Barclays Investment-Grade Energy and Pipeline Conference New York City March 6, 2014
Derek S. Reiners Senior Vice President, Chief Financial Officer and Treasurer Page 2
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…
Vision & Mission Page 5
ONEOK Vision and Mission Our Vision 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 execute its…
ONEOK Partners Vision and Mission Our Vision Creating exceptional value for all stakeholders by: Re-bundling services across the energy value chain, primarily through vertical integration, to provide customers with premium services…
Our Key Strategies A Premier Energy Company ONEOK Partners Increase distributable cash flow per unit through investments in internal growth projects and acquisitions Financial Manage our balance sheet and maintain investment-grade…
Well-Positioned Assets Page 9
ONEOK as Pure-Play General Partner Overview ONEOK consists of the general partner (GP) and limited partner (LP) interests in OKS, following the ONE Gas separation in January 2014 Discontinue Energy Services by March 2014 ONEOK is…
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…
OKS Predominantly Fee-Based Earnings Percent of Margin Commodity price risk Sources of Margin Exists primarily in natural gas 1.2 B 1.6 B 1.6 B 1.7B 2.1 B gathering and processing segment 9% 11% 13% Mitigated by hedging 20% 31%…
Disciplined Growth Continues Page 13
Disciplined Growth Continues 10 to 11 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 acquisitions in 2010-2016 Approximately 2.7…
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…
Williston Basin Strategic Fit Largest independent natural gas gatherer and processor Extensive infrastructure Williston Basin Bakken Shale Best positioned to provide critical midstream capability Knowledgeable workforce and…
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…
Williston Basin Lonesome Creek Natural Gas Gathering and Processing Investments Lonesome Creek plant 200 MMcf/d natural gas Williston Basin Bakken Shale processing facility, our largest in North Dakota Expected to be completed in…
Sage Creek Acquisition Powder River Basin Sage Creek acquisition 305 million investment Approximately 440 million 50 MMcf/d natural gas processing facility and related natural gas gathering and NGL infrastructure Completed…
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…
Sterling NGL Pipelines Investments 750 million to 800 million Sterling III pipeline Flexibility to transport NGL purity products and unfractionated NGLs 540 plus miles, 16-inch diameter 193,000 bpd, expandable to 250,000 bpd 75%…
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 December 2013 100% of available capacity committed MB-3 fractionator - 75,000 bpd capacity…
Cana-Woodford - Canadian Valley Plant Natural Gas Gathering and Processing Investments Canadian Valley Plant 200 MMcf/d natural gas processing Mississippian facility Lime Expected to be completed in March 2014 190 million…
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…
Future Growth 2 to 3 Billion Backlog Lengthy backlog of unannounced growth projects Includes natural gas, NGL and crude-oil-related infrastructure projects, including: Natural gas processing plants Natural gas pipelines NGL…
Demonstrated Ability to Create Value Page 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…
Creating OKE Shareholder Value Dividend Growth 53% increase in 2014 dividends declared compared with 2013 Increase to 56 cents per share in April 2014, following the separation ONEOKs natural gas distribution segment into ONE Gas…
Financial Strength Page 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…
OKS Strong Balance Sheet Liquidity* OKS Revolver Availability OKS Debt Maturities*** ( in millions) ( in millions) Cash 135 2013 2015 - Total Capacity Available** 1,700 2016 1,100 Less 2017 400 Commercial Paper - 2018 425…
OKE Balance Sheet Liquidity* OKE Revolver Availability OKE Debt Maturities ( in millions) ( in millions) Cash 15 2013 2021 - Total Capacity Available 300 2022 2035 1,136 Less Commercial Paper - terminated - Letters of Credit…
Key Investment Considerations Strengths Strategic assets connecting prolific supply basins and key markets Non-discretionary services to producers, processors and customers Stable cash flow ONEOK Partners primarily fee based,…
Questions Page 35
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 37 Appendix ONEOK Partners Financial 40…
Appendix - ONEOK Financial Page 37
OKE Financial Guidance Summary 2014 Cash flow available for dividends 560-640 million Dividend: 53% increase in dividends declared for 2014 compared with 2013 Increase to 56 cents per share in April 2014, following the separation…
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,…
Appendix ONEOK Partners Financial Page 40
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…
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…
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 43
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…
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 949 946 190 18 1,115 Capital project…
Appendix ONEOK Partners Growth Projects Page 46
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…
Williston Basin Natural Gas Flaring Producers are currently flaring 36% of natural gas production* Results in loss of NGL and natural gas value uplift North Dakota Monthly Natural Gas Flared Percent of Production 40% 35 30 25 20 15…
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…
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…
Mid-Continent-Gulf Coast-related Project Status 2010-2015 Contract Major Project Contracting Status Completed Committed Type Sterling I expansion Capacity available for optimization 100% Differential November 2011 or fee based…
Appendix Natural Gas Gathering and Processing Page 52
Asset Overview Natural Gas Gathering and Processing Non-discretionary services to Williston Basin producers Gathering, compression, treating and processing Diverse contract portfolio More than 2,000 contracts Wind River Powder…
Natural Gas Gathering and Processing Gathered Volumes 2014 volumes gathered are expected to increase 26% from 2013 Well connections have quadrupled since 2010 Well Connections by Region Natural Gas Gathered (BBtu/d) 1,700 1,300…
Natural Gas Gathering and Processing Processed Volumes 2014 processed volumes Natural Gas Processed (BBtu/d) are expected to increase 29% from 2013 1,410 Higher volumes in Williston Basin Stateline II in service April 2013 1,094…
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) 110,400 MMBtu/d of estimated…
Natural Gas Gathering and Processing Contract Portfolio Current contract mix aligns interests with producers Minimal keep-whole contracts Contract Mix by Margin 65% 69% 66% 60% 68% 35% 34% 40% 32% 31% 2010 2011 2012…
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…
Natural Gas Liquids Gathering and Fractionation Volumes 2014 gathering volumes estimated to increase by 15%; 2014 fractionation volumes estimated to increase by 10% MB-2 fractionator in service in December 2013 MB-3 fractionator…
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 & Transportation 59% Storage…
Ethane Outlook Supply and Demand are Key Drivers Ethane rejection is expected to continue through 2016 until new world-scale ethylene cracking capacity comes on line in 2017 Ethane prices will remain under pressure until new ethylene…
Fractionation Capacity Natural Gas Liquids Currently 684,000 bpd, net ownership Increased capacity by: 60,000 bpd of fractionation services from Targa began in second quarter 2011 Bushton 60,000 bpd expansion in service in…
Appendix Natural Gas Pipelines Page 65
Asset Overview Natural Gas Pipelines Predominantly fee-based Viking Gas Northern Border Transmission income Pipeline 88% of transportation capacity Guardian contracted under demand- Pipeline based rates in 2014 84% of…
Northern Border Pipeline 50-Percent Equity Investment Links natural gas supply from the Williston Basin and western Canada to Midwest Williston Basin Bakken Shale markets Bison Pipeline interconnection Powder Supply diversity…
Appendix - Energy Services Page 68
Accelerated Wind Down Energy Services Discontinue segment, through an accelerated wind down process by March 31, 2014 139 million pre-tax, non-cash charge (87 million after-tax) through December 31, 2013, related to the capacity…
Non-GAAP Reconciliations ONEOK Page 70
Non-GAAP Reconciliations ONEOK, Inc. Stand-Alone ONEOK has disclosed in this presentation stand-alone cash flow, before changes in working capital, cash available for dividends and free cash flow, all amounts that are non-GAAP…
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…
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…
Non-GAAP Reconciliations Stand-Alone Cash Flow, Before Changes in Working Capital and Free Cash Flow ( in Millions) 2008 2009 2010 2011 2012 2013 Net income attributable to ONEOK 312 305 335 361 361 267 Charges attributable to exit…
Non-GAAP Reconciliations ONEOK Partners Page 75
Non-GAAP Reconciliations ONEOK Partners ONEOK Partners has disclosed in this presentation historical and anticipated EBITDA, Distributable Cash Flow (DCF) and coverage ratio levels that are non-GAAP financial measures. EBITDA, DCF…
OKS Non-GAAP Reconciliations EBITDA and Distributable Cash Flow ( in Millions) 2006 2007 2008 2009 2010 2011 2012 2013 2014G* Reconciliation of Net Income to EBITDA and Distributable Cash Flow Net Income 445 408 626 435 473 831 888 804…
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