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

The Williams Companies, Inc.

(Exact name of registrant as specified in its charter)

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

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

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

Not Applicable

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 February 19, 2009, The Williams Companies, Inc. (“Williams” or the “Company”) issued a press release announcing its financial results for the quarter and year ended December 31, 2008. A copy of the press release and its accompanying financial highlights and operating statistics and reconciliation schedules are furnished as a part of this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein in its entirety by reference.

          The press release and accompanying financial highlights and operating statistics and reconciliation schedules are being furnished pursuant to Item 2.02, Results of Operations and Financial Condition. The information furnished is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 7.01. Regulation FD Disclosure.

          On February 19, 2009, Williams announced that the Company will maintain its current structure, as the conclusion of its management and board of directors having completed the evaluation of a variety of structural changes as previously announced on November 6, 2008. A copy of the press release announcing the same is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein in its entirety by reference.

          On February 19, 2009, Williams also announced that its domestic and international proved natural gas reserves as of December 31, 2008, increased to approximately 4.5 trillion cubic feet equivalent. Williams replaced its 2008 U.S. wellhead production of 406 billion cubic feet equivalent (Bcfe) at a rate of 148 percent. A copy of the press release announcing the same is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein in its entirety by reference.

          The press releases are being furnished pursuant to Item 7.01, Regulation FD Disclosure. The information furnished is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 9.01. Financial Statements and Exhibits.

     List below the financial statements, pro forma financial information and exhibits, if any, filed as a part of this report.

	(a)		None
	(b)		None
	(c)		None
	(d)		Exhibits

Exhibit 99.1		Copy of Williams’ press release, and its accompanying schedules, dated February 19, 2009, publicly announcing its fourth quarter and year-end 2008 financial results and that it will maintain its current structure.
Exhibit 99.2		Copy of Williams’ press release dated February 19, 2009, publicly announcing its replacement of 2008 U.S. natural gas production.

          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.

		THE WILLIAMS COMPANIES, INC.
Date: February 19, 2009		By: Name:		/s/ Donald R. Chappel   Donald R. Chappel
		Title:		Chief Financial Officer

INDEX TO EXHIBITS

EXHIBIT
NUMBER		DESCRIPTION
Exhibit 99.1		Copy of Williams’ press release, and its accompanying schedules, dated February 19, 2009, publicly announcing its fourth quarter and year-end 2008 financial results and that it will maintain its current structure.
Exhibit 99.2		Copy of Williams’ press release dated February 19, 2009, publicly announcing its replacement of 2008 U.S. natural gas production.

Exhibit 99.1

News Release

NYSE: WMB

Date:     Feb. 19, 2009

Williams Reports Fourth-Quarter and Full-Year 2008 Financial Results

	•		’08 Net Income Rises 43% to $1,418 Million, $2.40 EPS
	•		Recurring Adjusted EPS Up 24% to $2.15 for the Year
	•		’08 U.S. Natural Gas Production Climbs 20%; Proved Reserves Rise 200 Bcfe to 4.5 Tcfe
	•		4Q Results and ’09 Outlook Hit by Steep Decline in Commodity Prices
	•		Company Cuts Expected ’09 Capital Expenditures by $650 Million on Expectation of Sharply Lower Energy Prices
	•		Company Decides Current Structure Best to Manage Risk, Create Value
	•		Financial Condition Remains Strong, Company Poised to Benefit Upon Economic Recovery

Year-End Summary Financial Information		2008								2007
Per share amounts are reported on a fully diluted basis		millions				per share				millions				per share
Income from continuing operations		$	1,334			$	2.26			$	847			$	1.40
Income from discontinued operations			84				0.14				143				0.23
Net income		$	1,418			$	2.40			$	990			$	1.63
Recurring income from continuing operations*		$	1,318			$	2.23			$	873			$	1.44
After-tax mark-to-market adjustments			(47	)			(0.08	)			178				0.29
Recurring income from continuing operations — after mark-to-market adjustments*		$	1,271			$	2.15			$	1,051			$	1.73

Quarterly Summary Financial Information		4Q 2008								4Q 2007
Per share amounts are reported on a fully diluted basis		millions				per share				millions				per share
Income from continuing operations		$	130			$	0.23			$	206			$	0.34
Income (loss) from discontinued operations			(15	)			(0.03	)			19				0.03
Net income		$	115			$	0.20			$	225			$	0.37
Recurring income from continuing operations*		$	208			$	0.35			$	267			$	0.44
After-tax mark-to-market adjustments			(16	)			(0.02	)			91				0.15
Recurring income from continuing operations — after mark-to-market adjustments*		$	192			$	0.33			$	358			$	0.59

     TULSA, Okla. – Williams (NYSE:WMB) announced 2008 unaudited net income of $1,418 million, or $2.40 per share on a diluted basis, compared with net income of $990 million, or $1.63 cents per share on a

Williams (NYSE: WMB) Year-End 2008 Financial Results — Feb. 19, 2009				Page 1 of 11

diluted basis for 2007.

     Strong performance in Williams’ exploration and production and gas pipeline businesses drove the improved results. In 2008, the company received higher net realized average prices for its natural gas production and produced more; both factors contributed to the increased income. Another driver of the improved results was the absence in 2008 of the significant level of mark-to-market losses in Gas Marketing the previous year.

     While the full-year 2008 results are favorable compared with 2007, the sharp decline in energy commodity prices during the fourth quarter had a negative effect on results in the Exploration & Production and Midstream businesses. Results for both business segments in the last quarter of 2008 were significantly lower than the same period in 2007. There is more detail on the effect to each business in their respective sections of this news release.

     Strong earnings from Gas Pipeline partially offset the negative effect of declining energy commodity prices. Gas Pipeline benefited from a full year of higher rates on the Transco system that went into effect early in 2007 and from the nature of its contracts, which are insulated from near-term commodity price volatility. Other factors that served to mitigate the effect of falling commodity prices include Exploration & Production’s hedge positions, which cover a significant portion of its production, and fee-based revenues from certain of Midstream’s gathering and processing services. The results also benefited from a reduction in the company’s estimate of the effective deferred state tax rate during the fourth quarter.

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 $1,271 million, or $2.15 per share for 2008. On the same adjusted basis, recurring income from continuing operations was $1,051 million, or $1.73 per share, for 2007.

     Favorable performances in Williams’ exploration and production and gas pipeline businesses drove the improved results for the year. Declining energy commodity prices led to much lower fourth-quarter results in Exploration & Production and Midstream, which partially offset these benefits.

     For fourth-quarter 2008, recurring income from continuing operations after mark-to-market adjustments was $192 million, or $0.33 per share, compared with $358 million, or $0.59 per share for fourth-quarter 2007.

     Reduced segment profit in Exploration & Production and Midstream was the key driver of the lower recurring adjusted results in the fourth quarter. The less favorable energy commodity environment during the 2008 period was a key factor in the reduction.

     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.

Williams (NYSE: WMB) Year-End 2008 Financial Results — Feb. 19, 2009				Page 2 of 11

2009 Outlook Down on Expected Very Low Commodity Prices

     Williams has updated its outlook for commodity price assumptions and its earnings, cash flow and capital expenditure outlook for 2009. The table below illustrates the economic recession-driven downward movement in the company’s expectation for energy commodity prices and the corresponding effect on its results. Presented for comparison are the company’s expectations as of Nov. 6 when it reported third-quarter results, its current expectations, and actuals from 2008.

		2009 Assumptions				2009 Assumptions				2008
		as of Nov. 6, 2008				as of Feb. 19, 2009				Actuals
Natural Gas (Henry Hub)		$	6.00 - $8.00			$	4.50 - $6.00			$	9.03
Crude Oil: WTI (reference only)		$	60 - $90			$	40 - $60			$	104.34
Crude-to-Natural Gas Ratio			10.0x - 11.3x				8.9x - 10.0x				11.6x
Average NGL Margins ($/gallon)		$	0.29 - $0.57			$	0.22 - $0.35			$	0.61
Capital and Investment Expenditures*		$	2,800 - $3,100			$	2,150 - $2,450			$	3,586
Cash Flow from Operations*		$	2,400 - $3,100			$	1,900 - $2,200			$	3,355
Recurring Adjusted EPS		$	1.25 - $2.05			$	0.60 - $1.10			$	2.15

     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.

     For 2009, Williams has lowered its consolidated segment profit guidance to a range of $1,350 million to $1,925 million and earnings per share of $0.60 to $1.10. The previous ranges were $1,950 million to $2,900 million and earnings per share of $1.25 to $2.05. The updated expectations for 2009 reflect the effect of sharply lower commodity prices as well as a modestly reduced rate of natural gas production.

     Williams is reducing its previous capital expenditure guidance for 2009 by $650 million. The new range is $2,150 million to $2,450 million. The previous range was $2,800 million to $3,100 million. Williams’ total capital and investment expenditures in 2008 were $3,586 million.

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

Company Decides Current Structure Best to Manage Risk, Create Value

     Williams’ management and its board of directors today announced they have completed a review of potential structural changes to the company and determined to leave the structure unchanged.

     The company said the major factors in its decision was the sharp decline in energy commodity prices and further deterioration in the macroeconomic environment since early November when it announced the review. Maintaining the company’s investment-grade credit rating while credit markets remain difficult, as well as the

Williams (NYSE: WMB) Year-End 2008 Financial Results — Feb. 19, 2009				Page 3 of 11

extraordinary costs, risks and lost synergies associated with a potential structure change, were other factors that contributed to the decision.

     When the company announced it was evaluating a variety of structural changes to enhance shareholder value, it said the macroeconomic environment, credit markets and energy prices would be among factors it considered. The company also stated an intention to maintain its strong credit profile and financial flexibility.

     Williams’ business mix and strong credit profile position the company to weather the challenging economic and market conditions in 2009 and benefit as the economy recovers.

     As has been its practice, Williams in the normal course of business will continue to review the benefits and feasibility of strategies designed to create shareholder value.

CEO Perspective

     “Williams delivered very strong performance in 2008, largely on the strength of the first three quarters,” said Steve Malcolm, chairman, president and chief executive officer. “Even with a fourth quarter that suffered from the effects of global economic conditions, our full-year performance still drove a 24-percent increase in adjusted earnings per share.

     “Our 2008 results demonstrate the foundation of value in our businesses. We made significant additions to our reserves while keeping our finding and development costs low and increasing domestic production by 20 percent.

     “We again realized the benefit of our business mix and our strategy to manage the anomaly in the Rockies gas market,” Malcolm said. “Our Midstream business was a buyer of low-cost Rockies natural gas and our Exploration & Production business again sold the vast majority of its Rockies production into higher-priced markets.

     “Again, we benefited from strong cash flows in the parts of our business – our gas pipelines and fee-based midstream services – that are relatively insulated from the effects of commodity price changes.

     “We are not immune from the challenges created by the global economic recession. Given the effects of very low energy commodity prices on our business, we are making adjustments designed to preserve the value-creating capability and future growth of our businesses,” Malcolm said.

     “We expect 2009 to be a challenging year in the industry, but Williams’ liquidity is strong, we have no significant debt payments until 2011 and we are making significant reduction in our capital spending to focus on those areas that best position us to prosper as the economy recovers.”

Company’s Financial Condition Remains Strong

     As of Feb. 16, 2009, Williams had approximately $1.35 billion of cash and cash equivalents and approximately $2.34 billion of available credit capacity under the company’s credit facilities.

Williams (NYSE: WMB) Year-End 2008 Financial Results — Feb. 19, 2009				Page 4 of 11

     Williams has no significant debt maturities until 2011 and the company’s $1.43 billion primary credit facility does not expire until May 2012. Additionally, the company has a separate credit facility that expires in 2013 that it uses to support hedging transactions for its exploration and production business. The company also has other shorter-term credit facilities that expire during 2009 and 2010 – $500 million and $700 million, respectively. Williams is rated investment grade by three of the major rating agencies.

     During 2009, the company plans to invest approximately $500 million to $800 million in excess of its expected cash flow. That excess investment will be funded using cash currently on hand as well as expected borrowings. Excluding the Exploration & Production hedging-support facility, the company expects its year-end 2009 total liquidity to be approximately $2 billion — $2.2 billion. The company also expects that it will have the ability to access capital markets, if needed. Williams plans to fund its 2010 capital spending through cash flow from operations. The company may further reduce capital spending if economic conditions and/or energy prices weaken to a substantially greater extent.

     Williams’ risk from its net credit exposure to the company’s derivative counterparties, considering master netting agreements and collateral support, was $447 million on Dec. 31. “A” rated or better counterparties represent more than 99 percent of this total.

Williams (NYSE: WMB) Year-End 2008 Financial Results — Feb. 19, 2009				Page 5 of 11

Business Segment Performance

Consolidated Segment Profit (Loss)		Year-End								4Q
Amounts in millions		2008				2007				2008				2007
Exploration & Production		$	1,260			$	756				($27	)		$	190
Midstream Gas & Liquids			963				1,072				153				367
Gas Pipeline			689				673				157				160
		$	2,912			$	2,501			$	283			$	717
Gas Marketing Services		$	3				($337	)		$	12				($177	)
Other			(3	)			(1	)			(1	)			(1	)
Consolidated Segment Profit		$	2,912			$	2,163			$	294			$	539

Recurring Consolidated Segment Profit (Loss)

After Mark-to-Market Adjustments*		Year-End								4Q
Amounts in millions		2008				2007				2008				2007
Exploration & Production		$	1,298			$	760			$	136			$	194
Midstream Gas & Liquids			926				1,071				124				374
Gas Pipeline			670				638				157				160
		$	2,894			$	2,469			$	417			$	728
Gas Marketing after MTM Adjustments			($72	)			($29	)			($14	)			($9	)
Other			(3	)			(1	)			(1	)			(1	)
Recurring Consolidated Segment Profit After Mark-to-Market Adjustments		$	2,819			$	2,439			$	402			$	718

Exploration & Production: Strong Annual Production Growth, First Three Quarters Drive 67%

Increase in Segment Profit

     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.

     The business reported segment profit of $1,260 million for 2008, compared with segment profit of $756 million in 2007, an increase of 67 percent.

     Higher net realized average prices for the first three quarters of the year and strong growth in domestic natural gas production volumes for the year and were the primary drivers of the increased segment profit. Increased operating costs, primarily due to increased production volumes and higher well service and lease service costs, partially offset the benefits outlined above.

     The 2008 results also included a one-time gain of $148 million on the sale of certain international interests, as well as impairment charges of $143 million, primarily in the fourth quarter, related to properties

Williams (NYSE: WMB) Year-End 2008 Financial Results — Feb. 19, 2009				Page 6 of 11

in the Arkoma Basin. The results were also negatively affected by higher operating taxes resulting from an adverse state ruling during the fourth quarter associated with prior periods.

     Increased development within the Piceance, Powder River and Fort Worth basins drove the 20 percent growth in domestic production volumes for the year. In the Piceance Basin of western Colorado – the company’s largest production area – average daily production increased 20 percent for the year. In the Powder River Basin in Wyoming, the company’s second-largest production area, average daily production increased 34 percent for the year.

Average Daily Production		Full Year
Amounts in million cubic feet equivalent of natural gas (MMcfe)		2008				2007				Growth rate
Piceance Basin			650				540				20	%
Powder River Basin			228				170				34	%
Other Basins			216				203				6	%
U.S. Interests only			1,094				913				20	%
U.S. & International Interests			1,144				960				19	%

     For fourth-quarter 2008, Exploration & Production reported a segment loss of $27 million, compared with a segment profit of $190 million in fourth-quarter 2007.

     The primary drivers of the fourth-quarter segment loss were the impairment charge and the decline in natural gas prices in the fourth quarter, which led to lower net realized average prices for U.S. production. The higher operating taxes noted above also negatively affected the fourth quarter results.

     During fourth-quarter 2008, Williams’ net realized average price for U.S. production was $4.43 per thousand cubic feet of natural gas equivalent (Mcfe), which was 12 percent lower than the $5.06 per Mcfe realized in fourth-quarter 2007.

     In a separate announcement today, Williams reported year-end 2008 domestic proved U.S. natural gas reserves of 4.34 trillion cubic feet equivalent (Tcfe), up 5 percent from year-end 2007 reserves of 4.14 Tcfe. Including its international interests, Williams had total proved natural gas and oil reserves of 4.5 Tcfe at year-end 2008 as compared to 4.3 Tcfe at year-end 2007.

     Williams’ development activities in 2008 resulted in a net addition of 602 billion cubic feet equivalent (Bcfe) in net proved reserves. Based on the higher year-end price in 2007, Williams would have realized a net addition of 714 Bcfe for 2008. Over the past three years, Williams has added approximately 2 Tcfe in domestic net reserves from drilling activity.

     In 2008, Williams replaced its U.S. wellhead production of 406 Bcfe at a rate of 148 percent. Adding back revisions of 112 Bcfe that were not recognized due to lower year- end prices in 2008, Williams would have replaced 176 percent of its U.S. wellhead production.

Williams (NYSE: WMB) Year-End 2008 Financial Results — Feb. 19, 2009				Page 7 of 11

U.S. Proved Reserves Reconciliation

Amounts in billion cubic feet equivalent of natural gas

Proved reserves Dec. 31, 2007			4,143
Acquisitions			31
Additions and revisions			571
Wellhead Production			(406	)
Proved reserves Dec. 31, 2008			4,339

     In 2008, Williams drilled 1,787 gross wells, achieving a success rate exceeding 99 percent. During the year, the company continued to be an industry leader in cost performance, as its three-year domestic average finding and developing cost was $2.57 per thousand cubic feet equivalent (Mcfe) of natural gas. Excluding 2008 acquisitions, which were heavily weighted toward unproved properties, the three-year domestic average finding and development cost was $2.32 per Mcfe of natural gas.

Midstream Gas & Liquids: Falling Commodity Prices, Hurricanes Impact 2008 Segment Profit

     Midstream provides natural gas gathering and processing, natural gas liquids (NGL) fractionation and storage services and olefins production.

     The business reported segment profit of $963 million for 2008, compared with segment profit of $1,072 million for 2007.

     The decline in segment profit for the year is primarily because of lower NGL sales volumes and margins and higher operating expenses.

     A lack of third-party NGL pipeline transportation capacity in the West Region during the third quarter and the steep decline in NGL prices in the fourth quarter were the key drivers of the lower NGL margins for the year.

     The restricted transportation capacity in the West Region resulted in reduced recovery of ethane, which reduced total sales volumes. These restrictions were alleviated during the fourth quarter when NGL volumes from the company’s Wyoming plants began flowing into the new Overland Pass NGL pipeline.

     The steep decline in NGL prices in the fourth quarter also created unfavorable ethane economics, which resulted in the temporary suspension of ethane recoveries at certain plants. This further reduced the company’s NGL sales volumes for the year.

     Two major hurricanes in the Gulf of Mexico also negatively affected sales volumes and Midstream’s full-year 2008 results. Hurricane-related disruptions not only contributed to lower sales volumes in the Gulf Region, but also intensified the NGL pipeline capacity problem in the West Region when operations were suspended at a third-party fractionation facility at Mont Belvieu, Texas. Williams estimates that the hurricane-related downtime and costs related to repairs and property insurance deductibles reduced Midstream’s 2008 segment profit by $60 million to $85 million.

Williams (NYSE: WMB) Year-End 2008 Financial Results — Feb. 19, 2009				Page 8 of 11

     Higher per-unit NGL margins and higher fee-based revenues for the year partially offset these negative impacts. More favorable commodity prices during the first half of the year drove the higher per-unit NGL margins and fee revenues were higher across all regions.

     For fourth-quarter 2008, Midstream reported segment profit of $153 million, compared with $367 million in fourth-quarter 2007. The decline in segment profit during the fourth quarter was due to the sharp decline in NGL prices and to lower NGL sales volumes as outlined above.

Gas Pipeline: New Transco Rates, Higher Gulfstream Earnings Drive Improved Segment Profit for Year

     Gas Pipeline, which primarily delivers natural gas to markets along the Eastern Seaboard, in Florida and in the Pacific Northwest, reported 2008 segment profit of $689 million, compared with $673 million for 2007.

     On a recurring basis, Gas Pipeline’s segment profit for 2008 was $670 million, compared with $638 million for 2007.

     The 5-percent improvement in recurring segment profit for the year was due to revenues from expansion projects placed in service during fourth-quarter 2007, increased revenues from new rates on the Transco system effective March 1, 2007, and increased earnings from the company’s 50 percent interest in Gulfstream Natural Gas Systems. These increases were partially offset by lower production area revenues on the Transco system and higher operating costs resulting primarily from additional project development costs.

     For fourth-quarter 2008, Gas Pipeline reported segment profit of $157 million, compared with $160 million for fourth-quarter 2007.

Gas Marketing Services: Supporting Natural Gas Businesses with Marketing, Risk Management

     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 NGLs 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-party customers and suppliers. 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.

Williams (NYSE: WMB) Year-End 2008 Financial Results — Feb. 19, 2009				Page 9 of 11

Gas Marketing Recurring Segment Profit (Loss) Adjusted for Mark-to-Market Effect*

		Year-End								4Q
Amounts in millions		2008				2007				2008				2007
Segment profit (loss)		$	3				($337	)		$	12				($177	)
Nonrecurring adjustments			–				20				–				20
Recurring segment profit (loss)		$	3				($317	)		$	12				($157	)
Mark-to-market adjustments			(75	)			288				(26	)			148
Recurring segment loss after MTM adjustments			($72	)			($29	)			($14	)			($9	)

     The $72 million recurring segment loss after mark-to-market adjustments for 2008 is comprised primarily of a $35 million write-down of storage inventory to market prices, $43 million of realized losses associated with certain legacy and proprietary positions, which were recognized in earnings in prior periods, and $20 million of general and administrative costs. These losses were offset by $34 million in realized gains associated with storage and transportation contracts.

     Although not significant for the full-year or fourth-quarter 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.

Today’s Analyst Call

     Management will discuss the year-end 2008 results and outlook for 2009 during a live webcast beginning at 9:30 a.m. EST today. Participants are encouraged to access the webcast and corresponding slides for viewing, downloading and printing at www.williams.com.

     A limited number of phone lines also will be available at (877) 719-9791. International callers should dial (719) 325-4808. Replays of the year-end webcast, in both streaming and downloadable podcast formats, will be available for two weeks at www.williams.com following the event.

Form 10-K

     The company plans to file its Form 10-K with the Securities and Exchange Commission during the week of Feb. 23. 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.

Williams (NYSE: WMB) Year-End 2008 Financial Results — Feb. 19, 2009				Page 10 of 11

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

# # #

     Our reports, filings, and other public announcements 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 the Private Securities Litigation Reform Act of 1995. You typically can identify forward-looking statements by the use of forward-looking words, such as “anticipate,” believe,” “could,” “continue,” “estimate,” “expect,” “forecast,” “may,” “plan,” “potential,” “project,” “schedule,” “will,” and other similar words. These statements are based on our present intentions and our assumptions about future events and are subject to risks, uncertainties, and other factors. In addition to any assumptions, risks, uncertainties or other factors referred to specifically in connection with such statements, other factors not specifically referenced could cause our actual results to differ materially from the results expressed or implied in any forward-looking statements. Those factors include, among others:

	•		availability of supplies (including the uncertainties inherent in assessing, estimating, acquiring and developing future natural gas reserves), market demand, volatility of prices, and the availability and costs of capital;
	•		inflation, interest rates, fluctuation in foreign exchange, and general economic conditions (including the recent economic slowdown and the disruption of global credit markets and the impact of these events on our customers and suppliers);
	•		the strength and financial resources of our competitors;
	•		development of alternative energy sources;
	•		the impact of operational and development hazards;
	•		costs of, changes in, or the results of laws, government regulations (including proposed climate change legislation), environmental liabilities, litigation, and rate proceedings;
	•		our costs and funding obligations for defined benefit pension plans and other postretirement benefit plans;
	•		changes in the current geopolitical situation;
	•		risks related to strategy and financing, including restrictions stemming from our debt agreements and future changes in our credit ratings;
	•		risks associated with future weather conditions;
	•		acts of terrorism, and
	•		additional risks described in our filings with the Securities and Exchange Commission.

     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. In addition to causing our actual results to differ, the factors listed above may cause our intentions to change. Such changes in our intentions may also cause our results to differ. We disclaim any obligation to and do not intend to publicly update or revise any forward-looking statements or changes to our intentions, 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 presentation such as “probable” reserves and “possible” reserves and “unrisked theoretical resource estimates” that the SEC’s guidelines strictly prohibit us from including in filings with the SEC. The SEC defines proved reserves as estimated hydrocarbon 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. Generally under such techniques, probable reserve estimates are more than 50% certain and possible reserve estimates are less than 50% but more than 10% certain. Unrisked theoretical resource estimates are even less certain than those for possible reserves and are not risk adjusted. Unrisked theoretical resource estimates include (i) an estimate of hydrocarbon quantities for new areas for which we do not have sufficient information to date to classify the resources as probable or even possible reserves and (ii) the amount by which we have reduced our probable and possible reserves for existing areas to take into account the reduced level of certainty of recovery of the resources. Unlike probable and possible reserves, unrisked theoretical resource estimates do not take into account the uncertainty of resource recovery and are therefore not indicative of the expected future recovery and should not be relied upon.

     Reference to “Resource Potential” includes proved, probable and possible reserves as well as unrisked theoretical resource estimates that might never be recoverable and are contingent on exploration success, technical improvements in drilling access, commerciality and other factors.

Williams (NYSE: WMB) Year-End 2008 Financial Results — Feb. 19, 2009				Page 11 of 11

Financial Highlights and Operating Statistics
(UNAUDITED)

Final

December 31, 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				4th Qtr				Year
Income from continuing operations available to common stockholders		$	170			$	243			$	228			$	206			$	847			$	416			$	419			$	369			$	130			$	1,334
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			$	0.23			$	2.26
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				129				143
Accrual for Wyoming severence taxes			—				—				—				—				—				—				—								34				34
Total Exploration & Production nonrecurring items			—				—				—				4				4				(118	)			(25	)			18				163				38
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				—				—				—				6				6
Involuntary conversion gain related to Ignacio gas processing plant			—				—				—				—				—				—				(3	)			(6	)			(3	)			(12	)
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				5				13
Involuntary conversion gain from hurricane damage at Cameron			—				—				—				—				—				—				—				—				(5	)			(5	)
Gulf Liquids litigation partial settlement			—				—				—				—				—				—				—				—				(32	)			(32	)
Total Midstream Gas & Liquids nonrecurring items			(8	)			—				—				7				(1	)			—				(2	)			(6	)			(29	)			(37	)
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				134				(18	)
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				—				—				—				(11	)			(11	)
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				—				—				—				—				—
Interest related to Wyoming severance tax audit noted above (Interest accrued — E&P)			—				—				—				—				—				—				—				—				4				4
Rounding			—				1				(1	)			—				—				—				—				—				—				—
			1				2				(2	)			20				21				—				—				—				(7	)			(7	)
Total nonrecurring items			(7	)			(21	)			(14	)			51				9				(118	)			(36	)			2				127				(25	)
Tax effect for above items (1)(2)			(3	)			1				(5	)			13				6				(45	)			(14	)			1				49				(9	)
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			$	208			$	1,318
Recurring diluted earnings per common share		$	0.27			$	0.36			$	0.36			$	0.44			$	1.44			$	0.57			$	0.67			$	0.63			$	0.35			$	2.23
Weighted-average shares — diluted (thousands)			611,470				613,172				610,651				604,243				609,866				598,627				596,187				589,138				587,057				592,719

Note:		The sum of earnings per share for the quarters may not equal the total earnings per share for the year due to changes in the weighted-average number of common shares outstanding.
		The sum of amounts for the quarters may not equal the totals for the year due to rounding.

     

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				4th Qtr				Year
Revenues (1)		$	2,348			$	2,805			$	2,844			$	2,489			$	10,486			$	3,204			$	3,701			$	3,245			$	2,202			$	12,352
Segment costs and expenses:
Costs and operating expenses(1)			1,823				2,161				2,206				1,817				8,007				2,353				2,719				2,364				1,720				9,156
Selling, general and administrative expenses			102				108				107				154				471				111				131				133				129				504
Other (income) expense-net			(18	)			(18	)			(2	)			20				(18	)			(117	)			(35	)			—				70				(82	)
Total segment costs and expenses			1,907				2,251				2,311				1,991				8,460				2,347				2,815				2,497				1,919				9,578
Equity earnings			21				23				52				41				137				36				37				54				10				137
Income from investments			—				—				—				—				—				—				—				—				1				1
Total segment profit			462				577				585				539				2,163				893				923				802				294				2,912
Reclass equity earnings			(21	)			(23	)			(52	)			(41	)			(137	)			(36	)			(37	)			(54	)			(10	)			(137	)
Reclass income from investments			—				—				—				—				—				—				—				—				(1	)			(1	)
General corporate expenses			(40	)			(36	)			(40	)			(45	)			(161	)			(42	)			(42	)			(34	)			(31	)			(149	)
Operating income			401				518				493				453				1,865				815				844				714				252				2,625
Interest accrued			(172	)			(172	)			(171	)			(170	)			(685	)			(165	)			(165	)			(166	)			(157	)			(653	)
Interest capitalized			5				7				9				11				32				8				16				16				19				59
Investing income			52				66				78				61				257				55				55				65				16				191
Early debt retirement costs			—				—				—				(19	)			(19	)			—				—				—				(1	)			(1	)
Minority interest in income of consolidated subsidiaries			(14	)			(25	)			(29	)			(22	)			(90	)			(39	)			(63	)			(55	)			(17	)			(174	)
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				105				2,047
Provision (benefit) for income taxes			104				153				160				107				524				263				268				207				(25	)			713
Income from continuing operations			170				243				228				206				847				416				419				369				130				1,334
Income (loss) from discontinued operations			(36	)			190				(30	)			19				143				84				18				(3	)			(15	)			84
Net income		$	134			$	433			$	198			$	225			$	990			$	500			$	437			$	366			$	115			$	1,418
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			$	0.23			$	2.26
Income (loss) from discontinued operations			(0.06	)			0.31				(0.05	)			0.03				0.23				0.14				0.03				—				(0.03	)			0.14
Net income		$	0.22			$	0.71			$	0.33			$	0.37			$	1.63			$	0.84			$	0.73			$	0.62			$	0.20			$	2.40
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				587,057				592,719
Common shares outstanding at end of period (thousands)			598,492				599,781				593,016				586,148				586,148				584,025				579,117				578,641				579,052				579,052
Market price per common share (end of period)		$	28.46			$	31.62			$	34.06			$	35.78			$	35.78			$	32.98			$	40.31			$	23.65			$	14.48			$	14.48
Common dividends per share		$	0.09			$	0.10			$	0.10			$	0.10			$	0.39			$	0.10			$	0.11			$	0.11			$	0.11			$	0.43