Williams Companies, Inc. (the) · NYSE:WMB
Williams Companies, Inc. (the) — The Williams Companies — Q1 2006 Earnings Presentation
80 slides from Williams Companies, Inc. (the)'s earnings presentation, May 4, 2006
Slide 1: Williams 2006 1st Quarter Earnings
Williams 2006 1st Quarter Earnings May 4, 2006 © 2006 The Williams Companies, Inc. All rights reserved.
Slide 2: Forward Looking Statements
Forward Looking Statements Our reports, filings, and other public announcements might contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of the Private Securities Litigatio
Slide 3: Oil and Gas Reserves Disclaimer
Oil and Gas Reserves Disclaimer The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves. We use certain terms in this presentation, such as “probable” reserves and “possible” reserves and “new opportunities potential” reserves that the SEC’s guidelines
Slide 4: Overview
Overview Steve Malcolm Chairman, President & CEO © 2006 The Williams Companies, Inc. All rights reserved.
Slide 5: Headlines
Overview Headlines Key earnings measure jumps 19% on 1Q performance Development and step-outs boost proved, probable and possible reserves 22% Activity yields 16% increase over 1Q05 in natural gas production Continued drilling ramp-up designed to deliver more reserves, production growth In
Slide 6: Key Operations Accomplishments
Key Operations Accomplishments Increased 1Q natural gas production nearly 100 MMcfe/d Ramp-up in Piceance development continues Deployed 4 new H&P rigs to develop Piceance Basin production Kicked off 2006 drilling in Piceance Highlands Additional 10-acre spacing OK’d Firmed up plan for n
Slide 7: Financial Results
Financial Results Don Chappel Chief Financial Officer © 2006 The Williams Companies, Inc. All rights reserved.
Slide 8: Consolidated Financial Results
Consolidated Financial Results 1st Quarter Dollars in millions ( except per share amounts) 2006 2005 Income from Continuing Operations $131 $202 Income (Loss) from Discontinued Operations 1 (1) Net Income $132 $201 Net Income/Share $0.22 $0.34 Recurring Income from Continuing Operations /Share $0.23
Slide 9: Recurring Income from Continuing Operations
Consolidated Recurring Income from Continuing Operations 1st Quarter Dollars in millions ( except per share amounts) 2006 2005 Income from Continuing Operations $131 $202 Nonrecurring Items Debt Retirement Expense 27 - Regulatory & Litigation Contingencies/Settlements (7) 4 (Income)/expense related
Slide 10: Recurring Income from Cont. Ops. after MTM Adjustment
Consolidated Recurring Income from Cont. Ops. after MTM Adjustment 1st Quarter Dollars in millions ( except per share amounts) 2006 2005 Recurring Income from Continuing Ops. Avail. to Common $136 $198 Recurring Diluted Earnings per Common Share $0.23 $0.33 Mark-to-Market (MTM) adjustments for Power
Slide 11: First Quarter Segment Profit
Consolidated First Quarter Segment Profit Reported Recurring Dollars in millions 2006 2005 2006 2005 Exploration & Production (see slide 44) $148 $104 $148 $96 Midstream Gas & Liquids (see slide 51) 151 129 145 129 Gas Pipeline (see slide 57) 135 167 133 154 Power (see slide 62) (23) 114 (23) 125 Ot
Slide 12: 2006 Cash Information
Consolidated 2006 Cash Information Dollars in millions 1st Qtr Beginning Unrestricted Cash $ 1,597 1 Cash flow from Continuing Operations 165 Debt Retirements (64) Capital Expenditures (468) Dividends (45) Other-Net (70) Change in Cash and Cash equivalents $ (482) Ending Unrestricted Cash at 03/31/0
Slide 13: Liquidity at March 31, 2006
Consolidated Liquidity at March 31, 2006 Dollars in millions Cash and cash equivalents $ 1,115 Other current securities 184 Less: Subsidiary and International cash & cash equivalents $ 284 Customer margin deposits payable1 129 (413) Available unrestricted cash 886 Available revolver capacity 1,349 T
Slide 14: Exploration & Production
Exploration & Production Ralph Hill President © 2006 The Williams Companies, Inc. All rights reserved.
Slide 15: Total 3P Reserves Grow by 22%
Exploration & Production Total 3P Reserves Grow by 22% 12.0 10.7 Tcfe % r owth 22 10.0 3P G 8.8 Tcfe 8.0 Reserves, Tcfe 6.0 wth 13% 4.0 Proved Gro 2.0 - YE '04 YE '05 Proved Reserves Probable & Possible Reserves © 2006 The Williams Companies, Inc. All rights reserved. Williams 2006 First Quarter Ear
Slide 16: Powder River Production
Exploration & Production Powder River Up 17 MMcfed or 16% over a year ago Big George production is driving basin growth Williams' Powder River Production 150 Net MMcfe/d 100 50 1Q '05 2Q '05 3Q '05 4Q '05 1Q '06 © 2006 The Williams Companies, Inc. All rights reserved. Williams 2006 First Quarter
Slide 17: Piceance Production Growth
Exploration & Production Piceance Production Growth Up 81 MMcfed or 29% over a year ago 21 rigs currently operating compared to 13 a year ago 6 additional H&P FlexRigs to be received Williams' Piceance Production 375 Net MMcfe/d 325 275 225 175 1Q '05 2Q '05 3Q '05 4Q '05 1Q '06 © 2006 The Wil
Slide 18: Low Cost Industry Leader
Exploration & Production Low Cost Industry Leader Industry leader in 3-year average F&D cost of 3-yr Avg ('03-'05) F&D Cost * $0.92/Mcfe $2.00 Top quartile in 2005 $1.50 production cost per Mcfe $/mcfe Top quartile Reserves $1.00 Replacement Rate of 277% $0.50 $0.00 XTO Chevron Devon Kerr-McGe
Slide 19: Cash Margin Analysis
Exploration & Production Cash Margin Analysis 3-Year Average (2006-08) $6.00 Previous Previous $5.75 $3.98 $5.00 $4.00 Cash $3.82 Margin $3.00 $5.55 $2.00 $1.77 $1.00 Cash $1.73 Costs $0.92 $0.00 Realized Gas Price Margin/Cost Assumption F&D Costs Assumption Reflective of core basins •$5.55 is after
Slide 20: Rockies Producer Not Rockies Price Taker
Exploration & Production Rockies Producer Not Rockies Price Taker Powder River Pipes Used to Move Williams ’ Gas CIG NWPL Glenrock Questar Wamsutter Opal Rockies Express Trailblazer Meeker Cheyenne TransColorado WIC Greasewood Piceance Firm Access Under Contract North to Wamsutter 200 Blanco San Jua
Slide 21: 2006-08 Consolidated Outlook
2006-08 Consolidated Outlook Don Chappel Chief Financial Officer © 2006 The Williams Companies, Inc. All rights reserved.
Slide 22: 2006 Forecast Guidance
Consolidated 2006 Forecast Guidance May 4 Feb 28 Dollars in millions, except per-share amounts Guidance Guidance Segment profit before MTM adjustment $1,273 - $1,613 $1,240 - $1,580 Net Interest Expense (665) - (705) (665) - (705) Other (Primarily General Corp. Costs) (85) - (120) (90) - (120) Preta
Slide 23: 2006-08 Segment Profit
Consolidated 2006-08 Segment Profit Dollars in millions 2006 2007 2008 Exploration & Production $525 - 625 $775 - 900 $950 - 1,100 650 - 725 Midstream 500 - 600 410 - 530 440 - 580 400 - 500 Gas Pipeline 475 - 520 585 - 655 590 - 665 Power 1 (205) - (105) (165) - (15) (165) - (15) (235) - (135) (160
Slide 24: 2006-08 Capital Expenditures
Consolidated 2006-08 Capital Expenditures Dollars in millions 2006 2007 2008 Exploration & Prod. $950 - 1,050 $950 - 1,050 $1,000 - 1,150 Midstream 280 - 300 230 - 270 70 - 90 Gas Pipeline 710 - 785 390 - 490 410 - 510 Power - - - Other/Corporate 10 - 30 10 - 30 10 - 30 Total $1,950 - 2,150 $1,600 -
Slide 25: 2006-08 Outlook
Consolidated 2006-08 Outlook Dollars in millions 2006 2007 2008 Segment Profit Reported After MTM Adj. $1,528 - 1,868 $ 1,830 - 2,255 $2,015 - 2,580 $1,520 - 1,860 Recurring After MTM Adj. 1,520 - 1,860 1,830 - 2,255 2,015 - 2,580 DD&A 790 - 890 900 - 1,000 1,000 - 1,100 Cash Flow from Ops.1 1,500 -
Slide 26: Strong Operating Cash Flow Growth & Increasing Investment Opportunities
Consolidated Strong Operating Cash Flow Growth & Increasing Investment Opportunities Cash Flow 1 / Debt / Cap 2 Cap Ex $2,200 to $2,600 2,600 100% 2,400 $1,950 $1,850 to $2,150 to $2,150 90% 2,200 2,000 Opportunity Rich 80% 1,800 $ Millions $1,500 Cap Ex 1,600 to 70% $1,800 $1,600 $1,472 $1,450 to $
Slide 27: Financing Activities to Date
Consolidated Financing Activities to Date Increased Equity Early conversion of $220 million of 5.5% Junior Subordinated Convertible Debentures reduced debt and increased equity Removed Secured Debt Retired $486MM Williams Production RMT term loan Replaced $1.275B secured revolver with $1.5
Slide 28: Planned Future Financing Transactions
Consolidated Planned Future Financing Transactions Senior Unsecured WMB offering to refinance a portion of recently retired Williams Production RMT term loan Debt & Equity offering at WPZ to fund Four Corners acquisition Financing at NWP to fund capital projects This information shall not cons
Slide 29: Financial Strategy/Key Points
Consolidated Financial Strategy/Key Points Drive/enable sustainable growth in EVA® / shareholder value Maintain a cash/liquidity cushion of $1.0 billion plus Continue to steadily improve credit ratios/ratings; ultimately achieving investment grade ratios Reduce risk in Power segment Opport
Slide 30: Summary
Summary Steve Malcolm Chairman, President & CEO © 2006 The Williams Companies, Inc. All rights reserved.
Slide 31: Headlines
Overview Headlines Key earnings measure jumps 19% on 1Q performance Development and step-outs boost proved, probable and possible reserves 22% Activity yields 16% increase over 1Q05 in natural gas production Continued drilling ramp-up designed to deliver more reserves, production growth In
Slide 32: Q&A
Q&A © 2006 The Williams Companies, Inc. All rights reserved.
Slide 33: Non-GAAP Reconciliations
Non-GAAP Reconciliations © 2006 The Williams Companies, Inc. All rights reserved.
Slide 34: Non-GAAP Disclaimer
Non-GAAP Disclaimer This presentation includes certain financial measures, EBITDA, recurring earnings, free cash flow and recurring segment profit, that are non-GAAP financial measures as defined under the rules of the Securities and Exchange Commission. EBITDA represents the sum of net income (loss
Slide 35: Non-GAAP Reconciliation Schedule
Non-GAAP Reconciliation Non-GAAP Reconciliation Schedule Reconciliation of Income from Continuing Operations to Recurring Earnings (Loss) (UNAUDITED) 2005 2006 (Dollars in millions, except per-share amounts) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr Income from continuing operations available to
Slide 36: Non-GAAP Reconciliation Schedule
Non-GAAP Reconciliation Non-GAAP Reconciliation Schedule Reconciliation of Segment Profit to Recurring Segment Profit (UNAUDITED) 2005 2006 (Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr Segment profit (loss): Exploration & Production $ 103.7 $ 118.3 $ 158.8 $ 206.4 $ 587.2 $ 147
Slide 37: Non-GAAP Reconciliation Schedule – EPS after MTM adjustment
Non-GAAP Reconciliation Non-GAAP Reconciliation Schedule – EPS after MTM adjustment Dollars in millions except per share amounts 2006 1Q 2Q 3Q 4Q Year Recurring income from cont. ops available to common shareholders$ 136 $ 136 Recurring diluted earnings per common share $ 0.23 $ 0.23 Mark-to-Market
Slide 38: EBITDA Reconciliation
Non-GAAP Reconciliation EBITDA Reconciliation Dollars in millions 1Q06 Net Income $ 132 (Gain)/Loss from Discontinued Operations (1) Net Interest Expense 160 DD&A 197 Provision for Income Taxes 88 EBITDA $ 576 © 2006 The Williams Companies, Inc. All rights reserved. Williams 2006 First Quarter Earni
Slide 39: 1Q 2006 Segment Contribution
Non-GAAP Reconciliation 1Q 2006 Segment Contribution Dollars in Millions Corp/ E&P Gas Pipeline Midstream Power Other Total Segment Profit (Loss) $ 148 $ 135 $ 151 $ (23) $ 1 $ 412 DD&A 73 69 49 3 3 197 Segment Profit before DDA $ 221 $ 204 $ 200 $ (20) $ 4 $ 609 General Corporate Expense (32) Inves
Slide 40: 2006 Forecast EBITDA Reconciliation
Non-GAAP Reconciliation 2006 Forecast EBITDA Reconciliation Dollars in millions May 4 Guidance Feb 28 Guidance Net Income $308 - 468 $280 - 440 Loss from Disc. Ops. 5-0 5-0 Net Interest 665 - 705 665 - 705 DD&A 790 - 890 790 - 890 Provision for Income Taxes 210 - 320 200 - 315 Other/Rounding (3) - (
Slide 41: 2006 Forecast Segment Contribution
Non-GAAP Reconciliation 2006 Forecast Segment Contribution Corp/ Dollars in millions E&P Midstream Gas Pipeline Power 1 Other Total Segment Profit (Loss) $525 - 625 $500 - 600 $475 - 520 $(205) - (105) $(22) - (27) $1,273 - 1,613 DD&A 335 - 375 190 - 200 280 - 300 10 - 20 (25) – (5) 790 - 890 Segmen
Slide 42: 2006 Forecast Guidance Contribution
Non-GAAP Reconciliation 2006 Forecast Guidance Contribution Dollars in millions, except per-share amounts May 4 Guidance Feb 28 Guidance Net Income $308 - 468 $280 - 440 Less: Discontinued Operations (Loss) (5) – 0 (5) – 0 Income from Continuing Ops $313 - 468 $285 - 440 Non-Recurring Items (Pretax)
Slide 43: Appendix
Appendix © 2006 The Williams Companies, Inc. All rights reserved.
Slide 44: E&P Segment Profit
Exploration & Production Segment Profit 1st Quarter Dollars in millions 2006 2005 Segment Profit $148 $104 Nonrecurring Gain on sales of assets - (8) Recurring segment profit $148 $96 1Q05 to 1Q06 financial highlights include: 16% volume production growth 54% recurring segment profit growth
Slide 45: E&P 2006 Accomplishments
Exploration & Production 2006 Accomplishments 1Q06 total production up Recurring Segment Profit + Depreciation 16%, 100 MMcfed, since 300 1Q05 250 4 H&P rigs drilling 200 Additional Piceance 150 10-acre spacing approved in 100 April for 11,200 acres 50 Piceance Highlands 2006 0 drilling prog
Slide 46: E&P 2006-08 Guidance
Exploration & Production 2006-08 Guidance Dollars in millions 2006 2007 2008 Segment Profit $525 – 625 $775 - 900 $950 - 1,100 650 - 725 Annual DD&A 335 - 375 425 - 475 475 - 525 Segment Profit + DD&A $860 – 1,000 $1,200 - 1,375 $1,425 - 1,625 985 – 1,100 Capital Spending $950 - 1,050 $950 - 1,050 $
Slide 47: New E&P Opportunities
Exploration & Production New E&P Opportunities Piceance Basin: Shale Ridge Prospect (Dakota Sandstone play) WYOMING Leased 13,904 gross/net acres 100% WI; 87.5% NRI 10-year lease term UTAH Piceance Basin: Pending Williams COLORADO Fork Project Uinta 2006 drill-to-earn commitment Basin Pi
Slide 48: US Natural Gas Reserves Rankings
Exploration & Production US Natural Gas Reserves Rankings Bcf 2005 Reserves Company 2004 2005 Repl. Rate 1 BP 14,081 15,382 72% 2 ExxonMobil 12,329 13,692 112% 3 ConocoPhillips 7,578 7,586 230% 4 Chesapeake 4,374 6,901 659% 5 Anadarko 6,093 6,578 151% 6 XTO 4,715 6,086 463% 7 Burlington 5,076 5,275
Slide 49: Williams is a Leader in US Gas Production Growth through the Drill Bit
Exploration & Production Williams is a Leader in US Gas Production Growth through the Drill Bit Top 20 U.S. Gas Producers Top 20 U.S. Gas Producers (sorted by 2005 MMcfd) (sorted by Percent Change) MMcfd Percent MMcfd Percent Company 2004 2005 change Company 2004 2005 change 1 BP 2,749 2,546 -7.4% 1
Slide 50: 2006-08 Hedge Update
Exploration & Production 2006-08 Hedge Update Dollars in millions 2Q-4Q 2006 2007 2008 Fixed Price at the basin: Volume (MMcf/d) 301 172 73 Average Price ($/Mcf) $3.82 $3.90 $3.96 NYMEX Collars: Volume (MMcf/d) 65 15 - Average Price ($/Mcf) $6.62 - $8.42 $6.50 - $8.25 At the Basin Collars:1 NWPL Roc
Slide 51: Midstream Segment Profit
Midstream Segment Profit 1st Quarter Dollars in millions 2006 2005 Segment Profit $151 $129 Nonrecurring International Contract Settlement (6) Recurring segment profit $145 $129 1Q06 to 1Q05 financial highlights include: Near record quarter (4Q04 recurring was $151) Higher deepwater production h
Slide 52: Midstream 2006 Accomplishments
Midstream 2006 Accomplishments Recurring Segment Profit + Depreciation Increased NGL production $ MM Cameron Meadows back-on line 200 Entering into forward sale of NGL’s 180 Discovery Emergency Open 160 Season volumes 140 New Deepwater development 120 Progress on Overland Pass project 10
Slide 53: Midstream 2006-08 Guidance
Midstream 2006-08 Guidance Dollars in millions 2006 2007 2008 Segment Profit $500 - 600 $410 - 530 $440 – 580 400 – 500 Annual DD&A 190 - 200 200 - 210 210 – 220 Segment Profit + DD&A $690 - 800 $610 - 740 $650 – 800 590 – 700 Capital Spending $280 - 300 $230 - 270 $70 – 90 Major Growth Projects inc
Slide 54: Margins Above Average
Midstream Margins Above Average Domestic NGL Average Realized Net Margin and Volumes by Quarter Margin Total Production & Equity 25 (Cents / Gallon) Volumes by Quarter 800 (MM Gallons) 700 20 600 500 15 400 10 300 200 5 100 0 0 Q1'02 Q2'02 Q3'02 Q4'02 Q1'03 Q2'03 Q3'03 Q4'03 Q1'04 Q2'04 Q3'04 Q4'04
Slide 55: Strong Free Cash Flow
Midstream Strong Free Cash Flow Dollars in millions Seg Profit & DDA 800 Discretionary 700 Expansion Margin 600 Uplift 500 Base 400 Capital Spending 300 Historic Expansion 200 Discretionary Expansion 100 Maintenance 0 Well Connects 2004 2005 2006 2007 2008 Capital Seg Capital Seg Capital Seg Capital
Slide 56: NGL Forward Sales
Midstream NGL Forward Sales (as of April 28, 2006) Amount of Forward Sales Expected Margin @ NYMEX Strip 1,400 0.40 1,200 0.35 Volume (MM Gals) 1,000 0.30 Price ($/Gallon) 800 0.25 600 0.20 0.15 400 0.10 200 0.05 0 Expected Equity Forward Sales 0.00 Volume (Annual) Volume (May- Avg 5 Yr Opal Expecte
Slide 57: Gas Pipeline Segment Profit
Gas Pipeline Segment Profit 1st Quarter Dollars in millions 2006 2005 Segment Profit $135 $167 Nonrecurring Excess royalty reserve reversal (2) - Income related to prior period - (13) Recurring segment profit $133 $154 1Q05 to 1Q06 financial highlights include: 2006 • $2 million - environmental
Slide 58: Gas Pipeline 2006 Accomplishments
Gas Pipeline 2006 Accomplishments Northwest: FERC certificate application filed for Parachute Lateral Recurring Segment Profit + Depreciation Successful open season for Jackson Prairie 250 incremental storage service 200 Northwest partners with PG&E and Fort 150 Chicago Energy Partners, LP to
Slide 59: Gas Pipeline 2006-08 Guidance
Gas Pipeline 2006-08 Guidance Dollars in millions 2006 2007 2008 Segment Profit $475 - 520 $585 - 655 $590 - 665 Annual DD&A 280 - 300 290 - 310 295 - 315 Segment Profit + DD&A $755 - 820 $875 - 965 $885 - 980 Capital Spending $710 - 785 $390 - 490 $410 - 510 Note: If guidance has changed, previous
Slide 60: 2006-08 Capital Spending Detail
Gas Pipeline 2006-08 Capital Spending Detail Dollars in millions 2006 2007 2008 Normal Maintenance/Compliance $340 - 405 $210 - 265 $180 - 260 Northwest 26-inch Replacement 276 2 - Expansion 95 - 105 180 - 220 230 - 250 Total $710 - 785 $390 - 490 $410 - 510 1 Major Growth Projects (in guidance): 20
Slide 61: Strong Free Cash Flow
Gas Pipeline Strong Free Cash Flow Dollars in millions Seg Profit + DDA 1000 Seg Profit + DDA 900 800 Capital Spending 700 Expansion 600 26-inch Replacement 500 Maint/Compliance 400 300 200 100 0 2005 2006 2007 2008 Note: - Segment Profit is stated on a recurring basis. - Segment Profit + DDA and Ca
Slide 62: Power Segment Profit
Power Segment Profit 1st Qtr Dollars in Millions 2006 2005 Segment Profit/(Loss) ($23) $114 Nonrecurring: Accrual for Regulatory & Litigation Contingencies/Settlements - 4 Expense Related to Prior Periods - 7 Recurring Segment Profit/(Loss) (23) 125 MTM Adjustment (Recurring) 34 (108) Recurring Segm
Slide 63: Power 2006-08 Guidance
Power 2006-08 Guidance Dollars in millions 2006 2007 2008 Prior Guidance - Segment Loss before MTM Adj ($235) - (135) ($160) - (10) ($150) - (0) Est. Fwd Impact of 1Q06 MTM Earnings 30 (5) (15) New Guidance - Segment Loss before MTM Adj ($205) - (105) ($165) - (15) ($165) - (15) (235) - (135) (160)
Slide 64: 1Q 2006 - Segment Profit/(Loss) to Cash Flow from Ops
Power 1Q 2006 - Segment Profit/(Loss) to Cash Flow from Ops Dollars in Millions Commodity Working Power Capital/ & NG Other CFFO Segment Profit/(Loss) ($26) $3 ($23) MTM Adjustments: Reverse Forward Unrealized MTM (Gains) (43) (43) Add Realized Gains from MTM Previously Recognized 77 77 Segment Prof
Slide 65: Cash Flow Analysis
Power Cash Flow Analysis Estimated undiscounted dollars in millions YTD Actual vs. Forecast 2006 1Q06A 1Q06F Variance 2006A+F 2007F 2008F Tolling Demand Payment Obligations ($86) ($86) $0 ($397) ($402) ($407) Hedged Cash Flows 2 585 503 524 131 1 136 (5) Merchant Cash Flows 3 43 92 85 SG&A and Other
Slide 66: New contracts since February call
Power New contracts since February 28 call Tenaska - Lindsay Hill Southeast Utility 56 Mar 06 - Dec 06 Tenaska - Lindsay Hill Utility 106 Mar 07 - Dec 09 Red Oak (closed in April 06) Northeast Utility 100 Summer 07 Ironwood (closed in April 06) Northeast Muni 200 Jun 06 - May 07 Ironwood (closed in
Slide 67: New Deals Since 2004 Add to Estimated Hedged Cash Flows
Power New Deals Since 2004 Add to Estimated Hedged Cash Flows $700 Undiscounted dollars in millions $650 $600 $550 $500 Demand payments plus SG&A $450 $400 $580 million increase $350 $300 $250 2006 2007 2008 2009 2010 Hedged on 12/31/04 Hedged on 3/31/06 Merchant on 3/31/06 © 2006 The Williams Compa
Slide 68: Capacity Sold by Year
Power Capacity Sold by Year Capacity Sold by Year 8,000 6,000 2,471 2,784 2,826 4,000 4,887 4,574 4,532 2,000 0 2006F 2007F 2008F Total Capacity Sold Remaining Available Upside © 2006 The Williams Companies, Inc. All rights reserved. Williams 2006 First Quarter Earnings / Thursday, May 4, 2006 / 68
Slide 69: 1Q06 Financial Statement Changes for Derivatives
Power 1Q06 Financial Statement Changes for Derivatives During 1Q06, Williams reported the following changes related to its derivative portfolio: Balance Sheet Income Statement Dollars in millions Der A/L OCI MTM Realized Gain/(Loss) (Gain)/Loss Total Change in Consolidated Derivative Values $269 $
Slide 70: West Undiscounted Cash Flows
Power West Undiscounted Cash Flows Dollars in millions West Power Portfolio Estimated as of 3/31/06 Q1'06A 2006F+A 2007F 2008F Tolling Demand Payment Obligations ($38) ($152) ($153) ($155) Hedged Cash Flows 2 $89 $430 $400 $377 Merchant Cash Flows 3 $0 $1 $1 $4 Total Cash Flows $51 $279 $248 $226 Ca
Slide 71: Mid-Con Undiscounted Cash Flows
Power Mid-Con Undiscounted Cash Flows Dollars in millions Mid-Continent Power Portfolio Estimated as of 3/31/06 Q1'06A 2006F+A 2007F 2008F Tolling Demand Payment Obligations ($13) ($88) ($89) ($90) Hedged Cash Flows2 $4 $29 $31 $29 Merchant Cash Flows3 $0 $15 $19 $21 Total Cash Flows ($9) ($44) ($39
Slide 72: East Undiscounted Cash Flows
Power East Undiscounted Cash Flows Dollars in millions East Power Portfolio Estimated as of 3/31/06 Q1'06A 2006F+A 2007F 2008F Tolling Demand Payment Obligations ($35) ($158) ($160) ($162) Hedged Cash Flows 2 $34 $127 $71 $118 3 Merchant Cash Flows $0 $28 $71 $59 Total Cash Flows ($1) ($3) ($18) $15
Slide 73: WMB Collateral Outstanding
Enterprise Risk Management WMB Collateral Outstanding As of 3/31/06 Corp./ Dollars in millions E&P Midstream Power Other Total Margins & Ad. Assur. $152 $0 $27 $0 $179 Prepayments 0 1 9 0 10 Subtotal 152 1 36 0 189 Letters of Credit 497 138 427 64 1126 Total as of 3/31/06 649 139 463 64 1315 Total a
Slide 74: WMB Collateral Sensitivity
Enterprise Risk Management WMB Collateral Sensitivity Dollars in millions Margin Volatility (1% chance of exceeding) -Potential incremental collateral requirement Days 3/31/2006 12/30/2005 9/30/2005 6/30/2005 30 ($223) ($325) ($469) ($178) 180 ($769) ($559) ($868) ($458) 360 ($626) ($567) ($926) ($3
Slide 75: Sensitivity Analysis
Enterprise Risk Management Sensitivity Analysis Dollars in millions, except per unit increases Enterprise 1 Power Co. 2 Midstream 3 Natural Gas Power Processing Margin Per MMBtu Per MWh Per Gallon of NGL's Increase $0.10 $1 $0.01 2006 4 $2-$5 $2-$4 $7-$11 2007 $8-$10 $6-$8 $10-$15 2008 $20-$22 $9-$1
Slide 76: Debt Balance
Consolidated Debt Balance1 Dollars in millions Avg. Cost Debt Balance @ 12/31/05 $7,713 7.6% Early Conversions (220) Scheduled Debt Retirements & Amortization (64) Debt Balance @ 3/31/06 $7,429 7.7% Fixed Rate Debt @ 03/31/06 $6,788 7.8% Variable Rate Debt @ 03/31/06 $641 6.7% 1 Debt is long-term de
Slide 77: EPS Metrics
Consolidated EPS Metrics 2006 1Q 2Q 3Q 4Q Total Diluted EPS from Cont. Ops.$0.22 - - - - Recurring EPS 0.23 - - - - Recurring EPS after MTM Adj. 0.26 - - - - Average Shares (MM) 607 - - - - 2005 1Q 2Q 3Q 4Q Total Diluted EPS from Cont. Ops.$0.34 $0.07 $0.01 $0.11 $0.53 Recurring EPS 0.33 0.11 (0.01)
Slide 78: 2006 Interest Expense Forecast Guidance
Consolidated 2006 Interest Expense Forecast Guidance Dollars in millions 2006 Interest on Long-Term Debt $574 - $591 Amortization Discount/Premium and other 35 - 43 Debt Expense Credit Facilities: 42 - 52 (incl. Commitment Fees plus LC Usage) Interest on other Liabilities 22 - 32 Interest Expense $6
Slide 79: 2006 Effective Tax Rates
Consolidated 2006 Effective Tax Rates 2006 First Quarter Statutory Rate 77 35% State 12 6% Foreign 0 0% Other (1) -1% Tax Provision/(Benefit) 88 40% 2006 2007 2008 1 Effective Tax Rate Guidance 39% 39% 39% 2 Cash Tax Rate Guidance 8-13% 5-10% 9-14% Note 1: Additional income tax expense of $5-15 mill
Slide 80: The Williams Companies, Inc.
The Williams Companies, Inc. © 2006 The Williams Companies, Inc. All rights reserved.
The Williams Companies — Q1 2006 Earnings Presentation on 6ix