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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2025-02-25 compared with 2024-02-21 · 68 added, 42 removed, 41 unchanged (73% of the section changed)

1 unchanged sentence

Interest Rate Risk

Our current interest rate risk exposure is related primarily to our debt portfolio.

Our debt portfolio is primarily comprised of fixed rate debt, which mitigates the impact of fluctuations in interest rates.

Any borrowings under our credit facility and any issuances under our commercial paper program could be at a variable interest rate and could expose us to the risk of increasing interest rates.

The maturity of our long-term debt portfolio is partially influenced by the expected lives of our operating assets.

We may utilize interest rate derivative instruments to hedge interest rate risk associated with future debt issuances (see Note 12 – Debt and Banking Arrangements).

The tables below provide information by maturity date about our interest rate risk-sensitive instruments as of December 31, 2023 and 2022.

See Note 15 – Fair Value Measurements, Guarantees, and Concentration of Credit Risk for the methods used in determining the fair value of our long-term debt.

2024 2025 2026 2027 2028 Thereafter (1) Total Fair Value December 31, 2023

Williams’ current interest rate risk exposure, inclusive of subsidiaries, is related primarily to its debt portfolio.

The debt portfolio is primarily comprised of fixed rate debt, which mitigates the impact of fluctuations in interest rates.

Any borrowings under the credit facility and any issuances under Williams’ commercial paper program could be at a variable interest rate and could expose it to the risk of increasing interest rates.

The maturity of Williams’ long-term debt portfolio is partially influenced by the expected lives of its operating assets.

Williams may utilize interest rate derivative instruments to hedge interest rate risk associated with future debt issuances (see Note 13 – Debt and Banking Arrangements).

The tables below provide information by maturity date about the interest rate risk-sensitive instruments as of December 31, 2024 and 2023.

The tables exclude unamortized debt issuance costs and net unamortized debt premium (discount) as disclosed in Note 13 – Debt and Banking Arrangements.

See Note 16 – Fair Value Measurements, Guarantees, and Concentration of Credit Risk for the methods used in determining the fair value of Williams’ long-term debt.

2025 2026 2027 2028 2029 Thereafter

Total Fair Value December 31, 2024

Long-term debt, including current portion:

3 unchanged sentences

$ 455 $ — $ — $ — $ — $ — $ 455 $ 455

2023 2024 2025 2026 2027 Thereafter (1) Total Fair Value December 31, 2022

2024 2025 2026 2027 2028 Thereafter

Total Fair Value December 31, 2023

Long-term debt, including current portion:

4 unchanged sentences

__________________

(1) Includes unamortized discount / premium and debt issuance costs.

(1) The weighted-average interest rate for commercial paper as of December 31, 2024 and 2023 was 4.6 percent and 5.6 percent, respectively.

At December 31, 2024 and 2023, Transco’s debt portfolio included only fixed rate debt, which mitigates the impact of fluctuations in interest rates.

Any borrowings under the credit facility would be at a variable interest rate and would expose it to the risk of increasing interest rates.

The following tables provide Transco’s information by maturity date about the interest rate risk-sensitive instruments, as of December 31, 2024 and 2023.

The tables exclude unamortized debt issuance costs and net unamortized debt premium (discount) as disclosed in Note 13 – Debt and Banking Arrangements.

See Note 16 – Fair Value Measurements, Guarantees, and Concentration of Credit Risk for the methods used in determining the fair value of Transco’s long-term debt.

2025 2026 2027 2028 2029 Thereafter

Total Fair Value December 31, 2024

Long-term debt, excluding other financing obligation:

Fixed rate $ — $ 1,208 $ — $ 400 $ — $ 2,575 $ 4,183 $ 3,858

Weighted-average interest rate 5.2 % 4.8 % 4.2 % 4.2 % 4.2 % 4.5 %

Other financing obligations, including current portion:

Fixed rate $ 35 $ 37 $ 41 $ 45 $ 50 $ 878 $ 1,086 $ 1,418

Weighted-average interest rate 9.2 % 9.2 % 9.2 % 9.2 % 9.2 % 9.3 %

2024 2025 2026 2027 2028 Thereafter

Total Fair Value December 31, 2023

Long-term debt, excluding other financing obligation:

$ — $ — $ 1,208 $ — $ 400 $ 2,575 $ 4,183 $ 3,948

Weighted-average interest rate 5.2 % 5.2 % 4.4 % 4.2 % 4.2 % 4.4 %

Other financing obligations, including current portion:

$ 32 $ 35 $ 37 $ 41 $ 45 $ 926 $ 1,116 $ 1,490

Weighted-average interest rate 9.2 % 9.2 % 9.2 % 9.2 % 9.2 % 9.3 %

At December 31, 2024 and 2023, NWP’s debt portfolio included only fixed rate debt, which mitigates the impact of fluctuations in interest rates.

Any borrowings under the credit facility would be at a variable interest rate and would expose it to the risk of increasing interest rates.

The following tables provide NWP’s information by maturity date about the interest rate risk-sensitive instruments, as of December 31, 2024 and 2023.

The tables exclude unamortized debt issuance costs and net unamortized debt premium (discount) as disclosed in Note 13 – Debt and Banking Arrangements.

See Note 16 – Fair Value Measurements, Guarantees, and Concentration of Credit Risk for the methods used in determining the fair value of NWP’s long-term debt.

2025 2026 2027 2028 2029 Thereafter

Total Fair Value December 31, 2024

Long-term debt, including current portion:

Fixed rate $ 85 $ — $ 500 $ — $ — $ — $ 585 $ 573

Weighted-average interest rate 4.2 % 4.0 % — % — % — % — %

2024 2025 2026 2027 2028 Thereafter

Total Fair Value December 31, 2023

Long-term debt:

$ — $ 85 $ — $ 500 $ — $ — $ 585 $ 581

Weighted-average interest rate 4.5 % 4.2 % 4.0 % — % — % — %

Commodity Price Risk

We are exposed to commodity price risk through our natural gas and NGL marketing activities, including contracts to purchase, sell, transport, and store product.

We routinely manage this risk with a variety of exchange-traded and OTC energy contracts such as forward contracts, futures contracts, and basis swaps, as well as physical transactions.

Williams is exposed to commodity price risk through its natural gas and NGL marketing activities, including contracts to purchase, sell, transport, and store product.

Williams routinely manages this risk with a variety of exchange-traded and OTC energy contracts such as forward contracts, futures contracts, and basis swaps, as well as physical transactions.

Although many of the contracts used to manage commodity exposure are derivative instruments, these economic hedges are not designated or do not qualify for hedge accounting treatment.

We are also exposed to commodity prices through our upstream business and certain gathering and processing contracts.

We use derivative instruments to lock in forward sales prices on a portion of our expected future production and to lock in NGL margin on a portion of our commodity-exposed gathering and processing volumes.

Williams is also exposed to commodity prices through the upstream business and certain gathering and processing contracts.

Williams uses derivative instruments to lock in forward sales prices on a portion of expected future production and to lock in NGL margin on a portion of commodity-exposed gathering and processing volumes.

These economic hedges are not designated for hedge accounting treatment.

The maturities of our commodity derivative contracts at December 31, 2023 and 2022 were as follows:

The fair value measurements and maturities of Williams’ commodity derivative assets (liabilities) at December 31, 2024 and 2023, were as follows:

Value Maturity

Fair Value Measurements of Assets (Liabilities) Using (1)

Fair Value Measurements Level (1)

Level 1 (2) $ (105) $ (41) $ (56) $ (8)

4 unchanged sentences

Value Maturity

Fair Value Measurements of Assets (Liabilities) Using (1)

2023 2024 - 2025 2026 - 2027+

Fair Value Measurements Level (1)

Level 1 (3) $ 138 $ 110 $ 33 $ (5)

5 unchanged sentences

(1) See Note 16 – Fair Value Measurements, Guarantees, and Concentration of Credit Risk for discussion of valuation techniques by level within the fair value hierarchy.

See Note 16 – Commodity Derivatives for the amount of change in fair value recognized in our Consolidated Statement of Income.

See Note 17 – Commodity Derivatives for the amount of change in fair value recognized in Williams’ Consolidated Statement of Income.

(2) Commodity derivative assets and liabilities exclude $288 million of net cash collateral in Level 1.

2 unchanged sentences

VaR is the maximum predicted loss in portfolio value over a specified time period that is not expected to be exceeded within a given degree of probability.

Our VaR may not be comparable to that of other companies due to differences in the factors used to calculate VaR.

Our VaR is determined using parametric models with 95 percent confidence intervals and one-day holding periods, which means that 95 percent of the time, the risk of loss in a day from a portfolio of positions is expected to be less than or equal to the amount of VaR calculated.

Our open exposure is managed in accordance with established policies that limit market risk and require daily reporting of predicted financial loss to management.

Because we generally manage physical gas assets and economically protect our positions by hedging in the futures markets, our open exposure is generally mitigated.

We employ daily risk testing, using both VaR and stress testing, to evaluate the risk of our positions.

We actively monitor open commodity marketing positions and the resulting VaR and maintain a relatively small risk exposure as total buy volume is close to sell volume, with minimal open natural gas price risk.

Starting in the second quarter of 2022, following the further integration of our legacy trading activities with the operations acquired in the Sequent Acquisition, we now present VaR for our integrated natural gas trading operations.

For the first quarter of 2022, the VaR presented reflects the legacy Sequent operations only.

The VaR associated with our integrated natural gas trading operations was $9 million at December 31, 2023 and $10 million at December 31, 2022.

We had the following VaRs for the periods shown:

Twelve Months Ended

December 31, 2023

Nine Months Ended

Williams’ VaR may not be comparable to that of other companies due to differences in the factors used to calculate VaR.

Williams’ VaR is determined using parametric models with 95 percent confidence intervals and one-day holding periods, which means that 95 percent of the time, the risk of loss in a day from a portfolio of positions is expected to be less than or equal to the amount of VaR calculated.

Williams’ open exposure is managed in accordance with established policies that limit market risk and require daily reporting of predicted financial loss to management.

Because Williams generally manages physical gas assets and economically protects its positions by hedging in the futures markets, its open exposure is generally mitigated.

Williams employs daily risk testing, using both VaR and stress testing, to evaluate the risk of its positions.

Williams actively monitors open commodity marketing positions and the resulting VaR and maintain a relatively small risk exposure as total buy volume is close to sell volume, with minimal open natural gas price risk.

The VaR associated with Williams’ integrated natural gas trading operations was $4 million at December 31, 2024 and $9 million at December 31, 2023.

Williams had the following VaRs for the period shown:

December 31, 2024 Year Ended

December 31, 2023

Three Months Ended

March 31, 2022

Trading Trading

Average $ 3 $ 6

High $ 15 $ 13

Low $ 4 $ 4 $ 4

Our non-trading portfolio primarily consists of commodity derivatives that hedge our upstream business and certain gathering and processing contracts.

Williams’ non-trading portfolio primarily consists of commodity derivatives that hedge Williams’ upstream business and certain gathering and processing contracts.

The VaR associated with these commodity derivatives was $8 million at December 31, 2024 and $3 million at December 31, 2023.

We had the following VaRs for the periods shown:

Twelve Months Ended

December 31, 2023

Six Months Ended

Williams had the following VaRs for the period shown:

December 31, 2024 Year Ended

December 31, 2023

Average $ 5 $ 4

High $ 8 $ 33

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk