Along with disappointing 3Q earnings announced by The WilliamsCos. came an acknowledgement by management that the companycontinues to achieve disappointing results in several of itsbusinesses. With results reduced by energy market conditions and bypre-tax charges and write-downs of about $70 million, or 10cents/share, Williams reported unaudited net income of $32.1million, or 7 cents/share on a diluted basis, for the thirdquarter. This compares to unaudited restated net income of $13.7million, or 3 cents/share, for the same period of 1997, a quarterin which results were reduced by 17 cents/share for the cost ofdebt restructuring.

“It is never enjoyable to report a quarter that falls short ofexpectations,” said CEO Keith E. Bailey. “.[W]e continue to achievedisappointing financial results in several key areas of ourbusinesses.” Bailey noted gas liquids margins continue to languishat historic lows. Refined product margins and prices have weakenedas they have tracked the year’s decline in oil prices. Low gasolineprices are translating into lower ethanol prices. And, continuingintegration issues in Williams’ communications solutions businesshurt third quarter performance.

Results from Williams’ Gas Pipeline group were static whileresults from Energy Services were off, in part to low commodityprices.

Williams Gas Pipeline group reported third quarter operatingprofit of $141.7 million, identical to the operating profitreported during the same period of 1997. The quarter benefited fromexpansions on the Transco system, new services offered on theTransco and Texas Gas systems and lower operating and maintenanceexpenses within the pipeline group. Quarter-to-quarter operatingprofit is flat because the third quarter of last year includedfavorable adjustments to certain accruals. Although disrupted byhurricanes during the quarter, Williams completed the first phaseof Mobile Bay, a suite of regulated and unregulated gas projectsthat provide a strategic platform for growth in the eastern Gulf ofMexico.

Energy Services, which provides traditional and advanced energyproducts and services, reported third quarter operating profit of$116.6 million, compared with operating profit of $137.3 million inthe third quarter of 1997. The benefit of substantially higherelectric power marketing and trading, lower operating losses fromretail propane operations and increased petroleum pipelinetransportation activities was more than offset by lower refiningand per-unit gas liquids margins. Also, results from gas tradingand ethanol activities were lower. And the quarter includes creditloss accruals of $26.4 million, partially offset by settlement of along-term transportation contract. On the bright side in energyservices, a California electric power marketing arrangementlaunched this summer already has proven successful.

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