Along with disappointing 3Q earnings announced by Williams camean acknowledgment by management that the company continues toachieve disappointing results in several of its businesses. Withresults reduced by energy market conditions and by pre-tax chargesand write-downs of about $70 million, or 10 cents/share, Williamsreported unaudited net income of $32.1 million, or 7 cents/share ona diluted basis, for the third quarter. This compares to unauditedrestated net income of $13.7 million, or 3 cents/share, for thesame period of 1997, a quarter in which results were reduced by 17cents/share for the cost of debt 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. The pipeline group reported operating profit of $141.7million, identical to the operating profit reported in 3Q97. Thequarter benefited from Transco’s expansions, new services offeredon the Transco and Texas Gas systems and lower operating andmaintenance expenses. Quarter-to-quarter operating profit is flatbecause the third quarter of last year included favorableadjustments to certain accruals. Although disrupted by hurricanesduring the quarter, Williams completed the first phase of itsMobile Bay expansion, a suite of regulated and unregulated gasprojects that provide a strategic platform for growth in theeastern Gulf.

Energy Services reported third quarter operating profit of$116.6 million, compared with $137.3 million in 3Q97. The benefitof substantially higher electric power marketing and trading, loweroperating losses from retail propane operations and increasedpetroleum pipeline transportation activities was more than offsetby lower refining and per-unit gas liquids margins. Also, resultsfrom gas trading and ethanol activities were lower. And the quarterincludes credit loss accruals of $26.4 million, partially offset bysettlement of a long-term transportation contract. On the brightside in energy services, a California electric power marketingarrangement launched this summer already has proven successful.

©Copyright 1998 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press,Inc.