Williams Companies, Inc. (the) · NYSE:WMB

Williams Companies, Inc. (the) — The Williams Companies — Q3 2006 Earnings Presentation

100 slides from Williams Companies, Inc. (the)'s earnings presentation, Nov 2, 2006

1. Slide 1: Williams 2006 3rd Quarter Earnings

   Williams 2006 3rd Quarter Earnings November 2, 2006 © 2006 The Williams Companies, Inc. All rights reserved.

2. 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

3. Slide 3: Forward Looking Statements (cont.)

   Forward Looking Statements (cont.) • Our ability to receive services from outsourcing provider locations outside the United States might be impacted by cultural differences, political instability, or unanticipated regulatory requirements in jurisdictions outside the United States; • We could be held

4. Slide 4: 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

5. Slide 5: Overview

   Overview Steve Malcolm Chairman, President & CEO © 2006 The Williams Companies, Inc. All rights reserved.

6. Slide 6: Headlines

   Headlines ‹ Portfolio delivers strong quarter-over-quarter earnings ƒ 38% quarter-over-quarter increase in key earnings measure* ƒ 47% jump year-to-date ’06 vs. ’05 ‹ Raising guidance for ’06 ‹ Production up 22% year over year ‹ NGL margins at historic levels ‹ Progress on deepwater expansion * Recu

7. Slide 7: Well-positioned for near- to long-term value creation

   Well-positioned for near- to long-term value creation ƒ E&P – our growth: long-lived natural gas assets and among industry’s lowest development costs Premier assets that are ƒ Midstream – significant growth potential; strong free cash flow from ops and drop-downs; opportunity rich recent record quar

8. Slide 8: Portfolio delivers value in various price environments

   Portfolio delivers value in various price environments Crude = West Texas Intermediate. Gas = Henry Hub. Source = Energy Information Administration © 2006 The Williams Companies, Inc. All rights reserved. Williams 2006 Third Quarter Earnings / Thursday, November 2, 2006 / 8

9. Slide 9: E&P net realized prices relatively unaffected by cash market drop

   E&P net realized prices relatively unaffected by cash market drop E&P net realized price 16 14 12 Opal Henry 10 Hub $/MMBtu 8 6 4 Daily cash $4.80 $5.66 $4.80 market 2 $4.18 $4.32 Net realized price 0 3Q 4Q 1Q 2Q 3Q ’05 ’05 ’06 ’06 ’06 © 2006 The Williams Companies, Inc. All rights reserved. William

10. Slide 10: We move Piceance gas to higher-price markets for sale

    We move Piceance gas to higher-price markets for sale ‹ Insulated from Rockies prices for gas sales ‹ Our contracted pipeline capacity to moves our Rockies production to 209 150 more favorable price markets 200 200 Firm Capacity Under Contract Wamsutter 200 285 East to Midcontinent 209 South to San

11. Slide 11: Commodity prices affect Midstream differently

    Commodity prices affect Midstream differently Commodity Prices ($/MMBtu) $14 $12 $10 Frac ($/MMBtu) $8 Spread $6 $4 $2 $0 1Q '05 2Q '05 3Q '05 4Q '05 1Q '06 2Q '06 3Q '06 Oil - NYMEX ($/MMBtu) NGL - Mont Belvieu ($/MMBtu) Gas - Opal ($/MMBtu) Gas prices based on average Gas Daily settle prices at NW

12. Slide 12: Current Rockies price softness benefits our Midstream

    Current Rockies price softness benefits our Midstream ‹ We’re a purchaser of Rockies gas to fuel our processing business ‹ In strong crude market, lower gas prices dramatically improve the margins for our Midstream business © 2006 The Williams Companies, Inc. All rights reserved. Williams 2006 Third

13. Slide 13: E&P Business creates net long position

    E&P Business creates net long position… Economic Natural Gas Exposure for E&P (4Q 2006-2008) E&P Gross Commodity Position 1,000,000 E&P Net Commodity Position E&P Net Commodity Position 750,000 500,000 MMBtu/Day 250,000 0 4Q 2006 2007 2008 (250,000) (500,000) • All values are undiscounted • Internat

14. Slide 14: Offset by Midstream gas use

    …which is offset by Midstream gas use Economic Natural Gas Exposure for E&P (4Q 2006-2008) E&P Gross Commodity Position 1,000,000 E&P Net Commodity Position Midstream Fuel & Shrink E&P Net Commodity Position 750,000 500,000 MMBtu/Day 250,000 0 (250,000) (500,000) 4Q 2006 2007 2008 • All values are u

15. Slide 15: Well-positioned for near- to long-term value creation

    Well-positioned for near- to long-term value creation Premier assets that are opportunity rich Pursuing growth with discipline Solid record of delivering results Taking action to drive value creation © 2006 The Williams Companies, Inc. All rights reserved. Williams 2006 Third Quarter Earnings / Thur

16. Slide 16: Financial Results

    Financial Results Don Chappel Chief Financial Officer © 2006 The Williams Companies, Inc. All rights reserved.

17. Slide 17: Financial Results

    Financial Results Financial Results 3rd Quarter YTD Dollars in millions ( except per share amounts) 2006 2005 2006 2005 Income from Continuing Operations $ 110 $ 5 $ 177 $ 249 (Loss) from Discontinued Operations (4) (1) (15) (2) Net Income $ 106 $ 4 $ 162 $ 247 Net Income/Share $ 0.18 $ 0.01 $ 0.27

18. Slide 18: Recurring Income from Continuing Operations

    Financial Results Recurring Income from Continuing Operations 3rd Quarter YTD Dollars in millions ( except per share amounts) 2006 2005 2006 2005 Income from Continuing Operations $ 110 $ 5 $ 177 $ 249 Nonrecurring Items Regulatory & Litigation Contingencies Settlements & Related Costs 10 - 253 18 D

19. Slide 19: Recurring Income from Cont. Ops. After MTM Adjustment

    Financial Results Recurring Income from Cont. Ops. After MTM Adjustment 3rd Quarter YTD Dollars in millions ( except per share amounts) 2006 2005 2006 2005 Recurring Inc. (Loss) from Cont. Ops. Avail. to Common $ 113 $ (5) $ 362 $ 260 Recurring Diluted Earnings (Loss) per Common Share $ 0.19 $(0.01)

20. Slide 20: Third Quarter Segment Profit

    Financial Results Third Quarter Segment Profit Reported Recurring Dollars in millions 2006 2005 2006 2005 Exploration & Production (see slide 54) $145 $159 $145 $137 Midstream Gas & Liquids (see slide 65) 212 121 222 121 Gas Pipeline (see slide 75) 109 161 109 147 Power (see slide 82) (70) (226) (79

21. Slide 21: 2006 YTD Segment Profit

    Financial Results 2006 YTD Segment Profit Reported Recurring Dollars in millions 2006 2005 2006 2005 Exploration & Production (see slide 54) $412 $381 $412 $352 Midstream Gas & Liquids (see slide 65) 494 359 566 359 Gas Pipeline (see slide 75) 366 493 364 444 Power (see slide 82) (172) (187) (181) (

22. Slide 22: Exploration & Production

    Exploration & Production Ralph Hill President © 2006 The Williams Companies, Inc. All rights reserved.

23. Slide 23: Piceance Production Growth

    Exploration & Production Piceance Production Growth ‹ Up 101 MMcfed or 31% over a year ago ‹ 24 total rigs currently operating in Valley and Highlands compared to 15 a year ago ‹ 2 additional H&P FlexRigs to be received in 2006 ‹ 4 Nabors Super Sundowner rigs to be received in early 2007 ‹ Williams

24. Slide 24: Piceance Highlands – Building Momentum

    Exploration & Production Piceance Highlands – Building Momentum ‹ 39 wells spud year to date ‹ 24 MMcfed current net production, up from 5 MMcfed year ago ‹ Averaged 8 rigs operating during 3Q06 ‹ Major road, pipeline, and facilities under construction ‹ Working towards year round drilling © 2006 Th

25. Slide 25: Piceance Basin: Highlands Ownership Position

    Exploration & Production Piceance Basin: Highlands Ownership Position Highlands ownership positions outlined in red Farm-In Deals Barcus Creek Ryan Gulch ‹ Earned 16,000 net acres by Ryan Gulch drilling 6 wells Allen Point ‹ Earned 6,200 net acres by drilling 6 wells Barcus Creek Trail Ridge West ‹

26. Slide 26: Barcus Creek Farm-In Deal

    Exploration & Production Barcus Creek Farm-In Deal ‹ Direct bolt-on to Ryan Gulch Project ‹ Targets Williams Fork Formation ‹ Drill 5 wells by October 2007, with first well currently drilling ‹ Earn 45% working interest in ~25,000 gross acres (~11,000 acres net to Williams) ‹ 87.5% NRI ‹ 45% working

27. Slide 27: Midstream

    Midstream Alan Armstrong President © 2006 The Williams Companies, Inc. All rights reserved.

28. Slide 28: Significant Progress Made on Growth Projects

    Midstream Significant Progress Made on Growth Projects In Development/Proposal Under Negotiation In Guidance 2006 2007 2008+ 2006 2007 2008+ 2006 2007 2008+ Spending $900MM–1,500MM Spending $300MM–500MM Spending $800-900MM 7% 11% 32% 12% 25% 37% 58% 77% 10% 31% Deepwater Overland Pass Deepwater Opal

29. Slide 29: Deepwater Lower Tertiary Discoveries

    Midstream Deepwater Lower Tertiary Discoveries © 2006 The Williams Companies, Inc. All rights reserved. Williams 2006 Third Quarter Earnings / Thursday, November 2, 2006 / 29

30. Slide 30: 2006-08 Consolidated Outlook

    2006-08 Consolidated Outlook Don Chappel Chief Financial Officer © 2006 The Williams Companies, Inc. All rights reserved.

31. Slide 31: 2006 Forecast Guidance

    Consolidated 2006 Forecast Guidance Nov 2 Aug 3 Dollars in millions, except per-share amounts Guidance Guidance Segment profit before MTM adjustment $1,430 - $1,645 $1,355 - $1,675 Net Interest Expense (660) - (690) (670) - (710) Other (Primarily General Corp. Costs) (115) - (135) (105) - (125) Secu

32. Slide 32: 2006-08 Segment Profit

    Consolidated 2006-08 Segment Profit Dollars in millions 2006 2007 2008 Exploration & Production $550 - 600 $825 - 950 $1,025 - 1,175 650 Midstream 675 - 750 1 500 - 750 550 - 800 550 - 675 1 Gas Pipeline 475 - 500 585 - 655 590 - 665 520 Power (240) - (190) (75) - 25 (150) - 0 (200) - (150) (175) -

33. Slide 33: 2006-08 Capital Expenditures

    Consolidated 2006-08 Capital Expenditures Dollars in millions 2006 2007 2008 Exploration & Prod. $1,150 - 1,250 $1,150 - 1,250 $1,150 - 1,300 Midstream 250 - 260 420 - 460 260 - 300 280 - 300 230 - 270 70 - 90 Gas Pipeline 745 - 815 370 - 470 340 - 440 Power - - - Other/Corporate 10 - 30 10 - 30 10

34. Slide 34: 2006-08 Outlook

    Consolidated 2006-08 Outlook Dollars in millions 2006 2007 2008 Segment Profit Reported After MTM Adj. $1,745 - 1,960 $ 1,970 - 2,475 $2,200 - 2,875 $1,630 - 1,950 Recurring After MTM Adj. 1,806 - 2,021 1,970 - 2,475 2,200 - 2,875 1,690 - 2,010 DD&A 840 - 920 960 - 1,060 1,050 - 1,150 820 - 920 930

35. Slide 35: Strong Operating Cash Flow Growth & Increasing Investment Opportunities

    Consolidated Strong Operating Cash Flow Growth & Increasing Investment Opportunities Cash Flow 1 / Cap Ex 3,000 $2,425 to 100% $2,825 2,800 2,600 90% Opportunity Rich 2,400 80% 2,200 $2,000 to $2,175 to $2,300 $ Millions 2,000 $2,375 Cap E x 70% $2,000 to $2,200 1,800 62% $1,500 $1,800 to $1,415 3 t

36. Slide 36: Financial Strategy/Key Points

    Consolidated Financial Strategy/Key Points ‹ Drive/enable sustainable growth in EVA® / shareholder value ‹ Strategy to accelerate delivery of MLP benefits to WMB ‹ Continue to maintain and/or improve credit ratios/ratings ‹ Reduce risk in Power segment ‹ Opportunity rich ƒ Increasing focus and disci

37. Slide 37: Summary

    Summary Steve Malcolm Chairman, President & CEO © 2006 The Williams Companies, Inc. All rights reserved.

38. Slide 38: Well-positioned for near- to long-term value creation

    Well-positioned for near- to long-term value creation Premier assets that are opportunity rich Pursuing growth with discipline Solid record of delivering results Taking action to drive value creation © 2006 The Williams Companies, Inc. All rights reserved. Williams 2006 Third Quarter Earnings / Thur

39. Slide 39: Q&A

    Q&A © 2006 The Williams Companies, Inc. All rights reserved.

40. Slide 40: Non-GAAP Reconciliations

    Non-GAAP Reconciliations © 2006 The Williams Companies, Inc. All rights reserved.

41. Slide 41: 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

42. Slide 42: Non-GAAP Reconciliation Schedule

    Non-GAAP Reconciliation Non-GAAP Reconciliation Schedule Reconciliation of Income (Loss) 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 2nd Qtr 3rd Qtr Year Income (loss) from

43. Slide 43: Non-GAAP Reconciliation Schedule

    Non-GAAP Reconciliation Non-GAAP Reconciliation Schedule (UNAUDITED) 2005 2006 (Dollars in millions) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr Year Segment profit (loss): Exploration & Production $ 103.7 $ 118.3 $ 158.8 $ 206.4 $ 587.2 $ 147.6 $ 119.8 $ 144.5 $ 411.9 Gas Pipeline

44. Slide 44: 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 $ 113 $ 113 $ 362 Recurring diluted earnings per common share $ 0.23 $ 0.19 $

45. Slide 45: EBITDA Reconciliation

    Non-GAAP Reconciliation EBITDA Reconciliation Dollars in millions 3Q06 YTD Net Income $ 106 $ 162 Loss from Discontinued Operations 4 15 Net Interest Expense 158 495 DD&A 220 628 Provision for Income Taxes 100 190 EBITDA $ 588 $ 1,490 © 2006 The Williams Companies, Inc. All rights reserved. Williams

46. Slide 46: 3Q 2006 Segment Contribution

    Non-GAAP Reconciliation 3Q 2006 Segment Contribution Dollars in Millions Corp/ E&P Midstream Gas Pipeline Power Other Total Segment Profit (Loss) $ 145 $ 212 $ 109 $ (70) $ - $ 396 DD&A 95 50 70 2 3 220 Segment Profit before DDA $ 240 $ 262 $ 179 $ (68) $ 3 $ 616 General Corporate Expense (35) Secur

47. Slide 47: YTD 2006 Segment Contribution

    Non-GAAP Reconciliation YTD 2006 Segment Contribution Dollars in Millions Corp/ E&P Midstream Gas Pipeline Power Other Total Segment Profit (Loss) $ 412 $ 494 $ 366 $ (172) $ 1 $ 1,101 DD&A 252 149 209 9 9 628 Segment Profit before DDA $ 664 $ 643 $ 575 $ (163) $ 10 $ 1,729 General Corporate Expense

48. Slide 48: 2006 Forecast EBITDA Reconciliation

    Non-GAAP Reconciliation 2006 Forecast EBITDA Reconciliation Dollars in millions Nov 4 Guidance Aug 3 Guidance Net Income $245 - 355 $228 - 383 Loss from Disc. Ops. 20 - 0 5-0 Net Interest 660 - 690 670 - 710 DD&A 840 - 920 820 - 920 Provision for Income Taxes 225 - 300 185 - 295 Other/Rounding 10 (8

49. Slide 49: 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) $550 - 600 $675 - 750 $475 - 500 $(240) - (190) $(30) - (15) $1,430 - 1,645 DD&A 360 - 400 190 - 200 280 - 300 10 - 15 0-5 840 - 920 Seg Profit/

50. Slide 50: 2006 Forecast Guidance Contribution

    Non-GAAP Reconciliation 2006 Forecast Guidance Contribution Dollars in millions, except per-share amounts Nov 2 Guidance Aug 3 Guidance Net Income $245 - 355 $228 - 383 Less: Discontinued Operations (Loss) (20) - 0 (5) - 0 Income from Continuing Ops $265 - 355 $233 - 383 Non-Recurring Items (Pretax)

51. Slide 51: Appendix

    Appendix © 2006 The Williams Companies, Inc. All rights reserved.

52. Slide 52: Exploration & Production

    Exploration & Production © 2006 The Williams Companies, Inc. All rights reserved.

53. Slide 53: Key Points – Value Creation Continues

    Exploration & Production Key Points – Value Creation Continues ‹ An industry leader in production growth, cost efficiencies and reserves replacement ‹ Long-term repeatable drilling inventory of significant proved undeveloped, probables, and possibles ‹ Strategy remains rapid development of our premi

54. Slide 54: Segment Profit – Exploration & Production

    Exploration & Production Segment Profit – Exploration & Production 3rd Quarter YTD Dollars in millions 2006 2005 2006 2005 Segment Profit $145 $159 $412 $381 Nonrecurring Gains on sales of assets - (22) - (29) Recurring segment profit $145 $137 $412 $352 3Q06 to 3Q05 financial highlights: ƒ 21.8% vo

55. Slide 55: Exploration & Production 2006 Accomplishments

    Exploration & Production 2006 Accomplishments ‹ 3Q06 production up 22%, 149 MMcfed since 3Q05 ‹ Surpassed 800MMcfed ‹ 8 H&P rigs drilling Recurring Segment Profit + Depreciation ‹ Additional 4,080 acres Piceance 300 Valley 10-acre spacing approved 250 ‹ Big George/Powder River volumes continue impre

56. Slide 56: Powder River

    Exploration & Production Powder River ‹ Up 28 MMcfed or 24% over a year ago ‹ Big George coals driving basin growth ƒ Up 80% year over year ƒ September vs. June volumes up 12% ‹ Anadarko assumes outside operations Williams' Powder River Production 150 Net MMcfe/d 100 Big George Wyodak/Other 50 0 1Q

57. Slide 57: Rockies Producer Not Rockies Price Taker

    Exploration & Production Rockies Producer Not Rockies Price Taker Pipes Used to Move Williams Gas Powder River CIG NWPL Questar Glenrock Rockies Express Wamsutter Opal Trailblazer TransColorado Meeker Cheyenne WIC Greasewood Firm Access Under Contract Piceance North to Wamsutter 200 East to Mid -con

58. Slide 58: Paradox Basin Project

    Exploration & Production Paradox Basin Project ‹ Paradox Basin is immediately adjacent to Piceance and WYOMING Uinta Basins ‹ Acreage position increased UTAH COLORADO from 30,608 to 74,000 net acres Uinta ‹ Formed large Joint Venture with Basin Piceance successful Rocky Mountain Basin independent Pa

59. Slide 59: 2006-08 Guidance

    Exploration & Production 2006-08 Guidance Dollars in millions 2006 2007 2008 Segment Profit $550 - 600 $825 - 950 $1,025 - 1,175 650 Annual DD&A 360 - 400 455 - 505 500 - 550 Segment Profit + DD&A $910 - 1,000 $1,280 - 1,455 $1,525 - 1,725 910-1050 Capital Spending $1,150 - 1,250 $1,150 - 1,250 $1,1

60. Slide 60: Cash Margin Analysis

    Exploration & Production Cash Margin Analysis 3-Year Average (2006-08) Previous $6.00 Previous $5.65 $3.90 $5.00 $4.00 $3.84 Cash Margin $3.00 $5.65 $2.00 $1.75 $1.00 Cash $1.81 Costs $0.92 $0.00 Realized Gas Price Margin/Cost Assumption F&D Costs Assumption Reflective of core basins •$5.65 is after

61. Slide 61: 3Q Net Realized Price Summary

    Exploration & Production 3Q Net Realized Price Summary Unhedged Hedge Market Price: NYMEX $6.25 - $7.00 $4.38 NYMEX collars 0.17 Basis Differential (0.80) - (1.05) (0.55) Net basin market price $5.20 - $6.20 $3.99 Net basin market price $5.20 - $6.20 $3.99 Fuel & Shrinkage/Gathering/ (0.60) - (0.80)

62. Slide 62: 2006-08 Hedge Update

    Exploration & Production 2006-08 Hedge Update 4Q Dollars in millions 2006 2007 2008 Fixed Price at the basin: Volume (MMcf/d) 288 172 73 Average Price ($/Mcf) $3.89 $3.90 $3.96 NYMEX Collars: Volume (MMcf/d) 64 15 - Average Price ($/Mcf) $6.62 - $8.42 $6.50 - $8.25 At the Basin Collars:1 NWPL Rockie

63. Slide 63: Midstream

    Midstream © 2006 The Williams Companies, Inc. All rights reserved.

64. Slide 64: Key Points

    Midstream Key Points ‹ Focused on our strategy of reliability ‹ Base business continues to generate healthy returns and free cash flows ‹ NGL margins again exceed historic levels – cushioning enterprise impact of lower gas prices ‹ Forecast margins in line with current gas/crude pricing relationship

65. Slide 65: Segment Profit - Midstream

    Financial Results Segment Profit - Midstream 3rd Quarter YTD Dollars in millions 2006 2005 2006 2005 Segment Profit $212 $121 $494 $359 Nonrecurring Accrual for Gulf Liquids litigation 2 - 70 - International Contract Settlement - - (6) - Asset sales, retirement & abandonment (3) - (3) - Accounts pay

66. Slide 66: 2006 Accomplishments

    Midstream 2006 Accomplishments Recurring Segment Profit + Depreciation ‹ Another record quarter $ MM 300 ‹ NGL unit margins at new records 250 ‹ Canadian Oil Sands YTD ’06 vs YTD ’05: 200 ƒ + 37% in composite unit margins ƒ + 86% in production volume 150 ‹ Western Gulf Deepwater Expansions 100 ‹ Lon

67. Slide 67: 2006-08 Guidance

    Midstream 2006-08 Guidance Dollars in millions 2006 2007 2008 Segment Profit $675 - 750 $500 - 750 $550 - 800 550 - 675 Annual DD&A 190 - 200 200 - 210 210 – 220 Segment Profit + DD&A $865 - 950 $700 - 960 $760 - 1,020 740 - 875 Capital Spending $250 – 260 $420 - 460 $260 - 300 280 – 300 230 – 270 7

68. Slide 68: Free Cash Flow - Forecast

    Midstream Free Cash Flow - Forecast Recurring Segment Profit & DDA $1,000 Discretionary Expansion $900 Segment Profit $800 Margin Uplift $700 $’s in Millions $600 Base Segment Profit + DDA $500 Capital Spending Discretionary Expansion $400 $300 Historic Expansion $200 $100 Maintenance $0 Well Connec

69. Slide 69: Pricing Assumptions Included in Guidance

    Midstream Pricing Assumptions Included in Guidance Oil WTI ($/bbl) High Oil Nat Gas Henry Hub ($/MMBtu) 90 Low 90 Oil 14 Nat Gas Henry Hub ($/MMBtu) 14 80 80 12 70 12 70 60 10 60 10 $/MMBtu 50 $/MMBtu $/bbl 50 8 $/bbl 8 40 40 6 6 30 30 4 4 20 20 2 10 2 10 0 0 0 0 2006 2007 2008 '00 '01 '02 '03 '04 '

70. Slide 70: Margins Above Average

    Midstream Margins Above Average Domestic NGL Average Realized Net Margin and Volumes by Quarter Realized Margin Total Production & Equity (Cents / Gallon) Volumes by Quarter (MM Gallons) 45 800 40 700 35 600 30 500 25 400 20 300 15 200 10 5 100 0 0 Q1'02 Q2'02 Q3'02 Q4'02 Q1'03 Q2'03 Q3'03 Q4'03 Q1'

71. Slide 71: Frac Spread Drivers

    Midstream Frac Spread Drivers Commodity Prices ($/MMBtu) $14 $12 $10 Frac ($/MMBtu) $8 Spread $6 $4 $2 $0 1Q '05 2Q '05 3Q '05 4Q '05 1Q '06 2Q '06 3Q '06 Oil - NYMEX ($/MMBtu) NGL - Mont Belvieu ($/MMBtu) Gas - Opal ($/MMBtu) Gas prices based on average Gas Daily settle prices at NWP, Wyoming. NGL

72. Slide 72: YTD Equity NGL Margins by Region

    Midstream YTD Equity NGL Margins by Region Western Region 32.3 cpg Midstream Domestic Average Opal Echo Springs 31.4 cpg Ignacio Kutz Lybrook Williams YTD Equity NGL Gallons Mobile Bay Gas Processing & Larose Treatment Plants Markham 36% Gathering Areas Cameron Gulf Coast Region 64% 29.8 cpg Western

73. Slide 73: Gas Pipeline

    Gas Pipeline © 2006 The Williams Companies, Inc. All rights reserved.

74. Slide 74: Key Points

    Gas Pipeline Key Points ‹ 26-inch Replacement project construction substantially complete in November ‹ Growth projects progressing ‹ Rate Cases Progressing ‹ Segment Profit remains on target © 2006 The Williams Companies, Inc. All rights reserved. Williams 2006 Third Quarter Earnings / Thursday, No

75. Slide 75: Segment Profit – Gas Pipeline

    Gas Pipeline Segment Profit – Gas Pipeline 3rd Quarter YTD Dollars in millions 2006 2005 2006 2005 Segment Profit $109 $161 $366 $493 Nonrecurring 1999 Fuel Tracker adjustment - (14) - (14) Excess royalty reserve reversal - - (2) - Pension expense reduction - - - (17) Adjustment to carrying value of

76. Slide 76: 2006 Accomplishments

    Gas Pipeline 2006 Accomplishments Northwest Recurring Segment Profit + Depreciation ‹ Parachute Lateral Expansion 250 Project receives FERC approval 200 ‹ Northwest celebrates 50 years of 150 continuous service 100 50 ‹ Northwest filed rate case June 30th, 0 effective Jan 1st 2007 1Q 2Q 3Q 4Q Transc

77. Slide 77: 2006-08 Guidance

    Gas Pipeline 2006-08 Guidance Dollars in millions 2006 2007 2008 Segment Profit $475 - 500 $585 - 655 $590 - 665 475-520 Annual DD&A 280 - 300 305 - 325 325 - 350 290-310 295-315 Segment Profit + DD&A $755 - 800 $890 - 980 $915 – 1,015 755-820 875-965 885-980 Capital Spending $745 - 815 $370 - 470 $

78. Slide 78: 2006-08 Capital Spending Detail

    Gas Pipeline 2006-08 Capital Spending Detail Dollars in millions 2006 2007 2008 Normal Maintenance/Compliance $375 - 435 $210 - 265 $180 - 260 Northwest 26-inch Replacement 276 2 - Expansion1 95 - 105 160 - 200 160 - 180 Total $745 - 815 $370 - 470 $340 - 440 1 Major Growth Projects (in guidance): 2

79. Slide 79: Free Cash Flow

    Gas Pipeline Free Cash Flow Seg Profit + DDA 1200 Seg Profit + DDA 1000 Capital Spending 800 Expansion 26-inch Replacement 600 Maint/Compliance 400 200 0 2005 2006 2007 2008 Note: - Segment Profit is stated on a recurring basis. - Segment Profit + DDA and Capital Spending reflect midpoint of ranges

80. Slide 80: Rate Case Filing Update

    Gas Pipeline Rate Case Filing Update NWP TGPL Filing Date 6/30/2006 8/31/2006 Base Period 4/05-3/06 6/05-5/06 Test Period 4/06-12/06 6/06-2/07 Effective Date 1/1/07 3/1/07 Rate Base $1.5B $2.95B Cap Structure (Equity) 55% 62% Filed Return on Equity 13.6% 13.8% © 2006 The Williams Companies, Inc. All

81. Slide 81: Power

    Power © 2006 The Williams Companies, Inc. All rights reserved.

82. Slide 82: Segment Profit - Power

    Power Segment Profit - Power 3rd Quarter YTD Dollars in millions 2006 2005 2006 2005 Segment Profit/(Loss) ($70) ($226) ($172) ($187) Nonrecurring Accrual for regulatory & litigation Contingencies/Settlements 4 - 4 13 Contingent obligation adjustments (13) - (13) 5 Expense related to prior periods -

83. Slide 83: 2006-08 Guidance

    Power 2006-08 Guidance Dollars in millions 2006 2007 2008 Prior Guidance - Segment Loss before MTM Adj ($200) - (150) ($175) - (75) ($155) - (5) Est. Fwd Impact of 3Q06 MTM Earnings (40) 100 5 and other portolio adjustments New Guidance - Segment Loss before MTM Adj ($240) - (190) ($75) - 25 ($150)

84. Slide 84: YTD 2006 - Segment Profit/(Loss) to Cash Flow from Ops

    Power YTD 2006 - Segment Profit/(Loss) to Cash Flow from Ops Dollars in Millions Commodity Working Power Capital/ & NG Other Total Segment Loss ($145) ($27) ($172) MTM Adjustments: Reverse Forward Unrealized MTM (Gains) 11 11 Add Realized Gains from MTM Previously Recognized 257 257 Segment Profit/(

85. Slide 85: Power Portfolio Cash Flow Analysis

    Power Power Portfolio Cash Flow Analysis Estimated undiscounted dollars in millions Power Portfolio QTD YTD Actual vs. Forecast 2006 3Q06A 3Q06F Variance YTD06A YTD06F Variance 2006A+F Tolling Demand Payment Obligations ($128) ($127) (1) ($314) ($312) (2) ($400) 2 Hedged Cash Flows 187 462 566 3 166

86. Slide 86: 3Q06 Financial Statement Changes for Derivatives

    Power 3Q06 Financial Statement Changes for Derivatives During 3Q06, Williams reported the following changes related to its derivative portfolio: Dollars in millions Balance Sheet Income Statement Der A/L OCI MTM Realized Gain/(Loss) (Gain)/Loss 1 Total Change in Consolidated Derivative Values $116 $

87. Slide 87: West Undiscounted Cash Flows

    Power West Undiscounted Cash Flows Dollars in millions West Power Portfolio QTD Estimated as of 9/30/06 Q306A Q306F Variance 2006F+A Tolling Demand Payment Obligations ($39) ($38) ($1) ($154) Hedged Cash Flows 2 440 119 1 138 (19) Merchant Cash Flows 3 8 Total Cash Flows $80 $100 ($20) $294 Capacity

88. Slide 88: Mid-Con Undiscounted Cash Flows

    Power Mid-Con Undiscounted Cash Flows Dollars in millions Mid-Continent Power Portfolio QTD Estimated as of 9/30/06 Q306A Q306F Variance 2006F+A Tolling Demand Payment Obligations ($41) ($41) $0 ($88) 2 Hedged Cash Flows 34 3 20 1 20 0 Merchant Cash Flows 5 Total Cash Flows ($21) ($21) $0 ($49) Capa

89. Slide 89: East Undiscounted Cash Flows

    Power East Undiscounted Cash Flows Dollars in millions East Power Portfolio QTD Estimated as of 9/30/06 Q306A Q306F Variance 2006F+A Tolling Demand Payment Obligations ($48) ($48) $0 ($158) Hedged Cash Flows2 91 28 1 67 (39) Merchant Cash Flows3 5 Total Cash Flows ($20) $19 ($39) ($62) Capacity Avai

90. Slide 90: WMB Collateral Outstanding

    Enterprise Risk Management WMB Collateral Outstanding As of 9/30/06 Corp./ Dollars in millions E&P Midstream Power Other Total Margins & Ad. Assur. $41 $0 $9 $0 $50 Prepayments 0 0 5 0 5 Subtotal 41 0 14 0 55 Letters of Credit 448 131 382 25 986 Total as of 9/30/06 489 131 396 25 1,041 Total as of 1

91. Slide 91: WMB Collateral Sensitivity

    Enterprise Risk Management WMB Collateral Sensitivity Dollars in millions Margin Volatility (1% chance of exceeding) -Potential incremental collateral requirement Days 9/29/2006 6/30/2006 3/31/2006 12/30/2005 30 ($155) ($246) ($223) ($325) 180 ($459) ($580) ($769) ($559) 360 ($471) ($489) ($626) ($5

92. Slide 92: Sensitivity Analysis

    Enterprise Risk Management Sensitivity Analysis Dollars in millions, except per unit increases 1 2 3 Enterprise Power Co. Midstream Natural Gas Power Processing Margin Per MMBtu Per MWh Per Gallon of NGL's Increase $0.10 $1 $0.01 2006 $0-$2 MM $(1)-$1 MM $2-$4 MM 2007 $5-$8 MM $2-$4 MM $17-$19 MM 20

93. Slide 93: Consolidated

    Consolidated © 2006 The Williams Companies, Inc. All rights reserved.

94. Slide 94: Liquidity at September 30, 2006

    Consolidated Liquidity at September 30, 2006 Dollars in millions Cash and cash equivalents $ 1,075 Other current securities 160 Less: Subsidiary and Int'l cash & cash equivalents $ 368 Customer margin deposits payable 77 (445) Available unrestricted cash 790 Available revolver capacity 1,712 Total L

95. Slide 95: 2006 Cash Information

    Consolidated 2006 Cash Information Dollars in millions 3rd Quarter YTD Beginning unrestricted cash $ 980 $ 1,597 Cash flow from continuing operations 634 1,308 Debt retirements (45) (774) Proceeds from debt issuance - 699 Proceeds from sale of limited partnership units - 225 Capital expenditures (75

96. Slide 96: 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% Additions 699 Early Retirements (485) Scheduled Debt Retirements & Amortization (180) Debt Balance @

97. Slide 97: Debt Amortization – As of 9/30/2006

    Consolidated Debt Amortization – As of 9/30/2006 Dollars in millions $2,000 $1,750 $1,500 $1,250 $1,000 2,020 1,851 $750 1,168 $500 998 $250 392 385 239 217 22 3 8 10 54 80 $0 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 19 28 10 11 12 13 14 15 16 17 06 07 08 09 18 33 -2 -2 02 03 7 2 © 2006 The W

98. Slide 98: EPS Metrics

    Consolidated EPS Metrics 2006 1Q 2Q 3Q 4Q Total Diluted EPS from Cont. Ops.$0.22 ($.11) $0.19 - $0.29 Recurring EPS 0.23 0.19 0.19 - 0.60 Recurring EPS after MTM Adj. 0.26 0.33 0.28 - 0.87 Average Shares (MM) 607 596 609 - 608 2005 1Q 2Q 3Q 4Q Total Diluted EPS from Cont. Ops.$0.34 $0.07 $0.01 $0.11

99. Slide 99: 2006 Interest Expense Forecast Guidance

    Consolidated 2006 Interest Expense Forecast Guidance Dollars in millions 2006 Interest on Long-Term Debt $570 - $580 Amortization Discount/Premium and other 25 - 30 Debt Expense Credit Facilities: 30 - 40 (incl. Commitment Fees plus LC Usage) Interest on other Liabilities 45 - 55 Interest Expense $6

100. Slide 100: 2006 Effective Tax Rates

     Consolidated 2006 Effective Tax Rates 2006 First Quarter Second Quarter Third Quarter Year-to-Date Statutory Rate 77 35% (22) 35% 73 35% 128 35% State 10 5% (1) 1% 14 6% 23 6% Foreign 0 0% 7 -10% 7 3% 14 4% Nondeductible Expenses (Shareholder Litigation/Convertible Debentures) 0 0% 18 -28% 0 0% 18 5

The Williams Companies — Q3 2006 Earnings Presentation on 6ix