Responding to investor concerns related to California’s energycrisis, Tulsa-based Williams Cos. said Tuesday that its fourthquarter earnings will be well above expected earnings estimates.Shares of the company had dropped to a 52-week low last week afternews surfaced that California’s utilities — one of Williams’largest markets — might not be able to pay their power bills.

The No. 2 U.S. gas pipeline operator, which continues to serveCalifornia’s wholesale energy markets, said in a statement that it”does not expect material creditworthiness issues in the fourthquarter.” High prices in California and across the country areboosting its profits, it said. Williams made the announcement earlyTuesday, and the company’s stock responded, rising 4 and 9/16 toclose at 37 and 7/16.

The company was expected on average to earn 17 cents a share inthe fourth quarter, based on a poll of 14 analysts by FirstCall/Thomson Financial. While not disclosing expected earningsnumbers, Williams said its report will “substantially exceed” theestimate. In the fourth quarter of 1999, Williams had earnings fromcontinuing operations of $57.1 million, or 12 cents a dilutedshare, on revenue of $2.45 billion. Its 2000 fourth quarter resultswill be released Jan. 31.

“The driver of our better-than-expected earnings performance iscoming from our energy businesses, which we expect to substantiallyexceed current Wall Street estimates,” said CEO Keith E. Bailey.”The improvement is occurring in many areas of our energybusinesses, but is primarily because of higher trading results.This is due in large part to price volatility in the forward energymarkets that is occurring throughout the nation.”

Most of Williams’ California electric energy position was soldinto forward markets, an arena that the state’s utilities could notparticipate in, said Williams. Because of that, the company doesnot expect to have any credit problems, it said.

In the third quarter, Williams’ energy services unit of tradingand marketing businesses saw its profit double to $311.5 millionprimarily based on energy trading. Sales in energy trading grew by$133.2 million as gas, electricity and gas liquids prices climbed.The energy services unit’s revenue grew 54% in the third quarter to$2.56 billion, up from $1.66 billion a year earlier.

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