The Williams Companies, Inc. (WMB) 8-K Williams Completes Separation of E&P Business

Exhibit 99.2

Introduction to the Unaudited Pro Forma Condensed Consolidated Financial Statements

On December 31, 2011, we, The Williams Companies, Inc., completed the tax-free spin-off of our 100 percent interest in WPX Energy, Inc. (WPX), to our shareholders. WPX was formed in April 2011 to hold our former exploration and production business. The spin-off was completed by means of a special stock dividend, which consisted of a distribution of one share of WPX common stock for every three shares of our common stock.

The following unaudited pro forma condensed consolidated financial statements adjust our historical condensed consolidated financial statements for the spin-off of WPX, as well as for certain related financing activities. These include the issuance of $1.5 billion of senior unsecured notes by WPX in November 2011, and the retirement of $746 million of our debt in December 2011.

Our historical condensed consolidated financial statements have been derived from and should be read together with the historical audited and unaudited consolidated financial statements and the related notes in Exhibit 99.1 of our Form 8-K dated June 1, 2011, and the Quarterly Report on Form 10-Q for the quarter ended September 30, 2011. The unaudited pro forma condensed consolidated balance sheet assumes these transactions occurred on September 30, 2011. The unaudited pro forma condensed consolidated statements of income assume these transactions occurred on January 1, 2008.

The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only to reflect the disposal of WPX and related financing activities and do not represent what our results of operations or financial position would actually have been had the spin-off and related financing activities occurred on the dates noted above, or project our results of operations or financial position for any future periods. The unaudited pro forma condensed consolidated financial statements are intended to provide information about the continuing impact of the spin-off and related financing activities as if they had been consummated earlier and do not represent any conclusions about whether such operations of our former exploration and production business will be reported as discontinued operations. The pro forma adjustments are based on available information and certain assumptions that management believes are factually supportable and are expected to have a continuing impact on our results of operations. In the opinion of management, all adjustments necessary to present fairly the unaudited pro forma condensed consolidated financial statements have been made.

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The Williams Companies, Inc.

Pro Forma Condensed Consolidated Balance Sheet

September 30, 2011

	The Williams Companies, Inc. Historical			Notes Offering (a)		Debt Retirement (b)			Spin-Off (c)			Pro Forma Adjustments (d)			Pro Forma
	(Dollars in millions, except per-share amounts) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	996		$	1,479	$	(1,019	)	$	(550	)	$	—		$	906
Accounts and notes receivable (net of allowance for doubtful accounts)		1,039			—		—			(422	)		—			617
Inventories		287			—		—			(82	)		—			205
Derivative assets		381			—		—			(381	)		—			—
Other current assets and deferred charges		186			—		—			2			—			188
Total current assets		2,889			1,479		(1,019	)		(1,433	)		—			1,916
Investments		1,492			—		—			(119	)		—			1,373
Property, plant and equipment, at cost		32,159			—		—			(13,494	)		—			18,665
Accumulated depreciation, depletion and amortization		(11,186	)		—		—			4,761			—			(6,425	)
Property, plant and equipment — net		20,973			—		—			(8,733	)		—			12,240
Derivative assets		118			—		—			(118	)		—			—
Other assets and deferred charges		674			21		(7	)		(48	)		(33	)		607
Total assets	$	26,146		$	1,500	$	(1,026	)	$	(10,451	)	$	(33	)	$	16,136
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,174		$	—	$	—		$	(562	)	$	—		$	612
Accrued liabilities		801			—		(119	)		(192	)		—			490
Derivative liabilities		103			—		—			(103	)		—			—
Long-term debt due within one year		361			—		—			—			—			361
Total current liabilities		2,439			—		(119	)		(857	)		—			1,463
Long-term debt		9,024			1,500		(738	)		(1,502	)		—			8,284
Deferred income taxes		3,609			—		—			(1,675	)		—			1,934
Derivative liabilities		73			—		—			(73	)		—			—
Other liabilities and deferred income		1,748			—		—			(364	)		(33	)		1,351
Contingent liabilities and commitments
Equity:
Stockholders’ equity:
Common stock (960 million shares authorized at $1 par value; 623 million shares issued at September 30, 2011)		623			—		—			—			—			623
Other stockholders’ equity		7,286			—		(169	)		(5,905	)		—			1,212
Total stockholders’ equity		7,909			—		(169	)		(5,905	)		—			1,835
Noncontrolling interests in consolidated subsidiaries		1,344			—		—			(75	)		—			1,269
Total equity		9,253			—		(169	)		(5,980	)		—			3,104
Total liabilities and equity	$	26,146		$	1,500	$	(1,026	)	$	(10,451	)	$	(33	)	$	16,136

See accompanying notes.

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The Williams Companies, Inc.

Pro Forma Condensed Consolidated Statement of Income

	For the Nine Months Ended September 30, 2011
	The Williams Companies, Inc. Historical			Spin-off (c)			Pro Forma Adjustments (e)		Pro Forma
	(Dollars in millions, except per-share amounts) (Unaudited)
Revenues	$	7,947		$	(2,122	)	$	—	$	5,825
Segment costs and expenses:
Costs and operating expenses		5,871			(1,779	)		—		4,092
Selling, general and administrative expenses		401			(161	)		—		240
Other (income) expense — net		2			(5	)		—		(3	)
Total segment costs and expenses		6,274			(1,945	)		—		4,329
General corporate expenses		152			(4	)		—		148
Operating income		1,521			(173	)		—		1,348
Interest accrued		(466	)		2			45		(419	)
Interest capitalized		29			(12	)		—		17
Investing income — net		145			(18	)		—		127
Other income (expense) — net		4			—			—		4
Income from continuing operations before income taxes		1,233			(201	)		45		1,077
Provision for income taxes		194			(78	)		17		133
Income from continuing operations		1,039			(123	)		28		944
Less: Income from continuing operations attributable to noncontrolling interests		203			(7	)		—		196
Income from continuing operations attributable to The Williams Companies, Inc.	$	836		$	(116	)	$	28	$	748
Earnings per common share attributable to The Williams Companies, Inc.:
Basic	$	1.42							$	1.27
Diluted	$	1.40							$	1.25
Weighted-average shares (thousands):
Basic		588,082								588,082
Diluted		597,250								597,250

See accompanying notes.

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The Williams Companies, Inc.

Pro Forma Condensed Consolidated Statement of Income

	For the Nine Months Ended September 30, 2010
	The Williams Companies, Inc. Historical			Spin-off (c)			Pro Forma Adjustments (e)		Pro Forma
	(Dollars in millions, except per-share amounts) (Unaudited)
Revenues	$	7,180		$	(2,285	)	$	—	$	4,895
Segment costs and expenses:
Costs and operating expenses		5,382			(1,879	)		—		3,503
Selling, general and administrative expenses		356			(134	)		—		222
Impairments of goodwill and long-lived assets		1,681			(1,681	)		—		—
Other (income) expense — net		(17	)		(10	)		—		(27	)
Total segment costs and expenses		7,402			(3,704	)		—		3,698
General corporate expenses		173			—			—		173
Operating income (loss)		(395	)		1,419			—		1,024
Interest accrued		(476	)		4			45		(427	)
Interest capitalized		43			(11	)		—		32
Investing income — net		162			(15	)		—		147
Early debt retirement costs		(606	)		—			—		(606	)
Other income (expense) — net		(12	)		—			—		(12	)
Income (loss) from continuing operations before income taxes		(1,284	)		1,397			45		158
Provision (benefit) for income taxes		(140	)		142			17		19
Income (loss) from continuing operations		(1,144	)		1,255			28		139
Less: Income from continuing operations attributable to noncontrolling interests		121			(6	)		—		115
Income (loss) from continuing operations attributable to The Williams Companies, Inc.	$	(1,265	)	$	1,261		$	28	$	24
Earnings (loss) per common share attributable to The Williams Companies, Inc.:
Basic	$	(2.16	)						$	0.04
Diluted	$	(2.16	)						$	0.04
Weighted-average shares (thousands):
Basic		584,365								584,365
Diluted (f)		584,365								590,244

See accompanying notes.

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The Williams Companies, Inc.

Pro Forma Condensed Consolidated Statement of Income

	Year Ended December 31, 2010
	The Williams Companies, Inc. Historical			Spin-off (c)			Pro Forma Adjustments (e)		Pro Forma
	(Dollars in millions, except per-share amounts) (Unaudited)
Revenues	$	9,600		$	(2,964	)	$	—	$	6,636
Segment costs and expenses:
Costs and operating expenses		7,164			(2,452	)		—		4,712
Selling, general and administrative expenses		498			(187	)		—		311
Impairments of goodwill and long-lived assets		1,691			(1,681	)		—		10
Other (income) expense — net		(26	)		1			—		(25	)
Total segment costs and expenses		9,327			(4,319	)		—		5,008
General corporate expenses		221			—			—		221
Operating income		52			1,355			—		1,407
Interest accrued		(632	)		4			60		(568	)
Interest capitalized		51			(15	)		—		36
Investing income — net		209			(21	)		—		188
Early debt retirement costs		(606	)		—			—		(606	)
Other income (expense) — net		(12	)		—			—		(12	)
Income (loss) from continuing operations before income taxes		(938	)		1,323			60		445
Provision (benefit) for income taxes		(26	)		136			22		132
Income (loss) from continuing operations		(912	)		1,187			38		313
Less: Income from continuing operations attributable to noncontrolling interests		175			(8	)		—		167
Income (loss) from continuing operations attributable to The Williams Companies, Inc.	$	(1,087	)	$	1,195		$	38	$	146
Earnings (loss) per common share attributable to The Williams Companies, Inc.:
Basic	$	(1.86	)						$	0.25
Diluted	$	(1.86	)						$	0.25
Weighted-average shares (thousands):
Basic		584,552								584,552
Diluted (f)		584,552								590,699

See accompanying notes.

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The Williams Companies, Inc.

Pro Forma Condensed Consolidated Statement of Income

	Year Ended December 31, 2009
	The Williams Companies,  Inc. Historical			Spin-off (c)			Pro Forma Adjustments (e)		Pro Forma
	(Dollars in millions, except per-share amounts) (Unaudited)
Revenues	$	8,238		$	(2,962	)	$	—	$	5,276
Segment costs and expenses:
Costs and operating expenses		6,059			(2,347	)		—		3,712
Selling, general and administrative expenses		512			(184	)		—		328
Impairments of goodwill and long-lived assets		15			(15	)		—		—
Other (income) expense — net		(3	)		(31	)		—		(34	)
Total segment costs and expenses		6,583			(2,577	)		—		4,006
General corporate expenses		164			—			—		164
Operating income		1,491			(385	)		—		1,106
Interest accrued		(661	)		5			60		(596	)
Interest capitalized		76			(15	)		—		61
Investing income — net		46			(8	)		—		38
Early debt retirement costs		(1	)		—			—		(1	)
Other income (expense) — net		2			—			—		2
Income from continuing operations before income taxes		953			(403	)		60		610
Provision for income taxes		363			(158	)		22		227
Income from continuing operations		590			(245	)		38		383
Less: Income from continuing operations attributable to noncontrolling interests		146			(7	)		—		139
Income from continuing operations attributable to The Williams Companies, Inc.	$	444		$	(238	)	$	38	$	244
Earnings per common share attributable to The Williams Companies, Inc.:
Basic	$	0.76							$	0.42
Diluted	$	0.76							$	0.42
Weighted-average shares (thousands):
Basic		581,674								581,674
Diluted		589,385								589,385

See accompanying notes.

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The Williams Companies, Inc.

Pro Forma Condensed Consolidated Statement of Income

	Year Ended December 31, 2008
	The Williams Companies,  Inc. Historical			Spin-off (c)			Pro Forma Adjustments (e)		Pro Forma
	(Dollars in millions, except per-share amounts) (Unaudited)
Revenues	$	11,851		$	(4,948	)	$	—	$	6,903
Segment costs and expenses:
Costs and operating expenses		8,739			(3,528	)		—		5,211
Selling, general and administrative expenses		498			(182	)		—		316
Impairments of goodwill and long-lived assets		10			—			—		10
Other (income) expense — net		(226	)		149			—		(77	)
Total segment costs and expenses		9,021			(3,561	)		—		5,460
General corporate expenses		149			—			—		149
Operating income		2,681			(1,387	)		—		1,294
Interest accrued		(636	)		4			60		(572	)
Interest capitalized		59			(14	)		—		45
Investing income — net		189			(21	)		—		168
Early debt retirement costs		(1	)		—			—		(1	)
Income from continuing operations before income taxes		2,292			(1,418	)		60		934
Provision for income taxes		733			(512	)		22		243
Income from continuing operations		1,559			(906	)		38		691
Less: Income from continuing operations attributable to noncontrolling interests		161			(8	)		—		153
Income from continuing operations attributable to The Williams Companies, Inc.	$	1,398		$	(898	)	$	38	$	538
Earnings per common share attributable to The Williams Companies, Inc.:
Basic	$	2.41							$	0.93
Diluted	$	2.37							$	0.91
Weighted-average shares (thousands):
Basic		581,342								581,342
Diluted		592,719								592,719

See accompanying notes.

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The Williams Companies, Inc.

Notes to Pro Forma Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Pro Forma Adjustments and Assumptions

Details of the adjustments are as follows:

(a) In November 2011, WPX completed the issuance of $1.5 billion of senior unsecured notes. WPX received approximately $1.479 billion from the offering, net of initial purchaser discounts and other issuance costs. WPX subsequently distributed $979 million of the proceeds to us which was utilized for our debt retirement. This distribution to us is not specifically reflected in these adjustments as it has no net impact on the pro forma condensed consolidated financial statements. The issuance of the notes by WPX and the related distribution of a portion of the proceeds to us was a condition to be satisfied prior to the spin-off.

(b) Primarily utilizing the distribution we received related to the WPX debt issuance and conditional upon the receipt of such distribution, we retired $746 million of long-term debt. In conjunction with the retirement, we paid premiums of $254 million, accrued interest of $19 million, and recognized charges of $8 million and $7 million related to the write-off of unamortized discount and unamortized debt issuance costs, respectively. The impact of these charges within other stockholders’ equity reflects the application of a composite statutory tax rate of 37 percent.

(c) Effective December 31, 2011, we completed the tax-free spin-off of our 100 percent interest in WPX to our shareholders. Amounts presented are the adjustments necessary to reflect the removal of our former exploration and production business from our consolidated historical financial statements. The adjustments for the nine months ended September 30, 2011, include the removal of $12 million of transaction costs related to the separation of WPX ($8 million inselling, general & administrative costs and $4 million ingeneral corporate expenses).

(d) Per the terms of the Separation and Distribution Agreement, we have indemnified WPX for certain contingent matters related to a former power business. Resolution of these matters is currently expected to result in a net cash inflow to WPX, which WPX will be required to pay to us. We have adjusted our Pro Forma Condensed Consolidated Balance Sheet to eliminate the gross obligation for these matters and reflect only a net receivable from WPX.

(e) These adjustments reflect the elimination of interest expense associated with the $746 million in debt that was retired in December 2011. A composite statutory tax rate of 37 percent was applied to the adjustments for all periods.

(f) For the periods ended September 30 and December 31, 2010, weighted-average shares outstanding were adjusted for the effect of dilutive securities as the pro forma adjustments resulted in pro forma income from continuing operations attributable to The Williams Companies, Inc.

In connection with the spin-off, we and WPX entered into a Separation and Distribution Agreement, an Employee Matters Agreement, and a Tax Sharing Agreement. No adjustments have been made related to these agreements, except for that described in (d) above, as any such adjustments would be considered either nonrecurring in nature or not objectively determinable at this time. No adjustments have been made for the potentially dilutive impact of changes to stock-based compensation resulting from the Employee Matters Agreement as the impact is not objectively determinable at this time and is not expected to be significant.

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We may incur a noncash impairment charge if we determine that the carrying value of our exploration and production business exceeded its fair value at the time of spin-off. Any such impairment would not have an impact on these unaudited pro forma condensed consolidated financial statements, as it would not have a continuing impact on our future results of operations.

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