Fair Value Measurements and Guarantees

6 Months Ended

Jun. 30, 2025

Fair Value Disclosures [Abstract]

Fair Value Measurements and Guarantees [Text Block]

Note 8 – Fair Value Measurements and Guarantees

The following table presents, by level within the fair value hierarchy, certain of Williams’, Transco’s, and NWP’s significant financial assets and liabilities. The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and commercial paper approximate fair value because of the short-term nature of these instruments. Therefore, these assets and liabilities are not presented in the following table.

					Fair Value Measurements Using
	Carrying Amount		Fair Value		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Millions)
Assets (liabilities) at June 30, 2025:
Measured on a recurring basis:
ARO Trust investments - Transco	$	323	$	323	$	323	$	—	$	—
Commodity derivative assets (1)	265		609		421		136		52
Commodity derivative liabilities (1)	(336)		(949)		(522)		(380)		(47)
Additional disclosures:
Guarantees	(35)		(28)		—		(12)		(16)
Debt by issuer, including current portion:
Williams	(22,394)		(21,941)		—		(21,941)		—
Transco	(5,221)		(5,254)		—		(5,254)		—
NWP	(583)		(579)		—		(579)		—
MountainWest	(374)		(373)		—		(373)		—
Total debt	(28,572)		(28,147)		—		(28,147)		—
Assets (liabilities) at December 31, 2024:
Measured on a recurring basis:
ARO Trust investments - Transco	$	297	$	297	$	297	$	—	$	—
Commodity derivative assets (1)	344		726		427		188		111
Commodity derivative liabilities (1)	(400)		(1,070)		(532)		(475)		(63)
Additional disclosures:
Guarantees	(36)		(28)		—		(12)		(16)
Debt by issuer, including current portion:
Williams	(20,167)		(19,517)		—		(19,517)		—
Transco	(5,235)		(5,276)		—		(5,276)		—
NWP	(582)		(573)		—		(573)		—
MountainWest	(372)		(364)		—		(364)		—
Gulf Coast Storage deferred consideration (Note 3)	(100)		(100)		—		(100)		—
Total debt	(26,456)		(25,830)		—		(25,830)		—

(1)The carrying amount is presented net of counterparty offsetting arrangements and collateral (see Note 9 – Commodity Derivatives).

Fair Value Methods

The following methods and assumptions are used in estimating the fair value of financial instruments:

Assets Measured at Fair Value on a Recurring Basis

ARO Trust investments

Transco is entitled to collect rates in the amounts necessary to fund its future asset retirement obligations (AROs) and deposits a portion of the collected rates into an external trust (ARO Trust). The ARO Trust invests in a moderate risk portfolio of actively traded mutual funds that are measured at fair value on a recurring basis based on quoted prices in an active market and is reported in Regulatory assets, deferred charges, and other in Williams’ Consolidated Balance Sheet and in Deferred charges and other in the Transco Balance Sheet. The Money Market Funds held in the ARO Trust are considered investments. Both realized and unrealized gains and losses are ultimately recorded to the ARO regulatory asset.

Effective March 1, 2025, the annual funding obligation is approximately $64 million, with deposits made monthly.

Transco investments within the ARO Trust were as follows:

	June 30, 2025				December 31, 2024
	Amortized Cost Basis		Fair Value		Amortized Cost Basis		Fair Value
	(Millions)
Money Market Funds	$	24	$	24	$	27	$	27
U.S. Equity Funds	53		153		53		146
International Equity Funds	32		47		32		40
Municipal Bond Funds	104		99		88		84
Total	$	213	$	323	$	200	$	297

Commodity derivatives

Williams’ commodity derivatives include exchange-traded contracts and over-the-counter (OTC) contracts, which consist of physical forwards, futures, and swaps that are measured at fair value on a recurring basis. Williams also has other derivatives related to asset management agreements and other contracts that require physical delivery. Derivatives classified as Level 1 are valued using New York Mercantile Exchange (NYMEX) futures prices. Derivatives classified as Level 2 are valued using basis transactions that represent the cost to transport natural gas from a NYMEX delivery point to the contract delivery point. These transactions are based on quotes obtained either through electronic trading platforms or directly from brokers. Derivatives classified as Level 3 are valued using a combination of observable and unobservable inputs. See Note 9 – Commodity Derivatives for additional information.

Additional Fair Value Disclosures

Long-term debt, including current portion

The disclosed fair value of long-term debt is determined primarily by a market approach using broker quoted indicative period-end bond prices. The quoted prices are based on observable transactions in less active markets for the debt or similar instruments. The fair values of the financing obligations associated with Transco’s Dalton, Leidy South, and Atlantic Sunrise projects, as well as the deferred consideration obligation associated with the Gulf Coast Storage Acquisition (see Note 3 – Acquisitions and Divestitures), all included within long-term debt including current portion, were determined using an income approach.

Guarantees

Guarantees primarily consist of a guarantee Williams has provided in the event of nonpayment by a previously owned communications subsidiary, Williams Communications Group, Inc., (WilTel), on a lease performance obligation that extends through 2042. Guarantees also include an indemnification related to a disposed operation.

To estimate the fair value of the WilTel guarantee, an estimated default rate is applied to the sum of the future contractual lease payments using an income approach. The estimated default rate is determined by obtaining the average cumulative issuer-weighted default rate based on the credit rating of WilTel’s current owner and the term of the underlying obligation. The default rate is published by Moody’s Investors Service. The carrying value of the WilTel guarantee is reported in Other current liabilities. The maximum potential undiscounted liquidity exposure is approximately $21 million at June 30, 2025. The exposure declines systematically through the remaining term of WilTel’s obligation.

The fair value of the guarantee associated with the indemnification related to a disposed operation was estimated using an income approach that considered probability-weighted scenarios of potential levels of future performance. The terms of the indemnification do not limit the maximum potential future payments associated with the guarantee. The carrying value of this guarantee is reported in Regulatory liabilities, deferred income, and other.

Williams is required by its revolving credit agreement to indemnify lenders for certain taxes required to be withheld from payments due to the lenders and for certain tax payments made by the lenders. The maximum potential amount of future payments under these indemnifications is based on the related borrowings and such future payments cannot currently be determined. These indemnifications generally continue indefinitely unless limited by the underlying tax regulations and have no carrying value. Williams has never been called upon to perform under these indemnifications and there is no current expectation of a future claim.