The Williams Companies Inc. Reports Operating Results (10-Q)

The Williams Companies Inc. (WMB, Financial) filed Quarterly Report for the period ended 2010-03-31.

The Williams Companies Inc. has a market cap of $13.62 billion; its shares were traded at around $23.33 with a P/E ratio of 24.8 and P/S ratio of 1.6. The dividend yield of The Williams Companies Inc. stocks is 1.9%.WMB is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, Brian Rogers of T Rowe Price Equity Income Fund, Murray Stahl of Horizon Asset Management, Jim Simons of Renaissance Technologies LLC, John Buckingham of Al Frank Asset Management, Inc., Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC, Steven Cohen of SAC Capital Advisors, Manning & Napier Advisors, Inc, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

On February 17, 2010, we completed a strategic restructuring, which involved contributing a substantial majority of our domestic midstream and gas pipeline businesses, including our limited and general partner interests in Williams Pipeline Partners L.P. (WMZ), into Williams Partners L.P. (WPZ). (See Note 2 of Notes to Consolidated Financial Statements.) As consideration for the asset contributions, we received proceeds from WPZs debt issuance of approximately $3.5 billion, less WPZs transaction fees and expenses, as well as 203 million WPZ Class C units, which are identical to common units, except for a prorated initial distribution. We also maintained our 2 percent general partner interest. WPZ assumed approximately $2 billion of existing debt associated with the gas pipeline assets. In connection with the restructuring, we retired $3 billion of our debt and paid $574 million in related premiums. These amounts, as well as other transaction costs, were primarily funded with the cash consideration received from WPZ. The premiums paid and certain other transaction costs were recorded as expense in the first quarter of 2010.

In April 2010, our Board of Directors approved a regular quarterly dividend of $0.125 per share, which reflects an increase of 14 percent compared to the $0.11 per share that we paid in each of the eight prior quarters.

The increase in operating income primarily reflects $135 million of higher NGL production margins at Williams Partners, $48 million of higher natural gas production revenues at Exploration & Production, and $20 million of higher olefin production margins at Other. These changes reflect an improved energy commodity price environment in the first quarter of 2010 compared to the first quarter of 2009. The increase in operating income also reflects the absence of $34 million of early contract termination penalties at Exploration & Production. Partially offsetting these increases are $39 million of restructuring transaction costs incurred in the first quarter of 2010.

The favorable change in investing income (loss) is primarily due to the absence of 2009 impairment charges of $75 million related to our Accroven equity investment at Other and $11 million related to a cost-based investment at Exploration & Production in addition to a $17 million increase in equity earnings, primarily at Williams Partners.

We expect to spend $660 million to $870 million in 2010 on capital projects and additional investments in partially owned equity investments, of which $587 million to $797 million remains to be spent. The ongoing major expansion projects include:

The increase in William Partners segment profit reflects $135 million of higher NGL production margins and $21 million of higher equity earnings, primarily due to a $14 million increase from Discovery Producer Services LLC, reflecting recovery from the impact of the 2008 hurricanes, new volumes in the first quarter of 2010 from a recently completed expansion, and higher processing margins.

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