Jefferies Global Energy Conference 2012 Alan Armstrong, Chief Executive Officer November 29, 2012

Transcription

1 Jefferies Global Energy Conference 2012 Alan Armstrong, Chief Executive Officer November 29, 2012

2 Forward-looking statements The reports, filings, and other public announcements of The Williams Companies, Inc. 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. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of You typically can identify forward-looking statements by various forms of words such as "anticipates," "believes," "seeks," "could," "may," "should," "continues," "estimates," "expects, assumes, "forecasts," "intends," "might," "goals," "objectives," "targets," "planned," "potential," "projects," "scheduled," "will, guidance, outlook, in service date or 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: > Amounts and nature of future capital expenditures; > Expansion and growth of our business and operations; > Financial condition and liquidity; > Business strategy; > Cash flow from operations or results of operations; > The levels of dividends to Williams stockholders and of cash distributions to WPZ unit holders; > Seasonality of certain business components; and > Natural gas, natural gas liquids, and crude oil prices and demand 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 presentation. 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 Williams has sufficient cash to enable it to pay current and expected levels of dividends; > Whether WPZ has sufficient cash from operations to enable it to pay current and expected levels of cash distributions following establishment of cash reserves payment of fees and expenses, including payments to WPZ s general partner; > Availability of supplies, market demand, volatility of prices, and the availability and cost of capital; > Inflation, interest rates, -- and in the case of Williams fluctuation in foreign exchange and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on our customers and suppliers); > The strength and financial resources of our competitors; 2

3 Forward-looking statements continued > Ability to acquire new businesses and assets and integrate those operations and assets into our existing businesses, as well as expand our facilities; > Development of alternative energy sources; > The impact of operational and development hazards; > Costs of, changes in, or the results of laws, government regulations (including safety and climate change regulation and changes in natural gas production from exploration and production areas that we serve), environmental liabilities, litigation, and rate proceedings; > Williams costs and funding obligations for defined benefit pension plans and other postretirement benefit plans sponsored by its affiliates; > WPZ s allocated costs for defined benefit pension plans and other post retirement 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 strategy and financing, including restrictions stemming from our debt agreements, future changes in our credit ratings and the availability and cost of credit; > Risks associated with future weather conditions; > Acts of terrorism, including cyber security threats and related disruptions; and > 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 to 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 announcement. 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. With respect to WPZ, limited partner interests are inherently different from the capital stock of a corporation, although many of the business risks to which we are subject are similar to those that would be faced by a corporation engaged in a similar business. Investors are urged to closely consider the disclosures and risk factors in Williams annual report on Form 10-K filed with the SEC on Feb. 28, 2012, WPZ s annual report on Form 10-K filed with the SEC on Feb. 28, 2012 and each of our quarterly reports on Form 10-Q available from our offices or from our websites at and 3

4 Natural gas infrastructure supercycle Long-term, low natural-gas-to-crude ratio driving infrastructure supercycle Vast need for new infrastructure and large-scale service providers like Williams Industry Power Generation Natural Gas Supply NGLs Petchem 4

5 Diverse, large-scale positions drive high-value business Northwest Pipeline Rocky Mountain Utica Shale Marcellus Shale Piceance Basin NGL Services Infrastructure San Juan Basin Petchem Services Transco Canada Deepwater Gulf of Mexico 5

6 In guidance projects bringing largescale infrastructure to the Marcellus Marcellus Shale Overview Ohio Valley Midstream 2015* 1.1 Bcf/d processing capacity ~100 MBPD fractionation/deethanization Susquehanna Supply Hub 2015* 3 Bcf/d takeaway capacity Laurel Mountain Midstream 2015* 900 MMcf/d takeaway capacity Constitution Pipeline 2015* 650 MDt/d Northeast Supply Link 2013* 250 MDt/d Proposed Leidy Southeast 2015* 534 MDt/d * Represents estimated in-service dates and estimated capacity at respective year end 6

7 Avg Annual Gathered volumes (Bcf/d) Building scale in the Marcellus through strategic investments Expected gathering volume growth and upside capacity Laurel Mountain Midstream Susquehanna Supply Hub Ohio Valley Midstream Upside Capacity Expected Capacity > Focusing on capacity buildouts where the producers need it most > Highest growth rates are in rich-gas Ohio Valley Midstream where we have higher per-unit revenues > Williams Ohio Valley Midstream positioned to drive NGL takeaway solutions > Outlook derived from base business; expect to capture additional upside 7

8 Geismar dropdown gives WPZ robust MLP cash flow generator > Industry-leading IRS Private Letter Ruling in hand > ~$2.36 B price financed primarily with ~42.8 MM WPZ LP units directly to WMB > $16 MM/quarter waived IDRs expected for 5 quarters ($80 MM total) Geismar Segment Profit, DD&A and Capex (midpoint of guidance, dollars in millions) $600 Growth Capital Maintenance Capital DD&A $500 Segment Profit $400 Geismar Segment Profit + DD&A Multiple (midpoint of guidance, dollars in millions) Asset Price Post- Closing Capex 2014 SP + DD&A Multiple Plant $2,264 $270 $ X Pipes X Total $2,364 $430 $ X $300 $200 $100 $

9 Canadian business signs major new customer NGL / Olefins volume (Mbbl/d) Barrels from expansions and new upgraders (Voyageur, CNRL expansion, other) Existing barrels beyond Williams current operations Contracted expansions in progress (Suncor C2 & CNRL C2+) Barrels at existing Williams operations (C3+) (Suncor) > Expected to add approximately 15 MBPD of NGL/Olefins production (12 MBPD by mid-2015; growing to 15 MBPD by 2018) > Ethane price risk mitigated via previously announced agreement to supply NOVA up to 17 MBPD of ethane and ethylene (includes price floor) > Total Capex expected to be CA$500 $600 million 9

10 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Average # Rigs World s largest energy companies our customers ramp up Gulf drilling Monthly drilling rig activity in deepwater Gulf of Mexico January 2010 October Moratorium imposed Moratorium rescinded Source: RigData.com 10

11 Large-scale Gulf Coast projects built for deepwater production levels adding to asset base capacities Gas processing: 1,790 MMcf/d Gas gathering 2,683 MMcf/d Fractionation: 57,000 Bbls/d Production handling: 332,000 BOE/d Oil gathering: 475,000 Bbls/d Gulfstar Floating Production System > Speed-to-market solution for majors > 60,000 Bbls/d of oil & 200 MMcf/d of natural gas > Expected online mid-2014 Keathley Canyon Connector > Strategic deepwater position > 400 MMcf/d capacity > Expected to be in service by mid-year 2014 Includes projects in guidance. Fractionation capacity includes future capacity of projects not completed, but in guidance. Includes both owned and controlled assets. 11

12 New fee-based business focused on optimizing connectivity, market access for petchems and NGL growth NGL supply growth Pipeline, fractionation, storage facilities Distribution infrastructure Consuming/ market areas Delivering on strategy to grow NGL & Petchem services in Gulf Coast Three separate acquisitions for 17 different pipelines serving Gulf Coast NGL/Petchem markets totaling ~$290 MM $490 MM of Incremental Capex to complete market/supply connections > Expanding existing ethylene hub and increasing connectivity to MB > Creating a propylene hub with connectivity to MB > Establishing an isobutane network for single-sourced or undersupplied customers > Pursuing additional projects using unused portions of acquired pipelines > Completing ethane system connecting emerging supplies to Mississippi River 12

13 Major projects in guidance & on track; almost all are fee-based revenues Eastern Seaboard (WPZ) > Mid-South Expansion 3Q 12 / 2Q 13 > Rockaway Lateral as early as spring 14 > Virginia Southside 3Q 15 > Leidy SE late 15 Western U.S. (WPZ) > Parachute Plant Expansion 2014 > Overland Pass Expansion early 2013 Canada (MC&O) > Boreal Pipeline in service (2Q) > Ethane Recovery mid-year 13 > CNRL Upgrader processing midyear 15 Petchem Services (WPZ and MC&O) > Geismar Expansion 3Q 13 > Other Gulf Coast Infrastructure Projects Marcellus (WPZ) > NE Supply Link 4Q 13 > Constitution Pipeline spring 15 Ongoing: > Susquehanna Supply Hub > Caiman acquisition build-out > Laurel Mountain Midstream Deepwater Gulf of Mexico (WPZ) > Gulfstar mid-year 14 > Keathley Canyon mid-year 14 > Pie represents midpoint of $10.7-$12.2 billion of capital investments in guidance Utica (WPZ) > JV with Caiman (Ongoing) > Projects are listed with expected in-service dates 13

14 Current large cap ex carry drives strong expected cash flow growth Project Description and Capital Expenditures* Utica JV Ongoing Laurel Mountain Midstream Caiman Acquisition Build-out Susquehanna Supply Hub Leidy SE $639MM CNRL Upgrader $ MM Gulfstar 50% Ownership $500MM ExxonMobil Pipeline Acq. & Related Petchem Svs. Projects $480MM Keathley Canyon Connector 60% Ownership $430MM Geismar Expansion $ MM Constitution Pipeline 51% Ownership $380MM NE Supply Link $341MM Canadian Ethane Recovery $ MM Virginia South Side $296MM Other Petchem Svs. Projects $240MM Mid-South Expansion $205MM Parachute Plant Expansion $200MM Rockaway Lateral $182MM Overland Pass Expansion 50% Ownership $45MM Expected Remaining Time to In-Service Date ~$6.2 billion of Marcellus/Utica cap. ex. in guidance for midstream projects with various start dates 2Q 13 4Q 13 2Q 14 4Q 14 2Q 15 4Q 15 Forecasting ~$11.5 billion in projects coming online over the next 3 years Varying levels of pre-tax IRRs possible ranging from ~13% to ~25%+ (depending on project) *Except for the Marcellus and Utica projects, capital expenditures represent total expected capital expenditure amounts. As noted in the arrow, the ~$6.2 billion of Marcellus and Utica midstream projects are based on the midpoint of guidance cap ex amounts for the years 2012 through 2014 only. 14

15 Visibility to diversity of growth Growth investment spending by supply and market areas $10.7 $12.2 billion $16.8 billion $27.3 billion > In guidance > In guidance > Under negotiation > In guidance > Under negotiation > Potential NGL & Petchem Services (WPZ and MC&O) Canada (MC&O) Marcellus (WPZ) Eastern Seaboard (WPZ) Note: Guidance presented here is at the midpoint of ranges. Western U.S. (WPZ) Deepwater Gulf of Mexico (WPZ) Utica (WPZ) 15

16 Expect fee-based revenues to increase to >70% of business by WMB total gross margin 1 7% 4% 14% 2013 Forecast $4.4 billion 5% 0% 36% 2% 13% 2014 Forecast $5.1 billion 5% 1% 33% Blues = Fee-based Greens = Commodity WPZ Gas Pipeline Demand Revenues Non-demand Revenues WPZ Midstream Fee Revenue Non-ethane Margin 9% Fee-based Ethane Margin Olefins Margin 31% 3% 35% 2% MC&O Fee Revenue Commodity Margin Note: Amounts reflect dropdown of Geismar from MC&O to WPZ in November Excludes amounts associated with equity investments that are not consolidated. 1 Gross margin is gross revenues less related product costs and certain gas pipeline revenues, which are related to tracked operating costs. 16

17 Strong, clear dividend growth and excess cash flow guidance Cash dividends per share growth CAGR of 37%* (midpoint of guidance) Illustrative excess cash flow available & coverage ratio* (upside & cushion for risk) $2.00 $1.75 $1.50 $1.25 $1.20 $1.44 $1.75 (Millions) $1,600 $1,400 $1,200 $1, x 1.18x 1.23x $1.00 $0.75 $0.50 $0.49 $0.775 $800 $600 $400 $0.25 $200 $ Actual Guidance * Detailed illustrative dividend and coverage calculations are included in the appendix. $ Expected Cash Flow Available After Dividends Expected Dividends Paid 17

18 Premier energy-infrastructure investment Natural gas infrastructure supercycle Large-scale positions, strong competitive advantages Deep, diverse, long-range growth opportunities provide visibility to cash flow beyond guidance Sustainable sector-leading dividend growth guidance 18

19 Appendix

20 % of Crude Geismar mitigates declining ethane to crude ratio 100% 90% 80% 70% Ethane and Ethylene relationship to crude 60% 50% 40% 30% 20% 10% 0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Ethane as % of WTI Ethylene as % of WTI Note: Historical CMAI pricing for ethylene and ethane converted to a $/barrel basis. 20

21 Price assumptions and financial impacts Guidance 2013 Guidance 2014 Guidance Actual Low Midpoint High Low Midpoint High Low Midpoint High Crude Oil - WTI $94.01 $88.00 $93.00 $98.00 $70.00 $85.00 $ $70.00 $85.00 $ Natural Gas - Henry Hub $4.04 $2.50 $2.50 $2.50 $2.75 $3.25 $3.75 $3.25 $3.75 $4.25 Ethane 1 $0.77 $0.41 $0.44 $0.46 $0.45 $0.55 $0.65 $0.45 $0.55 $0.65 Propane 1 $1.46 $0.97 $1.04 $1.10 $1.05 $1.25 $1.45 $1.05 $1.25 $1.45 Ethylene 2 $0.56 $0.53 $0.56 $0.58 $0.40 $0.50 $0.59 $0.53 $0.63 $0.73 Crude to Gas Ratio x 35.2x 37.2x 39.2x 25.5x 26.1x 26.7x 21.5x 22.5x 23.5x NGL to Crude Oil Relationship 4 56% 41% 41% 41% 54% 52% 49% 54% 52% 49% Average NGL Margins 1 $0.83 $0.64 $0.67 $0.69 $0.64 $0.71 $0.78 $0.54 $0.63 $0.71 Composite Frac Spread 5 $0.91 $0.65 $0.70 $0.74 $0.68 $0.78 $0.87 $0.63 $0.73 $0.83 Capex & Investments 6 $1,490 $6,325 $6,513 $6,700 $3,485 $3,785 $4,085 $2,175 $2,525 $2,875 Adjusted Segment Profit 7 $2,197 $1,900 $2,025 $2,150 $2,000 $2,250 $2,500 $2,650 $2,950 $3,250 Depreciation, Depletion and Amortiz. (DD&A) $661 $725 $750 $775 $815 $840 $865 $950 $975 $1,000 Adjusted Segment Profit 7 + DD&A $2,858 $2,625 $2,775 $2,925 $2,815 $3,090 $3,365 $3,600 $3,925 $4,250 Adjusted Diluted EPS 7 $1.23 $1.05 $1.15 $1.25 $1.05 $1.25 $1.45 $1.45 $1.70 $1.95 Notes: 1 Dollars per gallon. 2 Dollars per pound. 3 Oil = WTI; Natural Gas = Henry Hub. 4 Calculated as the price of natural gas liquids as a percentage of the price of crude oil on an equal volume basis. 5 Natural Gas = Henry Hub; NGL = Mont Belvieu; Dollars per gallon. 6 Dollars in millions. Includes purchases of property, plant & equipment; investments; and businesses, including those funded by issuance of equity directly to the seller. For partially owned joint ventures, amount only includes our proportionate share of forecasted capital investments. 7 Adjusted Segment Profit (shown in millions) and Adjusted Diluted EPS are non-gaap measures. A reconciliation to the most relevant GAAP measure is provided in this presentation. 21

22 Sensitivities to price changes (millions) Balance of NG Ethane Propane C4+ Ethylene Propylene WPZ 1 + $0.10/MMBtu ($1.4) + $0.01/gallon $0.6 $0.4 $0.3 $0.4 $0.2 MC&O 2 + $0.10/MMBtu ($0.4) + $0.01/gallon $0.0 $0.2 $0.1 $0.1 WMB + $0.10/MMBtu ($1.8) + $0.01/gallon $0.6 $0.6 $0.4 $0.4 $0.3 NG Ethane Propane C4+ Ethylene Propylene WPZ 1 + $0.10/MMBtu ($9.6) + $0.01/gallon $1.4 $2.5 $2.4 $3.7 $1.0 MC&O 2 + $0.10/MMBtu ($2.6) + $0.01/gallon $0.7 $1.0 $0.5 $0.4 WMB + $0.10/MMBtu ($12.2) + $0.01/gallon $2.1 $3.5 $2.9 $3.7 $1.4 NG Ethane Propane C4+ Ethylene Propylene WPZ 1 + $0.10/MMBtu ($8.5) + $0.01/gallon ($2.0) $2.5 $2.1 $5.7 $1.0 MC&O 2 + $0.10/MMBtu ($3.2) + $0.01/gallon $1.3 $1.1 $0.6 $0.4 WMB + $0.10/MMBtu ($11.7) + $0.01/gallon ($0.7) $3.6 $2.7 $5.7 $1.4 Note: Includes equity volumes and hedges; excludes commodity exposed fee contracts. 1 WPZ now reflects equity volumes from RGP Splitter, Geismar and the impact of fixed margin contracts. 2 Includes equity volumes from Canada (hedges and fee contracts are N/A) 22

23 Dividend illustration and coverage calculation (Midpoint of guidance, dollars in millions except per share amounts) Williams positioned to provide shareholders strong dividend increases Distributions from WPZ 1 $1,107 $1,469 $1,788 Less Cash Taxes 2 (277) (367) (447) Net Distributions from WPZ 830 1,102 1,341 Corporate Interest (Net of Tax) (81) (81) (81) Corporate Capex (35) (35) (25) Subtotal ,235 Per share $1.14 $1.54 $1.92 Midstream Canada & Olefins Adjusted Cash Flow After Coverage WMB Cash Flow Available for Dividends 894 1,031 1,310 WMB Expected Dividends Paid 4 (742) (907) (1,108) Excess Cash Flow Available (upside & cushion for risk) $152 $124 $202 Dividend Per Share $1.20 $1.44 $1.75 Annual Growth Rate 55% 20% 21% WMB Coverage Calculation (excluding WPZ Coverage) WMB Cash Flow Available for Dividends $894 $1,031 $1,310 MC&O Assumed Coverage After Tax WMB Cash Flow Available for Dividends + MC&O Assumed Coverage 929 1,071 1,365 WMB Expected Dividends Paid (742) (907) (1,108) Cash Flow Available After Dividends $187 $164 $257 Coverage Ratio x 1.18x 1.23x Notes: Amounts reflect dropdown of Geismar from MC&O to WPZ in November Assumes WPZ distributions per unit are increased at a rate of 1.5 per quarter in 2012, and then increased by 2.0 per quarter in 2013 and Cash taxes estimated at an average normalized rate of 25% of distributions. Actuals cash taxes may vary. 3 See Midstream Canada & Olefins Adjusted Cash Flow Available slide for additional details. 4 Assumes dividend per share is increased by 1.25 per quarter in 4Q Annual dividends assumed to increase by approximately 20% in 2013 and WMB Cash Flow Available for Dividends + MC&O Assumed Coverage / WMB Expected Dividends Paid. 23

24 Midstream Canada & Olefins (MC&O) Illustrative cash flow available (Dollars in millions) MC&O positioned to contribute significantly to dividend growth 2012 Guidance 2013 Guidance 2014 Guidance Low Midpoint High Low Midpoint High Low Midpoint High Adjusted Segment Profit 1 + DD&A $275 $330 $385 $75 $130 $185 $110 $190 $270 Less: Maintenance Capex (5) (10) (15) (5) (10) (15) (5) (10) (15) Less: General Corp Costs (10) (15) (20) (5) (8) (10) (5) (8) (10) Less: Interest Expense (Canada) (3) (5) Less: Cash Taxes 2 (80) (90) (100) (15) (28) (40) (25) (40) (55) Illustrative Cash Flow $180 $215 $250 $50 $85 $120 $75 $130 $185 Assumed Coverage After Tax - (35) (70) (5) (40) (75) - (55) (110) Adjusted Cash Flow Available After Coverage $180 $180 $180 $45 $45 $45 $75 $75 $75 Coverage Ratio x 1.19x 1.39x 1.11x 1.89x 2.67x 1.00x 1.74x 2.47x Notes: Amounts reflect dropdown of Geismar from MC&O to WPZ in November A more detailed schedule reconciling Reported segment profit to Adjusted segment profit is provided in this presentation. 2 Cash taxes estimated at 25% of pretax income for Midstream Canada and 35% of pretax income for Gulf Olefins. 3 Calculated as Adjusted Cash Flow / Adjusted Cash Flow Available After Coverage. 24

25 WMB Non-GAAP Reconciliations

26 WMB non-gaap disclaimer This presentation may include certain financial measures adjusted segment profit, adjusted income from continuing operations ( earnings ) and adjusted earnings per share that are non-gaap financial measures as defined under the rules of the Securities and Exchange Commission. Adjusted segment profit, adjusted earnings and adjusted earnings per share measures exclude items of income or loss that the company characterizes as unrepresentative of its ongoing operations. Management believes these measures provide investors meaningful insight into the company's results from ongoing operations. 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 widely accepted financial indicators used by investors to compare a company s performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the company and aid investor understanding. Neither adjusted segment profit, adjusted earnings nor adjusted earnings per share measures are intended to represent an alternative to segment profit, net income or earnings per share. 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. 26

27 WMB Non-GAAP Reconciliations Non-GAAP reconciliation schedule adjusted segment profit (loss) Reconciliation of segment profit (loss) to adjusted segment profit (loss) (unaudited) (Dollars in millions) 1 st Qtr 2 nd Qtr 3 rd Qtr 4 th Qtr Year 1 st Qtr 2 nd Qtr 3 rd Qtr Year Segment profit (loss) Williams Partners $437 $471 $471 $517 $1,896 $488 $339 $373 $1,200 Midstream Canada & Olefins Other Total segment profit (loss) $531 $545 $545 $595 $2,216 $650 $408 $446 $1,504 Adjustments Williams Partners - $3 $6 $2 $11 $1 $13 $11 $25 Midstream Canada & Olefins (19) (19) Other (11) (11) (53) - - (53) Total segment adjustments $(11) $3 $6 $(17) $(19) $(52) $13 $15 $(24) Adjusted segment profit (loss) Williams Partners $437 $474 $477 $519 $1,907 $489 $352 $384 $1,225 Midstream Canada & Olefins Other Total adjusted segment profit (loss) $520 $548 $551 $578 $2,197 $598 $421 $461 $1,480 Note: Segment profit (loss) includes equity earnings (losses) and income (loss) from investments reported in investing income net in the Consolidated Statement of Income. Equity earnings (losses) results from investments accounted for under the equity method. Income (loss) from investments results from the management of certain equity investments. 27

28 WMB Non-GAAP Reconciliations WMB 2012 schedule of adjustments (Dollars in millions) Segment profit adjustments Williams Partners (WPZ) Acquisition and transition-related costs $23 Loss related to Eminence storage facility leak 2 Impairment of certain assets 6 Gain on sale of certain assets (6) Total Williams Partners adjustments 25 Midstream Canada & Olefins Loss due to Geismar furnace fire 4 Total Midstream Canada & Olefins adjustments 4 Other Gain from Venezuela investment (53) Total Other adjustments (53) Adjustments included in segment profit (loss) $(24) Adjustments below segment profit (loss) Reorganization-related costs 12 Gain from Venezuela investment related interest Other (10) Interest income on note receivable from sale of Venezuelan assets - Other (5) Allocation of adjustments to non-controlling interests (11) Total adjustments below segment profit (14) Total adjustments before tax $(38) Less tax effect for above items 1 Total adjustments after tax $(37) 28

29 WMB Non-GAAP Reconciliations Segment profit guidance Reported to adjusted (Dollars in millions) 2012 Guidance 2013 Guidance 2014 Guidance Low Midpoint High Low Midpoint High Low Midpoint High Reported segment profit: Williams Partners (WPZ) $1,630 $1,700 $1,770 $1,950 $2,150 $2,350 $2,575 $2,800 $3,025 Midstream Canada & Olefins Other (3) (5) Total Reported segment profit 1,924 2,049 2,174 2,000 2,250 2,500 2,650 2,950 3,250 Adjustments Acquisition and transition-related costs Loss related to Eminence storage facility leak Impairment of certain assets Gain on sale of certain assets (6) (6) (6) Total Williams Partners adjustments Loss due to Geismar furnace fire Total Midstream Canada & Olefins adjustments Gain from Venezuela investment (53) (53) (53) Total "Other" adjustments (53) (53) (53) Total adjustments (24) (24) (24) Adjusted segment profit: Williams Partners (WPZ) 1,655 1,725 1,795 1,950 2,150 2,350 2,575 2,800 3,025 Midstream Canada & Olefins Other (5) Total Adjusted segment profit $1,900 $2,025 $2,150 $2,000 $2,250 $2,500 $2,650 $2,950 $3,250 Note: Amounts reflect dropdown of Geismar from MC&O to WPZ in November