Williams Companies (WMB) 10-K risk factor changes: FY2017 vs FY2016

The reports, [removed: filings] [added: filings,] and other public announcements of [removed: The] Williams [removed: Companies, Inc. (Williams)] 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 (Securities [removed: Act),] [added: Act)] and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act).

These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcome of regulatory proceedings, market [removed: conditions] [added: conditions,] and other matters.

All statements, other than statements of historical [removed: fact,] [added: facts,] included in this report that address activities, [removed: events] [added: events,] or developments that we expect, believe or anticipate will exist or may occur in the future, are forward-looking statements.

Forward-looking statements can be identified by various forms of words such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “assumes,” “guidance,” “outlook,” [removed: “in service date”] [added: “in-service date,”] or other similar expressions.

| • | [removed: Levels] [added: Expected levels] of cash distributions by [removed: Williams Partners L.P. (WPZ)] [added: WPZ] with respect to limited partner interests; |

| • | Natural [removed: gas, natural] gas [removed: liquids,] and [removed: olefins] [added: natural gas liquids] prices, supply, and demand; |

Forward-looking statements are based on numerous assumptions, [removed: uncertainties] [added: uncertainties,] and risks that could cause future events or results to be materially different from those stated or implied in this report.

| • | Whether WPZ will produce sufficient cash flows to provide [removed: the level] [added: expected levels] of cash [removed: distributions that we expect;] [added: distributions;] |

| • | Whether we will be able to effectively execute our financing [removed: plan including the receipt of anticipated levels of proceeds from planned asset sales;] [added: plan;] |

| • | Inflation, interest rates, and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on [added: our] customers and suppliers); |

| • | Development [added: and rate] of [added: adoption of] alternative energy sources; |

| • | [removed: Availability of adequate insurance coverage and the] [added: The] impact of operational and developmental hazards and unforeseen [removed: interruptions;] [added: interruptions, and the availability of adequate insurance coverage;] |

| • | The impact of existing and future [removed: laws,] [added: laws (including, but not limited to, the Tax Cuts and Job Acts of 2017),] regulations, the regulatory environment, environmental liabilities, and litigation, as well as our ability to obtain [added: necessary] permits and [added: approvals and] achieve favorable rate proceeding outcomes; |

| • | Risks related to financing, including restrictions stemming from debt agreements, future changes in credit ratings as determined by [removed: nationally-recognized] [added: nationally recognized] credit rating [removed: agencies] [added: agencies,] and the availability and cost of capital; |

| • | Acts of terrorism, including cybersecurity [removed: threats] [added: threats,] and related disruptions; |

We disclaim any obligations to and do not intend to update the above list or [added: to] announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.

Each of these factors could adversely affect our business, prospects, financial condition, results of operations, cash [removed: flows] [added: flows,] and, in some cases our reputation.

Generally, our customers are rated investment grade, are otherwise considered [removed: creditworthy] [added: creditworthy,] or are required to make prepayments or provide security to satisfy credit concerns.

Our customers and counterparties include industrial customers, local distribution companies, natural gas producers, and marketers whose creditworthiness may be suddenly and disparately impacted by, among other factors, commodity price volatility, [added: deteriorating energy market conditions, and public and regulatory opposition to energy producing activities.]

Further, during any such bankruptcy proceeding, prior to assumption, rejection or renegotiation of such contracts, the bankruptcy court may temporarily authorize the payment of value for our services less than contractually required, which could have a material adverse effect on our business, [added: financial condition,] results of operations, [removed: cash flows,] and [removed: financial conditions.][added: cash flows.]

[removed: For example, Chesapeake] Energy Corporation and its affiliates, which accounted for approximately [removed: 14] [added: 10] percent of our [removed: 2016] [added: 2017] consolidated revenues, have experienced significant, negative financial results due to sustained low commodity prices.

If we fail to adequately assess the creditworthiness of existing or future customers and counterparties or otherwise do not take or are unable to take sufficient mitigating actions, including obtaining sufficient collateral, deterioration in their [removed: creditworthiness] [added: creditworthiness,] and any resulting increase in nonpayment and/or nonperformance by them could cause us to write down or write off accounts receivable.

Prices for [removed: NGLs, olefins,] natural gas, [added: NGLs,] oil, and other commodities, are volatile and this volatility has and could continue to adversely affect our financial results, cash flows, access to capital, and ability to maintain our existing businesses.

Our revenues, operating results, future rate of growth, and the value of certain components of our businesses depend primarily upon the prices of [removed: NGLs, olefins,] natural gas, [added: NGLs,] oil, or other commodities, and the differences between prices of these [removed: commodities,] [added: commodities] and could be materially adversely affected by an extended period of current low commodity [removed: prices] [added: prices,] or a further decline in commodity prices.

The markets for [removed: NGLs, olefins,] natural gas, [added: NGLs,] oil, and other commodities are likely to continue to be volatile.

| • | Worldwide and domestic supplies of and demand for natural gas, NGLs, [removed: olefins,] oil, and related commodities; |

A substantial portion of our operations are conducted through, and our cash flows are substantially derived [removed: from] [added: from,] distributions paid to us [removed: by,] [added: by] WPZ.

Alternative fuel sources such as electricity, coal, fuel oils, or nuclear [removed: energy] [added: energy, as well as technological advances and renewable sources of energy,] could reduce demand for natural gas in our markets and have an adverse effect on our business.

[removed: We also face all] [added: In] the [removed: risks associated with construction, including] [added: current environment, we may face] political opposition by landowners, environmental activists, and others resulting in the delay and/or denial of required governmental permits.

[removed: Other construction] [added: Additional] risks [added: associated with construction may] include the inability to obtain rights-of-way, skilled labor, equipment, materials, and other required inputs in a timely manner such that projects are completed, on time or at all, and the risk that construction cost overruns could cause total project costs to exceed budgeted costs.

| • | Acquisitions could disrupt our ongoing business, distract management, divert [removed: financial,] [added: financial] and operational resources from existing operations and make it difficult to maintain our current business standards, controls, and procedures; |

As of December 31, [removed: 2016,] [added: 2017,] our investments in the Partially Owned Entities accounted for approximately [removed: 8] [added: 7] percent of our total consolidated assets.

Our cash flow [removed: depends] [added: is] heavily [added: dependent] on the earnings and distributions of WPZ.

Our partnership interest in WPZ is [removed: currently] our largest cash-generating asset.

Therefore, we [removed: are, at the least,] [added: are] indirectly exposed to all [added: of] the risks to which WPZ is [removed: subject and] [added: subject, as] our cash flow is heavily dependent upon the ability of WPZ to make distributions to its partners.

[removed: Failure to successfully] compete against current and future competitors could have a material adverse effect on our business, results of operations, financial condition, and cash flows.

| • | The level of existing and new competition in our businesses or from alternative [removed: fuel] sources, such as electricity, [added: renewable resources,] coal, fuel oils, or nuclear energy; |

| • | Natural [removed: gas, NGL,] [added: gas] and [removed: olefins] [added: NGL] prices, demand, availability, and margins in our markets. Higher prices for energy commodities related to our businesses could result in a decline in the demand for those commodities and, therefore, in customer contracts or throughput on our pipeline systems. Also, lower energy commodity prices could negatively impact our ability to maintain or achieve favorable contractual terms, including pricing, and could also result in a decline in the production of energy commodities resulting in reduced customer contracts, supply contracts, and throughput on our pipeline systems; |

In addition, joint venture participants may have obligations that are important to the success of the joint venture, such as the obligation to pay substantial carried costs pertaining to the joint venture and to pay their share of capital and other costs of the joint [removed: venture.][added: venture, the performance of which is outside our control.]

| • | Expected in-service dates for capital projects; |

Risks Related to Our Business

For example, Chesapeake

We may face opposition to the construction and operation of our pipelines and facilities from various groups.

We may face opposition to the construction and operation of our pipelines and facilities from environmental groups, landowners, tribal groups, local groups and other advocates.

Such opposition could take many forms, including organized protests, attempts to block or sabotage our operations, intervention in regulatory or administrative proceedings involving

our assets, or lawsuits or other actions designed to prevent, disrupt or delay the operation of our assets and business.

In addition, acts of sabotage or eco-terrorism could cause significant damage or injury to people, property or the environment or lead to extended interruptions of our operations.

Any such event that interrupts the revenues generated by our operations, or which causes us to make significant expenditures not covered by insurance, could adversely affect our financial condition and results of operations.

Any current or future competitor that delivers natural gas, NGLs, or other commodities into the areas that we operate could offer transportation services that are more desirable to shippers than those we provide because of price, location, facilities or other factors.

Failure to successfully

| • | Security risks, including cybersecurity; |

natural gas or NGL products to end use markets or to receive deliveries of mixed NGLs, thereby reducing our revenues.

Failure to attract and retain an appropriately qualified workforce could negatively impact our results of operations.

Events such as an aging workforce without appropriate replacements, mismatch of skill sets to future needs, or unavailability of contract labor may lead to operating challenges such as lack of resources, loss of knowledge, and a lengthy time period associated with skill development, including with the workforce needs associated with projects and ongoing operations.

Failure to hire and adequately obtain replacement employees, including the ability to transfer significant internal historical knowledge and expertise to the new employees, or the future availability and cost of contract labor may adversely affect our ability to manage and operate the businesses.

If we are unable to successfully attract and retain an appropriately qualified workforce, results of operations could be negatively impacted.

Risks Related to Financing Our Business

Risks Related to Regulations

We expect that certain aspects of Tax Cuts and Jobs Act signed into law on December 22, 2017 (Tax Reform), including regulatory liabilities relating to reduced corporate federal income tax rates, could adversely impact our financial condition and our future financial results.

Certain of the rates we charge to our customers are subject to the rate-making policies of the FERC.

These policies permit us to include in our cost-of-service an income tax allowance that includes a deferred income tax component.

The recently enacted Tax Reform makes significant changes to the U.S. federal income tax rules applicable to both individuals and entities, including among other things, a reduction in corporate federal income tax rates.

Although we expect the decreased federal income tax rates will require us to return amounts to certain customers for this item through future rates and have recognized a regulatory liability, the details of any regulatory implementation guidance remain uncertain.

| • | Whether we will be able to effectively manage the transition in our board of directors and management as well as successfully execute our business restructuring; |

Such litigation includes, among other litigation matters, litigation brought by stockholders of us and unitholders of WPZ related to the ETC Merger and/or Williams’ termination of the merger agreement with WPZ.

Such litigation also includes the on-going litigation against ETE and its affiliates a portion of which is on appeal in the Delaware Supreme Court and in which ETE has asserted counterclaims against us.

We continue to believe that our lawsuit against ETE and its affiliates is an enforcement of our rights under the Merger Agreement and that this lawsuit is designed to deliver to our stockholders benefits under the Merger Agreement.

deteriorating energy market conditions, and public and regulatory opposition to energy producing activities.

We may not be able to sell assets or, if we are able to sell assets, to raise a sufficient amount of capital from such asset sales.

In addition, the timing to enter into and close any asset sales could be significantly different than our expected timeline.

We are planning to monetize certain assets held by our subsidiaries in 2017 (including without limitation the Geismar olefins facility owned by WPZ) to fund additional debt reduction and capital and investment expenditures.

Given the commodity markets, financial markets, and other challenges currently facing the energy sector, our competitors may also engage in asset sales leading to lower demand for the assets we wish to sell.

We may not be able to sell the assets we identify for sale on favorable terms or at all.

If we are able to sell assets, the timing of the receipt of the asset sale proceeds may not align with the timing of our capital requirements.

A failure to raise sufficient capital from asset sales or a misalignment of the timing of capital raised and capital funding needs could have an adverse impact on our business, financial condition, results of operations, and cash flows.

Some of our competitors are large oil, natural gas, and petrochemical companies that have greater access to supplies

of natural gas and NGLs than we do.

Similarly, a highly-liquid competitive commodity market in natural gas and increasingly competitive markets for natural gas services, including competitive secondary markets in pipeline capacity, have developed.

As a result, pipeline capacity is being used more efficiently, and peaking and storage services are increasingly effective substitutes for annual pipeline capacity.

For instance, pursuant to a compression services agreement, one of our businesses receives a substantial portion of its compression capacity on certain gathering systems from EXLP Operating LLC (“Exterran Operating”).

Exterran Operating has, until December 31, 2020, the exclusive right to provide compression services on certain gas gathering systems located in Wyoming, Texas, Oklahoma, Louisiana, and Arkansas, in return for the payment of specified monthly rates for the services provided, subject to an annual escalation provision.

The performance and ability of third parties to satisfy their obligations under joint venture arrangements is outside our control.

If these third parties do not satisfy their obligations under these arrangements, our business may be adversely affected.

Joint venture partners may be permitted to fund any deficiency resulting from our failure to make such capital contribution, which would result in a dilution of our ownership interest, or such joint venture partners may have the option to purchase all of our existing interest in the subject joint venture.

| • | Truck and rail loading and unloading; |

We currently maintain excess liability insurance with limits of $820 million per occurrence and in the annual aggregate with a $2 million per occurrence deductible.

This insurance covers us, our subsidiaries, and certain of our affiliates for legal and contractual liabilities arising out of bodily injury or property damage, including resulting loss of use to third parties.

This excess liability insurance includes coverage for sudden and accidental pollution liability for full limits, with the first $135 million of insurance also providing gradual pollution liability coverage for natural gas and NGL operations.

Although we maintain property insurance on certain physical assets that we own, lease or are responsible to insure, the policy may not cover the full replacement cost of all damaged assets or the entire amount of business interruption loss we may experience.

In addition, certain perils may be excluded from coverage or be sub-limited.

We may not be able to maintain or obtain insurance of the type and amount we desire at reasonable rates.

We may elect to self-insure a portion of our risks.

We do not insure our onshore underground pipelines for physical damage, except at certain locations such as river crossings and compressor stations.

Offshore assets are covered for property damage when loss is due to a named windstorm event, but coverage for loss caused by a named windstorm is subject to a significant sub-limit and to a large deductible.

All of our insurance is subject to deductibles.

In addition, to the insurance coverage described above, we are a member of Oil Insurance Limited (OIL), an energy industry mutual insurance company, which provides coverage for damage to our property.

As an insured member of OIL, we share in the losses among other OIL members even if our property is not damaged.

historic rates of return associated with our assets and operations.

Acts of terrorism could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

These “negotiated rate” contracts are not generally

Stockholder activists may also seek to involve themselves in the governance, strategic direction, and operations of the Company.

Such proposals may disrupt the Company’s business and divert the attention of the Company’s management and employees; and any perceived uncertainties as to the Company’s future direction resulting from such a situation could result in the loss of potential business opportunities, the perception that the Company needs a change in the direction of its business, or the perception that the Company is unstable or lacks continuity, any or all of which may be exploited by our competitors, cause concern to our current or potential customers, and may make it more difficult for the Company to attract and retain qualified personnel and business partners, which could adversely affect the Company’s business.

We are experiencing significant change in the composition of our Board of Directors and senior management.

We are an energy infrastructure company focused on connecting North America’s significant hydrocarbon resource plays to growing markets for natural [removed: gas, NGLs,] [added: gas] and [removed: olefins.][added: NGLs.]

The gas pipeline businesses include interstate natural gas pipelines and pipeline joint project investments; and the midstream businesses provide natural gas gathering, treating, and processing services; NGL production, fractionation, storage, [removed: marketing] [added: marketing,] and transportation; deepwater production handling and crude oil transportation services; [removed: an olefin production business,] and [removed: is] [added: are] comprised of several wholly owned and partially owned subsidiaries and joint project investments.

The gas pipeline business also holds interests in joint venture interstate and intrastate natural gas pipeline systems including a 50 percent equity-method investment in Gulfstream and a 41 percent interest in Constitution (a consolidated entity), which is [removed: under development.][added: developing a pipeline project.]

[added: (See Note 3 – Variable Interest Entities of Notes to Consolidated Financial Statements.)] As of December 31, [removed: 2016,] [added: 2017,] Transco and Northwest Pipeline [removed: own] [added: owned] and [removed: operate] [added: operated] a combined total of approximately 13,600 miles of pipelines with a total annual throughput of approximately [removed: 4,230] [added: 4,533] Tbtu of natural gas and peak-day delivery capacity of approximately [removed: 15.5] [added: 18.8] MMdth of natural gas.

Williams [removed: Partners'] [added: Partners’] midstream businesses primarily consist of (1) natural gas gathering, treating, compression, and processing; (2) NGL fractionation, [removed: storage] [added: storage,] and transportation; (3) crude oil production handling and transportation; and (4) olefins production.

(See [removed: Geismar Olefins Facility Monetization below.)] [added: Note 2 – Acquisitions and Divestitures of Notes to Consolidated Financial Statements.)] The primary service areas are concentrated in major producing basins in Colorado, Texas, Oklahoma, Kansas, New Mexico, Wyoming, the Gulf of Mexico, Louisiana, Pennsylvania, West Virginia, New York, and [removed: Ohio] [added: Ohio,] which include the Barnett, Eagle Ford, Haynesville, Marcellus, Niobrara, and Utica [removed: Shale] [added: shale] plays as well as the Mid-Continent region.

The midstream businesses include equity-method investments in natural gas gathering and processing assets and NGL fractionation and transportation assets, including a 62 percent equity-method investment in UEOM, a [removed: 50 percent equity-method investment in the Delaware basin gas gathering system (DBJV) in the Mid-Continent region, a] 69 percent equity-method investment in Laurel Mountain, a 58 percent equity-method investment in Caiman II, a 60 percent equity-method investment in Discovery, a 50 percent equity-method investment in OPPL, and Appalachia Midstream Services, LLC, which owns an approximate average [removed: 41] [added: 66] percent equity-method investment interest in multiple gas gathering systems in the Marcellus Shale (Appalachia Midstream [removed: Investments).][added: Investments), as well as our previously owned 50 percent equity-method investment in the Delaware basin gas gathering system (DBJV) in the Mid-Continent region (see Note 5 – Investing Activities of Notes to Consolidated Financial Statements).]

The midstream businesses previously included [removed: our] Canadian midstream operations, which were comprised of an oil sands offgas processing plant near Fort McMurray, Alberta and an NGL/olefin fractionation facility at Redwater, Alberta.

In September 2016, [removed: these] [added: the] Canadian [removed: operations] [added: assets] were sold.

(See Note [removed: 3] [added: 5] – [removed: Divestiture] [added: Investing Activities] of Notes to Consolidated Financial Statements.)

We focus on consistently attracting new business by providing highly reliable service to our customers and investing in growing [removed: markets, including the deepwater Gulf of Mexico, the Marcellus Shale, the Gulf Coast Region,] [added: markets] and areas of increasing natural gas demand.

Williams Partners’ interstate transmission and related storage activities are subject to regulation by the FERC and as such, our rates and charges for the transportation of natural gas in interstate commerce, and the extension, expansion [added: or abandonment of jurisdictional facilities and accounting, among other things, are subject to regulation.]

[removed: Changes in commodity prices and volumes transported have] limited near-term impact on these revenues because the majority of cost of service is recovered through firm capacity reservation charges in transportation rates.

[removed: Williams NGL & Petchem Services] [added: Other also] includes certain domestic olefins pipeline assets as well as [removed: the previously owned] [added: certain] Canadian [removed: assets] [added: assets,] which included a liquids extraction plant [added: located] near Fort McMurray, Alberta, that began operations in March [removed: 2016] [added: 2016,] and a propane dehydrogenation facility [added: which was] under [removed: development in Canada.][added: development.]

In December [removed: 2016,] [added: 2017,] we paid a regular quarterly dividend of [removed: $0.20] [added: $0.30] per share.

On February [removed: 20, 2017,] [added: 21, 2018,] our board of directors approved a regular quarterly dividend of [removed: $0.30] [added: $0.34] per share payable on March [removed: 27, 2017, representing a 50 percent increase from our previous quarterly dividend.][added: 26, 2018.]

In January 2017, we [removed: announced] [added: entered into] agreements with WPZ, wherein we permanently waived the general partner’s [removed: incentive distribution rights] [added: IDRs] and converted our 2 percent general partner interest in WPZ to a [removed: non-economic] [added: noneconomic] interest in exchange for 289 million newly issued WPZ common units.

Additionally, we purchased approximately 59 million common units of WPZ at a price of $36.08586 per unit in a private placement transaction, funded with proceeds from our equity offering (see Note [removed: 15 -] [added: 14 –] Stockholders’ Equity of Notes to Consolidated Financial Statements).

[removed: Following] [added: Subsequent to] these [removed: transactions,] [added: transactions and as of December 31, 2017,] we own a 74 percent limited partner interest in WPZ.

In August [removed: 2016,] [added: 2017,] the [removed: Rock Springs] [added: Dalton] expansion [added: to the Transco system] was placed into service.

In [removed: February] [added: July] 2017, [added: Phase I of] the [removed: Gulf Trace expansion] [added: Hillabee Expansion Project] was placed into service.

[removed: The] [added: This] project expanded Transco’s existing natural gas transmission system together with greenfield facilities to provide incremental firm transportation capacity from [added: our] Station [removed: 65] [added: 210] in [removed: St. Helena Parish, Louisiana] [added: New Jersey] to [removed: a new interconnection with Sabine Pass Liquefaction] [added: markets] in [removed: Cameron Parish, Louisiana.][added: northwest Georgia.]

[removed: It] [added: The project] is expected to increase capacity by [removed: 1,200] [added: 65] Mdth/d.

NGL per-unit margins were approximately [removed: 7] [added: 62] percent [removed: lower] [added: higher] in [removed: 2016] [added: 2017] compared to [removed: the same period of 2015.][added: 2016 due to a 42 percent increase in per-unit non-ethane prices.]

| [removed: ] [added: ] |

Our growth capital and investment expenditures in [removed: 2017] [added: 2018] are expected to [removed: total $2.1 billion to $2.8] [added: be approximately $2.7] billion.

Approximately [removed: $1.4 billion to $1.9] [added: $1.7] billion of our growth capital funding needs include Transco expansions and other interstate pipeline growth projects, most of which are fully contracted with firm transportation agreements.

The remaining growth capital spending in [removed: 2017] [added: 2018] primarily reflects investment in gathering and processing systems in the Northeast region limited primarily to known new producer volumes, including volumes that support Transco expansion projects including our Atlantic Sunrise project.

As a result of our significant continued capital and investment expenditures on Transco expansions and fee-based gathering and processing projects, [removed: as well as the previously discussed sale of our Canadian operations and the planned monetization of the Geismar olefins facility,] fee-based businesses are [removed: becoming an even more] [added: a] significant component of our portfolio and serve to reduce the influence of commodity price fluctuations on our operating results and cash flows.

However, some of our customers may continue to curtail or delay drilling plans until there is a more sustained recovery in prices, which may negatively impact our gathering [added: and processing] volumes.

We expect overall gathering and processing volumes to [removed: remain steady] [added: grow] in [removed: 2017] [added: 2018] and increase thereafter to meet the growing demand for natural gas and natural gas products.

| • | Opposition to infrastructure projects, including the risk of delay [added: or denial] in permits [added: and approvals] needed for our projects; |

| • | Lower than expected distributions from [removed: WPZ.] [added: WPZ;] |

[removed: Our] [added: Williams Partners’] ongoing major expansion projects include the following:

In December 2014, [removed: we] [added: Constitution] received approval from the FERC to construct and operate [removed: the jointly owned Constitution] [added: its proposed] pipeline, which will have an expected capacity of 650 Mdth/d.

However, in April 2016, the New York State Department of Environmental Conservation (NYSDEC) denied [removed: a] [added: the] necessary water quality certification [added: under Section 401 of the Clean Water Act] for the New York portion of the pipeline.

[removed: (See Note 4 – Variable Interest Entities of Notes to Consolidated Financial Statements.)] We currently own 41 percent of Constitution with three other parties holding 25 percent, 24 percent, and 10 percent, respectively.

We [removed: will be] [added: are] the operator of Constitution.

The 126-mile Constitution pipeline [removed: will] [added: is proposed to] connect our gathering system in Susquehanna County, Pennsylvania, to the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in New York, as well as to a local distribution company serving New York and Pennsylvania.

In April 2016, we received approval from the FERC to expand Transco’s existing natural gas transmission system to provide incremental firm transportation capacity from Station 210 in New Jersey to a new interconnection [removed: on our Trenton Woodbury Lateral in New Jersey.]

Our operations are located principally in the United States.

We have one reportable segment, Williams Partners.

As of December 31, 2017, we own 74 percent of the interests in WPZ.

Changes in commodity prices and volumes transported have

Other is comprised of business activities that are not operating segments, as well as corporate operations.

According to the terms of this agreement, concurrent with WPZ’s quarterly distributions in February 2017 and May 2017, we paid additional consideration totaling $56 million to WPZ for these units.

Net income (loss) attributable to The Williams Companies, Inc., for the year ended December 31, 2017, changed favorably by $2.598 billion compared to the year ended December 31, 2016, reflecting a $1.949 billion improvement in the provision (benefit) for income taxes primarily due to Tax Reform, the absence of $430 million of impairments of equity-method investments incurred in 2016, a $219 million increase in Other investing income (loss) – net primarily associated with the disposition of certain equity-method investments in 2017, a $204 million increase in operating income and reduced interest expense, partially offset by a $261 million increase in net income attributable to noncontrolling interests primarily due to increased income at WPZ.

The increase in operating income reflects a gain of $1.095 billion from the sale of our Geismar Interest, increased service revenue from expansion projects, and lower costs and expenses, partially offset by a $674 million regulatory charge resulting from Tax Reform, a $375 million increase in impairments of certain assets, and a $184 million decrease in product margins primarily due to the loss of olefins volumes as a result of the sale of our Gulf Olefins and Canadian operations.

Tax Reform

In December 2017, the Tax Cuts and Jobs Act was enacted, which, among other things, reduced the federal corporate income tax rate from 35 percent to 21 percent (Tax Reform).

As a result, we have remeasured our existing deferred income tax assets and liabilities, to reflect the expected future realization of existing temporary differences at the lower income tax rate.

This resulted in the recognition of a net income tax provision benefit of $1.923 billion for the year ended December 31, 2017.

Certain adjustments within the provision benefit are considered provisional and are potentially subject to change in the future.

(See Note 7 – Provision (Benefit) for Income Taxes of Notes to Consolidated Financial Statements.)

Transco and Northwest Pipeline have recognized regulatory liabilities to reflect the probable return to customers through future rates of the future decrease in income taxes payable associated with Tax Reform.

These liabilities represent an obligation to return amounts directly to our customers.

The regulatory liabilities were recorded in December 2017 through regulatory charges to operating income totaling $674 million.

(See Note 1 – General, Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies of Notes to Consolidated Financial Statements.) The timing and actual amount of such return will be subject to future negotiations regarding this matter and many other elements of cost-of-service rate proceedings, including other costs of providing service.

Revenue Recognition

As a result of the adoption of Accounting Standards Update 2014-09, Revenues from Contracts with Customers (ASC 606), we expect that our 2018 revenues will increase in situations where we receive noncash consideration, which exists primarily in certain of our gas processing contracts where we receive commodities as full or partial consideration for services provided.

This increase in revenues will be offset by a similar increase in costs and expenses when the commodities received are subsequently sold.

Based on commodities received during 2017 as consideration for services and market prices during 2017, we estimate the impact to revenues and costs would have been approximately $350 million.

Additionally, we expect future revenues will be impacted by application of the new accounting standard to certain contracts for which we received prepayments for services and have recorded deferred revenue (contract liabilities).

For these contracts, which underwent modifications in periods prior to January 1, 2018, the modification is treated as a termination of the existing contract and the creation of a new contract.

The new accounting guidance requires that the transaction price, including any remaining deferred revenue from the old contract, be allocated to the performance obligations over the term of the new contract.

As a result, we will recognize the deferred revenue over longer periods than application of revenue recognition under accounting guidance prior to January 1, 2018.

The application of ASC 606 to prior periods related to these contracts would have resulted in lower revenues in 2016 and 2017.

Revenues will also be lower in 2018 and 2019 than what would have been recorded under the previous guidance, offset by increased revenues in later reporting periods given the longer period of recognition.

We are adopting ASC 606 utilizing the modified retrospective transition approach, effective January 1, 2018, by recognizing the cumulative effect of initially applying ASC 606 for periods prior to January 1, 2018, which we expect to result in a decrease of approximately $255 million, net of tax, to the opening balance of Total equity in the Consolidated Balance Sheet.

This adjustment is primarily associated with the impact to the timing of deferred revenue (contract liabilities) for certain contracts as noted above.

Pension Deferred Vested Benefit Early Payout Program

In September 2017, we initiated a program to pay out certain deferred vested pension benefits to reduce investment risk, cash funding volatility, and administrative costs.

In December 2017, the lump-sum payments were made and the annuity payments were commenced in relation to this program.

As a result of these lump-sum payments, as well as lump-sum benefit payments made throughout 2017, settlement accounting was required.

We settled $261 million in liabilities and recognized a pre-tax, non-cash settlement charge of $71 million.

(See Note 9 – Employee Benefit Plans of Notes to Consolidated Financial Statements.)

Expansion Project Completions

In December 2017, the Virginia Southside II expansion project to the Transco system was placed into service.

The project increased capacity by 250 Mdth/d.

In October 2017, the New York Bay expansion to the Transco system was placed into service.

Our operations are located principally in the United States and are organized into the Williams Partners and Williams NGL & Petchem Services reportable segments.

Williams Partners

As of December 31, 2016, we owned approximately 60 percent of the interests in WPZ, including the interests of the general partner, which were wholly owned by us, and IDRs.

or abandonment of jurisdictional facilities and accounting, among other things, are subject to regulation.

Williams NGL & Petchem Services

Net income (loss) attributable to The Williams Companies, Inc., for the year ended December 31, 2016, increased $147 million compared to the year ended December 31, 2015, reflecting the absence of certain goodwill impairments, lower impairments of equity-method investments, an increase in olefins margins associated with our Geismar plant, decreases in operating and maintenance expenses, and higher equity earnings.

These favorable changes were partially offset by an unfavorable change in net income attributable to noncontrolling interests driven primarily by higher WPZ income as well as the impact of reduced incentive distributions from WPZ associated with the termination of the WPZ Merger Agreement.

The favorable changes were also partially offset by increased impairment charges and loss on sale associated with our Canadian operations, lower insurance recoveries, as well as higher interest incurred.

See additional discussion in Results of Operations.

In February, 2017, we announced agreements to acquire additional interests in two Marcellus Shale gathering systems within Williams Partners’ Appalachia Midstream Investments in exchange for equity-method investment interests in DBJV and the Ranch Westex gas processing plant, both currently reported within the Williams Partners segment.

We also expect to receive a total of $200 million in cash as part of the agreements subject to customary closing conditions and purchase price adjustments.

The transactions are expected to close in late first-quarter or early second-quarter 2017.

It is anticipated that the combination of these measures will improve WPZ’s cost of capital, provide for debt reduction, and eliminate WPZ’s need to access the public equity markets for several years.

In addition to the previously announced Geismar monetization process, we have announced plans to monetize other select assets that are not core to our strategy.

We expect to raise more than $2 billion in after-tax proceeds from

the monetization process of Geismar and the other select assets.

As we pursue these other asset monetizations, it is possible that we may incur impairments of certain equity-method investments, property, plant, and equipment, and intangible assets.

Such impairments could potentially be caused by indications of fair value implied through the monetization process or, in the case of asset dispositions that are part of a broader asset group, the impact of the loss of future estimated cash flows.

Energy Transfer Merger Agreement

On September 28, 2015, we publicly announced in a press release that we had entered into a Merger Agreement with Energy Transfer and certain of its affiliates.

The Merger Agreement provided that, subject to the satisfaction of customary closing conditions, we would merge with and into the newly formed ETC, with ETC surviving the ETC Merger.

On June 29, 2016, Energy Transfer provided us written notice terminating the Merger Agreement, citing the alleged failure of certain conditions under the Merger Agreement.

Termination of WPZ Merger Agreement

On May 12, 2015, we entered into an agreement for a unit-for-stock transaction whereby we would have acquired all of the publicly held outstanding common units of WPZ in exchange for shares of our common stock (WPZ Merger Agreement).

On September 28, 2015, prior to our entry into the Merger Agreement, we entered into a Termination Agreement and Release (Termination Agreement), terminating the WPZ Merger Agreement.

Under the terms of the Termination Agreement, we were required to pay a $428 million termination fee to WPZ, at which time we owned approximately 60 percent, including the interests of the general partner and IDRs.

Such termination fee settled through a reduction of quarterly incentive distributions we were entitled to receive from WPZ (such reduction not to exceed $209 million per quarter).

The distributions from WPZ in November 2015, February 2016, and May 2016 were reduced by $209 million, $209 million, and $10 million, respectively, related to this termination fee.

Organizational Realignment

In September 2016, we announced organizational changes aiming to simplify our structure, increase direct operational alignment to advance our natural gas-focused strategy, and drive continued focus on customer service and execution.

Effective January 1, 2017, we implemented these changes, which combined the management of certain of our operations and reduced the overall number of operating areas managed within our business.

Information in this report has generally been prepared to be consistent with the reportable segment presentation in our consolidated financial statement in Part II, Item 8 of this document.

These segments are discussed in further detail in the following sections.

Northwest Pipeline rate case

On January 23, 2017, Northwest Pipeline filed a Stipulation and Settlement Agreement with the FERC for new rates.

The new rates become effective January 1, 2018, and are not expected to materially affect our trend of earnings.

Pursuant to this agreement, Northwest Pipeline can file for new rates to be effective after October 1, 2018, and must file a general rate case for new rates to become effective no later than January 1, 2023.

In September 2016, Williams Partners announced the initiation of an ongoing process to explore monetization of its ownership interest in the Geismar, Louisiana, olefins plant and complex, consistent with our strategy to narrow our focus and allocate capital to our natural gas–focused business.

Sale of Canadian operations

In September 2016, we completed the sale of our Canadian operations for total consideration of $1.02 billion.

(See Note [removed: 14] [added: 13] – Debt, Banking Arrangements, and Leases of Notes to Consolidated Financial Statements.)

The tables below provide information by maturity date about our interest rate risk-sensitive instruments as of December 31, [removed: 2016] [added: 2017] and [removed: 2015.][added: 2016.]

| | | 2017 | | | [added: |] 2018 | | | [added: |] 2019 | | | [added: |] 2020 | | | [added: |] 2021 | | | [added: |] Thereafter (1) | | | [added: |] Total | | | [added: |] Fair Value December 31, 2016 | | [added: |]

| | (Millions) | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| Long-term debt, including current portion: | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| Fixed rate | [added: |] $ | 785 | | [added: |] $ | 500 | | [added: |] $ | 32 | | [added: |] $ | 2,121 | | [added: |] $ | 871 | | [added: |] $ | 17,475 | | [added: |] $ | 21,784 | | [added: |] $ | 22,465 | |

| [removed: Interest] [added: Weighted-average interest] rate | | 5.2 | [added: |] % | | 5.2 | [added: |] % | | 5.2 | [added: |] % | | 5.2 | [added: |] % | | 5.2 | [added: |] % | | 5.6 | [added: |] % | | | | | | | [added: | |]

| Variable rate [added: (3)] | [added: |] $ | — | | [added: |] $ | 850 | | [added: |] $ | — | | [added: |] $ | 775 | | [added: |] $ | — | | [added: |] $ | — | | [added: |] $ | 1,625 | | [added: |] $ | 1,625 | |

| Commercial paper: | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| Variable rate [added: (4)] | [added: |] $ | 93 | | [added: |] $ | — | | [added: |] $ | — | | [added: |] $ | — | | [added: |] $ | — | | [added: |] $ | — | | [added: |] $ | 93 | | [added: |] $ | 93 | |

| | | [removed: 2016] [added: 2018] | | | [removed: 2017] | [added: 2019] | | [removed: 2018] | | [added: 2020] | [removed: 2019] | | | [removed: 2020] [added: 2021] | | | [added: | 2022 | | | |] Thereafter (1) | | | [added: |] Total | | | [added: |] Fair Value December 31, [removed: 2015] [added: 2017] | | [added: |]

| Long-term debt, including current portion: [removed: (2)] | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| Variable rate [added: (2)] | [added: |] $ | [removed: 499] [added: —] | | [added: |] $ | — | | [added: |] $ | — | | [added: |] $ | [removed: —] [added: 270] | | [added: |] $ | — | | [added: |] $ | — | | [added: |] $ | [removed: 499] [added: 270] | | [added: |] $ | [removed: 499] [added: 270] | |

| (3) | The weighted-average interest rates for WPZ’s $850 million term [removed: loan,] [added: loan] and our $775 million credit facility borrowing at December 31, 2016 were 2.50 percent and 2.51 percent, respectively. |

| (4) | The weighted-average interest rate was 1.06 percent [removed: and 0.92 percent] at December 31, [removed: 2016 and 2015, respectively.] [added: 2016.] |

We are exposed to the impact of fluctuations in the market price of [removed: NGLs, olefins,] [added: NGLs] and natural gas, as well as other market factors, such as market volatility and energy commodity price correlations.

[removed: The fair value of derivative contracts is subject] to many factors, including changes in energy commodity market prices, the liquidity and volatility of the markets in which the contracts are transacted, and changes in interest rates.

At December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] our derivative activity was not material.

(See Note [removed: 17] [added: 16] – Fair Value Measurements, Guarantees, and Concentration of Credit Risk of Notes to Consolidated Financial Statements.)

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Fixed rate | | $ | 502 | | | $ | 33 | | | $ | 2,123 | | | $ | 873 | | | $ | 2,003 | | | $ | 15,131 | | | $ | 20,665 | | | $ | 22,735 | |

| Weighted-average interest rate | | 5.1 | | % | | 5.1 | | % | | 5.1 | | % | | 5.1 | | % | | 5.2 | | % | | 5.7 | | % | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | (Millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| (2) | The weighted-average interest rate for our $270 million credit facility borrowing at December 31, 2017 was 3.16 percent. |

The fair value of derivative contracts is subject

Long-term debt in the tables represents principal cash flows, net of (discount) premium and debt issuance costs, and weighted-average interest rates by expected maturity dates.

| | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Interest rate (3) | | | | | | | | | | | | | | | | | | | | | | | | |

| Interest rate (4) | | | | | | | | | | | | | | | | | | | | | | | | |

| Fixed rate | $ | 375 | (*) | $ | 785 | | $ | 500 | | $ | 32 | | $ | 2,121 | | $ | 17,364 | | $ | 21,177 | | $ | 16,796 | |

| Interest rate | | 5.1 | % | | 5.1 | % | | 5.0 | % | | 5.0 | % | | 5.0 | % | | 5.5 | % | | | | | | |

| Variable rate | $ | — | | $ | — | | $ | 850 | | $ | — | | $ | 1,960 | | $ | — | | $ | 2,810 | | $ | 2,810 | |

| Interest rate (5) | | | | | | | | | | | | | | | | | | | | | | | | |

| _____________ | | | | | | | | | | | | | | | | | | | | | | | | |

| (*) $200 million presented as long-term debt at December 31, 2015, due to WPZ’s intent and ability to refinance. | | | | | | | | | | | | | | | | | | | | | | | | |

| | |

| --- | --- |

| (2) | Excludes capital leases. |

| (5) | The weighted-average interest rates for WPZ’s $1.3 billion credit facility borrowing, WPZ’s $850 million term loan, and our $650 million credit facility borrowing at December 31, 2015 were 1.63 percent, 1.85 percent, and 2.32 percent, respectively. |

Foreign Currency Risk

In September 2016, we disposed of our Canadian operations, which comprised substantially all of our foreign operations.

(See Note 3 – Divestiture of Notes to Consolidated Financial Statements.)

Our Internet website is [removed: www.williams.com.][added: http://investor.williams.com/.]

We make available, free of charge, through the [removed: Investor] [added: Investors] tab of our Internet website our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

We are [removed: primarily] an energy infrastructure company focused on connecting North America’s significant hydrocarbon resource plays to markets for natural [removed: gas, NGLs,] [added: gas] and [removed: olefins.][added: NGLs.]

As of December 31, [removed: 2016,] [added: 2017,] our interstate gas [removed: pipelines, midstream,] [added: pipelines] and [removed: olefins production] [added: midstream] interests were largely held through our significant investment in [removed: Williams Partners L.P. (WPZ).][added: WPZ.]

We [removed: owned] [added: own] the general partner interest and a [removed: 58] [added: 74] percent [removed: limited-partner] [added: limited partner] interest in WPZ.

Williams’ headquarters are located in Tulsa, Oklahoma, with other major offices in Salt Lake City, Utah; Houston, Texas; [removed: Oklahoma City, Oklahoma;] Pittsburgh, Pennsylvania; and the Four Corners Area.

(See Note [removed: 3] [added: 5] – [removed: Divestiture] [added: Investing Activities] of Notes to Consolidated Financial Statements.)

[removed: See “Item 8 —] Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements — Note [removed: 19] [added: 18] – Segment Disclosures.”

Our activities in [removed: 2016] [added: 2017] were operated through the following reporting segments as presented in the accompanying financial statements and management’s discussion and analysis.

| • | Williams Partners — comprised of our consolidated master limited partnership, WPZ, which includes gas pipeline and midstream businesses. The gas pipeline business includes interstate natural gas pipelines and pipeline joint project investments. The midstream business provides natural gas gathering, treating, processing and compression services; NGL production, fractionation, storage, marketing and transportation; deepwater production handling and crude oil transportation services; an olefin production business [removed: and is comprised of several wholly owned and partially owned subsidiaries and joint project investments.] [added: (see Note 2 –] |

[removed: Prior to September 2016, this] [added: This] reporting segment also included our [added: former] Canadian midstream operations comprised of an oil sands offgas processing plant near Fort McMurray, Alberta, an NGL/olefin fractionation facility, and the Boreal [removed: Pipeline] [added: Pipeline,] which were [removed: subsequently sold.][added: sold in September 2016 (see Note 2 – Acquisitions and Divestitures of Notes to Consolidated Financial Statements).]

For a discussion of our ongoing expansion projects, see [added: Part II,] Item 7.

Our gas pipeline business also holds interests in joint venture interstate and intrastate natural gas pipeline systems including a 50 percent equity-method investment in Gulfstream and a 41 percent interest in Constitution (a consolidated entity), which is [removed: under development.][added: developing a pipeline project (see Note 3 – Variable Interest Entities of Notes to Consolidated Financial Statements).]

Transco and Northwest Pipeline own and operate a combined total of approximately 13,600 miles of pipelines with a total annual throughput of approximately [removed: 4,230] [added: 4,533] TBtu of natural gas and peak-day delivery capacity of approximately [removed: 15.5] [added: 18.8] MMdth of natural gas.

Transco’s system includes [removed: 47] [added: 50] compressor stations, four underground storage fields, and an LNG storage facility.

Compression facilities at sea level-rated capacity total approximately [removed: 1.8] [added: 2.1] million horsepower.

Shippers on Transco’s system include public utilities, municipalities, [added: intrastate pipelines,] direct industrial users, electric power generators, and natural gas marketers and producers.

At December 31, [removed: 2016,] [added: 2017,] Transco’s customers had stored in its facilities approximately [removed: 151 Bcf of natural gas.][added: 141]

At December 31, [removed: 2016,] [added: 2017,] Northwest Pipeline’s system, having long-term firm transportation and storage redelivery agreements with aggregate capacity reservations of approximately 3.8 MMdth/d, was composed of approximately 3,900 miles of mainline and lateral transmission pipeline and 41 transmission compressor stations having a combined sea level-rated capacity of approximately 472,000 horsepower.

Northwest Pipeline transports and stores natural gas for a broad mix of customers, including local natural gas distribution companies, [removed: public] [added: municipal] utilities, [removed: municipalities,] direct industrial users, electric power generators, and natural gas marketers and producers.

Northwest Pipeline’s firm transportation and storage [removed: redelivery] contracts are generally long-term contracts with various expiration dates and account for the major portion of Northwest Pipeline’s business.

The primary businesses are: (1) natural gas gathering, treating, and processing; (2) NGL fractionation, storage and transportation; (3) crude oil transportation; and (4) olefins [removed: production.][added: production (see Note 2 – Acquisitions and Divestitures of Notes to Consolidated Financial Statements).]

| • | Disciplined growth in [removed: core] service [removed: areas and new step-out] areas. |

Our gas processing services generate revenues primarily from the following [removed: three] types of contracts:

| • | Fee-based: We are paid a fee based on the volume of natural gas processed, generally measured in the Btu heating value. Our customers are entitled to the NGLs produced in connection with this type of processing agreement. A portion of our fee-based processing revenues includes a share of the margins on the NGLs produced. For the year ended December 31, [removed: 2016, 69] [added: 2017, 70] percent of [removed: the domestic] [added: our] NGL production volumes were under fee-based contracts. |

| • | [removed: Keep-whole: Under] [added: Noncash commodity-based: We also process gas under two types of commodity-based contracts,] keep-whole [added: and percent-of-liquids, where we receive consideration for our services in the form of NGLs. Under these] contracts, we [removed: (1) process natural gas produced by customers, (2)] retain some or all of the extracted NGLs as compensation for our [removed: services, (3)] [added: services. For a keep-whole arrangement we] replace the Btu content of the retained NGLs that were extracted during processing with natural gas purchases, also known as shrink replacement [removed: gas, and (4)] [added: gas. For a percent-of-liquids arrangement, we] deliver [added: to customers] an [removed: equivalent Btu content] [added: agreed-upon percentage] of [removed: natural gas for customers at] the [removed: plant outlet.] [added: extracted] NGLs [added: and retain the remainder. NGLs] we retain in connection with [removed: this type] [added: these types] of processing [removed: agreement] [added: agreements] are referred to as our equity NGL production. Under [removed: these] [added: keep-whole] agreements, we have commodity price exposure on the difference between NGL and natural gas prices. For the year ended December 31, [removed: 2016, 26] [added: 2017, 30] percent of [removed: the domestic] [added: our] NGL production volumes were under [removed: keep-whole] [added: noncash commodity-based] contracts. |

In addition, certain contracts include fee redetermination or cost of service mechanisms that are designed to support a return on invested capital and allow our gathering rates to be [added: adjusted, subject to specified caps in certain cases, to account for variability in volume, capital expenditures, commodity price fluctuations, compression and other expenses.]

[removed: If] the [removed: minimum annual or semi-annual volume commitment is not met, these customers are obligated to pay a fee equal to the] applicable fee for each Mcf by which the applicable customer’s minimum annual or semi-annual volume commitment exceeds the actual volume gathered.

During [removed: 2016,] [added: 2017,] Williams Partners’ facilities gathered and processed gas [added: and crude oil] for approximately [removed: 200] [added: 260] customers.

Williams Partners’ top [removed: eight gathering and processing] [added: ten] customers accounted for approximately [removed: 78] [added: 75] percent of our gathering and processing fee revenues and NGL margins from our [removed: keep-whole and percent-of-liquids] [added: noncash commodity-based] agreements.

| Ohio Valley [added: Midstream] | [added: Ohio,] West [removed: Virginia] [added: Virginia,] & Pennsylvania | | [removed: 210] [added: 216] | | 0.8 | | 100% | | Appalachian |

| Susquehanna Supply Hub | Pennsylvania & New York | | [removed: 399] [added: 436] | | [removed: 2.9] [added: 3.2] | | 100% | | Appalachian |

| Cardinal (1) | Ohio | | [removed: 352] [added: 353] | | 1.0 | | 66% | | Appalachian |

| Flint | Ohio | | [removed: 33] [added: 75] | | [removed: 0.2] [added: 0.4] | | 100% | | Appalachian |

| Marcellus South (2) | [removed: West Virginia &] Pennsylvania | | 41 | | 0.1 | | 100% | | Appalachian |

| Other Western Gulf | Offshore shelf and other | | [removed: 120] [added: 105] | | [removed: 0.9] [added: 0.5] | | 100% | | Western Gulf of Mexico |

| Four Corners | Colorado & New Mexico | | [removed: 3,743] [added: 3,742] | | 1.8 | | 100% | | San Juan |

| Wamsutter | Wyoming | | [removed: 1,973] [added: 2,084] | | [removed: 0.6] [added: 0.7] | | 100% | | Wamsutter |

| Niobrara | Wyoming | | [removed: 184] [added: 224] | | 0.2 | | (4) | | Powder River |

| Barnett Shale | Texas | | 858 | | [removed: 0.9] [added: 0.8] | | 100% | | Barnett Shale |

See Part II, “Item 8.

Acquisitions and Divestitures of Notes to Consolidated Financial Statements), and is comprised of several wholly owned and partially owned subsidiaries and joint project investments.

| • | Other — comprised of business activities that are not operating segments, as well as corporate operations. Other also includes certain domestic olefins pipeline assets as well as certain Canadian assets, which included a liquids extraction plant located near Fort McMurray, Alberta, that began operations in March 2016, and a propane dehydrogenation facility which was under development. In September 2016, the Canadian assets were sold (see Note 2 – Acquisitions and Divestitures of Notes to Consolidated Financial Statements). |

At December 31, 2017, Transco’s system, which extends from Texas to New York, had a system-wide delivery capacity totaling approximately 15.0 MMdth of natural gas per day.

During 2017, Transco completed five fully-contracted expansions, which added more than 2.8 MMdth of firm transportation capacity per day to the existing pipeline system.

Bcf of natural gas.

If the minimum annual or semi-annual volume commitment is not met, these customers are obligated to pay a fee equal to

| Piceance | Colorado | | 352 | | 1.8 | | (3) | | Piceance |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

owned by Discovery.

NGL & Petchem Services is comprised of previously owned operations, including an 88.5 percent undivided interest in an olefins production facility in Geismar, Louisiana, which was sold in July 2017 (see Note 2 – Acquisitions and Divestitures of Notes to Consolidated Financial Statements), and a refinery grade propylene splitter in the Gulf

region, which was sold in June 2017.

Discovery’s mainline has a gathering inlet capacity of 600 MMcf/d, while the Keathley Canyon Connector, a deepwater lateral pipeline in the central deepwater Gulf of Mexico has a gathering inlet capacity of 400 MMcf/d.

During the first quarter of 2017, we exchanged all of our 50 percent interest in the Delaware basin gas gathering system for an increased interest in the Bradford Supply Hub natural gas gathering system that is part of the Appalachia Midstream Investments and $155 million in cash.

Following this exchange, we have an approximate average 66 percent interest in the Appalachia Midstream Investments.

We continue to account for this investment under the equity-method due to the significant participatory rights of our partners such that we do not exercise control.

| | 2017 | | | 2016 | | | 2015 | |

| 2017 | | | |

Discovery provides transportation service for offshore Louisiana production from the South Timbalier,

We also own an ethane pipeline in West Virginia and Pennsylvania (Williams Ohio Valley Pipeline LLC) and an ethane pipeline in Texas and Louisiana (Williams Bayou Ethane Pipeline) each of which provides interstate service subject to FERC jurisdiction under the Interstate Commerce Act.

Intrastate Liquids Pipelines in the Gulf Coast

See Part II, Item 8.

Financial Statements and Supplementary Data — Note 17 – Contingent Liabilities and Commitments of Notes to Consolidated Financial Statements.

We believe our significant presence in traditional prolific

See Part II, Item 8.

Also see Part II, Item 8.

See the Financial Repositioning discussion below for recent changes to our interest in WPZ.

FINANCIAL REPOSITIONING

In January 2017, we announced agreements with WPZ, wherein we permanently waived the general partner’s incentive distribution rights and converted our 2 percent general partner interest in WPZ to a non-economic interest in exchange for 289 million newly issued WPZ common units.

Pursuant to this agreement, we also purchased approximately 277 thousand WPZ common units for $10 million.

Additionally, we purchased approximately 59 million common units of WPZ at a price of $36.08586 per unit in a private placement transaction, funded with proceeds from our equity offering (see Note 15 - Stockholders’ Equity of Notes to Consolidated Financial Statements).

Following these transactions, we own a 74 percent limited partner interest in WPZ.

It is anticipated that the combination of these measures will improve WPZ’s cost of capital, provide for debt reduction, and eliminate WPZ’s need to access the public equity markets for several years.

In addition to the previously announced Geismar monetization process, we have announced plans to monetize other select assets that are not core to our strategy.

We expect to raise more than $2 billion in after-tax proceeds from the monetization process of Geismar and the other select assets.

SALE OF OUR CANADIAN OPERATIONS

In September 2016, we completed the sale of our Canadian operations.

Consideration received to date totaled $1.020 billion, net of $31 million of cash divested and subject to customary working capital adjustments.

We recognized an impairment charge of $747 million during the second quarter of 2016 related to these operations and an additional loss of $66 million upon completion of the sale.

ENERGY TRANSFER MERGER AGREEMENT

On September 28, 2015, we publicly announced in a press release that we had entered into a Merger Agreement with Energy Transfer and certain of its affiliates.

The Merger Agreement provided that, subject to the satisfaction of customary closing conditions, we would merge with and into the newly formed ETC, with ETC surviving the ETC Merger.

On June 29, 2016, Energy Transfer provided us written notice terminating the Merger Agreement, citing the alleged failure of certain conditions under the Merger Agreement.

ORGANIZATIONAL REALIGNMENT

In September 2016, we announced organizational changes aiming to simplify our structure, increase direct operational alignment to advance our natural gas-focused strategy, and drive continued focus on customer service and execution.

Effective January 1, 2017, we implemented these changes, which combined the management of certain of our operations and reduced the overall number of operating areas managed within our business.

Information in this report has generally been prepared to be consistent with the reportable segment presentation in our consolidated financial statements in Part II, Item 8 of this document.

These segments are discussed in further detail in the following sections.

| | |

| --- | --- |

| • | Williams NGL & Petchem Services — comprised of our Texas Belle pipeline and certain other domestic olefins pipeline assets. Prior to September 2016, this reporting segment also included certain Canadian growth projects under development, including a propane dehydrogenation facility and a recently completed liquids extraction plant which were subsequently sold. |

| • | Other — primarily comprised of corporate operations and our Canadian construction services company. |

As previously discussed, in September 2016 we announced organizational changes aiming to simplify our structure, increase direct operational alignment to advance our natural gas-focused strategy, and drive continued focus on customer service and execution.

As a result of this realignment and the sale of our Canadian operations, the Williams NGL & Petchem Services reporting segment will be eliminated and the remaining assets will be reported with Other.

At December 31, 2016, Transco’s system had a mainline delivery capacity of approximately 6.6 MMdth of natural gas per day from its production areas to its primary markets, including delivery capacity from the mainline to locations on its Mobile Bay Lateral.

Using its Leidy Line along with market-area storage and transportation capacity, Transco can deliver an additional 5.1 MMdth of natural gas per day for a system-wide delivery capacity total of approximately 11.7 MMdth of natural gas per day.

We also own and operate gas gathering and processing assets and pipelines primarily within the onshore, offshore shelf, and deepwater areas in and around the Gulf Coast states of Texas, Louisiana, Mississippi, and Alabama.

| • | Percent-of-Liquids: Under percent-of-liquids processing contracts, we (1) process natural gas produced by customers, (2) deliver to customers an agreed-upon percentage of the extracted NGLs, (3) retain a portion of the extracted NGLs as compensation for our services, and (4) deliver natural gas to customers at the plant outlet. Under this type of contract, we are not required to replace the Btu content of the retained NGLs that were extracted during processing, and are therefore only exposed to NGL price movements. NGLs we retain in connection with this type of processing agreement are also referred to as our equity NGL production. For the year ended December 31, 2016, 5 percent of the domestic NGL production volumes were under percent-of-liquids contracts. |

adjusted, subject to specified caps in certain cases, to account for variability in volume, capital expenditures, commodity price fluctuations, compression and other expenses.

| Piceance | Colorado | | 336 | | 1.5 | | (3) | | Piceance |

The commodity price exposure of this asset was the spread between the price for natural gas and the NGL and olefin products we produce.

These products were sold within Canada and the United States.

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

In 2015, we placed in service an expansion of the olefins production facility that increased its ethylene production capacity by 600 million pounds per year, for a total production capacity of 1.95 billion pounds of ethylene and 114 million pounds of propylene per year.

Our feedstocks for the cracker are ethane and propane; as a result, these assets are primarily exposed to the price spread between ethane and propane, and ethylene and propylene, respectively.

On February 21, 2017, we received notice from the Environmental Enforcement Section of the United States Department of Justice [added: (DOJ)] regarding certain alleged violations of the Clean Air Act at our Moundsville facility as set forth in a Notice of Noncompliance issued by the EPA on January 14, 2016.

The notice includes an offer to avoid further legal action on the alleged violations by paying [removed: $2,000,000.][added: $2 million.]

Other [added: Litigation]

The additional information called for by this [removed: item] [added: Item] is provided in Note [removed: 18] [added: 17] – Contingent Liabilities and Commitments of Notes to Consolidated Financial Statements included under Part II, Item 8 Financial Statements of this report, which information is incorporated by reference into this [removed: item.][added: Item.]

On June 13, 2013, an explosion and fire occurred at our formerly owned Geismar olefins plant and rendered the facility temporarily inoperable (Geismar Incident).

On October 21, 2013, the EPA issued an Inspection Report pursuant to the Clean Air Act’s Risk Management Program following its inspection of the facility on June 24 through June 28, 2013.

The report notes the EPA’s preliminary determinations about the facility’s documentation regarding process safety, process hazard analysis, as well as operating procedures, employee training, and other matters.

On June 16, 2014, we received a request for information related to the Geismar Incident from the EPA under Section 114 of the Clean Air Act to which we responded on August 13, 2014.

The EPA could issue penalties pertaining to final determinations.

In discussion with the DOJ and the EPA, the EPA has indicated its belief that additional similar violations have occurred at our Oak Grove facility and has expressed interest in pursuing a global settlement.

On January 19, 2018, we received an offer from the DOJ to globally settle the government’s claim for civil penalties associated with the alleged violations at both the Moundsville and the Oak Grove facilities for $1.955 million.

We are currently evaluating the penalty assessment and the proposed global settlement offer and will respond to the agencies.

On May 5, 2017, we entered into a Consent Order with the Georgia Department of Natural Resources, Environmental Protection Division (GADNR) pertaining to alleged violations of the Georgia Water Quality Control Act and associated rules arising from a permit issued by GADNR for construction of the Dalton Project.

Pursuant to the Consent Order, we paid a fine of $168,750 and agreed to perform a Corrective Action Order to remedy the alleged violations.

On January 19, 2018, we received notice from the PHMSA regarding certain alleged violations of PHMSA regulations in connection with a fire and release of liquid ethane that occurred at our Houston Meter Station located near Houston, Washington County, PA on December 24, 2014.

The Notice of Probable Violation and Proposed Civil Penalty issued by PHMSA alleges failure to timely notify the National Response Center of a release of a hazardous

liquid resulting in a fire or explosion and failure to verify that the facility was constructed, inspected, tested, and calibrated in accordance with comprehensive written specifications or standards and proposes a total civil penalty of $174,100.

We are currently evaluating the penalty assessment and will respond to the agency.

Other environmental matters called for by this Item are described under the caption “Environmental Matters” in Note 17 – Contingent Liabilities and Commitments of Notes to Consolidated Financial Statements included under Part II, Item 8 Financial Statements of this report, which information is incorporated by reference into this Item.

On January 21, 2016, we received a Compliance Order from the Pennsylvania Department of Environmental Protection requiring the correction of several alleged deficiencies arising out of the construction of the Springville Gathering Line, the Pennsylvania Mainline Gathering Line, and the 2008 Core Zone Gathering Line.

The original Order identified civil penalties in the amount of approximately $712,000.

On December 28, 2016, we entered into an Order with the Pennsylvania Department of Environmental Protection to address the issues and paid the associated penalty of $581,477.

We are currently evaluating the communication and our response.

| | For the fiscal year ended December 31, [removed: 2016] [added: 2017] |

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting [added: company,” and “emerging growth] company” in Rule 12b-2 of the Exchange Act.

| [removed: |] Large accelerated filer þ | | Accelerated filer ¨ | | [removed: |] Non-accelerated filer ¨ | | Smaller reporting company ¨ | | [added: Emerging growth company ¨ |]

| | | | | [removed: |] (Do not check if a smaller reporting company) | | | | |

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second quarter was approximately [removed: $16,207,908,251.][added: $24,993,673,967.]

The number of shares outstanding of the registrant’s common stock outstanding at February [removed: 17, 2017] [added: 19, 2018] was [removed: 825,823,918.][added: 827,327,336.]

Portions of the Registrant’s Definitive Proxy Statement for the Registrant’s Annual Meeting of Stockholders to be held on May [removed: 18, 2017,] [added: 10, 2018,] are incorporated into Part III, as specifically set forth in Part III.

| Item 1. | [removed: [Business](#s2BAB634EE6FF5806801C52C99A574C92)] [added: [Business](#sC3B842F71B9DF9F3CCFEED341592623E)] | [removed: [4](#s2BAB634EE6FF5806801C52C99A574C92)] [added: [4](#sC3B842F71B9DF9F3CCFEED341592623E)] |

| | [Website Access to Reports and Other [removed: Information](#sD22B7FA064445755A90C848963A7ED1B)] [added: Information](#s7D5F43C1A5E147AA913DED3415B04D30)] | [removed: [4](#sD22B7FA064445755A90C848963A7ED1B)] [added: [4](#s7D5F43C1A5E147AA913DED3415B04D30)] |

| | [Financial Information About [removed: Segments](#sEE486ECE075C5E6F8B0176E06BE3B84D)] [added: Segments](#s41447FB84C5C9F796302ED3416AA90E8)] | [removed: [5](#sEE486ECE075C5E6F8B0176E06BE3B84D)] [added: [4](#s41447FB84C5C9F796302ED3416AA90E8)] |

| | [Business [removed: Segments](#sCDD37C507A375DEF9B2EE10D47A1A691)] [added: Segments](#s9EC831D7582D87C102B9ED3416DCE1BC)] | [removed: [5](#sCDD37C507A375DEF9B2EE10D47A1A691)] [added: [4](#s9EC831D7582D87C102B9ED3416DCE1BC)] |

| | [Williams [removed: Partners](#s2E675EEDD3785478A0F3338283215C3C)] [added: Partners](#sC15442525A7E36F9A504ED3417041126)] | [removed: [6](#s2E675EEDD3785478A0F3338283215C3C)] [added: [5](#sC15442525A7E36F9A504ED3417041126)] |

| | [Additional Business Segment [removed: Information](#sA93DABD39AAD5BD0A9F1BBCEE7DBE485)] [added: Information](#s945B802BA746C1B646BDED3406ECDD63)] | [removed: [16](#sA93DABD39AAD5BD0A9F1BBCEE7DBE485)] [added: [14](#s945B802BA746C1B646BDED3406ECDD63)] |

| | [Regulatory [removed: Matters](#s5FB4E291495D5774A443EADAD028AB9D)] [added: Matters](#sAEB570E3C831E9696D6CED3417865FEF)] | [removed: [16](#s5FB4E291495D5774A443EADAD028AB9D)] [added: [15](#sAEB570E3C831E9696D6CED3417865FEF)] |

| | [Environmental [removed: Matters](#s071184CF9DFC587BAF22798BA55C0A70)] [added: Matters](#sC4C4F47F75D2E39AFFC3ED3417A4AE06)] | [removed: [19](#s071184CF9DFC587BAF22798BA55C0A70)] [added: [17](#sC4C4F47F75D2E39AFFC3ED3417A4AE06)] |

| | [Financial Information about Geographic [removed: Areas](#s41D65185D37F5264AF5E99BA08A10A60)] [added: Areas](#s00DDDDDB0794688A7800ED3418302DA7)] | [removed: [20](#s41D65185D37F5264AF5E99BA08A10A60)] [added: [19](#s00DDDDDB0794688A7800ED3418302DA7)] |

| Item 1A. | [Risk [removed: Factors](#s0DDBBBBF17C450E2BFBD5C9975A1822B)] [added: Factors](#s69BA0CB293CC9CBD10BDED34184E6C4D)] | [removed: [21](#s0DDBBBBF17C450E2BFBD5C9975A1822B)] [added: [20](#s69BA0CB293CC9CBD10BDED34184E6C4D)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#s28FB6364868A5B47BBEBEA4C88323AB0)] [added: Comments](#s6C9C264522FAA7F07665ED341880EE6B)] | [removed: [38](#s28FB6364868A5B47BBEBEA4C88323AB0)] [added: [36](#s6C9C264522FAA7F07665ED341880EE6B)] |

| Item 2. | [removed: [Properties](#s60459027B3225DA19E5FE31D68215915)] [added: [Properties](#s473228526EB7DB70AD12ED34189EE7F7)] | [removed: [38](#s60459027B3225DA19E5FE31D68215915)] [added: [36](#s473228526EB7DB70AD12ED34189EE7F7)] |

| Item 3. | [Legal [removed: Proceedings](#sF5854052C486590DB1A294C9E48797B2)] [added: Proceedings](#sDE1DE7EDD97A2292218CED3418D0E71D)] | [removed: [38](#sF5854052C486590DB1A294C9E48797B2)] [added: [36](#sDE1DE7EDD97A2292218CED3418D0E71D)] |

| Item 4. | [Mine Safety [removed: Disclosures](#sAC2B6AE5FD57552CBECEF773ADFA0F3B)] [added: Disclosures](#s6BE4CA09885CA6EACEA3ED3418F8BF56)] | [removed: [39](#sAC2B6AE5FD57552CBECEF773ADFA0F3B)] [added: [37](#s6BE4CA09885CA6EACEA3ED3418F8BF56)] |

| | [Executive Officers of the [removed: Registrant](#s01FA1A35A96A5BA4B5FA660741F50DBC)] [added: Registrant](#sF9A132383B132D344956ED34192AFA49)] | [removed: [40](#s01FA1A35A96A5BA4B5FA660741F50DBC)] [added: [38](#sF9A132383B132D344956ED34192AFA49)] |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sDAD5A3F50CE85FB3BA79FBE05B1EDC0B)] [added: Securities](#s6762210A85011A697389ED34197A3580)] | [removed: [44](#sDAD5A3F50CE85FB3BA79FBE05B1EDC0B)] [added: [42](#s6762210A85011A697389ED34197A3580)] |

| Item 6. | [Selected Financial [removed: Data](#s804752F19EA357B4BA1D6A5EEACB8EE9)] [added: Data](#s7C6C1D2A139B6F4BB409ED3419980EB5)] | [removed: [45](#s804752F19EA357B4BA1D6A5EEACB8EE9)] [added: [43](#s7C6C1D2A139B6F4BB409ED3419980EB5)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#s4A3414C85AAF5C1DB6F223CD33B7BF1D)] [added: Operations](#sD0759AECE5E17AF8D756ED3419F22EC5)] | [removed: [46](#sC1AED1A992D05C7F9071DBE4F02EB604)] [added: [44](#sFC2B58C6083970DC6BFCED341A420277)] |

| Item 7A. | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sB2AA8200F81B5CFFB025E00F1D978756)] [added: Risk](#sD4C3212E9DB10F52BF30ED34073C3DD1)] | [removed: [76](#sB2AA8200F81B5CFFB025E00F1D978756)] [added: [75](#sD4C3212E9DB10F52BF30ED34073C3DD1)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#s15C77629A9F25B0ABBCF96EA7B08CA9F)] [added: Data](#s9F7ED0145707F30F592BED341CD684D6)] | [removed: [78](#s15C77629A9F25B0ABBCF96EA7B08CA9F)] [added: [77](#s9F7ED0145707F30F592BED341CD684D6)] |

| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sA57C3F2403A35E33A05B120A89021AA6)] [added: Disclosure](#sF906C1039C4C0298E42CED3425DCB806)] | [removed: [155](#sA57C3F2403A35E33A05B120A89021AA6)] [added: [154](#sF906C1039C4C0298E42CED3425DCB806)] |

| Item 9A. | [Controls and [removed: Procedures](#sD1490DD865985A3A8E8203CD34304D11)] [added: Procedures](#sAE58E5272DBE8BEB8CDFED3425FAA82A)] | [removed: [155](#sD1490DD865985A3A8E8203CD34304D11)] [added: [154](#sAE58E5272DBE8BEB8CDFED3425FAA82A)] |

| Item 9B. | [Other [removed: Information](#s6CA795019C1051ABA13D05A3965F1D91)] [added: Information](#s1B33F3530728E2588E81ED34262C74BE)] | [removed: [158](#s6CA795019C1051ABA13D05A3965F1D91)] [added: [157](#s1B33F3530728E2588E81ED34262C74BE)] |

| Item 10. | [Directors, Executive Officers and Corporate [removed: Governance](#s0BD39CBDCC2858998FDED84728F956EB)] [added: Governance](#s6C9158E2076274F674A3ED34267C9821)] | [removed: [158](#s0BD39CBDCC2858998FDED84728F956EB)] [added: [157](#s6C9158E2076274F674A3ED34267C9821)] |

| Item 11. | [Executive [removed: Compensation](#s042E163514AE5C69A997C23974878637)] [added: Compensation](#s458E327EF408B777FEEFED3426A45137)] | [removed: [158](#s042E163514AE5C69A997C23974878637)] [added: [157](#s458E327EF408B777FEEFED3426A45137)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sE369DB6AA91455A59EC54E4826725EE9)] [added: Matters](#s49CAE9973630EB327AADED3426D63ECB)] | [removed: [158](#sE369DB6AA91455A59EC54E4826725EE9)] [added: [157](#s49CAE9973630EB327AADED3426D63ECB)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s4DE36F818F3B5912BB22400E66FA0F4E)] [added: Independence](#s800633FE722E723BED47ED3426F42A64)] | [removed: [159](#s4DE36F818F3B5912BB22400E66FA0F4E)] [added: [158](#s800633FE722E723BED47ED3426F42A64)] |

| Item 14. | [Principal Accountant Fees and [removed: Services](#sCB305F8558FD5CD7BA558543C162AD6A)] [added: Services](#s829E3B042DCCF4A5347CED3427261C08)] | [removed: [159](#sCB305F8558FD5CD7BA558543C162AD6A)] [added: [158](#s829E3B042DCCF4A5347CED3427261C08)] |

| Item 15. | [Exhibits and Financial Statement [removed: Schedules](#s93731DBC2CCC5157B0BA32D9FB310510)] [added: Schedules](#s614F9EE5CBA54C2CD154ED340A48C404)] | [removed: [160](#s93731DBC2CCC5157B0BA32D9FB310510)] [added: [159](#s614F9EE5CBA54C2CD154ED340A48C404)] |

The following is a listing of certain abbreviations, acronyms and other industry terminology [added: that may be] used throughout this Annual Report.

Partially Owned Entities: Entities in which we do not own a 100 percent ownership interest and which, as of December 31, [removed: 2016,] [added: 2017,] we account for as an equity-method investment, including principally the following:

10-K 1 wmb_20171231x10k.htm 10-K

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

| | [General](#s3F96111E69F8160F33CEED3415E24504) | [4](#s3F96111E69F8160F33CEED3415E24504) |

| | [Competition](#s9A93322D0AA2F28CCC69ED3417D6B57A) | [18](#s9A93322D0AA2F28CCC69ED3417D6B57A) |

| | [Employees](#s023459CDD0FFDC69EE6BED3417FE9B67) | [19](#s023459CDD0FFDC69EE6BED3417FE9B67) |

| Item 16. | [Form 10-K Summary](#s5d39f9c7e8fe47ef96bb64d7257f2da1) | [168](#s5d39f9c7e8fe47ef96bb64d7257f2da1) |

The statements in this Annual Report that are not historical information, including statements concerning plans and objectives of management for future operations, economic performance or related assumptions, are forward-looking statements.

Forward-looking statements may be identified by various forms of words such as “anticipates,” “believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “assumes,” “guidance,” “outlook,” “in-service date,” or other similar expressions and other words and terms of similar meaning.

Although we believe that our expectations regarding future events are based on reasonable assumptions, we can give no assurance that such expectations or assumptions will be achieved.

Additional information regarding forward-looking statements and important factors that could cause actual results to differ materially from those in the forward-looking statements are described under Part I, Item 1A in this Annual Report.

10-K 1 wmb_20161231x10k.htm 10-K

(Check one):

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | [General](#sD41B8314670E52758969C0557AAD37E2) | [4](#sD41B8314670E52758969C0557AAD37E2) |

| | [Financial Repositioning](#s20610643c0e8434c93a5824bc116d41b) | [4](#s20610643c0e8434c93a5824bc116d41b) |

| | [Sale of Our Canadian Operations](#scf8e1360f7af4cf3947d3f1927cf99ec) | [5](#scf8e1360f7af4cf3947d3f1927cf99ec) |

| | [Energy Transfer Merger Agreement](#sF9815D824990504294C806AC98C348C3) | [5](#sF9815D824990504294C806AC98C348C3) |

| | [Organizational Realignment](#sfcdd62f78d8245c98326d905b40b5e6d) | [5](#sfcdd62f78d8245c98326d905b40b5e6d) |

| | [Williams NGL & Petchem Services](#s9F415A6E70215B5FAE7185B075C66D71) | [16](#s9F415A6E70215B5FAE7185B075C66D71) |

| | [Competition](#s381F86B4437C5C62B45FD5D5F81BCFA4) | [19](#s381F86B4437C5C62B45FD5D5F81BCFA4) |

| | [Employees](#s7DE0465DBBA65A0A91A146CACE075EB6) | [20](#s7DE0465DBBA65A0A91A146CACE075EB6) |

Bluegrass: Bluegrass Pipeline Company LLC

Moss Lake: Moss Lake Fractionation LLC and Moss Lake LPG Terminal LLC

DRIP: Distribution reinvestment program

The name, age, period of service, and title of each of our executive officers as of February 22, [removed: 2017,] [added: 2018,] are listed below.

[removed: As previously discussed,] Williams Partners L.P. merged with ACMP in February 2015 (the ACMP Merger).

| | Age: [removed: 54] [added: 55] |

| | Position held since [added: January] 2011. |

| | [removed: From 2002 to 2011,] Mr. Armstrong [added: has] served as [removed: Senior Vice President - Midstream and acted as President of] our [removed: midstream business. From 1999 to 2002, Mr. Armstrong was Vice President, Gathering] [added: Chief Executive Officer] and [removed: Processing in our midstream business] [added: President] and [removed: from 1998 to 1999 was Vice President, Commercial Development.] [added: a director of Williams since January 2011.] Mr. Armstrong has served as a director of the general partner of ACMP/WPZ since 2012, as Chief Executive Officer [added: of ACMP/WPZ] since December 31, 2014, and as Chairman of the Board [added: of ACMP/WPZ] since February 2, 2015. Mr. Armstrong [removed: has served as a director of BOK Financial Corporation, a financial services company, since 2013. Mr. Armstrong] also served as Chairman of the Board and Chief Executive Officer of the general partner of Pre-merger WPZ from 2011 until the ACMP Merger, as Senior Vice President - Midstream [added: of Pre-merger WPZ] from 2010 to 2011, and [added: a] director and Chief Operating Officer [added: of Pre-merger WPZ] from 2005 to 2010. [added: From 2002 to 2011, Mr. Armstrong served as Williams’ Senior Vice President - Midstream and acted as president of our midstream business. From 1999 to 2002, Mr. Armstrong was Vice President, Gathering and Processing in our midstream business and from 1998 to 1999 was Vice President, Commercial Development. Mr. Armstrong has served as a director of BOK Financial Corporation, a financial services company, since 2013.] |

| Walter J. Bennett | Senior Vice President [removed: —] [added: -] West |

| | Age: [removed: 47] [added: 48] |

| | Mr. Bennett [removed: was formerly Chief Operating Officer of Chesapeake Midstream Development and] [added: has] served as [added: our] Senior Vice [removed: President-Operations at Boardwalk Pipeline Partners. Previously, Mr. Bennett served in a variety of senior positions at Gulf South Pipeline Company that included operations and commercial responsibilities. Mr. Bennett began his career at a subsidiary of Koch Industries.] [added: President - West since January 2015.] Mr. Bennett has served as Senior Vice President - West of the general partner of ACMP/WPZ since December 2013 and [removed: served] as Senior Vice President - West of the general partner of Pre-merger WPZ from January 2015 until the ACMP Merger. [removed: He has] [added: Mr. Bennett previously] served as a director of the general partner of ACMP/WPZ [removed: since] [added: from] February [added: 2017 through November] 2017. [added: Mr. Bennett was formerly Chief Operating Officer of Chesapeake Midstream Development and served as Senior Vice President - Operations at Boardwalk Pipeline Partners.] |

| [removed: Francis (Frank) E. Billings] [added: Chad J. Zamarin] | Senior Vice President [removed: —] [added: -] Corporate Strategic Development |

| | Position held since [removed: January 2014.] [added: September 2017.] |

| [removed: Donald R. Chappel] [added: John D. Chandler] | Senior Vice President and Chief Financial Officer |

| | Age: [removed: 65] [added: 48] |

| | Position held since [removed: 2003.] [added: February 2017.] |

| John [removed: R. Dearborn] [added: E. Poarch] | Senior Vice President [removed: — NGL & Petchem] [added: - Engineering] Services |

| | Age: [removed: 59] [added: 53] |

| | Position held since [removed: 2013.] [added: June 2017] |

| [removed: Robyn L. Ewing] [added: T. Lane Wilson] | Senior Vice [removed: President] [added: President, General Counsel] and Chief [removed: Administrative] [added: Compliance] Officer |

| | Position held since [removed: 2008.] [added: November 2017.] |

| [removed: Rory L. Miller] [added: Frank J. Ferazzi] | Senior Vice President [removed: — Atlantic] - [added: Atlantic] Gulf |

| | Age: [removed: 56] [added: 61] |

| | [removed: From 2011 until 2013,] Mr. [removed: Miller was] [added: Scheel has served as our] Senior Vice President - [removed: Midstream of Williams and the general partner of Pre-merger WPZ, acting as President of Williams’ midstream business.] [added: Northeast G&P since January 2014.] Mr. [removed: Miller was] [added: Scheel served as] a [removed: Vice President] [added: director] of [removed: Williams’ midstream business] [added: ACMP/WPZ] from [removed: 2004] [added: the ACMP Merger] until [removed: 2011.] [added: November 2017.] Mr. [removed: Miller] [added: Scheel] served as a director [removed: and Senior Vice-President - Atlantic-Gulf] of the [removed: general partner of] Pre-merger WPZ [added: general partner] from [removed: 2011] [added: 2012] until the ACMP [removed: Merger and has] [added: Merger. Mr. Scheel] served [removed: in those roles for] [added: as a director of] the [added: Pre-merger ACMP] general partner [added: from December 2012 to February 2014. Previously, Mr. Scheel served as Senior Vice President - Corporate Strategic Development] of [removed: ACMP/WPZ since] [added: Williams and] the [removed: ACMP Merger.] [added: Pre-merger WPZ general partner from February 2012 to January 2014.] Mr. [removed: Miller has also] [added: Scheel] served as [removed: a member] [added: Vice President] of [removed: the Management Committee] [added: Business Development] of [removed: Transco, since 2013.] [added: Williams’ midstream business from January 2011 to February 2012.] |

| | Age: [removed: 45] [added: 51] |

| | Position held since [removed: 2015.] [added: July 2005.] |

| James E. Scheel | Senior Vice President [removed: —] [added: -] Northeast G&P |

| | Position held since [removed: July 2015.] [added: April 2017.] |

| | Age: [removed: 60] [added: 41] |

| | Position held since [removed: 2005.] [added: June 2017.] |

| | Mr. Timmermans [removed: served as Assistant Controller of Williams from 1998 to 2005. Mr. Timmermans] [added: has] served as [added: our] Vice President, [removed: Controller &] [added: Controller, and] Chief Accounting Officer [removed: of the general partner of Pre-merger WPZ until the ACMP Merger and] [added: since July 2005. Mr. Timmermans] has served in [removed: those] [added: the same] roles for the general partner of ACMP/WPZ since the ACMP Merger. Mr. Timmermans served as Chief Accounting Officer of [removed: the general partner of] WMZ from 2008 until its merger with [removed: Pre-merger] [added: Pre-Merger] WPZ in 2010. [added: Previously, Mr. Timmermans served as our Assistant Controller from 1998 to 2005.] |

| | Mr. Chandler has served as our Senior Vice President and Chief Financial Officer since September 2017, and as a director of the general partner of ACMP/WPZ since November 2017. Mr. Chandler most recently served as Senior Vice President and Chief Financial Officer of Magellan GP, LLC, the general partner of Magellan Midstream Partners, LP from 2009 until his retirement in March 2014. From 2003 until 2009, he served as Senior Vice President and Chief Financial Officer for the general partner of Magellan Midstream Holdings, L.P. From 1992 until 2002, Mr. Chandler held various accounting and finance roles within Williams and MAPCO Inc., prior to its acquisition by Williams. Mr. Chandler has served as a director of Matrix Service Company since June 2017. |

| Micheal G. Dunn | Executive Vice President and Chief Operating Officer |

| | Mr. Dunn has served as our Executive Vice President and Chief Operating Officer and as a director of the general partner of ACMP/WPZ since February 2017. Previously, Mr. Dunn served as President of Questar Pipeline and as Executive Vice President of Questar Corporation from 2015 through 2017. Prior to that, Mr. Dunn served as President and Chief Executive Officer of PacifiCorp Energy from 2010 through 2015, a subsidiary of Berkshire Hathaway Energy. Earlier, Mr. Dunn was president of Kern River Gas Transmission Company, a Berkshire Hathaway Energy interstate natural gas pipeline subsidiary. He joined Kern River in 1990, having served in various leadership roles in the areas of operations, construction, engineering and information technology before being named President of Kern River in 2007. Mr. Dunn began his career with Williams as an operations engineer and spent 14 years with the company in a variety of technical and leadership roles. |

| | Mr. Ferazzi has served as our Senior Vice President - Atlantic-Gulf since June 2017. Previously, Mr. Ferazzi served as VP & GM Eastern Interstates from November 2014 through June 2017, and previously as VP & GM Transco from January 2013 through January 2015. Prior to that, Mr. Ferazzi served as VP Commercial Operations - Gas Pipeline from May 2010 through December 2012. |

| | Mr. Poarch has served as our Senior Vice President - Engineering Services since November 2017. Previously, he served as VP Commercial West OA from March 2017 through November 2017, and before that, as VP Commercial & Business Development from January 2015 through March 2017. Previously, Mr. Poarch was the general manager for Access Midstream’s Eagle Ford operations. |

| | Mr. Wilson has served as Senior Vice President, General Counsel and Chief Compliance Officer since April 2017. Prior to joining Williams, Mr. Wilson served as a United States Magistrate Judge for the Northern District of Oklahoma from 2009 until he joined Williams in April 2017. Mr. Wilson previously served as a shareholder and member of the board of directors of the Hall Estill law firm from 1994 through 2008. |

| | Mr. Zamarin has served as our Senior Vice President - Corporate Strategic Development since June 2017. Mr. Zamarin has served as a director of the general partner of ACMP/WPZ since November 2017. Previously, he served as President, Pipeline and Midstream at Cheniere Energy from 2014 through 2017. Prior to joining Cheniere, Mr. Zamarin served as the Chief Operating Officer at NiSource Midstream, LLC and NiSource Energy Ventures, LLC, as well as the President of Pennant Midstream, LLC, a joint venture with Hilcorp Energy. |

| | |

| --- | --- |

| | Mr. Billings served as Senior Vice President - Northeast G&P of us and Pre-merger WPZ from January 2013 to January 2014. Mr. Billings served as Vice President of our midstream gathering and processing business from 2011 until 2013 and as Vice President, Business Development from 2010 to 2011. Mr. Billings served as President of Cumberland Plateau Pipeline Company, a privately held company developing an ethane pipeline to serve the Marcellus Shale area, from 2009 until 2010. From 2008 to 2009, Mr. Billings served as Senior Vice President of Commercial for Crosstex Energy, Inc. and Crosstex Energy L.P., an independent midstream energy services master limited partnership and its parent corporation. In 1988, Mr. Billings joined MAPCO Inc., which merged with one of our subsidiaries in 1998, serving in various management roles, including in 2008 as a Vice President in the midstream business. Mr. Billings served as Senior Vice President - Corporate Strategic Development of the general partner of Pre-merger WPZ from January 2014 until the ACMP Merger. He has served as Senior Vice President - Corporate Strategic Development since the ACMP Merger, and as a director of the general partner of ACMP/WPZ since the ACMP Merger until February 2017. |

| | Prior to joining us, Mr. Chappel held various financial, administrative and operational leadership positions. Mr. Chappel has served as a director of the general partner of ACMP/WPZ since 2012 and as Chief Financial Officer of the general partner of ACMP/WPZ since December 31, 2014. Mr. Chappel has also served as a member of the Management Committee of Northwest Pipeline since 2007. Mr. Chappel served as Chief Financial Officer and a director of the general partner of Pre-merger WPZ from 2005 until the ACMP Merger. Mr. Chappel was Chief Financial Officer from 2007 and a director from 2008 of the general partner of Williams Pipeline Partners L.P. (WMZ), until its merger with Pre-merger WPZ in 2010. Mr. Chappel is a director of SUPERVALU, Inc. (a grocery and pharmacy company). |

| | Mr. Dearborn served as a senior leader for Saudi Basic Industries Corporation, a petrochemical company, from 2011 to 2013. From 2001 to 2011, Mr. Dearborn served in a variety of leadership positions with the Dow Chemical Company. Mr. Dearborn also worked for Union Carbide Corporation, prior to its merger with DOW, from 1981 to 2001 where he served in several leadership roles. Mr. Dearborn also served as Senior Vice President - NGL & Petchem Services of the general partner of Pre-merger WPZ from 2013 until the ACMP Merger and has served in that role for the general partner of ACMP/WPZ since the ACMP Merger. |

| | From 2004 to 2008, Ms. Ewing was Vice President of Human Resources. Prior to joining Williams, Ms. Ewing worked at MAPCO, which merged with Williams in 1998. Ms. Ewing began her career with Cities Service Company in 1976. |

| Sarah C. Miller | Senior Vice President and General Counsel |

| | Ms. Miller joined Williams in 2000, where she has served in a variety of legal leadership positions, including Vice President, Corporate Secretary and Assistant General Counsel for the company’s corporate secretary team, Senior Counsel for the company’s midstream business, and as Senior Attorney for the legal department’s business development team. She was named Senior Vice President and General Counsel on June 20, 2015. Prior to joining Williams, Ms. Miller was a litigation associate at Crowe & Dunlevy. |

| | From 2012 to 2014, Mr. Scheel served as Senior Vice President - Corporate Strategic Development of us and the general partner of Pre-merger WPZ. From 2011 until 2012, Mr. Scheel served as Vice President of Business Development for our midstream business. Mr. Scheel joined Williams in 1988 and has served in leadership roles in business strategic development, engineering and operations, our NGL business, and international operations. Mr. Scheel has served as a director and Senior Vice President - Northeast G&P of the general partner of ACMP/WPZ since the ACMP Merger, having previously served as a director of the general partner of ACMP/WPZ from 2012 to February 2014. Mr. Scheel served as a director of the general partner of Pre-merger WPZ from 2012 until the ACMP Merger. |

| John D. Seldenrust | Senior Vice President — Engineering Services |

| | Mr. Seldenrust served as Senior Vice President - Eastern Operations for us from January 2015 to July 2015, and for ACMP/WPZ from 2013 to July 2015. Mr. Seldenrust also previously served in a variety of operations and engineering leadership roles at ACMP and Chesapeake Energy from 2004 to August 2013. Prior to joining Chesapeake, Mr. Seldenrust held reservoir, production and facilities engineering positions with ARCO Oil & Gas, Vastar Resources and BP America. |

Our common stock is listed on the New York Stock Exchange under the symbol “WMB.” At the close of business on February [removed: 17, 2017,] [added: 19, 2018,] we had approximately [removed: 7,376] [added: 6,979] holders of record of our common stock.

On February [removed: 20, 2017,] [added: 21, 2018,] our board of directors approved a regular quarterly dividend of [removed: $0.30] [added: $0.34] per share payable on March [removed: 27, 2017, representing a 50 percent increase from our previous quarterly dividend.][added: 26, 2018.]

Set forth below is a line graph comparing our cumulative total stockholder return on our common stock (assuming reinvestment of dividends) with the cumulative total return of the S&P 500 Stock Index and the Bloomberg Americas Pipelines Index for the period of five fiscal years commencing January 1, [removed: 2012.][added: 2013.]

The Bloomberg Americas Pipelines Index is composed of [removed: Enbridge,] [added: Enbridge] Inc., [removed: Inter Pipeline Ltd.,] Kinder Morgan, Inc., [added: TransCanada Corporation,] ONEOK, Inc., Pembina Pipeline [removed: Corp, Plains GP Holdings LP, Spectra Energy Corp, TransCanada] [added: Corporation, Cheniere Energy, Inc., Targa Resources] Corp., [added: Inter Pipeline Ltd.,] Keyera Corp., AltaGas Ltd., [added: Plains GP Holdings, L.P.,] and Williams.

[removed: ][added: ]

| | [removed: 2011 | |] 2012 | | 2013 | | 2014 | | 2015 | | 2016 | [added: | 2017 |]

| 2017 | | | | | | | | | | | |

| First Quarter | $ | 32.69 | | | $ | 27.68 | | | $ | 0.30 | |

| Second Quarter | 31.25 | | | | 27.65 | | | | 0.30 | | |

| Third Quarter | 32.18 | | | | 28.76 | | | | 0.30 | | |

| Fourth Quarter | 30.72 | | | | 26.82 | | | | 0.30 | | |

| The Williams Companies, Inc. | 100.0 | | 122.8 | | 149.1 | | 90.6 | | 119.1 | | 121.5 |

| S&P 500 Index | 100.0 | | 132.4 | | 150.5 | | 152.5 | | 170.8 | | 208.1 |

| Bloomberg Americas Pipelines Index | 100.0 | | 111.0 | | 130.0 | | 71.5 | | 105.0 | | 104.7 |

| 2015 | | | | | | | | | | | |

| First Quarter | $ | 51.15 | | | $ | 40.07 | | | $ | 0.58 | |

| Second Quarter | 61.38 | | | | 46.28 | | | | 0.59 | | |

| Third Quarter | 58.77 | | | | 34.64 | | | | 0.64 | | |

| Fourth Quarter | 44.51 | | | | 20.95 | | | | 0.64 | | |

| The Williams Companies, Inc. | 100.0 | | 126.1 | | 154.5 | | 187.4 | | 114.2 | | 150.0 |

| S&P 500 Index | 100.0 | | 115.9 | | 153.4 | | 174.3 | | 176.8 | | 197.8 |

| Bloomberg Americas Pipelines Index | 100.0 | | 113.4 | | 125.9 | | 147.3 | | 81.5 | | 119.2 |

The following financial data at December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] and for each of the three years in the period ended December 31, [removed: 2016,] [added: 2017,] should be read in conjunction with the other financial information included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 8, Financial Statements and Supplementary Data of this Form 10-K.

| | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Revenues (1) | $ | [removed: 7,499] [added: 8,031] | | | $ | [removed: 7,360] [added: 7,499] | | | $ | [removed: 7,637] [added: 7,360] | | | $ | [removed: 6,860] [added: 7,637] | | | $ | [removed: 7,486] [added: 6,860] | |

| Income (loss) from continuing operations (2) | [added: 2,509 | | | |] (350 | | ) | | (1,314 | | ) | | 2,335 | | | | 679 | | | [removed: | 929 | | |]

| Income (loss) from continuing operations (2) | [added: 2,174 | | | |] (424 | | ) | | (571 | | ) | | 2,110 | | | | 441 | | | [removed: | 723 | | |]

| Income (loss) from continuing operations (2) | [added: 2.62 | | | |] (.57 | | ) | | (.76 | | ) | | 2.91 | | | | .64 | | | [removed: | 1.15 | | |]

| Total assets at December 31 (3) | [removed: 46,835] [added: 46,352] | | | | [removed: 49,020] [added: 46,835] | | | | [removed: 50,455] [added: 49,020] | | | | [removed: 27,065] [added: 50,455] | | | | [removed: 24,248] [added: 27,065] | | |

| Commercial paper and long-term debt due within one year at December 31 (4) | [removed: 878] [added: 501] | | | | [removed: 675] [added: 878] | | | | [removed: 802] [added: 675] | | | | [removed: 226] [added: 802] | | | | [removed: 1] [added: 226] | | |

| Long-term debt at December 31 (3) | [removed: 22,624] [added: 20,434] | | | | [removed: 23,812] [added: 22,624] | | | | [removed: 20,780] [added: 23,812] | | | | [removed: 11,276] [added: 20,780] | | | | [removed: 10,656] [added: 11,276] | | |

| Stockholders’ equity at December 31 (3) [added: (5)] | [removed: 4,643] [added: 9,656] | | | | [removed: 6,148] [added: 4,643] | | | | [removed: 8,777] [added: 6,148] | | | | [removed: 4,864] [added: 8,777] | | | | [removed: 4,752] [added: 4,864] | | |

| Cash dividends declared per common share | [removed: 1.680] [added: 1.200] | | | | [removed: 2.450] [added: 1.680] | | | | [removed: 1.9575] [added: 2.450] | | | | [removed: 1.438] [added: 1.958] | | | | [removed: 1.196] [added: 1.438] | | |

| • | For 2014 includes $2.5 billion [removed: pretax] [added: pre-tax] gain recognized as a result of remeasuring to fair value the equity-method investment we held before we acquired a controlling interest in ACMP, $246 million of insurance recoveries related to the 2013 Geismar Incident, and $154 million of cash received related to a contingency settlement. 2014 also includes $78 million of [removed: pretax] [added: pre-tax] equity losses from Bluegrass Pipeline and Moss Lake related primarily to the underlying write-off of previously capitalized project development costs and $76 million of [removed: pretax] [added: pre-tax] acquisition, merger, and transition expenses related to our acquisition of ACMP; |

| (3) | The increases in 2014 reflect assets acquired and debt assumed primarily related to our acquisition of ACMP [removed: (see Note 2 – Acquisitions)] in third quarter as well as $1.9 billion of related debt issuances and $2.8 billion of debt issuances at WPZ. Additionally, we issued $3.4 billion of [removed: equity (see Note 15 – Stockholders' Equity).] [added: equity.] |

| (4) | The [removed: increases] [added: increase] in 2014 [removed: and 2013 reflect] [added: reflects] borrowings under WPZ’s commercial paper program, which was initiated in 2013. |

| • | For 2017 includes a $1.923 billion benefit for income taxes resulting from Tax Reform rate change, a $1.095 billion pre-tax gain on the sale of our Geismar Interest, partially offset by $1.248 billion of pre-tax impairments of certain assets, and $776 million of pre-tax regulatory charges resulting from Tax Reform; |

| | |

| --- | --- |

| | |

| --- | --- |

| (5) | The increase in 2017 includes our issuance of common stock as part of our Financial Repositioning. |

The [added: Stockholders and the] Board of Directors [removed: and Stockholders] of

We have audited the accompanying consolidated balance sheet of The Williams Companies, Inc. [added: (the “Company”)] as of December 31, [removed: 2016 and 2015,] [added: 2017] and [added: 2016,] the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, [removed: 2016.][added: 2017, and the related notes and financial statement schedules listed in the index at Item 15(a) (collectively referred to as the “consolidated financial statements”).]

These financial statements [removed: and schedules] are the responsibility of the Company's management.

Our responsibility is to express an opinion on [removed: these] [added: the Company’s consolidated] financial statements [removed: and schedules] based on our audits.

In the consolidated financial statements, the Company’s investment in Gulfstream was [removed: $261] [added: $244] million and [removed: $293] [added: $261] million as of December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively, and the Company’s equity earnings in the net income of Gulfstream were [added: $75 million in 2017,] $69 million [added: in 2016] and $65 [removed: million, respectively, for the years then ended.][added: million in 2015.]

[removed: For the periods indicated above,] Gulfstream’s financial statements were audited by other auditors whose [removed: report has] [added: reports have] been furnished to us, and our opinion, insofar as it relates to the amounts included for [removed: Gulfstream for 2016 and 2015,] [added: Gulfstream,] is based solely on the [removed: report] [added: reports] of the other auditors.

We conducted our audits in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material [removed: misstatement.][added: misstatement, whether due to error or fraud.]

[removed: An audit includes] [added: Such procedures included] examining, on a test basis, evidence [removed: supporting] [added: regarding] the amounts and disclosures in the financial statements.

[removed: An] [added: Our] audit also [removed: includes assessing] [added: included evaluating] the accounting principles used and significant estimates made by management, as well as evaluating the overall [added: presentation of the] financial [removed: statement presentation.][added: statements.]

We believe that our audits and the [removed: report] [added: reports] of other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits [removed: and, for 2016] and [removed: 2015,] the [removed: report] [added: reports] of other auditors, the [added: consolidated] financial statements [removed: referred to above] present fairly, in all material respects, the consolidated financial position of [removed: The Williams Companies, Inc.] [added: the Company] at December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2016,] [added: 2017,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United [removed: States), The Williams Companies, Inc.'s] [added: States) (“PCAOB”), the Company’s] internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 22, [removed: 2017] [added: 2018] expressed an unqualified opinion thereon.

We have audited the balance [removed: sheets] [added: sheet] of Gulfstream Natural Gas System, L.L.C. (the [removed: “Company”)] [added: "Company")] as of December 31, [removed: 2016 and 2015,] [added: 2016,] and the related [removed: statements] [added: statement] of operations, comprehensive income, cash flows, and members’ equity for each of the [removed: three] [added: two] years in the period ended December 31, 2016.

In our opinion, such financial statements present fairly, in all material respects, the financial position of Gulfstream Natural Gas System, L.L.C. as of December 31, [removed: 2016 and 2015,] [added: 2016,] and the results of its operations and its cash flows for each of the [removed: three] [added: two] years in the period ended December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.

| | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Service revenues | | $ | [removed: 5,171] [added: 5,312] | | | $ | [removed: 5,164] [added: 5,171] | | | $ | [removed: 4,116] [added: 5,164] | |

| Product sales | | [removed: 2,328] [added: 2,719] | | | | [removed: 2,196] [added: 2,328] | | | | [removed: 3,521] [added: 2,196] | | |

| Total revenues | | [removed: 7,499] [added: 8,031] | | | | [removed: 7,360] [added: 7,499] | | | | [removed: 7,637] [added: 7,360] | | |

| Product costs | | [removed: 1,725] [added: 2,300] | | | | [removed: 1,779] [added: 1,725] | | | | [removed: 3,016] [added: 1,779] | | |

| Operating and maintenance expenses | | [removed: 1,580] [added: 1,585] | | | | [removed: 1,655] [added: 1,580] | | | | [removed: 1,492] [added: 1,655] | | |

| Depreciation and amortization expenses | | [removed: 1,763] [added: 1,736] | | | | [removed: 1,738] [added: 1,763] | | | | [removed: 1,176] [added: 1,738] | | |

| Selling, general, and administrative expenses | | [removed: 723] [added: 608] | | | | [removed: 741] [added: 723] | | | | [removed: 661] [added: 741] | | |

| Impairment of goodwill (Note [removed: 17)] [added: 16)] | | — | | | | [removed: 1,098] [added: —] | | | | [removed: —] [added: 1,098] | | |

| Impairment of certain assets (Note [removed: 17)] [added: 16)] | | [removed: 873] [added: 1,248] | | | | [removed: 209] [added: 873] | | | | [removed: 52] [added: 209] | | |

| [removed: Net insurance] [added: Insurance] recoveries – Geismar Incident | | [removed: (7] [added: (9] | | ) | | [removed: (126] [added: (7] | | ) | | [removed: (232] [added: (126] | | ) |

| Other (income) expense – net | | [removed: 142] [added: 80] | | | | [removed: 40] [added: 142] | | | | [removed: (97] [added: 40] | | [removed: )] |

| Total costs and expenses | | [removed: 6,799] [added: 7,127] | | | | [removed: 7,134] [added: 6,799] | | | | [removed: 6,068] [added: 7,134] | | |

| Operating income (loss) | | [removed: 700] [added: 904] | | | | [removed: 226] [added: 700] | | | | [removed: 1,569] [added: 226] | | |

| Equity earnings (losses) | | [removed: 397] [added: 434] | | | | [removed: 335] [added: 397] | | | | [removed: 144] [added: 335] | | |

| Impairment of equity-method investments (Note [removed: 17)] [added: 16)] | | [removed: (430] [added: —] | | [removed: )] | | [removed: (1,359] [added: (430] | | ) | | [removed: —] [added: (1,359] | | [added: )] |

| Other investing income (loss) – net | | [removed: 63] [added: 282] | | | | [removed: 27] [added: 63] | | | | [removed: 43] [added: 27] | | |

| Interest incurred | | [removed: (1,217] [added: (1,116] | | ) | | [removed: (1,118] [added: (1,217] | | ) | | [removed: (888] [added: (1,118] | | ) |

| Interest capitalized | | [removed: 38] [added: 33] | | | | [removed: 74] [added: 38] | | | | [removed: 141] [added: 74] | | |

| Other income (expense) – net | | [removed: 74] [added: (2] | | [added: )] | | [removed: 102] [added: 74] | | | | [removed: 31] [added: 102] | | |

| Income (loss) [removed: from continuing operations] before income taxes | | [removed: (375] [added: 535] | | [removed: )] | | [removed: (1,713] [added: (375] | | ) | | [removed: 3,584] [added: (1,713] | | [added: )] |

| Provision (benefit) for income taxes | | [removed: (25] [added: (1,974] | | ) | | [removed: (399] [added: (25] | | ) | | [removed: 1,249] [added: (399] | | [added: )] |

| [removed: Income] [added: Net income] (loss) [removed: from continuing operations] | | [removed: (350] [added: 2,509] | | [removed: )] | | [removed: (1,314] [added: (350] | | ) | | [removed: 2,335] [added: (1,314] | | [added: )] |

| Net income (loss) | | [removed: (350] [added: $] | [added: 2,509] | [removed: )] | | [removed: (1,314] [added: $] | [added: (350] | ) | | [removed: 2,339] [added: $] | [added: (1,314] | [added: )] |

| Less: Net income (loss) attributable to noncontrolling interests | | [removed: 74] [added: 335] | | | | [removed: (743] [added: 74] | | [removed: )] | | [removed: 225] [added: (743] | | [added: )] |

Opinion on the Financial Statements

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We have served as the Company’s auditor since 1962.

To the Management Committee and Members of Gulfstream Natural Gas System, L.L.C.:

Opinion on the Financial Statements

We have audited the balance sheet of Gulfstream Natural Gas System, L.L.C. (the “Company”) as of December 31, 2017, and the related statements of operations, comprehensive income, cash flows, and members’ equity for the year then ended, including the related notes (collectively referred to as the “financial statements;” not presented herein).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of these financial statements in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

February 22, 2018

We have served as the Company’s auditor since 2018.

Report of Independent Registered Public Accounting Firm

Houston, Texas

| Gain on sale of Geismar Interest (Note 2) | | (1,095 | | ) | | — | | | | — | | |

| Regulatory charges resulting from Tax Reform (Note 1) | | 674 | | | | — | | | | — | | |

| Net income (loss) | — | | | | — | | | | 2,174 | | | | — | | | | — | | | | 2,174 | | | | 335 | | | | 2,509 | | |

| Issuance of common stock (Note 14) | 75 | | | | 2,043 | | | | — | | | | — | | | | — | | | | 2,118 | | | | — | | | | 2,118 | | |

| Adoption of ASU 2016-09 (Note 1) | — | | | | 1 | | | | 36 | | | | — | | | | — | | | | 37 | | | | — | | | | 37 | | |

| Net increase (decrease) in equity | 76 | | | | 3,621 | | | | 1,215 | | | | 101 | | | | — | | | | 5,013 | | | | (2,884 | | ) | | 2,129 | | |

| Balance – December 31, 2017 | $ | 861 | | | $ | 18,508 | | | $ | (8,434 | ) | | $ | (238 | ) | | $ | (1,041 | ) | | $ | 9,656 | | | $ | 6,519 | | | $ | 16,175 | |

| Net (gain) loss on disposition of equity-method investments | | (269 | | ) | | (27 | | ) | | — | | |

| Gain on sale of Geismar Interest (Note 2) | | (1,095 | | ) | | — | | | | — | | |

| Regulatory charges resulting from Tax Reform (Note 1) | | 776 | | | | — | | | | — | | |

| Contributions in aid of construction | | 426 | | | | 218 | | | | 87 | | |

| Proceeds from dispositions of equity-method investments | | 200 | | | | 34 | | | | — | | |

Our operations are located principally in the United States.

We have one reportable segment, Williams Partners.

(See Note 2 – Acquisitions and Divestitures.)

In September 2016, the Canadian assets were sold.

Our audits also included the financial statement schedules listed in the index at Item 15(a).

Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

February 22, 2017

| Gain on remeasurement of equity-method investment (Note 2) | | — | | | | — | | | | 2,544 | | |

| Income (loss) from discontinued operations | | — | | | | — | | | | 4 | | |

| Net income (loss) | | $ | (424 | ) | | $ | (571 | ) | | $ | 2,114 | |

| Income (loss) from discontinued operations | | — | | | | — | | | | .01 | | |

| Prior service credit (cost) arising during the year (Note 10) | | — | | | | — | | | | (1 | | ) |

| Balance – December 31, 2013 | $ | 718 | | | $ | 11,599 | | | $ | (6,248 | ) | | $ | (164 | ) | | $ | (1,041 | ) | | $ | 4,864 | | | $ | 4,057 | | | $ | 8,921 | |

| Net income (loss) | — | | | | — | | | | 2,114 | | | | — | | | | — | | | | 2,114 | | | | 225 | | | | 2,339 | | |

| Issuance of common stock for acquisition of business (Note 15) | 61 | | | | 3,317 | | | | — | | | | — | | | | — | | | | 3,378 | | | | — | | | | 3,378 | | |

| Noncontrolling interest resulting from acquisition of business (Note 2) | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 7,502 | | | | 7,502 | | |

| Deconsolidation of Bluegrass Pipeline (Note 6) | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (63 | | ) | | (63 | | ) |

| Net increase (decrease) in equity | 64 | | | | 3,326 | | | | 700 | | | | (177 | | ) | | — | | | | 3,913 | | | | 7,338 | | | | 11,251 | | |

| Gain on remeasurement of equity-method investment | | — | | | | — | | | | (2,544 | | ) |

Our operations are located principally in the United States and are organized into the Williams Partners and Williams NGL & Petchem Services reportable segments.

For periods after the ACMP Acquisition (see Note 2 – Acquisitions), the acquired ACMP business is reported within Williams Partners.

For periods prior to the ACMP Acquisition, the results associated with our former equity-method investment in ACMP are reported within Other.

| | | | | |

| --- | --- | --- | --- | --- |

| The Williams Companies, Inc. | | | | |

| Notes to Consolidated Financial Statements – (Continued) | | | | |

In September 2016, we completed the sale of our Canadian operations.

Williams NGL & Petchem Services

Other

Canada Dropdown

In February 2014, we contributed certain Canadian operations to Pre-merger WPZ (Canada Dropdown) for total consideration of $56 million of cash from Pre-merger WPZ (including a $31 million post-closing adjustment received in the second quarter of 2014), 25,577,521 Pre-merger WPZ Class D limited-partner units, and an increase in the capital account of its general partner to allow us to maintain our 2 percent general partner interest.

In lieu of cash distributions, the Class D units received quarterly distributions of additional paid-in-kind Class D units.

In October 2014, a purchase price adjustment was finalized whereby we paid $56 million in cash to Pre-merger WPZ in the fourth quarter and waived $2 million in payment of IDRs with respect to the November 2014 distribution.

During 2016, WPZ issued 3,273,601 common units pursuant to an equity distribution agreement between WPZ and certain banks resulting in net proceeds of $115 million.

WPZ also implemented a distribution reinvestment program in the third quarter of 2016 resulting in 7,891,414 common units issued associated with reinvested distributions of $260 million, of which $250 million related to our participation.

In addition, in August 2016, WPZ completed an equity issuance of 6,975,446 common units sold to us in a private placement transaction for an aggregate purchase price of $250 million.

We have announced plans to monetize our olefins production plant in Geismar, Louisiana, as well as other select assets that are not core to our strategy.

| • | Acquisition related purchase price allocations. |

the cost of debt funds related to construction activities, while a component for equity is prohibited.

| | December 31, | | | | | | |

Gains and losses recorded

Unrecognized prior service costs and credits for the other postretirement benefit plans are amortized on a straight line basis over the average remaining years of service to eligibility for eligible plan participants, which is approximately 4 years.

Early adoption is permitted for interim and annual goodwill impairment tests performed after January 1, 2017, and we plan to adopt this standard in 2017.

method investees, to reduce diversity in practice.

There have been no changes during the fourth quarter of [removed: 2016] [added: 2017] that have materially affected, or are reasonably likely to materially affect, our Internal Control over Financial Reporting.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013).

Based on our assessment, we concluded that, as of December 31, [removed: 2016,] [added: 2017,] our internal control over financial reporting was effective.

The [added: Stockholders and the] Board of Directors [removed: and Stockholders] of

We have audited The Williams Companies, Inc.’s internal control over financial reporting as of December 31, [removed: 2016,] [added: 2017,] based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the [removed: COSO criteria).][added: “COSO criteria”).]

The [removed: Williams Companies, Inc.’s] [added: Company’s] management is responsible for maintaining effective internal control over financial [removed: reporting,] [added: reporting] and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

We conducted our audit in accordance with the standards of the [removed: Public Company Accounting Oversight Board (United States).][added: PCAOB.]