With total natural gas consumption in the U.S. expected to increase 14% by 2035, oil and gas companies have stepped up their operations. Oklahoma-based Williams Cos. (NYSE: WMB) is one company that is looking to jump on the bandwagon and help bring natural gas to the market.

The growth prospects for the company are enormous, and Fools should take a look.

Income matters
Williams Partners, which controls Williams' gas pipeline and midstream business, operates approximately 13,900 miles of pipelines, which have an annual capacity of 2.72 trillion cubic feet. That figure is growing quickly.

The unit has shown staggering growth in the last five years. Revenue from this segment has grown by more than four times to $5.8 billion in the last 12 months, from 2006 levels. Overall, LTM revenue has grown by 7.6% to $9.6 billion.

As the company's business has expanded, its efficiency has also gone up in the process. Its operating margin has increased to 17.4% in the last 12 months from 14.1% back in 2006.

Financial stability is important to all businesses, but particularly ones that are exposed to vicious commodity cycles like natural gas companies. In this case, Williams' debt-to-equity ratio, which stands at 102.6%, is high on an absolute basis (which is not great), but is similarly elevated when compared to Enterprise Products' (NYSE: EPD) 119.5% and El Paso's (NYSE: EP) 190%. This relatively high ratio is clearly in line with industry norms and, at present, is not a major worrying sign as you'll see in just a second.

The company's LTM free cash flow stands at $554.5 million, up from $454.6 million, a year ago. With a current ratio of 1.0 time, the company has just enough monetizable assets on its books to satisfy its short-term obligations, which is fine. On top of this, a high interest coverage ratio of 6.6 times puts the company in no real trouble as far as payment of near-term debt is concerned.

Value and yield
With a forward P/E of 20.24, Williams is in sync with its peers. Enterprise's forward P/E stands at 22.17 times whereas El Paso sports a forward P/E of 17.46 times. 

On a cash basis, however, the company appears to look cheaper than its peers as its TEV/FCF ratio suggests. The ratio stands at 50.24 times compared to Enterprise's high TEV/FCF of 298.63 times. (El Paso has negative free cash flow; hence its TEV/FCF is not meaningful.)

But the thing to consider here is that Enterprise and El Paso are more highly levered than Williams, which reduces that overall FCF figure because debt demands repayment. They have invested heavily in capital expenditures to help fund future growth, leading to El Paso's negative free cash flow and Enterprise's low FCF of $163.5 million. And that's not such a bad thing -- potentially.

Williams, on the other hand, looks like a steadier play and has already raised its dividend to $0.80 this year and plans to increase it 15%-20% more by July 2012. The current dividend yield stands at 2.7%.

Growth plans
The company has been rapidly expanding its presence in the Marcellus shale play. It has already spent $1 billion in the last two years to further strengthen its footing in the area. It is also planning to construct a 261-mile natural gas liquid/olefin pipeline from its Fort McMurray facility in Canada. Overall, it plans to make investments worth close to $4 billion in the next two years to help fund growth.

To add to this, Williams is looking to beat Energy Transfer Equity (NYSE: ETE) in the race to acquire Southern Union (NYSE: SUG). The deal, reportedly worth $5.1 billion, if successful, will help expand its network as Southern operates a natural gas pipeline over 5,000 miles.

These efforts will greatly expand Williams' capacity and help it cater to the growing natural gas market.

The Foolish bottom line
Looking at the growth prospects, Williams looks like a very promising stock to hold in the long run. Investors should take note.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.