Good day everyone and welcome to the Williams First Quarter 2020 Earnings Conference Call. Today's conference is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Brett Krieg, Head of Investor Relations. Please go ahead.

Thanks, Simon. Good morning, thank you for joining us and for your interest in The Williams Companies. Yesterday afternoon, we released our earnings press release and the presentation that our President and CEO, Alan Armstrong, will speak to momentarily. Joining us on the call today are our Chief Operating Officer, Micheal Dunn; our CFO, John Chandler; our General Counsel, Lane Wilson; and our Senior Vice President of Corporate Strategic Development, Chad Zamarin. In our presentation materials, you will find the disclaimer related to forward-looking statements. This disclaimer is important and integral to our remarks and you should review it. Also included in our presentation materials are non-GAAP measures that we reconcile to Generally Accepted Accounting Principles. And these reconciliation schedules appear at the back of today's presentation materials. And so with that, I'll turn it over to Alan Armstrong.

Okay, great. Thanks, Brett, and good morning, everyone. Thanks for joining us today as we go through our first quarter 2020 financial performance. While the world around us has changed dramatically, some things have remained remarkably stable, and we should not take for granted the sacrifices and dedication required to keep the most essential of services available to us. But I'd like to start by thanking the frontline employees of The Williams, who have continued to operate our critical natural gas infrastructure during the Coronavirus pandemic. We often take our warm and well lit homes for granted, but it took great dedication, extra effort and resourcefulness to keep our most basic energy needs available during these disruptive times. Thankfully, we have always maintained robust plans to ensure business continuity, and we've been able to successfully execute on these plans while staying aligned with federal and state guidelines to keep our employees healthy and safe. I'm glad to report we have not missed a beat and this is a testament to the efforts of our employees across the country. Of course, the other big related news story that we're closely monitoring is the collapse in oil prices, and the impact this is having on our upstream customers. With that said, let's get to the business at hand and talk about our strong 1Q '20 performance. On Slide 1, we've provided a clear view of our first quarter 2020 financial performance relative to 1Q of '19 and as you can see, this was a really good quarter. We continue to enjoy steady growth across our key measures despite the impact of much lower commodity margins and deferred revenue recognition step down. From the top of the table you'll see we continued a long trend of year-over-year growth in cash flow from operations,…

[Operator Instructions] Your first question comes from the line of Jeremy Tonet with JPMorgan. Your line is open.

Thanks for all the detail in the call this morning and just wanted to kind of build on some of those points there. I guess with your producer conversations I mean, it seems like natural gas prices, further out in the curve continues to climb here. And so, I'm just wondering if you could share a bit more on what type of operating leverage you think Williams would enjoy as gas prices improve and producer activity kicks up in response to what we've seen here?

Yes Jeremy, thank you. We know we have a wide variety of rates out there in the market. And so it kind of, obviously depends on where that volume is produced. And so I think, that's very dependent. The good news is I think, as we've demonstrated in the Northeast, we've got a very strong leverage where our costs that we've been able to really keep down even as volumes have grown. And so, if we see a lot of that growth occur in the Northeast, it's going to continue to be limited capital and limited incremental operating costs. So pretty good operating leverage to that. In the Haynesville, that's probably the other area that we would expect to respond here in the near term. And the operating leverage there is pretty similar. We've got, pretty low incremental operating costs, so a lot of revenue will drop to the bottom line there. So as we've said in the past, the rates out there on the dry gas gathering are in the $0.30 to $0.50 range. And so that's kind of what you can pick quite a bit of that from the bottom line in terms of the gas volumes that we have. If we happen to see some of that come through on across rich gas or processable gas, which we are seeing right now occur in the West Virginia, we're seeing volumes going up pretty nicely there. We obviously get a much higher margin on that just because we're offering additional services to that. So I would say that the lower operating leverage that we have is in the dry gas and little bit higher operating leverage against the rich gas or the process.

That's helpful color thanks. And just want to kind of pivot if I could to Regional Energy Access. Seems like other pipes in the Northeast are continuing to face challenges getting built here. And just wondering what you could share with regard to how that project is developing and what opportunities to do this?

Good morning, Jeremy, this is Michael. Regional Energy Access continues to move toward a first filing early summer. We're still seeing a bit of a slowdown in the commercial execution of our final proceeding agreements and it directly attributable to COVID-19, and our inability to meet directly with the customers. But we are still executing those and we have gained momentum on that project and continue to. And just as a reminder, the majority of those facilities are in Pennsylvania. We think that's why we have a significant benefit and opportunity to get our project permit approvals in a timely fashion. And just as a reminder that we only have one facility that we project to be outside of Pennsylvania, and that's electric driven compressor station in New Jersey, which we feel like we won't have any permitting issues at all. So commercial activity is still underway, but we are in the midst of preparing the pre-filing documents and expect to have those and purchasing in this summer.

Your next question comes from the line of Colton Bean with Tudor, Pickering, Holt. Your line is open.

Alan I think he just noted that you're seeing some decent trends there across the rich gas exposure in West Virginia and thinking about the system more broadly can you update us on what you're seeing across some of your more NGL exposed areas and condensate particularly?

Yes, Michael will take that.

Yes, good morning Colton. We are seeing some concerns early on in regard to condensate production where the producers were chasing condensate earlier this year. I think if you go back and look at the Southwestern call occurred a few days ago, they feel like they're not going to have any shut-ins due to any condensate issues for the month of May. And that's obviously good for us. We're large customer of theirs - they are large customer of ours there in West Virginia. So we're pleased to see that announcement from them. There are definitely challenges in some of the areas that Eagle Ford certainly has some condensate challenges there. We are working with our customers there to find opportunities. We've had a team working on condensate opportunities to store condensate for customers. And we have opportunities to be able to do that for them, if they so choose to do that at our facilities around the country. And so, we've given a lot of options to our customers if they want to continue to produce and move those condensate volumes into our potential storage opportunities for them. On the NGL side, we aren't seeing as much pressure on the producers from a production standpoint as you would on the condensate side. So, we are seeing some increase. I think prices are actually moving higher and NGL prices are continuing to move stronger from where they were over the last several weeks. And so we’re not seeing as much pressure there as we are going to condensate that.

Got it, appreciate that. And then just on the National Grid, so I think you all commented that you think you could see approval there for Northeast supply as early as June? So I guess in terms of key hurdles to watch, what exactly is it that you guys are evaluating and then if we weren't to see approval by June, is the in-service, potential step change into 2022 or what sort of impacts would you expect there?

Yes, I'll take that as well. So National Grid concluded their public comment meetings. They went virtual on the majority of those and had a two week extension in the deadline. So those concluded on May 1. And I think the resounding thing became very clear there is NESE project is the only opportunity for them to meet their long-term solutions. We recall the settlement agreement that they had with the state requires them to provide a long-term solution to the state by June and that long-term solution had to be in service by fall of 2021. And it's abundantly clear that NESE is the only opportunity to be able to do that. But the one thing I do want to mention, we watched the demand very closely across the U.S. and we certainly watched it very closely in the New York metropolitan area for natural gas. And we've seen virtually no impact due to the COVID-19 situation and if you weather normalize the demand up there and looks like a normal year. It's been a very warm year in January, February and March in the Northeast, April was about normal. And so when you weather normalize those demand picture across those four months, it looks just like a normal year for gas demand. So we see no impact there. It certainly wouldn't factor into any decisions that our customers would be making there. And you could make the argument that maybe commercial construction possibly could slowdown. But we do think from a long-term standpoint, natural gas demand is going to be increasing in the New York metropolitan area, just because of the amount of conversions of fuel oil still need to occur there, as well as the growth in infrastructure that's been built in New York City. We'll also say that, through this public comment process where we're prosecuting our permit, we've seen over 16,000 positive public comments come in to note both New York and New Jersey to support our project. There's more than 80 elected officials and community organizations that also support the NESE project that didn't make these public comments on the record. The upcoming deadlines on the 401 certifications that we have are May 16 in New York and June 5 in New Jersey. And so that's really the key markers that you should be watching out for here. And to answer the last part of your question, if we do not get those approvals in May and June for both New York and New Jersey, we'll have to go back and reevaluate with our customer what the expectation is there. But we certainly could refile those permits as we've had in the past and have those turned around fairly quickly in New York and New Jersey choose to do so.

Your next question comes from the line of Gabe Moreen with Mizuho. Your line is open.

Alan if I could just ask it seems like also producers are taking a different approach to their outlook for Nat gas prices next year and how much they've been willing to head to the 21 strip yet. Can you talk about maybe the insight you've got in terms of some of the private producers, whether it's Encino and the Utica or some of the producers are under Haynesville acreage and how they're treating 21 and whether they're - and what their outlook might be for having rigs and how soon that might happen?

Yes, I would say, there's a lot of people kind of still licking their wounds a little bit from the low price environment that we seen here in the first quarter and that's not forgotten easily. And I think they want to make sure that they're going to be very disciplined around the capital and allowing themselves to make decent returns. And so, I'm not speaking to anyone producer here, just to be clear, but I do think that the very low prices that they've had to endure on both the gas and the NGL prices in some of these locations, has got them really thinking hard about how to move forward. And frankly, I think they see the fundamentals perhaps being even stronger with that kind of cost discipline to the degree that takes hold across space, which it seems to be frankly, that with the fundamentals will drive even higher prices. And so you look this morning, I think the January 2021 prices were up to 320 for January 2021. So they may be exactly right on that and thinking that the fundamentals will continue to drive those prices up. So I think they're really going to make sure that they're not just doing this to turn bits, but to make really good value for their shareholders and their owners and - they're going to be patient make sure that the price really allows them to make some decent returns. And frankly, that's the kind of discipline I think that'll make the space healthy over time.

Understood, thanks Alan. And then maybe John if I could get sort of updated thoughts from you and where you're thinking about debt markets now clearly things have improved quite a bit since a couple of weeks ago and the update call. And I guess just your thoughts around taking some of off the revolver when you put those earlier maturities on the revolver?

Yes, no those rates have as significantly improved. And a little painful from where they were in February. It is incredibly low, right, but as we look today, the rates are very attractive for Williams and for Transco. And so it's, we'll watch the markets and we feel like there's a good opportunity. We'll certainly take advantage of that and try to get some off of our revolver. We still have 1.7 billion on a revolver, but I'd say we also have $700 million in cash. So we've got a very strong liquidity position our revolver again is $4.5 billion and doesn't mature until 2023. So we could be patient, but just to be clear, rates are attractive and our bond spreads that really traded in the last couple of weeks.

Your next question comes from the line of Alex Kania with Wolfe Research. Your line is open.

Just a question, I guess just on Gulf of Mexico. First, I guess just thinking about making sure that we understand how the sensitivities and volumes work, it sounds like again, you feel like from large producers, there's not going to be a big move. But again, just wondering if volumes do move does that directly impact your bottom line or is there some protection within Teva contracts work on the cost base basis? And then related to that maybe, if there's any impact on capital related to I guess the Whale delay that Shell announced a couple days ago. And second question is just thoughts on the NWP 12 permit? Do you use that typically for your construction activities, is that going to cause any complications for any planning that you plan on gathering or transmission over the next few months until we get some resolution on that? Thanks.

Yes, I'll take the first question there broadly on the deepwater and then have Michael answer the Whale and NWP 12 questions. On the deepwater for the most part, there are some MVCs and some fixed payments out there, but for the most part, because a lot of MVCs are so much below the actual volumes that people are sitting at today. You should consider our deepwater business to be pretty well driven by volume so both on the oil and the gas side. So I would - it's not that complicated out there for the most part, it's saying that there are places like the Northwood and places like that, that were true up on an annual basis, but you wouldn't see that in a quarterly basis. So anyway, so newer assets like Northwood tend to have those and the older assets those MVCs have, we've gotten our capital back in those MVCs or those fixed payments have gone away, just like Gulfstar. As we mentioned the fixed payments on that terminated the majority of the fixed payments terminated in May of last. So Mike if you take the Whale and NWP.

Sure Alan thanks. On Whale, we actually before all of the oil price shock occurred. We had actually placed some orders for some equipment and we've got more favorable timing terms on those orders and so our capital would actually be reduced to this year. It's just the timing issue for the most part, though prior to any announcements came from the Whale customers. Since the Whale customers have made their announcements, we've had conversations with them. They've not asked us to change course in any fashion with regard to our current undertaking of engineering, and procurement of materials to support their project, although they have announced the NESE delay. So right now it's a steady issue goes in regard to our performance under our reimbursement agreement with those Whale customers. And on the Nationwide 12 question, as you all probably are well aware of the Keystone XL pipeline in Montana, has suspended authorization of the Nationwide toll permit for that project, and it certainly is something that we're all looking at across the industry. The core engineers has stated they're not authorizing any new projects right now under the Nationwide 12, but they've not shutdown any projects that we know and certainly none of ours that were being performed under the nationwide 12. We don't think this is going to be a significant issue to Williams and for example in Pennsylvania, New Jersey, they don't even use the Nationwide 12 Permits, they're certainly not an impact at all. There anywhere that we were going to use those this year on new optimizations. It was just small pad connections and our gathering systems for the most part, and we could pivot to a different permitting team for those and achieve our permitting goals for those projects. And so as of now, we've got no project shutdown. And every core engineer's office that has jurisdiction over our permits, each one of those jurisdictions, we've had conversations with them and they said they have no intention of shutting down any projects that are currently underway with Nationwide 12 Permit.

Your next question comes from the line of Tristan Richardson with SunTrust. Your line is open.

Really appreciate all the commentary this morning. Just a follow-up question on the Northeast G&P I mean, with the volumes we've seen in 1Q and your commentary, perhaps suggesting even the rich gas volumes remain resilient. We think about the 1.4 billion in EBITDA number you've talked about in the past, should we think about is still a relevant number in the current environment in Northeast G&P?

This is Michael I’ll take that. I think we had temporary expectations on growth. They're coming into this year last year that's why you saw significant reduction in our capital. But if you do a run rate on the Northeast I think we were at 370 EBITDA this quarter. And we would expect to see some continued flat performance if you will through the majority of the Northeast PA production areas, as everyone knows Cabot's talk about going into maintenance mode with flat production for the year. We're seeing some growth in the Bradford still our cost of service agreements up there. And we do think some of the areas in West Virginia will be a more of a bright spot in the coming several quarters probably towards the end of the year and next year. And so, I think we do have some line in sight ultimately to be able to get to that 1.4. It might be a little bit delayed from where we were hoping, but we had those expectations input coming into this year.

Helpful, thank you. And just a brief follow-up, with respect to Bluestem with the fractionator online now, can you see contributions from any of that capacity today, or any fractionation contributions would come when Bluestem comes online for the next year?

Yes, assuming that Frac 7 and Targa is controlled is taking product, we will get revenue from that. So it is - as we understand, and so we will get revenue from that prior boosting coming online.

Your next question comes from the line of Shneur Gershuni with UBS. Your line is open.

Thank you for the extended update today, and a lot of my questions have been asked to answer, but maybe to follow up on Gabe's question a little bit here, but in a different way. When we think about the producers in the Northeast, a lot of them have - are not really well capitalized coming into this excluding Targa, which I realize is a very important customer of yours. Are we sure that the higher gas prices ensures that we get higher volumes or a higher volumetric opportunity for Williams. Was there a chance that they sit there and just sort of take their production ideas and enjoy the high prices and not accelerate CapEx, just to kind of try to think about how we should think about it from a volumetric perspective in '21, just sort of given the starting place from where the producers work?

Are you speaking just to…

Northeast.

Well, I would say as you would think a variety of producers and financial drivers out there, some are well hedged, and are taking advantage of the cost low - available cost structures to them out right now and growing very successfully and not really missing a beat. On the other hand, you have players for us like Chevron up there that has announced the sales process, and kind of pull back on their drilling operations. So, that's probably the extreme to that. But as I mentioned earlier, I do think that some producers are going to sit back and wait to see how firm these prices will get. They keep moving in the right direction. And I think they're waiting to - I think they believe that the fundamentals are on their side. And so if you translate all of the negative discussion around oil and shut-ins and demand destruction, if you believe that strongly, then you have to turn around and believe that gas is going to have a big call on these gas corrected basins. And so I think that's what you're seeing and some of them having quite a bit of confidence in fundamentals and are waiting to make sure that those fundamentals show up in the way of price where they commit to anything, but be clear, these are all - there is not - I can't point to a large producer that we deal with out there that I don't have quite a bit of respect for the way they think about this. They just have different motivations and drivers out there in front of them. But they all I would say are always in the case of planning. So they're not sitting back right now, even though it may appear that way. They're not sitting back on their haunches and not planning for what looks like opportunity for growth in the future. But I think they're only going to pull those triggers when they're confident that these prices are something that they can lean into. So I would say what we are seeing pretty visibly is a lot of planning for growth, but not necessarily a commitment to that growth just yet. And but I think there is a lot of belief in the fundamentals that exist out there. And again, it's kind of hard to believe in all the carnage on the oil side and not believe that on the pool on the gas side.

Maybe as a follow-up on that. Maybe this is difficult to speculate about. But do you see some scenarios where maybe some of them - just given how difficult capital access is right now for them, that they potential to JV and do like drill co JVs and so forth with private equity is? Do you kind of see that is a potential avenue for some of them?

I think more of that - they are not necessarily the Northeast producers. I think we'll see more of that in the Haynesville area where there is a lot of easy acreage to go hit a lot of private companies that are even less capitalized in some cases. But they've got some very - it’s not a whole lot of risk involved in the development there, and certainly not a lot of risk in getting the gas to the markets. And so I think we'll see a little more of that kind of activity like these teams.

One thing I do want to go back to the question I was asked earlier about Northeast EBITDA coming in, I believe the question was about $1.4 billion. And I would tell you, coming in earlier this year, we felt like, perhaps could come in under that level, just because Cabot was going back to maintenance mode and we saw Chevron signaling, they were going to slow some of their activity down. But again, remember we had a really good first quarter and our volumes are really good, really strong. And of course, things are starting to look better for the Northeast in the latter half of the year as well. So as we look at it today, we do believe we'll be operating above $1.4 billion in the Northeast for the year.

Your next question comes from the line of Praneeth Satish with Wells Fargo. Your line is open.

Just in the Haynesville, can you maybe just give us a breakdown on the customer mix there? How much is Chesapeake versus privates, and then in terms of potential growth in the Haynesville if it does occur, would you expect it to come more from the public or private producers in the region?

I'm going to have Chad Zamarin, who has been dealing with a lot of the opportunities out there to address them.

In the Haynesville, Chesapeake still about 70% of our volume. So if you've looked back about three years that would have been a much higher percentage even than that. So we've seen pretty rapid growth in third party volumes from primarily a private producers. Fine is one of those producers [indiscernible] as a producer that's not private, but we've been picking up additional activity province. To the question kind of earlier, we have seen those producers in the Haynesville taking advantage of the current pricing environment and extend their hedging and to Alan's point around access to capital for drilling in the Haynesville, ability to hedge out. Now, many of these producers are hedging more than 24 months out and those Haynesville wells are very much front end weighted from a value recovery perspective. And so those Haynesville producers have a pretty, pretty good opportunity to lock in their production plans over the next couple of years. So the recovery of kind of the back end of the price curve is really created a very stabilizing effect for ongoing development. In Haynesville, we actually think we'll see additional growth as a result.

Right, thanks. And then can maybe just rank order, which of your oil directed regions would get hit the hardest from potential shut-ins? And then how many quarters would you expect the settings to persist for, is this a one quarter, two quarter for the balance of 2020?

Yes, this is Michael, I will take that. From a [indiscernible] Eagle Ford is probably the highest at least in our acreage area because of the condensate that the customers are producing there, but we are protected by an MVC, for example, on the Chesapeake contracts, so even if the volumes do decline, we do have an MVC protection under letting them which we think would be very strong for us from a protective revenue there regard to that. So I'd say the Eagle Ford is probably the highest, the DJ is probably one as well, where they're also seeing some of things like gravity production, they are probably condensating oil that they're kicking in the DJ. So we would also have some months of work shutting risks there. Gulf of Mexico, you've got some of the smaller independence in the Gulf of Mexico. That's probably next on the list. But so far, we've not seen any of the large producers in the Gulf shut-in any production.

Ladies and gentlemen, at this time, I will now turn it back over to Mr. Armstrong for closing remarks.

Okay, well, thank you all very much for joining us this morning. A great quarter. We're really excited to see the execution that we had in the quarter and we think the fundamentals are very strong for our business in the way we're positioned out in front of us. So thanks again for joining us this morning.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.