Williams Cos. (WMB): 2Q26 Preview: Quiet Quarter; Watching Near Term BTM Funding and M&A Updates

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Williams Cos. (WMB): 2Q26 Preview: Quiet Quarter; Watching Near Term BTM Funding and M&A Updates

t grade counterparties outside of Meta, and 4)

geography of incremental project announcements. We believe progress on extending

contract tenors, diversifying counterparty mix, and more explicit details on the value of

the balance-of-plant infrastructure of WMB’s BTM footprints, particularly relative to

competitor offerings, should be helpful read-throughs on the still-debated terminal

value of the BTM business.

Expect near-term funding updates on BTM to manage balance sheet tightness. We

will monitor funding updates for WMB to manage their tighter balance sheet position in

2026-2027, and we note updates here may come in the near-term. For context, before

potential impacts of M&A as we discuss below, leverage capacity had already screened

tight through 2027. Management noted on the 1Q26 call that 2026 leverage is expected

to be 4.1x in 2026, above their 4x leverage ceiling. We note 2027 looks similarly tight

(4.1x) in our model. However, management was clear on both the 1Q26 call and at the

recent EIC conference that they are evaluating financing options for their BTM business

that could alleviate short-term leverage tightness including: 1) financial partners, 2)

hybrid securities, 3) insurance-backed JVs, or 4) not bringing on a partner and allowing

leverage to temporarily remain above the 4.0x ceiling. We do not expect common equity

issuance to be used as a funding lever, particularly given interest in the market for

behind-the-meter power ownership. We will look for details on ultimate funding

arrangements, and note we see potential for these structures to include a promote

WMB’s economics, in line with management commentary. As an example, we note WMB

1 July 2026 2