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BAIRD GROWTH STOCK CONFERENCE – Oneok Inc.

Oneok Inc. · May 8, 2014 · 72 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 1
    Baird Growth Stock Conference Chicago May 8, 2014
  2. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 2
    Index Overview Vision and mission 5 Well-positioned assets 9 Disciplined growth continues 13 Demonstrated ability to create value 26 Financial strength 29 Appendix ONEOK financial 32 ONEOK Partners financial 35 ONEOK Partners…
  3. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 3
    What Well Cover Key Points Vision and Mission As a pure-play general partner, creating exceptional value through our ownership in ONEOK Partners by maximizing the dividend payout of ONEOK Well-positioned assets Connecting prolific…
  4. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 4
    Vision and Mission Page 5
  5. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 5
    ONEOK Vision and Mission Our Vision Has Changed A pure-play General Partner that creates exceptional value for all stakeholders through our ownership in ONEOK Partners Providing management and resources enabling ONEOK Partners to…
  6. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 6
    ONEOK Partners Vision and Mission Our Vision Remains the Same Creating exceptional value for all stakeholders by: Re-bundling services across the energy value chain, primarily through vertical integration, to provide customers with…
  7. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 7
    Our Key Strategies A Premier Energy Company ONEOK Partners Increase distributable cash flow per unit through investments in internal growth projects and strategic acquisitions Continue to grow/expand our integrated natural gas and…
  8. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 8
    Well-Positioned Assets Page 9
  9. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 9
    ONEOK as Pure-Play General Partner Overview ONEOK now consists of the general partner (GP) and limited partner (LP) interests in OKS ONEOK is one of the largest pure- play, publicly traded GPs Significant free cash flow driven by…
  10. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 10
    ONEOK Partners Asset Overview Owns and operates assets in midstream natural gas and natural gas liquids businesses Provides non- discretionary services to producers, processors and customers Predominantly fee-based earnings…
  11. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 11
    OKS Predominantly Fee-Based Earnings Percent of Margin Commodity price risk Sources of Margin Exists primarily in natural gas gathering and processing segment 1.2 B 1.6 B 1.6 B 1.7 B 2.1 B 9% 11% 13% Mitigated by hedging 20% 31%…
  12. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 12
    Disciplined Growth Continues Page 13
  13. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 13
    Disciplined Growth Continues 11 to 12 Billion in Capital Investments Completed more than 2 billion in growth projects (2006-2009) Approximately 6.0 to 6.4 billion in growth projects and strategic acquisitions in 2010-2016…
  14. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 14
    Announced Capital Investments 6.0 to 6.4 Billion By Region* By Segment* 1.0 1.6 3.6 3.1 3.1 Williston Basin to Bushton, Kan. Natural Gas Gathering and Processing Mid-Continent to Mont Belvieu, Texas Natural Gas Liquids…
  15. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 15
    Williston Basin Crude-oil- and NGL-driven Economic Development Largest independent natural gas gatherer and processor Extensive infrastructure Williston Basin Bakken Shale Best positioned to provide critical midstream capability…
  16. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 16
    Williston Basin Natural Gas Gathering and Processing Investments Six new plants and related infrastructure 2.3 billion to 2.5 billion Garden Creek 100 MMcf/d In service December 2011 Stateline I 100 MMcf/d Williston Basin Bakken…
  17. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 17
    Williston Basin Lonesome Creek Natural Gas Gathering and Processing Investments Lonesome Creek plant 320-390 million Williston Basin Bakken Shale 200 MMcf/d natural gas processing facility, our largest in North Dakota Expected…
  18. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 18
    Sage Creek Acquisition Powder River Basin Sage Creek acquisition Approximately 440 million 305 million investment 50 MMcf/d natural gas processing facility and related natural gas gathering and NGL infrastructure Completed in…
  19. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 19
    Williston Basin Natural Gas Liquids Investments Approximately 890 million Bakken NGL Pipeline Expansion 100 million to expand capacity to 135,000 bpd from 60,000 bpd with additional pump stations; Williston Basin Bakken Shale…
  20. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 20
    Sterling NGL Pipelines Investments 760 million to 790 million Sterling III pipeline Flexibility to transport NGL purity products and unfractionated NGLs 550-plus miles, 16-inch diameter 193,000 bpd, expandable to 260,000 bpd 75%…
  21. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 21
    New Fractionators and E/P Splitter Investments at Mont Belvieu 950 million to 1.0 billion MB-2 fractionator - 75,000 bpd capacity In service in December 2013 100% of available capacity committed MB-3 fractionator - 75,000 bpd…
  22. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 22
    Cana-Woodford - Canadian Valley Plant Natural Gas Gathering and Processing Investments Canadian Valley Plant 190 million Mississippian Lime 200 MMcf/d natural gas processing facility Completed in March 2014 Well connections,…
  23. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 23
    Routine Growth Capital The Other Stuff Routine Growth Capital Expenditures Smaller projects included in 2014 by Segment (Millions) capital expenditure guidance but not announced specifically 18 Well connections 94 NGL storage…
  24. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 24
    Future Growth 3 to 4 Billion Backlog Increased backlog range to 3 billion to 4 billion Lengthy backlog of unannounced growth projects Natural gas, NGL and crude-oil related infrastructure projects, including: Natural gas processing…
  25. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 25
    Demonstrated Ability to Create Value Page 26
  26. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 26
    Creating OKS Unitholder Value Distribution Growth 6-8% expected annual distribution growth between 2013-2016 29% increase in distributions paid since 2011 67% increase since 2006, when a wholly owned subsidiary of ONEOK became…
  27. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 27
    Creating OKE Shareholder Value Dividend Growth 53% increase in 2014 dividends declared compared with 2013 Increased to 56 cents per share in April 2014, following the separation ONEOKs natural gas distribution segment into ONE Gas…
  28. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 28
    Financial Strength Page 29
  29. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 29
    OKS Growth Benefits OKE Value of GP Interest to ONEOK ONEOK Partners growth Distributions Paid to ONEOK ( in Millions) projects expected to 20% CAGR drive continued OKS 607 distribution growth 536 Two-thirds of every incremental…
  30. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 30
    OKS Strong Balance Sheet Investment Grade Committed to investment-grade credit ONEOK Partners rating Long-Term Debt-to-Capitalization Ratio S&P: BBB (stable) Moodys: Baa2 (stable) Capital structure targets 47% 51% 46% 53% 52% 54%…
  31. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 31
    Appendix - ONEOK Financial Page 32
  32. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 32
    OKE Financial Guidance Summary 2014 Cash flow available for dividends 560-640 million Dividend: 53% increase in dividends declared for 2014 compared with 2013 Increased to 56 cents per share in April 2014, following the separation…
  33. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 33
    ONEOK Income Taxes Assumes bonus depreciation expires in 2013 Taxes on GP earnings at full corporate tax rate Taxes on LP distributions have been 100% deferred in recent years No cash taxes expected to be paid in 2014 Beyond 2014,…
  34. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 34
    Appendix ONEOK Partners Financial Page 35
  35. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 35
    OKS Financial Guidance Summary 2014 Net income: range of 975 million-1.075 billion EBITDA: range of 1.565-1.665 billion Distributable cash flow: range of 1.15-1.25 billion Capital expenditures: 2.02 billion 1.9 billion in growth…
  36. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 36
    OKS Three-year Financial Outlook 2013-2016 Expected average annual EBITDA growth of 15-20% between 2013-2016 Driven by earnings from completed capital projects Sustainable distribution growth Projected 1.5-cent-per-unit per-quarter…
  37. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 37
    ONEOK Partners 2014 Operating Income and Equity Earnings by Segment Natural Gas Gathering Natural Gas Liquids Natural Gas Pipelines and Processing 23% 61% 16% 308 million 803 million 206 million Page 38
  38. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 38
    OKS 2014 Financial Guidance By Segment Natural gas gathering and processing: Operating Income and Equity Earnings ( in Millions) Higher gathered and processed 14% CAGR volumes Benefit of new processing plants on 308 line 211…
  39. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 39
    OKS Distribution Coverage Financial Discipline Distributable Cash Flow (DCF) Target long-term annual ( in Millions) 16% CAGR coverage ratio of 1.05x 1,202 to 1.15x 87 1,008 Considerations 946 949 190 18 1,115 Capital project…
  40. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 40
    Appendix ONEOK Partners Growth Projects Page 41
  41. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 41
    OKS Growth: 2006-2009 More than 2 Billion of Growth Projects Completed 2010 was first full year of all of these projects contributing EBITDA Two-thirds of investments were fee-based, NGL-related projects Set the stage for next…
  42. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 42
    Williston Basin Natural Gas Flaring Results in loss of NGL and natural gas value uplift 29% of North Dakotas natural gas production was flared in November North Dakota Petroleum Council Flaring Task Force recommendations target a…
  43. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 43
    Williston Basin Drilling Economics More than 90% of producer Producer Economics economics from crude-oil Natural production NGLs gas Drilling is economical with 4% 2% crude-oil prices (WTI) as low as 55-70 per barrel Increased…
  44. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 44
    Williston Basin-related Project Status 2010-2016 Major Project Contracting Status Committed Contract Type Completed Garden Creek plant and related Backed by acreage dedications Acreage dedications POP with fee December 2011…
  45. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 45
    Mid-Continent-Gulf Coast-related Project Status 2010-2015 Contract Major Project Contracting Status Committed Completed Type Sterling I expansion Capacity available for optimization 100% Differential November 2011 or fee based…
  46. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 46
    Appendix Natural Gas Gathering and Processing Page 47
  47. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 47
    Asset Overview Natural Gas Gathering and Processing Non-discretionary services to producers Williston Basin Gathering, compression, treating and processing Diverse contract portfolio More than 2,000 contracts Wind River Powder…
  48. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 48
    Natural Gas Gathering and Processing Well Connections Well Connections by Region 2014 well connections expected to increase 12% 1,300 from 2013 and quadruple 1,160 175 145 from 2010 940 Approximately 800 well 180 connections in…
  49. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 49
    Natural Gas Gathering and Processing Gathered Volumes 2014 volumes gathered Natural Gas Gathered (BBtu/d) expected to increase 12% CAGR 1,700 26% from 2013 Largest volume growth 1,347 expected in the Rocky 1,067 1,119 1,000…
  50. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 50
    Natural Gas Gathering and Processing Processed Volumes 2014 processed volumes Natural Gas Processed (BBtu/d) are expected to increase 20% CAGR 1,410 29% from 2013 Higher volumes in Williston Basin and Mid-Continent 1,094…
  51. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 51
    Natural Gas Gathering and Processing Commodity Price Risk Mitigation Commodity Price Sensitivity Before Hedging 2014 hedged positions* Margin Impact Natural gas: 75% at 4.06/MMBtu (in Millions) 4.1 115,600 MMBtu/d of…
  52. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 52
    Natural Gas Gathering and Processing Contract Portfolio Current contract mix aligns our interests with producers Primarily percent-of-proceeds contracts with fee-based component Minimal keep-whole contracts Contract Mix by…
  53. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 53
    ONEOK Partners Commodity Price Point-of-View Price Assumptions (Unhedged) 2014 2015 2016 NYMEX crude oil/Bbl 93.84 95.72 98.00 NYMEX natural gas/ MMBtu 4.10 4.50 4.80 NGL composite/gallon* 1.25 0.99 0.92 Conway-to-Mont Belvieu…
  54. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 54
    Appendix Natural Gas Liquids Page 55
  55. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 55
    Asset Overview Natural Gas Liquids Provides non-discretionary, fee- based services to processors and customers Gathering, fractionation, transportation, marketing and storage Extensive NGL gathering system Connected to…
  56. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 56
    Natural Gas Liquids Gathered and Fractionated Volumes 2014 NGL gathered volumes estimated to increase by 15% compared with 2013 2014 NGL fractionated volumes estimated to increase by 10% compared with 2013 MB-2 fractionator in…
  57. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 57
    Natural Gas Liquids Margin Profile Margin Profile Mix Exchange & Storage Services Gather, fractionate, transport and store NGLs and deliver to market hubs; primarily fee based 68% 55% Exchange & 59% Storage Services…
  58. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 58
    Ethane Outlook Supply and Demand are Key Drivers Ethane rejection is expected to continue at least through much of 2016 until new world-scale ethylene cracking capacity begins coming on line Ethane prices will remain under pressure…
  59. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 59
    Fractionation Capacity Natural Gas Liquids Currently 744,000 bpd of available capacity Increased our fractionation capacity 60,000 bpd of fractionation services from Targa began in second quarter 2011 under long-term contract…
  60. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 60
    Appendix Natural Gas Pipelines Page 61
  61. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 61
    Asset Overview Natural Gas Pipelines Predominantly fee-based income Viking Gas Northern Border Transmission 88% of transportation capacity Pipeline contracted under demand-based rates in 2014 Guardian Pipeline 84% of contracted…
  62. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 62
    Northern Border Pipeline 50-Percent Equity Investment Links natural gas supply from western Canada and the Williston Basin Bakken Shale Williston Basin to Midwest markets Powder River Niobrara Shale Bison Pipeline…
  63. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 63
    Appendix - Energy Services Page 64
  64. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 64
    Accelerated Wind Down Energy Services Discontinued, through an accelerated wind down process completed on March 31, 2014 Expected future cash payments for released capacity contracts of approximately 68 million on an after-tax…
  65. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 65
    Non-GAAP Reconciliations ONEOK Page 66
  66. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 66
    Non-GAAP Reconciliations ONEOK, Inc. Stand-Alone ONEOK has disclosed in this presentation cash available for dividends and free cash flow, all amounts that are non-GAAP financial measures. Management believes these measures provide…
  67. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 67
    OKE Financial Measures Cash Flow Available for Dividends ( in Millions) 2014G* Recurring cash flows: Distributions received from ONEOK Partners declared 636 Interest expense (60) Cash taxes - Energy services cash flow 39…
  68. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 68
    OKE Non-GAAP Reconciliation Cash Flow Available for Dividends and Free Cash Flow ( in Millions) 2014G* Net income attributable to ONEOK 285 Depreciation and amortization 4 Deferred income taxes 178 Equity in earnings of ONEOK…
  69. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 69
    Non-GAAP Reconciliations ONEOK Partners Page 70
  70. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 70
    Non-GAAP Reconciliations ONEOK Partners ONEOK Partners has disclosed in this presentation historical and anticipated Adjusted EBITDA, Distributable Cash Flow (DCF) and coverage ratio levels that are non-GAAP financial measures.…
  71. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 71
    OKS Non-GAAP Reconciliations Adjusted EBITDA and Distributable Cash Flow ( in Millions) 2006 2007 2008 2009 2010 2011 2012 2013 2014G* Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow Net Income 445 408 626…
  72. BAIRD GROWTH STOCK CONFERENCE – Oneok Inc. – slide 72

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