Williams Prepares for Full Tax-free Spinoff of E&P Business By Year-end 2011

TULSA, Okla., Oct. 18, 2011 /PRNewswire/ -- Williams' (NYSE: WMB) board of directors has approved a revised plan to separate the company's businesses into two stand-alone, publicly traded corporations.  The revised plan calls for Williams to fully separate its exploration and production business via a tax-free spinoff to Williams shareholders by year-end 2011.  The new independent exploration and production business will be known as WPX Energy, Inc.  

The previously proposed plan was to conduct an initial public offering (IPO) of WPX Energy in 2011, followed by a spinoff of Williams' remaining WPX Energy shares in first-quarter 2012.

Following the spinoff, Williams shareholders will own common stock in Williams, a premier owner/operator of North American midstream and natural gas pipeline infrastructure assets; and common stock in WPX Energy, a large-scale, independent North American diversified exploration and production company with positions in key North American oil shale and gas basins along with additional holdings in South America.  WPX Energy's stock will trade on the New York Stock Exchange under the symbol "WPX."

"The continued instability and weakness in equity markets, especially for new issuances, makes the IPO of WPX Energy appear unattractive in the near term," said Alan Armstrong, president and chief executive officer.  "However, the strong growth in cash flows from our energy infrastructure businesses gives us the flexibility to revise our plans and prepare to separate WPX Energy by the end of this year.

"Despite the change, the outcome of the separation remains the same – we're creating two distinct and well-positioned companies, each of which will provide an opportunity for shareholders to realize greater value.  

"Williams will be focused on meeting demand for large-scale energy infrastructure in North America and providing our shareholders significant value with our high-dividend, high-growth platform," Armstrong said.

Williams expects to maintain a capital structure that will support its investment-grade credit ratings. Williams also expects Williams Partners L.P. (NYSE: WPZ) to maintain its investment-grade ratings.

WPX Energy to File Form 10

In preparation for the spinoff, WPX Energy, Inc., will file tomorrow its initial Form 10 with the U.S. Securities and Exchange Commission.  The filing provides information about the spinoff and a detailed look at WPX Energy's business.

WPX Energy Senior Management

WPX Energy has named the members of its senior management team.  The executive officers are as follows:  Ralph A. Hill, chief executive officer; Rodney J. Sailor, senior vice president, chief financial officer and treasurer; James J. Bender, senior vice president, general counsel and corporate secretary; Bryan K. Guderian, senior vice president of operations; Neal A. Buck, senior vice president of business development and land; Marcia MacLeod, senior vice president of human resources and administration; Michael R. Fiser, senior vice president of marketing; Steven G. Natali, senior vice president of exploration; and J. Kevin Vann, chief accounting officer and controller.

Biographical information for the executive officers will be available in WPX Energy's Form 10 filing with the SEC.

Williams' preparations for a WPX Energy spinoff by the end of the year do not preclude the company from pursuing the alternative of a WPX Energy IPO followed by a spinoff of its remaining WPX Energy shares, as originally planned, in the event that market conditions become favorable.

Barclays Capital and Citi are acting as lead financial advisers to Williams. J.P. Morgan also serves as a financial adviser to the company. Williams' legal adviser is Gibson, Dunn & Crutcher LLP.

About Williams (NYSE: WMB)

Williams is an integrated natural gas company focused on exploration and production, midstream gathering and processing, and interstate natural gas transportation primarily in the Rocky Mountains, Gulf Coast, Pacific Northwest, Eastern Seaboard and the Marcellus Shale in Pennsylvania. Most of the company's interstate gas pipeline and midstream assets are held through its 75-percent ownership interest (including the general-partner interest) in Williams Partners L.P. (NYSE: WPZ), a leading diversified master limited partnership.  More information is available at www.williams.com. Go to http://www.b2i.us/irpass.asp?BzID=630&to=ea&s=0 to join our e-mail list.

Our reports, filings, and other public announcements 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 of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We make these forward looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. You typically can identify forward-looking statements by various forms of words such as "anticipates," "believes," "seeks," "could," "may," "should," "continues," "estimates," "expects," "forecasts," "intends," "might," "goals," "objectives," "targets," "planned," "potential," "projects," "scheduled," "will" 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:

• Plans to separate our exploration and production business into a stand-alone, publicly traded corporation;
• Amounts and nature of future capital expenditures;
• Expansion and growth of our business and operations;
• Financial condition and liquidity;
• Business strategy;
• Estimates of proved, probable, and possible gas and oil reserves;
• Reserve potential;
• Development drilling potential;
• Cash flow from operations or results of operations;
• Seasonality of certain business segments; and
• Natural gas, natural gas liquids, and crude oil prices and demand.

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 announcement. 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:

• Our ability to complete the separation of our exploration and production business into a stand-alone, publicly traded corporation or to complete the separation on the timeline or terms we have announced;
• Availability of supplies (including the uncertainties inherent in assessing, estimating, acquiring and developing future natural gas and oil reserves), market demand, volatility of prices, and the availability and cost of capital;
• Inflation, interest rates, fluctuation in foreign exchange, and general economic conditions (including future disruptions and volatility in the global credit markets and the impact of these events on our customers and suppliers);
• The strength and financial resources of our competitors;
• Development of alternative energy sources;
• The impact of operational and development hazards;
• Costs of, changes in, or the results of laws, government regulations (including climate change regulation and/or potential additional regulation of drilling and completion of wells), environmental liabilities, litigation, and rate proceedings;
• Our costs and funding obligations for defined benefit pension plans and other postretirement benefit plans;
• Changes in maintenance and construction costs;
• Changes in the current geopolitical situation;
• Our exposure to the credit risk of our customers;
• Risks related to strategy and financing, including restrictions stemming from our debt agreements, future changes in our credit ratings and the availability and cost of credit;
• Risks associated with future weather conditions;
• Acts of terrorism; and
• Additional risks described in our filings with the Securities and Exchange Commission ("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 to 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 may cause our intentions to change from those statements of intention set forth in this announcement. 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.

Investors are urged to closely consider the disclosures and risk factors in our annual report on Form 10-K filed with the SEC on Feb. 24, 2011, and our quarterly reports on Form 10-Q available from our offices or from our website at www.williams.com.

SOURCE Williams