Tuohy Brothers Annual Energy Conference New York City August 7, 2012
Index Overview Vision and Strategy 5 Well-positioned assets 8 Track record of disciplined growth 15 Demonstrated ability to create value 25 Appendix ONEOK 34 Financial 35 Natural Gas Distribution 39 Energy Services 48 Appendix…
Overview Key Points Vision and Strategy A premier energy company Well-positioned assets Connecting prolific supply basins to key markets Track record of disciplined growth Investing in new and existing infrastructure Demonstrated…
Vision and Strategy Page 5
Our Vision A Premier Energy Company Creating exceptional value for customers Rebundling services across the value chain, primarily through vertical integration, to provide customers with premium services at lower costs Applying our…
Our Key Strategies A Premier Energy Company Operate in a safe, reliable and environmentally responsible manner Generate consistent growth and sustainable earnings Increase distributable cash flow at ONEOK Partners through a…
Well-Positioned Assets Page 8
ONEOK Today A Premier Energy Company Assets that fit and work together Integrated operations Connecting prolific supply basins to key markets Proven ability to grow profitably ONEOK Partners is ONEOKs primary growth vehicle…
Business Segments Provide Stability and Opportunity ONEOK Partners ONEOKs primary growth vehicle Growth at OKS benefits OKE Generates primarily fee-based earnings Provides non-discretionary services to producers, processors and…
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 Primarily fee-based earnings Aligned…
Well Positioned in Shale Plays Our Fairway Active in and evaluating numerous shale plays Producer supply commitments are key Exposure to NGL-rich resource development Provides platform for future growth Bakken Shale Williston…
Natural Gas Distribution Asset Overview Kansas City Eighth largest U.S. natural gas distributor Wichita Tulsa Largest in Oklahoma and Kansas; Oklahoma City third largest in Texas More than 2 million customers served El…
Energy Services Asset Overview Delivers natural gas, together with bundled, reliable, premium products and services Peaking services Primarily to LDCs Access to prolific supply and high-demand areas Deep industry knowledge and…
Track Record of Disciplined Growth Page 15
Disciplined Growth Continues 10 Billion in Capital Investments Announced approximately 5.7 to 6.6 billion in growth projects in 2011-2015 Adjacent to and within our existing operating footprint including: 3.6 to 4.2 billion related…
Bakken Shale Strategic Fit Largest independent processor Extensive infrastructure Best positioned to provide critical midstream capability Knowledgeable workforce and contractors in place Strong producer relationships Existing…
Bakken Shale Natural Gas Gathering and Processing Investments Four new plants and related 1.4 billion 1.5 billion infrastructure Garden Creek 100 MMcf/d Bakken Completed December 2011 Shale Garden Creek II 100 MMcf/d Expected to…
Bakken Shale Natural Gas Liquids Investments Bakken NGL Pipeline 695 million to 830 million 450-550 million 525-to 615-mile, 12-inch diameter, NGL pipeline Bakken from Bakken Shale to Overland Pass Pipeline Shale Initial capacity…
Bakken Shale Crude Oil Investment 1.5 billion to 1.8 billion Bakken Crude Express Pipeline 1,300-mile crude oil pipeline Initial capacity of 200,000 barrels per day Transport light-sweet crude oil from Bakken Shale to Cushing,…
Cana-Woodford Shale and Granite Wash Natural Gas Liquids Investments 220 million Natural Gas Liquids Expanded partnerships existing Mid- Continent NGL gathering system Connected three new processing plants and expands capacity at…
Cana-Woodford - Canadian Valley Plant Natural Gas Gathering and Processing Investments Canadian Valley Plant 200 MMcf/d natural gas Mississippian processing facility Lime 190 million In service first quarter of 2014…
Sterling NGL Pipelines Investments 610 million to 810 million Build new Sterling III pipeline Flexibility to transport purity products and unfractionated NGLs 570-plus-mile, 16-inch diameter 193,000 bpd expandable to 250,000 bpd…
New Fractionators and E/P Splitter Investments 870 million to 1.0 billion Build MB-2 fractionator at Mont Belvieu 300 to 390 million Completion expected in mid-2013 75,000 bpd capacity 100% of available capacity committed Build…
Demonstrated Ability to Create Value Page 25
Value for OKS Unitholders Distribution Growth Expects 2.5-cent-per- Distributions Paid Per Unit unit per-quarter (Split Adjusted) 8% CAGR** 0.710 increase for 2012* 0.685 0.660 15-20% annual 0.635 0.610 0.595…
Value for OKE Shareholders Dividend Growth January and July 2012 Dividends paid per share dividend increases of 2.5 (adjusted for stock split) 13% CAGR** cents per share Split-adjusted Dividend growth of 40% between 2012-2014*…
Creating OKS Unitholder Value Total Unitholder Return ONEOK Partners total return exceeds S&P 500 and Alerian MLP Indices ONEOK Partners as of July 31, 2012 600% 541% 500% 400% 386% 300% 200% 167% 136% 100% 85% 92%…
Creating OKE Shareholder Value Total Shareholder Return ONEOKs total return exceeds S&P 500 and S&P 500 Utilities Indices ONEOK as of July 31, 2012 700% 600% 588% 500% 400% 300% 196% 200% 170% 110% 100% 85% 49% 49%…
OKS Growth Benefits OKE ONEOKs Growth Engine 1-cent-per-quarter Distributions paid to ONEOK ( in Millions) distribution increase 20% CAGR provides 12.5 million in 437 incremental annual distributions to ONEOK 333 Growth projects…
Stable Cash Flows Key Points Business is built to weather economic cycles through: Regulatory-recovery mechanisms Hedging strategies to mitigate risk Predominantly fee-based earnings in ONEOK Partners segment Non-discretionary…
Free Cash Flow at ONEOK Provides Financial Flexibility 115-145 million in 2012 guidance Stand-alone cash flow, before changes in working capital Lower bonus depreciation than in 2011 ( in Millions) Available for: Additional…
Key Investment Considerations A Premier Energy Company Strategic assets connecting prolific supply basins and key markets Non-discretionary services to producers, processors and customers Focused on creating value for both customers…
Appendix ONEOK Page 34
Appendix ONEOK Financial Page 35
Financial Guidance Summary* 2012 Net income: range of 345-375 million Capital expenditures: 304 million on a stand-alone basis Stand-alone cash flow before changes in working capital: midpoint of 695 million 115-145 million in free…
Earnings 2012 Financial Guidance Stand-alone Operating Income ONEOK Partners increases: Plus Equity Earnings* Higher optimization margins ( in Millions) Lower commodity prices 659 655 597 625 Natural gas distribution 591 609…
Strong Balance Sheet Investment Grade Commitment to investment- grade credit rating S&P: BBB (stable) ONEOK Stand Alone Moodys: Baa2 (stable) Debt-to-Capitalization Ratio Capital structure Goal: 50/50 capitalization 46% 40% 45%…
Appendix Natural Gas Distribution Page 39
Financial Performance Natural Gas Distribution Goal: Minimize the gap between actual and allowed returns Allowed return on equity (ROE)*: Range of 10.1-10.7% 2012 estimate: 8.8%* Operating Income** ( In Millions) CAGR = 11%…
Reducing Margin Sensitivity Natural Gas Distribution Two-thirds of margin is residential More than 70% of margin from fixed charges Weather normalization stabilizes volumetric charges Oklahoma Kansas Texas Total Residential…
Regulatory - On the Horizon Natural Gas Distribution Oklahoma - Oklahoma - Performance- Performance-based rate based rate filing approved in filing in March 2013 with Oklahoma - A July 2012 new rates to be effective general rate…
Oklahoma Natural Gas Natural Gas Distribution Largest customer base Approximately 83 percent of states natural gas customers 836,000 customers 75% in metropolitan areas Oklahoma Corporation Commission Three commissioners elected…
Oklahoma Natural Gas Performance-based Rates Performance-based rate structure If actual ROE is higher Increase frequency and than band: decrease size of rate case 50 bps 75% revenue- changes sharing requirement 25% earnings Once…
Kansas Gas Service Natural Gas Distribution Coldest territory Approximately 67 percent of states natural gas customers 632,000 customers 60% in metropolitan areas Kansas Corporation Commission Three commissioners appointed by…
Kansas Gas Service Rate Case Update Rate application filed in May Last adjustment in base rates in January 2007 Request to increase overall annual revenues by 32.7 million 50.7 million increase in base rates 18 million reduction…
Texas Gas Service Natural Gas Distribution Third largest natural gas distributor in the state Approximately 14 percent of states natural gas customers 621,000 customers 75% in metropolitan areas Home Rule with 10 jurisdictions…
Appendix Energy Services Page 48
Meeting Customer Needs Energy Services Utilities need non-uniform natural gas supply as dictated by weather requirements Utilities are willing to pay a premium for callable service Assures physical gas is available when and where…
What We Do Energy Services Provide bundled, reliable products and services to natural gas and electric utilities Buy natural gas supply from diverse sources Lease and optimize storage and transportation capacity Effectively use…
Current Efforts Action Plan Maintain existing premium-services customers More than 90% retained annually Premium-services fees lower due to lower natural gas price and volatility Maximize earnings through effective optimization…
Capacity Realignment Efforts Energy Services Realign contracted capacity Storage Capacity (Bcf) with customer requirements 91 Expected storage capacity to 60 83 Bcf by year end 2015 74 76 72 Expected long-term transportation…
Rebasing Cost Structure Current Plans Re-contract transportation and storage capacity Renewal Estimates Based on Capacity* At competitive rates that are economically attractive Aligned with premium-services 88% customer needs…
Appendix ONEOK Partners Page 54
ONEOK Partners Strong Asset Position Strategic assets connecting prolific supply basins to key markets Embedded growth opportunities within existing operating footprint Provides non-discretionary services to producers, processors…
Appendix ONEOK Partners Growth Projects Page 56
ONEOK Partners Growth More than 2 Billion of Growth Projects Completed 2006-2009 2010 was first full year of all projects contributing EBITDA Two-thirds of investments were NGL-related projects fee based Set the stage for next…
Bakken Shale Drilling Economics More than 90% of producer economics from crude-oil Producer Economics* production Natural Drilling is economical with NGLs gas 6% 3% crude oil prices as low as 50-60 per barrel* Increased…
Bakken Shale Current Environment Backlog of wells waiting to be fractured Shortage of crews Competing with other shales Increases well-completion costs Flaring of natural gas is reduced with our investments Existing OKS…
Bakken-related Project Status 2011-2015 % Contract In-service Major Project Contracting Status Committed Type Date Garden Creek plant and related Backed by volume commitments 100% committed POP with fee Dec. 2011 infrastructure and…
Mid-Continent-Gulf Coast Related Project Status 2011-2014 Contracting Contract Major Project % Committed In-service Date Status Type Sterling I expansion Capacity available 100% committed Differential or November 2011 for…
Bakken Shale Garden Creek Plant Natural Gas Gathering and Processing Investments Garden Creek plant 100 MMcf/d natural gas processing facility In service and processing near capacity Well-connects, upgrades and expansions to…
Bakken Shale Garden Creek II Plant Natural Gas Gathering and Processing Investments Garden Creek II plant 100 MMcf/d natural gas processing facility In service third quarter 2014 Well-connects, upgrades and expansions to existing…
Bakken Shale Stateline I Plant Natural Gas Gathering and Processing Investments Stateline I plant 100 MMcf/d natural gas processing facility 180-205 million In service third quarter 2012 Well-connects, upgrades and expansions to…
Bakken Shale Stateline II Plant Natural Gas Gathering and Processing Investments Stateline II plant 100 MMcf/d natural gas processing facility 135-150 million In service first half of 2013 Well-connects, upgrades and expansions…
Bakken Shale Divide County Natural Gas Gathering and Processing Investments Divide County gathering system 270-mile system in Divide County, N.D. Expected to be completed in second half 2013 Gather and deliver natural Garden…
Niobrara Shale Growth Potential Producers accumulating significant acreage Bakken Driven by crude-oil economics Shale Gathering and processing infrastructure required Bakken NGL pipeline designed to expand in order to capture…
Mississippian Lime New Play with Great Potential Existing natural gas gathering and processing and NGL assets are well positioned Exceptional potential Mississippian Lime Eastern section contains higher amount of NGLs Western…
Future Growth 2 Billion-plus Backlog Lengthy backlog of unannounced growth projects Includes natural gas-, NGL- and crude-oil-related infrastructure projects, including: Natural gas processing plants NGL fractionation and storage…
Appendix ONEOK Partners Financial Page 70
Financial Guidance Summary* 2012 Net income: range of 860-910 million Distributable cash flow: range of 975 million-1.025 billion Capital expenditures: approximately 2.0 billion 1.9 billion in growth capital 108 million in…
Earnings 2012 Financial Guidance Gathering and processing: Higher gathered and processed Operating Income and Equity Earnings* volumes ( in Millions) 15% CAGR Lower commodity prices 1,067 1,077 Garden Creek natural gas 211 250…
Predominantly Fee-Based Earnings Percent of Margin Fee-based margins increase in 2012 Sources of Margin Capital investments provide 0.9 B 1.1 B 1.1 B 1.2 B 1.6 B 1.7 B predominantly fee-based earnings 9% 13% 18% growth 20% 21%…
Distribution Coverage Financial Discipline Target long-term Distributable Cash Flow (DCF) coverage ratio of 1.05x to ( in Millions) 1.15x 1,000 946 182 Considerations 320 818 Capital project execution 637 558 588 626 Volume…
Strong Balance Sheet Investment Grade ONEOK Partners Committed to investment-grade credit Debt-to-Capitalization Ratio rating S&P: BBB (stable) Moodys: Baa2 (stable) Capital structure targets 50% 44% 55% 54% 55% 53% 50/50…
Appendix Natural Gas Gathering and Processing Page 76
Asset Overview Natural Gas Gathering and Processing Non-discretionary services Williston Basin to producers Gathering, compression, treating and processing Wind River Powder River Natural gas supplies from six basins Diverse…
Contract Portfolio Natural Gas Gathering and Processing Contract restructuring is a core capability Increases fee-based business and reduces commodity price sensitivity Conditioning language on 75% of keep-whole contracts to reduce…
Commodity Price Risk Mitigation Natural Gas Gathering and Processing Contract restructuring reduced keep- whole sensitivity Commodity Price Sensitivity Before Hedging Margin Impact 2012 hedged positions* 4.8 4.5 NGLs: 70% at…
Volume Growth by Basin Natural Gas Gathering and Processing Williston Basin produces high NGL-content gas - produced with crude oil Oklahoma and Kansas regions produce moderately wet gas - requires processing Powder River Basin…
Gathered Volumes Natural Gas Gathering and Processing 2012 volumes gathered expected to increase 12% Natural Gas Gathered (BBtu/d) from 2011 Wells connected 1,171 1,164 1,152 1,123 2012: 800+ (estimate) 1,067 1,030 2011: 583…
Processed Volumes Natural Gas Gathering and Processing 2012 processed volumes Natural Gas Processed (BBtu/d) expected to increase 24% from 2011 882 Higher volumes in Williston Basin 674 713 Garden Creek in service 658 621 641…
Future Growth Opportunities Natural Gas Gathering & Processing Continue growing our Bakken Shale/Williston Basin super- system New processing plants, additional infrastructure in Williston Basin region Western Oklahoma and Texas…
Appendix Natural Gas Pipelines Page 84
Asset Overview Natural Gas Pipelines Predominantly fee-based income Viking Gas Northern Border Transmission Approximately 82% of Pipeline transportation capacity contracted under demand-based Guardian Pipeline rates in 2012…
Northern Border Pipeline 50-Percent Equity Investment Links natural gas supply from western Canada to Midwest markets Bakken Shale Bison Pipeline interconnection Supply diversity accessing Powder River Rockies natural gas with…
Future Growth Opportunities Natural Gas Pipelines Connections to new natural gas-fired electric-generation plants Providing pipeline takeaway capacity for growing natural gas shale plays Pipeline expansions and extensions into new…
Appendix Natural Gas Liquids Page 88
Asset Overview Natural Gas Liquids Provides non-discretionary and fee-based services to processors and customers Gathering, fractionation, transportation, marketing and storage Extensive NGL gathering system NGL Gathering…
Volume Growth Natural Gas Liquids 2012 gathering volumes increase by 22%; fractionation volumes increase by 11% Significant volume growth in the Mid-Continent from 30 new processing plants and growth from existing plants Currently…
Delivering NGL Purity Products Delivering NGL Purity Products Volumes almost doubled NGLs Transported - Distribution Lines since 2007 500 North System purchased from 450 Kinder Morgan in 2007 400 Bushton fractionator expansion…
Margin Profile Natural Gas Liquids Exchange & Storage Services Gather, fractionate, transport and store Exchange & NGLs and deliver to market hubs; primarily Storage Services fee based 68% 59% Transportation Transportation 59%…
NGL Transportation Capacity Four Straws Sterling I and II distribution pipelines are at capacity Sterling I expansion complete Arbuckle NGL gathering pipeline can be used to capture market differentials The Four Straws will…
NGL Industry Environment Key Points NGL supply growing from liquids-rich regions Petrochemical demand growth in Gulf Coast NGLs enjoy significant price advantage vs. crude-oil based feedstocks Fractionation capacity is tight, with…
NGL Supply Decline Rates 80,000 Substantial new supply U.S. Natural Gas Production by Year needed to just offset U.S. 70,000 base decline 2011 Correlation of U.S. natural gas 60,000 production to NGL production 2010 Industry…
Arbuckle Pipeline Delivering Unfractionated NGLs to Gulf Coast Expanded to 240,000 bpd From southern Oklahoma through Barnett Shale to Mont Belvieu Completed in April 2012 Another option to deliver NGLs to Gulf Coast…
Overland Pass Pipeline 50-Percent Equity Investment Links NGL supply from Bakken Shale Rockies to Mid-Continent and Gulf-Coast markets Williams is 50% owner and became operator in April 2011 Williams is anchor shipper Strong…
Optimization Opportunities Natural Gas Liquids Provides earnings upside to fee-based business How it works: Ability to deliver NGL products at either Conway or Mont Belvieu Utilize assets, contract portfolio and market knowledge…
Fractionation Capacity Natural Gas Liquids 549,000 bpd, net ownership* Increasing our fractionation capacity 60,000 bpd of fractionation services from Targa began in second quarter 2011 Expanding Bushton by 60,000 bpd in 2012…
U.S. NGL Supply Sources and End Uses 2011 Averages NGL Supply Sources NGL products1 NGL End Uses Ethane - 42% Primary Propane - 28% Petrochemicals 54% of NGLs Supplied Gas Processing Normal Butane - 7% 80% of U.S Supply…
Future Growth Opportunities Natural Gas Liquids Gathering, Fractionation & Storage NGL Pipelines Increase fractionation capacity Overland Pass and Arbuckle Expand existing Mid-Continent Expansions and laterals to new NGL supply…
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