New projects and rising commodity prices should push Williams Cos. Inc. to near record performance levels within two years despite third-quarter earnings that were lower than the same period of 2008, the Tulsa-based company's CEO said Thursday.

All three Williams companies tallied quarterly profits, but lower natural gas prices and tighter margins pushed their net incomes below last year's period.

Growth expectations through 2011 have company officials optimistic, CEO Steve Malcolm said during a conference call with analysts and media.

"We're opportunity-rich, which leads to sustained growth ahead," Malcolm said, singling out projects in Colorado's Piceance Basin and in the Marcellus Shale area of Pennsylvania.

The parent Williams logged $143 million in third-quarter net income, down 61 percent from the $366 million generated in 2008's third quarter. Year-to-date profit totaled $266 million, compared with $1.3 million in the first nine months of last year.

Williams is confident about commodity price assumptions two years out showing oil at about $80 per barrel and natural gas up to $6.50 per million British thermal units from the current price of about $4.50. Those estimates are still well below 2008's historic highs but strong enough to generate healthy profits, company officials said.

"We're not relying on $100 oil and $9 gas to get us back to where we need to be," Malcolm said.

Williams plans $4 billion worth of projects through 2011, officials said. The Piceance Basin offers thousands of low-risk locations still to develop beyond what's already drilled, the CEO added.

"This is world-class resource," Malcolm said, comparing it to Williams' stakes in the Marcellus, Barnett and Woodford shales. "In our view, none of them has exceeded the quality of our core Piceance position."

The Rockies region's basis differentials, in which lower market prices made exploration and production less profitable, have steadied. In some cases, production has fetched even higher prices than those on the Henry Hub in Louisiana, Malcolm noted.

Williams also will start drilling new wells soon on its joint venture with Rex Energy in the Marcellus Shale. Another joint venture with Atlas Pipeline Partners will help connect wells in a new Marcellus gathering system, Malcolm said.

"We're adding fuel to our earnings engine," he said.

Williams cut its capital budget this year to $2.6 billion but added $600 million worth of liquidity through a debt offering in March. Altogether, Williams has about $1.7 billion in cash and cash equivalent combined with $1.9 billion of available credit capacity.

Shares of Williams rose $1.27 Thursday to $19.52 on the New York Stock Exchange. Three Williams companies

Williams Cos. Inc.

The 102-year-old company produces about 1.2 million cubic feet of natural gas per day in the U.S., offshore and abroad. It owns 8,500 miles of gas gathering lines and 14,600 miles of pipelines.

Williams Partners LP

A publicly traded master limited partnership, founded in 2005, focuses on natural gas and natural gas liquids gathering and processing in New Mexico, Colorado and Wyoming. It owns more than 5,000 miles in gathering systems.

Williams Pipeline Partners LP

The newest Williams entity, formed in 2007, owns a 35 percent general partnership interest in Northwest Pipeline GP. That system includes 12.8 billion cubic feet of working natural gas storage capacity and a 3,900-mile pipeline from New Mexico to the Pacific Northwest.

Rod Walton 581-8457

Originally published by ROD WALTON World Staff Writer.

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