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Date

  • Tuesday, August 5, 2025, at 1:30 p.m. ET

Call participants

  • President and Chief Executive Officer — Chad Zamarin
  • Chief Financial Officer — John Porter
  • Executive Chair — Alan Armstrong
  • Senior Vice President, Transmission & Gulf — Larry Larson
  • Senior Vice President, Corporate Development — Rob Wingo
  • General Counsel — Lane Wilson

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Risks

  • West segment volume commitments— The West segment experienced a negative impact due to a step-down in minimum volume commitments at Eagle Ford.
  • Northeast G&P Aux Sable divestiture— The Northeast G&P segment was unfavorably affected by the prior year’s Aux Sable divestiture.
  • Other segment oil price impact— The other segment’s higher upstream volumes were partially offset by unfavorable price impacts from significantly lower oil prices compared to the prior year.
  • Transco modernization tracker— Larson stated, "I'm not optimistic that we'll have [a modernization tracker] in here," regarding the Transco rate case settlement negotiation, which may affect future emissions reduction spend.

Takeaways

  • Adjusted EBITDA-- $1.808 billion in adjusted EBITDA for Q2 2025, up 8% over the prior year, driven primarily by record results in Transmission & Gulf and higher volumes across multiple segments.
  • Transmission & Gulf of Mexico segment adjusted EBITDA-- Up $91 million, or 11%, setting an all-time record due to higher revenues from expansion projects and strong storage business renewal rates.
  • Gulf gathering volumes-- Increased over 17% year-over-year, with NGL production up about 77%.
  • Northeast G&P segment adjusted EBITDA-- Improved by $22 million, or 5%, primarily on higher gathering and processing rates, despite the negative impact from the Aux Sable divestiture.
  • West segment adjusted EBITDA-- Grew $22 million, or 7%, supported by higher Haynesville and DJ Basin volumes, including effects from the Rimrock acquisition.
  • West segment volume growth-- Achieved overall volume growth of about 13%, with the Sabre acquisition contributing from June 2, 2025.
  • 2025 adjusted EBITDA guidance-- Raised the 2025 adjusted EBITDA guidance midpoint by $50 million to $7.75 billion and increased the upper end of the range to $7.9 billion, reflecting 9% growth at the midpoint compared to 2024.
  • Transco system records-- Delivered a summer daily record of 16.1 Bcf on July 29, 2025, with nine of the ten highest all-time summer days occurring in 2025, despite 4.2% cooler weather as measured by cooling degree days compared to the prior year.
  • Major project completions-- Six major projects were placed into service in Q2 2025, including Southeast Energy Connector, Texas to Louisiana Energy Pathway, Louisiana Energy Gateway, Haynesville West, and Discovery’s Shenandoah commissioning.
  • Sabre Midstream acquisition-- Acquired at an "attractive multiple" with a modest expected 2025 contribution of less than $20 million, solidifying position as the largest gas gatherer in the Haynesville basin.
  • CECI project acceleration-- Timeline for the Southeast Supply Enhancement (SESI/CECI) project, the largest earnings contributor in company history, was accelerated by one quarter, enhancing in-service value by 2027.
  • NESE progress-- The Northeast Supply Enhancement (NESE) project achieved a significant milestone with commercial agreements signed and regulatory filings proceeding, targeting 2027 in-service.
  • Bonus depreciation impact-- Restoration of 100% bonus depreciation under recent tax legislation will lower 2025 current income taxes by about $100 million and provide significant cash tax deferrals linked to non-regulated capital investment service dates.
  • Growth CapEx outlook-- Growth capital expenditures are expected to be toward the high end of 2025 guidance, including accelerated SESI/CECI spending.
  • Power innovation projects-- Orders placed for two additional behind-the-meter projects, with up to one gigawatt of potential capacity targeted by end of 2027 and strong confidence in near-term commercialization.

Summary

Williams Companies(WMB -0.42%) reported record summer demand on the Transco system in July 2025 and placed six major projects into service, positioning Williams for further earnings growth through 2025 and beyond. The company’s 2025 adjusted EBITDA (non-GAAP) guidance midpoint was raised by $50 million to $7.75 billion, marking the second upward revision since the original guidance was issued in February 2024. Management highlighted substantial expansion opportunities across all regions, progressed regulatory milestones for NESE, and accelerated the SESI/CECI project, which is the largest in company history by earnings contribution.

  • Management expects to fully commercialize additional power innovation projects in the next few months, aiming to deliver up to a gigawatt of new capacity by end of 2027.
  • Larson said, "we've seen some great interest" in the Rockies Columbia Connector Project, with a nonbinding open season closing imminently and rising Pacific Northwest gas demand driving future expansion prospects.
  • John Porter stated, "2025 is off to a solid start toward meeting or beating our guidance even after raising it a cumulative $350 million," referring to the total increase in 2025 adjusted EBITDA guidance since the original guidance was set in February 2024.
  • The company’s balance sheet is projected to remain well within its target leverage range of 3.5x-4x for 2025, even with an expanded CapEx program including high-return projects.
  • Williams’ strategy continues to prioritize disciplined project layering, “demand pull” project development tied closely to end-market demand, and opportunistic bolt-on acquisitions with rigorous return thresholds.
  • Chad Zamarin emphasized the long-term project backlog, stating the company’s opportunity set is "even healthier now" and the business is "built to exceed kind of our historical kind of set growth rates."
  • Recent regulatory and permitting developments, including bonus depreciation tax benefits and streamlined approvals, are supporting both near- and longer-term cash flow and project economics.

Industry glossary

  • Transco: The company’s flagship interstate natural gas transmission pipeline system, running from Texas to the Northeast U.S.
  • NGL: Natural Gas Liquids, hydrocarbons found in natural gas that are extracted as liquids, such as propane, butane, and ethane.
  • Haynesville: A prolific natural gas-producing formation in northwest Louisiana and east Texas.
  • CECI/SESI project: Southeast Supply Enhancement Initiative (also referred to as CECI), a major pipeline expansion stated to be the largest in Williams’ history by earnings impact.
  • NESE: Northeast Supply Enhancement, a major natural gas pipeline expansion project serving the New York City market.
  • FID: Final Investment Decision, the stage at which a company commits to move forward with a project.
  • Behind-the-meter: Energy infrastructure projects located on the customer’s side of the utility meter, typically customized to serve specific end-user facilities such as data centers.
  • Open season: A period when pipeline capacity is offered on a nonbinding or binding basis to gauge shipper interest for expansion projects.

Full Conference Call Transcript

Chad Zamarin: Thanks, Danilo, and thank you all for joining us today. Before we dive in, I want to welcome Rob Wingo to the call. Rob joined The Williams Companies, Inc. on July 14, backfilling my previous role. And Rob has hit the ground running, and we are thrilled to welcome him to Williams and to welcome his family to Tulsa. With Rob now on board, we have successfully transitioned and settled the leadership team and we are laser-focused on not missing a beat. Alan and I have had a very smooth transition, and last week, we held our first series of Williams board meetings with Alan as Executive Chair.

It was a great set of meetings with our board and we continue to benefit from what I believe is the very best board in the energy industry. It really is an incredible time to be at Williams. Our teams are firing on all cylinders, and the fundamentals supporting our business are stronger than ever. We continue to see robust demand across our footprint and you will see rising tides in our offshore business in the West, along the Gulf Coast across the Northeast and of course along our Transco Port.

As an example of these fundamental tailwinds, after posting record demand on Transco this past winter, in July, we set an all-time record for summer demand on Transco, delivering a record-breaking 16.1 BCF of natural gas on July 29. In addition, nine of the 10 all-time highest peak summer days have occurred this summer. And you might think this is being driven by an abnormally hot summer, but in fact, on a cooling degree day basis, this summer has actually been 4.2% cooler than last year. And now to the quarter.

Our teams continue to deliver strong, consistent performance across the business and the second quarter is another example of how we are positioned to lead and grow in an evolving energy landscape. So let's begin on slide two. From deepwater developments to major pipeline expansions, our team has consistently delivered complex projects on time and on budget. In fact, oftentimes, ahead of schedule and under budget. And this past quarter was no different. In total, we placed six major projects into service, including Transco's Southeast Energy Connector in Alabama, and Transco's Texas to Louisiana Energy Pathway Project along the Gulf Coast.

In the deepwater, we successfully completed the expansion of our Gulf E system to serve Chevron's Ballymore production which started up in April. We commissioned Shenandoah, which will drive significant cash flows across our Discovery offshore asset that is now wholly owned following last year's acquisition of our partner P66's interest in Discovery. In the Haynesville, we brought the Louisiana Energy Gateway and Haynesville West projects online, enhancing our ability to deliver reliable energy across key markets, and we continue to strengthen our footprint in the Haynesville completing the acquisition of Sabre Midstream, at an attractive multiple and further enhancing our position as the largest gas gatherer in one of the most prolific natural gas basins in the country.

As our new projects ramp up and serve our customers' needs, they will really show their power from an earnings perspective through 2025 and beyond. As for projects and execution, we've accelerated the timeline for Transco's Southeast Supply Enhancement or SESI project, which is the largest project ever from an earnings contribution perspective in the history of the company. Accelerating CECI shows our ability to move quickly and efficiently in response to customer needs and growing natural gas demand across the Mid-Atlantic and Southeast.

We also began construction on the Socrates Power Innovation project and we remain on track for bringing the project in service in 2026 as Williams supports our nation in winning the race for artificial intelligence and the next generation of technology. And in late-breaking news, just yesterday, Northeast Supply Enhancement or NESE project. This is a significant step forward in bringing increased energy reliability, affordability, and lower emissions to New York City and we look forward to finalizing federal and state regulatory approval.

The country is waking up to the fact that when we lag in building natural gas infrastructure, we see increases in energy costs, a reduction in energy reliability, and a stifling of economic opportunity and growth. and embrace natural gas as the very best solution reducing consumer costs, and delivering energy reliability and security with U.S. Produced energy. Turning to our financials. We are increasing our 2025 adjusted EBITDA guidance midpoint by $50 million and we're now guiding to $7.75 billion at the midpoint since our original guidance was set in 2024. And John will go through this in more detail in his remarks.

And finally, we published our 2024 sustainability report last week which outlines our progress in environmental stewardship, and we continue to lead the industry in this space. As I said at the top of the call, it is an exciting time at Williams and I'm very proud of the team and equally excited about the opportunities ahead. And I'll now turn it over to John for a deeper dive into the financials.

John Porter: Thanks, Chad. Starting here on slide three with a closer look at our adjusted EBITDA performance, which was 8% over 2024. Walking now from last year's $1.667 billion to this year's $1.808 billion. We start with our transmission and Gulf business, which improved $91 million or 11% setting an all-time record due to higher revenues from expansion projects. At Transco, we had increases from regional energy access, South Side reliability enhancement, Texas to Louisiana Energy Pathway, and the Southeast Energy Connector projects. We also continue to see growth from our storage business on higher renewal rates at Gulf Coast Storage and Nortex, as well as incremental contributions from market-based rates. At our Washington storage facility.

In The Gulf, we saw contributions from our Discovery as well as contributions from our new service to Shell's Whale project. Second quarter Gulf gathering volumes were up over 17% versus prior year, and NGL production was up about 77%. Lastly, for this segment, although our new Transco rates went into effect on March 1, we continue to maintain a conservative reserve pending the final sell. Next, our Northeast G and P business improved $22 million or 5% primarily on higher revenues, including higher gathering and processing rates. This segment was unfavorably impacted by the Aux Sable divestiture that we made last August.

Overall volumes picked up about five over 2Q '24, and we've continued to see July volumes that are basically in line with 2Q '25 averages. The West, we were also $22 million or 7% higher, driven by higher Haynesville volumes and growth in the DJ Basin, including the Rimrock acquisition that closed at the end of January. The West was negatively impacted by a step down in our minimum volume commitments at Eagle Ford. On the volume front, overall volumes grew about 13% driven by growth in the Haynesville, including volumes from the Sabre acquisition acquired on June 2, 2025.

Our CEQUIP marketing business was flat versus the prior year, where contributions from the Cogentrix acquisition offset weaker realizations in the gas marketing. And then finally, our other segment, which includes our upstream business, was up about $7 million including higher upstream volumes partially offset by unfavorable price impacts from significantly lower oil prices versus prior year. So that gets you to the $1.808 billion of EBITDA for 2Q '25 or 8% growth. Let's move to the next slide and discuss what we're seeing for the remainder of '25.

As Chad mentioned, we once again revising our 2025 adjusted EBITDA guidance upward from a previous midpoint of $7.7 billion to now $7.75 billion and we're moving the top of the range to $7.9 billion. At $7.75 billion we will see 9% growth adjusted EBITDA over '24, and a 9% CAGR from 2020. Additionally, if you bridge back to when we first issued our '25 adjusted EBITDA guide, in February '24, we are now at $350 million cumulative from the original guidance of $7.4 billion.

Our current guidance update reflects a continued solid start to '25 the addition of the Sabre acquisition with an expected modest contribution for '25 of less than $20 million and our overall confidence in the growth of our underlying business plus line of sight to an extraordinary number of projects coming online in the near future. Speaking specifically to the segments and our transmission and Gulf segment, we look forward to settling our Transco rate case, and seeing the contributions from the two transmission projects we recently placed in service as well as completing four additional transmission projects by end of year, and we remain optimistic about continued upside in the recontracting of our storage business.

The revised guidance we are issuing today does include what we feel is a pretty good read on where we think the rate case will sell. Additionally, in the deepwater, we've now completed the Shenandoah Whale, and Ballymore project and still have the Salamanca project to go for 2025. In the deepwater, we are only in the early stages of a volume ramp that will accelerate through the remainder of the year. to see overall strengthening in our volumes, reflecting our exposure to crucial natural gas-focused basins, and our Haynesville expansions, including our large-scale Louisiana Gateway project. Lastly, we are still well-positioned to deliver on plan for our upstream business available funds from operations.

First for growth CapEx, accounting for the favorable acceleration of the Southeast Supply Enhancement project we now see growth CapEx coming in towards the high end of our current guidance. that includes our higher expected adjusted EBITDA, as well as lowering our 2025 current income taxes by about $100 million. We were very pleased with the restoration of a 100% bonus depreciation in the one big beautiful bill, As we've discussed, this creates significant cash tax deferrals that are tied to the in service date of non-regulated capital investments like our power innovation projects, but also covering our other gathering and processing investments.

So again, 2025 is off to a solid start toward meeting or beating our guidance even after raising it a cumulative $350 million. Our '25 guidance delivers 9% growth at midpoint, and would sustain a 9% CAGR for 2020 to 2025. leading growth in the coming years, and our recently completed annual ten-year forecast just keeps improving. All of this gives us confidence in the long-term sustainability of the strong financial performance. And with that, I'll turn it back over to Chad.

Chad Zamarin: Thanks, John. Before we turn it over to questions, I want to wrap with a clear message. This is the golden age of natural gas, and Williams is built for this moment. With an ever-expanding backlog of fully contracted projects, now extending beyond 2030, and our proven ability to meet customer needs and capture new business in emerging markets, Williams is better positioned than any other company to benefit from the growing wave of natural gas demand. The world is quickly recognizing that natural gas is the backbone of reliable, affordable, and cleaner energy and our infrastructure is essential to meeting growing demand here in the U.S. and around the world.

On top of the world's need for clean, reliable, and affordable energy, we've also seen the rapid emergence of the need for speed with respect to energy. The race is on for the next generation of technology and the race can only be won if we get back to building the products technologies, and energy of the future. This needs to be an urgent wake-up call. We've seeded ground in our ability to compete globally, and it's time to reclaim it. And it all starts with energy infrastructure. And we believe with natural gas infrastructure as a critical backbone of our nation's energy system. At Williams, we're investing in the infrastructure that will power America's future.

Our teams are as active as ever. Our strategy is intentionally aligned with the world's growing demand for clean, affordable and reliable energy as well as for the need for speed. And with that, we'll turn it over to your questions.

Operator: Thank you. At this time, we will conduct a question-and-answer session. Please limit to one question and one follow-up. Our first question comes from the line of Praneeth Satish of Wells Fargo. Your line is now open.

Praneeth Satish: Thanks. Good morning. So you've increased EBITDA to a 9% CAGR over the last five years. I guess when I look at the opportunity set for the next five years, it looks dramatically better with CapEx opportunities rising, power demand rising, and ROIC improving. So I get that you're, you know, going up against the law of large but do you think there's some upward bias here to the 5% to 7% EBITDA CAGR guidance that's out there? I mean, from our math, you could surpass that? Or are there some headwinds that we should be thinking about as we look out through 2030?

Chad Zamarin: Yeah. No. I don't think there are Praneeth. I think you actually said it well. You know, we've shown, I think, pretty remarkable growth over the last five years. And you know, the company is even healthier now. The balance sheet is stronger, and I say the tailwinds are even better. And so, you know, we're going to remain disciplined. And the longer range opportunity set in our Analyst Day in early 2026. But I think, you know, you captured it well. We want to continue to invest in a disciplined manner, high return projects, and I think we demonstrated that the business is built to exceed kind of our historical kind of set growth rates.

But I'd say more to come as we roll out the next five plus years of projects.

Praneeth Satish: Got it. Thanks. And then on the last call, you had mentioned, ordering some long lead time equipment for two additional behind-the-meter projects. Beyond Socrates. Maybe can you provide any updates there where those projects stand in development, when you expect to FID them? And maybe I'll try to push my luck here, but have taken place in Texas and Ohio. Can we assume that at least one of those projects is located in those regions? And then any further thoughts you could provide in terms of sizing and economics of those projects relative to Socrates?

Chad Zamarin: You know, I think we've said we expect to deliver tremendous job, I'd say, at meeting the customer's needs. And tailoring kind of our solutions to what the market is looking for. So we have placed orders, as you mentioned, and, you know, I would expect that we're going to be fully commercializing the next couple of projects in the next few months. And, you know, we remain on track. We have talked about that looking like another, call it, up to a gigawatt of capacity that we think we could bring online by the end of 2027. And so I still think that's a good target. And, you know, we would expect the economics to look as attractive.

Look for opportunities that even better opportunities all the way from our gathering and processing business through to the end kind of customer need. And so we continue to feel good about those projects moving forward. And I'd also say we are continuing to see the potential to upsize even the Socrates project. And so I'd say stay tuned but I think the second half of the year, we should we're feeling confident about our ability to deliver the next round of projects.

Praneeth Satish: Got it. Thank you.

Operator: Thank you. Our next question comes from the line of Jeremy Tonet of JPMorgan Securities. Your line is now open.

Jeremy Tonet: Hi. Good morning. Can you hear me there?

Chad Zamarin: Yeah. Great.

Jeremy Tonet: Just want to kind of pick up with the opportunity set as you outlined, you know, previously. Just if we think about the back half of '25, do you see FIDs on the pipeline side more likely stemming from another Transco type of expansion? Do you see the possibility, you know, for, an FID on, something stemming from the Northwest system? It seems like there's a lot of irons in the fire as you laid out in the slides there.

Chad Zamarin: Yeah. I can start, and Larry can also weigh in here. You know, obviously, we've crystallized, I think, the scoping of Power Express on Transco. The announcement on NESE yesterday is a significant milestone. And I think it's reflective of markets that have been constrained reopening and recognizing the need for natural gas as we've seen utility bills go up. We've seen reliability go down. And so we are seeing still across the entire footprint, including as you mentioned, in the Pacific Northwest, an area that's been a bit quiet over the last few years from a gas pipeline expansion perspective.

And, you know, so whether or not we see FIDs here in the second half of the year, kind of wait to see the pace at which the next round of project roll out. But, you know, we as I mentioned in my remarks, we continue to be as active as ever, and we really do see project opportunities in the Gulf Coast, in the Southeast, Mid Atlantic, the Northeast, and in the West and Pacific Northwest. But can also maybe give an update on the West opportunities.

Larry Larson: Yeah. Thanks, Chad. This is Larry Larson. As a lot of people know, we do have an open season that's out there right now on our Rockies Columbia Connector Project that's targeted to serve the Pacific Northwest, Washington, Oregon, and Idaho. That open season's not binding. It closes tomorrow, and I think so far, we've seen some great interest, having really good with customers. I think we're optimistic we'll see something materialize just because we are seeing an increase in demand for natural gas that system utilization on Northwest Pipeline continues to remain high. And so the team is working well with the comp their customer group and working towards negotiation.

So I think we'll just have to see the pace of how that comes together. Over the second half of this year.

Jeremy Tonet: Got it. Thank you for that. And, a question for Rob, if I might. Rob, just wondering if you could talk a bit about your experience at EQT. And what you're bringing to Williams here as far as, you know, any different thoughts on how to approach things strategically or any thoughts in general on what you're seeing so far?

Rob Wingo: Jeremy, good to meet you. Yeah. So, you know, I've spent quite a bit of my career both on the midstream and on the upstream side. And so I'm bringing both of those perspectives to bear here. I would say that what I've seen here has a very robust, thoughtful strategy comprehensive, and it's been proving to be very successful. My goal is to execute on the plan that's already in place. And tweak work where necessary. And to, you know, basically capture the robust opportunity set that's in front of us here. I've gotten a very warm welcome from the team. And I'm very grateful for that.

I see an organization full of very strong performers bolstered by frankly, one of the best cultures I've seen. And the team is excited. You know, they're excited about Chad's leadership. And the leadership from the rest of the executive team.

Jeremy Tonet: Got it. Great. Thanks for that.

Operator: Thank you. Our next question comes from the line of Spiro Dounis of Citi. Your line is now open.

Spiro Dounis: Thanks, operator. Morning, team. Wanted to go back maybe to that project backlog. And as we think about that 2028 to 2030 timeframe, you know, you got Power Express not coming to 2030. You got a few more let's call it, longer cycle projects in the hopper. I guess I'm just curious as we think about the mix long cycle over short cycle, in that time frame, are you leaning in any one particular direction right now as we anticipate some of these FIDs coming? And do you think about the CapEx that's going to sort of fill that out? Should it look similar to 2025 or do you see that changing?

Chad Zamarin: Thanks, Spiro. It's a good question. Yeah. I think, generally, we really tried to demonstrate our ability to layer in projects to create, you know, fairly predictable earnings growth. And we do see that opportunity over the next five years. And frankly, it's crystallizing, I think, pretty nicely. So you will see ended the decade with, you know, the Southeast Supply Enhancement project coming online in 2027. We've Power Express that will come online in 2030. And then layering in a call it singles and doubles on the transmission side of the business, but then also importantly, our Power Express projects that are pretty powerful because they turn from, you know, FID to in service pretty quickly.

And so I think you'll continue to see a pretty good layering in of demand pull projects, which is really great from a strategy perspective because we're connecting these projects to robust demand from LNG exports, power demand, industrial, demand, and direct power for data center demand. And what that will do is ultimately pull supply to meet that demand. And so we do see the next five years, an ability to continue to layer in transmission projects and power innovation projects. And then we will expect to see the supply response to meet that kind of demand that we're connecting to the system. And so, you know, I'd say, you're seeing some of the larger projects.

And as we announced in the next round of Power Innovation projects, I think those will really fill significant growth through the end of the decade, but we'll layer in then the smaller projects along the way. And from a CapEx perspective, I think as John has mentioned, we've been able to keep the balance sheet in an incredibly strong position. In fact, we've added quite a bit of growth without increasing the targeted credit metric for 2025.

If you look at the capacity that we have to invest over the next couple of years, I think we will see a bit more investment than we may have seen, you know, the last few years, although 2025 is shaping up to be a pretty healthy organic capital year. But I think we feel really good about our ability to maybe tick up capital a bit, but well within the capacity of the balance sheet to maintain our strong credit metrics.

John Porter: And I think, Spiro, yeah, just maybe one more thought to that. I mean, what we're seeing with our long-range forecast and opportunities that the commercial teams are bringing forward is that is it continued cadence of high-returning CapEx projects too. So we've got the capacity. Commercial teams are busier than ever, but what we're seeing in the backlog continues to be high-returning projects. And as Chad said, many of those cycling to operations in pretty short time frames.

Spiro Dounis: Got it. Thanks, John. Thanks, Chad. Second one, just on M&A, maybe a two-part question here. First, with respect to Sabre, fills this up beyond current levels and maybe even necessitates an expansion at some point? Just looking at M&A more broadly, the recent deals have been a little bit smaller in scale. Is that an effort on your part to keep that small and focus more on organic? Just curious how to think about your M&A strategy right now.

Chad Zamarin: Yeah. So first on Sabre, you know, the Sabre footprint, it's a great set of assets underpinned by very high-quality counterparty credit and very strong minimum volume commitments. And it sits just north of our Haynesville footprint in Louisiana, which is nice. It extends our footprint north into an area where we currently don't operate, and we do see the ability over time to attract volumes through that system down into our southern infrastructure and towards, you know, markets along the Gulf Coast, which is what our leg system provides.

So we do think it's a very attractive acquisition from a value perspective, but also over time, we think has some potential upside potential to better integrate into our footprint than had it been just continuing to stand on its own. So we like it from that perspective. And I think your point about, you know, the bolt-on acquisitions in a way that's very manageable from pacing and an overall capital perspective. You know, on the one hand, we do respond to some degree to what's available in the marketplace. But more importantly, I think constantly looking for the right strategic opportunities that are unique to our footprint and our ability to capture outsized value.

And so we tend to think long term even from an M&A perspective and plan those moves so that they layer into our overall program and not feel like in a position where we have to react to what's available in the market. And so, you know, there are fewer smaller companies today than there were five years ago, but we continue to have we think such strong positions across our footprint that if there are opportunities that make sense, in many cases, we can somewhat, you know, be patient, and we can layer those in when and where it makes sense.

Spiro Dounis: Great. I'll leave it there for today. Thank you, team.

Operator: Thank you. Our next question comes from the line of Zack Van Everen of TPH and Company. Your line is now open.

Zack Van Everen: Hi, all. Thanks for taking my question. Maybe just starting on leg, great to see that online and flowing. It looks like it's flowing a decent amount of gas. I'm just curious if that gas was waiting behind pipe or...

Larry Larson: Yeah. Hey, Zack. This is Larry Larsen. I'll take that one. Question. Yeah. We're, one, really excited to get Leg online. Obviously, we know that one has been a challenging project for us to get to on some fronts and excited to have first flow start last week. And think you're gonna see a mix of yeah. We are seeing some ramp up in productivity that's going to be driving growth on volumes to the system. But you'll also see some we anticipate that to ramp up pretty quickly and hopefully see that being running pretty full here by the end of the year.

Zack Van Everen: Got it. That makes sense. Maybe you stick on the same team. Maybe just an update on your guys' overall macro view in the Haynesville in the Northeast. We've seen prices come down a bit, but we've also seen some private producers around your system add quite a bit of rigs. So maybe just a general view on the volumes across the systems through the rest of the year.

Chad Zamarin: Yeah. I'll start and then let Larry talk about producer activity. I think we tend to say this often, you know, lower prices continue to, I think, confirm the demand for natural gas. You know, today, gas is about a quarter of the cost of oil on an MMBtu basis. And a quarter of the cost of electricity, you know, at the delivered retail level. And so, you know, having an attractive price for natural gas frankly, in time when we're seeing utility bills increase across our footprint, I think, is reaffirming the demand for natural gas. So that's a good thing. From our perspective. And, you know, we do see very clear line of sight to growing demand.

And so, you know, I'll let Larry talk about current producer activity. But, you know, we were, I think, already talking about the supply and demand balance through the end of the decade being to call significantly on the Haynesville, call significantly on the Permian. And then as much as we can out, you know, unlock from the Northeast. And that was before we started to see more in basin demand start to materialize because of power generation growth across the entire United States. And so you've seen projects like NESE. NESE was not in the supply and demand balance for the Northeast.

And so, you know, we're seeing projects that are being announced that are gonna add demand to the footprint of our country, and we're gonna need to continue to see a big call on gas. And so I think we like the fact that low natural gas prices are showing the power of natural gas to be that low-cost solution for our country, and we definitely think we will see that demand grow even beyond what was being modeled through the end of the decade. But, Larry, maybe you could speak to current activity levels.

Larry Larson: Yes. We have seen an uptick in activity in the Haynesville and it's been mixed between producers. We have seen some of the privates bring some activity into the Haynesville. We expect the volumes to continue to ramp. We're obviously seeing demand pick up now with leg coming into service and having access to the growing LNG demand in other markets down Gillis? We anticipate through the back half of this year, continued growth compared to what we've seen in the first half. If you think about the Northeast, it's been somewhat mixed, beating which would be producer as well. It's great to see Cotero, their announcement coming out that they're continued activity in the Northeast PA.

So we're anticipating volume growth in the Northeast and as well as in of our development in Ohio Basin. And so it's a little somewhat more moderate probably in the Northeast just you got a mix between producers, but we are seeing some second half of the year volume growth anticipated.

Zack Van Everen: Got it. Appreciate the time, everyone. Thanks.

Operator: Thank you. Our next question comes from the line of Jay Gabelman of TD Cowen.

Jay Gabelman: I first want to ask about the tariff impact on kind of CapEx and build multiples. As we think about new projects that you're going to build, like, NESE,

Larry Larson: Yes. No, great question. This is Larry. I'll take that one. Yeah. Obviously, we're very engaged. Our supply chain is actively monitoring impacts of this. As we look at it, I mean, the steel cost I mean, it can, depending on the project, be somewhere between 5% to 15% of total project cost. And so as we see some of these tariffs, as we look at some of our projects right now, it could have anywhere from a 1% to maybe 3% impact on total project cost. And so nothing too significant at this point. I mean, a lot of that is managed within the contingencies.

If you think about just ongoing management of projects, we're always navigating variability in steel price and so nothing's different here. But really just goes to a lot of the strategic sourcing that our teams do on supply chain front and really trying to get ahead of any constraints that we see in the marketplace right now. But as we think about NESE and other projects near term, we don't see anything that's a significant impact to it.

Chad Zamarin: Yeah. And I would just add, I think we've talked about this, and to put some numbers to it. You know, NESE's a great example. I mean, the FERC, you know, has reinstated the environmental study that was done for NESE last go around. That's an example of helping to lower cost. You know, it costs it can cost several $100 million to get through the permitting phase of a project. So, you know, addressing permitting reform has a way bigger opportunity to impact cost. We were able to receive a favorable permit allowance from the Army Corps of Engineers for spoil for the NESE project.

That was the fact that we've got to, as a country, address permitting reform opportunity for lowering costs for consumers in the U.S. and the tariffs, I think, as Larry mentioned, are something that we feel confident we can manage getting back to making it more efficient to build infrastructure in the U.S.

Jay Gabelman: My second one is on the LNG infrastructure build out. And I noticed that in your slides, you increased the forecast for LNG export projects under construction, and then pre-FID projects within your footprint. And I guess with that moving higher, the question is how does that kind of impact your outlook for additional projects that could build in the U.S. Gulf Coast? Then also, do you think about the storage opportunity with the LNG build out continuing to move up into the right?

Chad Zamarin: Yeah. So thanks. Good question. And maybe I'll start. First, we've certainly seen I think, with the negotiations that are happening around trade, but also just the fundamentals around natural gas we've seen I think, a lot of upside to the LNG demand case, which is great. We're seeing pretty clear line of sight to that demand growth. I think you're seeing that already kind of play through in some of our early announcements, but this is going to be a story that continues to drive additional project. But Larry mentioned where we are on leg, you know, we've announced an expansion of our Haynesville gathering system that will move more volumes the leg over time.

That project will come online in 2027. That's adding 400 million cubic feet a day of expansion capacity just from our South Mansfield gathering system. And so do think that there will continue to be a pretty significant call. You know, most kind of demand that we're going to continue to see expansion still up projects like Legg and have expansions beyond this current round. Larry, I don't know if you have anything you want to add to that.

Larry Larson: No. I think you hit it pretty well. I mean, on the storage front, we announced the time for expansion early year, and we've got a great footprint in The Gulf. And so as you continue to see LNG demand grow and some of the potential volatility that'll create we expect that will create more opportunity for more storage opportunities in the future. I think that'll something we'll continue to monitor and now, we're just focused on getting primary expansion executed and we'll continue to talk to some of both the producer market as well as the LNG market on what the needs for additional storage will look like.

Chad Zamarin: Yes. I think on that note, it's probably worth saying, Pine Prairie, as we announced that been able to pull together sufficient support the project, but even have seen demand beyond that project capacity. And so teams are already working on the next round of storage expansion opportunities. So we do think that's gonna be added.

Jay Gabelman: Great. Thanks for the answers.

Operator: Thank you. Our next question comes from the line of John McKay of Goldman Sachs.

John McKay: Hey, everyone. Thank you for the time. I wanted to ask on two Transco projects. Just on the first one, you talked on this briefly of being able to pull forward Sessie a little bit. I think you've even potentially more forward. Could you just kind of walk us through, what you're thinking there and kind of what you're looking for to get a better sense of...

Larry Larson: Yeah. So this is Larry. I can take that one. So, yeah, it's great news. Far as being able to have an environmental assessment, versus going through a full environmental impact statement related to CECI. And so that helps speed up the permitting timeline. And so I'll hopefully be able to get a notice proceed on that project next year and be able to move that up a quarter in full in service. We are anticipating some opportunities to have partial in service come in at the 2021. We're still kind of finalizing the actual scope of that and how we'll end up contracting that from a revenue standpoint.

But I think pretty excited news to be able to bring that in and accelerate some value in 2027. So that's kind of the main feedback on it.

John McKay: Alright. That's helpful. Thank you, man. Second one is it does look like Power Express, the size was kind of refined. Down a little bit. Maybe just walk us through the thinking there and capacity over time. Thanks.

Chad Zamarin: I'll start and see if anyone wants to add. But I do think anytime we were pulling a project together, we went through the same process. I think if you recall on Southeast Supply Enhancement, we're really the team's work to find the optimum most efficient size of the project from a build and capital efficiency perspective and also from a market perspective. And we did see more demand than what we ultimately decided to contract for in this first round of the project. But we kind of found that point of efficiency. And I would say, you know, don't it isn't don't necessarily interpret the amount of volume to equate to the highest returning, highest value project.

And we were looking we're constantly looking for the sweet spot to find the point of efficiency from a capacity and capital efficiency perspective. And I think we've founded for Power Express in but I would say, continue to see along that entire corridor quite a bit of additional demand. And so that we don't expect that to be the last project along that footprint. So we'll continue to work on the next round of opportunities.

John McKay: Appreciate the time. Thank you.

Operator: Thank you. Our next question comes from the line of Manav Gupta of UBS. Your line is now open.

Manav Gupta: Good morning, guys. I wanted to talk a little bit about Rockies Columbia connector project. Can you get more details about it? Looks very interesting project. Talk about some benefits and what would be the path forward here?

Larry Larson: Yes. This is Larry. I can hit on that. I mentioned a little bit earlier in the comment. So went out with a nonbinding open season that closes tomorrow. Really, that's the big driver of it is increased demand and as we're seeing across Washington, Oregon and Idaho in those markets, a lot of it's driven by power generation needs, but just also enhancing reliability as we're continuing to see the systems get fully utilized. And so I think as we think about those markets, it's been ones where they haven't really growth in natural gas. We're excited to see a shift in perspective and excitement around the need for additional infrastructure.

And so we'll be working to close out that open season and hopefully work through negotiations with some of the anchor shippers and progress that forward to an FID at some point here shortly. But so far, it's been really, I think, exciting interest in it. And it'll be a nice expansion for the Northwest pipeline system going into one of our key market areas.

Chad Zamarin: Yeah. I think it's important, Larry mentioned, and we've been talking about this, we've seen peak power demand peak natural gas demand across all of our transmission assets over the last several years. We just talked about seeing peaks summer demand on Transco in a summer that isn't abnormally hot. In fact, it's quite a bit cooler than it was last summer. That kind of activity across our footprint will be a precursor to additional expansion. I mean, that is a signal that these markets need more capacity.

And we've talked about the fact that as the country continues to add intermittent resources to our energy system that we're going to continue to need more natural gas infrastructure to meet peak demand. And so I think you know, we're seeing that theme play out across the footprint in the Pac Northwest. Certainly, following that same fundamental.

Manav Gupta: Thank you. And my quick follow-up here is it's been about like, seven or eight months since you have had a new administration. I'm just trying to understand have things actually changed on the ground permitting, and people from this government reaching out to you, do you now have a seat at the table in determining the policies which can drive, you know, energy independence of United States. Thank you.

Chad Zamarin: Yeah. I'm gonna let Lane weigh in on that, but the first thing I'd say is that I think that our teams have done a great job having a seat at the table irrespective of administration. Our strategy is not designed to, you know, play to anyone kind of administration or constituency. I would say that we have seen an increase in clearly support recognition for the need for our infrastructure. Some of that is I think, because of the new administration. But I think most of that is because just the recognition that we need low cost, affordable, reliable, energy, and natural gas is the tool that, you know, best provides that.

But we are very active at the table. And, Lane, maybe you can give an update on just the permitting reform and the general landscape as you see it.

Lane Wilson: Yes. Thanks, Chad. And I couldn't agree more with Chad's comments. Think we had a seat at the table previously, and we certainly have one now. And probably the biggest thing that could happen, I think we've got some tailwinds. I think the administration is certainly behind us, would be permitting reform. It almost made it through the one big beautiful bill. Unfortunately, the senate parliamentarian struck it near the end. But I think the energy cost in this country the recognition of the need for more and more natural gas, and more and more linear infrastructure sort of set the table for the possibility of a nice permitting reform package. At near the end of the year.

It's politics, so we never know. But I certainly think that we're in the game, and we're hopeful that could happen via bipartisan effort because truly would be good for all Americans.

Manav Gupta: Thank you.

Operator: Our next question comes from the line of Theresa Chen of Barclays. Your line is now open.

Theresa Chen: Good morning. In terms of the guidance increase, it looks like you bumped AFFO more than adjusted EBITDA at the midpoint. Was this the result of tax savings expected at post OBBB? Or were there other drivers of this delta?

John Porter: Thanks for the question, Theresa. I know there's a few questions about the overall impact of the OBV on our cash taxes. So maybe I'll just hit that more comprehensively. I did note in my comments that restoration of the 1% bonus depreciation in the field did create significant cash tax deferrals for us. And those will be tied to, in general, to the in service dates of the non-regulated capital investment that we are making and that we will be making, including all of those power innovation projects that are coming as well as other gathering and processing investment. You know, for 2025, I discussed that we had basically moved our current taxes down by about $100 million.

So specifically to answer your question, the two biggest impacts to the increase in AFFO per share guidance were of the current income taxes. Again, seeing questions about kind of the impact of this going forward. As we think about, for example, 2026, it'll be another year where we'll have significant growth in earnings. In '26. And based on kind of what we're seeing now, we would expect the cash tax would be at or below our 25 levels. Given the benefits of the 100% bonus depreciation. So again, less than $200 even though we'll continue to consistently grow taxable income and earnings.

And if you think about 'twenty five and 'twenty six cash taxes, those numbers that I've been discussing around $200 million those are really tied more to the corporate alternative minimum tax which is a reminder that the payments that we're making under the corporate alternative minimum tax can be used to offset future regular tax amount owed. So you start looking beyond '26, and I think the overall effects of the bill will be largely dependent on the amount of non regulated capital investments that we'll be placing in service in any given year.

But I'm pretty optimistic that we're going to continue to see really significant cash tax deferrals beyond 'twenty six, especially when we look at the slate of power innovation opportunities that are out there for the team.

Theresa Chen: Thank you for that detailed answer, John. And with the project runway on Gas Power Innovation, survey data centers and AI in particular, can you provide us an update about how you're using AI within your own organization at this point, whether it be on the cost saving side or he's on the commercial side, bringing this full circle.

Chad Zamarin: Yeah. I'll start and then maybe Larry know, can chime in. I mean, we've certainly been adding capabilities within the organization. You know, our great chief technology officer, Brian Leskis, retired last year, but we were able to hire his replacement, Naveen. Has been coming in with a lot of passion around AI and truly a the organization, both on the cost and efficiency side, but also on the way we transform how we do our business.

You know, you think about the projects that we're taking on and the scale of those projects, in many cases, being larger, and, you know, our team Eric Gorman, who leads our project organizations working closely with Nadim and bringing artificial intelligence capabilities to how we do that business. Our market intelligence functions are adding data analytics capabilities. You know, you think about our footprint, both from Sequin perspective, but also from an infrastructure perspective. We've got such incredible knowledge and information across the organization. How can we better integrate that information and understand how markets are behaving, and then ultimately, how we can develop infrastructure solutions to provide support for those markets.

But, Larry, you might have some direct examples you want to share.

Larry Larson: Yeah. No. That's I think you hit it pretty well right now. We're very focused on just getting the data into the hands of our teams to be able to make really smart decisions around it. And that's both on the commercial front, on the project execution, and in our day-to-day operations as we think about our maintenance strategies and practice and trying to find efficiencies in how we how and when we do maintenance on our facilities. And so I think there's some really good opportunities there. I think we're in the early stages of how we think about AI is gonna complement that.

But excited about Naveen coming in and bringing energy and working with our team to actually bring some of that to fruition.

Chad Zamarin: And I'll just give you a little anecdote, and this will be for Rob Wingo to figure out how to make happen everywhere. But last year, we did a test case where we had some of our young talent compete with one of our 10-year traders in our Sequin business on a unique asset in the Dallas-Fort Worth area. And for a month, the young programmers, data analytics team was building AI models to figure out how to market energy in the Dallas-Fort Worth area.

And after the end of a month, if you looked back and thought about what perfect execution would look like, and if it would have been a 100%, you could have predicted weather, price, the supply and demand. Our 10-year gas trader scored around a 94%, and one of the AI modelers scored a 96%. And it gives you an idea of the power of, you know, someone who had never marketed energy before. Think about what we could do as a country to be just a even just that initial case of being a few percentage points more efficient in how we market energy across the United States.

It's given us a lot of, I think, excitement around our ability to bring our unique proprietary capabilities and knowledge and build smarter solutions for our customers.

Theresa Chen: That is a fascinating exercise. Thank you both.

Operator: Thank you. Our next question comes from the line of Bert Sanzivaro of Wolfe Research. Your line is now open.

Bert Sanzivaro: Hi, good morning. Just a quick one on NESE. Just what are the next steps from here, and what needs to happen on the approval side? For the project to be in service by 2027? And then how quick is the physical build timeline?

Chad Zamarin: Yeah. Look. I don't think you can understate the importance of NESE. First, I want to give a shout out to our team. That's a traditionally been a pretty tough place to develop infrastructure. But we are certainly seeing the market and I think the even the, you know, the political atmosphere shift in recognizing the benefits of natural gas. And so, you know, that, yesterday signing the commercial agreements on NESE was a huge signal, you know, from the utilities that they recognize the need and they believe are seeing support from the regulatory bodies, in New York move forward with the project. And so the next steps are we will file today the agreements with the FERC.

And, you know, we expect the FERC to act pretty quickly. You know, we've seen the BERT really do its job well over the last several months. And so we do expect the FERC to quickly in reinstating the certificate. And then we still need to receive the New York water permit. And we are on file for the water permit, and the state has issued a notice of complete application. And we do expect the state to issue the water permit once the Public Service Commission affirms our customers' plans for the project. And so we expect that to happen within the next couple of months.

And assuming that all happens on time, I think everyone is very focused on trying to maintain that schedule. We would actually break ground this year and then be more active in construction next year, bring the product online. We're targeting right now a 2027 in service for this, ahead of the 2027 winter heating season.

Bert Sanzivaro: Thanks for that. And just for my second one, you mentioned a bit in prepared remarks on it, but if you could just please speak to how discussions are tracking on the Transco rate case, latest expectations, and are you optimistic on getting some form of tracker for emissions reduction spend?

Larry Larson: Yes. So, Larry, I can take that question. And the team has been doing a great job engaging with the shipper group on the rate case settlement discussions. We're not quite there yet, but we're getting really close, optimistic we'll end up there. I think as most people know when we filed our motion on it, we were seeking to have a modernization tracker in it. I think through the negotiations right now. I'm not optimistic that we'll have that in here. I think that we still think that's the right answer longer term as we think about the need for modernization. And so if we're not successful in this settlement negotiation, we'll continue to look at the projects.

Going forward, but we'll kind of think about the timing of those as it relates to the next rate case.

Bert Sanzivaro: Thank you.

Operator: Our next question comes from the line of Jean Ann Salisbury of Bank of America. Your line is now open.

Jean Ann Salisbury: Hey, good morning. I just have one. Can Sessie be expanded further? It seems like demand in the Southeast only continues to increase. What is the constraint on this current size of Sessie at 1.6 BcFD? Was that a customer contracting number, or was it more of a mechanical limit of compression that you could add?

Chad Zamarin: Yeah. No. If you roll back the tape to assess these original FID, it was a timing and, again, kind of finding that sweet spot from a capacity and efficiency perspective, but also from a timing perspective. We needed to kind of, you know, shut the book on that episode and chapter of the project so that we could maintain pace to get it in service in 2027. We do still see significant opportunity and demand along those corridors, both serving the Mid Atlantic and Northeast from the South, but also bringing more volumes in, you know, the Marcellus and Utica and attracting those to markets from the North.

And so that Transco in general along the Eastern Seaboard, we think, we'll continue to have quite a bit of expansion opportunity. And so yeah, Sessie we won't we from a permitting and project execution perspective, we won't change the scope of CESE, but there are additional expansion projects along that corridor that the team is working on every day.

Jean Ann Salisbury: Great. Thank you. I'll leave it there.

Operator: Thank you. Our next question comes from the line of Robert Catellier of CIBC Capital Markets. Your line is now open.

Robert Catellier: Hey, good morning. Chad, I think you mentioned your early comments, the need for speed. And you've already announced one project being accelerated. So I'm curious what you're seeing in terms of additional opportunities to either accelerate or upsize existing projects as we've seen with some of your peer group this quarter. And on a related note, what's your comfort level in terms of carrying temporarily higher leverage as a result?

Chad Zamarin: Yes. I'll let John weigh in on the higher leverage. I think we demonstrate our ability to grow the business from an, frankly, a peer-leading perspective without straining the balance sheet. John can talk more about that. And then from a need for speed perspective, yes, I think you will continue to see us press the accelerator as much as possible on any project that we have underway. But, also, meeting the customer, you know, where their needs are.

And that's why layering in, you know, a nice complement of longer-term projects over the long-range horizon of the plan, but also delivering power innovation behind the meter creative solutions for customers that frankly can't wait for the longer-term build-out of the grid will continue to be our strategy. And so I mentioned adding another, you know, gigawatt of power innovation projects by 2027. You know, that kind of speed to market, you know, is, I think, unique. And demonstrates the team's ability to pull together a lot of different capabilities and to do it very quickly. But yeah, we will continue to press to see what other projects can be brought faster.

But, John, maybe you address the balance sheet.

John Porter: Yes. Thanks, Chad. Maybe just starting with 2025. When we put out our original guidance for 2025 back in February '24, we had a leverage target of 3.65 at midpoint of guidance. You know, since then, we've added, you know, all of the Socrates spend, which was over $900 million in 2025 and some other spend related to CECI. And it looks like we're gonna be able to basically stay at that original leverage.

So I think, you know, if you think about our overall leverage targets of 3.5x to 4x, as we look out with our long-range plan, we see lots of capacity on the balance sheet to be able to add projects and not even begin to strain that four times top level. So I think we feel very comfortable that we can operate within this three and a half to four times and pursue a very large-scale CapEx budget. But again, we're very focused on the returns on these projects and being careful that we continue to demonstrate that the investments we're making are really leading the industry in terms of cash returns. That's a very high priority for us.

But the balance sheet's not going to be an issue I don't believe, over the next few years, even though we are seeing as many of these opportunities as we've seen in a long time.

Robert Catellier: K. That's helpful. And last one for me. It's You've been active on GMP acquisitions over the last couple of years. I wonder how much more investment you might see there and where do you see the gaps in the value chain or the regional capability?

Chad Zamarin: Yeah. I think the great news for us, and we've just been through our strategy process with our Board. There really are no must-fill gaps. We can deliver, we think, continue to deliver industry-leading growth without having to fill any holes. And so that's a great position to be starting from. So that means we can be very opportunistic, you know, across our footprint. We tend to focus on projects that are M&A that's within our footprint. I mean, at the end of the day, you know, we use the same capital allocation model for M&A that we as we do for capital projects.

So those projects, those opportunities have to compete with high return growth projects, which is why you tend to see us be very disciplined and opportunistic in pursuing targets that synergy value. And so I think you'll continue to see more of that but we don't feel like we have a strategic hole that needs to be filled in order to achieve our, you know, really, I think, impressive growth outlook. We'll continue to take advantage of our footprint and look for, you know, high leverage opportunities across the footprint.

Robert Catellier: Thank you.

Operator: That concludes the Q&A portion of our call. I would now like to turn it over to President and CEO, Chad Zamarin, for closing remarks.

Chad Zamarin: Great. Well, thank you for joining us today. Thanks for the robust Q&A session, and thanks for your interest in The Williams Companies, Inc. We look forward to speaking with you again soon. And in the meantime, we wish you well.

Operator: Alright. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.