | |
| Throughput (TBtu) | | | 536.5 | | | | 443.0 | | | | 448.5 | | | | 482.4 | | | | 1,910.4 | | | | 549.7 | |
| Average daily transportation volumes (TBtu) | | | 5.9 | | | | 4.9 | | | | 4.9 | | | | 5.2 | | | | 5.2 | | | | 6.1 | |
| Average daily firm reserved capacity (TBtu) | | | 7.0 | | | | 6.7 | | | | 6.6 | | | | 6.8 | | | | 6.8 | | | | 7.0 | |
5
Midstream Gas & Liquids
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2008 | | | 2009 | |
| (Dollars in millions) | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | Year | | | 1st Qtr | |
| Revenues: | | | | | | | | | | | | | | | | | | | | | | | | |
| Gathering & processing | | $ | 97 | | | $ | 108 | | | $ | 105 | | | $ | 104 | | | $ | 414 | | | $ | 107 | |
| Venezuela fee revenue | | | 40 | | | | 44 | | | | 43 | | | | 39 | | | | 166 | | | | — | |
| NGL sales from gas processing | | | 383 | | | | 473 | | | | 397 | | | | 270 | | | | 1,523 | | | | 150 | |
| Production handling and transportation | | | 27 | | | | 29 | | | | 24 | | | | 28 | | | | 108 | | | | 33 | |
| Olefins sales (including Gulf and Canada) | | | 325 | | | | 335 | | | | 319 | | | | 146 | | | | 1,125 | | | | 143 | |
| Marketing sales | | | 1,178 | | | | 1,372 | | | | 1,094 | | | | 533 | | | | 4,177 | | | | 657 | |
| Other revenues | | | 51 | | | | 57 | | | | 50 | | | | 58 | | | | 216 | | | | 38 | |
| | | | | | | | | | | | | | | | | | | |
| | | | 2,101 | | | | 2,418 | | | | 2,032 | | | | 1,178 | | | | 7,729 | | | | 1,128 | |
| Intrasegment eliminations | | | (544 | ) | | | (664 | ) | | | (596 | ) | | | (283 | ) | | | (2,087 | ) | | | (229 | ) |
| | | | | | | | | | | | | | | | | | | |
| Total revenues | | | 1,557 | | | | 1,754 | | | | 1,436 | | | | 895 | | | | 5,642 | | | | 899 | |
| Segment costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
| NGL cost of goods sold | | | 187 | | | | 286 | | | | 196 | | | | 101 | | | | 770 | | | | 92 | |
| Olefins cost of goods sold | | | 280 | | | | 279 | | | | 288 | | | | 132 | | | | 979 | | | | 119 | |
| Marketing cost of goods sold | | | 1,180 | | | | 1,357 | | | | 1,118 | | | | 615 | | | | 4,270 | | | | 652 | |
| Venezuela operating costs | | | 21 | | | | 22 | | | | 20 | | | | 23 | | | | 86 | | | | 18 | |
| Operating costs | | | 168 | | | | 157 | | | | 165 | | | | 172 | | | | 662 | | | | 153 | |
| Other |
| Selling, general and administrative expenses | | | 34 | | | | 39 | | | | 36 | | | | 35 | | | | 144 | | | | 83 | |
| Other (income) expense — net | | | (7 | ) | | | (1 | ) | | | (17 | ) | | | (61 | ) | | | (86 | ) | | | 231 | |
| Intrasegment eliminations | | | (544 | ) | | | (664 | ) | | | (596 | ) | | | (283 | ) | | | (2,087 | ) | | | (229 | ) |
| | | | | | | | | | | | | | | | | | | |
| Total segment costs and expenses | | | 1,319 | | | | 1,475 | | | | 1,210 | | | | 734 | | | | 4,738 | | | | 1,119 | |
| Equity earnings | | | 23 | | | | 16 | | | | 28 | | | | (9 | ) | | | 58 | | | | 4 | |
| Income from investments | | | — | | | | — | | | | — | | | | 1 | | | | 1 | | | | (75 | ) |
| | | | | | | | | | | | | | | | | | | |
Reported segment profit | | | 261 | | | | 295 | | | | 254 | | | | 153 | | | | 963 | | | | (291 | ) |
| Nonrecurring adjustments | | | — | | | | (2 | ) | | | (6 | ) | | | (29 | ) | | | (37 | ) | | | 372 | |
| | | | | | | | | | | | | | | | | | | |
Recurring segment profit | | $ | 261 | | | $ | 293 | | | $ | 248 | | | $ | 124 | | | $ | 926 | | | $ | 81 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Operating statistics | | | | | | | | | | | | | | | | | | | | | | | | |
Domestic Gathering and Processing Gathering volumes (TBtu) | | | 234 | | | | 268 | | | | 254 | | | | 257 | | | | 1,013 | | | | 255 | |
| Plant inlet natural gas volumes (TBtu) | | | 325 | | | | 337 | | | | 328 | | | | 321 | | | | 1,311 | | | | 317 | |
| NGL equity sales (million gallons) * | | | 308 | | | | 366 | | | | 272 | | | | 285 | | | | 1,231 | | | | 292 | |
| NGL margin ($/gallon) | | $ | 0.64 | | | $ | 0.51 | | | $ | 0.74 | | | $ | 0.59 | | | $ | 0.61 | | | $ | 0.20 | |
| NGL production (million gallons) * | | | 634 | | | | 645 | | | | 555 | | | | 538 | | | | 2,372 | | | | 579 | |
Olefins | | | | | | | | | | | | | | | | | | | | | | | | |
| Canadian NGL equity sales (million gallons) | | | 33 | | | | 22 | | | | 20 | | | | 37 | | | | 112 | | | | 36 | |
| Olefins sales (Ethylene & Propylene) (million lbs) | | | 457 | | | | 428 | | | | 407 | | | | 313 | | | | 1,605 | | | | 459 | |
Discovery Producer Services L.L.C. (equity investment) - 100% | | | | | | | | | | | | | | | | | | | | | | | | |
| NGL equity sales (million gallons) | | | 37 | | | | 23 | | | | 21 | | | | 4 | | | | 85 | | | | 12 | |
| NGL production (million gallons) | | | 70 | | | | 58 | | | | 43 | | | | 10 | | | | 181 | | | | 30 | |
| | |
| * | | Excludes volumes associated with partially owned assets that are not consolidated for financial reporting purposes. |
6
Gas Marketing Services
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2008 | | | 2009 | |
| (Dollars in millions) | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | Year | | | 1st Qtr | |
| Revenues | | $ | 1,650 | | | $ | 2,010 | | | $ | 1,716 | | | $ | 1,036 | | | $ | 6,412 | | | $ | 867 | |
| Segment costs and expenses: | | | | | | | | | | | | | | | | | | | | | | | | |
| Costs and operating expenses | | | 1,625 | | | | 2,049 | | | | 1,695 | | | | 1,019 | | | | 6,388 | | | | 864 | |
| Selling, general and administrative expenses | | | 4 | | | | 7 | | | | 4 | | | | 5 | | | | 20 | | | | 5 | |
| Other expense — net | | | — | | | | — | | | | 1 | | | | — | | | | 1 | | | | — | |
| | | | | | | | | | | | | | | | | | | |
| Total segment costs and expenses | | | 1,629 | | | | 2,056 | | | | 1,700 | | | | 1,024 | | | | 6,409 | | | | 869 | |
Reported segment profit (loss) | | | 21 | | | | (46 | ) | | | 16 | | | | 12 | | | | 3 | | | | (2 | ) |
| Nonrecurring adjustments | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | |
Recurring segment profit (loss) | | $ | 21 | | | $ | (46 | ) | | $ | 16 | | | $ | 12 | | | $ | 3 | | | $ | (2 | ) |
7
Capital Expenditures and Investments
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2008 | | | 2009 | |
| (Dollars in millions) | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | Year | | | 1st Qtr | |
Capital expenditures: | | | | | | | | | | | | | | | | | | | | | | | | |
| Exploration & Production | | $ | 391 | | | $ | 711 | | | $ | 800 | | | $ | 617 | | | $ | 2,519 | | | $ | 320 | |
| Gas Pipeline: | | | | | | | | | | | | | | | | | | | | | | | | |
| Northwest Pipeline | | | 13 | | | | 16 | | | | 29 | | | | 21 | | | | 79 | | | | 6 | |
| Transcontinental Gas Pipe Line | | | 53 | | | | 43 | | | | 53 | | | | 78 | | | | 227 | | | | 22 | |
| Other | | | 1 | | | | (1 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | |
| Total | | | 67 | | | | 58 | | | | 82 | | | | 99 | | | | 306 | | | | 28 | |
| Midstream Gas & Liquids | | | 105 | | | | 205 | | | | 141 | | | | 157 | | | | 608 | | | | 132 | |
| Gas Marketing Services | | | — | | | | — | | | | 1 | | | | — | | | | 1 | | | | — | |
| Other | | | 16 | | | | 8 | | | | 8 | | | | 9 | | | | 41 | | | | 4 | |
| | | | | | | | | | | | | | | | | | | |
Total | | $ | 579 | | | $ | 982 | | | $ | 1,032 | | | $ | 882 | | | $ | 3,475 | | | $ | 484 | |
| | | | | | | | | | | | | | | | | | | |
Purchase of investments: | | | | | | | | | | | | | | | | | | | | | | | | |
| Exploration & Production | | | — | | | | 3 | | | | 3 | | | | (3 | ) | | | 3 | | | | — | |
| Gas Pipeline | | | 20 | | | | 28 | | | | 36 | | | | 8 | | | | 92 | | | | 10 | |
| Midstream Gas & Liquids | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3 | |
| Other | | | — | | | | 16 | | | | (1 | ) | | | 1 | | | | 16 | | | | — | |
| | | | | | | | | | | | | | | | | | | |
Total | | $ | 20 | | | $ | 47 | | | $ | 38 | | | $ | 6 | | | $ | 111 | | | $ | 13 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Summary: | | | | | | | | | | | | | | | | | | | | | | | | |
| Exploration & Production | | $ | 391 | | | $ | 714 | | | $ | 803 | | | $ | 614 | | | $ | 2,522 | | | $ | 320 | |
| Gas Pipeline | | | 87 | | | | 86 | | | | 118 | | | | 107 | | | | 398 | | | | 38 | |
| Midstream Gas & Liquids | | | 105 | | | | 205 | | | | 141 | | | | 157 | | | | 608 | | | | 135 | |
| Gas Marketing Services | | | — | | | | — | | | | 1 | | | | — | | | | 1 | | | | — | |
| Other | | | 16 | | | | 24 | | | | 7 | | | | 10 | | | | 57 | | | | 4 | |
| | | | | | | | | | | | | | | | | | | |
Total | | $ | 599 | | | $ | 1,029 | | | $ | 1,070 | | | $ | 888 | | | $ | 3,586 | | | $ | 497 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Cumulative summary: | | | | | | | | | | | | | | | | | | | | | | | | |
| Exploration & Production | | $ | 391 | | | $ | 1,105 | | | $ | 1,908 | | | $ | 2,522 | | | $ | 2,522 | | | $ | 320 | |
| Gas Pipeline | | | 87 | | | | 173 | | | | 291 | | | | 398 | | | | 398 | | | | 38 | |
| Midstream Gas & Liquids | | | 105 | | | | 310 | | | | 451 | | | | 608 | | | | 608 | | | | 135 | |
| Gas Marketing Services | | | — | | | | — | | | | 1 | | | | 1 | | | | 1 | | | | — | |
| Other | | | 16 | | | | 40 | | | | 47 | | | | 57 | | | | 57 | | | | 4 | |
| | | | | | | | | | | | | | | | | | | |
Total | | $ | 599 | | | $ | 1,628 | | | $ | 2,698 | | | $ | 3,586 | | | $ | 3,586 | | | $ | 497 | |
| | | | | | | | | | | | | | | | | | | |
8
Depreciation, Depletion and Amortization and Other Selected Financial Data
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2008 | | | 2009 | |
| (Dollars in millions) | | 1st Qtr | | | 2nd Qtr | | | 3rd Qtr | | | 4th Qtr | | | Year | | | 1st Qtr | |
| |
Depreciation, depletion and amortization: | | | | | | | | | | | | | | | | | | | | | | | | |
| Exploration & Production | | $ | 165 | | | $ | 180 | | | $ | 190 | | | $ | 202 | | | $ | 737 | | | $ | 219 | |
| Gas Pipeline: | | | | | | | | | | | | | | | | | | | | | | | | |
| Northwest Pipeline | | | 22 | | | | 21 | | | | 21 | | | | 22 | | | | 86 | | | | 22 | |
| Transcontinental Gas Pipe Line | | | 55 | | | | 59 | | | | 59 | | | | 62 | | | | 235 | | | | 61 | |
| | | | | | | | | | | | | | | | | | | |
| Total | | | 77 | | | | 80 | | | | 80 | | | | 84 | | | | 321 | | | | 83 | |
| Midstream Gas & Liquids | | | 55 | | | | 55 | | | | 58 | | | | 65 | | | | 233 | | | | 61 | |
| Gas Marketing Services | | | 1 | | | | — | | | | — | | | | — | | | | 1 | | | | — | |
| Other | | | 4 | | | | 3 | | | | 5 | | | | 6 | | | | 18 | | | | 4 | |
| | | | | | | | | | | | | | | | | | | |
Total | | $ | 302 | | | $ | 318 | | | $ | 333 | | | $ | 357 | | | $ | 1,310 | | | $ | 367 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Other selected financial data: | | | | | | | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 2,240 | | | $ | 1,937 | | | $ | 1,524 | | | $ | 1,439 | | | $ | 1,439 | | | $ | 1,786 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 27,172 | | | $ | 31,216 | | | $ | 26,893 | | | $ | 26,006 | | | $ | 26,006 | | | $ | 25,368 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Capital structure: | | | | | | | | | | | | | | | | | | | | | | | | |
| Debt | | | | | | | | | | | | | | | | | | | | | | | | |
| Current | | $ | 85 | | | $ | 83 | | | $ | 84 | | | $ | 196 | | | $ | 196 | | | $ | 164 | |
| Noncurrent | | $ | 7,799 | | | $ | 7,869 | | | $ | 7,827 | | | $ | 7,683 | | | $ | 7,683 | | | $ | 8,278 | |
| Stockholders’ equity | | $ | 7,801 | | | $ | 7,652 | | | $ | 8,574 | | | $ | 8,440 | | | $ | 8,440 | | | $ | 8,326 | |
| Debt to debt-plus-stockholders’ equity ratio | | | 50.3 | % | | | 51.0 | % | | | 48.0 | % | | | 48.3 | % | | | 48.3 | % | | | 50.3 | % |
9
Adjustment to remove MTM effect
Dollars in millions except for per share amounts
| | | | | | | | | |
| | | First Quarter | |
| | | 2009 | | | 2008 | |
Recurring income from cont. ops available to common shareholders | | $ | 106 | | | $ | 343 | |
Recurring diluted earnings per common share | | $ | 0.18 | | | $ | 0.57 | |
| Mark-to-Market (MTM) adjustments for Gas Marketing | | | 36 | | | | (3 | ) |
| Tax effect of total MTM adjustments | | | (14 | ) | | | 1 | |
| | | | | | | |
| After tax MTM adjustments | | | 22 | | | | (2 | ) |
Recurring income from cont. ops available to common shareholders after MTM adjust. | | $ | 128 | | | $ | 341 | |
Recurring diluted earnings per share after MTM adj. | | $ | 0.22 | | | $ | 0.57 | |
| weighted average shares — diluted (thousands) | | | 579,495 | | | | 598,627 | |
Note: all amounts attributable to Williams
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.
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.
