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Williams to sell Kern River pipeline to MidAmerican Energy Holdings

$960 million deal to increase Williams’ cash flow; reduce debt, spending requirements

TULSA, Okla., March 7, 2002 — Williams has signed an agreement to sell its Kern River interstate natural gas pipeline business to a unit of MidAmerican Energy Holdings Company for $450 million in cash and assumption of $510 million in debt.

The energy trader and natural gas pipeline operator also reported a loss of $477.7 million, or 95 cents per share for 2001 after taking a big pre-tax charge of $2.05 billion related to its former telecommunications subsidiary Williams Communications. By comparison, net income for 2000 was $524.3 million.

The stock market reacted to the news by trading Williams Cos. Stock higher, adding $1.82, or 8.97 percent, to trade at $22.10 in recent dealings, CBS MarketWatch.com reported.

The sale to MidAmerican, a member of the Berkshire Hathaway Inc. family of companies, is expected to close by March 31, subject to bank consents and successful completion of Hart-Scott-Rodino review.

Upon closing, Williams will receive $450 million in cash, subject to certain adjustments, and MidAmerican will assume $510 million in debt. MidAmerican will continue with scheduled expansions to the Kern River system. As a result of the sale, Williams’ capital expenditure requirements will be reduced by approximately $1.26 billion over the next one-and-a-half years.

“We are taking this decisive step to strengthen our balance sheet to meet the more conservative requirements of the rating agencies, which now require companies like Williams to reduce debt and increase cash flow to maintain an investment-grade credit rating. The sale of our Kern River system is an important building block in achieving the financial flexibility to expand our businesses now and in the future,” said Steve Malcolm, president and CEO of Williams.

“We are extremely pleased to be acquiring the Kern River Gas Transmission Company, which we view as one of the finest natural gas pipeline assets in North America,” said David L. Sokol, MidAmerican chairman and CEO.

Upon completion of the sale, Kern River will become a subsidiary of MidAmerican. Bob Sluder, senior vice president and general manager of Williams’ Kern River and Northwest systems, will become president of the new MidAmerican subsidiary.

“We are pleased that Bob Sluder and the Kern River management team will be joining us to continue their legacy of high-quality operations,” said Greg Abel, president of MidAmerican.

Lehman Brothers acted as financial adviser to Williams in connection with the transaction.

Kern River System
Williams’ Kern River pipeline is an important route for the transmission of natural gas from the vast reserves in the Rocky Mountain states to the rapidly growing markets in Utah, Nevada and California. Constructed in 1992, Kern River extends 926 miles from Opal, Wyo., to the San Joaquin Valley near Bakersfield, Calif. Kern River has a design capacity of 835 million cubic feet per day.

Williams in August 2001 filed with the Federal Energy Regulatory Commission to more than double capacity on the Kern River system by adding approximately 900 million cubic feet per day of additional capacity from Wyoming to California and markets in between.

Upon completion of the expansion project in May 2003, Kern River will be capable of transporting 1.7 billion cubic feet of natural gas per day. When converted to electricity, that is enough energy to power approximately 10 million homes.

Information on MidAmerican and its three principal business platforms, CalEnergy Generation, MidAmerican Energy, and Northern Electric, is available on the Internet at www.midamerican.com .

Williams information is available at www.williams.com .