WILLIAMS COMPANIES, INC.WMB
WILLIAMS COMPANIES, INC. Fair Value Disclosure
Note 16 – Fair Value Measurements, Guarantees, and Concentration of Credit Risk
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 December 31, 2025: | |||||||||||||||||||||||||||||
| Measured on a recurring basis: | |||||||||||||||||||||||||||||
ARO Trust - Transco | $ | 356 | $ | 356 | $ | 356 | $ | — | $ | — | |||||||||||||||||||
Commodity derivative assets (1) | 336 | 722 | 431 | 158 | 133 | ||||||||||||||||||||||||
Commodity derivative liabilities (1) | (340) | (915) | (497) | (270) | (148) | ||||||||||||||||||||||||
| Additional disclosures: | |||||||||||||||||||||||||||||
| Guarantees | (35) | (28) | — | (12) | (16) | ||||||||||||||||||||||||
Debt by issuer, including current portion: | |||||||||||||||||||||||||||||
Williams | (21,649) | (21,556) | — | (21,556) | — | ||||||||||||||||||||||||
| Transco | (5,888) | (5,941) | — | (5,941) | — | ||||||||||||||||||||||||
| NWP | (748) | (747) | — | (747) | — | ||||||||||||||||||||||||
| MountainWest | (376) | (385) | — | (385) | — | ||||||||||||||||||||||||
Total debt | (28,661) | (28,629) | — | (28,629) | — | ||||||||||||||||||||||||
Assets (liabilities) at December 31, 2024: | |||||||||||||||||||||||||||||
| Measured on a recurring basis: | |||||||||||||||||||||||||||||
ARO Trust - 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 17 – Commodity Derivatives).
Fair Value Methods
The following methods and assumptions are used in estimating the fair value of financial instruments:
Assets and Liabilities Measured at Fair Value on a Recurring Basis
ARO Trust
Transco is entitled to collect rates in the amounts necessary to fund its future AROs and deposits a portion of the collected rates into an external 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 fund held in the ARO Trust is considered an investment. Both realized and unrealized gains and losses are ultimately recorded to the ARO regulatory asset.
Effective March 1, 2026, the annual funding obligation is approximately $51 million. See Note 18 – Contingencies and Commitments for additional information.
Investments within the ARO Trust were as follows:
| December 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||
Amortized Cost Basis | Fair Value | Amortized Cost Basis | Fair Value | |||||||||||||||||||||||
(Millions) | ||||||||||||||||||||||||||
Money market fund | $ | 34 | $ | 34 | $ | 27 | $ | 27 | ||||||||||||||||||
U.S. equity funds | 53 | 169 | 53 | 146 | ||||||||||||||||||||||
International equity fund | 32 | 51 | 32 | 40 | ||||||||||||||||||||||
Municipal bond fund | 104 | 102 | 88 | 84 | ||||||||||||||||||||||
Total | $ | 223 | $ | 356 | $ | 200 | $ | 297 | ||||||||||||||||||
Commodity derivatives
Williams’ commodity derivatives include exchange-traded contracts and 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 17 – Commodity Derivatives for additional information.
The following table presents a reconciliation of changes in fair value of the net commodity derivatives classified as Level 3 in the fair value hierarchy.
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (Millions) | |||||||||||
| Balance at beginning of period | $ | 48 | $ | 53 | |||||||
Gains (losses) included in Williams’ Consolidated Statement of Income | |||||||||||
| Purchases, issuances, and settlements | (31) | (1) | |||||||||
| Transfers into Level 3 | (78) | 1 | |||||||||
| Transfers out of Level 3 | (4) | — | |||||||||
| Balance at end of period | $ | (15) | $ | 48 | |||||||
The derivatives classified within Level 3, including those transferred in during 2025, primarily reflect long-term energy commodity contracts valued based on pricing inputs that include internally-developed estimates for prices beyond observable periods, which are considered significant unobservable inputs to the valuation.
Additional Fair Value Disclosures
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 December 31, 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.
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 (see Note 13 – Debt and Banking Arrangements).
Nonrecurring fair value measurements
In December 2025, Williams’ management approved a plan to sell certain gas gathering assets in the Mid-Continent region. These operations were designated as held for sale at December 31, 2025. As a result, the fair value of the disposal group was measured using the expected sales price under a contract with a third party which resulted in an impairment of $176 million, which included Intangible assets – net, within the West segment and is included in Impairment or write-off of certain assets within Operating income (loss). These inputs resulted in a fair value measurement of $48 million within Level 2 of the fair value hierarchy. The estimated fair value of the Property, plant, and equipment – net and Intangible assets – net were determined using a market approach, which incorporated indications of interest from third parties.
In September 2025, Williams’ management decided to abandon certain compression assets in the DJ Basin resulting in a $25 million write-off of Property, plant, and equipment – net within the West segment. This write-off represents a Level 3 measurement within the fair value hierarchy, reflecting significant unobservable inputs, and is included in Impairment or write-off of certain assets within Operating income (loss).
Concentration of Credit Risk
Accounts receivable
The following table summarizes Williams’ concentration of receivables, net of allowances:
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| (Millions) | |||||||||||
Natural gas, NGLs, and related products and services | $ | 575 | $ | 594 | |||||||
| Regulated interstate natural gas transportation and storage | 404 | 339 | |||||||||
| Marketing of natural gas and NGLs | 535 | 516 | |||||||||
| Upstream activities | 18 | 45 | |||||||||
Accounts receivable related to revenues from contracts with customers | 1,532 | 1,494 | |||||||||
| Receivables from derivatives | 444 | 294 | |||||||||
| Other accounts receivable | 108 | 75 | |||||||||
| Trade accounts and other receivables - net | $ | 2,084 | $ | 1,863 | |||||||
Williams’ customers include producers, distribution companies, industrial users, gas marketers, and pipelines primarily located in the continental United States. As a general policy, collateral is not required for receivables with the exception of the marketing receivables discussed below. Customers’ financial condition and credit worthiness are evaluated regularly; and, based upon this evaluation, Williams may obtain collateral to support receivables.
Williams uses established credit policies to determine and monitor the creditworthiness of gas marketing and trading counterparties, including requirements to post collateral or other credit security, as well as the quality of pledged collateral. Collateral or credit security is most often in the form of cash or letters of credit from an investment-grade financial institution, but may also include U.S. government securities. Williams also utilizes netting agreements whenever possible to mitigate exposure to gas marketing and trading counterparty credit risk. When more than one derivative transaction with the same counterparty is outstanding and a legally enforceable netting agreement exists with that counterparty, the “net” mark-to-market exposure represents a reasonable measure of the credit risk with that counterparty.
Transco and NWP receivables from contracts with customers are included within Receivables - Trade and Receivables - Affiliates. Receivables that are not related to contracts with customers are included within the balance of Receivables - Advances to affiliate and Receivables - Other.
Revenues
Customers representing 10 percent or more of Transco’s and NWP’s revenues include:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
(Millions) | |||||||||||||||||
Transco: | |||||||||||||||||
| Dominion Energy, Inc (1) | $ | 216 | $ | 217 | $ | 287 | |||||||||||
NWP: | |||||||||||||||||
| Puget Sound Energy, Inc. | $ | 139 | $ | 136 | $ | 126 | |||||||||||
| Northwest Natural Gas Company | 49 | 47 | 47 | ||||||||||||||
| Cascade Natural Gas Corporation | 48 | 46 | 47 | ||||||||||||||
_______________
(1) The 2025 and 2024 amounts are less than 10 percent of Transco’s revenue.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 24, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Feb 24, 2021 | |
| 2019 | Feb 24, 2020 | |
| 2018 | Feb 21, 2019 | |
| 2017 | Feb 22, 2018 | |
| 2016 | Feb 22, 2017 | |
| 2015 | Feb 26, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.