Scotia Howard Weil 2018 Annual Energy Conference

Transcription

1 WE MAKE ENERGY HAPPEN Scotia Howard Weil 2018 Annual Energy Conference March 27, 2018 / Alan Armstrong, President & CEO / New Orleans, LA NYSE: WMB NYSE: WPZ williams.com

2 Williams is Strong, Stable, Conservative, and Growing STRONG Execution > Exceeded midpoint for 2017 key guidance metrics; dividends and distributions paid as guided > Exceptional operations and project execution: Transco capacity expanded by ~25%, Northeast gathering volumes up ~8% STABLE Foundation > Natural gas market fundamentals support volume-driven strategy: demand for low-cost U.S. natural gas continues to grow > Steady, high-quality revenues from broad mix of fee-based contracts: volume-protected and volume-driven > 2017 gross margin 96% fee-based CONSERVATIVE Financial Position > Strengthened balance sheet and credit profile > No WMB or WPZ equity issuance for forecast growth capital expect to fund planned growth capex with retained cash flow, asset sale proceeds, and low-cost debt > WMB s economic DCF, including proportionate share of healthy cash distribution coverage at WPZ, expected to provide 1.75x (1) coverage of WMB dividend in 2018 GROWING Advantaged Businesses > Nation s largest and fastest growing interstate gas pipeline system, Transco, with unrivaled proximity to growing Mid-Atlantic, Southeast and Gulf Coast demand centers > Largest gas gatherer in fastest growing basins (Marcellus and Utica; ~7.8 Bcf/d) > Improving ROCE with highly efficient capital projects linked to existing assets (1) This slide contains non-gaap financial measures. A reconciliation of all non-gaap financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation. 2

3 Delivering on Our Promises: 2017 Results Exceeded Guidance Midpoint Adjusted EBITDA $4.472 Bn $4.35 Low $4.45 Mid $4.55 High DCF $2.6 Low $2.821 Bn $2.7 Mid $2.8 High WPZ Cash Coverage Ratio 1.23x 1.13x Low 1.175x Mid 1.22x High Growth Capex 2017 Total WPZ 2017 Transco Guidance $2.1 - $2.8 Bn $1.4 - $1.9 Bn $2.3 Bn $1.5 Bn Leverage Guidance 2017 Debt / EBITDA < 4.50x 1 See footnote 2 WMB Cash Coverage Ratio Consolidated Leverage 2017 Dividend Coverage Ratio 2017 Debt / EBITDA Guidance ~1.4x Guidance <5.25x x See footnote 2 Note: This slide contains non-gaap financial measures. A reconciliation of all non-gaap financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation. 1 Rating agency adjusted Debt / EBITDA. 2 Actual Net Debt (Long-term debt plus commercial paper, less cash) divided by Adjusted EBITDA was 3.49x and 4.42x for WPZ and WMB, respectively. Rating agencies typically publish their credit metrics upon review of our audited financial statements. We expect our leverage ratio to be below 4.50x for WPZ and 5.25x for WMB on a Rating Agency Adjusted basis. 3

4 $/MMBtu Natural Gas Demand Growth Accelerating in a Sustained Low Price Environment Crude to Natural Gas Price Relationship 1 Price $ $12 $10 $8 $6 $4 $2 $0 ICE Brent Crude Oil NYMEX Henry Hub Natural Gas x4 on MMBtu Basis Or Avg. of 7$/MMBtu Industrial There are ~55 gas-intensive industrial plant projects forecasted to come on line in N.A. through 2022, taking advantage of N.A s low-cost & abundant natural gas supplies LNG Exports Global demand for LNG is forecasted to increase by ~35% through 2022, especially in China & South Asia driven by state initiatives to reduce carbon emissions & a desire for low-cost fuel Power Generation 57% of the total power plant retirements through 2022 are from coal-fired generation units, while 60% of the announced power capacity additions are from gas-fired units 1 Forward Curves as of Sources: Wood Mackenzie for global LNG demand growth and Industrial NA demand growth and EIA for Power Generation 4

5 Bcf/d Long-term Global LNG Demand Growth Anchored in Asia and Europe LNG demand in Asia is forecasted to increase 40%, or 11 Bcf/d, from 2017 to 2027 Global LNG Demand by Region ( ) Europe makes up 27% of global LNG demand growth China makes up 30% of Asian LNG demand growth, increasing by 3.8 Bcf/d Japan, South Korea, Taiwan China South Asia Southeast Asia Europe Middle East Africa FSRU Marine Bunkers Latin America North America NOTE: Converted to Bcf/d Source: Wood Mackenzie 5

6 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18 Oct-18 Dec-18 Feb-19 Apr-19 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Coming Wave of Pipeline Capacity Drives Marcellus and Utica Production Growth 21 Planned Northeast Gas Pipeline Capacity (Bcf/d) (1) 18 All Other Projects (2) Williams owned systems gather ~1/3 of Marcellus & Utica Gas Production (3) Atlantic Coast Mountain Valley PennEast Mountaineer Atlantic Sunrise WB Xpress NEXUS Rover Leach Xpress > Marcellus and Utica volumes poised for growth with pipeline capacity additions > Williams is largest gas gatherer across the Marcellus and Utica > Existing footprint allows for efficient incremental expansions justified by volume growth (1) Capacity and in-service date per Wood Mackenzie. (2) All Other Projects includes Garden State Expansion, New Market Project, Leidy South, Access South, Adair SW/Lebanon Extension, New York Bay Expansion, Susquehanna West, Triad Expansion Project, Orion Expansion Project, CPV Valley Lateral Project, Millennium Eastern System Upgrade, Gulf Xpress, Equitrans Expansion Project, Northeast Supply Enhancement, Constitution Pipeline, and Northern Access (3) Source for total Utica and Marcellus volume: Energy Information Administration, average daily production year-ended 9/30/2017. Partially owned gathering system volumes are shown at 100%. 6

7 NYMEX Henry Hub Natural Gas Price ($/mmbtu) Steady Adjusted EBITDA Growth Against Volatile Commodity Backdrop Williams TTM Adjusted EBITDA ($ Millions) (1) 5,000 4,500 4,000 3,500 3,000 $3,697 $3,892 $2.74 $2.73 $4,104 $2.23 $4,242 $1.99 $4,290 $2.24 $4,379 $2.80 $4,436 $3.18 $4,525 $3.06 $4,573 $3.14 $4,494 $4,531 $2.96 $2.92 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 2,500 $1.50 WPZ Continuing Businesses (less Geismar and Canada) WMB (includes Geismar, Canada, and WMB-Other) NYMEX HH Price Note: This slide contains non-gaap financial measures. A reconciliation of all non-gaap financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation. (1) Trailing Twelve Months ( TTM ) Adjusted EBITDA as derived from WMB Analyst Package or WPZ Analyst Package, as appropriate. 7

8 Net Debt (2) / TTM Adjusted EBITDA (3) (4) Significant De-leveraging with Adjusted EBITDA Growth from Fee-based Revenue 6.50x 6.28x 5, x 5.50x 5.00x 4.50x 4.00x 3.50x 5.07x 4.98x 4.42x 3.49x 4,500 4,000 3,500 3,000 TTM Adjusted EBITDA ($ Millions) (3) 3.00x 2,500 6/30/15 9/30/15 12/31/15 3/31/16 6/30/16 9/30/16 12/31/16 3/31/17 6/30/17 9/30/17 12/31/17 WMB WPZ 4Q'17 Peer Average WPZ TTM Adjusted EBITDA ($MM) (1) (5) Note: This slide contains non-gaap financial measures. A reconciliation of all non-gaap financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation. (1) Peer company Net Debt and Trailing Twelve Months ( TTM ) Adjusted EBITDA source Bloomberg. Peer set per 2017 Proxy Statement comparator group for Relative TSR pertaining to 2017 performancebased RSUs: ENB, EPD, ETE, KMI, OKE, PAA, TRGP, TRP, and WES. (2) Net Debt is long-term debt plus commercial paper less cash (3) TTM Adjusted EBITDA as derived from WMB Analyst Package or WPZ Analyst Package, as appropriate. (4) Net Debt / TTM Adjusted EBITDA ratio presented here is based on data directly from public disclosures and does not represent leverage ratios measured for either WMB or WPZ credit agreement compliance or leverage ratios as calculated by the major credit ratings agencies. See Appendix for calculation of WMB and WPZ Net Debt to TTM Adjusted EBITDA ratio. (5) Decline in WPZ TTM Adjusted EBITDA for 9/30/2017 is primarily a result of the sale of Geismar 8

9 Fully-contracted Regulated Pipelines, Portfolio of Non-regulated Services Offer Stability and Growth ~96% of WPZ 2017 Gross Margin from Fee-based Sources Pro Forma for Geismar Sale 2017 Gross Margin (1) 4% NGL and Other Commodity Exposure > Volume-driven fee-based contracts for gathering, processing, or other nonregulated services > Some contracts include escalation provisions > Minimal commodity exposure with exit from olefins businesses > More upside than down (Ethane cracking demand; C3+ exports) > 1% increase over forecast realized from NGL uplift in late % Volume-driven Non-regulated Fee-based Revenue 32% 4% 30% 34% 34% Regulated Gas Pipeline Fee-Based Revenue > Fully contracted demand charge revenue > Attractive positions exposed to growth 30% Volume-protected Non-regulated Fee-based Revenue > Mix of capacity payments, MVCs (2), and Cost of Service agreements (1) Includes our proportional ownership of the gross margin of our equity method investments. Excludes certain regulated revenues, which are related to tracked operating costs. (2) MVC revenue includes revenue level guaranteed by MVC and excludes any revenue on volumes exceeding MVC. MVC revenue also includes amortization of upfront payments associated with canceled MVCs. 9

10 Gathering Growth Realized Across Majority of Large-Scale West Portfolio 4Q2017 vs. 4Q2016: Gathering Growth in 8 of 10 Franchises Southwest Wyoming Niobrara Wamsutter Piceance Four Corners Barnett Anadarko / Mid-Con West Gathering Volumes (Bcf/d) 4Q Q (8%) Permian Haynesville Eagle Ford 10

11 Atlantic Sunrise Project Update Atlantic Sunrise 1.7 MMDth/d Mid 2018 > Construction Progressing Total Project work: ~50% complete Pipeline right of way clearing: 100% complete Installation of 132,000 horsepower of compression: ~50% complete > Target In-service date: mid-2018 Cove Point LNG > Significant revenue contribution Early mainline service currently providing ~$2.5 million/month Full in-service consolidated fee-based revenue expected to be $35 million/month (1) Additional revenue in Northeast G&P 1) Consolidated revenue will be burdened by lease payment of ~$8 million/month to partners. 11

12 Attractive Growth Outlook Driven by North American Natural Gas Cost Advantage Growth opportunities emerging across Williams assets beyond 2019 > Interstate Gas Transmission: ~27 total projects being pursued across portfolio Seven fully-contracted projects in forecast that would go into service after Atlantic Sunrise ~20 additional potential projects being pursued; expect new projects to be sanctioned during 2018 > Marcellus and Utica growth opportunity on track with capital-efficient incremental expansions Further expansions of Oak Grove processing complex based on strong customer demand Finalizing negotiations for an additional major expansion of Susquehanna Supply Hub Dry Utica growth continuing > Deepwater Gulf of Mexico contributes to growth in 2020 and beyond Construction underway to serve new contracted volumes from Shell Norphlet play Williams assets in close proximity to major new discoveries Actively bidding additional large-scale opportunities across Deepwater portfolio > Developing West opportunities demonstrate long-term value of competitive positions Drilling activity in Eagle Ford, Wamsutter, and Niobrara to drive growth in gathering and processing volumes Continued improvement in unit cost 12

13 Attractive Returns on Visible, Contracted Growth Capital Focused on Transco and Northeast G&P Projects No Equity Issuance Required to Fund Forecasted Growth Capital WPZ Forecasted Growth Capital Expenditures Averages $2.0 to $2.5 Billion per year > Susquehanna expansion supports supply to Atlantic Sunrise > Oak Grove cryogenic processing expansion > Other highly efficient expansions of existing footprint > Justified by volumes Non- Regulated Northeast G&P Non-Regulated West Non-Regulated Atlantic Gulf 8% 24% 7% 61% Regulated Growth Projects Major projects: > Atlantic Sunrise > Dalton > Garden State > Gateway Expansion > Gulf Connector > Gulf Trace > Hillabee Ph. 1 and 2 > New York Bay > North Seattle Lateral > Rivervale South to Market > Southeastern Trail > St. James Supply > Northeast Supply Enhancement > Virginia Southside II 13

14 Expected WPZ 2018 Adjusted EBITDA Growth Driven by Increase in Transco and Northeast G&P Fee Revenues Adjusted EBITDA ~ +$300 Increase in Adjusted EBITDA at Continuing Business 1 ($ in millions) $4,750 +$160 -$40 $4,700 ~ -$150 $4,625 $4,500 $4,375 $4,250 $4,125 $4,000 $4, Actual Adjusted EBITDA -$72 Atl-Gulf Growth WPZ NGL & Petchem Services 2017 Adjusted EBITDA (Geismar sold in mid-2017) +$180 Increase in Atlantic-Gulf Fee Revenues driven by increases in Transco fee revenues (partial year of new 2018 projects and additional contribution of 2017 Big 5 Projects), partially offset by lower Discovery NE Growth Increase in Northeast Fee Revenues driven by increases in fee revenues at Susquehanna Supply Hub, Ohio River Primarily higher operating expenses associated with Atlantic-Gulf and Northeast growth projects, partially offset by higher West Fee Revenues 2018 Adjusted EBITDA before impacts of New Rev. Rec. Accounting Standard and Tax Reform Non-cash impact of new revenue recognition standard (Barnett and Mid-Con prepayments) and modest 2018 impact of tax reform (primarily Northwest Pipeline) 2,3 Notes: A more detailed schedule reconciling this non-gaap measure is provided in this presentation. 1 Excludes WPZ NGL & Petchem Services. 2 ~$120 million non-cash impact from updated revenue recognition standard due primarily to the extension of time period over which Barnett and Mid-Con prepayments from 2016 are amortized into revenue. This extension reduces the amount of revenue to be recognized in 2018 and 2019 and increases the amount of revenue being recognized beyond 2019 versus revenue recognition under prior standard. 3 ~$30 million 2018 impact from tax reform is primarily the result of Northwest pipeline s 2017 rate settlement agreement, which included provisions related to non-cash deferral of revenue in the event of corporate tax rate reductions. $4, Midpoint of Guidance 2018 Adjusted EBITDA Guidance Midpoint 14

15 Transco Expansion Projects Poised to Contribute Strong Future Growth Transco Contribution to Atlantic-Gulf Adjusted EBITDA ($ in millions) $1,800 $1,600 $1,400 $1,200 $1, Drivers > $140 million partial-year contribution from Big 5 expansion projects > Higher expenses $1,033 $ Drivers > Additional ~$110 million contribution from Big 5 ($250 million full-year contribution) > ~$140 million partial-year revenue contribution from Atlantic Sunrise and Garden State > ~$33 million negative impact from increased O&M and other items $140 $33 $1, Drivers > Additional ~$285 million contribution from Atlantic Sunrise and Garden State (~$425 million full-year contribution) > ~$35 million partial year contribution from 2019 expansion projects > August rate case filing (+) (1) Increased expenses (+) Maintenance capital (+) Tax reform (-) $800 $ Adjusted EBITDA Contribution Actual 2018 Adjusted EBITDA Contribution Estimate Based on Guidance Midpoint (1) Subject to further analysis of the FERC order related to income tax recovery for pipelines held by MLPs 15

16 Williams is Strong, Stable, Conservative, and Growing STRONG Execution > Exceeded midpoint for 2017 key guidance metrics; dividends and distributions paid as guided > Exceptional operations and project execution: Transco capacity expanded by ~25%, Northeast gathering volumes up ~8% STABLE Foundation > Natural gas market fundamentals support volume-driven strategy: demand for low-cost U.S. natural gas continues to grow > Steady, high-quality revenues from broad mix of fee-based contracts: volume-protected and volume-driven > 2017 gross margin 96% fee-based CONSERVATIVE Financial Position > Strengthened balance sheet and credit profile > No WMB or WPZ equity issuance for forecast growth capital expect to fund planned growth capex with retained cash flow, asset sale proceeds, and low-cost debt > WMB s economic DCF, including proportionate share of healthy cash distribution coverage at WPZ, expected to provide 1.75x (1) coverage of WMB dividend in 2018 GROWING Advantaged Businesses > Nation s largest and fastest growing interstate gas pipeline system, Transco, with unrivaled proximity to growing Mid-Atlantic, Southeast and Gulf Coast demand centers > Largest gas gatherer in fastest growing basins (Marcellus and Utica; ~7.8 Bcf/d) > Improving ROCE with highly efficient capital projects linked to existing assets (1) This slide contains non-gaap financial measures. A reconciliation of all non-gaap financial measures used in this presentation to their nearest GAAP comparable financial measures are included at the back of this presentation. 16

17 Forward-looking Statements 17

18 Forward-looking Statements > The reports, filings, and other public announcements of The Williams Companies, Inc. (Williams) and Williams Partners L.P. (WPZ) may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements relate to anticipated financial performance, management s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market conditions, and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of All statements, other than statements of historical fact, included in this document that address activities, events or developments that we expect, believe or anticipate will exist or may occur in the future, are forward-looking statements. Forward-looking statements can be identified by various forms of words such as anticipates, believes, seeks, could, may, should, continues, estimates, expects, forecasts, intends, might, goals, objectives, targets, planned, potential, projects, scheduled, will, assumes, guidance, outlook, in-service date and other similar expressions. These forward-looking statements are based on management s beliefs and assumptions and on information currently available to management and include, among others, statements regarding: Levels of cash distributions by WPZ with respect to limited partner interests; Levels of dividends to Williams stockholders; Future credit ratings of Williams, WPZ, and their affiliates; Amounts and nature of future capital expenditures; Expansion and growth of Williams business and operations; Expected in-service dates for capital projects; Financial condition and liquidity; Business strategy; Cash flow from operations or results of operations; Seasonality of certain business components; Natural gas and natural gas liquids prices, supply, and demand; Demand for our services. > Forward-looking statements are based on numerous assumptions, uncertainties and risks that could cause future events or results to be materially different from those stated or implied in this document. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following: Whether WPZ will produce sufficient cash flows to provide expected levels of cash distributions; Whether Williams is able to pay current and expected levels of dividends; Whether WPZ elects to pay expected levels of cash distributions and Williams elects to pay expected levels of dividends; Whether we will be able to effectively execute our financing plan; Whether Williams will be able to effectively manage the transition in its board of directors and management as well as successfully execute its business restructuring; Availability of supplies, including lower than anticipated volumes from third parties served by our business, and market demand; Volatility of pricing including the effect of lower than anticipated energy commodity prices and margins; Inflation, interest rates, and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on customers and suppliers); The strength and financial resources of our competitors and the effects of competition; Whether we are able to successfully identify, evaluate and timely execute capital projects and other investment opportunities in accordance with our forecasted capital expenditures budget; Our ability to successfully expand our facilities and operations; Development and rate of adoption of alternative energy sources; 18

19 Forward-looking Statements (cont d) The impact of operational and developmental hazards, unforeseen interruptions, and the availability of adequate insurance coverage; The impact of existing and future laws (including but not limited to the Tax Cuts and Jobs Act of 2017), regulations, the regulatory environment, environmental liabilities, and litigation, as well as our ability to obtain necessary permits and approvals, and achieve favorable rate proceeding outcomes; Williams costs and funding obligations for defined benefit pension plans and other postretirement benefit plans; WPZ s costs for defined benefit pension plans and other postretirement benefit plans sponsored by its affiliates; Changes in maintenance and construction costs; Changes in the current geopolitical situation; Our exposure to the credit risk of our customers and counterparties; Risks related to financing, including restrictions stemming from debt agreements, future changes in credit ratings as determined by nationally-recognized credit rating agencies and the availability and cost of capital; The amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate; Risks associated with weather and natural phenomena, including climate conditions and physical damage to our facilities; Acts of terrorism, including cybersecurity threats, and related disruptions; Additional risks described in our filings with the Securities and Exchange Commission (SEC). > Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments. > In addition to causing our actual results to differ, the factors listed above may cause our intentions to change from those statements of intention set forth in this document. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise. > Because forward-looking statements involve risks and uncertainties, we caution that there are important factors, in addition to those listed above, that may cause actual results to differ materially from those contained in the forward-looking statements. For a detailed discussion of those factors, see Part I, Item 1A. Risk Factors in Williams and WPZ s Annual Reports on Form 10-K filed with the SEC on February 22,

20 Non-GAAP Reconciliations and Appendix 20

21 Non-GAAP Disclaimer > This presentation may include certain financial measures adjusted EBITDA, adjusted income ( earnings ), adjusted earnings per share, cash available for dividends, dividend coverage ratio, economic coverage ratio, distributable cash flow and cash distribution coverage ratio that are non-gaap financial measures as defined under the rules of the Securities and Exchange Commission. > Our segment performance measure, modified EBITDA is defined as net income (loss) before income (loss) from discontinued operations, income tax expense, net interest expense, equity earnings from equity-method investments, other net investing income, remeasurement gain on equity-method investment, impairment of equity investments and goodwill, depreciation and amortization expense, and accretion expense associated with asset retirement obligations for nonregulated operations. We also add our proportional ownership share (based on ownership interest) of modified EBITDA of equity-method investments. > Adjusted EBITDA further excludes items of income or loss that we characterize as unrepresentative of our ongoing operations. Management believes this measure provides investors meaningful insight into results from ongoing operations. > For Williams, cash available for dividends is defined as cash received from its ownership in WPZ and adjusted EBITDA from our Other segment, less interest, taxes and maintenance capital expenditures with our Other segment. We also calculate the ratio of cash available for dividends to the total cash dividends paid (dividend coverage ratio). This measure reflects Williams cash available for dividends relative to its actual cash dividends paid. We further adjust these metrics to include Williams proportionate share of WPZ s distributable cash flow in excess of distributions paid, resulting in Williams Economic DCF and Economic Coverage Ratio. > For Williams Partners L.P., we define distributable cash flow as adjusted EBITDA less maintenance capital expenditures, cash portion of interest expense, income attributable to noncontrolling interests and cash income taxes, plus WPZ restricted stock unit non-cash compensation and certain other adjustments that management believes affects the comparability of results. Adjustments for maintenance capital expenditures and cash portion of interest expense include our proportionate share of these items of our equity-method investments. > For Williams Partners L.P., we also calculate the ratio of distributable cash flow to the total cash distributed (cash distribution coverage ratio). This measure reflects the amount of distributable cash flow relative to our cash distribution. We have also provided this ratio calculated using the most directly comparable GAAP measure, net income. > This presentation is accompanied by a reconciliation of these non-gaap financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are accepted financial indicators used by investors to compare company performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of assets and the cash that the business is generating. > Neither adjusted EBITDA, adjusted income, cash available for dividends, nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles. 21

22 WPZ Reconciliation of Net Income (Loss) to Non- GAAP Adjusted EBITDA, 2016 and (Dollars in millions, except coverage ratios) 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year Williams Partners L.P. Reconciliation of "Net Income (Loss)" to "Modified EBITDA", Non-GAAP "Adjusted EBITDA" and "Distributable cash flow" Net income (loss) $ 79 $ (77) $ 351 $ 166 $ 519 $ 660 $ 348 $ 284 $ (317) $ 975 Provision (benefit) for income taxes 1 (80) (6) 5 (80) 3 1 (1) 3 6 Interest expense Equity (earnings) losses (97) (101) (104) (95) (397) (107) (125) (115) (87) (434) Impairment of equity-method investments Other investing (income) loss - net (1) (28) (29) (271) (2) (4) (4) (281) Proportional Modified EBITDA of equity-method investments Depreciation and amortization expenses , ,700 Accretion expense associated with asset retirement obligations for nonregulated operations Modified EBITDA ,070 1,235 3,864 1,132 1,076 1, ,616 Adjustments Estimated minimum volume commitments (194) (48) Severance and related costs Potential rate refunds associated with rate case litigation Settlement charge from pension early payout program Regulatory charges resulting from Tax Reform Share of regulatory charges resulting from Tax Reform for equity-method investments ACMP Merger and transition costs Constitution Pipeline project development costs Share of impairment at equity-method investment Geismar Incident adjustment (7) (7) (9) 2 8 (1) Gain on sale of Geismar Interest (1,095) (1,095) Impairment of certain assets , ,151 Ad valorem obligation timing adjustment 7 7 Organizational realignment-related costs Loss related to Canada disposition (3) (1) Gain on asset retirement (11) (11) (5) 5 Gains from contract settlements and terminations (13) (2) (15) Accrual for loss contingency 9 9 Gain on early retirement of debt (30) 3 (27) Gain on sale of RGP Splitter (12) (12) Expenses associated with Financial Repositioning 2 2 Expenses associated with strategic asset monetizations Total EBITDA adjustments (122) 563 (15) Adjusted EBITDA 1,060 1,065 1,189 1,113 4,427 1,117 1,104 1,101 1,150 4,472 22

23 WPZ Reconciliation of Net Income (Loss) to Non- GAAP Adjusted EBITDA, 2014 and

24 WMB Reconciliation of Net Income (Loss) to Non- GAAP Adjusted EBITDA, 2016 and

25 WMB Reconciliation of Net Income (Loss) to Non- GAAP Adjusted EBITDA, 2014 and

26 WMB Adjustments to Modified EBITDA by Segment, 2016 and

27 WMB Adjustments to Modified EBITDA by Segment, 2014 and

28 WPZ 2018 Guidance: Reconciliation of Non-GAAP Adjusted EBITDA and DCF to GAAP Net Income The Williams Companies, Inc. All All rights reserved. Williams Scotia and Williams Howard Weil Partners 2018 Fourth Annual Quarter Energy Earnings Conference Call 3/27/2018 2/15/18 28

29 WMB 2018 Guidance: Dividend Illustration and Economic Coverage Calculation The Williams Companies, Inc. All All rights reserved. Williams Scotia and Williams Howard Weil Partners 2018 Fourth Annual Quarter Energy Earnings Conference Call 3/27/2018 2/15/18 29

30 Appendix: Calculation of Net Debt to TTM Adjusted EBITDA Ratio WMB ($MM) Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 17 Q3 17 (4) Q4 17 Net Debt (1) 23,202 23,587 24,387 24,648 25,241 24,642 23,332 21,186 21,358 19,897 20,036 TTM Adj. EBITDA (2) 3,697 3,892 4,104 4,242 4,290 4,379 4,436 4,525 4,573 4,494 4,531 Net Debt / EBITDA (3) 6.28 x 6.06 x 5.94 x 5.81 x 5.88 x 5.63 x 5.26 x 4.71 x 4.70 x 4.46 x 4.46 x WPZ ($MM) Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 17 Q3 17 (4) Q4 '17 Net Debt (1) 18,678 19,034 19,580 19,490 19,997 19,637 18,418 16,440 16,657 15,337 15,616 TTM Adj. EBITDA (2) 3,681 3,874 4,089 4,232 4,289 4,378 4,427 4,484 4,523 4,435 4,472 Net Debt / EBITDA (3) 5.07 x 4.91 x 4.79 x 4.61 x 4.66 x 4.49 x 4.16 x 3.67 x 3.68 x 3.46 x 3.49 x (1) Net Debt is long-term debt plus commercial paper less cash (2) TTM Adjusted EBITDA as published in WMB Analyst Package or the WPZ Analyst Package, as appropriate. (3) Net Debt / TTM Adjusted EBITDA ratio presented here is based on data directly from public financial statements and does not represent leverage ratios measured for either WMB or WPZ credit agreement compliance or leverage ratios as calculated by the major credit ratings agencies. (4) Decline in WPZ and WMB TTM Adjusted EBITDA for 3Q 17 is primarily a result of the sale of Geismar 30