UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 6, 2008

The Williams Companies, Inc.

(Exact name of registrant as specified in its charter)

Delaware		1-4174		73-0569878
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

One Williams Center, Tulsa, Oklahoma		74172
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 918-573-2000

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240-14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02. Results of Operations and Financial Condition.

     On November 6, 2008, The Williams Companies, Inc. (“Williams” or the “Company”) issued a press release announcing its financial results for the quarter ended September 30, 2008. A copy of the press release and its accompanying financial highlights and reconciliation schedules are furnished herewith as Exhibit 99.1 and is incorporated herein in its entirety by reference.

Item 7.01. Regulation FD Disclosure.

     The Company announced today that its management and board of directors are evaluating a variety of structural changes in the Company as a means to enhance shareholder value. A copy of the press release announcing this is furnished herewith as Exhibit 99.2 and is incorporated herein in its entirety by reference.

     The information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section. The information in this Current Report shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

Item 9.01. Financial Statements and Exhibits.

     (a) None

     (b) None

     (c) None

     (d) Exhibits

Exhibit 99.1		Press release dated November 6, 2008, and its accompanying financial highlights and reconciliation schedules, publicly announcing the Williams Companies, Inc. third quarter 2008 financial results.
Exhibit 99.2		Press release dated November 6, 2008, announcing evaluation of structural changes.

     Pursuant to the requirements of the Securities Exchange Act of 1934, Williams has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

INDEX TO EXHIBITS

EXHIBIT
NUMBER		DESCRIPTION
Exhibit 99.1		Press release dated November 6, 2008, and its accompanying financial highlights and reconciliation schedules, publicly announcing the Williams Companies, Inc. third quarter 2008 financial results.
Exhibit 99.2		Press release dated November 6, 2008, announcing evaluation of structural changes.

News Release

Date:      Nov. 6, 2008

	•		Net Income is $366 Million for 3Q 2008, $1.3 Billion Year-to-date
	•		Key Measure — Recurring Adjusted EPS is 57 Cents — Up 46% in 3Q
	•		Effect of Hurricanes, Unusual Items Reduced 3Q Results
	•		18-percent Natural Gas Production Growth, Higher Prices Drive 3Q Results
	•		Company’s Liquidity is Strong — $3.5 Billion as of Oct. 31, No Significant Debt Maturities Until 2011
	•		Earnings, Capital Expenditure Outlook Lowered to Reflect Global Credit Crisis

Quarterly Summary Financial Information		3Q 2008									3Q 2007
Per share amounts are reported on a fully diluted basis		millions				per share					millions				per share
Income from continuing operations		$	369			$	0.62				$	228			$	0.38
Income (loss) from discontinued operations			(3	)			—					(30	)			(0.05	)
Net income		$	366			$	0.62				$	198			$	0.33
Recurring income from continuing operations*		$	370			$	0.63				$	219			$	0.36
After-tax mark-to-market adjustments			(38	)			(0.06	)				20				0.03
Recurring income from continuing operations — after mark-to-market adjustments*		$	332			$	0.57				$	239			$	0.39

Year-To-Date Summary Financial Information		YTD 2008									YTD 2007
Per share amounts are reported on a fully diluted basis		millions				per share					millions				per share
Income from continuing operations		$	1,204			$	2.02				$	641			$	1.05
Income (loss) from discontinued operations			99				0.17					124				0.20
Net income		$	1,303			$	2.19				$	765			$	1.25
Recurring income from continuing operations*		$	1,110			$	1.87				$	606			$	0.99
After-tax mark-to-market adjustments			(30	)			(0.05	)				87				0.15
Recurring income from continuing operations — after mark-to-market adjustments*		$	1,080			$	1.82				$	693			$	1.14

     TULSA, Okla. — Williams (NYSE:WMB) announced third-quarter 2008 unaudited net income of $366 million, or $0.62 per share on a diluted basis, compared with net income of $198 million, or $0.33 cents per share on a diluted basis, for third-quarter 2007.

     A strong performance in the company’s exploration and production business was the driver of the increase in the third-quarter results. Key factors were higher net realized average natural gas prices and strong

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008		Page 1 of 10

natural gas production growth. Lower natural gas liquid (NGL) sales volumes, due to a number of factors discussed in the Midstream section of this release, partially offset the improved results in Exploration & Production. The effect of two hurricanes in the Gulf of Mexico and other unusual items also negatively impacted the third-quarter results.

     Year-to-date through Sept. 30, Williams reported net income of $1,303 million, or $2.19 per share on a diluted basis, compared with net income of $765 million, or $1.25 per share on a diluted basis for the first three quarters of 2007.

     Higher net realized average natural gas prices and strong natural gas production drove the year-to-date improvement in net income. The year-to-date results also benefited from a gain on the sale of certain international interests. The effect of the lower NGL sales volumes in the third quarter partially offset these benefits.

Recurring Results Adjusted for Effect of Mark-to-Market Accounting

     Recurring income from continuing operations, after adjustments to remove the effect of mark-to-market accounting for certain hedges and other derivatives in Gas Marketing Services, was $332 million, or $0.57 per share for third-quarter 2008. On the same adjusted basis, recurring income from continuing operations was $239 million, or $0.39 per share, for third-quarter 2007.

     The increases in the recurring adjusted results in the third-quarter reflect strong performances in the company’s exploration and production business, partially offset by the effect of the lower NGL sales volumes in the midstream business.

     For the first nine months of 2008, recurring income from continuing operations after mark-to-market adjustments was $1,080 million, or $1.82 per share, compared with $693 million, or $1.14 per share for the same period in 2007.

     The year-to-date increases reflect strong performances in the company’s natural gas businesses, including higher net realized average prices and natural gas production in the exploration and production business as well as higher per-unit NGL margins and fee-based revenues in the midstream business.

     A reconciliation of the company’s income from continuing operations to recurring income from continuing operations and mark-to-market adjustments is available at www.williams.com and as an attachment to this news release.

Liquidity Strong, No Significant Debt Payments Until 2011

     As of Oct. 31, 2008, Williams’ total liquidity was approximately $3.5 billion, which included approximately $1.8 billion in cash and cash equivalents and $2.4 billion in unused revolving credit facilities from a group of 19 banks. The cash and cash equivalents balance includes approximately $600 million being utilized by international operations and certain subsidiaries, with the remainder comprised primarily of government-backed securities.

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008		Page 2 of 10

     Williams’ cash flow from operations has also remained strong. Year-to-date through Sept. 30, Williams generated $2.6 billion in cash flow from operations.

     The company also does not have any significant debt maturities until June 2011. To view Williams’ complete debt maturity schedule, please go to www.williams.com/investors.

     Williams’ risk from its net credit exposure to the company’s derivative counterparties, considering master netting agreements and collateral support, was $384 million as of Sept. 30. “A” rated or better counterparties represent more than 97 percent of this total.

CEO Perspective

     “Williams achieved another quarter of strong earnings growth, highlighted by an 18 percent increase in natural gas production,” said Steve Malcolm, chairman, president and chief executive officer. “We now face a much more challenging environment, as the global financial crisis and economic recession have driven energy prices much lower.

     “While we have changed our earnings and capital spending outlook in light of current conditions, Williams’ strong liquidity and balance sheet provide us with firm footing and the flexibility to perform in a difficult market.

     “We will continue our disciplined approach to growth, funding our capital projects with cash on hand, cash flow from operations and existing credit facilities,” Malcolm said.

Lower Commodity Assumptions, Earnings, Capital Expenditure Guidance

     The recent instability in financial markets has created global concerns about the liquidity of financial institutions and is having overarching impacts on the economy as a whole. In this volatile economic environment, many financial markets, institutions and other businesses remain under considerable stress. In addition, oil and gas prices have recently experienced significant declines.

     Given these market conditions, Williams is updating its outlook for commodity price assumptions and its earnings and capital expenditure outlook for 2008 and 2009 based on these new assumptions.

Un-hedged Commodity		Nov. 6 Outlook					Aug. 7 Outlook
Price Assumptions		2008		2009			2008		2009
Natural Gas:
Basin Prices
Average Rockies		$6.10 - $6.35		$4.00 - $5.75			$7.30 - $8.10		$6.60 - $8.10
Average San Juan/Mid-Continent		$7.00 - $7.40		$5.00 - $7.00			$7.70 - $9.00		$7.00 - $9.00
NYMEX (reference only)		$8.90 - $9.10		$6.00 - $8.00			$9.00 - $10.50		$8.00 - $10.50
Crude Oil: WTI (reference only)		$104 - $106		$60 - $90			$100 - $120		$80 - $120
Average NGL Margins: ($/gallon)		$0.56 - $0.63		$0.29 - $0.57			$0.57 - $0.68		$0.43 - $0.71

     Guidance for consolidated segment profit includes results for Exploration & Production, Midstream and Gas Pipeline, as well as Gas Marketing and the Other segment. All consolidated segment profit and earnings per share ranges are presented on a recurring basis adjusted to remove the effect of mark-to-market accounting.

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008		Page 3 of 10

     For 2008, Williams has lowered its consolidated segment profit guidance to a range of $2,900 million to $3,150 million and earnings per share of $2.10 to $2.30. The previous ranges were $3,150 million to $3,650 million in consolidated segment profit and earnings per share of $2.35 to $2.80. The updated range for 2008 reflects lower expected natural gas prices and NGL margins, as well as the effect of two hurricanes in the Gulf of Mexico.

     For 2009, Williams has lowered its consolidated segment profit guidance to a range of $1,950 million to $2,900 million and earnings per share of $1.25 to $2.05. The previous ranges were $2,925 million to $3,825 million for consolidated segment profit and earnings per share of $2.10 to $2.95. The updated range for 2009 reflects lower expected natural gas prices, lower expected NGL margins and a slower expected growth rate of natural gas production, reflecting lower expected capital spending in Exploration & Production.

     Williams is lowering its previous capital expenditure guidance for 2008. The new range is $3,375 million to $3,575 million. The previous range was $3,300 million to $3,850 million, inclusive of potential future projects.

     Williams is also lowering its capital expenditure guidance for 2009. The new range is $2,800 million to $3,100 million. The previous range was $2,925 million to $3,625 million, inclusive of potential future projects.

     The reduction in the company’s total potential capital spending for 2009 is primarily based the company’s expectation for lower spending in Exploration & Production and Midstream based on lower energy prices, a slower economy and difficult financial markets.

Business Segment Performance: Exploration & Production Drives Strong 3Q Segment Profit Growth

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008		Page 4 of 10

Consolidated Segment Profit (Loss)		3Q									YTD
Amounts in millions		2008				2007					2008				2007
Exploration & Production		$	361			$	169				$	1,287			$	566
Midstream Gas & Liquids			254				300					810				705
Gas Pipeline			173				183					532				513
		$	788			$	652				$	2,629			$	1,784
Gas Marketing Services			16				(67	)				(9	)			(160	)
Other			(2	)			—					(2	)			—
Consolidated Segment Profit		$	802			$	585				$	2,618			$	1,624

Recurring Consolidated Segment Profit (Loss)
After Mark-to-Market Adjustments*

		3Q									YTD
Amounts in millions		2008				2007					2008				2007
Exploration & Production		$	379			$	169				$	1,162			$	566
Midstream Gas & Liquids			248				300					802				697
Gas Pipeline			163				171					513				478
		$	790			$	640				$	2,477			$	1,741
Gas Marketing after MTM Adjustments			(45	)			(35	)				(58	)			(20	)
Other			(2	)			—					(2	)			—
Recurring Consolidated Segment Profit After Mark-to-Market Adjustments		$	743			$	605				$	2,417			$	1,721

     For third-quarter 2008, Williams’ businesses reported consolidated segment profit of $802 million, compared with $585 million for third-quarter 2007. A strong performance in Exploration & Production drove the 37 percent improvement in the consolidated results.

     Year-to-date through Sept. 30, Williams’ businesses reported consolidated segment profit of $2,618 million, compared with $1,624 million for the same period in 2007. Strong results in Exploration & Production, Midstream and Gas Pipeline drove the 61 percent increase in year-to-date consolidated segment profit. The year-to-date period also benefited from the previously noted gain on the sale of certain international interests.

     On a basis adjusted to remove the effect of nonrecurring items and mark-to-market accounting, Williams’ recurring consolidated segment profit was $743 million in third-quarter 2008, compared with $605 million for third-quarter 2007, an increase of 23 percent.

     For the first nine months of 2008 on the same basis, Williams’ recurring consolidated segment profit was $2,417 million, compared with $1,721 million for the first nine months of 2007.

Exploration & Production: Higher Prices, Strong Production Growth Drives Segment Profit Increases

     Exploration & Production includes natural gas production and development in the U.S. Rocky Mountains, San Juan Basin and Mid-Continent, and oil and gas development in South America.

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008		Page 5 of 10

     The business reported segment profit of $361 million for third-quarter 2008, compared with third-quarter 2007 segment profit of $169 million, an increase of 114 percent. Year-to-date through Sept. 30, Exploration & Production reported segment profit of $1,287 million, compared with $566 million for the first nine months of 2007, an increase of 127 percent.

     Higher net realized average prices and strong growth in domestic natural gas production volumes were the primary drivers of the significant increases in segment profit for both the third-quarter and year-to-date periods. Results for the year-to-date 2008 period also benefited from the previously noted pre-tax gain on the sale of certain international interests.

     Increased development within the Piceance, Powder River and Fort Worth basins drove the 18 percent growth in domestic production volumes. In the Piceance Basin of western Colorado — the company’s cornerstone for production and reserves growth — average daily production increased 15 percent for the third quarter. In the Powder River Basin in Wyoming, the company’s second-largest production area, average daily production increased 37 percent for the quarter.

Quarterly Average Daily Production
Amounts in million cubic feet equivalent of natural		3Q
gas (MMcfe)		2008				2007					Growth rate
Piceance Basin			657				570					15	%
Powder River Basin			225				164					37	%
Other Basins			214				192					11	%
U.S. Interests only			1,096				926					18	%
U.S. & International Interests			1,146				974					18	%

     During third-quarter 2008, Williams’ net realized average price for U.S. production was $6.97 per thousand cubic feet of natural gas equivalent (Mcfe), which was 52 percent higher than the $4.59 per Mcfe realized in third-quarter 2007.

     The benefits of higher net realized average prices and higher production volumes in the third-quarter and year-to-date periods were partially offset by increased depreciation, depletion and amortization, higher operating taxes, higher lease operating expenses, and an impairment of certain producing properties.

Midstream Gas & Liquids: Solid Year-to-date Growth, Despite Third-Quarter Obstacles

     Midstream provides natural gas gathering and processing, NGL fractionation and storage services and olefins production. For third-quarter 2008, the business reported segment profit of $254 million, compared with segment profit of $300 million for third-quarter 2007.

     The decline in Midstream’s third-quarter segment profit is primarily because of lower NGL sales volumes. Higher per-unit NGL margins partially offset the decline in sales volumes.

     A lack of third-party NGL pipeline transportation capacity in the West Region was the primary driver of the lower sales volumes during the quarter. These restrictions were alleviated early in the fourth quarter, as the company began delivering NGL volumes from one of its Wyoming plants into the new Overland Pass NGL

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008		Page 6 of 10

pipeline. Williams expects its remaining NGL volumes from its Wyoming facilities to begin flowing into Overland Pass by the end of the year.

     Two major hurricanes in the Gulf of Mexico also negatively affected Midstream’s third-quarter results. Hurricane-related disruptions not only contributed to lower sales volumes in the Gulf Region, but also affected sales volumes in the West Region when operations were suspended at a third-party fractionation facility at Mont Belvieu, Texas. As a result, a portion of Midstream’s West Region NGL equity volumes produced during the third quarter was placed in storage. The company expects to sell most of this excess inventory in fourth-quarter 2008 and in early 2009. In addition, hurricane-related repairs and property insurance deductibles drove higher operating costs for the quarter.

     Williams estimates that the hurricane-related downtime and reserves for repairs and property insurance deductibles reduced Midstream’s third-quarter 2008 segment profit by $50 million to $65 million.

     Higher fee-based revenues partially offset the lower sales volumes and the negative effect of the hurricanes, when comparing third-quarter 2008 with third-quarter 2007.

     For the first nine months of 2008, Midstream’s segment profit was $810 million, compared with $705 million for the same time period in 2007.

     Higher per-unit NGL margins, higher fee-based revenues across all regions and increased olefins sales drove the increase in the year-to-date period. The acquisition of an additional interest in the Geismar plant in July 2007 helped drive the increase in olefins sales.

Gas Pipeline: Expansion Projects, New Rates Drive Year-to-date Recurring Segment Profit Growth

     Gas Pipeline, which primarily delivers natural gas to markets along the Eastern Seaboard, in Florida and in the Pacific Northwest, reported third-quarter 2008 segment profit of $173 million, compared with $183 million for third-quarter 2007.

     Year-to-date through Sept. 30, Gas Pipeline reported segment profit of $532 million, compared with $513 million for the same period in 2007.

     On a recurring basis, Gas Pipeline’s segment profit for third-quarter 2008 was $163 million, compared with $171 million for third-quarter 2007.

     This decrease on a recurring basis was due primarily to an increase in project development costs and costs associated with a pipeline rupture in Appomattox County, Virginia. Increased revenues from expansion projects placed in service during fourth-quarter 2007 partially offset these items.

     Year-to-date through Sept. 30, Gas Pipeline’s recurring segment profit was $513 million, compared with $478 million on a recurring basis for the same time frame in 2007.

     The increase in year-to-date recurring segment profit was primarily a result of increased revenues from new rates on the Transco system, revenues from expansion projects placed in service during fourth-quarter 2007,

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008		Page 7 of 10

increased earnings from the company’s 50 percent interest in Gulfstream Natural Gas Systems, and lower operating costs.

     This increase was partly offset by higher project development costs along with higher selling, general and administrative expenses.

     Gas Marketing Services is responsible for supporting Williams’ natural gas businesses by providing marketing and risk management services. These services primarily include marketing and hedging the gas produced by Exploration & Production, and procuring fuel and shrink gas and hedging natural gas liquids for Midstream.

     In addition, Gas Marketing manages various natural-gas related contracts, such as transportation, storage, and related hedges, and proprietary trading positions. It also provides marketing services to third-parties, such as producers. The segment also manages certain legacy natural gas contracts and positions that previously were reported in the former power business, which have been reduced to a minimal level.

		3Q									YTD
Amounts in millions		2008				2007					2008				2007
Segment profit (loss)		$	16			$	(67	)			$	(9	)		$	(160	)
Nonrecurring adjustments			—				—					—				—
Recurring segment profit (loss)		$	16			$	(67	)			$	(9	)		$	(160	)
Mark-to-market adjustments			(61	)			32					(49	)			140
Recurring segment loss after MTM adjustments		$	(45	)		$	(35	)			$	(58	)		$	(20	)

     The $45 million recurring segment loss after mark-to-market adjustments is comprised primarily of a $24 million write-down of storage inventory to market prices and $18 million of realized losses associated with certain proprietary and legacy positions, which were recognized in earnings in prior periods.

     Although not significant for third-quarter or year-to-date 2008 results, the company expects in the future to have some level of mark-to-market volatility in Gas Marketing Services, primarily from natural gas storage hedging.

     As separately announced today, Williams’ management and board of directors are evaluating a variety of structural changes in the company to enhance shareholder value. The company expects to announce a specific direction in the first quarter next year. Among the potential changes is the separation of one or more of the company’s principal business units. The company noted that there can be no assurance as to the timing or that the evaluation announced today will result in any changes to the company’s current structure.

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008		Page 8 of 10

     Management will discuss third-quarter 2008 results during a live webcast beginning at 9:30 a.m. EST today. Participants are encouraged to access the webcast and access slides for viewing, downloading and printing at www.williams.com.

     A limited number of phone lines also will be available at (877) 558-9190. International callers should dial (706) 902-3248. Replays of the third-quarter webcast, in both streaming and downloadable podcast formats, will be available for two weeks at www.williams.com following the event.

     The company will file its Form 10-Q with the Securities and Exchange Commission today. The document will be available on both the SEC and Williams websites.

About Williams (NYSE: WMB)

Williams, through its subsidiaries, finds, produces, gathers, processes and transports natural gas. Williams’ operations are concentrated in the Pacific Northwest, Rocky Mountains, Gulf Coast, and Eastern Seaboard. More information is available at http://www.williams.com. Go to http://www.b2i.us/irpass.asp?BzID=630&to=ea&s=0 to join our e-mail list.

Contact:		Jeff Pounds
		Williams (media relations)
		(918) 573-3332
		Travis Campbell
		Williams (investor relations)
		(918) 573-2944
		Richard George
		Williams (investor relations)
		(918) 573-3679
		Sharna Reingold
		Williams (investor relations)
		(918) 573-2078

# # #

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008		Page 9 of 10

unit to successfully implement key systems, such as order entry systems and service delivery systems; the impact of future federal and state regulations of business activities, including allowed rates of return, the pace of deregulation in retail natural gas market, and the resolution of other regulatory matters; changes in environmental and other laws and regulations to which Williams and its subsidiaries are subject or other external factors over which we have no control; changes in foreign economies, currencies, laws and regulations, and political climates, especially in Canada, Argentina and Venezuela, where Williams has direct investments; the timing and extent of changes in commodity prices, interest rates, and foreign currency exchange rates; the weather and other natural phenomena; the ability of Williams to develop or access expanded markets and product offerings as well as their ability to maintain existing markets; the ability of Williams and its subsidiaries to obtain governmental and regulatory approval of various expansion projects; future utilization of pipeline capacity, which can depend on energy prices, competition from other pipelines and alternative fuels, the general level of natural gas and petroleum product demand, decisions by customers not to renew expiring natural gas transportation contracts; the accuracy of estimated hydrocarbon reserves and seismic data; and global and domestic economic repercussions from terrorist activities and the government’s response to such terrorist activities. In light of these risks, uncertainties, and assumptions, and the additional risks described in the risk factors sections of our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

In regard to the company’s reserves in Exploration & Production, the SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves. We have used certain terms in this news release, such as “probable” reserves and “possible” reserves and “new opportunities potential” reserves that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. The SEC defines proved reserves as estimated quantities that geological and engineering data demonstrate with reasonable certainty to be recoverable in the future from known reservoirs under the assumed economic conditions. Probable and possible reserves are estimates of potential reserves that are made using accepted geological and engineering analytical techniques, but which are estimated with reduced levels of certainty than for proved reserves. Possible reserve estimates are less certain than those for probable reserves. New opportunities potential is an estimate of reserves for new areas for which we do not have sufficient information to date to raise the reserves to either the probable category or the possible category. New opportunities potential estimates are even less certain than those for possible reserves.

Reference to “total resource portfolio” includes proved, probable and possible reserves as well as new opportunities potential.

Investors are urged to closely consider the disclosures and risk factors in our annual report on Form 10-K filed with the Securities and Exchange Commission on Feb. 26, 2008, and our quarterly reports on Form 10-Q available from our offices or from our website at www.williams.com

Williams (NYSE: WMB) Third-Quarter 2008 Financial Results — Nov. 6, 2008		Page 10 of 10

Financial Highlights and Operating Statistics
(UNAUDITED)

Final

September 30, 2008

Reconciliation of Income from Continuing Operations to Recurring Earnings
(UNAUDITED)

		2007																				2008
(Dollars in millions, except per-share amounts)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Income from continuing operations available to common stockholders		$	170			$	243			$	228			$	206			$	847			$	416			$	419			$	369			$	1,204
Income from continuing operations — diluted earnings per common share		$	0.28			$	0.40			$	0.38			$	0.34			$	1.40			$	0.70			$	0.70			$	0.62			$	2.02
Nonrecurring items:
Exploration & Production
Accrual for royalty litigation contingency		$	—			$	—			$	—			$	4			$	4			$	—			$	—			$	—			$	—
Gain on sale of Peru interests			—				—				—				—				—				(118	)			(30	)			—				(148	)
Reserve for receivables from bankrupt counterparty			—				—				—				—				—				—				5				4				9
Impairment of certain natural gas producing properties			—				—				—				—				—				—				—				14				14
Total Exploration & Production nonrecurring items			—				—				—				4				4				(118	)			(25	)			18				(125	)
Gas Pipeline
Change in estimate related to a regulatory liability — NWP			—				(17	)			—				—				(17	)			—				—				—				—
Payments received for terminated firm transportation agreement — NWP			—				(6	)			(12	)			—				(18	)			—				—				—				—
Gain on sale of excess inventory gas — TGPL			—				—				—				—				—				—				(9	)			—				(9	)
Gain on sale of certain south Texas assets — TGPL			—				—				—				—				—				—				—				(10	)			(10	)
Total Gas Pipeline nonrecurring items			—				(23	)			(12	)			—				(35	)			—				(9	)			(10	)			(19	)
Midstream Gas & Liquids
Reversal of a maintenance accrual			(8	)			—				—				—				(8	)			—				—				—				—
Income from a favorable litigation outcome			—				—				—				(12	)			(12	)			—				—				—				—
Reserve for international receivables			—				—				—				9				9				—				—				—				—
Impairment of Carbonate Trend pipeline			—				—				—				10				10				—				—				—				—
Involuntary conversion gain related to Ignacio gas processing plant			—				—				—				—				—				—				(3	)			(6	)			(9	)
Reserve for receivables from bankrupt counterparty			—				—				—				—				—				—				1				—				1
Final earnout payment from 2005 Gulf Liquids asset sale			—				—				—				—				—				—				—				(8	)			(8	)
Charges from Hurricanes Gustav & Ike			—				—				—				—				—				—				—				8				8
Total Midstream Gas & Liquids nonrecurring items			(8	)			—				—				7				(1	)			—				(2	)			(6	)			(8	)
Gas Marketing Services
Accrual for litigation contingencies			—				—				—				20				20				—				—				—				—
Total Gas Marketing Services nonrecurring items			—				—				—				20				20				—				—				—				—
Nonrecurring items included in segment profit (loss)			(8	)			(23	)			(12	)			31				(12	)			(118	)			(36	)			2				(152	)
Nonrecurring items below segment profit (loss)
Early debt retirement costs (Corporate)			—				—				—				19				19				—				—				—				—
Interest related to Gulf Liquids litigation contingency ( Interest accrued — Midstream)			1				1				1				—				3				—				—				—				—
Interest income related to contract termination gain noted above (Investing income — Gas Pipeline — NWP)			—				—				(2	)			—				(2	)			—				—				—				—
Interest related to royalty litigation contingency noted above (Interest accrued — E&P)			—				—				—				1				1				—				—				—				—
Rounding			—				1				(1	)			—				—				—				—				—				—
			1				2				(2	)			20				21				—				—				—				—
Total nonrecurring items			(7	)			(21	)			(14	)			51				9				(118	)			(36	)			2				(152	)
Tax effect for above items (1)(2)			(3	)			1				(5	)			13				6				(45	)			(14	)			1				(58	)
Adjustment for nonrecurring tax-related items (3)			—				—				—				23				23				—				—				—				—
Recurring income from continuing operations available to common stockholders		$	166			$	221			$	219			$	267			$	873			$	343			$	397			$	370			$	1,110
Recurring diluted earnings per common share		$	0.27			$	0.36			$	0.36			$	0.44			$	1.44			$	0.57			$	0.67			$	0.63			$	1.87
Weighted-average shares — diluted (thousands)			611,470				613,172				610,651				604,243				609,866				598,627				596,187				589,138				594,630

Consolidated Statement of Income
(UNAUDITED)

		2007																				2008
(Dollars in millions, except per-share amounts)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Revenues		$	2,368			$	2,824			$	2,860			$	2,506			$	10,558			$	3,224			$	3,729			$	3,267			$	10,220
Segment costs and expenses:
Costs and operating expenses			1,843				2,180				2,222				1,834				8,079				2,373				2,747				2,386				7,506
Selling, general and administrative expenses			102				108				107				154				471				111				131				133				375
Other (income) expense — net			(18	)			(18	)			(2	)			20				(18	)			(117	)			(35	)			—				(152	)
Total segment costs and expenses			1,927				2,270				2,327				2,008				8,532				2,367				2,843				2,519				7,729
Equity earnings			21				23				52				41				137				36				37				54				127
Total segment profit			462				577				585				539				2,163				893				923				802				2,618
Reclass equity earnings			(21	)			(23	)			(52	)			(41	)			(137	)			(36	)			(37	)			(54	)			(127	)
General corporate expenses			(40	)			(36	)			(40	)			(45	)			(161	)			(42	)			(42	)			(34	)			(118	)
Operating income			401				518				493				453				1,865				815				844				714				2,373
Interest accrued			(172	)			(172	)			(171	)			(170	)			(685	)			(165	)			(165	)			(166	)			(496	)
Interest capitalized			5				7				9				11				32				8				16				16				40
Investing income			52				66				78				61				257				55				55				65				175
Early debt retirement costs			—				—				—				(19	)			(19	)			—				—				—				—
Minority interest in income of consolidated subsidiaries			(14	)			(25	)			(29	)			(22	)			(90	)			(39	)			(63	)			(55	)			(157	)
Other income (expense) — net			2				2				8				(1	)			11				5				—				2				7
Income from continuing operations before income taxes			274				396				388				313				1,371				679				687				576				1,942
Provision for income taxes			104				153				160				107				524				263				268				207				738
Income from continuing operations			170				243				228				206				847				416				419				369				1,204
Income (loss) from discontinued operations			(36	)			190				(30	)			19				143				84				18				(3	)			99
Net income		$	134			$	433			$	198			$	225			$	990			$	500			$	437			$	366			$	1,303
Diluted earnings (loss) per common share:
Income from continuing operations		$	0.28			$	0.40			$	0.38			$	0.34			$	1.40			$	0.70			$	0.70			$	0.62			$	2.02
Income (loss) from discontinued operations			(0.06	)			0.31				(0.05	)			0.03				0.23				0.14				0.03				—				0.17
Net income		$	0.22			$	0.71			$	0.33			$	0.37			$	1.63			$	0.84			$	0.73			$	0.62			$	2.19
Weighted-average number of shares used in computation (thousands)			611,470				613,172				610,651				604,243				609,866				598,627				596,187				589,138				594,630
Common shares outstanding at end of period (thousands)			598,492				599,781				593,016				586,148				586,148				584,025				579,117				578,641				578,641
Market price per common share (end of period)		$	28.46			$	31.62			$	34.06			$	35.78			$	35.78			$	32.98			$	40.31			$	23.65			$	23.65
Common dividends per share		$	0.09			$	0.10			$	0.10			$	0.10			$	0.39			$	0.10			$	0.11			$	0.11			$	0.32

Reconciliation of Segment Profit to Recurring Segment Profit
(UNAUDITED)

		2007																				2008
(Dollars in millions)		1st Qtr				2nd Qtr				3rd Qtr				4th Qtr				Year				1st Qtr				2nd Qtr				3rd Qtr				Year
Segment profit (loss):
Exploration & Production		$	188			$	209			$	169			$	190			$	756			$	430			$	496			$	361			$	1,287
Gas Pipeline			150				180				183				160				673				180				179				173				532
Midstream Gas & Liquids			154				251				300				367				1,072				261				295				254				810
Gas Marketing Services			(30	)			(63	)			(67	)			(177	)			(337	)			21				(46	)			16				(9	)
Other			—				—				—				(1	)			(1	)			1				(1	)			(2	)			(2	)
Total segment profit		$	462			$	577			$	585			$	539			$	2,163			$	893			$	923			$	802			$	2,618
Nonrecurring adjustments:
Exploration & Production		$	—			$	—			$	—			$	4			$	4			$	(118	)		$	(25	)		$	18			$	(125	)
Gas Pipeline			—				(23	)			(12	)			—				(35	)			—				(9	)			(10	)			(19	)
Midstream Gas & Liquids			(8	)			—				—				7				(1	)			—				(2	)			(6	)			(8	)
Gas Marketing Services			—				—				—				20				20				—				—				—				—
Other			—				—				—				—				—				—				—				—				—
Total segment nonrecurring adjustments		$	(8	)		$	(23	)		$	(12	)		$	31			$	(12	)		$	(118	)		$	(36	)		$	2			$	(152	)
Recurring segment profit (loss):
Exploration & Production		$	188			$	209			$	169			$	194			$	760			$	312			$	471			$	379			$	1,162
Gas Pipeline			150				157				171				160				638				180				170				163				513
Midstream Gas & Liquids			146				251				300				374				1,071				261				293				248				802
Gas Marketing Services			(30	)			(63	)			(67	)			(157	)			(317	)			21				(46	)			16				(9	)
Other			—				—				—				(1	)			(1	)			1				(1	)			(2	)			(2	)
Total recurring segment profit		$	454			$	554			$	573			$	570			$	2,151			$	775			$	887			$	804			$	2,466