Williams Companies 10-Q 2022-09-30

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission file number 1-4174

THE WILLIAMS COMPANIES, INC.

(Exact name of registrant as specified in its charter)

Delaware						73-0569878
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
One Williams Center
Tulsa, Oklahoma						74172-0172
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area code: (800) 945-5426

NO CHANGE

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, $1.00 par value			WMB			New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☑						Accelerated filer			☐						Non-accelerated filer			☐						Smaller reporting company			☐						Emerging growth company			☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class						Shares Outstanding at October 27, 2022
Common Stock, $1.00 par value						1,218,339,828

The Williams Companies, Inc.

Index

						Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statement of Income – Three and Nine Months Ended September 30, 2022 and 2021						6
Consolidated Statement of Comprehensive Income (Loss) – Three and Nine Months Ended September 30, 2022 and 2021						7
Consolidated Balance Sheet – September 30, 2022 and December 31, 2021						8
Consolidated Statement of Changes in Equity – Three and Nine Months Ended September 30, 2022 and 2021						9
Consolidated Statement of Cash Flows – Nine Months Ended September 30, 2022 and 2021						11
Notes to Consolidated Financial Statements						12
Note 1 - General, Description of Business, and Basis of Presentation						12
Note 2 - Variable Interest Entities						13
Note 3 - Acquisitions						14
Note 4 - Revenue Recognition						18
Note 5 - Provision (Benefit) for Income Taxes						21
Note 6 - Earnings (Loss) Per Common Share						22
Note 7 - Employee Benefit Plans						22
Note 8 - Debt and Banking Arrangements						23
Note 9 - Fair Value Measurements and Guarantees						24
Note 10 - Derivatives						26
Note 11 - Contingent Liabilities						27
Note 12 - Segment Disclosures						31
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						35
Item 3. Quantitative and Qualitative Disclosures About Market Risk						54
Item 4. Controls and Procedures						55
Part II. Other Information						55
Item 1. Legal Proceedings						55
Item 1A. Risk Factors						56
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						57
Item 5. Other Information						57
Item 6. Exhibits						59

The reports, filings, and other public announcements of The Williams 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 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, outcomes of regulatory proceedings, market conditions, and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical facts, included in this report that address activities, 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,” “in-service date,” or other similar expressions. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management and include, among others, statements regarding:

• Levels of dividends to Williams stockholders;

• Future credit ratings of Williams and its affiliates;

• Amounts and nature of future capital expenditures;

• Expansion and growth of our business and operations;

• Expected in-service dates for capital projects;

• Financial condition and liquidity;

• Business strategy;

• Cash flow from operations or results of operations;

• Seasonality of certain business components;

• Natural gas, natural gas liquids, and crude oil prices, supply, and demand;

• Demand for our services;

• The impact of the coronavirus (COVID-19) pandemic.

Forward-looking statements are based on numerous assumptions, uncertainties, and risks that could cause future events or results to be materially different from those stated or implied in this report. Many of the factors that will determine these results are beyond our ability to control or predict. Specific factors that could cause actual results to differ from results contemplated by the forward-looking statements include, among others, the following:

• Availability of supplies, market demand, and volatility of prices;

• Development and rate of adoption of alternative energy sources;

• The impact of existing and future laws and regulations, the regulatory environment, environmental matters, and litigation, as well as our ability to obtain necessary permits and approvals, and achieve favorable rate proceeding outcomes;

• Our exposure to the credit risk of our customers and counterparties;

• Our ability to acquire new businesses and assets and successfully integrate those operations and assets into existing businesses as well as successfully expand our facilities, and to consummate asset sales on acceptable terms;

• Whether we are able to successfully identify, evaluate, and timely execute our capital projects and investment opportunities;

• The strength and financial resources of our competitors and the effects of competition;

• The amount of cash distributions from and capital requirements of our investments and joint ventures in which we participate;

• Whether we will be able to effectively execute our financing plan;

• Increasing scrutiny and changing expectations from stakeholders with respect to our environmental, social, and governance practices;

• The physical and financial risks associated with climate change;

• The impacts of operational and developmental hazards and unforeseen interruptions;

• The risks resulting from outbreaks or other public health crises, including COVID-19;

• Risks associated with weather and natural phenomena, including climate conditions and physical damage to our facilities;

• Acts of terrorism, cybersecurity incidents, and related disruptions;

• Our costs and funding obligations for defined benefit pension plans and other postretirement benefit plans;

• Changes in maintenance and construction costs, as well as our ability to obtain sufficient construction-related inputs, including skilled labor;

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

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

• The ability of the members of the Organization of Petroleum Exporting Countries (OPEC) and other oil exporting nations to agree to and maintain oil price and production controls and the impact on domestic production;

• Changes in the current geopolitical situation, including the Russian invasion of Ukraine;

• Changes in U.S. governmental administration and policies;

• Whether we are able to pay current and expected levels of dividends;

• Additional risks described in our filings with the Securities and Exchange Commission (SEC).

Given the uncertainties and risk factors that could cause our actual results to differ materially from those contained in any forward-looking statement, we caution investors not to unduly rely on our forward-looking statements. We disclaim any obligations to and do not intend to update the above list or announce publicly the result of any revisions to any of the forward-looking statements to reflect future events or developments.

In addition to causing our actual results to differ, the factors listed above and referred to below may cause our intentions to change from those statements of intention set forth in this report. Such changes in our intentions may also cause our results to differ. We may change our intentions, at any time and without notice, based upon changes in such factors, our assumptions, or otherwise.

Because forward-looking statements involve risks and uncertainties, we caution that there are important factors, in addition to those listed above, that may cause actual results to differ materially from those contained in the forward-looking statements. For a detailed discussion of those factors, see Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 28, 2022, as supplemented by disclosures in Part II, Item 1A. Risk Factors in subsequent Quarterly Reports on Form 10-Q.

DEFINITIONS

The following is a listing of certain abbreviations, acronyms, and other industry terminology that may be used throughout this Form 10-Q.

Measurements:

Barrel or Bbl: One barrel of petroleum products that equals 42 U.S. gallons

Mbbls/d: One thousand barrels per day

Bcf: One billion cubic feet of natural gas

Bcf/d: One billion cubic feet of natural gas per day

MMcf/d: One million cubic feet per day

British Thermal Unit (Btu): A unit of energy needed to raise the temperature of one pound of water by one degree Fahrenheit

MMbtu: One million British thermal units

Tbtu: One trillion British thermal units

Dekatherms (Dth): A unit of energy equal to one million British thermal units

Mdth/d: One thousand dekatherms per day

MMdth: One million dekatherms or approximately one trillion British thermal units

MMdth/d: One million dekatherms per day

Consolidated Entities:

Cardinal: Cardinal Gas Services, L.L.C.

Gulfstar One: Gulfstar One LLC

Northeast JV: Ohio Valley Midstream LLC

Northwest Pipeline: Northwest Pipeline LLC

Transco: Transcontinental Gas Pipe Line Company, LLC

Partially Owned Entities: Entities in which we do not own a 100 percent ownership interest and which, as of September 30, 2022, we account for as equity-method investments, including principally the following:

Aux Sable: Aux Sable Liquid Products LP

Blue Racer: Blue Racer Midstream LLC

Discovery: Discovery Producer Services LLC

Gulfstream: Gulfstream Natural Gas System, L.L.C.

Laurel Mountain: Laurel Mountain Midstream, LLC

OPPL: Overland Pass Pipeline Company LLC

RMM: Rocky Mountain Midstream Holdings LLC

Targa Train 7: Targa Train 7 LLC

Government and Regulatory:

EPA: Environmental Protection Agency

Exchange Act, the: Securities and Exchange Act of 1934, as amended

FERC: Federal Energy Regulatory Commission

IRS: Internal Revenue Service

SEC: Securities and Exchange Commission

Other:

EBITDA: Earnings before interest, taxes, depreciation, and amortization

Fractionation: The process by which a mixed stream of natural gas liquids is separated into constituent products, such as ethane, propane, and butane

GAAP: U.S. generally accepted accounting principles

LNG: Liquefied natural gas; natural gas which has been liquefied at cryogenic temperatures

MVC: Minimum volume commitments

NGLs: Natural gas liquids; natural gas liquids result from natural gas processing and crude oil refining and are used as petrochemical feedstocks, heating fuels, and gasoline additives, among other applications

PART I – FINANCIAL INFORMATION

The Williams Companies, Inc.

Consolidated Statement of Income

(Unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
			(Millions, except per-share amounts)
Revenues:
Service revenues			$	1,685					$	1,506					$	4,828					$	4,418
Service revenues – commodity consideration			60						64						223						164
Product sales			1,260						1,296						3,475						3,229
Net gain (loss) on commodity derivatives			16						(391)						(491)						(441)
Total revenues			3,021						2,475						8,035						7,370
Costs and expenses:
Product costs			990						1,043						2,650						2,672
Net processing commodity expenses			29						28						99						67
Operating and maintenance expenses			486						409						1,345						1,148
Depreciation and amortization expenses			500						487						1,504						1,388
Selling, general, and administrative expenses			163						152						477						389
Other (income) expense – net			33						1						14						12
Total costs and expenses			2,201						2,120						6,089						5,676
Operating income (loss)			820						355						1,946						1,694
Equity earnings (losses)			193						157						492						423
Other investing income (loss) – net			1						2						4						6
Interest incurred			(296)						(295)						(871)						(892)
Interest capitalized			5						3						13						8
Other income (expense) – net			(6)						4						5						4
Income (loss) before income taxes			717						226						1,589						1,243
Less: Provision (benefit) for income taxes			96						53						169						313
Net income (loss)			621						173						1,420						930
Less: Net income (loss) attributable to noncontrolling interests			21						8						40						35
Net income (loss) attributable to The Williams Companies, Inc.			600						165						1,380						895
Less: Preferred stock dividends			1						1						2						2
Net income (loss) available to common stockholders			$	599					$	164					$	1,378					$	893
Basic earnings (loss) per common share:
Net income (loss)			$	.49					$	.14					$	1.13					$	.74
Weighted-average shares (thousands)			1,218,964						1,215,434						1,218,202						1,215,113
Diluted earnings (loss) per common share:
Net income (loss)			$	.49					$	.13					$	1.13					$	.73
Weighted-average shares (thousands)			1,222,472						1,217,979						1,222,153						1,217,558

See accompanying notes.

The Williams Companies, Inc.

Consolidated Statement of Comprehensive Income (Loss)

(Unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2022						2021						2022						2021
			(Millions)
Net income (loss)			$	621					$	173					$	1,420					$	930
Other comprehensive income (loss):
Designated cash flow hedging activities:
Net unrealized gain (loss) from derivative instruments, net of taxes of $3 and $1 in 2022 and $5 and $14 in 2021			(8)						(17)						(3)						(43)
Reclassifications into earnings of net derivative instruments (gain) loss, net of taxes of $— and $— in 2022 and ($5) and ($7) in 2021			—						15						—						21
Pension and other postretirement benefits:
Net actuarial gain (loss) arising during the year, net of taxes of ($1) and ($1) in 2022 and $— and $— in 2021			2						—						2						—
Amortization of actuarial (gain) loss and net actuarial loss from settlements included in net periodic benefit cost (credit), net of taxes of ($1) and ($2) in 2022 and ($1) and ($3) in 2021			2						3						7						9
Other comprehensive income (loss)			(4)						1						6

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General

We are an energy company committed to being the leader in providing infrastructure that safely delivers natural gas products to reliably fuel the clean energy economy. Our operations are located in the United States.

Our interstate natural gas pipeline strategy is to create value by maximizing the utilization of our pipeline capacity by providing high quality, low cost transportation of natural gas to large and growing markets. Our gas pipeline businesses’ interstate transmission and 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 or abandonment of jurisdictional facilities and accounting, among other things, are subject to regulation. The rates are established primarily through the FERC’s ratemaking process, but we also may negotiate rates with our customers pursuant to the terms of our tariffs and FERC policy. 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.

The ongoing strategy of our midstream operations is to safely and reliably operate large-scale midstream infrastructure where our assets can be fully utilized and drive low per-unit costs. We focus on consistently attracting new business by providing highly reliable service to our customers. These services include natural gas gathering, processing, treating, compression, and storage, NGL fractionation, transportation and storage, crude oil production handling and transportation, as well as marketing services for NGL, crude oil and natural gas.

Consistent with the manner in which our chief operating decision maker evaluates performance and allocates resources, our operations are conducted, managed, and presented within the following reportable segments: Transmission & Gulf of Mexico, Northeast G&P, West, and Gas & NGL Marketing Services. All remaining business activities, including our upstream operations and corporate activities, are included in Other. Our reportable segments are comprised of the following businesses:

• Transmission & Gulf of Mexico is comprised of our interstate natural gas pipelines and complimentary natural gas storage facilities within Transco and 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 (a consolidated VIE), a 50 percent equity-method investment in Gulfstream, and a 60 percent equity-method investment in Discovery. Transmission & Gulf of Mexico also includes natural gas storage facilities and pipelines providing services in north Texas.

• 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 our Northeast JV (a consolidated VIE) which operates in West Virginia, Ohio, and Pennsylvania, a 66 percent interest in Cardinal (a consolidated VIE) which operates in Ohio, a 69 percent equity-method investment in Laurel Mountain, a 50 percent equity-method investment in Blue Racer, and Appalachia Midstream Investments, 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.

• 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 east Texas and 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 OPPL, a 50 percent equity-method investment in RMM, a 20 percent equity-method investment in Targa Train 7, and a 15 percent equity-method investment in Brazos Permian II, LLC.

Management’s Discussion and Analysis (Continued)			Table of Contents

• Gas & NGL Marketing Services includes our NGL and natural gas marketing and trading operations previously reported within the West segment prior to January 1, 2022, as well as the operations acquired in the Sequent Acquisition in 2021. This segment includes risk management and the storage and transportation of natural gas on strategically positioned assets, including our Transco system.

Dividends

In September 2022, we paid a regular quarterly dividend of $0.425 per share.

Overview of Nine Months Ended September 30, 2022

Net income (loss) attributable to The Williams Companies, Inc., for the nine months ended September 30, 2022, increased $485 million compared to the nine months ended September 30, 2021, reflecting the benefit of higher service revenues from commodity-based gathering and processing rates and higher gathering volumes, including from the Trace Acquisition in the West, as well as Transco’s Leidy South project placed in service in December 2021, higher results from our upstream operations associated with higher prices and increased scale of operations, higher commodity margins, higher equity earnings, and favorable interest expense due to debt retirements. These favorable impacts were partially offset by a $12 million unfavorable change in net unrealized loss on commodity derivatives, increased intangible asset amortization, the absence of a $77 million favorable impact in 2021 from Winter Storm Uri, higher operating and maintenance expenses, and higher selling, general, and administrative expenses, primarily resulting from the Sequent Acquisition. The tax provision benefited from the release of valuation allowances on deferred income tax assets and federal income tax settlements, as well as from a decrease in our estimated deferred state income tax rate.

Our results include a $12 million unfavorable change in net unrealized losses from commodity derivatives not designated as hedges for accounting purposes. We can experience significant earnings volatility from the fair value accounting required for the derivatives used to hedge a portion of the economic value of the underlying transportation and storage marketing portfolio as well as upstream related production. However, the unrealized fair value measurement gains and losses are generally offset by valuation changes in the economic value of the underlying production or contracts, which is not recognized until the underlying transaction occurs.

The following discussion and analysis of results of operations and financial condition and liquidity should be read in conjunction with our consolidated financial statements and notes thereto of this Form 10‑Q and in Exhibit 99.1 of our Form 8-K dated May 2, 2022.

Recent Developments

Trace Acquisition

On April 29, 2022, we closed on the acquisition of 100 percent of Gemini Arklatex, LLC through which we acquired the Haynesville Shale region gas gathering and related assets of Trace Midstream for $972 million, subject to post-closing adjustments. The purpose of the Trace Acquisition was to expand our footprint into the east Texas area of the Haynesville Shale region, increasing in-basin scale in one of the largest growth basins in the country.

Purchase of North Texas Assets

On August 31, 2022, we purchased a group of assets in north Texas, primarily natural gas storage facilities and pipelines, from NorTex Midstream Holdings, LLC for approximately $424 million. These assets are included in the Transmission &

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Interest Rate Risk

Our current interest rate risk exposure is related primarily to our debt portfolio and has not materially changed during the first nine months of 2022.

Commodity Price Risk

We are exposed to commodity price risk through our natural gas and NGL marketing activities, including contracts to purchase, sell, transport, and store product. We routinely manage this risk with a variety of exchange-traded and OTC energy contracts such as forward contracts, futures contracts, and basis swaps, as well as physical transactions. Although many of the contracts used to manage commodity exposure are derivative instruments, these economic hedges are not designated or do not qualify for hedge accounting treatment.

We are also exposed to commodity prices through our upstream business and certain gathering and processing contracts. We use derivative instruments to lock in forward sales prices on a portion of our expected future production. These economic hedges are not designated for hedge accounting treatment.

The maturities of our derivative contracts at September 30, 2022 were as follows:

						Total Fair Value						Maturity
Fair Value Measurements Using (1)									2022						2023 - 2024						2025 - 2026+
						(Millions)
Level 1 (2)						$	(51)					$	44					$	(93)					$	(2)
Level 2						(663)						(60)						(359)						(244)
Level 3						(6)						8						(15)						1
Fair value of contracts outstanding at end of period						$	(720)					$	(8)					$	(467)					$	(245)

---

(1)See Note 9 – Fair Value Measurements and Guarantees of Notes to Consolidated Financial Statements for discussion of valuation techniques by level within the fair value hierarchy. See Note 10 – Derivatives of Notes to Consolidated Financial Statements for the amount of change in fair value recognized in our Consolidated Statement of Income.

(2)Net commodity derivative assets and liabilities exclude $210 million of net cash collateral in Level 1.

Value at Risk (VaR)

VaR is the maximum predicted loss in portfolio value over a specified time period that is not expected to be exceeded within a given degree of probability. Our VaR may not be comparable to that of other companies due to differences in the factors used to calculate VaR. Our VaR is determined using parametric models with 95 percent confidence intervals and one-day holding periods, which means that 95 percent of the time, the risk of loss in a day from a portfolio of positions is expected to be less than or equal to the amount of VaR calculated. Our open exposure is managed in accordance with established policies that limit market risk and require daily reporting of predicted financial loss to management. Because we generally manage physical gas assets and economically protect our positions by hedging in the futures markets, our open exposure is generally mitigated. We employ daily risk testing, using both VaR and stress testing, to evaluate the risk of our positions.

We actively monitor open commodity marketing positions and the resulting VaR and maintain a relatively small risk exposure as total buy volume is close to sell volume, with minimal open natural gas price risk. Starting in the second quarter of 2022, following the further integration of our legacy trading activities with the operations acquired in the Sequent Acquisition, we now present VaR for our integrated trading operations. For the first quarter of 2022, the VaR presented reflects the legacy Sequent operations only.

At September 30, 2022, the VaR associated with this activity was $7 million. We had the following VaRs for the periods shown:

						Three Months Ended March 31, 2022						Six Months Ended September 30, 2022
						Sequent Only						Trading
						(Millions)
Average						$	6.2					$	11.1
High						$	10.4					$	20.6
Low						$	4.1					$	5.6

Our remaining portfolio primarily consists of derivatives that hedge our upstream business and certain gathering and processing contracts. At September 30, 2022, the VaR associated with these derivatives was $11 million.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures (as defined in Rules 13a - 15(e) and 15d - 15(e) of the Securities Exchange Act of 1934, as amended) (Disclosure Controls) or our internal control over financial reporting (Internal Controls) will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. We monitor our Disclosure Controls and Internal Controls and make modifications as necessary; our intent in this regard is that the Disclosure Controls and Internal Controls will be modified as systems change and conditions warrant.

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our Disclosure Controls was performed as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that these Disclosure Controls are effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes during the third quarter of 2022 that have materially affected, or are reasonably likely to materially affect, our Internal Control over Financial Reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Environmental

Certain reportable legal proceedings involving governmental authorities under federal, state, and local laws regulating the discharge of materials into the environment are described below. While it is not possible for us to

predict the final outcome of the proceedings that are still pending, we do not anticipate a material effect on our consolidated financial position if we receive an unfavorable outcome in any one or more of such proceedings. Our threshold for disclosing material environmental legal proceedings involving a governmental authority where potential monetary sanctions are involved is $1 million.

On January 19, 2016, we received a Notice of Noncompliance with certain Leak Detection and Repair (LDAR) regulations under the Clean Air Act at our Moundsville Fractionator Facility from the EPA, Region 3. Subsequently, the EPA alleged similar violations of certain LDAR regulations at our Oak Grove Gas Plant. On March 19, 2018, we received a Notice of Violation of certain LDAR regulations at our former Ignacio Gas Plant from the EPA, Region 8, following an on-site inspection of the facility. On March 20, 2018, we also received a Notice of Violation of certain LDAR regulations at our Parachute Creek Gas Plant from the EPA, Region 8. All such notices were subsequently referred to a common attorney at the Department of Justice (DOJ). We are pursuing global resolution of the claims at these facilities, as well as alleged violations at certain other facilities, with the DOJ. Global resolution, once finalized, would include both payment of a civil penalty and an injunctive relief component. We continue to work with the DOJ and the other agencies towards final resolution of these claims.

Other environmental matters called for by this Item are described under the caption “Environmental Matters” in Note 11 – Contingent Liabilities of Notes to Consolidated Financial Statements included under Part I, Item 1. Financial Statements of this report, which information is incorporated by reference into this Item.

Other litigation

The additional information called for by this Item is provided in Note 11 – Contingent Liabilities of Notes to Consolidated Financial Statements included under Part I, Item 1. Financial Statements of this report, which information is incorporated by reference into this Item.

Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on February 28, 2022, as supplemented by the disclosures in Part II, Item 1A. Risk Factors in our Quarterly Report on Form 10-Q, as filed with the SEC on May 2, 2022, includes risk factors that could materially affect our business, financial condition, or future results. Those Risk Factors have not materially changed.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES
Period						(a) Total Number of Shares Purchased						(b) Average Price Paid Per Share						(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs**(1)**						(d) Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs
July 1 - July 31, 2022						—						$	—					—						$	1,500,000,000
August 1 - August 31, 2022						—						$	—					—						$	1,500,000,000
September 1 - September 30, 2022						304,281						$	28.76					304,281						$	1,491,248,057
Total						304,281												304,281

(1)We announced a stock repurchase program on September 8, 2021. Our board of directors has authorized the repurchase of up to $1.5 billion of the company’s common stock. The stock repurchase program has no expiration date. We intend to purchase shares of our stock from time to time in open market transactions, block purchases, privately negotiated or structured transactions, or in such other manner as determined at our discretion, subject to market conditions and other factors.

On October 25, 2022, our Board of Directors (the “Board”) approved amendments to the By-laws of The Williams Companies, Inc. (the “By-laws”), effective immediately. Changes to the amended and restated By-laws include the following:

• Changes to conform with recent amendments to the General Corporation Law of the State of Delaware to (i) provide greater flexibility for adjourning and reconvening stockholder meetings; and (ii) delete the requirement that the Company make a list of stockholder information available during a meeting of stockholders.

• Updates stemming from the SEC’s recently adopted “universal proxy” rules in Rule 14a-19 under the Exchange Act to provide for the use of universal proxy cards (“Universal Proxy Card Rules”) and updates enhancing procedural mechanics and disclosure requirements in connection with stockholder nominations of directors and submissions of stockholder proposals (other than proposals to be included in the Company’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or nominations pursuant to the company’s proxy access bylaws), including by (i) requiring additional disclosures from nominating stockholders, proposed nominees and other persons associated with nominating stockholders; (ii) conforming existing provisions to the Universal Proxy Card Rules by providing that a proposed nominee consent to being named in any proxy statement and form of proxy card; (iii) requiring a representation as to whether such stockholder intends to solicit proxies in support of director nominees other than the Company’s nominees in accordance with the Universal Proxy Card Rules and the procedures set forth in the By-Laws, and that such stockholder will provide the Company with evidence demonstrating compliance

with such requirements; and (iv) requiring that stockholders directly or indirectly soliciting proxies from other stockholders use a proxy card color other than white.

• Changes incorporating other ministerial, clarifying, and conforming changes.

The foregoing is only a summary of the changes made to the By-laws and is qualified in its entirety by reference to the full text of the By-laws, which is filed as Exhibit 3.4 to this Quarterly Report on Form 10‑Q and is incorporated herein by reference.

Exhibit No.												Description
2.1						—						Agreement and Plan of Merger dated as of May 16, 2018, by and among The Williams Companies, Inc., SCMS LLC, Williams Partners L.P., and WPZ GP LLC (filed on May 17, 2018 as Exhibit 2.1 to The Williams Companies, Inc.’s current report on Form 8-K (File No. 001-04174) and incorporated herein by reference).
2.2						—						Amendment No 1. to Agreement and Plan of Merger dated as of May 1, 2016, by and among The Williams Companies, Inc., Energy Transfer Corp LP, Energy Transfer Corp GP, LLC, Energy Transfer Equity, L.P., LE GP, LLC, and Energy Transfer Equity GP, LLC (filed on May 3, 2016 as Exhibit 2.1 to The Williams Companies, Inc.’s current report on Form 8-K (File No. 001-04174) and incorporated herein by reference).
2.3						—						Agreement and Plan of Merger dated as of September 28, 2015, by and among The Williams Companies, Inc., Energy Transfer Corp LP, Energy Transfer Corp GP, LLC, Energy Transfer Equity, L.P., LE GP, LLC, and Energy Transfer Equity GP, LLC (filed on October 1, 2015 as Exhibit 2.1 to The Williams Companies, Inc.’s current report on Form 8-K (File No. 001-04174) and incorporated herein by reference).
3.1						—						Amended and Restated Certificate of Incorporation as supplemented (filed on May 26, 2010, as Exhibit 3.1 to The Williams Companies, Inc.’s current report on Form 8-K (File No. 001-04174) and incorporated herein by reference).
3.2						—						Certificate of Designations of Series B Preferred Stock of The Williams Companies, Inc. (filed on July 17, 2018 as Exhibit 3.1 to The Williams Companies, Inc.’s current report on Form 8-K (File No. 001-04174) and incorporated herein by reference).
3.3						—						Certificate of Amendment dated August 10, 2018 (filed on August 10, 2018 as Exhibit 3.1 to The Williams Companies, Inc.’s current report on Form 8-K (File No. 001-04174) and incorporated herein by reference).
3.4*						—						By-Laws of The Williams Companies, Inc., as last amended effective October 25, 2022.
10.1§*						—						The Williams Companies, Inc. Executive Severance Pay Plan as amended and restated, effective August 1, 2022.
31.1*						—						Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S‑K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						—						Certification of Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended, and Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32**						—						Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*						—						XBRL Instance Document. The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH*						—						XBRL Taxonomy Extension Schema.
101.CAL*						—						XBRL Taxonomy Extension Calculation Linkbase.
101.DEF*						—						XBRL Taxonomy Extension Definition Linkbase.
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Exhibit No.												Description
101.PRE*						—						XBRL Taxonomy Extension Presentation Linkbase.
104*						—						Cover Page Interactive Data File. The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document (contained in Exhibit 101).

• Filed herewith.

** Furnished herewith.

§ Management contract or compensatory plan or arrangement.

SIGNATURE

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

			THE WILLIAMS COMPANIES, INC.
			(Registrant)
			/s/ Mary A. Hausman
			Mary A. Hausman
			Vice President, Chief Accounting Officer and Controller (Duly Authorized Officer and Principal Accounting Officer)

October 31, 2022