The Williams Companies, Inc. (NYSE:WMB) Q2 2023 Earnings Conference Call August 3, 2023 9:30 AM ET Company Participants Danilo Juvane – Vice President of Investor Relations, ESG, and Investment Analysis Alan Armstrong – President and Chief Executive Officer John Porter – Chief Financial Officer Michael Dunn – Chief Operating Officer Conference Call Participants Spiro Dounis – Citi Jeremy Tonet – JP Morgan Jean Ann Salisbury – Bernstein Brian Reynolds – UBS Praneeth Satish – Wells Fargo Colton Bean – TPH and ...

Williams 2nd Quarter 2023 Earnings Call WILLIAMS © 2023 The Williams Companies, Inc. All rights reserved NYSE: WMB I Williams 2nd Quarter 2023 Earnings Call I August 3, 2023 I www.williams.com 1 2Q at a glance Premier Midstream Operator Steadfast project execution to drive additional growth in 2023 and beyond ADJUST ED EBI T DA • Signed precedent agreement for Overthrust Westbound Expansion 8% • Fully integrated MountainWest into existing Western f ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ☑ ACT OF 1934 For the quarterly period ended June 30, 2023 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ☐ ACT OF 1934 For the transition period from _____________ to _____________ Commission file number 1-4174 THE WILLIAMS COMPANIES, INC. (Exact name of registrant as specified in its charter) Delaware 73-05 ...

Summary of The Williams Companies, Inc. Conference Call Company Overview - **Company**: The Williams Companies, Inc. (NYSE: WMB) - **Industry**: Natural Gas and Energy Sector Key Points and Arguments Natural Gas as a Solution - Natural gas is viewed as a critical and affordable solution to the intermittency of renewable energy sources as the energy landscape evolves [2][4] - The focus is on the capacity for natural gas rather than average annual use, emphasizing the importance of peak day capacity [2][3] Emission Reduction and Sustainability - Williams emphasizes the potential for natural gas to reduce emissions on an economically sustainable basis without requiring subsidies [3][4] - The company supports tighter regulations on methane emissions and is actively working on emission tracking technologies [8][9] Growth in Peak Day Demand - A study by McKinsey indicates that peak day power demand will increase significantly, even as average annual consumption of natural gas may decline [5][6] - From 2019 to 2022, there was an 85% increase in renewables, with corresponding increases in peak days of 9% and 14% in their systems [6] Investment and Financial Performance - Williams has a strong track record of year-over-year EBITDA growth, with a long-term growth target of 5% to 7% [14][33] - The company has been able to maintain growth despite fluctuations in gas prices, with guidance reflecting a softer gas market [12][36] Project Pipeline and Future Growth - Significant projects are expected to come online in 2025, which will contribute to a substantial increase in capacity and EBITDA [15][34] - The company has several ongoing projects, including the Mountain Valley Pipeline and Regional Energy Access project, which are expected to enhance their service capabilities [21][24] Capital Allocation Strategy - Williams is focused on balancing growth projects with shareholder returns, including stock buybacks when opportunities arise [29][32] - The company has a $1.5 billion authority for stock buybacks and is strategically investing in emission reduction projects [30][32] Market Position and Competitive Advantage - Williams is well-positioned to capitalize on the transition from coal to natural gas, particularly in regions with high renewable energy penetration [19][21] - The integration of their gas marketing arm, Sequent, has proven successful, enhancing their operational efficiency and cash flow generation [25][26] Conclusion - The Williams Companies is strategically positioned in the natural gas sector, focusing on emission reductions, capacity growth, and sustainable practices while maintaining a strong financial outlook and commitment to shareholder value [27][28]

Williams 1st Quarter 2023 Earnings Call May 4, 2023 WILLIAMS© ...

The Williams Companies, Inc. (NYSE:WMB) Q1 2023 Earnings Conference Call May 4, 2023 9:30 AM ET Company Participants Danilo Juvane - Vice President, Investor Relations Alan Armstrong - President and Chief Executive Officer John Porter - Chief Financial Officer Michael Dunn - Chief Operating Officer Lane Wilson - General Counsel Chad Zamarin - Executive Vice President, Corporate Strategic Development Conference Call Participants Brian Reynolds - UBS Jeremy Tonet - JP Morgan Marc Solecitto - Barclays Praneeth ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ☑ ACT OF 1934 For the quarterly period ended March 31, 2023 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ☐ ACT OF 1934 For the transition period from _____________ to _____________ Commission file number 1-4174 THE WILLIAMS COMPANIES, INC. (Exact name of registrant as specified in its charter) Delaware 73-0 ...

[PART I](index=6&type=section&id=PART%20I) [Business](index=6&type=section&id=Item%201.%20Business) The Williams Companies, Inc. is a major energy infrastructure company focused on safely delivering natural gas products [General Overview](index=6&type=section&id=General%20Overview) Williams is a major energy infrastructure company focused on natural gas gathering, processing, transmission, and NGL services across the US - The company owns and operates over **33,000 miles of pipelines**, **29 natural gas processing facilities**, and **7 NGL fractionation facilities**[9](index=9&type=chunk) - Key business variables include obstacles to expansion (permitting), producer drilling activity, customer retention, infrastructure growth, commodity prices, and disciplined growth[12](index=12&type=chunk) [Service Assets, Customers, and Contracts](index=7&type=section&id=Service%20Assets%2C%20Customers%2C%20and%20Contracts) Company assets include FERC-regulated interstate pipelines under long-term contracts and fee-based gathering/processing services - Most interstate natural gas transmission business is fully contracted under long-term firm reservation contracts. In 2022, the top three customers for Transco and Northwest Pipeline accounted for approximately **23% and 51% of their respective operating revenues**[14](index=14&type=chunk)[15](index=15&type=chunk) - Approximately **90% of NGL production volumes** were under fee-based processing contracts in 2022, with the remaining **10%** under noncash commodity-based contracts[17](index=17&type=chunk)[18](index=18&type=chunk) - The top ten gathering and processing customers accounted for approximately **70% of related fee revenues and NGL margins** in 2022[21](index=21&type=chunk) [Business Segments](index=10&type=section&id=Business%20Segments) Operations are managed through four segments: Transmission & Gulf of Mexico, Northeast G&P, West, and Gas & NGL Marketing Services - The company's operations are managed through four reportable segments: **Transmission & Gulf of Mexico**, **Northeast G&P**, **West**, and **Gas & NGL Marketing Services**[30](index=30&type=chunk) - The **Transmission & Gulf of Mexico** segment includes major interstate pipelines (Transco, Northwest Pipeline, MountainWest) and Gulf Coast assets[30](index=30&type=chunk) - The **Northeast G&P** segment focuses on midstream operations in the Marcellus and Utica Shale regions[31](index=31&type=chunk) - The **West** segment comprises gathering, processing, and treating operations in the Rocky Mountains and various Texas and Louisiana shale regions[32](index=32&type=chunk) [Regulatory Matters](index=19&type=section&id=Regulatory%20Matters) Interstate gas pipeline transmission and storage are heavily regulated by FERC, PHMSA, and TSA, with state regulations also applying - Interstate gas pipeline activities are subject to **FERC regulation** under the Natural Gas Act of 1938, governing rates, facility construction, and abandonment[82](index=82&type=chunk) - PHMSA's 'Mega Rule' has expanded federal pipeline safety oversight to previously unregulated gas gathering pipelines, affecting thousands of miles of the company's pipelines[89](index=89&type=chunk) - The company estimates incurring approximately **$126 million in 2023** for its Gas Integrity Management Plan and **$10 million** for its Liquid Integrity Management Plan to comply with PHMSA regulations[92](index=92&type=chunk)[93](index=93&type=chunk) - The TSA has issued security directives requiring critical pipeline operators to implement TSA-approved Cybersecurity Implementation Plans, develop Incident Response Plans, and establish assessment programs[95](index=95&type=chunk) [Environmental Matters](index=23&type=section&id=Environmental%20Matters) Operations are subject to extensive environmental laws, creating potential liabilities for pollutant discharges and cleanup costs - Operations are subject to numerous environmental laws, with potential liability for unlawful discharge of pollutants and cleanup costs, including for damages caused by former owners[101](index=101&type=chunk)[102](index=102&type=chunk) [Competition](index=23&type=section&id=Competition) Williams faces significant competition across all segments, based on reputation, fees, service reliability, and available capacity - Competition in gathering and processing is based on reputation, commercial terms, services provided, efficiency, and location[105](index=105&type=chunk) - The interstate natural gas pipeline business competes based on available capacity, rates, reliability, and proximity to customers, with significant barriers to entry for new pipeline construction[107](index=107&type=chunk)[109](index=109&type=chunk) [Human Capital Resources](index=24&type=section&id=Human%20Capital%20Resources) As of Feb 1, 2023, Williams had 5,043 employees, emphasizing safety, comprehensive rewards, and diversity and inclusion - As of February 1, 2023, the company had **5,043 full-time employees**, with a voluntary turnover rate of **7.7% in 2022**[113](index=113&type=chunk) - For 2022, safety and environmental goals comprised **15% of the employee annual incentive program**[116](index=116&type=chunk) - The company promotes diversity and inclusion through a council, **10 Employee Resource Groups (ERGs)**, and required training for leaders, with **25% of the Board of Directors being women** as of December 31, 2022[125](index=125&type=chunk)[126](index=126&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from natural gas supply/demand, commodity price volatility, project opposition, financial conditions, and extensive regulations [Risks Related to Our Business](index=29&type=section&id=Risks%20Related%20to%20Our%20Business) Business risks include reliance on third-party production, volatile commodity prices, customer credit, project opposition, and operational hazards - Financial condition depends on the continued availability of natural gas supplies from third-party producers and the demand for those supplies in served markets[136](index=136&type=chunk) - The company faces opposition to the operation and expansion of its pipelines from governmental officials, environmental groups, and local advocates, which can delay or deny necessary permits[139](index=139&type=chunk) - Operational risks include aging infrastructure, uncontrolled releases of products, fires, explosions, and cybersecurity threats, potentially resulting in significant damage, reputational harm, and financial losses[151](index=151&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) [Risks Related to Financing Our Business](index=37&type=section&id=Risks%20Related%20to%20Financing%20Our%20Business) Financial stability is subject to credit rating downgrades, significant indebtedness, difficult market conditions, and restricted fossil-fuel investment - A downgrade of the company's credit ratings could increase borrowing costs, require posting collateral, and limit access to capital markets[161](index=161&type=chunk) - Total outstanding long-term debt was **$22.6 billion** as of December 31, 2022, and debt agreements contain restrictive covenants affecting financial and operating flexibility[161](index=161&type=chunk) - Some financial institutions have restricted or eliminated investment in fossil-fuel related businesses, which could make it more difficult for the company and its customers to secure funding[165](index=165&type=chunk) [Risks Related to Regulations](index=39&type=section&id=Risks%20Related%20to%20Regulations) Operations are subject to extensive regulation by FERC and environmental laws, including climate change, impacting costs and profitability - Interstate pipeline transportation and storage are subject to comprehensive regulation by **FERC**, which affects rates, services, and facility construction, potentially impacting profitability[167](index=167&type=chunk) - Operations are subject to extensive environmental laws which may expose the company to significant costs, liabilities, and penalties for non-compliance[168](index=168&type=chunk) - Future climate change regulations or carbon taxes could result in increased costs to operate and maintain facilities, potentially making some activities uneconomic[168](index=168&type=chunk) [Legal Proceedings](index=42&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in legal proceedings, including an environmental matter with the DOJ and EPA for alleged Clean Air Act violations - The company has reached an agreement in principle with the DOJ to resolve alleged Clean Air Act violations at several facilities, which includes a proposed civil penalty of **$3.75 million** and injunctive relief[177](index=177&type=chunk) [Information About Our Executive Officers](index=43&type=section&id=Information%20About%20Our%20Executive%20Officers) This section details the company's executive officers as of February 27, 2023, including their names, ages, positions, and experience [PART II](index=45&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=45&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Common stock trades on NYSE under 'WMB', with a $1.5 billion stock repurchase program and a performance graph comparing returns - The company has a stock repurchase program authorized for up to **$1.5 billion**, with no expiration date, and no shares were purchased in Q4 2022[187](index=187&type=chunk) Cumulative Total Shareholder Return (2017-2022) | | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | The Williams Companies, Inc. | 100.0 | 74.5 | 85.1 | 78.7 | 108.9 | 144.8 | | S&P 500 Index | 100.0 | 94.8 | 124.7 | 147.6 | 189.9 | 155.5 | | Bloomberg Americas Pipelines Index | 100.0 | 83.8 | 113.4 | 89.7 | 120.3 | 139.0 | | Arca Natural Gas Index | 100.0 | 66.4 | 65.5 | 56.7 | 91.0 | 116.5 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses 2022 financial results, highlighting increased net income, recent acquisitions, and a positive 2023 outlook with planned capital expenditures [Recent Developments and Company Outlook](index=48&type=section&id=Recent%20Developments%20and%20Company%20Outlook) Recent strategic activities include MountainWest, NorTex, and Trace Midstream acquisitions, with a positive 2023 outlook and planned growth capital expenditures - Closed on the acquisition of MountainWest Pipelines Holding Company for **$1.08 billion in cash** and **$430 million in assumed debt** on February 14, 2023[203](index=203&type=chunk) - Acquired Haynesville Shale assets from Trace Midstream for **$972 million** in April 2022 and north Texas assets from NorTex for **$424 million** in August 2022[206](index=206&type=chunk)[205](index=205&type=chunk) - 2023 growth capital and investment expenditures are expected to be between **$1.40 billion and $1.70 billion**, excluding the MountainWest Acquisition[209](index=209&type=chunk) [Results of Operations](index=53&type=section&id=Results%20of%20Operations) Net income increased by $532 million to $2.049 billion in 2022, driven by higher service revenues and volume growth, partially offset by derivatives Consolidated Results of Operations (2022 vs. 2021) | Metric | 2022 (Millions) | 2021 (Millions) | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $10,965 | $10,627 | +$338 | +3% | | Operating Income | $3,018 | $2,631 | +$387 | +15% | | Net Income Attributable to Williams | $2,049 | $1,517 | +$532 | +35% | - Service revenues increased by **$535 million in 2022**, primarily due to higher gathering and processing rates, higher volumes from the Trace and NorTex acquisitions, and the Leidy South expansion project[228](index=228&type=chunk) - Net loss on commodity derivatives increased by **$239 million**, reflecting higher net unrealized losses in the Gas & NGL Marketing Services segment[231](index=231&type=chunk) [Financial Condition and Liquidity](index=66&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Liquidity) The company maintains strong liquidity with $3.55 billion available as of Dec 31, 2022, funding capital spending primarily with cash flow after dividends Available Liquidity as of Dec 31, 2022 | Source | Amount (Millions) | | :--- | :--- | | Cash and cash equivalents | $152 | | Available Credit Facility Capacity | $3,400 | | **Total Available Liquidity** | **$3,552** | Cash Flow Summary | Cash Flow Category | 2022 (Millions) | 2021 (Millions) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $4,889 | $3,945 | | Net Cash from Financing Activities | $(3,042) | $(942) | | Net Cash from Investing Activities | $(3,375) | $(1,465) | - The company holds stable, investment-grade credit ratings: **BBB from S&P, Baa2 from Moody's, and BBB from Fitch**[293](index=293&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=70&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate and commodity price risks using derivatives, with VaR for trading and non-trading portfolios as of Dec 31, 2022 - The debt portfolio is primarily comprised of fixed-rate debt, which mitigates the impact of interest rate fluctuations[304](index=304&type=chunk) - Commodity price risk is managed with exchange-traded and OTC energy contracts, though these are generally not designated for hedge accounting treatment[306](index=306&type=chunk) - At December 31, 2022, the Value at Risk (VaR) for the integrated natural gas trading activity was **$10 million**, and the VaR for the non-trading hedging portfolio was **$8 million**[314](index=314&type=chunk)[315](index=315&type=chunk) [Financial Statements and Supplementary Data](index=73&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains audited consolidated financial statements for 2022, with an unqualified opinion from Ernst & Young LLP on financials and internal controls - The independent auditor, Ernst & Young LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2022[318](index=318&type=chunk)[320](index=320&type=chunk) Consolidated Statement of Income Highlights (Year Ended Dec 31) | (Millions, except per-share) | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Total Revenues | $10,965 | $10,627 | $7,719 | | Operating Income | $3,018 | $2,631 | $2,202 | | Net Income Attributable to Williams | $2,049 | $1,517 | $211 | | Diluted EPS | $1.67 | $1.24 | $0.17 | Consolidated Balance Sheet Highlights (As of Dec 31) | (Millions) | 2022 | 2021 | | :--- | :--- | :--- | | Total Assets | $48,433 | $47,612 | | Total Liabilities | $34,388 | $33,511 | | Total Equity | $14,045 | $14,101 | [Controls and Procedures](index=141&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls and internal control over financial reporting were effective as of Dec 31, 2022, with no material changes - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[639](index=639&type=chunk) - Management assessed internal control over financial reporting as effective based on the COSO 2013 framework, and the independent auditor, Ernst & Young LLP, concurred[644](index=644&type=chunk)[647](index=647&type=chunk) [PART III](index=144&type=section&id=PART%20III) Part III incorporates by reference information from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders - Information regarding directors, executive compensation, security ownership, and related party transactions is incorporated by reference from the company's definitive Proxy Statement to be filed for the April 25, 2023, Annual Meeting of Stockholders[654](index=654&type=chunk)[657](index=657&type=chunk)[658](index=658&type=chunk)[660](index=660&type=chunk) [PART IV](index=146&type=section&id=PART%20IV) Part IV lists all financial statements, schedules, and exhibits filed as part of the Form 10-K report, including consolidated financials - This section lists all financial statements, schedules, and exhibits filed with the annual report, including consents of independent auditors and certifications by the CEO and CFO[663](index=663&type=chunk)[664](index=664&type=chunk)

The Williams Companies, Inc. (NYSE:WMB) Q3 2022 Earnings Conference Call November 1, 2022 9:30 AM ET Company Participants Danilo Juvane - Vice President of Investor Relations Alan Armstrong - President and CEO John Porter - Chief Financial Officer Chad Zamarin - Senior Vice President of Corporate Strategic Development Micheal Dunn - Chief Operating Officer Lane Wilson - General Counsel Conference Call Participants Jeremy Tonet - JPMorgan Praneeth Satish - Wells Fargo Chase Mulvehill - Bank of America Gabri ...

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) This section details the filing specifics for The Williams Companies, Inc.'s Form 10-Q, including the reporting period and company classification - The Williams Companies, Inc. filed a Form 10-Q for the quarterly period ended September 30, 2022[2](index=2&type=chunk) - The company is classified as a **large accelerated filer**[4](index=4&type=chunk) Company and Stock Information | Metric | Value | | :----- | :---- | | Trading Symbol | WMB | | Exchange | New York Stock Exchange | | Shares Outstanding (as of Oct 27, 2022) | 1,218,339,828 | [Definitions and Glossary](index=6&type=section&id=DEFINITIONS) This section provides definitions for key measurements, consolidated entities, partially owned investments, and important financial terms - The report includes definitions for various measurements such as Barrel (Bbl), Billion cubic feet (Bcf), British Thermal Unit (Btu), and Dekatherms (Dth)[14](index=14&type=chunk) - Key consolidated entities include Cardinal, Gulfstar One, Northeast JV, Northwest Pipeline, and Transco[14](index=14&type=chunk) - Partially owned entities, accounted for as equity-method investments, include Aux Sable, Blue Racer, Discovery, Gulfstream, Laurel Mountain, OPPL, RMM, and Targa Train 7[14](index=14&type=chunk)[15](index=15&type=chunk) - Important financial and operational terms defined include EBITDA, Fractionation, GAAP, LNG, MVC, and NGLs[16](index=16&type=chunk) [Part I – Financial Information](index=8&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents the company's unaudited consolidated financial statements and management's discussion and analysis of financial condition [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for The Williams Companies, Inc., including the Statement of Income, Comprehensive Income (Loss), Balance Sheet, Statement of Changes in Equity, and Statement of Cash Flows, along with detailed notes [Consolidated Statement of Income](index=8&type=section&id=Consolidated%20Statement%20of%20Income%20%E2%80%93%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202022%20and%202021) For the three months ended September 30, 2022, total revenues increased to **$3,021 million** from **$2,475 million** in 2021, with net income attributable to The Williams Companies, Inc. surging to **$600 million** from **$165 million** Consolidated Statement of Income (Millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :----------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Revenues | $3,021 | $2,475 | $8,035 | $7,370 | | Total Costs and Expenses | $2,201 | $2,120 | $6,089 | $5,676 | | Operating Income (Loss) | $820 | $355 | $1,946 | $1,694 | | Net Income (Loss) | $621 | $173 | $1,420 | $930 | | Net Income (Loss) Attributable to The Williams Companies, Inc. | $600 | $165 | $1,380 | $895 | | Basic EPS | $0.49 | $0.14 | $1.13 | $0.74 | | Diluted EPS | $0.49 | $0.13 | $1.13 | $0.73 | [Consolidated Statement of Comprehensive Income (Loss)](index=9&type=section&id=Consolidated%20Statement%20of%20Comprehensive%20Income%20(Loss)%20%E2%80%93%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202022%20and%202021) For the three months ended September 30, 2022, comprehensive income attributable to The Williams Companies, Inc. was **$596 million**, up from **$166 million** in the prior year, and **$1,386 million** for the nine months, an increase from **$882 million** in 2021 Consolidated Statement of Comprehensive Income (Loss) (Millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :--------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Income (Loss) | $621 | $173 | $1,420 | $930 | | Other Comprehensive Income (Loss) | $(4) | $1 | $6 | $(13) | | Comprehensive Income (Loss) | $617 | $174 | $1,426 | $917 | | Comprehensive Income (Loss) Attributable to The Williams Companies, Inc. | $596 | $166 | $1,386 | $882 | [Consolidated Balance Sheet](index=10&type=section&id=Consolidated%20Balance%20Sheet%20%E2%80%93%20September%2030%2C%202022%20and%20December%2031%2C%202021) As of September 30, 2022, total assets increased to **$48,672 million** from **$47,612 million**, while total liabilities rose to **$34,762 million** and total equity slightly decreased to **$13,910 million** Consolidated Balance Sheet (Millions) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :------------------------------------ | :----------- | :----------- | | Total Assets | $48,672 | $47,612 | | Total Current Assets | $4,438 | $4,549 | | Property, Plant, and Equipment – net | $30,338 | $29,258 | | Total Liabilities | $34,762 | $33,559 | | Total Current Liabilities | $5,017 | $4,972 | | Long-Term Debt | $22,530 | $21,650 | | Total Equity | $13,910 | $14,101 | [Consolidated Statement of Changes in Equity](index=12&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Equity%20%E2%80%93%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202022%20and%202021) For the three months ended September 30, 2022, total equity increased by **$74 million** due to net income, partially offset by dividends, while for nine months, it decreased by **$191 million** mainly due to dividends Consolidated Statement of Changes in Equity (Millions) | Metric | Balance Jun 30, 2022 | Net Income (Loss) | Cash Dividends (Common) | Balance Sep 30, 2022 | | :----------------------------------- | :------------------- | :---------------- | :---------------------- | :------------------- | | Total Equity (3 Months) | $13,836 | $621 | $(518) | $13,910 | | Total Equity (9 Months) | $14,101 (Dec 31, 2021) | $1,420 | $(1,553) | $13,910 | [Consolidated Statement of Cash Flows](index=14&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows%20%E2%80%93%20Nine%20Months%20Ended%20September%2030%2C%202022%20and%202021) For the nine months ended September 30, 2022, net cash provided by operating activities increased to **$3,670 million**, while investing and financing activities resulted in a net decrease in cash and cash equivalents of **$(821) million** Consolidated Statement of Cash Flows (Millions) | Metric | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------------ | :-------------------------- | :-------------------------- | | Net Cash Provided (Used) by Operating Activities | $3,670 | $2,806 | | Net Cash Provided (Used) by Financing Activities | $(1,956) | $(1,626) | | Net Cash Provided (Used) by Investing Activities | $(2,535) | $(1,108) | | Increase (Decrease) in Cash and Cash Equivalents | $(821) | $72 | | Cash and Cash Equivalents at End of Period | $859 | $214 | [Notes to Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes supporting the consolidated financial statements, covering business description, variable interest entities, acquisitions, revenue recognition, income taxes, EPS, employee benefits, debt, fair value, derivatives, contingent liabilities, and segment disclosures [Note 1 - General, Description of Business, and Basis of Presentation](index=15&type=section&id=Note%201%20-%20General%2C%20Description%20of%20Business%2C%20and%20Basis%20of%20Presentation) This note outlines the company's natural gas infrastructure business, its operational segments, and the basis of financial statement presentation, including reclassification of marketing revenues - The company's operations are segmented into Transmission & Gulf of Mexico, Northeast G&P, West, and Gas & NGL Marketing Services, effective January 1, 2022, following an organizational realignment[33](index=33&type=chunk) - Natural gas marketing revenues from Gas & NGL Marketing Services are now presented net of related costs in the Consolidated Statement of Income, as the entire natural gas marketing portfolio is considered held for trading purposes[33](index=33&type=chunk) - The company believes the carrying value of certain property, plant, and equipment and intangible assets may exceed current fair value, but remains recoverable[39](index=39&type=chunk) [Note 2 - Variable Interest Entities](index=16&type=section&id=Note%202%20-%20Variable%20Interest%20Entities) This note identifies the company's consolidated and nonconsolidated Variable Interest Entities (VIEs), detailing Williams' primary beneficiary role in consolidated VIEs and maximum loss exposure in nonconsolidated ones - Consolidated VIEs include Northeast JV (**65% interest**), Gulfstar One (**51% interest**), and Cardinal (**66% interest**), where Williams is the primary beneficiary[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - Targa Train 7 is a nonconsolidated VIE (**20% interest**) with a carrying value of **$46 million** as of September 30, 2022, representing the maximum exposure to loss[44](index=44&type=chunk) [Note 3 - Acquisitions](index=17&type=section&id=Note%203%20-%20Acquisitions) This note details two significant acquisitions: the Trace Acquisition for **$972 million** in April 2022 and the NorTex Asset Purchase for **$424 million** in August 2022, along with pro forma financial information - Acquired **100%** of Gemini Arklatex, LLC (Trace Midstream assets) for **$972 million** cash on April 29, 2022, expanding into the Haynesville Shale region[45](index=45&type=chunk) Trace Acquisition Contribution (April 29 - Sep 30, 2022) | Metric | Amount (Millions) | | :----- | :---------------- | | Revenues | $99 | | Modified EBITDA | $48 | - Purchased north Texas natural gas storage facilities and pipelines from NorTex Midstream Holdings, LLC for approximately **$424 million** on August 31, 2022[61](index=61&type=chunk) - The Sequent Acquisition (July 1, 2021) expanded natural gas marketing activities for **$159 million**[50](index=50&type=chunk) [Note 4 - Revenue Recognition](index=21&type=section&id=Note%204%20-%20Revenue%20Recognition) This note disaggregates revenue by major service line and segment, detailing service revenues and product sales, and provides reconciliations of contract assets and liabilities, and remaining performance obligations Total Revenues by Segment (Millions) - 3 Months Ended Sep 30, 2022 | Segment | Total Revenues | | :--------------------------------- | :------------- | | Transmission & Gulf of Mexico | $1,043 | | Northeast G&P | $459 | | West | $708 | | Gas & NGL Marketing Services | $938 | | Other | $215 | | Eliminations | $(342) | | **Total** | **$3,021** | Total Revenues by Segment (Millions) - 9 Months Ended Sep 30, 2022 | Segment | Total Revenues | | :--------------------------------- | :------------- | | Transmission & Gulf of Mexico | $3,040 | | Northeast G&P | $1,330 | | West | $1,957 | | Gas & NGL Marketing Services | $2,351 | | Other | $450 | | Eliminations | $(1,114) | | **Total** | **$8,035** | Remaining Performance Obligations (Millions) as of Sep 30, 2022 | Year | Contract Liabilities | Remaining Performance Obligations | | :--- | :------------------- | :-------------------------------- | | 2022 (three months) | $52 | $916 | | 2023 (one year) | $154 | $3,610 | | Thereafter | $527 | $17,191 | | **Total** | **$1,082** | **$30,589** | [Note 5 - Provision (Benefit) for Income Taxes](index=24&type=section&id=Note%205%20-%20Provision%20(Benefit)%20for%20Income%20Taxes) This note details the provision for income taxes, which was **$96 million** for three months and **$169 million** for nine months ended September 30, 2022, with effective tax rates lower than statutory due to state benefits and valuation allowance releases Provision (Benefit) for Income Taxes (Millions) | Metric | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2022 | | :--------------------------------- | :-------------------------- | :-------------------------- | | Current Federal | $0 | $(27) | | Current State | $4 | $14 | | Deferred Federal | $163 | $247 | | Deferred State | $(71) | $(65) | | **Total Provision (Benefit)** | **$96** | **$169** | - The effective income tax rate for the three and nine months ended September 30, 2022, was less than the federal statutory rate, primarily due to a **$92 million** state income tax benefit from a decrease in Pennsylvania's deferred state income tax rate[80](index=80&type=chunk)[81](index=81&type=chunk) - During Q2 2022, **$88 million** of valuation allowance was released, including **$70 million** for foreign tax credits and **$18 million** for state net operating loss carryforwards/credits[83](index=83&type=chunk) - Finalized IRS settlements for 2011-2014 decreased unrecognized tax positions by approximately **$46 million**, favorably impacting the tax provision[84](index=84&type=chunk) [Note 6 - Earnings (Loss) Per Common Share](index=26&type=section&id=Note%206%20-%20Earnings%20(Loss)%20Per%20Common%20Share) This note provides the basic and diluted earnings per common share (EPS) for the three and nine months ended September 30, 2022 and 2021, along with the weighted-average shares outstanding Earnings (Loss) Per Common Share | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :----------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Income (Loss) Available to Common Stockholders (Millions) | $599 | $164 | $1,378 | $893 | | Basic EPS | $0.49 | $0.14 | $1.13 | $0.74 | | Diluted EPS | $0.49 | $0.13 | $1.13 | $0.73 | | Basic Weighted-Average Shares (Thousands) | 1,218,964 | 1,215,434 | 1,218,202 | 1,215,113 | | Diluted Weighted-Average Shares (Thousands) | 1,222,472 | 1,217,979 | 1,222,153 | 1,217,558 | [Note 7 - Employee Benefit Plans](index=26&type=section&id=Note%207%20-%20Employee%20Benefit%20Plans) This note details the net periodic benefit cost (credit) for pension and other postretirement benefits for the three and nine months ended September 30, 2022 and 2021 Net Periodic Benefit Cost (Credit) (Millions) | Component | 3 Months Ended Sep 30, 2022 (Pension) | 3 Months Ended Sep 30, 2021 (Pension) | 9 Months Ended Sep 30, 2022 (Pension) | 9 Months Ended Sep 30, 2021 (Pension) | | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | :------------------------------------ | | Service Cost | $7 | $8 | $21 | $23 | | Interest Cost | $8 | $7 | $23 | $21 | | Expected Return on Plan Assets | $(11) | $(11) | $(33) | $(33) | | Amortization of Net Actuarial Loss | $3 | $4 | $9 | $11 | | Net Actuarial Loss from Settlements | $0 | $0 | $0 | $1 | | **Net Periodic Benefit Cost (Credit)** | **$7** | **$8** | **$20** | **$23** | Net Periodic Benefit Cost (Credit) (Millions) | Component | 3 Months Ended Sep 30, 2022 (Other Postretirement) | 3 Months Ended Sep 30, 2021 (Other Postretirement) | 9 Months Ended Sep 30, 2022 (Other Postretirement) | 9 Months Ended Sep 30, 2021 (Other Postretirement) | | :------------------------------------ | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Service Cost | $1 | $1 | $1 | $1 | | Interest Cost | $1 | $1 | $4 | $4 | | Expected Return on Plan Assets | $(3) | $(2) | $(8) | $(7) | | Reclassification to Regulatory Liability | $0 | $0 | $1 | $1 | | **Net Periodic Benefit Cost (Credit)** | **$(1)** | **$0** | **$(2)** | **$(1)** | [Note 8 - Debt and Banking Arrangements](index=27&type=section&id=Note%208%20-%20Debt%20and%20Banking%20Arrangements) This note outlines the company's debt activities, including early retirement of **$1.25 billion** and **$750 million** senior unsecured notes, issuance of **$1.75 billion** in new notes, and the early retirement of **$850 million** notes in October 2022 - Early retired **$1.25 billion** of **3.6%** senior unsecured notes due March 15, 2022, on January 18, 2022[89](index=89&type=chunk) - Early retired **$750 million** of **3.35%** senior unsecured notes due August 15, 2022, on May 16, 2022[89](index=89&type=chunk) - Issued **$1.0 billion** of **4.65%** senior unsecured notes due August 15, 2032, and **$750 million** of **5.30%** senior unsecured notes due August 15, 2052, on August 8, 2022[89](index=89&type=chunk) - Early retired **$850 million** of **3.7%** senior unsecured notes due January 15, 2023, on October 17, 2022[89](index=89&type=chunk) - No commercial paper was outstanding under the **$3.5 billion** program at September 30, 2022[90](index=90&type=chunk) Credit Facility at Sep 30, 2022 (Millions) | Metric | Stated Capacity | Outstanding | | :---------------------------------------- | :-------------- | :---------- | | Long-term credit facility | $3,750 | $0 | | Letters of credit under bilateral bank agreements | N/A | $40 | [Note 9 - Fair Value Measurements and Guarantees](index=28&type=section&id=Note%209%20-%20Fair%20Value%20Measurements%20and%20Guarantees) This note presents the fair value measurements of significant financial assets and liabilities, categorized by Level 1, 2, and 3 inputs, detailing valuation methods for ARO Trust investments, commodity derivatives, long-term debt, and guarantees Fair Value Measurements at Sep 30, 2022 (Millions) | Asset/Liability | Carrying Amount | Fair Value | Level 1 | Level 2 | Level 3 | | :------------------------------------ | :-------------- | :--------- | :------ | :------ | :------ | | ARO Trust investments | $216 | $216 | $216 | $0 | $0 | | Commodity derivative assets | $95 | $95 | $3 | $54 | $38 | | Commodity derivative liabilities | $(815) | $(815) | $(54) | $(717) | $(44) | | Long-term debt, including current portion | $(23,407) | $(21,911) | $0 | $(21,911) | $0 | | Guarantees | $(38) | $(25) | $0 | $(9) | $(16) | - Commodity derivatives are valued using NYMEX futures prices (**Level 1**), basis transactions (**Level 2**), and a combination of observable and unobservable inputs (**Level 3**)[98](index=98&type=chunk) - The company has a guarantee for a former communications subsidiary (WilTel) lease obligation, with a maximum potential undiscounted exposure of approximately **$24 million** at September 30, 2022[99](index=99&type=chunk)[100](index=100&type=chunk) [Note 10 - Derivatives](index=30&type=section&id=Note%2010%20-%20Derivatives) This note discusses the company's use of commodity-related derivatives to manage price risk in marketing and trading activities, providing notional volumes of net long/short positions and their financial statement presentation - The company uses commodity-related derivatives to economically hedge exposures to natural gas, NGLs, and crude oil, and monitors positions using techniques like value at risk[104](index=104&type=chunk)[105](index=105&type=chunk) Notional Volume of Net Long (Short) Positions for Commodity-Related Derivative Contracts at Sep 30, 2022 | Commodity | Unit of Measure | Net Long (Short) Position | | :---------------------- | :-------------- | :------------------------ | | Natural Gas (Index Risk) | MMBtu | 485,699,255 | | Natural Gas (Central Hub Risk - Henry Hub) | MMBtu | (58,780,281) | | Natural Gas Liquids (Central Hub Risk - Mont Belvieu) | Barrels | (52,710,000) | | Crude Oil (Central Hub Risk - WTI) | Barrels | (216,000) | Pre-Tax Effects of Commodity-Related Derivatives in Net Gain (Loss) on Commodity Derivatives (Millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------------------------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Realized commodity-related derivatives not designated as hedging instruments | $(13) | $(62) | $(145) | $(96) | | Unrealized commodity-related derivatives not designated as hedging instruments | $29 | $(309) | $(346) | $(317) | | **Net gain (loss) on commodity derivatives** | **$16** | **$(391)** | **$(491)** | **$(441)** | - The company has specific trade and credit contracts requiring collateral if credit ratings are downgraded to non-investment grade, with a contractually required collateral of **$18 million** as of September 30, 2022[112](index=112&type=chunk) [Note 11 - Contingent Liabilities](index=31&type=section&id=Note%2011%20-%20Contingent%20Liabilities) This note details various contingent liabilities, including ongoing litigation related to natural gas price index manipulation, Alaska refinery contamination, royalty underpayment lawsuits, litigation against Energy Transfer, and environmental remediation liabilities totaling **$32 million** - Two putative class actions related to natural gas price index manipulation remain unresolved, but a preliminary settlement agreement has been reached and fully accrued for[116](index=116&type=chunk)[117](index=117&type=chunk) - Litigation regarding Alaska refinery contamination resulted in a court finding against Williams, with estimated total incurred and potential future damages of **$86 million**, for which an accrued liability has been recorded[120](index=120&type=chunk) - Chesapeake Energy Corporation settled substantially all Pennsylvania royalty cases, which applies to Williams and does not require any contribution from Williams[122](index=122&type=chunk) - A Delaware Chancery Court judgment awarded Williams **$602 million** (including interest and fees) in litigation against Energy Transfer for breaches of the ETE Merger Agreement[126](index=126&type=chunk)[127](index=127&type=chunk) Accrued Environmental Liabilities at Sep 30, 2022 (Millions) | Category | Amount | | :------------------------------------ | :----- | | Interstate gas pipelines remediation | $4 | | Natural gas underground storage facilities | $10 | | Former operations | $18 | | **Total** | **$32** | [Note 12 - Segment Disclosures](index=35&type=section&id=Note%2012%20-%20Segment%20Disclosures) This note provides financial information by reportable segment: Transmission & Gulf of Mexico, Northeast G&P, West, and Gas & NGL Marketing Services, with performance evaluated based on Modified EBITDA - Reportable segments are Transmission & Gulf of Mexico, Northeast G&P, West, and Gas & NGL Marketing Services, with performance evaluated using **Modified EBITDA**[136](index=136&type=chunk)[137](index=137&type=chunk) Modified EBITDA by Segment (Millions) | Segment | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Transmission & Gulf of Mexico | $638 | $630 | $1,987 | $1,936 | | Northeast G&P | $464 | $442 | $1,332 | $1,253 | | West | $337 | $257 | $885 | $702 | | Gas & NGL Marketing Services | $20 | $(262) | $(249) | $(161) | | Other | $140 | $38 | $284 | $91 | | **Total Modified EBITDA** | **$1,599** | **$1,105** | **$4,239** | **$3,821** | - Modified EBITDA for Gas & NGL Marketing Services includes charges of **$64 million** (3 months) and **$76 million** (9 months) associated with lower of cost or net realizable value adjustments to inventory in 2022[139](index=139&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion of the company's financial condition and results of operations, highlighting its strategy as an energy company focused on natural gas infrastructure, covering consolidated overview, recent developments, company outlook, expansion projects, and segment-specific operating results [General](index=39&type=section&id=General) This sub-section reiterates the company's core business as an energy company providing natural gas infrastructure and outlines its four reportable segments, plus an 'Other' category - The company's strategy is to lead in providing infrastructure that safely delivers natural gas products to reliably fuel the clean energy economy[145](index=145&type=chunk) - Interstate natural gas pipeline activities are FERC-regulated, with rates primarily established through ratemaking processes, and revenues largely recovered through firm capacity reservation charges[146](index=146&type=chunk) - Midstream operations focus on safe, reliable, large-scale infrastructure, attracting new business through services like natural gas gathering, processing, and NGL fractionation[147](index=147&type=chunk) - The company's operations are conducted, managed, and presented within four reportable segments: Transmission & Gulf of Mexico, Northeast G&P, West, and Gas & NGL Marketing Services, plus an 'Other' category[148](index=148&type=chunk) [Overview of Nine Months Ended September 30, 2022](index=40&type=section&id=Overview%20of%20Nine%20Months%20Ended%20September%2030%2C%202022) Net income attributable to The Williams Companies, Inc. increased by **$485 million** for the nine months ended September 30, 2022, driven by higher service revenues, commodity margins, and upstream results, partially offset by unfavorable derivative changes and higher expenses - Net income attributable to The Williams Companies, Inc. increased by **$485 million** for the nine months ended September 30, 2022, compared to the same period in 2021[154](index=154&type=chunk) - Key drivers of the increase include higher service revenues from commodity-based gathering and processing rates, higher gathering volumes (Trace Acquisition), Transco's Leidy South project, higher upstream results, and improved commodity margins[154](index=154&type=chunk) - Offsetting factors include a **$12 million** unfavorable change in net unrealized loss on commodity derivatives, increased intangible asset amortization, and the absence of a **$77 million** favorable impact from Winter Storm Uri in 2021[154](index=154&type=chunk)[155](index=155&type=chunk) [Recent Developments](index=40&type=section&id=Recent%20Developments) Recent developments include the Trace Acquisition (**$972 million**) in April 2022, the NorTex Asset Purchase (**$424 million**) in August 2022, and Northwest Pipeline's FERC rate case settlement filing in August 2022 - Completed the Trace Acquisition of Haynesville Shale region gas gathering assets for **$972 million** on April 29, 2022[156](index=156&type=chunk) - Purchased north Texas natural gas storage facilities and pipelines from NorTex Midstream Holdings, LLC for approximately **$424 million** on August 31, 2022[157](index=157&type=chunk) - Northwest Pipeline filed a FERC rate case settlement agreement on August 26, 2022, establishing new general system firm rates effective January 1, 2023[158](index=158&type=chunk) [Company Outlook](index=41&type=section&id=Company%20Outlook) The company's 2022 outlook focuses on earnings and cash flow growth, benefiting from higher commodity prices and volume growth, with growth capital and investment expenditures projected at **$1.25 billion to $1.35 billion** - The company's strategy is to provide large-scale, reliable, and clean energy infrastructure, connecting supply basins with growing demand for cleaner fuels[160](index=160&type=chunk) - Operating results in 2022 are expected to benefit from higher commodity prices, volume growth in Haynesville and Ohio Valley Midstream, Transco expansion projects, and the Trace Acquisition[161](index=161&type=chunk) 2022 Capital Expenditures Outlook (Millions) | Category | Amount | | :------------------------------------ | :------------- | | Growth Capital & Investment Expenditures (excluding acquisitions) | $1,250 - $1,350 | | Total Acquisitions (Trace & NorTex) | ~$1,500 | | Funding Source | Cash flow after dividends | - Potential risks include continued negative impacts of COVID-19, opposition to infrastructure projects, counterparty credit risk, unexpected increases in capital expenditures or delays, and general economic downturns[163](index=163&type=chunk)[164](index=164&type=chunk) [Expansion Projects](index=42&type=section&id=Expansion%20Projects) The company is pursuing several major expansion projects, including five Transco projects to increase natural gas transportation capacity and the Louisiana Energy Gateway project to gather **1.8 Bcf/d** in the Haynesville Shale basin - Regional Energy Access project (Transco) aims to increase capacity by **829 Mdth/d**, in service as early as Q4 2024[166](index=166&type=chunk) - Southside Reliability Enhancement project (Transco) aims to increase capacity by **423 Mdth/d**, in service as early as 2024/2025 winter heating season[167](index=167&type=chunk) - Texas to Louisiana Energy Pathway project (Transco) aims to provide **364 Mdth/d** of new firm transportation service, in service as early as Q4 2025[168](index=168&type=chunk) - Louisiana Energy Gateway project (West) intends to construct new natural gas gathering assets to gather **1.8 Bcf/d** in the Haynesville Shale basin, expected in service late 2024[172](index=172&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's consolidated and segment-specific operating results, focusing on revenue drivers, cost changes, and Modified EBITDA performance [Consolidated Overview](index=44&type=section&id=Consolidated%20Overview) For the three months ended September 30, 2022, total revenues increased by **$546 million** to **$3,021 million**, and net income attributable to The Williams Companies, Inc. increased by **$435 million** to **$600 million**, primarily due to a favorable change in net gain on commodity derivatives Consolidated Financial Performance (Millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | $ Change | % Change | | :----------------------------------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Total Revenues | $3,021 | $2,475 | +546 | +22% | | Net Gain (Loss) on Commodity Derivatives | $16 | $(391) | +407 | NM | | Operating Income (Loss) | $820 | $355 | +465 | +131% | | Net Income (Loss) Attributable to The Williams Companies, Inc. | $600 | $165 | +435 | +264% | Consolidated Financial Performance (Millions) | Metric | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | $ Change | % Change | | :----------------------------------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Total Revenues | $8,035 | $7,370 | +665 | +9% | | Net Gain (Loss) on Commodity Derivatives | $(491) | $(441) | -50 | -11% | | Operating Income (Loss) | $1,946 | $1,694 | +252 | +15% | | Net Income (Loss) Attributable to The Williams Companies, Inc. | $1,380 | $895 | +485 | +54% | - Service revenues increased primarily due to higher gathering rates (favorable commodity prices, contractual escalations), higher gathering volumes (Trace Acquisition), and higher transportation fee revenues (Leidy South expansion)[177](index=177&type=chunk)[184](index=184&type=chunk) - Product sales decreased for the three months due to netting of legacy natural gas marketing revenues with associated costs, but increased for the nine months due to higher marketing sales prices and volumes (Sequent Acquisition), and higher upstream sales[178](index=178&type=chunk)[186](index=186&type=chunk) [Period-Over-Period Operating Results - Segments](index=47&type=section&id=Period-Over-Period%20Operating%20Results%20-%20Segments) Segment operating performance is evaluated based on Modified EBITDA, with increases in Transmission & Gulf of Mexico, Northeast G&P, and West, and a decrease in Gas & NGL Marketing Services for the nine months ended September 30, 2022 [Transmission & Gulf of Mexico](index=47&type=section&id=Transmission%20%26%20Gulf%20of%20Mexico) For the three months ended September 30, 2022, Modified EBITDA increased by **$8 million** to **$638 million**, primarily due to higher service revenues, and by **$51 million** to **$1,987 million** for the nine months Transmission & Gulf of Mexico Modified EBITDA (Millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Modified EBITDA | $638 | $630 | $1,987 | $1,936 | | Commodity Margins | $10 | $8 | $36 | $23 | - Service revenues increased due to a **$43 million** increase in Transco's natural gas transportation and storage revenues (Leidy South expansion, higher storage rates) for the three months, and a **$134 million** increase for the nine months[194](index=194&type=chunk)[196](index=196&type=chunk) - Other segment costs and expenses increased due to higher operating costs (reimbursable electric power, storage), Eminence storage cavern abandonments, and costs associated with the Leidy South expansion project[195](index=195&type=chunk)[197](index=197&type=chunk) [Northeast G&P](index=49&type=section&id=Northeast%20G%26P) For the three months ended September 30, 2022, Modified EBITDA increased by **$22 million** to **$464 million**, driven by higher service revenues and proportional Modified EBITDA from equity-method investments, and by **$79 million** to **$1,332 million** for the nine months Northeast G&P Modified EBITDA (Millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Modified EBITDA | $464 | $442 | $1,332 | $1,253 | | Commodity Margins | $3 | $(2) | $10 | $1 | - Service revenues increased due to higher gathering and processing volumes and rates at Northeast JV (**$16 million** for 3 months, **$36 million** for 9 months) and higher rates at Susquehanna Supply Hub and Utica Shale region[201](index=201&type=chunk)[202](index=202&type=chunk) - Proportional Modified EBITDA of equity-method investments increased at Laurel Mountain due to higher commodity-based gathering rates and MVC revenue[201](index=201&type=chunk)[203](index=203&type=chunk) [West](index=50&type=section&id=West) For the three months ended September 30, 2022, Modified EBITDA increased by **$80 million** to **$337 million**, driven by higher service revenues (Haynesville Shale, Barnett Shale) and proportional Modified EBITDA from equity-method investments, and by **$183 million** to **$885 million** for the nine months West Modified EBITDA (Millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Modified EBITDA | $337 | $257 | $885 | $702 | | Commodity Margins | $27 | $21 | $75 | $78 | - Service revenues increased by **$59 million** in Haynesville Shale (Trace Acquisition, higher rates) and **$40 million** in Barnett Shale (higher rates) for the three months[205](index=205&type=chunk) - Service revenues increased by **$127 million** in Haynesville Shale and **$88 million** in Barnett Shale for the nine months, driven by higher volumes and commodity pricing[206](index=206&type=chunk) - Proportional Modified EBITDA of equity-method investments increased due to higher volumes and commodity prices at RMM and higher volumes at OPPL[206](index=206&type=chunk)[208](index=208&type=chunk) [Gas & NGL Marketing Services](index=52&type=section&id=Gas%20%26%20NGL%20Marketing%20Services) For the three months ended September 30, 2022, Modified EBITDA increased significantly by **$282 million** to **$20 million**, primarily due to the absence of a large net unrealized loss from derivative instruments in 2021, while for nine months, it decreased by **$88 million** to **$(249) million** Gas & NGL Marketing Services Modified EBITDA (Millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Modified EBITDA | $20 | $(262) | $(249) | $(161) | | Commodity Margins | $39 | $46 | $162 | $154 | - For the three months, the increase in Modified EBITDA was primarily due to the absence of a 2021 net unrealized loss from derivative instruments[211](index=211&type=chunk) - For the nine months, commodity margins increased by **$8 million**, driven by a **$56 million** increase in natural gas marketing margins (Sequent Acquisition, favorable pricing spreads), partially offset by a **$48 million** decrease in NGL marketing margins[214](index=214&type=chunk)[215](index=215&type=chunk) - Net unrealized gain (loss) from derivative instruments changed primarily due to the Sequent Acquisition and changes in forward commodity prices relative to hedge positions[215](index=215&type=chunk) [Other](index=53&type=section&id=Other) For the three months ended September 30, 2022, Modified EBITDA increased by **$102 million** to **$140 million**, primarily due to higher results from upstream operations, and by **$193 million** to **$284 million** for the nine months Other Modified EBITDA (Millions) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Modified EBITDA | $140 | $38 | $284 | $91 | | Net Realized Product Sales | $180 | $105 | $418 | $210 | - For the three months, results from upstream operations increased by **$105 million**, driven by a **$75 million** increase in Net realized product sales (higher prices, new wells) and a **$44 million** favorable change in Net unrealized gain (loss) from derivative instruments[217](index=217&type=chunk) - For the nine months, results from upstream operations increased by **$190 million**, driven by a **$208 million** increase in Net realized product sales (higher prices, new wells, acquisitions) and a **$30 million** favorable change in Net unrealized gain (loss) from derivative instruments[218](index=218&type=chunk) - Other segment costs and expenses increased due to increased scale of upstream operations, higher property and production taxes, and an **$11 million** charge for loss contingency in Q3 2022[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the company's exposure to market risks, primarily interest rate risk and commodity price risk, detailing the use of derivative contracts and providing Value at Risk (VaR) metrics for trading and hedging activities - The company is exposed to commodity price risk through natural gas and NGL marketing activities and its upstream business, managed with exchange-traded and OTC energy contracts[239](index=239&type=chunk) Fair Value of Derivative Contracts Outstanding at Sep 30, 2022 (Millions) | Category | Total Fair Value | 2022 | 2023 | 2024 | 2025 - 2026+ | | :------- | :--------------- | :--- | :--- | :--- | :----------- | | Level 1 | $(51) | $44 | $(93) | $(2) | N/A | | Level 2 | $(663) | $(60) | $(359) | $(244) | N/A | | Level 3 | $(6) | $8 | $(15) | $1 | N/A | | **Total** | **$(720)** | **$(8)** | **$(467)** | **$(245)** | **N/A** | - Value at Risk (VaR) for integrated trading operations averaged **$11.1 million** for the six months ended September 30, 2022, with a high of **$20.6 million** and a low of **$5.6 million**[245](index=245&type=chunk) - At September 30, 2022, the VaR associated with derivatives hedging the upstream business and certain gathering and processing contracts was **$11 million**[245](index=245&type=chunk) [Item 4. Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2022, with no material changes to internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2022[247](index=247&type=chunk) - No material changes to internal control over financial reporting occurred during the third quarter of 2022[248](index=248&type=chunk) [Part II. Other Information](index=59&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, risk factors, equity security sales, other information, and a list of exhibits filed with the Form 10-Q [Item 1. Legal Proceedings](index=59&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses legal proceedings, including environmental matters and other litigation, stating no material effect on consolidated financial position is anticipated from pending environmental proceedings - No material effect on consolidated financial position is anticipated from pending environmental legal proceedings involving governmental authorities[250](index=250&type=chunk) - The company is pursuing global resolution with the Department of Justice for alleged Leak Detection and Repair (LDAR) violations at several facilities, which would include a civil penalty and injunctive relief[251](index=251&type=chunk) - Additional information on environmental and other litigation is incorporated by reference from Note 11 – Contingent Liabilities[252](index=252&type=chunk)[253](index=253&type=chunk) [Item 1A. Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the risk factors detailed in the company's Annual Report on Form 10-K for the year ended December 31, 2021, and subsequent Quarterly Reports on Form 10-Q, stating that these factors have not materially changed - Risk factors have not materially changed since the Annual Report on Form 10-K for the year ended December 31, 2021, as supplemented by subsequent Quarterly Reports on Form 10-Q[254](index=254&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=61&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on issuer purchases of equity securities, indicating that **304,281 shares** were repurchased in September 2022 as part of a publicly announced stock repurchase program, with **$1,491,248,057** remaining under the **$1.5 billion** authorization Issuer Purchases of Equity Securities (July 1 - Sep 30, 2022) | Period | Total Shares Purchased | Average Price Per Share | Max Value Remaining Under Program | | :------------------------- | :--------------------- | :---------------------- | :-------------------------------- | | July 1 - July 31, 2022 | — | — | $1,500,000,000 | | August 1 - August 31, 2022 | — | — | $1,500,000,000 | | September 1 - September 30, 2022 | 304,281 | $28.76 | $1,491,248,057 | | **Total** | **304,281** | | | - The company has a stock repurchase program, authorized on September 8, 2021, for up to **$1.5 billion** of common stock with no expiration date[257](index=257&type=chunk) [Item 5. Other Information](index=61&type=section&id=Item%205.%20Other%20Information) This section details amendments to the company's By-laws, effective October 25, 2022, conforming to recent Delaware law amendments and incorporating updates from the SEC's new 'universal proxy' rules - The Board of Directors approved amendments to the By-laws, effective October 25, 2022[258](index=258&type=chunk) - Changes conform to recent amendments to Delaware General Corporation Law, providing greater flexibility for adjourning stockholder meetings and deleting the requirement for a stockholder list during meetings[258](index=258&type=chunk) - Updates stem from the SEC's new "universal proxy" rules (Rule 14a-19), enhancing procedural mechanics and disclosure requirements for stockholder nominations and proposals[259](index=259&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including merger agreements, certificates of incorporation, by-laws (as amended), executive severance plan, CEO/CFO certifications, and XBRL interactive data files - The exhibits include various legal and corporate documents such as merger agreements, certificates of incorporation, and the amended By-laws[263](index=263&type=chunk) - Certifications from the Chief Executive Officer and Chief Financial Officer are included pursuant to the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002[263](index=263&type=chunk) - XBRL interactive data files (Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Presentation Linkbase, Cover Page Interactive Data File) are furnished[263](index=263&type=chunk)[265](index=265&type=chunk)