Basis of Presentation

6 Months Ended

Jun. 30, 2012

Basis of Presentation [Abstract]

BASIS OF PRESENTATION

1. BASIS OF PRESENTATION.

In this report, Transco (which includes Transcontinental Gas Pipe Line Company, LLC and unless the context otherwise requires, the subsidiaries that we control) is at times referred to in the first person as “we,” “us” or “our.”

Transco is owned, through Williams Partners Operating LLC (WPO), by Williams Partners L.P. (WPZ), a publicly traded Delaware limited partnership, which is consolidated by The Williams Companies, Inc. (Williams). At June 30, 2012, Williams holds an approximate 68 percent interest in WPZ, comprised of an approximate 66 percent limited partner interest and all of WPZ's 2 percent general partner interest.

General.

       The condensed consolidated unaudited financial statements include our accounts and the accounts of the subsidiaries we control. Companies in which we and our subsidiaries own 20 percent to 50 percent of the voting common stock or otherwise exercise significant influence over operating and financial policies of the company are accounted for under the equity method. The equity method investments as of June 30, 2012 and December 31, 2011 consist of Cardinal Pipeline Company, LLC (Cardinal) with ownership interest of approximately 45 percent and Pine Needle LNG Company, LLC (Pine Needle) with ownership interest of 35 percent. We received distributions associated with our equity method investments totaling $13.3 million and $4.1 million in the six months ended June 30, 2012 and June 30, 2011, respectively. Included in the distributions are $11.3 million return of capital from Cardinal in 2012 and $1.9 million return of capital from Pine Needle in 2011. We made capital contributions to Cardinal related to Cardinal's expansion project totaling $5.8 million and $11.5 million in the six months ended June 30,2012and June 30, 2011, respectively.

       The condensed consolidated unauditedfinancial statements have been prepared from our books and records. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP) have been condensed or omitted in this Form 10-Q pursuant to SEC rules and regulations. The condensed consolidated unaudited financial statements include all normal recurring adjustments and others which, in the opinion of our management, are necessary to present fairly our interim financial statements. These condensed consolidated unaudited financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our 2011 Annual Report on Form 10-K.

Through an agency agreement, WPX Energy Marketing, LLC (WPXEM), our affiliate until December 31, 2011, managed our long-term purchase agreements and our remaining jurisdictional merchant gas sales, which excludes our cash out sales in settlement of gas imbalances. On December 31, 2011, Williams completed the spin-off of its former exploration and production business, WPX Energy, Inc. (WPX). Subsequent to the spin-off, WPX managed our merchant function until May 1, 2012. Beginning May 1, 2012, our merchant function has been managed by Williams Energy Resources, LLC (WER), our affiliate. The long-term purchase agreements managed by WER remain in our name, as do the corresponding sales of such purchased gas. Therefore, we continue to record natural gas sales revenues and the related accounts receivable and cost of natural gas sales and the related accounts payable for the jurisdictional merchant sales managed by WER. WER receives all margins associated with our jurisdictional merchant gas sales business and assumes all market and credit risk associated with our jurisdictional merchant gas sales. Consequently, our merchant gas sales service has no impact on our operating income or results of operations.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated unaudited financial statements and accompanying notes. Actual results could differ from those estimates.

       Certain reclassifications from Administrative and general to Operation and maintenance, related to certain employee related expenses of $2.6 million and $4.6 million for the three and six months ended June 30, 2011, respectively, have been made to conform to the presentation utilized in the 2012 Condensed Consolidated Statement of Comprehensive Income.