WILLIAMS COMPANIES INC

Overview

During 2024, investing and financing expenditures included $2.6 billion of capital expenditures, $2.2 billion of acquisitions including Gulf Coast Storage, Discovery, and Crowheart, and $2.3 billion of dividends paid to common shareholders. These expenditures were funded primarily by $4.974 billion of cash provided by operating activities. Williams ended the year with $60 million of Cash and cash equivalents. See also the following section titled Sources (Uses) of Cash.

Transco and NWP fund their capital requirements with cash flows from operating activities, equity contributions and advances from Williams, accessing capital markets, and, if required, borrowings under the credit facility (see Note 13 – Debt and Banking Arrangements).

Transco and NWP may raise capital through private debt offerings, as well as offerings registered pursuant to offering-specific registration statements. Interest rates, market conditions, and industry conditions will affect amounts raised, if any, in the capital markets. Transco and NWP anticipate that they will be able to access public and private debt markets on terms commensurate with their credit ratings to finance their capital requirements, when needed.

Transco and NWP are also participants in Williams’ cash management program, and both make advances to and receive advances from Williams. At December 31, 2024, Transco’s advances to Williams totaled approximately $638 million and NWP’s advances from Williams totaled approximately $26 million. These advances are represented by demand notes. See Note 4 – Related Party Transactions.

Outlook

Growth capital and investment expenditures in 2025 are expected to range from $1.65 billion to $1.95 billion, excluding acquisitions. Growth capital spending in 2025 primarily includes projects supporting growth in the Haynesville Shale basin (including Louisiana Energy Gateway expansion project), Transco expansions, all of which are fully contracted with firm transportation agreements and projects supporting the Northeast G&P business. Williams also expects to invest capital in the development of its upstream oil and gas properties. In addition to growth capital and investment expenditures, Williams also remains committed to projects that maintain its assets for safe and reliable operations, as well as projects that reduce emissions, and meet legal, regulatory, and/or contractual commitments. Williams intends to fund substantially all planned 2025 capital spending with cash available after paying dividends. Williams retains the flexibility to adjust planned levels of growth capital and investment expenditures in response to changes in economic conditions or business opportunities including the repurchase of its common stock.

On January 9, 2025, Williams issued $1.5 billion of long-term debt and on January 15, 2025, Williams retired $750 million of long term debt (see Note 13 – Debt and Banking Arrangements).

As of December 31, 2024, Williams has approximately $1.7 billion of long-term debt due within one year. Williams’ potential sources of liquidity available to address these maturities include cash on hand, proceeds from refinancing, the credit facility, or the commercial paper program, as well as proceeds from asset monetizations.

Transco and NWP categorize their capital expenditures as either maintenance capital expenditures or growth capital expenditures. Maintenance capital expenditures are those expenditures required to maintain the existing operating capacity and service capability of their assets, including replacement of system components and equipment that are worn, obsolete, completing their useful life, or necessary to remain in compliance with environmental laws and regulations. Growth capital expenditures improve the service capability of existing assets, extend useful lives, increase transmission or storage capacities from existing levels, reduce costs or enhance revenues. Transco and NWP anticipate 2025 growth capital expenditures will be approximately $336 million and $43 million, respectively, primarily for expansion projects, and $423 million and $186 million, respectively, for maintenance projects. They expect to fund these capital expenditures with cash from operations.

Liquidity

Williams expects to have sufficient liquidity to manage its businesses in 2025 based on forecasted levels of cash flow from operations and other sources of liquidity. Williams’ potential material internal and external sources and uses of liquidity are as follows:

Sources:

Cash and cash equivalents on hand

Cash generated from operations

Distributions from equity-method investees

Utilization of the credit facility and/or commercial paper program

Cash proceeds from issuance of debt and/or equity securities

Proceeds from asset monetizations

Uses:

Working capital requirements

Capital and investment expenditures

Product costs

Gas & NGL Marketing Services payments for transportation and storage capacity and gas supply

Other operating costs including human capital expenses

Quarterly dividends to shareholders

Repayments of borrowings under the credit facility and/or commercial paper program

Debt service payments, including payments of long-term debt

Distributions to noncontrolling interests

Share repurchase program

As of December 31, 2024, Williams has approximately $24.7 billion of long-term debt due after one year. Potential sources of liquidity available to address these maturities include cash generated from operations, proceeds from refinancing, the credit facility, or the commercial paper program, as well as proceeds from asset monetizations.

Potential risks associated with Williams’ planned levels of liquidity discussed above include those previously discussed in Company Outlook.

As of December 31, 2024, Williams had a working capital deficit of $2.651 billion, including cash and cash equivalents and long-term debt due within one year. Williams available liquidity is as follows:

(1)In managing its available liquidity, Williams does not expect a maximum outstanding amount in excess of the capacity of its credit facility inclusive of any outstanding amounts under its commercial paper program. Williams had $455 million of Commercial paper (at par value) outstanding as of December 31, 2024. Through

December 31, 2024, the highest amount outstanding under the commercial paper program and credit facility during 2024 was $730 million. Williams expects to be in compliance with the financial covenants associated with the credit facility for the December 31, 2024, reporting period.

Dividends

Williams increased the regular quarterly cash dividend to common stockholders by approximately 6.1 percent from the $0.4475 per share paid in each quarter of 2023, to $0.4750 per share paid in each quarter of 2024. On January 28, 2025, Williams’ board of directors approved a regular quarterly dividend of $0.5000 per share payable on March 31, 2025.

Registrations

In February 2024, Williams filed a shelf registration statement as a well-known seasoned issuer.

Distributions from Equity-Method Investees

The organizational documents of entities in which Williams has an equity-method investment generally require periodic distributions of their available cash to their members. In each case, available cash is reduced, in part, by reserves appropriate for operating their respective businesses. See Note 8 – Investing Activities for our more significant equity-method investees.

Credit Ratings

The interest rates at which Williams is able to borrow money are impacted by its credit ratings, which are currently as follows:

In January 2025, Fitch Ratings changed its Outlook from Stable to Positive.

These credit ratings are included for informational purposes and are not recommendations to buy, sell, or hold Williams securities, and each rating should be evaluated independently of any other rating. No assurance can be given that the credit rating agencies will continue to assign Williams investment-grade ratings even if it meets or exceeds their current criteria for investment-grade ratios. A downgrade of its credit ratings might increase Williams’ future cost of borrowing and, if ratings were to fall below investment-grade, could require it to provide additional collateral to third parties, negatively impacting Williams’ available liquidity.

Sources (Uses) of Cash

The following table summarizes the sources (uses) of cash and cash equivalents for each of the periods presented in the Williams Consolidated Statement of Cash Flows:

Operating activities

The factors that determine Williams’ operating activities are largely the same as those that affect Net income (loss), with the exception of noncash items such as Depreciation and amortization, Provision (benefit) for deferred income taxes, Equity (earnings) losses, Net unrealized (gain) loss from commodity derivative instruments, Gain on sale of business, Gain on disposition of equity-method investments, Gain on remeasurement of equity-method investments, Inventory write-downs, and Amortization of stock-based awards.

Williams’ Net cash provided (used) by operating activities for the year ended December 31, 2024, decreased from the same period in 2023 primarily due to unfavorable changes in margin requirements, lower operating income (excluding non-cash items previously discussed), and unfavorable changes in net operating working capital.

Williams’ Net cash provided (used) by operating activities in 2023 increased from 2022 primarily due to higher operating income (excluding noncash items as previously discussed), as well as favorable changes in net operating working capital and margin requirements, partially offset by lower Distributions from equity-method investees.

Environmental

Williams is a participant in certain environmental activities in various stages including assessment studies, cleanup operations, and/or remedial processes at certain sites, some of which it currently does not own (see Note 18 – Contingencies and Commitments). Williams is monitoring these sites in a coordinated effort with other potentially responsible parties, the EPA, or other governmental authorities. Williams is jointly and severally liable along with unrelated third parties in some of these activities and solely responsible in others. Current estimates of the most likely costs of such activities are approximately $42 million, all of which are included in Other current liabilities and Regulatory liabilities, deferred income, and other at December 31, 2024. Williams will seek to recover approximately $3 million of accrued costs related to remediation activities by its interstate gas pipelines through future natural gas transmission rates. The remainder of these costs will be funded from operations. During 2024, Williams paid approximately $11 million for cleanup and/or remediation and monitoring activities. Williams expects to pay approximately $5 million in 2025 for these activities. Estimates of the most likely costs of cleanup are generally based on completed assessment studies, preliminary results of studies, or Williams’ experience with other similar cleanup operations. At December 31, 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 compounds and methane. Williams continuously monitors these regulatory changes and how they may impact its operations. Implementation of new or modified regulations may result in impacts to Williams’ operations and increase the cost of additions to Property, plant, and equipment – net for both new and existing facilities in affected areas; however, due to regulatory uncertainty on final rule content and applicability timeframes, Williams is unable to reasonably estimate the cost these regulatory impacts at this time.

Williams considers prudently incurred environmental assessment and remediation costs and the costs associated with compliance with environmental standards to be recoverable through rates for its interstate natural gas transmission pipelines. Historically, with limited exceptions, Williams has been permitted recovery of these environmental costs, and the intent is to continue seeking recovery of such costs through future rate filings.