Fitch Ratings Upgrades Williams Companies; Rating Outlook Stable.

Business Editors

NEW YORK--(BUSINESS WIRE)--May 2, 2003

The Williams Companies, Inc.'s (WMB) senior unsecured debt rating has been upgraded to 'B+' from 'B-' by Fitch Ratings. In addition, Fitch has assigned a 'BB' rating to WMB's outstanding senior secured debt obligations. The senior unsecured debt ratings of WMB's three pipeline issuing subsidiaries, Transcontinental Gas Pipe Line Corp. (TGPL), Northwest Pipeline Corp. (NWP), and Texas Gas Transmission Corp. (TGT) have been upgraded to 'BB' from 'BB-'. The ratings for WMB, TGPL, and NWP are removed from Rating Watch Evolving. The Rating Outlook is Stable. TGT's rating remains on Rating Watch Positive pending completion of the sale of TGT to Loews Corp. (senior unsecured rated 'A' by Fitch, Rating Outlook Negative).

The rating action reflects WMB's improved financial flexibility including its strengthened liquidity position and reduced ongoing debt refinancing risk. Cash and available liquidity is expected to exceed $2 billion at year-end 2003 after taking into account scheduled debt maturities, pending asset sales, and planned subsidiary financings. Additional asset sales could provide further upside to WMB's liquidity profile. In addition, the company has demonstrated an ability to access the debt capital markets at the subsidiary level evidenced by the March 2003 issuance of senior unsecured notes at NWP. The stable outlook incorporates Fitch's expectation that WMB will be able to restructure or extend its upcoming secured debt maturities including a $900 million reserved based financing at Williams Production RMT Co and $400 million corporate letter of credit facility maturing in July 2003.

The two notch separation in ratings between WMB's senior secured and senior unsecured debt reflects the enhanced structural position of secured creditors and Fitch's evaluation of the underlying collateral package. There is currently $553 million of secured debt outstanding at the WMB corporate level including $400 million of secured bank debt and letters of credit and approximately $153 million of notes and debentures which were equally and ratably secured with WMB's bank credit facility in accordance with the indentures governing those securities.

WMB's ongoing corporate restructuring and asset sale program is narrowing the scale and scope of the company. By year-end 2003 WMB is expected to emerge as a smaller integrated natural gas company with core operations encompassing FERC regulated interstate pipelines (TGPL and NWP), exploration and production (E&P), and midstream gas and liquids services. These businesses should generate a relatively predictable earnings and cash flow stream going forward with potential commodity prices volatility in the E&P segment offset by the cash flow stability of TGPL and NWP and WMB's growing portfolio of fee based midstream gas gathering assets. Commodity price risk at E&P is further mitigated by WMB's hedging strategy and focus on developing lower risk Rocky Mountain based tight sands and coalbed methane gas reserves.

Consolidated debt levels are expected to remain high relative to cash flow levels even after factoring in the impact of completed and targeted asset divestitures. Excluding any potential cash flow contribution from energy marketing and trading (EM&T) activities, Fitch expects consolidated debt to EBITDA to remain in excess of 5.0 times (x) through 2004. Given WMB's reduced capital spending program, consolidated credit measures should show gradual improvement over time.

WMB's sizable EM&T portfolio continues to pressure the company's consolidated credit profile. In addition, to consuming more than $1 billion of permanent working capital during 2002, efforts to limit near-term performance risk of this business unit will be constrained by WMB's inability to hedge its long dated contractual exposures in the current market environment. Although WMB has been successful in winding down speculative trading positions and reducing ongoing operating expenses at EM&T, the company remains obligated to make fixed payments obligations under long-term tolling and other capacity arrangements in excess of $400 million annually. Critical to the future direction of WMB's ratings will be its ability to execute upon its ongoing efforts to sell, monetize or joint venture its energy marketing and risk management portfolio. In Fitch's view, any potential transaction or arrangement that would assume EM&T's long-term contractual obligations would reduce overall business risk and likely have further positive credit implications for WMB.