Item 1. Financial Statements

The Williams Companies, Inc.

Consolidated Statement of Income

(Unaudited)



		Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
	(Millions, except per-share amounts)
Revenues:
Service revenues		$	1,911	$	1,770	$	5,653	$	5,212
Service revenues – commodity consideration		34		45		82		108
Product sales		703		720		2,158		2,158
Net gain (loss) from commodity derivatives		5		24		(133)		645
Total revenues		2,653		2,559		7,760		8,123
Costs and expenses:
Product costs		517		484		1,467		1,458
Net processing commodity expenses		7		31		29		129
Operating and maintenance expenses		580		522		1,613		1,466
Depreciation and amortization expenses		566		521		1,654		1,542
Selling, general, and administrative expenses		170		146		520		483



Gain on sale of business (Note 3)		—		(130)		—		(130)
Other (income) expense – net		(25)		(9)		(69)		(49)
Total costs and expenses		1,815		1,565		5,214		4,899
Operating income (loss)		838		994		2,546		3,224
Equity earnings (losses)		147		127		431		434


Other investing income (loss) – net		290		24		332		45
Interest expense		(338)		(314)		(1,026)		(914)



Other income (expense) – net		31		30		95		69
Income (loss) before income taxes		968		861		2,378		2,858
Less: Provision (benefit) for income taxes		227		176		549		635
Income (loss) from continuing operations		741		685		1,829		2,223
Income (loss) from discontinued operations (Note 1)		—		(1)		—		(88)
Net income (loss)		741		684		1,829		2,135
Less: Net income (loss) attributable to noncontrolling interests		35		30		90		94
Net income (loss) attributable to The Williams Companies, Inc.		706		654		1,739		2,041
Less: Preferred stock dividends		1		1		2		2
Net income (loss) available to common stockholders		$	705	$	653	$	1,737	$	2,039
Amounts attributable to The Williams Companies, Inc. available to common stockholders:
Income (loss) from continuing operations		$	705	$	654	$	1,737	$	2,127
Income (loss) from discontinued operations (Note 1)		—		(1)		—		(88)
Net income (loss) available to common stockholders		$	705	$	653	$	1,737	$	2,039
Basic earnings (loss) per common share:
Income (loss) from continuing operations		$	.58	$	.54	$	1.43	$	1.74
Income (loss) from discontinued operations		—		—		—		(.07)
Net income (loss) available to common stockholders		$	.58	$	.54	$	1.43	$	1.67
Weighted-average shares (thousands)		1,219,537		1,216,951		1,219,021		1,218,021
Diluted earnings (loss) per common share:
Income (loss) from continuing operations		$	.58	$	.54	$	1.42	$	1.74
Income (loss) from discontinued operations		—		—		—		(.07)
Net income (loss) available to common stockholders		$	.58	$	.54	$	1.42	$	1.67
Weighted-average shares (thousands)		1,222,869		1,220,073		1,222,444		1,222,650

See accompanying notes.

The Williams Companies, Inc.

Consolidated Statement of Comprehensive Income (Loss)

(Unaudited)



		Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
	(Millions)
Net income (loss)		$	741	$	684	$	1,829	$	2,135
Other comprehensive income (loss):
Designated interest rate cash flow hedging activities:
Net unrealized gain (loss) from derivative instruments, net of taxes of $4 and $(1) in 2024 and $(12) and $(23) in 2023		(13)		36		2		72
Reclassifications into earnings of net derivative instruments (gain) loss, net of taxes of $— and $— in 2024 and $— and $— in 2023		—		(1)		(1)		(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 $— and $— in 2024 and $— and ($1) in 2023		—		1		(1)		2



Other comprehensive income (loss)		(13)		36		—		72
Comprehensive income (loss)		728		720		1,829		2,207
Less: Comprehensive income (loss) attributable to noncontrolling interests		35		30		90		94
Comprehensive income (loss) attributable to The Williams Companies, Inc.		$	693	$	690	$	1,739	$	2,113

See accompanying notes.

The Williams Companies, Inc.

Consolidated Balance Sheet

(Unaudited)



	September 30,		December 31,
	2024		2023
	(Millions, except per-share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	762	$	2,150
Trade accounts and other receivables (net of allowance of ($4) at September 30, 2024 and ($3) at December 31, 2023)	1,310		1,655
Inventories	275		274
Derivative assets	143		239
Other current assets and deferred charges	208		195
Total current assets	2,698		4,513

Investments	4,201		4,637
Property, plant, and equipment	56,479		51,842
Accumulated depreciation and amortization	(18,505)		(17,531)
Property, plant, and equipment – net	37,974		34,311
Intangible assets – net of accumulated amortization	7,305		7,593
Regulatory assets, deferred charges, and other	1,659		1,573
Total assets	$	53,837	$	52,627

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,137	$	1,379
Derivative liabilities	95		105
Accrued and other current liabilities	1,203		1,284
Commercial paper	—		725
Long-term debt due within one year	2,284		2,337
Total current liabilities	4,719		5,830

Long-term debt	24,825		23,376
Deferred income tax liabilities	4,312		3,846
Regulatory liabilities, deferred income, and other	5,116		4,684
Contingent liabilities and commitments (Note 9)

Equity:
Stockholders’ equity:
Preferred stock ($1 par value; 30 million shares authorized at September 30, 2024 and December 31, 2023; 35 thousand shares issued at September 30, 2024 and December 31, 2023)	35		35
Common stock ($1 par value; 1,470 million shares authorized at September 30, 2024 and December 31, 2023; 1,258 million shares issued at September 30, 2024 and 1,256 million shares issued at December 31, 2023)	1,258		1,256
Capital in excess of par value	24,611		24,578
Retained deficit	(12,296)		(12,287)
Accumulated other comprehensive income (loss)	—		—
Treasury stock, at cost (39 million shares at September 30, 2024 and December 31, 2023 of common stock)	(1,180)		(1,180)
Total stockholders’ equity	12,428		12,402
Noncontrolling interests in consolidated subsidiaries	2,437		2,489
Total equity	14,865		14,891
Total liabilities and equity	$	53,837	$	52,627

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 at June 30, 2024	$	35	$	1,258	$	24,589	$	(12,419)	$	13	$	(1,180)	$	12,296	$	2,450	$	14,746

Net income (loss)	—		—		—		706		—		—		706		35		741
Other comprehensive income (loss)	—		—		—		—		(13)		—		(13)		—		(13)



Cash dividends – common stock ($0.4750 per share)	—		—		—		(579)		—		—		(579)		—		(579)

Stock-based compensation and related common stock issuances, net of tax	—		—		22		—		—		—		22		—		22


Dividends and distributions to noncontrolling interests	—		—		—		—		—		—		—		(48)		(48)


Other	—		—		—		(4)		—		—		(4)		—		(4)
Net increase (decrease) in equity	—		—		22		123		(13)		—		132		(13)		119
Balance at September 30, 2024	$	35	$	1,258	$	24,611	$	(12,296)	$	—	$	(1,180)	$	12,428	$	2,437	$	14,865

Balance at June 30, 2023	$	35	$	1,256	$	24,538	$	(12,982)	$	12	$	(1,180)	$	11,679	$	2,530	$	14,209
Net income (loss)	—		—		—		654		—		—		654		30		684
Other comprehensive income (loss)	—		—		—		—		36		—		36		—		36
Cash dividends – common stock ($0.4475 per share)	—		—		—		(544)		—		—		(544)		—		(544)

Stock-based compensation and related common stock issuances, net of tax	—		—		23		—		—		—		23		—		23

Dividends and distributions to noncontrolling interests	—		—		—		—		—		—		—		(62)		(62)


Other	—		—		1		(4)		—		—		(3)		—		(3)
Net increase (decrease) in equity	—		—		24		106		36		—		166		(32)		134
Balance at September 30, 2023	$	35	$	1,256	$	24,562	$	(12,876)	$	48	$	(1,180)	$	11,845	$	2,498	$	14,343

*Accumulated Other Comprehensive Income (Loss)

See accompanying notes.

The Williams Companies, Inc.

Consolidated Statement of Changes in Equity (Continued)

(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 at December 31, 2023	$	35	$	1,256	$	24,578	$	(12,287)	$	—	$	(1,180)	$	12,402	$	2,489	$	14,891

Net income (loss)	—		—		—		1,739		—		—		1,739		90		1,829




Cash dividends – common stock ($1.4250 per share)	—		—		—		(1,737)		—		—		(1,737)		—		(1,737)

Stock-based compensation and related common stock issuances, net of tax	—		2		33		—		—		—		35		—		35


Dividends and distributions to noncontrolling interests	—		—		—		—		—		—		—		(178)		(178)
Contributions from noncontrolling interests	—		—		—		—		—		—		—		36		36

Other	—		—		—		(11)		—		—		(11)		—		(11)
Net increase (decrease) in equity	—		2		33		(9)		—		—		26		(52)		(26)
Balance at September 30, 2024	$	35	$	1,258	$	24,611	$	(12,296)	$	—	$	(1,180)	$	12,428	$	2,437	$	14,865

Balance at December 31, 2022	$	35	$	1,253	$	24,542	$	(13,271)	$	(24)	$	(1,050)	$	11,485	$	2,560	$	14,045
Net income (loss)	—		—		—		2,041		—		—		2,041		94		2,135
Other comprehensive income (loss)	—		—		—		—		72		—		72		—		72
Cash dividends – common stock ($1.3425 per share)	—		—		—		(1,635)		—		—		(1,635)		—		(1,635)

Stock-based compensation and related common stock issuances, net of tax	—		3		19		—		—		—		22		—		22

Dividends and distributions to noncontrolling interests	—		—		—		—		—		—		—		(174)		(174)
Contributions from noncontrolling interests	—		—		—		—		—		—		—		18		18
Purchases of treasury stock	—		—		—		—		—		(130)		(130)		—		(130)
Other	—		—		1		(11)		—		—		(10)		—		(10)
Net increase (decrease) in equity	—		3		20		395		72		(130)		360		(62)		298
Balance at September 30, 2023	$	35	$	1,256	$	24,562	$	(12,876)	$	48	$	(1,180)	$	11,845	$	2,498	$	14,343

*Accumulated Other Comprehensive Income (Loss)

See accompanying notes.

The Williams Companies, Inc.

Consolidated Statement of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
	2024		2023
	(Millions)
OPERATING ACTIVITIES:
Net income (loss)	$	1,829	$	2,135
Adjustments to reconcile to net cash provided (used) by operating activities:
Depreciation and amortization	1,654		1,542
Provision (benefit) for deferred income taxes	467		586
Equity (earnings) losses	(431)		(434)
Distributions from equity-method investees	580		607



Net unrealized (gain) loss from commodity derivative instruments	210		(433)
Gain on sale of business (Note 3)	—		(130)
Gain on disposition of equity-method investments (Note 3)	(149)		—
Gain on consolidation of equity-method investments (Note 3)	(127)		—
Inventory write-downs	8		28
Amortization of stock-based awards	69		59
Cash provided (used) by changes in current assets and liabilities:
Accounts receivable	367		1,295
Inventories	(6)		29
Other current assets and deferred charges	(16)		(5)
Accounts payable	(317)		(1,072)
Accrued and other current liabilities	(108)		(114)
Changes in current and noncurrent commodity derivative assets and liabilities	(74)		172
Other, including changes in noncurrent assets and liabilities	(200)		(140)
Net cash provided (used) by operating activities	3,756		4,125
FINANCING ACTIVITIES:
Proceeds from (payments of) commercial paper – net	(723)		(352)
Proceeds from long-term debt	3,594		2,754
Payments of long-term debt	(2,286)		(21)
Payments for debt issuance costs	(31)		(21)
Proceeds from issuance of common stock	8		8
Purchases of treasury stock	—		(130)
Common dividends paid	(1,737)		(1,635)
Dividends and distributions paid to noncontrolling interests	(178)		(174)
Contributions from noncontrolling interests	36		18
Other – net	(34)		(19)
Net cash provided (used) by financing activities	(1,351)		428
INVESTING ACTIVITIES:
Property, plant, and equipment:
Capital expenditures (1)	(1,805)		(1,845)
Dispositions – net	(73)		(33)

Proceeds from sale of business (Note 3)	—		348
Purchases of businesses, net of cash acquired (Note 3)	(1,995)		(1,024)
Proceeds from dispositions of equity-method investments (Note 3)	161		—
Purchases of and contributions to equity-method investments	(101)		(80)
Other – net	20		3
Net cash provided (used) by investing activities	(3,793)		(2,631)
Increase (decrease) in cash and cash equivalents	(1,388)		1,922
Cash and cash equivalents at beginning of year	2,150		152
Cash and cash equivalents at end of period	$	762	$	2,074
_________
(1) Increases to property, plant, and equipment	$	(1,840)	$	(1,960)
Changes in related accounts payable and accrued liabilities	35		115
Capital expenditures	$	(1,805)	$	(1,845)

See accompanying notes.


The Williams Companies, Inc.
Notes to Consolidated Financial Statements

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, 2023, 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.

Share Repurchase Program

In September 2021, our Board of Directors authorized a share repurchase program with a maximum dollar limit of $1.5 billion. Repurchases may be made from time to time in the open market, by block purchases, in privately negotiated transactions, or in such other manner as determined by our management. Our management will also determine the timing and amount of any repurchases based on market conditions and other factors. The share repurchase program does not obligate us to acquire any particular amount of common stock, and it may be suspended or discontinued at any time. This share repurchase program does not have an expiration date. During the nine months ended September 30, 2024 and 2023, there have been $0 and $130 million in repurchases under the program which are included in our Consolidated Statement of Changes in Equity. Cumulative repurchases to date under the program total $139 million.

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 and are presented within the following reportable segments: 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 and corporate activities, are included in Other.

Transmission & Gulf of Mexico is comprised of our interstate natural gas pipelines, Transcontinental Gas Pipe Line Company, LLC (Transco), Northwest Pipeline LLC (Northwest Pipeline), and MountainWest Pipelines Holding Company (MountainWest), and their related natural gas storage facilities, 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), a 50 percent equity-method investment in Gulfstream Natural Gas System, L.L.C. (Gulfstream), and Discovery Producer Services LLC (Discovery), a former 60 percent equity-method investment in which we acquired the remaining ownership interest in August 2024 (see Note 3 – Acquisitions and Divestitures). Transmission & Gulf of Mexico also includes natural gas storage facilities and pipelines providing services in north Texas, and also in Louisiana and Mississippi related to the January 2024 Gulf Coast Storage Acquisition (see Note 3 – Acquisitions and Divestitures).

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

Notes (Continued)

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 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 east Texas and northwest Louisiana, the Mid-Continent region which includes the Anadarko and Permian basins, and the Denver-Julesberg Basin (DJ Basin) of Colorado which includes Rocky Mountain Midstream Holdings LLC (RMM), a former 50 percent equity-method investment in which we acquired the remaining ownership interest in November 2023 (see Note 3 – Acquisitions and Divestitures**)**. This segment also includes our NGL storage facilities, an undivided 50 percent interest in an NGL fractionator near Conway, Kansas, and a 50 percent equity-method investment in Overland Pass Pipeline Company LLC (OPPL).

Gas & NGL Marketing Services is comprised of our natural gas liquid (NGL) and natural gas marketing and trading operations, which includes risk management and transactions related to the storage and transportation of natural gas and NGLs on strategically positioned assets.

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.

Discontinued operations

During the second quarter of 2023, we recorded pre-tax charges of $115 million to Income (loss) from discontinued operations in our Consolidated Statement of Income related to litigation associated with our former Alaska refinery. An additional $1 million of pre-tax interest expense was recorded in the third quarter of 2023. This matter was settled in January 2024. Except for this item and unless indicated otherwise, the information in the Notes to Consolidated Financial Statements relates to our continuing operations.

Accounting Standards Issued But Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of significant segment expenses and expanded interim disclosures. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. We do not expect adoption of ASU 2023-07 will have a material impact on our financial

statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures, which requires disclosure of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold. This ASU is effective for fiscal years beginning after December 15, 2024,

Notes (Continued)

and early adoption is permitted. We do not expect adoption of ASU 2023-09 will have a material impact on our financial statements.

Note 2 – Variable Interest Entities

Consolidated VIEs

As of September 30, 2024, 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.

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 order to meet contractual gas gathering commitments, we may fund more than our proportional share of future expansion activity, which could ultimately impact relative ownership.

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



	September 30,		December 31,
	2024		2023
	(Millions)
Assets (liabilities):
Cash and cash equivalents	$	35	$	33
Trade accounts and other receivables – net	184		215
Inventories	5		5
Other current assets and deferred charges	5		4
Property, plant, and equipment – net	4,934		5,046
Intangible assets – net of accumulated amortization	1,968		2,049
Regulatory assets, deferred charges, and other	27		31
Accounts payable	(54)		(109)
Accrued and other current liabilities	(26)		(28)

Regulatory liabilities, deferred income, and other	(262)		(268)

Notes (Continued)

Nonconsolidated VIEs

We own certain equity-method investments that are VIEs due primarily to our limited participating rights as a minority equity holder. Our maximum exposure to loss is limited to the carrying value of these investments, which totaled $74 million at September 30, 2024.

Note 3 – Acquisitions and Divestitures

Discovery Acquisition

As of December 31, 2023, we owned a 60 percent interest in Discovery, which we accounted for as an equity-method investment. On August 1, 2024, we closed on the acquisition of the remaining 40 percent interest in Discovery, along with certain other assets, for $170 million cash, subject to working capital and post-closing adjustments (Discovery Acquisition). As a result of acquiring this additional interest, we obtained control and now consolidate Discovery. The purpose of this acquisition was to expand our gathering, processing, and transportation presence in the Gulf of Mexico region. Assets acquired, acquisition-related costs incurred, and results of operations realized are included within our Transmission & Gulf of Mexico segment.

During the period from the acquisition date of August 1, 2024 to September 30, 2024, the operations acquired in the Discovery Acquisition contributed Revenues of $46 million and Modified EBITDA (as defined in Note 10 – Segment Disclosures) of $10 million.

We accounted for the Discovery Acquisition 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 book value of our existing equity-method investment prior to the acquisition date of August 1, 2024, was $381 million. We recognized a $127 million gain on remeasuring our existing equity-method investment to fair value included in Other investing income (loss) – net in our Consolidated Statement of Income for the three and nine months ended September 30, 2024, which is not included in the pro forma Discovery adjustments below. We utilized the income approach to fair value our previous equity-method investment in Discovery.

The following table presents the preliminary allocation of the acquisition date fair value of the major classes of the assets acquired and liabilities assumed at August 1, 2024. The allocation is considered preliminary because the valuation work has not been completed due to the ongoing review of the valuation results and validation of significant inputs and assumptions. Preliminary fair value measurements were made for certain acquired assets and liabilities, primarily property, plant, and equipment, which utilized the cost approach; however, adjustments to those measurements may be made in subsequent periods, up to one year from the acquisition date, as new information related to facts and circumstances as of the acquisition date may be identified.


	(Millions)
Cash and cash equivalents	$	22
Other current assets	19
Property, plant, and equipment – net	941
Other noncurrent assets	39
Total assets acquired	$	1,021

Current liabilities	$	(40)
Noncurrent liabilities	(296)
Total liabilities assumed	$	(336)

Net assets acquired	$	685

Notes (Continued)

Gulf Coast Storage Acquisition

On January 3, 2024, we closed on the acquisition of 100 percent of a strategic portfolio of natural gas storage facilities and pipelines, located in Louisiana and Mississippi, from Hartree Partners LP (Gulf Coast Storage Acquisition) for $1.95 billion. The purpose of this acquisition was to expand our natural gas storage footprint in the Gulf Coast region. Assets acquired, acquisition-related costs incurred, and results of operations realized are included within our Transmission & Gulf of Mexico segment. The Gulf Coast Storage Acquisition was funded with cash on hand and $100 million of deferred consideration that does not accrue interest and is payable one year from the acquisition date. The obligation is presented within Long-term debt due within one year in our Consolidated Balance Sheet owed by our wholly owned subsidiary Williams Field Services Group, LLC.

During the period from the acquisition date of January 3, 2024 to September 30, 2024, the operations acquired in the Gulf Coast Storage Acquisition contributed Revenues of $171 million and Modified EBITDA of $123 million, which is impacted by acquisition-related costs. Acquisition-related costs for the Gulf Coast Storage Acquisition total $14 million, including $13 million incurred in the nine months ended September 30, 2024 included in Selling, general, and administrative expenses in our Consolidated Statement of Income.

We accounted for the Gulf Coast Storage Acquisition as a business combination. The valuation technique used consisted of the cost approach for property, plant, and equipment.

The following table presents the preliminary allocation of the acquisition date fair value of the major classes of the assets acquired and liabilities assumed at January 3, 2024. The allocation is considered preliminary because the valuation work has not been completed due to the ongoing review of the valuation results and validation of significant inputs and assumptions. Preliminary fair value measurements were made for certain acquired assets and liabilities, primarily property, plant, and equipment; however, adjustments to those measurements may be made in subsequent periods, up to one year from the acquisition date, as new information related to facts and circumstances as of the acquisition date may be identified.


	(Millions)
Cash and cash equivalents	$	46
Other current assets	18
Property, plant, and equipment – net	2,035
Other noncurrent assets	2
Total assets acquired	$	2,101

Current liabilities	$	(11)
Noncurrent liabilities	(107)
Total liabilities assumed	$	(118)

Net assets acquired	$	1,983

DJ Basin Acquisitions

Cureton Acquisition

On November 30, 2023, we closed on the acquisition of 100 percent of Cureton Front Range, LLC (Cureton Acquisition), whose operations are located in the DJ Basin, for $546 million, subject to working capital and post-closing adjustments. The purpose of this acquisition was to expand our gathering and processing footprint and create operational synergies for our operations in the DJ Basin. Assets acquired, acquisition-related costs incurred, and results of operations realized are included within our West segment. The Cureton Acquisition was funded with cash on hand.

Notes (Continued)

During the period from the acquisition date of November 30, 2023 to December 31, 2023, the operations acquired in the Cureton Acquisition contributed Revenues of $35 million and Modified EBITDA of $7 million.

Acquisition-related costs for the Cureton Acquisition total $7 million, including $1 million incurred in the nine months ended September 30, 2024, included in Selling, general, and administrative expenses in our Consolidated Statement of Income.

We accounted for the Cureton Acquisition as a business combination. The valuation techniques used consisted of the cost approach for property, plant, and equipment and the income approach for valuation of other intangible assets.

The following table presents the preliminary allocation of the acquisition date fair value of the major classes of the assets acquired and liabilities assumed at November 30, 2023. The allocation is considered preliminary because the valuation work has not been completed due to the ongoing review of the valuation results and validation of significant inputs and assumptions. Preliminary fair value measurements were made for certain acquired assets and liabilities, primarily property, plant, and equipment and other intangible assets; however, adjustments to those measurements may be made in subsequent periods, up to one year from the acquisition date, as new information related to facts and circumstances as of the acquisition date may be identified.


	(Millions)
Cash and cash equivalents	$	6
Other current assets	21
Property, plant, and equipment – net	435
Intangible assets – net of accumulated amortization	117
Other noncurrent assets	1
Total identifiable assets acquired	$	580

Current liabilities	$	(29)
Noncurrent liabilities	(14)
Total liabilities assumed	$	(43)

Net identifiable assets acquired	$	537

Goodwill included in Intangible assets – net of accumulated amortization	9
Net assets acquired	$	546

Other intangible assets recognized in the Cureton Acquisition are related to contractual customer relationships from gas gathering and processing agreements with our customers. The basis for determining the value of these intangible assets is estimated future net cash flows to be derived from acquired contractual customer relationships discounted using a risk-adjusted discount rate. These intangible assets are being amortized on a straight-line basis over an initial period of 20 years which represents the term over which the contractual customer relationships are expected to contribute to our cash flows. Approximately 24 percent of the expected future revenues from these contractual customer relationships are impacted by our ability and intent to renew or renegotiate existing customer contracts. We expense costs incurred to renew or extend the terms of our gas gathering contracts with customers. Based on the estimated future revenues during the current contract periods (as estimated at the time of the acquisition), the weighted-average period prior to the next renewal or extension of the existing contractual customer relationships is approximately 10 years.

RMM Acquisition

As of December 31, 2022, we owned a 50 percent interest in RMM which we accounted for as an equity-method investment. On November 30, 2023, we closed on the acquisition of the remaining 50 percent interest in RMM (RMM Acquisition) for $704 million. As a result of acquiring this additional interest, we obtained control and

Notes (Continued)

now consolidate RMM. The purpose of this acquisition was to expand our gathering and processing footprint and create operational synergies for our operations in the DJ Basin. Assets acquired and results of operations realized are included within our West segment. Substantially all of the RMM purchase price was not due to the seller until the first quarter of 2025, would not accrue interest until November 2, 2024, and could be repaid early without penalty. It was recorded as a deferred consideration obligation at fair value using an income approach, which resulted in a discount to the contractual amount due which was imputed as interest expense over the term of the obligation. The obligation is presented within Long-term debt due within one year in our Consolidated Balance Sheet as of September 30, 2024, owed by our wholly owned subsidiary Williams Rocky Mountain Midstream Holdings LLC. On November 1, 2024, we paid the remaining $651 million of the RMM purchase price obligation.

During the period from the acquisition date of November 30, 2023 to December 31, 2023, RMM contributed Revenues of $53 million and Modified EBITDA of $12 million.

We accounted for the RMM Acquisition as a business combination. The book value of our existing equity-method investment prior to the acquisition date of November 30, 2023, was $406 million. We recognized a $30 million gain on remeasuring our existing equity-method investment to fair value included in Other investing income (loss) – net in our Consolidated Statement of Income during 2023, which is not included in the pro forma DJ Basin adjustments below. The valuation techniques used consisted of the income approach for our previous equity-method investment in RMM and the valuation of other intangible assets, and the cost approach for property, plant, and equipment.

The following table presents the preliminary allocation of the acquisition date fair value of the major classes of the assets acquired and liabilities assumed at November 30, 2023. The net assets acquired primarily reflect the noncash consideration transferred, which includes the fair value of both our previous equity-method investment and the deferred consideration obligation. The allocation is considered preliminary because the valuation work has not been completed due to the ongoing review of the valuation results and validation of significant inputs and assumptions. Preliminary fair value measurements were made for certain acquired assets and liabilities, primarily property, plant, and equipment and other intangible assets; however, adjustments to those measurements may be made in subsequent periods, up to one year from the acquisition date, as new information related to facts and circumstances as of the acquisition date may be identified.


	(Millions)
Cash and cash equivalents	$	28
Other current assets	4
Investments	20
Property, plant, and equipment – net	1,041
Intangible assets – net of accumulated amortization	63
Other noncurrent assets	12
Total identifiable assets acquired	$	1,168

Current liabilities	$	(44)
Noncurrent liabilities	(103)
Total liabilities assumed	$	(147)

Net identifiable assets acquired	$	1,021

Goodwill included in Intangible assets – net of accumulated amortization	55
Net assets acquired	$	1,076

Goodwill recognized in the RMM Acquisition relates primarily to enhancing and diversifying our basin positions as well as delivering operational synergies, including increasing volumes on our existing processing facilities and increasing revenues on our NGL transportation, fractionation, and storage assets, and is reported within

Notes (Continued)

our West segment. Substantially all of the goodwill is deductible for tax purposes. Goodwill is included within Intangible assets – net of accumulated amortization in our Consolidated Balance Sheet and represents the excess of the consideration, plus the fair value of any noncontrolling interest or any previously held equity interest, over the fair value of the net assets acquired. It is not subject to amortization but is evaluated annually as of October 1 for impairment or more frequently if impairment indicators are present that would indicate it is more likely than not that the fair value of the reporting unit is less than its carrying amount. As part of the evaluation, we compare our estimate of the fair value of the reporting unit with its carrying value, including goodwill. If the carrying value of the reporting unit exceeds its fair value, an impairment charge is recorded for the difference (not to exceed the carrying value of goodwill). Judgments and assumptions are inherent in our management’s estimates of fair value.

Other intangible assets recognized in the RMM Acquisition are related to contractual customer relationships from gas gathering and processing agreements with our customers. The basis for determining the value of these intangible assets is estimated future net cash flows to be derived from acquired contractual customer relationships discounted using a risk-adjusted discount rate. These intangible assets are being amortized on a straight-line basis over an initial period of 20 years which represents the term over which the contractual customer relationships are expected to contribute to our cash flows. Approximately 18 percent of the expected future revenues from these contractual customer relationships are impacted by our ability and intent to renew or renegotiate existing customer contracts. We expense costs incurred to renew or extend the terms of our gas gathering contracts with customers. Based on the estimated future revenues during the current contract periods (as estimated at the time of the acquisition), the weighted-average period prior to the next renewal or extension of the existing contractual customer relationships is approximately 10 years.

MountainWest Acquisition

On February 14, 2023, we closed on the acquisition of 100 percent of MountainWest, which includes Federal Energy Regulatory Commission (FERC)-regulated interstate natural gas pipeline systems and natural gas storage capacity (MountainWest Acquisition), for $1.08 billion of cash, funded with available sources of short-term liquidity, and retaining $430 million outstanding principal amount of MountainWest long-term debt. For 2023, $1.024 billion is presented in Purchases of businesses, net of cash acquired in our Consolidated Statement of Cash Flows reflecting the cash purchase price, reduced for post-closing adjustments and the cash acquired as presented in the purchase price allocation. The purpose of the MountainWest Acquisition was to expand our existing transmission and storage infrastructure footprint into major markets in Utah, Wyoming, and Colorado. Assets acquired, acquisition-related costs incurred, and results of operations realized are included within our Transmission & Gulf of Mexico segment.

During the period from the acquisition date of February 14, 2023 to December 31, 2023, the operations acquired in the MountainWest Acquisition contributed Revenues of $225 million and Modified EBITDA of $122 million, which includes $27 million of transition-related costs.

Acquisition-related costs for the MountainWest Acquisition total $17 million, including $15 million incurred in the nine months ended September 30, 2023, included in Selling, general, and administrative expenses in our Consolidated Statement of Income.

We accounted for the MountainWest Acquisition as a business combination. The valuation techniques used consisted of the cost approach for nonregulated property, plant, and equipment, as well as the market approach for the assumed long-term debt consistent with the valuation technique discussed in Note 7 – Fair Value Measurements and Guarantees. MountainWest’s regulated operations are accounted for pursuant to Accounting Standards Codification Topic 980, “Regulated Operations.” The fair value of assets and liabilities subject to rate making and cost recovery provisions were determined utilizing the income approach. MountainWest’s expected return on rate base is consistent with expected returns of similarly situated assets, resulting in carryover basis of these assets and liabilities equaling their fair value.

Notes (Continued)

The following table presents the allocation of the acquisition date fair value of the major classes of the assets acquired and liabilities assumed at February 14, 2023. The fair value of accounts receivable acquired equals contractual amounts receivable.


	(Millions)
Cash and cash equivalents	$	23
Trade accounts and other receivables	33
Other current assets	26
Investments	20
Property, plant, and equipment – net	1,019
Other noncurrent assets	33
Total identifiable assets acquired	$	1,154

Current liabilities	$	(47)
Long-term debt	(365)
Other noncurrent liabilities	(95)
Total liabilities assumed	$	(507)

Net identifiable assets acquired	$	647

Goodwill included in Intangible assets – net of accumulated amortization	400
Net assets acquired	$	1,047

Goodwill recognized in the MountainWest Acquisition relates primarily to enhancing and diversifying our basin positions and the long-term value associated with rate regulated businesses and is reported within our Transmission & Gulf of Mexico segment. Substantially all of the goodwill is deductible for tax purposes.

Supplemental Pro Forma

The following pro forma Revenues and Net income (loss) attributable to The Williams Companies, Inc. for the three and nine months ended September 30, 2024 and 2023, are presented as if the Discovery Acquisition and Gulf Coast Storage Acquisition had been completed on January 1, 2023, and the DJ Basin Acquisitions and MountainWest Acquisition had been completed on January 1, 2022. These pro forma amounts are not necessarily indicative of what the actual results would have been if the acquisitions had in fact occurred on the dates 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 transactions or the potential costs to achieve these cost savings, operating synergies, and revenue enhancements.

Notes (Continued)


	Three Months Ended September 30, 2024
	As Reported		Pro Forma Discovery (1)								Pro Forma Combined
	(Millions)
Revenues	$	2,653	$	9							$	2,662
Net income (loss) attributable to The Williams Companies, Inc.	706		(1)								705

	Three Months Ended September 30, 2023
	As Reported		Pro Forma Discovery		Pro Forma Gulf Coast Storage		Pro Forma DJ Basin				Pro Forma Combined
	(Millions)
Revenues	$	2,559	$	31	$	51	$	78			$	2,719
Net income (loss) attributable to The Williams Companies, Inc.	654		1		12		5				672

	Nine Months Ended September 30, 2024
	As Reported		Pro Forma Discovery (1)								Pro Forma Combined
	(Millions)
Revenues	$	7,760	$	58							$	7,818
Net income (loss) attributable to The Williams Companies, Inc.	1,739		(5)								1,734

	Nine Months Ended September 30, 2023
	As Reported		Pro Forma Discovery		Pro Forma Gulf Coast Storage		Pro Forma DJ Basin		Pro Forma MountainWest (1)		Pro Forma Combined
	(Millions)
Revenues	$	8,123	$	96	$	145	$	219	$	35	$	8,618
Net income (loss) attributable to The Williams Companies, Inc.	2,041		—		47		13		6		2,107

(1)Excludes results from operations acquired in the acquisition for the period beginning on the acquisition date, as these results are included in the amounts as reported.

Sale of Aux Sable Interest

On August 1, 2024, we completed the sale of our equity-method investments in Aux Sable Liquid Products Inc., Aux Sable Liquid Products LP, and Aux Sable Midstream LLC (collectively, “Aux Sable”) in our Northeast G&P segment for total consideration of $161 million. As a result of this sale, we recorded a gain of $149 million in the third quarter of 2024. The gain is reflected in Other investing income (loss) – net in our Consolidated Statement of Income.

Sale of Certain Gulf Coast Liquids Pipelines

On September 29, 2023, we completed the sale of various petrochemical and feedstock pipelines and associated contracts in the Gulf Coast region for $348 million. As a result of this sale, we recorded a gain of $130 million primarily in the third quarter of 2023 in our Transmission & Gulf of Mexico segment. The gain is reflected in Gain on sale of business in our Consolidated Statement of Income. The results of operations for this disposal group, excluding the gain noted, were not significant for the reporting periods.

Notes (Continued)

Note 4 – Revenue Recognition

Revenue by Category

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


	Regulated Interstate Transportation & Storage		Gulf of Mexico Midstream & Storage		Northeast Midstream		West Midstream		Gas & NGL Marketing Services		Other		Eliminations		Total
	(Millions)
Three Months Ended September 30, 2024
Revenues from contracts with customers:
Service revenues:
Regulated interstate natural gas transportation and storage	$	879	$	—	$	—	$	—	$	—	$	—	$	(20)	$	859
Gathering, processing, transportation, fractionation, and storage:
Monetary consideration	—		177		442		422		—		—		(42)		999
Commodity consideration	—		14		1		19		—		—		—		34
Other	3		5		22		4		—		—		(3)		31
Total service revenues	882		196		465		445		—		—		(65)		1,923
Product sales	28		58		26		218		1,005		95		(318)		1,112
Total revenues from contracts with customers	910		254		491		663		1,005		95		(383)		3,035
Other revenues (1)	6		2		11		—		515		8		(1)		541
Other adjustments (2)	—		—		—		—		(1,038)		—		115		(923)
Total revenues	$	916	$	256	$	502	$	663	$	482	$	103	$	(269)	$	2,653

Three Months Ended September 30, 2023
Revenues from contracts with customers:
Service revenues:
Regulated interstate natural gas transportation and storage	$	841	$	—	$	—	$	—	$	—	$	—	$	(18)	$	823
Gathering, processing, transportation, fractionation, and storage:
Monetary consideration	—		121		450		368		—		—		(41)		898
Commodity consideration	—		11		—		34		—		—		—		45
Other	5		2		22		2		—		—		(3)		28
Total service revenues	846		134		472		404		—		—		(62)		1,794
Product sales	35		31		27		112		1,189		117		(244)		1,267
Total revenues from contracts with customers	881		165		499		516		1,189		117		(306)		3,061
Other revenues (1)	5		4		6		17		697		13		(2)		740
Other adjustments (2)	—		—		—		—		(1,328)		—		86		(1,242)
Total revenues	$	886	$	169	$	505	$	533	$	558	$	130	$	(222)	$	2,559

Notes (Continued)


	Regulated Interstate Transportation & Storage		Gulf of Mexico Midstream & Storage		Northeast Midstream		West Midstream		Gas & NGL Marketing Services		Other		Eliminations		Total
	(Millions)
Nine Months Ended September 30, 2024
Revenues from contracts with customers:
Service revenues:
Regulated interstate natural gas transportation and storage	$	2,605	$	—	$	—	$	—	$	—	$	—	$	(61)	$	2,544
Gathering, processing, transportation, fractionation, and storage:
Monetary consideration	—		480		1,317		1,253		—		—		(117)		2,933
Commodity consideration	—		28		1		53		—		—		—		82
Other	12		20		69		15		—		—		(12)		104
Total service revenues	2,617		528		1,387		1,321		—		—		(190)		5,663
Product sales	75		114		74		657		3,233		289		(884)		3,558
Total revenues from contracts with customers	2,692		642		1,461		1,978		3,233		289		(1,074)		9,221
Other revenues (1)	19		8		33		7		1,685		22		(2)		1,772
Other adjustments (2)	—		—		—		—		(3,575)		—		342		(3,233)
Total revenues	$	2,711	$	650	$	1,494	$	1,985	$	1,343	$	311	$	(734)	$	7,760

Nine Months Ended September 30, 2023
Revenues from contracts with customers:
Service revenues:
Regulated interstate natural gas transportation and storage	$	2,480	$	—	$	—	$	—	$	—	$	—	$	(41)	$	2,439
Gathering, processing, transportation, fractionation, and storage:
Monetary consideration	—		334		1,334		1,070		—		—		(130)		2,608
Commodity consideration	—		29		3		76		—		—		—		108
Other	14		10		67		8		1		—		(11)		89
Total service revenues	2,494		373		1,404		1,154		1		—		(182)		5,244
Product sales	114		91		104		287		3,519		302		(686)		3,731
Total revenues from contracts with customers	2,608		464		1,508		1,441		3,520		302		(868)		8,975
Other revenues (1)	26		11		20		95		3,240		36		(2)		3,426
Other adjustments (2)	—		—		—		—		(4,566)		—		288		(4,278)
Total revenues	$	2,634	$	475	$	1,528	$	1,536	$	2,194	$	338	$	(582)	$	8,123

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

(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 or engage in energy trading activities, the resulting revenues are presented net of the related costs of those activities in our Consolidated Statement of Income.

Notes (Continued)

Contract Assets

The following table presents a reconciliation of our contract assets:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(Millions)
Balance at beginning of period	$	67	$	56	$	36	$	29
Revenue recognized in excess of amounts invoiced	44		45		125		133
Minimum volume commitments invoiced	(23)		(28)		(73)		(89)
Contract assets acquired	36		—		$	36	—
Balance at end of period	$	124	$	73	$	124	$	73

Contract Liabilities

The following table presents a reconciliation of our contract liabilities:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(Millions)
Balance at beginning of period	$	1,064	$	1,039	$	1,081	$	1,043
Payments received and deferred	33		40		150		164
Significant financing component	2		3		6		7
Contract liability acquired (disposed) – net	53		(2)		53		3
Recognized in revenue	(66)		(68)		(204)		(205)
Balance at end of period	$	1,086	$	1,012	$	1,086	$	1,012

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 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 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 September 30, 2024, 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 September 30, 2024, that will be recognized in future periods is also excluded from our remaining performance obligations and is instead reflected in contract liabilities.

Notes (Continued)

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 September 30, 2024.


	Contract Liabilities		Remaining Performance Obligations
	(Millions)
2024 (three months)	$	55	$	1,052
2025 (one year)	171		4,069
2026 (one year)	142		3,819
2027 (one year)	131		3,438
2028 (one year)	115		2,716
Thereafter	472		15,980
Total	$	1,086	$	31,074

Accounts Receivable

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


	September 30, 2024		December 31, 2023
	(Millions)
Accounts receivable related to revenues from contracts with customers	$	1,096	$	1,292
Receivables from derivatives	155		311
Other accounts receivable	59		52
Trade accounts and other receivables	$	1,310	$	1,655

Note 5 – Provision (Benefit) for Income Taxes

The Provision (benefit) for income taxes from continuing operations includes:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(Millions)
Current:
Federal	$	11	$	10	$	65	$	10
State	7		7		17		11

	18		17		82		21
Deferred:
Federal	178		169		395		555
State	31		(10)		72		59

	209		159		467		614
Provision (benefit) for income taxes	$	227	$	176	$	549	$	635

The effective income tax rates for the total provision (benefit) for the three and nine months ended September 30, 2024 are greater than the federal statutory rate, primarily due to the effect of state income taxes.

The effective income tax rate for the total provision (benefit) for the three months ended September 30, 2023 is less than the federal statutory rate, primarily due to a decrease in our estimate of the deferred state income tax rate.

The effective income tax rate for the total provision (benefit) for the nine months ended September 30, 2023 is greater than the federal statutory rate, primarily due to the effect of state income taxes.

Notes (Continued)

Note 6 – Debt and Banking Arrangements

Issuances

Our senior unsecured public debt issuances for 2024 are as follows:


Issue Date	Maturity Date	Amount		Rate
		(Millions)
January 5, 2024	March 15, 2029	$	1,100	4.900%
January 5, 2024	March 15, 2034	1,000		5.150%
August 13, 2024	November 15, 2029	450		4.800%
August 13, 2024	March 15, 2034	300		5.150%
August 13, 2024	November 15, 2054	750		5.800%

Retirements

Our senior unsecured public debt retirements for 2024 are as follows:


Date of Retirement	Maturity Date	Amount		Rate
		(Millions)
March 4, 2024	March 4, 2024	$	1,000	4.300%
June 24, 2024	June 24, 2024	1,250		4.550%

Credit Facility


	September 30, 2024
	Stated Capacity		Outstanding
	(Millions)
Long-term credit facility (1)	$	3,750	$	—
Letters of credit under certain bilateral bank agreements			12

(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.

Commercial Paper Program

At September 30, 2024, no commercial paper was outstanding under our $3.5 billion commercial paper program.

Notes (Continued)

Note 7 – 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, accounts payable, and commercial paper 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 September 30, 2024:
Measured on a recurring basis:
ARO Trust investments	$	295	$	295	$	295	$	—	$	—
Commodity derivative assets (1)	132		132		21		62		49
Commodity derivative liabilities (1)	(319)		(319)		—		(317)		(2)


Additional disclosures:


Long-term debt, including current portion	(27,109)		(27,248)		—		(27,248)		—
Guarantees	(36)		(28)		—		(12)		(16)

Assets (liabilities) at December 31, 2023:
Measured on a recurring basis:
ARO Trust investments	$	269	$	269	$	269	$	—	$	—
Commodity derivative assets (2)	310		310		141		112		57
Commodity derivative liabilities (2)	(285)		(285)		(3)		(278)		(4)
Interest rate derivatives	6		6		—		6		—
Additional disclosures:

Long-term debt, including current portion	(25,713)		(25,553)		—		(25,553)		—
Guarantees	(37)		(28)		—		(12)		(16)

(1)Commodity derivative assets and liabilities exclude $76 million of net cash collateral in Level 1.

(2)Commodity derivative assets and liabilities exclude $2 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.

Notes (Continued)

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. 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. The fair value amounts are reported 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 Derivative assets and Regulatory assets, deferred charges, and other in our Consolidated Balance Sheet**.** Commodity derivative liabilities are reported in Derivative liabilities and Regulatory liabilities, deferred income, and other in our Consolidated Balance Sheet. Changes in the fair value of our derivative assets and liabilities are recorded in Net gain (loss) from commodity derivatives and Net processing commodity expenses in our Consolidated Statement of Income. See Note 8 – Commodity Derivatives for additional information on our derivatives.

Interest rate derivatives: At December 31, 2023, we held forward starting interest rate swap agreements with notional amounts totaling $1.15 billion. During the nine months ended September 30, 2024. we entered into additional agreements totaling $650 million of notional value and terminated agreements totaling $1.75 billion of notional value coinciding with issuances of long-term debt (see Note 6 – Debt and Banking Arrangements). At September 30, 2024, we hold interest rate swap agreements with notional amounts totaling $50 million. The fair value of these derivatives is determined using discounted cash flows considering forward interest rates and the terms of the agreements, corroborated by counterparty valuations, and is classified as a Level 2 measurement. We designated these derivatives as cash flow hedges to reduce interest rate exposure on future debt issuances. Gains and losses on these derivative instruments are reflected as a component of AOCI and, after the termination of the swap agreement, are amortized to earnings over the term of the related debt as a component of Interest expense in our Consolidated Statement of Income. These forward starting interest rate swaps are reported in Derivative assets and Derivative liabilities in our Consolidated Balance Sheet.

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, as well as the deferred consideration obligations associated with the RMM Acquisition and the Gulf Coast Storage Acquisition (see Note 3 – Acquisitions and Divestitures), all 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, Inc., (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 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 and other current liabilities in our Consolidated Balance Sheet. The maximum potential undiscounted liquidity exposure is approximately $22 million at September 30, 2024. Our exposure declines systematically through the remaining term of WilTel’s obligation.

Notes (Continued)

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 8 – Commodity 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 7 – Fair Value Measurements and Guarantees for additional fair value information. In our Consolidated Statement of Cash Flows, any cash impacts of settled commodity derivatives are recorded as operating activities.

We enter into commodity 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 September 30, 2024, 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







Index Risk	Natural Gas	MMBtu	643,267,898
Central Hub Risk - Henry Hub	Natural Gas	MMBtu	(81,249,969)
Basis Risk	Natural Gas	MMBtu	(32,352,683)
Central Hub Risk - Mont Belvieu	Natural Gas Liquids	Barrels	(1,108,762)
Basis Risk	Natural Gas Liquids	Barrels	(670,000)
Central Hub Risk - WTI	Crude Oil	Barrels	(240,000)

Notes (Continued)

Commodity Derivatives Financial Statement Presentation

The fair value of commodity derivatives, which are not designated as hedging instruments for accounting purposes, is reflected as follows:


	September 30, 2024				December 31, 2023
Commodity Derivatives Categories	Assets		(Liabilities)		Assets		(Liabilities)
	(Millions)





Current	$	360	$	(365)	$	623	$	(496)
Noncurrent	288		(470)		243		(345)
Total commodity derivatives	$	648	$	(835)	$	866	$	(841)
Counterparty and collateral netting offset	(433)		509		(552)		554
Amounts recognized in our Consolidated Balance Sheet	$	215	$	(326)	$	314	$	(287)

The pre-tax impacts of commodity derivatives, which are not designated as hedging instruments for accounting purposes, are reflected in our Consolidated Statement of Income as follows:


	Gain (Loss)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(Millions)
Net gain (loss) from commodity derivatives within Total revenues:

Realized	$	(7)	$	(8)	$	74	$	169
Unrealized	12		32		(207)		476
	$	5	$	24	$	(133)	$	645

Net gain (loss) from commodity derivatives within Net processing commodity expenses:
Realized	$	(2)	$	—	$	(7)	$	(3)
Unrealized	1		(9)		(3)		(43)
	$	(1)	$	(9)	$	(10)	$	(46)
Total net gain (loss) from commodity derivatives	$	4	$	15	$	(143)	$	599

Contingent Features

Generally, collateral may be provided in the form of 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. At September 30, 2024, the contractually required collateral in the event of a credit rating downgrade to non-investment grade status was $4 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 September 30, 2024, net cash collateral held on deposit in broker margin accounts was $76 million.

Notes (Continued)

Note 9 – Contingencies

Royalty Matters

Certain of our customers, including Expand Energy Corporation (formerly Chesapeake Energy Corporation or 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 alleged royalty underpayments. We believe that the claims asserted are subject to indemnity obligations owed to us by Chesapeake, which obligations survived Chesapeake’s bankruptcy proceedings. Prior to its bankruptcy, Chesapeake reached a settlement to resolve substantially all Pennsylvania royalty cases pending. During the pendency of the bankruptcy, that settlement was renegotiated. The settlement applies to both Chesapeake and us and does not require any contribution from us. On August 23, 2021, after referral to the United States District Court for the Southern District of Texas by the bankruptcy court, the court approved the settlement. Two objectors filed an appeal with the United States Court of Appeals for the Fifth Circuit. On June 8, 2023, the Court of Appeals vacated the settlement approval and remanded to the United States District Court for the Southern District of Texas with instructions to dismiss the settlement proceedings for lack of jurisdiction. On August 31, 2023, the bankruptcy court entered an order finding the settlement agreements to be null and void. Certain plaintiffs have filed a notice of dismissal of their claims against Chesapeake that arose prior to February 8, 2021, in the United States District Court for the Middle District of Pennsylvania lawsuits. The notice states that plaintiffs are not releasing their claims against the other defendants, including us, or claims against Chesapeake that arose after February 9, 2021. We continue to believe the claims against us are subject to indemnity obligations owed to us by Chesapeake.

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 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 September 30, 2024, we have accrued liabilities totaling $44 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 September 30, 2024, 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.

Notes (Continued)

Continuing operations

Our interstate gas pipelines are involved in remediation and monitoring 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 September 30, 2024, we have accrued liabilities of $12 million for these costs and expect to recover approximately $4 million through rates.

We also accrue environmental remediation costs for natural gas underground storage facilities, primarily related to soil and groundwater contamination. At September 30, 2024, we have accrued liabilities totaling $7 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. At September 30, 2024, we have accrued environmental liabilities of $25 million related to these matters.

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.

At September 30, 2024, other than as previously disclosed, we are not aware of any material claims against us involving the above-described indemnities. 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 10 – 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

Notes (Continued)

provided to our oil and gas properties. Intersegment Product sales primarily represent the sale of natural gas and 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:

◦Income (loss) from discontinued operations;

◦Provision (benefit) for income taxes;

◦Interest expense;

◦Equity earnings (losses);

◦Other investing income (loss) – net;

◦Depreciation and amortization expenses;

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

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.

Significant noncash items which are components of Modified EBITDA may include unrealized net gain (loss) from commodity derivatives within Total revenues, unrealized net gain (loss) from commodity derivatives within Net processing commodity expenses for our Gas & NGL Marketing Services segment, charges associated with lower of cost or net realizable value adjustments to our inventory within Product sales and Product costs, and impairments of certain assets within Other (income) expense – net within Operating income (loss).

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
	(Millions)
Modified EBITDA by segment:
Transmission & Gulf of Mexico	$	811	$	881	$	2,448	$	2,327
Northeast G&P	476		454		1,461		1,439
West	323		315		968		931
Gas & NGL Marketing Services	11		43		(14)		678
Total reportable segments	1,621		1,693		4,863		5,375
Modified EBITDA of other business activities	58		81		181		196
	1,679		1,774		5,044		5,571
Accretion expense associated with asset retirement obligations for nonregulated operations	(17)		(14)		(56)		(43)
Depreciation and amortization expenses	(566)		(521)		(1,654)		(1,542)

Equity earnings (losses)	147		127		431		434

Other investing income (loss) – net	290		24		332		45
Proportional Modified EBITDA of equity-method investments	(227)		(215)		(693)		(693)
Interest expense	(338)		(314)		(1,026)		(914)
(Provision) benefit for income taxes	(227)		(176)		(549)		(635)
Income (loss) from discontinued operations	—		(1)		—		(88)
Net income (loss)	$	741	$	684	$	1,829	$	2,135

Notes (Continued)

The following table reflects the reconciliation of Segment revenues to Total revenues as reported in our Consolidated Statement of Income:


	Transmission & Gulf of Mexico		Northeast G&P		West		Gas & NGL Marketing Services (1)		Other		Eliminations		Total
	(Millions)
Three Months Ended September 30, 2024
Segment revenues:
Service revenues
External	$	1,049	$	473	$	385	$	—	$	4	$	—	$	1,911
Internal	23		2		41		—		—		(66)		—
Total service revenues	1,072		475		426		—		4		(66)		1,911
Total service revenues – commodity consideration	14		1		19		—		—		—		34
Product sales
External	30		8		47		585		33		—		703
Internal	54		18		171		(104)		62		(201)		—
Total product sales	84		26		218		481		95		(201)		703
Net gain (loss) from commodity derivatives
Realized	—		—		—		(8)		1		—		(7)
Unrealized	—		—		—		9		3		—		12
Total net gain (loss) from commodity derivatives (2)	—		—		—		1		4		—		5
Total revenues	$	1,170	$	502	$	663	$	482	$	103	$	(267)	$	2,653





Three Months Ended September 30, 2023
Segment revenues:
Service revenues
External	$	953	$	473	$	340	$	—	$	4	$	—	$	1,770
Internal	25		5		34		—		—		(64)		—
Total service revenues	978		478		374		—		4		(64)		1,770
Total service revenues – commodity consideration	11		—		34		—		—		—		45
Product sales
External	35		13		14		619		39		—		720
Internal	28		14		98		(63)		79		(156)		—
Total product sales	63		27		112		556		118		(156)		720
Net gain (loss) from commodity derivatives
Realized	1		—		13		(31)		9		—		(8)
Unrealized	—		—		—		33		(1)		—		32
Total net gain (loss) from commodity derivatives (2)	1		—		13		2		8		—		24
Total revenues	$	1,053	$	505	$	533	$	558	$	130	$	(220)	$	2,559

Notes (Continued)


	Transmission & Gulf of Mexico		Northeast G&P		West		Gas & NGL Marketing Services (1)		Other		Eliminations		Total
	(Millions)
Nine Months Ended September 30, 2024
Segment revenues:
Service revenues
External	$	3,077	$	1,410	$	1,154	$	—	$	12	$	—	$	5,653
Internal	67		9		116		—		—		(192)		—
Total service revenues	3,144		1,419		1,270		—		12		(192)		5,653
Total service revenues – commodity consideration	28		1		53		—		—		—		82
Product sales
External	85		15		153		1,800		105		—		2,158
Internal	100		59		504		(309)		184		(538)		—
Total product sales	185		74		657		1,491		289		(538)		2,158
Net gain (loss) from commodity derivatives
Realized	—		—		5		40		29		—		74
Unrealized	—		—		—		(188)		(19)		—		(207)
Total net gain (loss) from commodity derivatives (2)	—		—		5		(148)		10		—		(133)
Total revenues	$	3,357	$	1,494	$	1,985	$	1,343	$	311	$	(730)	$	7,760





Nine Months Ended September 30, 2023
Segment revenues:
Service revenues
External	$	2,801	$	1,396	$	1,002	$	1	$	12	$	—	$	5,212
Internal	73		25		86		—		—		(184)		—
Total service revenues	2,874		1,421		1,088		1		12		(184)		5,212
Total service revenues – commodity consideration	29		3		76		—		—		—		108
Product sales
External	116		32		43		1,882		85		—		2,158
Internal	81		72		244		(224)		218		(391)		—
Total product sales	197		104		287		1,658		303		(391)		2,158
Net gain (loss) from commodity derivatives
Realized	2		—		85		41		41		—		169
Unrealized	—		—		—		494		(18)		—		476
Total net gain (loss) from commodity derivatives (2)	2		—		85		535		23		—		645
Total revenues	$	3,102	$	1,528	$	1,536	$	2,194	$	338	$	(575)	$	8,123

(1) As we are acting as agent for natural gas marketing customers or engage in energy trading activities, the resulting revenues are presented net of the related costs of those activities.

(2) We record transactions that qualify as commodity 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 from commodity derivatives held for energy trading purposes are presented on a net basis in revenue.

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