WESCO

Custom-Tailored Energy Solutions

WESCO provided the financing required by Dallas-based Chateau Oil and Gas to explore for natural gas in the Gulf Coast. Chateau President Dana Dutcher, left, and Cord Ederer, WESCO manager of producer services, take in the view from a platform drilling rig.

Williams Energy Services markets natural gas to local distribution companies and large industrial users. WESCO also manages customers' exposure to volatile energy prices through price-risk management, which provides financial and physical trading services in the energy commodity markets.

WESCO

A t WESCO, our people make the difference. Using skill, talent and experience, we customize our service to meet each customer's specific energy needs. From short-term transportation agreements to no-notice deliveries, we bring natural gas to customers nationwide. We also help them manage their energy portfolios through sophisticated price-risk management systems, a smart move in today's volatile energy marketplace. We also make it possible for producers to develop energy projects. In short, when you think of the comprehensive energy merchant, you're thinking of WESCO.

Selected Financial Data (dollars in millions) 1995** 1994 1993

Revenues $ 85.8*** $263.70 $360.80

Operating profit 30 0.5 7.9

Identifiable assets* 351.9 96.5 84.6

Operating profit as % of average assets 7.40% 0.60% 10.70%

Operating Statistics

Natural gas physical trading (TBtu) 754 148 190

Employees (December 31) 249 103 59

*Defined in Note 16 of the Notes to Consolidated Financial Statements, page 53.

** These amounts include Transco Energy Company's gas marketing/trading operations and statistics since January 18, 1995.

*** Reclassified as described in Note 15 of the Notes to Consolidated Financial Statements, page 50.

Key Points

We formed WESCO in 1995 by combining the financial and physical energy merchant businesses of Williams and Transco Energy.
Negotiated extensions to no-notice contracts for 1996 that Transco had held. This premium offering guarantees gas delivery to local distribution companies (LDCs) without prior notification.
Entered into an agreement in December 1995 with PanEnergy to form Altra Energy Technologies. This partnership will combine both companies' information networks to form a "super network" of online services. Users will include Williams, PanEnergy and other pipelines, which collectively transport more than half of all the gas used in the United States. Altra customers will have access to software and services that manage gas contracts; real-time, screen-based trading; and complete gas accounting systems, in addition to our electronic bulletin board network.
Our energy financing program enabled small and midsize producers to purchase reserves and complete drilling projects.
As a gas marketer operating in a commodity environment of very thin margins, we must find new avenues of business - such as in the bulk electricity market - and exploit non-regulated retail markets. In 1996 we plan to form alliances with several LDCs that should open opportunities in both retail gas and power markets.
WESCO, as a natural gas marketer and financial trader, blends financial and physical strengths inherited from Williams and Transco. Our performance during the startup year, combined with these strengths, gives us confidence in substantial growth in operating profit over the next few years.

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