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Williams to Report Non-Cash Impairment Charges in First Quarter Related to Venezuela Operations, Investments as Result of PDVSA Non-Payment

Posted on: Wednesday, 29 April 2009, 07:00 CDT

TULSA, Okla., April 29 /PRNewswire-FirstCall/ -- Williams (NYSE: WMB) announced today that it plans to report non-cash charges to net income attributable to The Williams Companies, Inc., of approximately $241 million in first-quarter 2009 related to its operations and investments in Venezuela.

Based on its current assessment of the situation detailed below, Williams is recording a reserve for uncollectible accounts receivable and impairing the associated long-lived assets and equity and cost-based investments to an estimate of their fair value. Williams will report a net loss in the first quarter as a result of the charges.

In Venezuela, Williams' midstream business has investments in and operates entities that provide services to Petroleos de Venezuela S.A. (PDVSA) under long-term agreements. Services include medium-pressure compression, high-pressure gas injection, gas liquids extraction, and gas liquids fractionation. The company's exploration and production business also owns a minority interest in an oil and gas operation which is majority-owned by a Venezuelan government-owned entity.

In its 2008 Form 10-K, filed Feb. 25 with the Securities and Exchange Commission, the company described the uncertainty of collecting its Venezuela receivables because PDVSA had ceased its regular payments to many service providers, including Williams, in late 2008. At the time of its Form 10-K filing, Williams expected that the amounts would ultimately be paid.

Because of continued non-payment by PDVSA and other current circumstances, Williams now believes that it is probable that PDVSA will not pay amounts owed, and that the company's associated long-lived assets are impaired. The company has issued notices of default to PDVSA, and continues to operate the assets. In the event that PDVSA does not cure the defaults and does not comply with its contractual obligations to purchase the related assets, Williams will pursue all rights available to it under its agreements, including international arbitration.

As a result of ceasing revenue recognition for the assets, Williams expects a loss of earnings from its Venezuela operations to reduce its full-year 2009 recurring results by approximately $0.04 per share.

After the adjustments and as of March 31, Williams' carrying value associated with its Venezuela operations is primarily comprised of $67 million of restricted cash, $106 million of property, plant and equipment, and $161 million of secured debt that is non-recourse to Williams.

Williams' initial investment and operations in Venezuela began in November 1997.

The company will provide more detail on the charges and its investments in Venezuela in its first-quarter 2009 Form 10-Q.

About Williams (NYSE: WMB)

Williams, through its subsidiaries, finds, produces, gathers, processes and transports natural gas. Williams' operations are concentrated in the Pacific Northwest, Rocky Mountains, Gulf Coast, and Eastern Seaboard. More information is available at http://www.williams.com. Go to http://www.b2i.us/irpass.asp?BzID=630&to=ea&s=0 to join our e-mail list.

Contact: Jeff Pounds Williams (media relations) (918) 573-3332 Richard George Williams (investor relations) (918) 573-3679

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 the Private Securities Litigation Reform Act of 1995. You typically can identify forward-looking statements by the use of forward-looking words, such as "anticipate," believe," "could," "continue," "estimate," "expect," "forecast," "may," "plan," "potential," "project," "schedule," "will," and other similar words. These statements are based on our present intentions and our assumptions about future events and are subject to risks, uncertainties, and other factors. In addition to any assumptions, risks, uncertainties or other factors referred to specifically in connection with such statements, other factors not specifically referenced could cause our actual results to differ materially from the results expressed or implied in any forward-looking statements. Those factors include, among others:

;

• availability of supplies (including the uncertainties inherent in assessing, estimating, acquiring and developing future natural gas 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 the current economic slowdown and the disruption of 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 proposed climate change legislation), environmental liabilities, litigation, and rate proceedings;
• our costs and funding obligations for defined benefit pension plans and other postretirement benefit plans;
• changes in the current geopolitical situation;
• 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;
• our exposure to the credit risks of our customers;
• acts of terrorism, and
• additional risks described in our filings with the Securities and Exchange Commission.

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. In addition to causing our actual results to differ, the factors listed above may cause our intentions to change. Such changes in our intentions may also cause our results to differ. We disclaim any obligation to and do not intend to publicly update or revise any forward-looking statements or changes to our intentions, whether as a result of new information, future events or otherwise.

SOURCE Williams

Source: PR Newswire

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