WILLIAMS COMPANIES, INC. [WMB] Filings

10-Q 1 wmb-20240930.htm 10-Q wmb-20240930

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, 2024


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

For the transition period from _____________ to _____________

Commission file number 1-4174

THE WILLIAMS COMPANIES, INC.


(Exact name of registrant as specified in its charter)


Delaware						73-0569878
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

One Williams Center
Tulsa, Oklahoma						74172-0172
(Address of principal executive offices)						(Zip Code)

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

NO CHANGE

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

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


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

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

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

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

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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


Class						Shares Outstanding at November 1, 2024
Common Stock, $1.00 par value						1,219,011,798

The Williams Companies, Inc.

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						Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statement of Income – Three and Nine Months Ended September 30, 2024 and 2023						7
Consolidated Statement of Comprehensive Income (Loss) – Three and Nine Months Ended September 30, 2024 and 2023						8
Consolidated Balance Sheet – September 30, 2024 and December 31, 2023						9
Consolidated Statement of Changes in Equity – Three and Nine Months Ended September 30, 2024 and 2023						10
Consolidated Statement of Cash Flows – Nine Months Ended September 30, 2024 and 2023						12
Notes to Consolidated Financial Statements						13
Note 1 - General, Description of Business, and Basis of Presentation						13
Note 2 - Variable Interest Entities						15
Note 3 - Acquisitions and Divestitures						16
Note 4 - Revenue Recognition						22
Note 5 - Provision (Benefit) for Income Taxes						26


Note 6 - Debt and Banking Arrangements						27

Note 7 - Fair Value Measurements and Guarantees						28
Note 8 - Commodity Derivatives						30
Note 9 - Contingencies						32
Note 10 - Segment Disclosures						33

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						37
Item 3. Quantitative and Qualitative Disclosures About Market Risk						58
Item 4. Controls and Procedures						59
Part II. Other Information						60
Item 1. Legal Proceedings						60
Item 1A. Risk Factors						60

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities						61
Item 5. Other Information						61
Item 6. Exhibits						62

The reports, filings, and other public announcements of The Williams Companies, Inc. (Williams) may contain or incorporate by reference statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements relate to anticipated financial performance, management’s plans and objectives for future operations, business prospects, outcomes of regulatory proceedings, market conditions, and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995.

All statements, other than statements of historical facts, included in this report that address activities, events, or developments that we expect, believe, or anticipate will exist or may occur in the future, are forward-looking statements. Forward-looking statements can be identified by various forms of words such as “anticipates,”

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“believes,” “seeks,” “could,” “may,” “should,” “continues,” “estimates,” “expects,” “forecasts,” “intends,” “might,” “goals,” “objectives,” “targets,” “planned,” “potential,” “projects,” “scheduled,” “will,” “assumes,” “guidance,” “outlook,” “in-service date,” or other similar expressions. These forward-looking statements are based on management’s beliefs and assumptions and on information currently available to management and include, among others, statements regarding:

•Levels of dividends to Williams stockholders;

•Future credit ratings of Williams and its affiliates;

•Amounts and nature of future capital expenditures;

•Expansion and growth of our business and operations;

•Expected in-service dates for capital projects;

•Financial condition and liquidity;

•Business strategy;

•Cash flow from operations or results of operations;

•Seasonality of certain business components;

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

•Demand for our services.

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

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

•Development and rate of adoption of alternative energy sources;

•The impact of existing and future laws and regulations, the regulatory environment, environmental matters, and litigation, as well as our ability and the ability of other energy companies with whom we conduct or seek to conduct business, to obtain necessary permits and approvals, and our ability to achieve favorable rate proceeding outcomes;

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

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

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

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

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

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

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

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•The physical and financial risks associated with climate change;

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

•The risks resulting from outbreaks or other public health crises;

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

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

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

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

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

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

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

•Changes in the current geopolitical situation, including the Russian invasion of Ukraine and conflicts in the Middle East, including between Israel and Hamas and conflicts involving Iran and its proxy forces;

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

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

•Additional risks described in our filings with the SEC.

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

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

Because forward-looking statements involve risks and uncertainties, we caution that there are important factors, in addition to those listed above, that may cause actual results to differ materially from those contained in the forward-looking statements. For a detailed discussion of those factors, see Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 21, 2024, as may be supplemented by disclosures in Part II, Item 1A. Risk Factors in subsequent Quarterly Reports on Form 10‑Q.

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DEFINITIONS

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

Measurements:

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

Mbbls/d: One thousand barrels per day

Bcf : One billion cubic feet of natural gas

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

MMcf/d: One million cubic feet of natural gas per day

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

MMBtu: One million British thermal units

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

Mdth/d: One thousand dekatherms per day

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

MMdth/d: One million dekatherms per day

Government and Regulatory:

EPA: Environmental Protection Agency

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

FERC: Federal Energy Regulatory Commission

IRS: Internal Revenue Service

SEC: Securities and Exchange Commission

Securities Act, the: Securities Act of 1933, as amended

Other:

Note: References to numerical notes refer to our Notes to Consolidated Financial Statements.

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

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

GAAP: U.S. generally accepted accounting principles

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

MVC: Minimum volume commitments

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

NGL margins: NGL revenues less Btu replacement cost, plant fuel, transportation, and fractionation

Appalachia Midstream Investments: Our equity-method investments with an approximate average 66 percent interest in multiple gas gathering systems in the Marcellus Shale region.

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Discovery Acquisition: On August 1, 2024, we closed on the acquisition of the remaining 40 percent interest in Discovery Producer Services, LLC (Discovery) which operates a natural gas gathering and transportation system in the Gulf of Mexico and processing and fractionation facilities in Louisiana, along with certain other assets.

DJ Basin Acquisitions: On November 30, 2023, we closed on the acquisition of 100 percent of Cureton Front Range, LLC (Cureton) (Cureton Acquisition) and also closed on the acquisition of the remaining 50 percent interest in Rocky Mountain Midstream Holdings LLC (RMM) (RMM Acquisition), both of which operate midstream assets in the Denver-Julesberg (DJ) Basin.

Gulf Coast Storage Acquisition: On January 3, 2024, we closed on the acquisition of 100 percent of both Hartree Cardinal Gas, LLC and Hartree Natural Gas Storage, LLC (collectively, “Hartree”), which own natural gas storage facilities and pipelines in Louisiana and Mississippi.

MountainWest Acquisition: The February 14, 2023, acquisition of 100 percent of MountainWest Pipelines Holding Company (MountainWest), which includes FERC-regulated interstate natural gas pipeline systems and natural gas storage capacity.

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PART I - FINANCIAL INFORMATION

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.

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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.

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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.

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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.

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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.

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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)