Item 1. Financial Statements

The Williams Companies, Inc.

Consolidated Statement of Income

(Unaudited)

									Three Months Ended March 31,
															2022						2021
															(Millions, except per-share amounts)
Revenues:
Service revenues															$	1,537					$	1,452
Service revenues – commodity consideration															77						49
Product sales															1,104						1,147
Net gain (loss) on commodity derivatives															(194)						(36)
Total revenues															2,524						2,612
Costs and expenses:
Product costs															803						932
Processing commodity expenses															30						21
Operating and maintenance expenses															394						360
Depreciation and amortization expenses															498						438
Selling, general, and administrative expenses															154						123
Other (income) expense – net															(9)						(1)
Total costs and expenses															1,870						1,873
Operating income (loss)															654						739
Equity earnings (losses)															136						131
Other investing income (loss) – net															1						2
Interest incurred															(289)						(296)
Interest capitalized															3						2
Other income (expense) – net															5						(2)
Income (loss) before income taxes															510						576
Less: Provision (benefit) for income taxes															118						141
Net income (loss)															392						435
Less: Net income (loss) attributable to noncontrolling interests															12						9
Net income (loss) attributable to The Williams Companies, Inc.															380						426
Less: Preferred stock dividends															1						1
Net income (loss) available to common stockholders															$	379					$	425
Basic earnings (loss) per common share:
Net income (loss)															$	.31					$	.35
Weighted-average shares (thousands)															1,216,940						1,214,646
Diluted earnings (loss) per common share:
Net income (loss)															$	.31					$	.35
Weighted-average shares (thousands)															1,221,279						1,217,211

See accompanying notes.

The Williams Companies, Inc.

Consolidated Statement of Comprehensive Income (Loss)

(Unaudited)

									Three Months Ended March 31,
															2022						2021
															(Millions)
Net income (loss)															$	392					$	435
Other comprehensive income (loss):
Cash flow hedging activities:
Net unrealized gain (loss) from derivative instruments, net of taxes of ($1) in 2022 and $2 in 2021															3						(9)
Reclassifications into earnings of net derivative instruments (gain) loss, net of taxes of $— in 2022 and $— in 2021															—						2
Pension and other postretirement benefits:
Amortization of actuarial (gain) loss and net actuarial loss from settlements included in net periodic benefit cost (credit), net of taxes of ($1) in 2022 and ($1) in 2021															2						3
Other comprehensive income (loss)															5						(4)
Comprehensive income (loss)															397						431
Less: Comprehensive income (loss) attributable to noncontrolling interests															12						9
Comprehensive income (loss) attributable to The Williams Companies, Inc.															$	385					$	422

See accompanying notes.

The Williams Companies, Inc.

Consolidated Balance Sheet

(Unaudited)

						March 31, 2022						December 31, 2021
						(Millions, except per-share amounts)
ASSETS
Current assets:
Cash and cash equivalents						$	604					$	1,680
Trade accounts and other receivables						1,987						1,986
Allowance for doubtful accounts						(14)						(8)
Trade accounts and other receivables – net						1,973						1,978
Inventories						201						379
Derivative assets						104						301
Other current assets and deferred charges						272						211
Total current assets						3,154						4,549
Investments						5,107						5,127
Property, plant, and equipment						44,416						44,184
Accumulated depreciation and amortization						(15,230)						(14,926)
Property, plant, and equipment – net						29,186						29,258
Intangible assets – net of accumulated amortization						7,278						7,402
Regulatory assets, deferred charges, and other						1,324						1,276
Total assets						$	46,049					$	47,612
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable						$	1,584					$	1,746
Accrued liabilities						1,099						1,201
Long-term debt due within one year						1,625						2,025
Total current liabilities						4,308						4,972
Long-term debt						20,801						21,650
Deferred income tax liabilities						2,570						2,453
Regulatory liabilities, deferred income, and other						4,399						4,436
Contingent liabilities and commitments (Note 12)
Equity:
Stockholders’ equity:
Preferred stock						35						35
Common stock ($1 par value; 1,470 million shares authorized at March 31, 2022 and December 31, 2021; 1,252 million shares issued at March 31, 2022 and 1,250 million shares issued at December 31, 2021)						1,252						1,250
Capital in excess of par value						24,476						24,449
Retained deficit						(13,378)						(13,237)
Accumulated other comprehensive income (loss)						(28)						(33)
Treasury stock, at cost (35 million shares of common stock)						(1,041)						(1,041)
Total stockholders’ equity						11,316						11,423
Noncontrolling interests in consolidated subsidiaries						2,655						2,678
Total equity						13,971						14,101
Total liabilities and equity						$	46,049					$	47,612

See accompanying notes.

The Williams Companies, Inc.

Consolidated Statement of Changes in Equity

(Unaudited)

			The Williams Companies, Inc. Stockholders
			Preferred Stock						Common Stock						Capital in Excess of Par Value						Retained Deficit						AOCI*						Treasury Stock						Total Stockholders’ Equity						Noncontrolling Interests						Total Equity
			(Millions)
Balance – December 31, 2021			$	35					$	1,250					$	24,449					$	(13,237)					$	(33)					$	(1,041)					$	11,423					$	2,678					$	14,101
Net income (loss)			—						—						—						380						—						—						380						12						392
Other comprehensive income (loss)			—						—						—						—						5						—						5						—						5
Cash dividends – common stock ($0.425 per share)			—						—						—						(518)						—						—						(518)						—						(518)
Dividends and distributions to noncontrolling interests			—						—						—						—						—						—						—						(37)						(37)
Stock-based compensation and related common stock issuances, net of tax			—						2						27						—						—						—						29						—						29
Contributions from noncontrolling interests			—						—						—						—						—						—						—						3						3
Other			—						—						—						(3)						—						—						(3)						(1)						(4)
Net increase (decrease) in equity			—						2						27						(141)						5						—						(107)						(23)						(130)
Balance – March 31, 2022			$	35					$	1,252					$	24,476					$	(13,378)					$	(28)					$	(1,041)					$	11,316					$	2,655					$	13,971

Balance – December 31, 2020			$	35					$	1,248					$	24,371					$	(12,748)					$	(96)					$	(1,041)					$	11,769					$	2,814					$	14,583
Net income (loss)			—						—						—						426						—						—						426						9						435
Other comprehensive income (loss)			—						—						—						—						(4)						—						(4)						—						(4)
Cash dividends – common stock ($0.41 per share)			—						—						—						(498)						—						—						(498)						—						(498)
Dividends and distributions to noncontrolling interests			—						—						—						—						—						—						—						(54)						(54)
Stock-based compensation and related common stock issuances, net of tax			—						1						10						—						—						—						11						—						11
Contributions from noncontrolling interests			—						—						—						—						—						—						—						2						2
Other			—						—						3						(5)						—						—						(2)						—						(2)
Net increase (decrease) in equity			—						1						13						(77)						(4)						—						(67)						(43)						(110)
Balance – March 31, 2021			$	35					$	1,249					$	24,384					$	(12,825)					$	(100)					$	(1,041)					$	11,702					$	2,771					$	14,473

*Accumulated Other Comprehensive Income (Loss)

See accompanying notes.

The Williams Companies, Inc.

Consolidated Statement of Cash Flows

(Unaudited)

			Three Months Ended March 31,
			2022						2021
			(Millions)
OPERATING ACTIVITIES:
Net income (loss)			$	392					$	435
Adjustments to reconcile to net cash provided (used) by operating activities:
Depreciation and amortization			498						438
Provision (benefit) for deferred income taxes			115						144
Equity (earnings) losses			(136)						(131)
Distributions from unconsolidated affiliates			212						176
Net unrealized (gain) loss from derivative instruments			123						—
Amortization of stock-based awards			21						20
Cash provided (used) by changes in current assets and liabilities:
Accounts receivable			(3)						(59)
Inventories			178						(8)
Other current assets and deferred charges			(65)						(6)
Accounts payable			(138)						38
Accrued liabilities			(149)						(116)
Changes in current and noncurrent derivative assets and liabilities			101						(6)
Other, including changes in noncurrent assets and liabilities			(67)						(10)
Net cash provided (used) by operating activities			1,082						915
FINANCING ACTIVITIES:
Proceeds from long-term debt			3						897
Payments of long-term debt			(1,256)						(5)
Proceeds from issuance of common stock			37						3
Common dividends paid			(518)						(498)
Dividends and distributions paid to noncontrolling interests			(37)						(54)
Contributions from noncontrolling interests			3						2
Payments for debt issuance costs			—						(6)
Other – net			(30)						(13)
Net cash provided (used) by financing activities			(1,798)						326
INVESTING ACTIVITIES:
Property, plant, and equipment:
Capital expenditures (1)			(291)						(260)
Dispositions – net			(6)						(1)
Contributions in aid of construction			(3)						19
Purchases of and contributions to equity-method investments			(56)						(14)
Other – net			(4)						(1)
Net cash provided (used) by investing activities			(360)						(257)
Increase (decrease) in cash and cash equivalents			(1,076)						984
Cash and cash equivalents at beginning of year			1,680						142
Cash and cash equivalents at end of period			$	604					$	1,126
_____________
(1) Increases to property, plant, and equipment			$	(260)					$	(263)
Changes in related accounts payable and accrued liabilities			(31)						3
Capital expenditures			$	(291)					$	(260)

See accompanying notes.

The Williams Companies, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – General, Description of Business, and Basis of Presentation

General

Our accompanying interim consolidated financial statements do not include all the notes in our annual financial statements and, therefore, should be read in conjunction with our consolidated financial statements and notes thereto for the year ended December 31, 2021, in our Annual Report on Form 10-K. The accompanying unaudited financial statements include all normal recurring adjustments and others that, in the opinion of management, are necessary to present fairly our interim financial statements.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Unless the context clearly indicates otherwise, references in this report to “Williams,” “we,” “our,” “us,” or like terms refer to The Williams Companies, Inc. and its subsidiaries. Unless the context clearly indicates otherwise, references to “Williams,” “we,” “our,” and “us” include the operations in which we own interests accounted for as equity-method investments that are not consolidated in our financial statements. When we refer to our equity investees by name, we are referring exclusively to their businesses and operations.

Description of Business

We are a Delaware corporation whose common stock is listed and traded on the New York Stock Exchange. Our operations are located in the United States. Effective January 1, 2022, following an organizational realignment, our natural gas liquid (NGL) and natural gas marketing services, previously reported within the West segment, along with the former Sequent segment, are now all managed within the Gas & NGL Marketing Services segment. As a result, our operations are presented within the following reportable segments as of March 31, 2022: Transmission & Gulf of Mexico, Northeast G&P, West, and Gas & NGL Marketing Services, consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources. All remaining business activities, including our upstream operations, as well as corporate activities are included in Other. Prior period segment disclosures have been recast for the new segment presentation. Additionally, beginning in 2022 and concurrent with the integration of our legacy gas marketing operations and the marketing operations acquired in the Sequent Acquisition (see Note 3 – Acquisitions), all natural gas marketing revenues from Gas & NGL Marketing Services are presented net of the related costs of those activities in our Consolidated Statement of Income, as subsequent to the integration the entire natural gas marketing portfolio is considered held for trading purposes which requires net presentation.

Transmission & Gulf of Mexico is comprised of our interstate natural gas pipelines, Transcontinental Gas Pipe Line Company, LLC (Transco) and Northwest Pipeline LLC (Northwest Pipeline), as well as natural gas gathering and processing and crude oil production handling and transportation assets in the Gulf Coast region, including a 51 percent interest in Gulfstar One LLC (Gulfstar One) (a consolidated variable interest entity, or VIE), which is a proprietary floating production system, a 50 percent equity-method investment in Gulfstream Natural Gas System, L.L.C. (Gulfstream), and a 60 percent equity-method investment in Discovery Producer Services LLC (Discovery).

Northeast G&P is comprised of our midstream gathering, processing, and fractionation businesses in the Marcellus Shale region primarily in Pennsylvania and New York, and the Utica Shale region of eastern Ohio, as well as a 65 percent interest in Ohio Valley Midstream LLC (Northeast JV) (a consolidated VIE) which operates in West Virginia, Ohio, and Pennsylvania, a 66 percent interest in Cardinal Gas Services, L.L.C. (Cardinal) (a consolidated VIE) which operates in Ohio, a 69 percent equity-method investment in Laurel Mountain Midstream, LLC (Laurel Mountain), a 50 percent equity-method investment in Blue Racer Midstream LLC (Blue Racer), and Appalachia

Notes (Continued)			Table of Contents

Midstream Services, LLC, a wholly owned subsidiary that owns equity-method investments with an approximate average 66 percent interest in multiple gas gathering systems in the Marcellus Shale region (Appalachia Midstream Investments).

West is comprised of our gas gathering, processing, and treating operations in the Rocky Mountain region of Colorado and Wyoming, the Barnett Shale region of north-central Texas, the Eagle Ford Shale region of south Texas, the Haynesville Shale region of northwest Louisiana, and the Mid-Continent region which includes the Anadarko and Permian basins. This segment also includes our NGL storage facilities, an undivided 50 percent interest in an NGL fractionator near Conway, Kansas, a 50 percent equity-method investment in Overland Pass Pipeline Company LLC (OPPL), a 50 percent equity-method investment in Rocky Mountain Midstream Holdings LLC (RMM), a 20 percent equity-method investment in Targa Train 7 LLC (Targa Train 7) (a nonconsolidated VIE), and a 15 percent interest in Brazos Permian II, LLC (Brazos Permian II).

Gas & NGL Marketing Services is comprised of our NGL and natural gas marketing and trading operations, which includes risk management and the storage and transportation of natural gas on strategically positioned assets, including our Transco system.

Basis of Presentation

Significant risks and uncertainties

We believe that the carrying value of certain of our property, plant, and equipment and intangible assets, notably certain acquired assets accounted for as business combinations between 2012 and 2014, may be in excess of current fair value. However, the carrying value of these assets, in our judgment, continues to be recoverable. It is reasonably possible that future strategic decisions, including transactions such as monetizing assets or contributing assets to new ventures with third parties, as well as unfavorable changes in expected producer activities, could impact our assumptions and ultimately result in impairments of these assets. Such transactions or developments may also indicate that certain of our equity-method investments have experienced other-than-temporary declines in value, which could result in impairment.

Note 2 – Variable Interest Entities

Consolidated VIEs

As of March 31, 2022, we consolidate the following VIEs:

Northeast JV

We own a 65 percent interest in the Northeast JV, a subsidiary that is a VIE due to certain of our voting rights being disproportionate to our obligation to absorb losses and substantially all of the Northeast JV’s activities being performed on our behalf. We are the primary beneficiary because we have the power to direct the activities that most significantly impact the Northeast JV’s economic performance. The Northeast JV provides midstream services for producers in the Marcellus Shale and Utica Shale regions. Future expansion activity is expected to be funded with capital contributions from us and the other equity partner on a proportional basis.

Gulfstar One

We own a 51 percent interest in Gulfstar One, a subsidiary that, due to certain risk-sharing provisions in its customer contracts, is a VIE. Gulfstar One includes a proprietary floating production system, Gulfstar FPS, and associated pipelines that provide production handling and gathering services in the eastern deepwater Gulf of Mexico. We are the primary beneficiary because we have the power to direct the activities that most significantly impact Gulfstar One’s economic performance.

Notes (Continued)			Table of Contents

Cardinal

We own a 66 percent interest in Cardinal, a subsidiary that provides gathering services for the Utica Shale region and is a VIE due to certain risks shared with customers. We are the primary beneficiary because we have the power to direct the activities that most significantly impact Cardinal’s economic performance. In accordance with the contract, future expansion activity is required to be funded with capital contributions from us and the other equity partner on a proportional basis.

The following table presents amounts included in our Consolidated Balance Sheet that are only for the use or obligation of our consolidated VIEs:

			March 31, 2022						December 31, 2021
			(Millions)
Assets (liabilities):
Cash and cash equivalents			$	116					$	78
Trade accounts and other receivables – net			104						132
Inventories			3						3
Other current assets and deferred charges			4						7
Property, plant, and equipment – net			5,237						5,295
Intangible assets – net of accumulated amortization			2,240						2,267
Regulatory assets, deferred charges, and other			23						20
Accounts payable			(50)						(61)
Accrued liabilities			(32)						(29)
Regulatory liabilities, deferred income, and other			(286)						(287)

Nonconsolidated VIEs

Targa Train 7

We own a 20 percent interest in Targa Train 7, which provides fractionation services at Mt. Belvieu and is a VIE due primarily to our limited participating rights as the minority equity holder. At March 31, 2022, the carrying value of our investment in Targa Train 7 was $47 million. Our maximum exposure to loss is limited to the carrying value of our investment.

Note 3 – Acquisitions

Sequent Acquisition

On July 1, 2021, we completed the acquisition of 100 percent of Sequent Energy Management, L.P. and Sequent Energy Canada, Corp (Sequent Acquisition). Total consideration for this acquisition was $159 million, which included $109 million related to working capital. The purpose of the Sequent Acquisition was to expand our natural gas marketing activities as well as optimize our pipeline and storage capabilities with expansions into new markets to reach incremental gas-fired power generation, liquified natural gas exports, and future renewable natural gas and other emerging opportunities.

The following unaudited pro forma Revenues and Net income (loss) attributable to The Williams Companies, Inc. for the three months ended March 31, 2021, are presented as if the Sequent Acquisition had been completed on January 1, 2020. These pro forma amounts are not necessarily indicative of what the actual results would have been if the Sequent Acquisition had in fact occurred on the date or for the periods indicated, nor do they purport to project Revenues or Net income (loss) attributable to The Williams Companies, Inc. for any future periods or as of any date. These amounts do not give effect to any potential cost savings, operating synergies, or revenue enhancements to result from the transaction or the potential costs to achieve these cost savings, operating synergies, and revenue enhancements.

Notes (Continued)			Table of Contents

									Three Months Ended March 31,
									2021
									(Millions)
Revenues									$	2,910
Net income (loss) attributable to The Williams Companies, Inc.									547

Seasonality can impact natural gas usage and operating results; thus, the results for the operations acquired in the Sequent Acquisition for interim periods are not necessarily indicative of annual results and can vary significantly from quarter to quarter. The results for the operations acquired in the Sequent Acquisition for the three months ended March 31, 2021, were favorably impacted by Winter Storm Uri.

During the period from the acquisition date of July 1, 2021 to December 31, 2021, results for the operations acquired in the Sequent Acquisition included net product sales of $(43) million (including $80 million of purchases from affiliates), net loss on commodity derivatives of $43 million, and unfavorable Modified EBITDA (as defined in Note 13 – Segment Disclosures) of $112 million. Both the Revenues and Modified EBITDA amounts reflect a net unrealized loss on commodity derivatives of $109 million for the period.

Costs related to the Sequent Acquisition for the period from the acquisition date of July 1, 2021 to December 31, 2021 were approximately $5 million and were included in Selling, general, and administrative expenses in our Consolidated Statement of Income for the year ended December 31, 2021.

The Sequent Acquisition was accounted for as a business combination, which requires, among other things, that identifiable assets acquired and liabilities assumed be recognized at their acquisition date fair values.

The following table presents the allocation of the acquisition date fair value of the major classes of the assets acquired, which are presented in the Gas & NGL Marketing Services segment, and liabilities assumed at July 1, 2021. The fair value of accounts receivable acquired equals contractual amounts receivable. The fair value of the intangible assets were measured using an income approach. The inventory acquired relates to natural gas in underground storage. The fair value of this inventory was based on the market price of the underlying commodity at the acquisition date. See Note 10 – Fair Value Measurements and Guarantees for the valuation techniques used to measure fair value of derivative assets and liabilities.

			(Millions)
Cash and cash equivalents			$	8
Trade accounts and other receivables – net			498
Inventories			121
Other current assets and deferred charges			4
Commodity derivatives included in other current assets and deferred charges			57
Property, plant, and equipment – net			5
Intangible assets			306
Regulatory assets, deferred charges, and other			3
Commodity derivatives included in regulatory assets, deferred charges, and other			49
Total assets acquired			$	1,051
Accounts payable			$	514
Accrued liabilities			46
Commodity derivatives included in accrued liabilities			116
Regulatory liabilities, deferred income, and other			1
Commodity derivatives included in regulatory liabilities, deferred income, and other			215
Total liabilities assumed			$	892
Net assets acquired			$	159

Notes (Continued)			Table of Contents

Intangible assets

Intangible assets are primarily related to transportation and storage capacity contracts. The basis for determining the value of these intangible assets was estimated future net cash flows to be derived from acquired transportation and storage capacity contracts that provide future economic benefits due to their market location, discounted using an industry weighted-average cost of capital. This intangible asset is being amortized based on the expected benefit period over which the underlying contracts are expected to contribute to our cash flows ranging from 1 year to 8 years. As a result, we expect a significant portion of the amortization to be recognized within the first few years of this range.

Notes (Continued)			Table of Contents

Note 4 – Revenue Recognition

Revenue by Category

The following table presents our revenue disaggregated by major service line:

			Transco						Northwest Pipeline						Gulf of Mexico Midstream						Northeast Midstream						West Midstream						Gas & NGL Marketing Services						Other						Eliminations						Total
			(Millions)
Three Months Ended March 31, 2022
Revenues from contracts with customers:
Service revenues:
Regulated interstate natural gas transportation and storage			$	665					$	113					$	—					$	—					$	—					$	—					$	—					$	(18)					$	760
Gathering, processing, transportation, fractionation, and storage:
Monetary consideration			—						—						82						323						317						—						—						(30)						692
Commodity consideration			—						—						21						7						49						—						—						—						77
Other			2						—						6						51						12						1						—						(6)						66
Total service revenues			667						113						109						381						378						1						—						(54)						1,595
Product sales			16						—						87						36						187						2,470						104						(393)						2,507
Total revenues from contracts with customers			683						113						196						417						565						2,471						104						(447)						4,102
Other revenues (1)			3						1						2						6						(3)						1,615						(65)						(3)						1,556
Other adjustments (2)			—						—						—						—						—						(3,232)						—						98						(3,134)
Total revenues			$	686					$	114					$	198					$	423					$	562					$	854					$	39					$	(352)					$	2,524
Three Months Ended March 31, 2021
Revenues from contracts with customers:
Service revenues:
Regulated interstate natural gas transportation and storage			$	625					$	113					$	—					$	—					$	—					$	—					$	—					$	(3)					$	735
Gathering, processing, transportation, fractionation, and storage:
Monetary consideration			—						—						86						311						269						—						—						(28)						638
Commodity consideration			—						—						11						3						35						—						—						—						49
Other			3						—						3						41						19						1						—						(5)						62
Total service revenues			628						113						100						355						323						1						—						(36)						1,484
Product sales			14						—						53						32						150						1,088						56						(248)						1,145
Total revenues from contracts with customers			642						113						153						387						473						1,089						56						(284)						2,629
Other revenues (1)			2						—						2						6						3						(34)						7						(3)						(17)
Total revenues			$	644					$	113					$	155					$	393					$	476					$	1,055					$	63					$	(287)					$	2,612

---

(1)Revenues not derived from contracts with customers consist of leasing revenues associated with our headquarters building and management fees that we receive for certain services we provide to operated equity-method investments, which are reported in Service revenues in our Consolidated Statement of Income, and realized and unrealized gains and losses associated with our derivative contracts, which are reported in Net gain (loss) on commodity derivatives in our Consolidated Statement of Income.

Notes (Continued)			Table of Contents

(2)Other adjustments reflect certain costs of Gas & NGL Marketing Services’ risk management activities. As we are acting as agent for natural gas marketing customers, the resulting revenues are presented net of the related costs of those activities in our Consolidated Statement of Income. In addition, the related derivatives qualify as held for trading purposes, which requires net presentation. (See Note 1 – General, Description of Business, and Basis of Presentation.)

Contract Assets

The following table presents a reconciliation of our contract assets:

									Three Months Ended March 31,
															2022						2021
															(Millions)
Balance at beginning of period															$	22					$	12
Revenue recognized in excess of amounts invoiced															55						45
Minimum volume commitments invoiced															(41)						(32)
Balance at end of period															$	36					$	25

Contract Liabilities

The following table presents a reconciliation of our contract liabilities:

									Three Months Ended March 31,
															2022						2021
															(Millions)
Balance at beginning of period															$	1,126					$	1,209
Payments received and deferred															29						13
Significant financing component															2						3
Recognized in revenue															(64)						(54)
Balance at end of period															$	1,093					$	1,171

Remaining Performance Obligations

Remaining performance obligations primarily include reservation charges on contracted capacity for our gas pipeline firm transportation contracts with customers, storage capacity contracts, long-term contracts containing minimum volume commitments (MVC) associated with our midstream businesses, and fixed payments associated with offshore production handling. For our interstate natural gas pipeline businesses, remaining performance obligations reflect the rates for such services in our current Federal Energy Regulatory Commission (FERC) tariffs for the life of the related contracts; however, these rates may change based on future tariffs approved by the FERC and the amount and timing of these changes are not currently known.

Our remaining performance obligations exclude variable consideration, including contracts with variable consideration for which we have elected the practical expedient for consideration recognized in revenue as billed. Certain of our contracts contain evergreen and other renewal provisions for periods beyond the initial term of the contract. The remaining performance obligation amounts as of March 31, 2022, do not consider potential future performance obligations for which the renewal has not been exercised and exclude contracts with customers for which the underlying facilities have not received FERC authorization to be placed into service. Consideration received prior to March 31, 2022, that will be recognized in future periods is also excluded from our remaining performance obligations and is instead reflected in contract liabilities.

Notes (Continued)			Table of Contents

The following table presents the amount of the contract liabilities balance expected to be recognized as revenue when performance obligations are satisfied and the transaction price allocated to the remaining performance obligations under certain contracts as of March 31, 2022.

			Contract Liabilities						Remaining Performance Obligations
			(Millions)
2022 (nine months)			$	98					$	2,683
2023 (one year)			120						3,386
2024 (one year)			119						3,152
2025 (one year)			114						2,623
2026 (one year)			110						2,395
Thereafter			532						17,027
Total			$	1,093					$	31,266

Accounts Receivable

The following is a summary of our Trade accounts and other receivables – net:

			March 31, 2022						December 31, 2021
			(Millions)
Accounts receivable related to revenues from contracts with customers			$	1,426					$	1,451
Receivables from derivatives			489						462
Other accounts receivable			58						65
Trade accounts and other receivables – net			$	1,973					$	1,978

Note 5 – Provision (Benefit) for Income Taxes

The Provision (benefit) for income taxes includes:

									Three Months Ended March 31,
															2022						2021
															(Millions)
Current:
Federal															$	1					$	(2)
State															2						(1)
															3						(3)
Deferred:
Federal															94						115
State															21						29
															115						144
Provision (benefit) for income taxes															$	118					$	141

The effective income tax rates for the total provision (benefit) for both the three months ended March 31, 2022 and 2021 are greater than the federal statutory rate, primarily due to the effect of state income taxes.

It is reasonably possible that the total amount of unrecognized tax benefits will significantly decrease by the end of 2022 due to the resolution of audits related to U.S. federal tax positions.

Notes (Continued)			Table of Contents

Note 6 – Earnings (Loss) Per Common Share

									Three Months Ended March 31,
															2022						2021
															(Dollars in millions, except per-share amounts; shares in thousands)
Net income (loss) available to common stockholders															$	379					$	425
Basic weighted-average shares															1,216,940						1,214,646
Effect of dilutive securities:
Nonvested restricted stock units															4,128						2,565
Stock options															211						—
Diluted weighted-average shares															1,221,279						1,217,211
Earnings (loss) per common share:
Basic															$	.31					$	.35
Diluted															$	.31					$	.35

Note 7 – Employee Benefit Plans

Net periodic benefit cost (credit) is as follows:

															Pension Benefits
									Three Months Ended March 31,
															2022						2021
															(Millions)
Components of net periodic benefit cost (credit):
Service cost															$	7					$	8
Interest cost															7						7
Expected return on plan assets															(11)						(11)
Amortization of net actuarial loss															3						4
Net periodic benefit cost (credit)															$	6					$	8

															Other Postretirement Benefits
									Three Months Ended March 31,
															2022						2021
															(Millions)
Components of net periodic benefit cost (credit):
Interest cost															$	1					$	1
Expected return on plan assets															(2)						(2)
Reclassification to regulatory liability															—						1
Net periodic benefit cost (credit)															$	(1)					$	—

The components of Net periodic benefit cost (credit) other than the Service cost component are included in Other income (expense) – net below Operating income (loss) in our Consolidated Statement of Income.

Notes (Continued)			Table of Contents

Note 8 – Debt and Banking Arrangements

Long-Term Debt

Issuances and retirements

On January 18, 2022, we early retired $1.25 billion of 3.6 percent senior unsecured notes due March 15, 2022.

Commercial Paper Program

At March 31, 2022, no commercial paper was outstanding under our $3.5 billion commercial paper program.

Credit Facility

			March 31, 2022
			Stated Capacity						Outstanding
			(Millions)
Long-term credit facility (1)			$	3,750					$	—
Letters of credit under certain bilateral bank agreements									16

(1)In managing our available liquidity, we do not expect a maximum outstanding amount in excess of the capacity of our credit facility inclusive of any outstanding amounts under our commercial paper program.

Note 9 – Stockholders’ Equity

AOCI

The following table presents the changes in AOCI by component, net of income taxes:

			Cash Flow Hedges						Foreign Currency Translation						Pension and Other Postretirement Benefits						Total
			(Millions)
Balance at December 31, 2021			$	(2)					$	(1)					$	(30)					$	(33)
Other comprehensive income (loss) before reclassifications			3						—						—						3
Amounts reclassified from accumulated other comprehensive income (loss)			—						—						2						2
Other comprehensive income (loss)			3						—						2						5
Balance at March 31, 2022			$	1					$	(1)					$	(28)					$	(28)

Reclassifications out of AOCI are presented in the following table by component for the three months ended March 31, 2022:

Component						Reclassifications						Classification
						(Millions)
Pension and other postretirement benefits:
Amortization of actuarial (gain) loss and net actuarial loss from settlements included in net periodic benefit cost (credit)						$	3					Other income (expense) – net below Operating income (loss)
Income tax benefit						(1)						Provision (benefit) for income taxes
Reclassifications during the period						$	2

Notes (Continued)			Table of Contents

Note 10 – Fair Value Measurements and Guarantees

The following table presents, by level within the fair value hierarchy, certain of our significant financial assets and liabilities. The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value because of the short-term nature of these instruments. Therefore, these assets and liabilities are not presented in the following table.

																		Fair Value Measurements Using
						Carrying Amount						Fair Value						Quoted Prices In Active Markets for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)
						(Millions)
Assets (liabilities) at March 31, 2022:
Measured on a recurring basis:
ARO Trust investments						$	250					$	250					$	250					$	—					$	—
Commodity derivative assets (1)						81						81						33						47						1
Commodity derivative liabilities (1)						(600)						(600)						(127)						(461)						(12)
Additional disclosures:
Long-term debt, including current portion						(22,426)						(24,301)						—						(24,301)						—
Guarantees						(39)						(26)						—						(10)						(16)
Assets (liabilities) at December 31, 2021:
Measured on a recurring basis:
ARO Trust investments						$	260					$	260					$	260					$	—					$	—
Commodity derivative assets (2)						84						84						2						81						1
Commodity derivative liabilities (2)						(488)						(488)						(69)						(403)						(16)
Additional disclosures:
Long-term debt, including current portion						(23,675)						(27,768)						—						(27,768)						—
Guarantees						(39)						(26)						—						(10)						(16)

(1)Excludes approximately $187 million of net cash collateral in Level 1.

(2)Excludes approximately $296 million of net cash collateral in Level 1.

Fair Value Methods

We use the following methods and assumptions in estimating the fair value of our financial instruments:

Assets measured at fair value on a recurring basis

ARO Trust investments*:* Transco deposits a portion of its collected rates, pursuant to its rate case settlement, into an external trust (ARO Trust) that is specifically designated to fund future asset retirement obligations (ARO). The ARO Trust invests in a portfolio of actively traded mutual funds that are measured at fair value on a recurring basis based on quoted prices in an active market and is reported in Regulatory assets, deferred charges, and other in our Consolidated Balance Sheet. Both realized and unrealized gains and losses are ultimately recorded as regulatory assets or liabilities.

Commodity derivatives*:* Commodity derivatives include exchange-traded contracts and over-the-counter (OTC) contracts, which consist of physical forwards, futures, and swaps that are measured at fair value on a recurring basis.

Notes (Continued)			Table of Contents

We also have other derivatives related to asset management agreements and other contracts that require physical delivery. Derivatives classified as Level 1 are valued using New York Mercantile Exchange (NYMEX) futures prices. Derivatives classified as Level 2 are valued using basis transactions that represent the cost to transport natural gas from a NYMEX delivery point to the contract delivery point. These transactions are based on quotes obtained either through electronic trading platforms or directly from brokers. Derivatives classified as Level 3 are valued using a combination of observable and unobservable inputs. Beginning in the third quarter of 2021 the fair value amounts are presented on a net basis and reflect the netting of asset and liability positions permitted under the terms of our master netting arrangements and cash held on deposit in margin accounts that we have received or remitted to collateralize certain derivative positions. Commodity derivative assets are reported in Other current assets and deferred charges and Regulatory assets, deferred charges, and other in our Consolidated Balance Sheet. Commodity derivative liabilities are reported in Accrued liabilities and Regulatory liabilities, deferred income, and other in our Consolidated Balance Sheet. See Note 11 – Derivatives for additional information on our derivatives.

Additional fair value disclosures

Long-term debt, including current portion*:* The disclosed fair value of our long-term debt is determined primarily by a market approach using broker quoted indicative period-end bond prices. The quoted prices are based on observable transactions in less active markets for our debt or similar instruments. The fair values of the financing obligations associated with our Dalton, Leidy South, and Atlantic Sunrise projects, which are included within long-term debt, were determined using an income approach.

Guarantees*:* Guarantees primarily consist of a guarantee we have provided in the event of nonpayment by our previously owned communications subsidiary, Williams Communications Group (WilTel), on a lease performance obligation that extends through 2042. Guarantees also include an indemnification related to a disposed operation.

To estimate the fair value of the WilTel guarantee, an estimated default rate is applied to the sum of the future contractual lease payments using an income approach. The estimated default rate is determined by obtaining the average cumulative issuer-weighted corporate default rate based on the credit rating of WilTel’s current owner and the term of the underlying obligation. The default rate is published by Moody’s Investors Service. The carrying value of the WilTel guarantee is reported in Accrued liabilities in our Consolidated Balance Sheet. The maximum potential undiscounted exposure is approximately $25 million at March 31, 2022. Our exposure declines systematically through the remaining term of WilTel’s obligation.

The fair value of the guarantee associated with the indemnification related to a disposed operation was estimated using an income approach that considered probability-weighted scenarios of potential levels of future performance. The terms of the indemnification do not limit the maximum potential future payments associated with the guarantee. The carrying value of this guarantee is reported in Regulatory liabilities, deferred income, and other in our Consolidated Balance Sheet.

We are required by our revolving credit agreement to indemnify lenders for certain taxes required to be withheld from payments due to the lenders and for certain tax payments made by the lenders. The maximum potential amount of future payments under these indemnifications is based on the related borrowings and such future payments cannot currently be determined. These indemnifications generally continue indefinitely unless limited by the underlying tax regulations and have no carrying value. We have never been called upon to perform under these indemnifications and have no current expectation of a future claim.

Note 11 – Derivatives

Commodity-Related Derivatives

We are exposed to commodity price risk. To manage this volatility, we use various contracts in our marketing and trading activities that generally meet the definition of derivatives. Derivative positions are monitored using techniques including, but not limited to value at risk. Derivative instruments are recognized at fair value in our Consolidated Balance Sheet as either assets or liabilities and are presented on a net basis by counterparty, net of margin deposits. See Note 10 – Fair Value Measurements and Guarantees for additional fair value information. In

Notes (Continued)			Table of Contents

our Consolidated Statement of Cash Flows, any cash impacts of settled commodity-related derivatives are recorded as operating activities.

We enter into commodity-related derivatives to economically hedge exposures to natural gas, NGLs, and crude oil and retain exposure to price changes that can, in a volatile energy market, be material and can adversely affect our results of operations.

At March 31, 2022, the notional volume of the net long (short) positions for our commodity derivative contracts were as follows:

						Commodity						Unit of Measure						Net Long (Short) Position
Sequent Acquisition (1)						Natural Gas						MMBtu						661,224,762
Central Hub Risk - Mont Belvieu						Natural Gas Liquids						Barrels						(2,205,000)
Basis Risk						Natural Gas Liquids						Barrels						(17,504,000)
Central Hub Risk - Henry Hub						Natural Gas						MMBtu						49,036,730
Basis Risk						Natural Gas						MMBtu						43,098,730
Central Hub Risk - WTI						Crude Oil						Barrels						(459,000)

---

(1)Derivative instruments include both long and short natural gas positions. The volume represents the net of long natural gas positions of 3.7 billion MMBtu (million British thermal units) and short natural gas positions of 3.1 billion MMBtu.

Derivative Financial Statement Presentation

The fair value of commodity-related derivatives, which are not designated as hedging instruments for accounting purposes, was reflected in our Consolidated Balance Sheet as follows:

						March 31, 2022												December 31, 2021
Derivative Category						Assets						(Liabilities)						Assets						(Liabilities)
						(Millions)
Current						$	657					$	(954)					$	619					$	(760)
Noncurrent						204						(426)						166						(429)
Total derivatives						$	861					$	(1,380)					$	785					$	(1,189)
Gross amounts recognized						$	861					$	(1,380)					$	785					$	(1,189)
Counterparty and collateral netting offset						(716)						903						(476)						772
Amounts recognized in our Consolidated Balance Sheet						$	145					$	(477)					$	309					$	(417)

Notes (Continued)			Table of Contents

For the three months ended March 31, 2022 and 2021 the pre-tax effects of commodity-related derivatives instruments in Net gain (loss) on commodity derivatives in our Consolidated Statement of Income were as follows:

																		Gain (Loss)
												Three Months Ended March 31,
																		2022						2021
																		(Millions)
Realized commodity-related derivatives designated as hedging instruments																		$	—					$	(2)
Realized commodity-related derivatives not designated as hedging instruments																		(69)						(34)
Unrealized commodity-related derivative instruments not designated as hedging instruments (1)																		(125)						—
Net gain (loss) on commodity derivatives																		$	(194)					$	(36)

---

(1)Amounts for the three months ended March 31, 2022 include $59 million related to our Gas & NGL Marketing Services segment and $66 million related to our Other segment.

Contingent Features

Generally, collateral may be provided by a parent guaranty, letter of credit, or cash. If collateral is required, fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral are offset against fair value amounts recognized for derivatives executed with the same counterparty.

We have specific trade and credit contracts that contain minimum credit rating requirements. These credit rating requirements typically give counterparties the right to suspend or terminate credit if our credit ratings are downgraded to non-investment grade status. Under such circumstances, we would need to post collateral to continue transacting business with these counterparties. As of March 31, 2022 the contractually required collateral in the event of a credit rating downgrade to non-investment grade status was $32 million.

We maintain accounts with brokers or the clearing houses of certain exchanges to facilitate financial derivative transactions. Based on the value of the positions in these accounts and the associated margin requirements, we may be required to deposit cash into these accounts. At March 31, 2022, net cash collateral held on deposit in broker margin accounts was $187 million.

Note 12 – Contingent Liabilities

Reporting of Natural Gas-Related Information to Trade Publications

Direct and indirect purchasers of natural gas in various states filed individual and putative class actions against us, our former affiliate WPX Energy, Inc. (WPX) and its subsidiaries, and others alleging the manipulation of published gas price indices in 2000 and 2002 and seeking unspecified amounts of damages. Such actions were transferred to the Nevada federal district court for consolidation of discovery and pre-trial issues. We have agreed to indemnify WPX and its subsidiaries related to this matter.

We reached an agreement to settle two of the class actions, and on August 5, 2019, the final judgment of dismissal with prejudice was entered. We also reached an agreement to settle the individual action and on January 18, 2022, it was dismissed.

Two putative class actions remain unresolved, and they have been remanded to their originally filed court, the Wisconsin federal district court where the plaintiffs have re-urged their motion for class certification. On March 30, 2017, the Nevada federal district court issued an order denying the plaintiffs’ motions for class certification. On June 13, 2017, the United States Court of Appeals for the Ninth Circuit granted the plaintiff’s petition for permission to appeal the order. On August 6, 2018, the Ninth Circuit reversed the order denying class certification and remanded the case to the Nevada federal district court, where the plaintiffs re-urged their motion for class certification.

Notes (Continued)			Table of Contents

Trial was scheduled to begin June 14, 2021, but the court struck the setting and has not reset it due to the pending motion for class certification.

Because of the uncertainty around the remaining unresolved issues, we cannot reasonably estimate a range of potential exposure at this time. However, it is reasonably possible that the ultimate resolution of these actions and our related indemnification obligation could result in a potential loss that may be material to our results of operations. In connection with this indemnification, we have an accrued liability balance associated with this matter and have exposure to future developments.

Alaska Refinery Contamination Litigation

We are involved in litigation arising from our ownership and operation of the North Pole Refinery in North Pole, Alaska, from 1980 until 2004, through our wholly owned subsidiaries Williams Alaska Petroleum Inc. (WAPI) and MAPCO Inc. We sold the refinery to Flint Hills Resources Alaska, LLC (FHRA), a subsidiary of Koch Industries, Inc., in 2004. The litigation involves three cases, with filing dates ranging from 2010 to 2014. The actions primarily arise from sulfolane contamination allegedly emanating from the refinery. A putative class action lawsuit was filed by James West in 2010 naming us, WAPI, and FHRA as defendants. We and FHRA filed claims against each other seeking, among other things, contractual indemnification alleging that the other party caused the sulfolane contamination. In 2011, we and FHRA settled the claim with James West. Certain claims by FHRA against us were resolved by the Alaska Supreme Court in our favor. FHRA’s claims against us for contractual indemnification and statutory claims for damages related to off-site sulfolane were remanded to the Alaska Superior Court. The State of Alaska filed its action in March 2014, seeking damages. The City of North Pole (North Pole) filed its lawsuit in November 2014, seeking past and future damages, as well as punitive damages. Both we and WAPI asserted counterclaims against the State of Alaska and North Pole, and cross-claims against FHRA. FHRA has also filed cross-claims against us.

The underlying factual basis and claims in the cases are similar and may duplicate exposure. As such, in February 2017, the three cases were consolidated into one action in state court containing the remaining claims from the James West case and those of the State of Alaska and North Pole. The State of Alaska later announced the discovery of additional contaminants per- and polyfluoralkyl (PFOS and PFOA) offsite of the refinery, and the court permitted the State of Alaska to amend its complaint to add a claim for offsite PFOS/PFOA contamination. The court subsequently remanded the offsite PFOS/PFOA claims to the Alaska Department of Environmental Conservation for investigation and stayed the claims pending their potential resolution at the administrative agency. Several trial dates encompassing all three cases have been scheduled and stricken. In the summer of 2019, the court deconsolidated the cases for purposes of trial. A bench trial on all claims except North Pole’s claims began in October 2019.

In January 2020, the Alaska Superior Court issued its Memorandum of Decision finding in favor of the State of Alaska and FHRA, with the total incurred and potential future damages estimated to be $86 million. The court found that FHRA is not entitled to contractual indemnification from us because FHRA contributed to the sulfolane contamination. On March 23, 2020, the court entered final judgment in the case. Filing deadlines were stayed until May 1, 2020. However, on April 21, 2020, we filed a Notice of Appeal. We also filed post-judgment motions including a Motion for New Trial and a Motion to Alter or Amend the Judgment. These post-trial motions were resolved with the court’s denial of the last motion on June 11, 2020. Our Statement of Points on Appeal was filed on July 13, 2020. On June 22, 2020, the court stayed the North Pole’s case pending resolution of the appeal in the State of Alaska and FHRA case. On December 23, 2020, we filed our opening brief on appeal. Oral argument was held on December 15, 2021. We have recorded an accrued liability in the amount of our estimate of the probable loss. It is reasonably possible that we may not be successful on appeal and could ultimately pay up to the amount of judgment.

Royalty Matters

Certain of our customers, including Chesapeake Energy Corporation (Chesapeake), have been named in various lawsuits alleging underpayment of royalties and claiming, among other things, violations of anti-trust laws and the Racketeer Influenced and Corrupt Organizations Act. We have also been named as a defendant in certain of these cases filed in Pennsylvania based on allegations that we improperly participated with Chesapeake in causing the

Notes (Continued)			Table of Contents

alleged royalty underpayments. We believe that the claims asserted are subject to indemnity obligations owed to us by Chesapeake. Chesapeake has reached a settlement to resolve substantially all Pennsylvania royalty cases pending, which settlement applies to both Chesapeake and us. The settlement does not require any contribution from us. On August 23, 2021, the court approved the settlement, but two objectors filed an appeal with the United States Court of Appeals for the Fifth Circuit.

Litigation Against Energy Transfer and Related Parties

On April 6, 2016, we filed suit in Delaware Chancery Court against Energy Transfer Equity, L.P. (Energy Transfer) and LE GP, LLC (the general partner for Energy Transfer) alleging willful and material breaches of the Agreement and Plan of Merger (ETE Merger Agreement) with Energy Transfer resulting from the private offering by Energy Transfer on March 8, 2016, of Series A Convertible Preferred Units (Special Offering) to certain Energy Transfer insiders and other accredited investors. The suit seeks, among other things, an injunction ordering the defendants to unwind the Special Offering and to specifically perform their obligations under the ETE Merger Agreement. On April 19, 2016, we filed an amended complaint seeking the same relief. On May 3, 2016, Energy Transfer and LE GP, LLC filed an answer and counterclaims.

On May 13, 2016, we filed a separate complaint in Delaware Chancery Court against Energy Transfer, LE GP, LLC and the other Energy Transfer affiliates that are parties to the ETE Merger Agreement, alleging material breaches of the ETE Merger Agreement for failing to cooperate and use necessary efforts to obtain a tax opinion required under the ETE Merger Agreement (Tax Opinion) and for otherwise failing to use necessary efforts to consummate the merger under the ETE Merger Agreement wherein we would be merged with and into the newly formed Energy Transfer Corp LP (ETC) (ETC Merger). The suit sought, among other things, a declaratory judgment and injunction preventing Energy Transfer from terminating or otherwise avoiding its obligations under the ETE Merger Agreement due to any failure to obtain the Tax Opinion.

The Court of Chancery coordinated the Special Offering and Tax Opinion suits. On May 20, 2016, the Energy Transfer defendants filed amended affirmative defenses and verified counterclaims in the Special Offering and Tax Opinion suits, alleging certain breaches of the ETE Merger Agreement by us and seeking, among other things, a declaration that we were not entitled to specific performance, that Energy Transfer could terminate the ETC Merger, and that Energy Transfer is entitled to a $1.48 billion termination fee. On June 24, 2016, following a two-day trial, the court issued a Memorandum Opinion and Order denying our requested relief in the Tax Opinion suit. The court did not rule on the substance of our claims related to the Special Offering or on the substance of Energy Transfer’s counterclaims. On June 27, 2016, we filed an appeal of the court’s decision with the Supreme Court of Delaware, seeking reversal and remand to pursue damages. On March 23, 2017, the Supreme Court of Delaware affirmed the Court of Chancery’s ruling. On March 30, 2017, we filed a motion for reargument with the Supreme Court of Delaware, which was denied on April 5, 2017.

On September 16, 2016, we filed an amended complaint with the Court of Chancery seeking damages for breaches of the ETE Merger Agreement by defendants. On September 23, 2016, Energy Transfer filed a second amended and supplemental affirmative defenses and verified counterclaim with the Court of Chancery seeking, among other things, payment of the $1.48 billion termination fee due to our alleged breaches of the ETE Merger Agreement. On December 1, 2017, the court granted our motion to dismiss certain of Energy Transfer’s counterclaims, including its claim seeking payment of the $1.48 billion termination fee. On December 8, 2017, Energy Transfer filed a motion for reargument, which the Court of Chancery denied on April 16, 2018. The Court of Chancery originally scheduled trial for May 20 through May 24, 2019; the court struck that setting and reset trial to occur in 2020. All 2020 trial settings were struck due to COVID-19. Trial was held May 10 through May 17, 2021. Post-trial argument occurred September 16, 2021. On December 29, 2021, the court entered judgment in our favor in the amount of $410 million, plus interest at the contractual rate, and our reasonable attorneys’ fees and expenses. The judgment may be appealed to the Delaware Supreme Court.

Environmental Matters

We are a participant in certain environmental activities in various stages including assessment studies, cleanup operations, and/or remedial processes at certain sites, some of which we currently do not own. We are monitoring

Notes (Continued)			Table of Contents

these sites in a coordinated effort with other potentially responsible parties, the U.S. Environmental Protection Agency (EPA), or other governmental authorities. We are jointly and severally liable along with unrelated third parties in some of these activities and solely responsible in others. Certain of our subsidiaries have been identified as potentially responsible parties at various Superfund and state waste disposal sites. In addition, these subsidiaries have incurred, or are alleged to have incurred, various other hazardous materials removal or remediation obligations under environmental laws. As of March 31, 2022, we have accrued liabilities totaling $30 million for these matters, as discussed below. Estimates of the most likely costs of cleanup are generally based on completed assessment studies, preliminary results of studies, or our experience with other similar cleanup operations. At March 31, 2022, certain assessment studies were still in process for which the ultimate outcome may yield different estimates of most likely costs. Therefore, the actual costs incurred will depend on the final amount, type, and extent of contamination discovered at these sites, the final cleanup standards mandated by the EPA or other governmental authorities, and other factors.

The EPA and various state regulatory agencies routinely propose and promulgate new rules and issue updated guidance to existing rules. These rulemakings include, but are not limited to, rules for reciprocating internal combustion engine and combustion turbine maximum achievable control technology, reviews and updates to the National Ambient Air Quality Standards, and rules for new and existing source performance standards for volatile organic compound and methane. We continuously monitor these regulatory changes and how they may impact our operations. Implementation of new or modified regulations may result in impacts to our operations and increase the cost of additions to Property, plant, and equipment – net in our Consolidated Balance Sheet for both new and existing facilities in affected areas; however, due to regulatory uncertainty on final rule content and applicability timeframes, we are unable to reasonably estimate the cost of these regulatory impacts at this time.

Continuing operations

Our interstate gas pipelines are involved in remediation activities related to certain facilities and locations for polychlorinated biphenyls, mercury, and other hazardous substances. These activities have involved the EPA and various state environmental authorities, resulting in our identification as a potentially responsible party at various Superfund waste sites. At March 31, 2022, we have accrued liabilities of $4 million for these costs. We expect that these costs will be recoverable through rates.

We also accrue environmental remediation costs for natural gas underground storage facilities, primarily related to soil and groundwater contamination. At March 31, 2022, we have accrued liabilities totaling $8 million for these costs.

Former operations

We have potential obligations in connection with assets and businesses we no longer operate. These potential obligations include remediation activities at the direction of federal and state environmental authorities and the indemnification of the purchasers of certain of these assets and businesses for environmental and other liabilities existing at the time the sale was consummated. Our responsibilities relate to the operations of the assets and businesses described below.

• Former agricultural fertilizer and chemical operations and former retail petroleum and refining operations;

• Former petroleum products and natural gas pipelines;

• Former petroleum refining facilities;

• Former exploration and production and mining operations;

• Former electricity and natural gas marketing and trading operations.

At March 31, 2022, we have accrued environmental liabilities of $18 million related to these matters.

Notes (Continued)			Table of Contents

Other Divestiture Indemnifications

Pursuant to various purchase and sale agreements relating to divested businesses and assets, we have indemnified certain purchasers against liabilities that they may incur with respect to the businesses and assets acquired from us. The indemnities provided to the purchasers are customary in sale transactions and are contingent upon the purchasers incurring liabilities that are not otherwise recoverable from third parties. The indemnities generally relate to breach of warranties, tax, historic litigation, personal injury, property damage, environmental matters, right of way, and other representations that we have provided.

At March 31, 2022, other than as previously disclosed, we are not aware of any material claims against us involving the above-described indemnities; thus, we do not expect any of the indemnities provided pursuant to the sales agreements to have a material impact on our future financial position. Any claim for indemnity brought against us in the future may have a material adverse effect on our results of operations in the period in which the claim is made.

In addition to the foregoing, various other proceedings are pending against us that are incidental to our operations, none of which are expected to be material to our expected future annual results of operations, liquidity, and financial position.

Summary

We have disclosed our estimated range of reasonably possible losses for certain matters above, as well as all significant matters for which we are unable to reasonably estimate a range of possible loss. We estimate that for all other matters for which we are able to reasonably estimate a range of loss, our aggregate reasonably possible losses beyond amounts accrued are immaterial to our expected future annual results of operations, liquidity, and financial position. These calculations have been made without consideration of any potential recovery from third parties.

Note 13 – Segment Disclosures

Our reportable segments are Transmission & Gulf of Mexico, Northeast G&P, West, and Gas & NGL Marketing Services. All remaining business activities are included in Other. (See Note 1 – General, Description of Business, and Basis of Presentation.)

Performance Measurement

We evaluate segment operating performance based upon Modified EBITDA. This measure represents the basis of our internal financial reporting and is the primary performance measure used by our chief operating decision maker in measuring performance and allocating resources among our reportable segments. Intersegment Service revenues primarily represent transportation services provided to our marketing business and gathering services provided to our oil and gas properties. Intersegment Product sales primarily represent the sale of NGLs from our natural gas processing plants and our oil and gas properties to our marketing business.

We define Modified EBITDA as follows:

• Net income (loss) before:

◦Provision (benefit) for income taxes;

◦Interest incurred, net of interest capitalized;

◦Equity earnings (losses);

◦Other investing income (loss) – net;

◦Depreciation and amortization expenses;

◦Accretion expense associated with asset retirement obligations for nonregulated operations.

Notes (Continued)			Table of Contents

• This measure is further adjusted to include our proportionate share (based on ownership interest) of Modified EBITDA from our equity-method investments calculated consistently with the definition described above.

The following table reflects the reconciliation of Modified EBITDA to Net income (loss) as reported in our Consolidated Statement of Income.

									Three Months Ended March 31,
															2022						2021
															(Millions)
Modified EBITDA by segment:
Transmission & Gulf of Mexico															$	697					$	660
Northeast G&P															418						402
West															260						222
Gas & NGL Marketing Services															13						93
Other															5						33
															1,393						1,410
Accretion expense associated with asset retirement obligations for nonregulated operations															(11)						(10)
Depreciation and amortization expenses															(498)						(438)
Equity earnings (losses)															136						131
Other investing income (loss) – net															1						2
Proportional Modified EBITDA of equity-method investments															(225)						(225)
Interest expense															(286)						(294)
(Provision) benefit for income taxes															(118)						(141)
Net income (loss)															$	392					$	435

Notes (Continued)			Table of Contents

The following table reflects the reconciliation of Segment revenues to Total revenues as reported in our Consolidated Statement of Income and Total assets by reportable segment.

			Transmission & Gulf of Mexico						Northeast G&P						West						Gas & NGL Marketing Services (1)						Other						Eliminations						Total
			(Millions)
Three Months Ended March 31, 2022
Segment revenues:
Service revenues
External			$	845					$	370					$	316					$	1					$	5					$	—					$	1,537
Internal			29						10						15						—						4						(58)						—
Total service revenues			874						380						331						1						9						(58)						1,537
Total service revenues – commodity consideration			21						7						49						—						—						—						77
Product sales
External			51						5						11						1,015						22						—						1,104
Internal			49						31						176						(47)						82						(291)						—
Total product sales			100						36						187						968						104						(291)						1,104
Net gain (loss) on commodity derivatives (2)			—						—						(5)						(115)						(74)						—						(194)
Total revenues			$	995					$	423					$	562					$	854					$	39					$	(349)					$	2,524
Three Months Ended March 31, 2021
Segment revenues:
Service revenues
External			$	822					$	347					$	278					$	1					$	4					$	—					$	1,452
Internal			12						11						13						—						3						(39)						—
Total service revenues			834						358						291						1						7						(39)						1,452
Total service revenues – commodity consideration			11						3						35						—						—						—						49
Product sales
External			40						4						15						1,039						49						—						1,147
Internal			27						28						137						49						7						(248)						—
Total product sales			67						32						152						1,088						56						(248)						1,147
Net gain (loss) on commodity derivatives (2)			—						—						(2)						(34)						—						—						(36)
Total revenues			$	912					$	393					$	476					$	1,055					$	63					$	(287)					$	2,612
March 31, 2022
Total assets			$	20,698					$	15,145					$	10,479					$	2,258					$	2,009					$	(4,540)					$	46,049
December 31, 2021
Total assets			$	20,394					$	14,939					$	10,330					$	2,127					$	2,991					$	(3,169)					$	47,612

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(1) See Note 1 – General, Description of Business, and Basis of Presentation.

(2) We record transactions that qualify as derivatives at fair value with changes in fair value recognized in earnings in the period of change and characterized as unrealized gains or losses. Gains and losses on derivatives held for energy trading purposes are presented on a net basis in revenue.

Notes (Continued)			Table of Contents

Note 14 – Subsequent Event

Trace Acquisition

In April 2022, we completed the acquisition of 100 percent of Gemini Arklatex, LLC through which we acquired the gas gathering and related assets of Trace Midstream, located in the Haynesville Shale region (Trace Acquisition), for approximately $950 million funded with available sources of short-term liquidity, subject to working capital and post-closing adjustments. The purpose of the Trace Acquisition was to expand our footprint into the East Texas region of the Haynesville Shale region, increasing in-basin scale in one of the largest growth basins in the country, and to advance our clean energy strategy. The transaction closed on April 29, 2022. Due to the timing, the initial purchase price accounting for the transaction was not yet complete at the time of filing.