Travis Campbell – Head, IR Steve Malcolm – Chairman, President and CEO Don Chappel – SVP and CFO Ralph Hill – President, Exploration and Production Phil Wright – President, Gas Pipeline Alan Armstrong – President, Midstream Gathering & Processing

Steve Maresca – Morgan Stanley Lasan Johong – RBC Capital Markets Seinly Aou [ph] – J.P. Morgan Ted Durbin – Goldman Sachs Carl Kirst – BMO Capital Markets Holly Stewart – Howard Weil Incorporated Rick Gross – Barclays Capital Faisel Khan – Citi Ray Deacon – Pritchard Capital Andrew Gundlach – Arnhold Bleichroeder Craig Shere – Tuohy Brothers Investment Research Brad Lundy – Ivory Capital

Good day, everyone and welcome to the Williams Companies' Second Quarter 2010 Earnings Release Conference Call. At this time for opening remarks and introductions, I'd like to turn the call over to Mr. Travis Campbell, head of Investor Relations. Please go ahead, sir.

Thank you. Good morning, everybody. Welcome to our second-quarter call. As always, we appreciate your interest in Williams. Steve Malcolm, our Chairman and CEO, will review the few slides, we have this morning. Be aware, though, that as always, all of our business unit heads and Don Chappel are available for questions that we'll take right after Steve's remarks. Also, as usual, we've put together a data book, which includes the normal information which we provide each quarter. So this morning on the website, williams.com, you should be able to find the slides, the data book and the press release that was issued earlier today. The second-quarter 10-Q will also be available today and you'll be able to access that on the website as well. At the beginning of the slide deck are the forward-looking statements on slide two and three and the disclaimer on oil and gas reserves on slide number four. Those are important and they're integral to our remarks, obviously, so please review those. Also included are various non-GAAP numbers that have been reconciled back to Generally Accepted Accounting Principles. Those schedules are available and they follow the presentation. So with that, Steve, I will turn it over to you.

Thank you, Travis. Welcome to our call and thanks for your interest in our company. Let's jump right into the slides and I'll start here on slide five. I am most pleased with our ability to strategically expand our business lines during the quarter. As you know, we completed a major E&P acquisition at the Williams level that establishes a significant and growing position in the Marcellus, we now have just under 100,000 acres there. And Williams' partners just recently announced two major Midstream business expansions, the increased stake at Overland Pass and the new cryo plant at Parachute. So continuing with the highlights, second quarter recurring adjusted EPS was up 35% versus the second quarter of '09 on the strength of higher NGL and olefin margins. We've kind of passed over the breakover point in terms of production growth. I think second quarter production marks a resumption of the expected growth and you can see we're expecting 12% in '11 and 16% in 2012, while we live within our drilling cash flows. We are expanding our Marcellus position in all lines of business. The business development opportunities are extraordinary. We are benefiting from increases in the Williams Partners distributions, what is good for WPZ is good for Williams and we've increased some of our cash flow certainty with some new E&P hedges. We've taken some of the risk off the table. As you know, we're 64% hedged in 2010 from a revenue standpoint. We've increased our hedge position in 2011 from 30% to 50% during the quarter. Turning to slide six, please – certainly a consistent theme that we have presented really over the past few years is the attractive, organic growth opportunities that exist at Williams and that's certainly reflected on this slide, one that you've seen before but which shows for the 2010-2012 timeframe, the capital intended to be spent on maintenance of facilities, on maintenance of volumes and for growth by business unit. I don't think I need to say anything more about this. Again, it shows $6 billion in growth during that timeframe. I would like to make one comment and this is the only comment I'll make about Canada, but you see the yellow growth capital in 2011 and 2012. It's fairly significant and most of that that's shown in yellow is associated with three specific projects in Canada, again continuing to take advantage of our first mover technological advantage that we have up in Canada. Turning to page seven, please, or slide seven, continuing to talk about the theme of growth and this, of course, talks about our E&P production growth during the period. We have adopted a very disciplined approach. We are living within our cash flows until such time as we see the macroclimate improve but even though we're living within our cash flows, we are growing production at 30% over this timeframe. You'll also note that Marcellus is becoming a bigger part of the mix. We expect to drill 100 wells in the Marcellus in 2011, running about eight rigs, close to 200 wells in 2012 as we run 14 rigs. So, clearly, Marcellus is becoming a bigger part of our mix. By 2013, it will be our second largest producing basin, by 2015, we would expect that Marcellus would be producing in excess of 500 million a day. As well, the Piceance will continue to be our low-cost workhorse basin that continues to generate very strong returns. Slide eight, please. Continuing again to talk about growth and here we are talking about WPZ Midstream growth. You've seen this slide before. The slices of the pie there show where we will be spending our capital and I think there are just three points that I want to make here. Overland Pass and Parachute capital is now in the guidance pie chart. Secondly, that when you look at the potential spending in each of the categories, obviously, the activity, the business development activity, continues to be very robust. And we would expect that you would see continued growth in the Marcellus, out West, where we already have a very significant position and we continue to be excited with respect to deepwater Gulf opportunities. Slide nine, please. Again, the WPZ Gas Pipeline growth. You've seen this slide before. This talks about the base hits approach that we've used in gas pipes, where all of our projects are backed by long-term commitments with creditworthy customers and so this slide simply shows the $1.3 billion worth of inventory that we have associated with our gas pipeline projects. A few updates – projects placed into service. The 85 North Phase 1 and Mobile Bay South projects in service now. Under construction now, the Sundance Trail. FERC certificates received with respect to the Pascagoula expansion and the Mobile Bay South 2 project, precedent agreements executed on the Midsouth expansion and I'm referring there to the remaining capacity and as well on the Cardinal expansion. And we have an open season ongoing with respect to the Opal Market Link project. So, a lot of activity – bite-sized in nature, although some of the projects, like Northeast Supply Link, which is a $307 million project and the Midsouth expansion, a $214 million project, are fairly large in terms of capital spending. The next few slides I will endeavor to answer some of the questions that we receive most often from investors as I'm out talking, as other officers are out talking or our questions that we're receiving in IR by telephone. But the first one here relates to the slide 10 now – questions asking for more specifics about what's going on in the Marcellus. We've talked about all of the very exciting opportunities that we have there and so let me run through quickly some of the details. As you know, from an E&P perspective, we're approaching now 100,000 acres in the Marcellus. We doubled our E&P lease acreage with the most recent acquisition. Our all-in costs for the now-97,000 acres we hold is just under $7,000 an acre. With respect to the Rex JV, 12 wells have been drilled under that JV, seven wells are now producing, we have one rig operating. Since we took over operation earlier this year, we've drilled one well. That's the Westmoreland County Slavic Trust Well and it appears to be our best well, flowing approximately 4.9 million a day on a 30-day test. We would note that the 70,000 of our 97,000 acres are not part of the JV. We are ramping up our drilling activity. We're adding rigs. We just signed a contract for two additional fit-for-purpose rigs, one comes to us in late August; the other in February of 2011. The first rig will likely be employed in the Rex JV area; the second in the Susquehanna area. With respect to Midstream, the opportunities really here are special. We have the huge JV with Atlas, which clearly was enhanced by the Reliance deal, which is going to allocate more drilling capital near-term. Springville is just proceeding. We may even upside this pipeline depending on business demand. There's a lot of business around the system. We're talking with many other players. I think this project will be a catalyst for other deals. You see a new green dot on the slide there, which shows the location of our Shamrock compressor station. This will likely be a central facility for us and will be the largest delivery point out of the system – out of the Atlas gathering system or the LMM system. We're building or expanding 11 compressor stations in support of Atlas' ultimate production targets and third-party growth opportunities. So a lot going on with respect to the JV with Atlas. But in addition to that, we've talked about the fact that we have 30 confidentiality agreements, we have identified 80 prospects, a lot of deal activity. We continue to work with a number of large parties in the Northeast, Pennsylvania area around significant gathering stepouts. We continue to offer producers a short-term blending opportunity for their ethane. We think that makes a lot of sense near-term. So, a lot of activity, a lot of excitement, probably so much activity that we may need another General Manager to handle the level of activity in the area. In terms of Gas Pipeline, we show two potential projects here, the Keystone Connector and the Northeast Supply Link, both shown on the map. These continue, I believe, to be viable pipeline projects and we continue to talk with shippers. Slide 11 is designed to answer the question. Are you going to exercise your option with respect to Overland Pass Pipeline? And obviously, we answered that earlier this week when we went forward with a press release announcing that we were increasing our interest to 50%. We do have an option to operate there. This is a $425 million transaction. The pipeline is nearly full now. It's expandable to 255,000 barrels. You see some of the announced expansion shown at the bottom of this chart. I would say these are the ones that have been announced thus far. We certainly expect more opportunity to expand beyond this and in fact, I would be disappointed if we don't see more expansions occurring during the near-term. This is clearly a strategic pipeline for us. You look at current volumes flowing and about 60% of those are associated with Williams Midstream and E&P businesses. Slide 12, what's happening with the Rockies basis, is a question that we have been receiving here recently. Certainly, we've seen the Rockies basis forward market for '11 and '12 move to about $0.50. We think the recent moves had to do with unusual weather, on excess hydro, on regional transportation issues but again, as we've pointed out in the past, I think the key is that E&P's exposure on a revenue basis is very modest, some might say de minimis. As a result of the transportation options that we have and the hedging that we've done and so you can see in 2010 that the exposure is about 5%; 2011, it's about 12% and we would expect to bring down the 28% in 2012 as we are successful with more hedging. I would also point out the fact that PZ Midstream benefits from the Rockies basis differential and I would encourage you to look at the data book, which we have a slide in the data book which shows our commodity exposure and we are, clearly, with respect to Rockies exposure, we're flat gas and – for the balance of 2010 and 2011. So, turning to slide 13, a lot of questions about the impact of the moratorium on WPZ and again, you can see that we have tried to give you some numbers associated with the estimated financial effect of a six-month drilling moratorium and a one-year moratorium. As you can see, our expectation is that the moratorium shouldn't last much longer than six months and the 2011 effect is about 2% of expected WPZ segment profit in DD&A, a one-year moratorium effect would be less than 4%. Looking at slide 14, we could probably speak at length here. I'll try to summarize my comments here and we can go into this in more detail in the Q&A session if you would like. But we have had a lot of questions about, well, what happened with NGL and methane prices in the second quarter? What's your short-term outlook? What's your long-term outlook? So let me just organize my thoughts and comments around each of those three main categories. And so in terms of what happened second-quarter versus first-quarter, we saw a steep decline in ethane margins during the second quarter. The primary contributors toward these ethane margins were several outages that went on longer than expected at ethylene plants, which dramatically reduced ethane and EP mix consumption, particularly in the Midwest and so the bottleneck for ethane was ethylene cracking capacity during the second quarter. The ethane price decline was not caused by lack of demand for ethylene as evidenced by the very strong margins that we experienced at Williams' Geismar ethylene facility during the second quarter. What I would point out here that, due to Williams' acquisition of BASF's capacity two years ago at Geismar that we continue to consume about half of our ethane exposure at our ethylene cracking facility at Geismar. So, the lower ethane margins were partially compensated for, during the quarter by the higher ethylene margins that we were able to capture at Geismar. So, turning now to a few comments about the short-term outlook. We believe the fundamentals continue to be very strong for near-term ethane demand as ethane is maintaining its favorable position in being the low-cost feedstock for ethylene production. We are seeing EP storage at Conway is being drawn down to more normal levels as the Midwest ethylene plants have returned to service. Large supplies of ethane from the shale plays require significant infrastructure. So we are not going to see the ethane production from some of these shale plays occur overnight. A great example of that is the Bakken infrastructure project that was announced by ONEOK recently. That's going to take three years before the planned startup. So we see very strong ethylene margins, likely incenting plants to invest in small plant expansions and certainly, Williams has a very low-cost expansion investment going on at Geismar right now, which is an example of that – the actions that the plants may take. Longer-term – longer-term outlook, we believe that the U.S. right now holds a large advantage for being the next low-cost tranche of ethylene production, given the abundant natural gas supplies and we believe the U.S. should be in a strong position to export its ethylene derivative products at a lower cost than incremental production elsewhere in the world. I think the key question long-term will be, will ethylene capacity be expanded to keep pace with increased NGL supplies here in the U.S. and given the current high ethane to ethylene spreads that exist, we think, ultimately, that conversions and low-cost capacity increases will, in fact, happen. Slide 15 just graphically shows you what margins have done over the last few quarters. We have seen strong NGL margins in recent quarters. They came back in the second quarter but again our expectation is they will continue to be very strong relative to historical averages. Page 16, slide 16, the financial guidance update. In terms of earnings guidance, our 2010 midpoint is moving down a nickel to $1.23 on lower NGL margins and a delay with respect to the Perdido Norte startup. 2011 and '12 are unchanged. With respect to capital, 2010 capital is increased for acquisitions, the Marcellus acreage and the Overland Pass pipeline interest and in 2011, capital is increased for the Parachute processing expansion that we talked about earlier. 2012 consolidated shows little change. Slide 17, we introduced the slide on 17 and 18 at our Investor Day meeting. These are the 2010 priorities for value creation, things that we need to do well during the year; things that we need to execute crisply around, in order to have a very successful year and so with respect to infrastructure projects, bringing those online, we now have construction completed on five of the projects that are checked here. We continue to make progress with respect to maximizing growth in the Marcellus and the Eagle Ford. We have already talked about some of those opportunities. On slide 18, we have been successful in initiating growth in the West where we already have a significant position. I'm speaking there about the Parachute cryo and with respect to the WPZ merger with WMZ, just point out that on August 31, the WMZ unit holders will vote to approve the proposed merger. Proxy materials have been sent to unit holders. The record date is July 15. A majority vote of the outstanding WMZ units not held by Williams affiliates is required for approval and assuming unit holder approval, we intend to close the merger transaction shortly after that special meeting. Slide 19, why Williams is a winning investment. We continue to believe that we have the superior assets. We have the very exciting growth opportunities. We have the balance sheet and the discipline to create significant future value for our shareholders. So with that, I will – we'll move into the Q&A session. Thank you.

(Operator Instructions) And we’ll take our first question from Steve Maresca from Morgan Stanley. Steve Maresca – Morgan Stanley: Good morning everybody. So my first question is on gas production and I appreciate how you guys have started to grow in the second quarter sequentially over the first quarter. But just what, if you guys are such are a low-cost operator in the areas that you're in, what holds you back from growing even more than you are right now in this gas price environment and what would change that?

This is Ralph. What you also heard Steve talk about is we're staying within our cash flows, which is what we did. Last year, we actually did cut our budget severely to save even more than that. So bottom line is, it's just a function of what we're – how much we're drilling now that we've gone to nine rigs in the Valley and four rigs in the Highlands. When the breakover point hits, which it's hitting now, the volumes start to expand rapidly and that's what we expect will happen. So what you really see is the effect of going from basically 28 rigs down to eight and now we're at 13. And we're just starting to – as we move back up from above eight, you'll see that the volumes will start to take off. Other areas such as Powder River, our partners had a delay in the dewatering process of their volumes and that's caused the Powder River to not come on as fast as we would like that to come and then you'll see, as Steve mentioned here, in the near future, as we start to add in the Marcellus and start to drill out the acreage that we already have, the 97,000 acres, you'll see a rapid growth in the Marcellus volumes. Steve Maresca – Morgan Stanley: Okay. In terms of using WPZ as a source of cash, you get the general partner and the dividends from the PZ stock. What are the thoughts on the remaining assets at WMB migrating into WPZ in terms of timing for that?

Steve, this is Don Chappel, good morning. Steve Maresca – Morgan Stanley: Hi.

The remaining assets include an interest in Gulf Stream pipeline, a 25.5% interest, because of a partnership agreement related to a tax matter. We were precluded from dropping that down in the same calendar year that we did the initial drop-down. So that is eligible and certainly one that we would certainly expect to drop down at a future date. We are certainly not providing any guidance on timing. Second is the Canadian assets. The Canadian assets are relatively modest in size today but growing very rapidly. We also think that – we also have nearly $500 million of international cash at Williams that will fund the initial tranche of that growth. So, I think we're several years away from considering the possibility of a drop-down. So I'm not signaling that we will or will not, but I think, certainly, while we're still consuming Williams excess cash that's held internationally, it would not be prudent. Steve Maresca – Morgan Stanley: Okay. Thanks a lot. I'll get back in the queue.

And we’ll take our next question from Lasan Johong from RBC Capital Markets. Lasan Johong – RBC Capital Markets: I'm actually interested in the other way around, Steve. What flexibility do you have to push E&P production down next year if things – if pricing doesn't improve?

Well, Lasan, you've seen us have the ability, as Ralph indicated earlier, to ramp up and ramp down. And here most recently, we've ramped down. We moved from 28 rigs in the Piceance down to eight. And so we have the ability to ramp down as necessary, depending on what kind of price signals that we're getting. So, the short answer to your question is that we certainly have the ability to ramp down if the price signals become very weak, as well as having the ability to ramp up if the price signals exceed our expectations in '11 and '12. Lasan Johong – RBC Capital Markets: But I'm assuming that in order to plan for your CapEx spending, you've already contracted for a certain number of rigs next year. But I'm assuming also that you have some flexibility in whether you take those rigs into operation or not. So I'm wondering how much rig flexibility you have over and under your contracted position?

We do have some rig flexibility and I'll let Ralph go into those details. But keep in mind that we have endeavored to do a little bit more hedging that allows us to implement the drilling program that we have in place. And so that takes some of the price risk off the table. Ralph?

I would agree that – the unique thing about our portfolio is that we can't flex it up and down without losing value. I think we're – many producers you see out there drilling full-out right now is because they have lease obligations or they have to satisfy a new JV agreement they just got into. Even in our newest area, we don't have expirations for several years in the Marcellus and those that do expire can be – 80% or 90% of those leases can be rolled over in a very minimal amount. What we try to do is we have a staggered amount – staggered contracting strategy in our rigs and most of them are not that long-term at this point. We have the option to make them longer-term. You always have the opportunity or option to lay the rigs down and pay the penalty, which happened last year. So there's a lot of flexibility in our portfolio. If we would have to flex down, the unique thing about us is that we wouldn't lose our value. And since – when I say lose our value, we wouldn't lose the value of the reserves; we wouldn't lose land; we wouldn't lose leases. So we can go up or down in that. Lasan Johong – RBC Capital Markets: Okay. In the Marcellus, have you – what's the discussion, the tone and tenor of the discussion around the Keystone connector? And have you made any decisions as to whether you want to put a liquids processing plant on the western side of that liquids divide?

Could you repeat that question please? Lasan Johong – RBC Capital Markets: Yes. Wondering what kind of tone and tenor you've had in terms of discussions around the Keystone connector? In other words, is the market enthusiastic, kind of base, interested, not interested? Second, in terms of the western side of the liquids divide, has Williams made any decisions as to whether it wants to put a processing plant there or not?

This is Phil Wright. We haven't decided on the need or location of an extraction plant just yet. In fact, one of the things that we're in dialogue with producers about is whether we want to make Keystone connector a wet gas line and perhaps locate extraction facilities eastward, if that makes sense, largely that will turn on the total scope of the project and how many people sign-on. In the ensuing period of time, one of the advantages we think we have is that we have a lot of blending capability and to the extent that it takes awhile to ramp up, to have ample liquids coming through, we have capacity to handle that as long as the heavies are knocked out in the southwest end. So, literally, we are evaluating the range of alternatives there and will optimize and select the most flexible one but we think that, again, an advantage is that we'll be able to ramp into that decision with more cards onto the table in the way of knowing exactly how much volume we're talking about, when it's going to come online and an ability to deal with a lot of liquids in the ensuing period of time. Lasan Johong – RBC Capital Markets: That's very interesting. Thank you.

And we’ll take our next question from Seinly Aou [ph] from J.P. Morgan. Seinly Aou – J.P. Morgan: Good morning guys. I have a question on your 2011 and 12 production growth, 12% and 16%. Is that just adding rigs from the Marcellus and do you see any shift in your rig count in other regions?

It is essentially, it's primarily driven by the Piceance and the Marcellus. We are showing a modest uptick in rig count in both '11 and '12 to do that. We would average about four more rigs on average in the Piceance side of the world if in 2011. And we'd average about four more rigs in 2011 in the Marcellus. So it is an addition of that and you can see that, in our capital guidance, goes up in the year 2011 also. Seinly Aou – J.P. Morgan: Okay. And I see you're still running four rigs in the Barnett. And when I look at your IRR returns, at current spot gas prices you're below 10% there. Why are you still running four rigs over there?

Actually down to 3%. I don't – we'd have to – offline, we can talk about the return there. We think our return is higher than that, but we just dropped a rig down to three so that's at the point. The biggest problem we have in that Barnett area is basically facilities permits. It's not actually the drilling. It's just a matter of getting the drilling completion done. It's just a matter of various air permits and compression permits and pipeline permits. But we have dropped a rig in that area. Seinly Aou – J.P. Morgan: Okay. It's not because of your return?

Right. Seinly Aou – J.P. Morgan: Okay. And shifting to your Overland Pass, do you expect the volume to ramp up to above like 200,000 barrels?

This is Alan Armstrong. Yes, ultimately we do. And a lot of growth opportunity out there. You saw the ONEOK announcement on their plans to bring Bakken production down in 2013. We, of course, are proposing the Parachute TXP1 plant there in the Piceance and we also have the Opal TXP4 plant that is just be coming online here in the third quarter. So we have a lot of new production and a lot of new volumes that we can point to very specifically and beyond that, there's a lot of other opportunity for growth out of there, like places like the Uinta and a lot of new production. So what we have in there is very specific. We know exactly where it's coming from. And then on top of that, because Overland Pass is really the only system that is easily expandable out of the Rockies, we think it will capture any incremental volumes out of that area. Seinly Aou – J.P. Morgan: Okay. So in terms of the incremental barrels, is it extracting the barrels from existing production that haven't been extracted or it's new – how much of it is from new production versus…?

Most of that is from existing flowing production. Seinly Aou – J.P. Morgan: So those barrels haven't been extracted?

That's right. Sorry, the gas production with the NGLs are flowing; the extraction facilities are not in place. That's correct. Seinly Aou – J.P. Morgan: Okay. Got you. Thank you.

And we’ll take our next question from Ted Durbin from Goldman Sachs. Ted Durbin – Goldman Sachs: Hi. My question is really about capital allocation at E&P. You've always talked about the Piceance being very strong returns. Can you just talk about the returns that you're expecting in the Marcellus and how you would decide whether to ramp there rather than staying with ramping the Piceance, assuming that the commodity works out the way you think it will?

The Piceance returns, in the Valley, are better than the Marcellus returns but not by that much. So the Marcellus returns we think are going to be very strong going forward. And we think as we really get into the newest area, the Susquehanna returns, that on an incremental basis, those will probably be potentially as good as the Piceance if not slightly better. So I think they'll probably end up being exactly the same. On the Highlands, returns are slightly lower than the Valley because the Highlands by definition has a couple extra thousand feet to drill through before we get to the level where you start in the Valley. So going forward, I think that you'll see that the Valley and the Marcellus will be side-by-side in the capital allocations followed thereafter by the Piceance Highlands. So capital allocation-wise, I think living within our cash flows, we feel we can ably execute on all three of those areas without hurting one or the other or trying to disadvantage one over the other. Ted Durbin – Goldman Sachs: Thanks. And then just again on the Marcellus, how are you feeling about your acreage position now? I mean, do you think you're going to be big enough to reach sort of the operational synergies that you'd like to have? Would you need to add some more acreage?

Well, we really feel good about the positions we have, particularly in Susquehanna and Clearfield Center and Westmoreland Counties. We also have a growing position in another county there that we haven't officially announced yet. I'd like to see us continue to add to that. As you can see, I think we were talking about 92,000 or so acres recently and now we're at 97,000 acres. So there's all kinds of opportunities up there. I think you see some of the operators that have a substantial amount of more acreage than we have, are starting to say, well, maybe we need a partner. Maybe we need to do a little bit more than what we're doing here and find somebody else. So since we're in the area in a major effort and based on the expertise we've developed in doing a world-class resource play like the Piceance, we hope that we can talk with some of those producers and maybe do some additional JVs and other things to expand our position or continue with what we've done in the past, which is grassroots leasing and/or acquisitions. I will say all that saying, as I look at Don Chappel, that we will do that in a very disciplined manner and we're going to make sure that we do everything we can and do what it takes to make sure our balance sheet stays very strong. But I see a lot of opportunities out there and I see some that are very attractive financially for us. Ted Durbin – Goldman Sachs: Okay. Thank you. And then if I could just ask a little bit of a detailed question, but you really had on the E&P side, the third party gathering and processing, so the costs have stepped up pretty significantly both in the first and second quarters. Is there anything going on there that we ought to be aware of? Most spreads just going down to PZ or what's – that trend has really picked up over the last couple of quarters?

Is that our Willow Creek processing, I think? So that's full scale. But I'll have to – let me get back and make sure I gave you the right answer on that, but I think that's what that is. Ted Durbin – Goldman Sachs: Okay. That's great. Thanks very much.

And we’ll take our next question from Carl Kirst from BMO Capital Markets. Carl Kirst – BMO Capital Markets: Nice. Good morning, everybody. Ralph and actually, I guess, Steve, you mentioned – I just want to make sure I heard it correctly, that the first rig at Susquehanna is coming in February '11, meaning we'll probably not get first results from that area until mid-next year? Is that about right from a timeframe standpoint?

Well, there's actually, there's a rig there already. Carl Kirst – BMO Capital Markets: Okay.

So what Steve meant is the new one, one of the new ones is going to – end of this month we'll probably dedicated more or end of August, I'm sorry, will be dedicated to the Rex JV area and then we'll have a new fit-for-purpose rig coming on early next year. There is a rig running that we inherited from Alta in Susquehanna. We've got currently 11 wells have been drilled up there. They are all horizontal wells. They are – I'm sorry, nine horizontals. They're all waiting on completion as they wait for the infrastructure to be developed. So we have a number of wells that have already been drilled that we're anxious to put on when the time is – when the infrastructure is done and we'll also continue to be drilling up there. So, hopefully, whenever that infrastructure is done, we're hearing late this year, could slip to early next year, we'll have some good results to start showing you about it. If you look at some of the producers right next to us, if you've seen their quarterly calls and other things, the results in that area are really doing very, very well and we're excited to start showing you that. Carl Kirst – BMO Capital Markets: Great. No, appreciate the clarification. And then with respect to some of the other questions, obviously, you're continuing to look at acreage growth in the Marcellus. In order to reach those goals that you have laid out as far as the 12% composition going to give you the second largest basin, is that contingent upon any new acreage being added or can you do that with what is a fairly sizable acreage position right now?

It's really what we have – it's based on what we have today. We do have built in the forecast a little bit of what I would call blocking and tackling – a little bolt-on leasing here and there, but basically it's what we own today. Carl Kirst – BMO Capital Markets: Great. And then one more if I could. And this is may be a question for you and Don. As you look at trying to do more acreage diversifications without having to perhaps tap the debt markets, we look at additional assets that could make their way into WPZ. And then one of the things we talked about prior was perhaps the Dew Point plants that are currently housed within E&P. And I just wanted to get a sense of what you guys are thinking about strategic necessity of continuing to hold those plants within E&P, if they, in fact, would make strategic sense to make a drop-down. And if so, is there any sense of size maybe that you can help us with there?

Probably, Carl, there's not many details that we can offer you there. You are correct, that we do have Midstream assets embedded in our Piceance E&P operations. And we've acknowledged that fact and we've talked fleetingly about that opportunity, but – and it does exist and – but we wouldn't want to offer any guidance on that at this point.

It is actually a large complex.

Just to remind you, it's about 1.2 Bcf a day of trading capacity. Because we've built all that out and have facilities and all that, that's why the cryo potential plant that Midstream is talking about is really a very economically-advantaged plant compared to what somebody else could do grass-roots there. So we feel very strong about the infrastructure we've built up there and the opportunities going forward. Carl Kirst – BMO Capital Markets: Okay. No, understood, but no sense of magnitude of EBITDA, for instance, that those treating plants are throwing off?

No. Carl, we're not prepared to offer anything like that. Carl Kirst – BMO Capital Markets: All right. Thank you.

And we’ll take our next question from Holly Stewart from Howard Weil. Holly Stewart – Howard Weil Incorporated: Hi guys. Good morning. Just a couple of quick ones. I guess, Ralph, I'll start with you. The ramp – the data in one of the presentations this morning, the nice ramp in the Marcellus, I think my notes from the Analyst Day – of course, that was pre-acquisition – have you trying to get to 100 million a day in the next five years. Now you're saying 500 million a day by 2015, so obviously very impressive numbers. And the second largest producing basin for you guys by 2013, which would surpass the PRB volumes in a relatively short period of time. Can you just give us a little color on how you get there? I mean, I see the ramp and rig count, but any other specifics?

Well, Holly, we really believe we can get there with what we own today and we're looking to be at about eight rigs next year. And as I mentioned, we're two currently; we're adding another one in August, so that will be three in the Marcellus. And then our current projections for '12 – of course, it's a couple of years away – show us at about 14 rigs. So really it's just looking at what we own, adding rigs, building out the infrastructure and doing what we do – taking basically the Piceance model and moving it there. So we feel that that kind of rig count and since we're not giving guidance past '12 – but that rig count stays at basically in that range going forward and that will get us to that 500 million-type level. Holly Stewart – Howard Weil Incorporated: Okay. Do you have a Marcellus production number for the quarter? I mean, I know it's probably pretty minimal, but do you have that breakout?

You know, we're only producing – it's a good growth. I mean, right now we're producing 5 million or 6 million a day, basically. So it's very – as you know, we just got in. The Rex JV has drilled some wells. A lot of facilities are just now coming on so we have a lot of wells just waiting to be turned on. I think we have half of the wells in the Rex JV are just now coming on based to as we finished out our compression and gathering projects. Holly Stewart – Howard Weil Incorporated: Anything wet over there yet?

No. No, we're still basically in the dry window. Holly Stewart – Howard Weil Incorporated: Okay. And then I guess just on the – you know, you lay out the ramp in production over the next couple of years. I know we've already hit this, but as a four-handle – I mean, are you still comfortable doing this with a four-handle on gas heading into '11?

Well, we've upped our hedges to about 50%. So really the comfort level is – and we've shown the economics we believe are pretty strong at that level still. But it will be a function of what our cash flows are as we continue to help – do our part for WMB to manage the balance sheet also. So it will be a function really of the cash flows. I think you see our forecasts are more, I think, in the $5 range going up over the next several years to maybe $6 on a NYMEX-type range. So it's not a large price increase. I know it's in our slide deck somewhere, but those are the – we're not seeing a huge uptick in pricing. But we're writing more our numbers based on the, I think, combined with our hedges and our price forecast going forward, so I don't have right in front of me. Holly Stewart – Howard Weil Incorporated: Got you. Okay. And then I guess, Alan, can you give any specifics on what's going on with Perdido Norte? And sorry if I missed this, but just – I know there's been a delay due to the moratorium. Can you give us any color?

Well, we really have to let the producers speak for themselves on that. There was – we had a hydrate in our line that was affecting the Boombang Nansen pipeline and so we – during construction process, we got water into the riser and that formed a hydrate. And we have remediated that. And so that production will be coming back on at Boombang, but that was part of that construction. But the actual delay that is experienced right now is related to operations from the actual production platform that we're not involved with. Holly Stewart – Howard Weil Incorporated: Okay. And then just one macro …

Let me add to that just so I don't leave people the wrong impression there. As far as we know, that is not related to the drilling moratorium itself. In other words, it's not related to any delay in drilling. The well is drilled; it's a matter of getting those production facilities up and running. Holly Stewart – Howard Weil Incorporated: Up and running, okay. And then just a macro question, you guys talked about your exposure to the Rockies basin. Can you just give us basis differential – sorry – can you just give us a little color on what's going on right now in the Rockies? I mean, it's widened and I guess we wouldn't have expected it to. So can you just give us from a pipeline and production standpoint, give us your perspective?

Well, there was several things that happened just for the May/June time period. And when it did get up to a couple of times, it came closer to $0.80, $0.90 on a daily basis. But we really had some – we had some transportation maintenance; we had record hydro; we had a strong weather, as in very warm weather in the eastern part of the United States and we had cooler weather in the western part. So a number of things like that just kind of combined, I think, to make the cash basis on a monthly basis seem like the basis was increasing. So going forward, we think all those things work themselves out and normalize, a little more normal weather patterns. Obviously, the transportation and maintenance goes away. The hydro goes away and we see, that's why you look at the forward curve, it's more like in that $0.50 range. So we looked it really as just kind of several things lined up together to make a blip on the screen of a higher basis for a couple months. Holly Stewart – Howard Weil Incorporated: Got it. Alright.

Watching the ACO [ph] pricing level is a really good indicator for the kind of pressure that is coming into supply in that Western area as we add hydro and cooler weather. So Opal tends to have to eventually compete with ACO [ph] pricing and that's been very low. Holly Stewart – Howard Weil Incorporated: Got it. Thanks, guys.

And we’ll take our next question from Rick Gross from Barclays Capital. Rick Gross – Barclays Capital: Good morning. Yes, I've got one on, we'll call it the Overland Pass corridor. And that the slides indicate that you think you'll be able to take it up to full capacity, which is over 100,000 barrels more a day going into the Conway area. ONEOK just announced 15,000 barrels a day expansion on Sterling. What I'm trying to figure out where the incremental barrels that come into Conway – and there may be some that sneak in the back door down enterprise from the Marcellus – where that goes. Because the incremental user in the Midwest is already an ethane EP mix user and the marginal barrel conversions in the Gulf. So how do I think about more barrels into Conway and how they get utilized, dispersed from growth in Overland Pass?

Rick, this is Alan. I think what you have to look at is the fact that there's been a long-term consistent spread between Conway and Belvieu on ethane that supports some type of infrastructure development. And that remains with the low-cost transportation available on Overland Pass, we think it remains one of the cheapest incremental sources of ethane into the Belvieu area. So we think there's quite a few things that will drive an answer to that bottleneck that you speak to. Rick Gross – Barclays Capital: Okay. Alternative is there's a mistral pipeline going up to NOVA Geoffrey [ph]which consumes 180,000 barrels a day of ethane. And those folks are worried. Is the expansion of Overland Pass and some of the things around that system that ONEOK has indicated – and this may be a ONEOK question – is that project, Alliance taking wet barrels versus Prairie Rose, all of those things – are these competing projects, kind of like the Bakken [ph] and the Marcellus or are these individual projects that are stand-alone and there's a lot of barrels coming out of the Bakken?

Well, I think you'd have to, again, direct that to ONEOK in that regard, but I do think there's a lot of barrels. We're certainly very well aware of the ethane demand in the hole there in Canada and we think that that presents an opportunity for U.S. ethane; but, as you know, that's a pretty expensive ticket. So – but still, compared to the other alternatives that you look to for additional incremental ethane supplies, like the Marcellus and so forth, we think it can still compete effectively, because we think Geoffrey and the Alberta ethane consumers have a high demand there and have a very low-cost efficient infrastructure up there, that's a good place to consume some of that ethane. So I guess what I would tell you is I think Overland Pass will provide a connection for supplies, whether it is ultimately for feeding ethane supplies into Canada or whether it is to Mont Belvieu. But I think Overland Pass clearly provides that connection for the production out of the Rockies into either one of those markets, ultimately. Rick Gross – Barclays Capital: Okay. Financial question, we've indicated that we're going to, at least for awhile, live within cash flows on the E&P company. We're going to fund the Canadian expansion with international cash. We've got CTLT [ph] cut money coming into the parent. We mentioned, in a variety of ways, kind of balance sheet, protect the balance sheet kind of thing, which are into investment grade. The question I have is, at what level of balance sheet coverage – are we looking at BBB flat kind of, BBB plus kind of metrics before we get to the point where we can put major stock buybacks into the value creation tool kit or is there a time frame when this might materialize? Because there's going to be cash buildup, you're going to have choices. One of those choices in a down market, people mentioning $4 gas prices, would be to buy in stock relative to spend it to create value per share E&P-wise.

Rick, this is Don. I understand the question. I would say that we're certainly looking at all the options. I would say that with low commodity prices and the down market, our credit metrics don't look nearly so good as they look in a more, I'll call it normal market. So I think one of the challenges is in a down market, it's even more difficult to buy back stock without a ratings consequence. So we're continuously looking at all the options and looking at where we stand within the credit framework. But you also have to look at what those metrics look like in that low environment. And again, the agencies also not just look at the environment in which we're living, but also look at an even more dire environment so, as they make their ratings decision. So it's hard to answer your question other than to give you some of the considerations. But I would say we're always looking at all the options. But I think stock buyback is something that's certainly not on the table this year. We'd like to have the flexibility to be able to consider that at a future date, but certainly it's not now. And I guess we'll take a look at where everything lines up in 2011 and beyond and see if that's something that's appropriate. Rick Gross – Barclays Capital: Thank you.

And we’ll take our next question from Faisel Khan from Citi. Faisel Khan – Citi: On the E&P side, in your Analyst meeting, you talked about the EURs or the ultimate recoveries improving in the Highlands and you gave some data on your best to date wells. Ralph, can you give us an idea of where those EURs are trending right now, where you are today?

Really, no change. So we just added the rigs, one earlier this year to get to two, and now we're just in the process of where we just brought our third and fourth on. So we're just in the midst of the drilling program. So we still believe that we're in the areas that we want to be in, that we're in a little sweeter spots in some of these areas and that we hope to see that the trend you saw will continue and normalize out to be at better levels than they were in the past. But it's just a little early this year. Faisel Khan – Citi: Okay. So you still think that that trend actually continues upwards?

Well, we felt pretty good about it and I don't know if it goes upwards from there, but basically, we'd like to at least get to where those were. And those were – that was a nice uptick from where we'd been last couple of years when we were still in the process of delineating the field. Faisel Khan – Citi: Okay. Do you have any update on the exploration wells that you may have drilled recently?

Well, there's one in the Paradox that was drilled by our partner and that has been completed – or drilled but not completed yet. And we're looking to put a very large volume frac on that and a large amount of sand and water that we've done in any of the previous wells. So that will happen sometime this summer. And we have completed a – one exploration – well, we've drilled one exploration well in the San Juan Basin that we've looked at. In the Mancos, we're in the process of drilling our second, but we're going to complete those at the same time and that will be later this fall. And that's the Mancos shale type look we're doing down there. Faisel Khan – Citi: Okay. Got you. On the natural gas liquid side, seeing your NGL sales from your processing trend down in the quarter, what's your expectation for the third quarter in terms of those NGL sales?

Well, about almost half of that was from an inventory shift, so just timing of sales. So kind of looking at our production as a piece of that. And then we had, as I mentioned earlier, we had one of the big deepwater wells – or deepwater platforms down in the Gulf that affected our volume as well. But a lot of that was just timing of inventory shift. And so we obviously wouldn't expect that to recur other than just the normal shifts in inventory that we see. But that was the largest driver in that. So nothing fundamentally is shifting on that in our business. Faisel Khan – Citi: So the 272 of that million gallons of NGLs sold in the quarter, that's kind of a steady-state number, do you think?

No, it'd probably be best to average the first quarter and second quarter to get to a more steady run rate there. Because that had the inventory shift from one quarter to the next in it. Faisel Khan – Citi: Okay. Got you. On the balance sheet and specifically the cash that you have in the international part of the business roughly, I think it's roughly $450 million or maybe $0.5 billion, I know you've talked about using some of that cash to invest in the Canadian Midstream operations. Would you also consider using that cash in maybe Canadian upstream assets?

No. Faisel Khan – Citi: Sorry. I didn't hear that.

No. Faisel Khan – Citi: Okay. Got you. All right. Thanks for the time. Appreciate it.

And we’ll take our next question from Ray Deacon from Pritchard Capital. Ray Deacon – Pritchard Capital: Thanks for taking my question. Ralph, I was wondering, just curious what your thoughts were on the Rex JV in terms of deliverability out of that area? Like how much do you think you can scale the area? I know you're very early on in the development there. And I guess just a general comment on the, I guess, 7,000 or 5,000 acre increase. Are you kind of more interested in the southwest part of the Marcellus or the Northeast at this point?

Well, we're more in the middle to the northeast part of the play, as you can see. And on the Rex side, we like what we've seen so far. I don't know the exact size of that yet, so I shouldn't, let us continue – we just took over operations. We drilled our – we're on a process of drilling our second well, so give us a little time on that to let you know what we think we can get there. But primarily, where you see our activity is from the Westmoreland and Clearfield Center Counties going out towards Susquehanna on our area of emphasis at this point. Ray Deacon – Pritchard Capital: Okay. Got it. And the primary takeaway I believe is going to end up being Equitrans, right? Is that a fair statement in Center Clearfield, Westmoreland?

I think so. There's some other opportunities in there too, but I think that's one of the primary areas. Ray Deacon – Pritchard Capital: Okay. Got it. Thanks very much.

And we’ll take our next question from Andrew Gundlach from Arnhold Bleichroeder. Andrew Gundlach – Arnhold Bleichroeder: Good morning. If I look at your guidance where you're on the E&P side of taking your volumes from 1200, 1250, 1500, 1700 and what you said about the Marcellus, Steve, it sounds like about half of that growth will come from the Marcellus drilling and about half of that growth from the Piceance. Is that the way to look at it?

Yes. Yes, Andrew. Andrew Gundlach – Arnhold Bleichroeder: Okay. And the numbers that you gave on the Marcellus, which are impressive – 500 by – would you say 2015? Can you help me think about how that will translate into proved reserves over that time? So, will the Marcellus by then be bigger than the San Juan, which is about 500 or so, if I remember correctly? I mean, how will this translate into proved reserves, is the question?

Well, we can't really give that. Yes, I can guide you to the press release, which we thought with the Alta deal and the unnamed additional 8,000 acres, we thought that has a potential. And that's not proved reserves; that those two transactions just by themselves had a potential of, like, 1.3 Tcf, I think it was in the press release. But we can't guide on proved reserves at this time at all. But we felt very good on the potential of the area. So that would be a substantial addition if those things would come true, to our proved reserve base. Andrew Gundlach – Arnhold Bleichroeder: I understand, okay. And then the other question I have is – I guess it's for Don and Steve. WPZ now has an under 6% yield and in my opinion, is one of the best positioned companies in the Midstream space out there. How can use that equity as an acquisition currency to increase your cash flows in ways that you could never do before. And thus increase your cash flows into WMB parent to deal with the opportunities that you're speaking about?

Andrew, this is Don. I agree, it's a terrific currency, well regarded by the market. I think the key is finding quality assets; assets that we like and then at a value that creates value for both WPZ and WMB. So we're certainly mindful of that opportunity and certainly would like to be able to take advantage of it, but it will be depending on those considerations. Andrew Gundlach – Arnhold Bleichroeder: I understand. But you see it strategically the way I'm thinking about it, is that correct?

Yes. Andrew Gundlach – Arnhold Bleichroeder: Okay. Thank you.

And we’ll take our next question from Craig Shere from Tudor. Craig Shere – Tuohy Brothers Investment Research: From Tuohy Investment – Tuohy Brothers Investment Research. Hi, guys, I missed a little of the call so I apologize if there's some redundancy here, but I know you were speaking to the opportunities with commodity pricing and recovering ethane prices. But in some basins, I think the ethane can be as low as maybe one-third of the mix, but in your Midstream, it's perhaps closer to 50%. Can you talk about the ethane mix that your equity NGL exposures have going forward, as you convert some things to fee-based and put on new projects?

Sure. First of all, you are right – our ethane mix today is about 50% and people have all kinds of different mix formulas for when they get to a consolidated barrel. But our number is around 50% and in terms of shift, things that might move that over time, we do have – we had had some contract changes in the San Juan that heavy-up our barrel a little bit and as we do the deepwater projects and those are percent of liquid contracts for the most part, those barrels are pretty heavy if you are – sorry, that mix is pretty heavy on those streams coming in. So we'll see a little bit there. But as big as our portfolio is, it takes a lot to move that very much, as you can imagine. So I wouldn't expect any dramatic movement in that. What I would suggest that from an MB investor perspective, that you take a look at is the fact that much of our ethane, a little over half of our ethane, on a – if you looked at our commodity exposure, is going into our ethylene cracking business at Geismar, where we consume about 30,000 barrels a day there. So for some piece of that, you really need to look all the way through the ethylene pricing if you're trying to get to a Williams earnings impact on that but we do continue to do fee-based contracts but that won't necessarily, just a straight up fee-base contract won't necessarily change our mix; it will just lower our overall exposure to commodity – but to both the heavies and to ethane. Craig Shere – Tuohy Brothers Investment Research: Sure. I appreciate that explanation.

And we’ll take our next question from Brad Lundy from Ivory Capital. Brad Lundy – Ivory Capital: Good morning. I certainly apologize if this has been addressed earlier in the call, but as you pointed, Don, the PZ transaction has been well regarded by the market and you can certainly see it with the equity up 50% year-to-date. Unfortunately, it has not translated into the same appreciation in the MB side. And I'm curious from your point of view at what point the Board starts to reevaluate the current structure?

Yes, this is Steve. You're right – the PZ deal has not yet translated into good things to WMB. We think it will over time. We think that as we grow PZ, as we grow distributions – I mean, we wouldn't have created this vehicle had we not had intentions to grow it over time. And so there are a lot of opportunities out there. We've talked about some of those opportunities in our last few calls and during our Investor Day; but while the market hasn't yet appreciated the transaction from an MB standpoint, we believe that it will over time. And I think it's up to us to execute on the PZ opportunity, to use that wonderful currency. And we believe that as we do that successfully, that the wonderful cash flow aspect of this structure will benefit Williams in a big way. Brad Lundy – Ivory Capital: Is there a defined timeline as to which the current structure will be reevaluated?

We – I mean, truly, we look at strategic options at every Board meeting that we have. So there's not a specific timeline because we're always looking at strategic options that might make sense.

This is Don to just add to Steve comments. Again, when we developed the WPZ transformational transaction, we did not expect that we would get great lift in the WMB stock price as a result. We really thought it was more a long-term strategic issue, to provide that advantaged and reliable capital source to our Midstream and Pipeline business and thereby enable them to grow at a much more rapid rate than they would absent that access to capital. And that really has come true. So, you can see Midstream and Pipeline is now developing the opportunities without fear that we cannot finance them. So it's really turned our Midstream and Pipeline team loose to really develop all the opportunities that add value and do so on a disciplined basis. Again, I'd just remind you that when we did the transaction and really through this date, our earnings did not change, our cash flows did not change. We highlighted the value of those two businesses in WPZ, but our earnings and cash flows did not change in the near-term. But we're very confident that, over the course of a few years, that we will see very high returns from those incremental investments that are made in those two businesses. Brad Lundy – Ivory Capital: Indeed. Thank you, Steve. Thank you, Don.

This concludes today's question-and-answer session. At this time, I'd like to turn the conference back over to your presenters for any additional or closing remarks.

Yes, this is Steve. Thank you for participating on the call. We think that we have a very bright future. The opportunities, the growth opportunities are extraordinary. And we look forward to a very bright future and look forward to talking more about those opportunities in the future. Thank you.

And this concludes today's conference. We thank you for your participation.