107263--2/28/2007--WILLIAMS_COMPANIES

related topics

{gas, price, oil}

{regulation, change, law}

{operation, natural, condition}

{loss, insurance, financial}

{system, service, information}

{acquisition, growth, future}

{competitive, industry, competition}

{cost, regulation, environmental}

{capital, credit, financial}

{operation, international, foreign}

{financial, litigation, operation}

{debt, indebtedness, cash}

{tax, income, asset}

{stock, price, operating}

{interest, director, officer}

{condition, economic, financial}

{product, market, service}

{regulation, government, change}

Risks Inherent to our Industry and Business The long-term financial condition of our natural gas transmission and midstream businesses is dependent on the continued availability of natural gas supplies in the supply basins that we access, demand for those supplies in our traditional markets, and market demand for natural gas. Estimating reserves and future net revenues involves uncertainties. Negative revisions to reserve estimates and oil and gas price declines may lead to decreased earnings, losses or impairment of oil and gas assets. Our past success rate for drilling projects and the historic performance of our exploration and production business is no predictor of future performance. Our drilling, production, gathering, processing and transporting activities involve numerous risks that might result in accidents, and other operating risks and hazards. Costs of environmental liabilities and complying with existing and future environmental regulations could exceed our current expectations. Our operating results for certain segments of our business might fluctuate on a seasonal and quarterly basis. Risks Related to the Current Geopolitical Situation Our investments and projects located outside of the United States expose us to risks related to the laws of other countries, and the taxes, economic conditions, fluctuations in currency rates, political conditions and policies of foreign governments. These risks might delay or reduce our realization of value from our international projects. Risks Related to Strategy and Financing Our debt agreements impose restrictions on us that may adversely affect our ability to operate our business. Our lack of investment grade credit ratings increases our costs of doing business in certain ways and attainment of an investment grade rating is within the control of independent third parties. Long-term power generation purchase contracts without corresponding long-term purchase sale contracts might expose us to fluctuations in the wholesale power markets and negatively affect our results of operations. Prices for electricity, natural gas liquids, natural gas and other commodities are volatile and this volatility could adversely affect our financial results, cash flows, access to capital and ability to maintain existing businesses. We might not be able to successfully manage the risks associated with selling and marketing products in the wholesale energy markets. Risks Related to Regulations that Affect our Industry Our natural gas sales, transmission, and storage operations are subject to government regulations and rate proceedings that could have an adverse impact on our results of operations. Competition in the markets in which we operate may adversely affect our results of operations. Expiration of firm transportation agreements. Our revenues might decrease if we are unable to gain adequate, reliable and affordable access to transmission and distribution assets due to regulation by the FERC and regional authorities of wholesale market transactions for electricity and natural gas. Our businesses are subject to complex government regulations. The operation of our businesses might be adversely affected by changes in these regulations or in their interpretation or implementation. The outcome of pending rate cases to set the rates we can charge customers on certain of our pipelines might result in rates that do not provide an adequate return on the capital we have invested in those pipelines. Legal and regulatory proceedings and investigations relating to the energy industry and capital markets have adversely affected our business and may continue to do so. Risks Related to Accounting Standards Potential changes in accounting standards might cause us to revise our financial results and disclosures in the future, which might change the way analysts measure our business or financial performance. Risks Related to Market Volatility and Risk Measurement and Hedging Activities Our risk measurement and hedging activities might not be effective and could increase the volatility of our results. Risks Related to Employees, Outsourcing of Non-Core Support Activities, and Technology Institutional knowledge residing with current employees nearing retirement eligibility might not be adequately preserved. Failure of the outsourcing relationships might negatively impact our ability to conduct our business.

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107263--2/28/2007--WILLIAMS_COMPANIES_INC