American Gas Association Financial Forum Naples, Fla. May 5-6, 2013
Pierce H. Norton II Executive Vice President - Commercial Page 2
What Well Cover Key Points Vision and Strategy A premier energy company Well-positioned assets Connecting prolific supply basins to key markets Disciplined growth continues Investing in new and existing infrastructure…
Vision & 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 ONEOK Partners Increase distributable cash flow per unit through investments in internal growth projects and acquisitions Natural Gas Distribution Increase operating income through rate…
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 source of growth…
Business Segments Provide Stability and Opportunity ONEOK Partners ONEOKs primary source of growth 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 services and products Peaking services Primarily to LDCs Leased Pipeline Capacity Leased Storage Capacity Storage* 53.4 Bcf of…
Disciplined Growth Continues Page 15
Disciplined Growth Continues 9 to 10 Billion in Capital Investments Announced approximately 4.7 to 5.2 billion in growth projects in 2011-2015 Adjacent to and within our existing operating footprint, including: Williston Basin to…
Williston Basin Strategic Fit Largest independent processor Extensive infrastructure Williston Basin Best positioned to provide Bakken Shale critical midstream capability Knowledgeable workforce and contractors in place Strong…
Williston Basin Natural Gas Gathering and Processing Investments Five new plants and related 1.7 billion to 1.8 billion infrastructure Garden Creek 100 MMcf/d Williston Basin In service December 2011 Bakken Shale Garden Creek II…
Williston Basin Natural Gas Liquids Investments Bakken NGL Pipeline Approx. 740 million to 780 million 590-620 million 600-mile, 12-inch diameter Williston Basin Initial capacity of 60,000 bpd Bakken Shale In service April 2013…
New Fractionators and E/P Splitter Investments at Mont Belvieu 890 million to 1.2 billion MB-2 fractionator 300-390 million Expected to be completed in third quarter 2013 75,000 bpd capacity 100% of available capacity committed…
Sterling NGL Pipelines Investments 610 million to 810 million Construct Sterling III pipeline Flexibility to transport purity products and unfractionated NGLs 540-plus-mile, 16-inch diameter 193,000 bpd expandable to 250,000 bpd…
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 23
OKE Three-year Financial Outlook* 2012-2015 Expected average annual net income growth of 15-20% comparing 2012 results with 2015 Driven by continued earnings growth at ONEOK Partners, primarily through volume growth Total dividend…
OKS Three-year Financial Outlook* 2012-2015 Expected average annual EBITDA growth of 15-20% comparing 2012 results with 2015 Driven by earnings from completed capital projects Sustainable distribution growth Projected…
Creating OKE Shareholder Value Dividend Growth and Total Shareholder Return 63% total increase in dividends paid since 2010 143% since 2006 Long-term dividend payout target of 60-70% of recurring earnings Dividends Paid Per Share…
Creating OKS Unitholder Value Distribution Growth and Total Unitholder Return 29% total increase in distributions paid since 2010 59% since 2006 8-12% annual distribution growth between 2012-2015* Distributions Paid Per Unit Per…
OKS Growth Benefits OKE ONEOKs Source of Growth Growth projects expected to Distributions Paid to ONEOK ( in Millions) drive continued ONEOK 21% CAGR Partners distribution growth 548 Two-thirds of every incremental ONEOK 437…
OKE Free Cash Flow Provides Financial Flexibility 195-235 million in 2013 guidance Stand-Alone Cash Flow, Driven by growth at ONEOK Partners Before Changes in Working Capital Bonus depreciation in 2013 ( in Millions) Available…
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…
Questions Page 31
Index Overview Vision and strategy 5 Well-positioned assets 8 Disciplined growth continues 15 Demonstrated ability to create value 23 Appendix ONEOK Financial 33 Natural Gas Distribution 37 Energy Services 43 Appendix ONEOK…
Appendix ONEOK Financial Page 33
OKE Financial Guidance Summary* 2013 ONEOK net income: range of 350 million - 400 million Capital expenditures: 316 million on a stand-alone basis Stand-alone cash flow before changes in working capital: midpoint of 835 million…
OKE 2013 Financial Guidance ONEOK Partners decreases: Stand-Alone Operating Income Plus Equity Earnings Ethane rejection ( in Millions) Lower optimization margins Lower commodity prices 716 Higher volumes from new projects 655…
Financial Performance Natural Gas Distribution Goal: Minimize the gap between allowed and actual returns* 2013 allowed return on equity (ROE): 9.9% 2013 ROE estimate: 8.3% Operating Income** ( In Millions) CAGR = 10% 225 216…
Regulatory - On the Horizon Natural Gas Distribution Oklahoma - Performance- Oklahoma - Performance-based rate filing based rate filing approved in in March 2013, with no change in rates Oklahoma - A July 2012 general rate review…
Oklahoma Natural Gas Natural Gas Distribution Largest customer base Approximately 87 percent of states natural gas customers 854,000 customers 75% in metropolitan areas Oklahoma Corporation Commission Three commissioners elected…
Kansas Gas Service Natural Gas Distribution Coldest territory Approximately 70 percent of states natural gas customers 641,000 customers 60% in metropolitan areas Kansas Corporation Commission Three commissioners appointed by…
Texas Gas Service Natural Gas Distribution Third largest natural gas distributor in the state Approximately 14 percent of states natural gas customers 633,000 customers 75% in metropolitan areas Home Rule with 10 jurisdictions…
Appendix Energy Services Page 43
Capacity Realignment Efforts Energy Services Realign contracted capacity with premium-services customer requirements Expected storage capacity to 52 Bcf by year end 2013 Reduction in working-capital requirements Storage…
Action Plan Rebase Cost Structure Align leased transportation and storage capacity with premium- services requirements Turn back non-premium-services-related leases Re-contract leased capacity at reduced costs and/or volume levels…
Appendix ONEOK Partners Financial Page 46
OKS Financial Guidance Summary* 2013 Net income: range of 790 million - 870 million Distributable cash flow: range of 910 million - 1.0 billion Expected annual coverage ratio between 1.0x - 1.05x Capital expenditures: approximately…
OKS 2013 Financial Guidance By Segment Natural gas gathering and Operating Income and Equity Earnings** processing: ( in Millions) Higher gathered and processed volumes 12% CAGR Benefit of three new processing plants 1,067 1,086…
OKS Predominantly Fee-Based Earnings Percent of Margin Fee-based margins expected to increase in 2013 Sources of Margin Capital investments provide 0.9 B 1.1 B 1.1 B 1.2 B 1.6 B 1.6 B 1.7B predominantly fee-based earnings 9% 9% 13%…
OKS Commodity Price Risk 2013 Hedging Commodity price risk primarily 2013 Margin Breakdown** resides in natural gas gathering and processing Equity production from percent-of- 9% proceeds contracts 2013 hedged positions* 23%…
OKS Distribution Coverage Financial Discipline Distributable Cash Flow (DCF) Target long-term annual ( in Millions) 15% CAGR coverage ratio of 1.05x to 1.15x 1,008 955 Considerations 946 8 190 Capital project execution 320…
Announced Capital Investments 4.7 to 5.2 Billion By Region* By Segment* 1.0 2.6 2.2 2.8 1.4 Williston Basin to Bushton, Kan. Natural Gas Gathering and Processing Mid-Continent to Mont Belvieu, Texas Natural Gas…
Williston Basin Drilling Economics More than 90% of producer Producer Economics* economics from crude-oil production NGLs Natural 6% gas Drilling is economical with 3% crude-oil prices as low as 55-70 per barrel (WTI)*…
Williston Basin Natural Gas Flaring Currently flaring 30-35% of natural gas production* Loss of NGL and natural gas value uplift North Dakota Monthly Natural Gas Flared Garden Creek startup Percent of Production* % 45 40 35 30…
Williston Basin-related Project Status 2011-2015 Contract Major Project Contracting Status Committed Completed Type Garden Creek plant and related Backed by acreage dedications Acreage dedications POP with fee December 2011…
Williston Basin Garden Creek Plants Natural Gas Gathering and Processing Investments Garden Creek plant 100 MMcf/d natural gas processing facility Williston Basin In service December 2011 Bakken Shale Garden Creek II plant 100…
Williston Basin Stateline Plants Natural Gas Gathering and Processing Investments Stateline I plant 100 MMcf/d natural gas Williston Basin processing facility Bakken Shale In service September 2012 Stateline II plant 100 MMcf/d…
Williston Basin Divide County Natural Gas Gathering and Processing Investments Divide County gathering system Williston Basin 270-mile system in Divide Bakken Shale County, N.D. Expected to be completed in third quarter 2013…
Mid-Continent-Gulf Coast-related Project Status 2011-2015 Contracting Contract Major Project Committed Completed Status Type Sterling I expansion Capacity available for 100% Differential or fee November 2011 optimization based…
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…
NGL Pipeline Natural Gas Liquids Investments 140 million Hutchinson, Kan., to Medford, Okla. 95-mile NGL pipeline between existing NGL fractionation infrastructure Modifications to existing NGL fractionation infrastructure at…
Cana-Woodford - Canadian Valley Plant Natural Gas Gathering and Processing Investments Canadian Valley Plant 190 million Mississippian 200 MMcf/d natural gas processing Lime facility Expected to be completed in first quarter 2014…
Niobrara Shale Growth Potential Producers accumulating significant acreage Williston Basin Bakken Shale Driven by crude-oil economics Gathering and processing infrastructure required Bakken NGL pipeline designed to expand in…
Mississippian Lime New Play with Great Potential Existing natural gas gathering and processing and NGL assets are well positioned Significant potential Mississippian Lime Eastern section contains higher amount of NGLs Western…
OKS Growth: 2006-2009 More than 2 Billion of Growth Projects Completed 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 tranche of…
Appendix Natural Gas Gathering and Processing Page 68
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 Current contract mix aligns interests with customers Minimal keep-whole contracts by volume and margin Contract restructuring is a core capability Contract Mix by Volume…
Commodity Price Risk Mitigation Natural Gas Gathering and Processing Contract restructuring reduced keep- Commodity Price Sensitivity Before Hedging whole sensitivity Margin Impact 2.9 2013 hedged positions* 2.5 Natural gas: 78%…
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 2013 volumes gathered Natural Gas Gathered (BBtu/d) expected to increase 22% 1,370 from 2012 Wells connected 1,171 1,164 1,123 1,067 1,030 1,119 2013: 1,000+ (estimate)…
Processed Volumes Natural Gas Gathering and Processing 2013 processed volumes Natural Gas Processed (BBtu/d) expected to increase 30% 1,125 from 2012 Higher volumes in Williston Basin 866 Stateline I in service September 632…
Commodity Statistics Natural Gas Gathering and Processing 2012 2013 Operating Information Q1 Q2 Q3 Q4 Total Q1 Previous Presentation Percent of proceeds NGL sales (Bbl/d) 7,275 10,146 9,941 11,186 9,803 10,603 Residue gas sales…
Appendix Natural Gas Pipelines Page 77
Asset Overview Natural Gas Pipelines Predominantly fee-based Viking Gas Northern Border Transmission income Pipeline Assumes 89% of transportation Guardian capacity contracted under Pipeline demand-based rates in 2013* 100% of…
Northern Border Pipeline 50-Percent Equity Investment Links natural gas supply from western Canada to Midwest markets Williston Basin Bakken Shale Bison Pipeline interconnection Supply diversity accessing Rockies natural gas with…
Appendix Natural Gas Liquids Page 80
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 Connected to…
NGL Demand Driven by Petrochemical Companies Petrochemical demand remains strong NGLs enjoy significant price advantage vs. crude oil-based feedstocks Cracker capacity utilization rates expected to remain more than 90% Petrochemical…
Ethane Fractionation and Cracker Capacity Outlook for Ethane Capacity* Ethane Fractionation Capacity and Cracker Capacity 1,900 1,800 1,700 1,600 1,500 MBPD 1,400 1,300 1,200 1,100 1,000 900 Sep-12 Mar-13…
Volume Growth Natural Gas Liquids 2013 gathering volumes estimated to increase by 14%; fractionation volumes estimated to increase by 8% Bakken NGL Pipeline in service April 2013 Widespread and prolonged ethane rejection in 2013…
Margin Profile Natural Gas Liquids Margin Profile Mix Exchange & Storage Services Gather, fractionate, transport and store NGLs and deliver to market hubs; primarily fee based 68% 55% Exchange & Transportation Storage Services…
Arbuckle Pipeline Delivering Unfractionated NGLs to Gulf Coast Expanded to 240,000 bpd From southern Oklahoma through Barnett Shale to Mont Belvieu In service April 2012 Expanding to 255,000 bpd in 2013 Another option to deliver…
Overland Pass Pipeline 50-Percent Equity Investment Williston Basin 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…
Optimization Opportunities Natural Gas Liquids Provides earnings upside to fee- based business How it works: Ability to deliver NGL products to either Conway or Mont Belvieu Utilize assets, contract portfolio and market knowledge…
Fractionation Capacity Natural Gas Liquids Currently 609,000 bpd, net ownership* Increasing our fractionation capacity 60,000 bpd of fractionation services from Targa began in second quarter 2011 Bushton 60,000 bpd expansion in…
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…
Non-GAAP Reconciliations ONEOK Page 91
Non-GAAP Reconciliations ONEOK ONEOK has disclosed in this presentation stand-alone cash flow, before changes in working capital, free cash flow, and stand-alone operating income and equity earnings, amounts that are non-GAAP…
Non-GAAP Reconciliations Stand-Alone Cash Flow, Before Changes in Working Capital and Free Cash Flow ( in Millions) 2008 2009 2010 2011 2012 2013G* Net income attributable to ONEOK 312 305 335 361 361 375 Equity in earnings of ONEOK…
Non-GAAP Reconciliations Stand-Alone Operating Income and Equity Earnings ( in Millions) 2007 2008 2009 2010 2011 2012 2013G* Consolidated operating income from continuing operations 815 908 883 943 1,159 1,103 1,140 Operating…
Non-GAAP Reconciliations ONEOK Partners Page 95
Non-GAAP Reconciliations ONEOK Partners ONEOK Partners has disclosed in this presentation historical and anticipated EBITDA and Distributable Cash Flow (DCF) levels that are non-GAAP financial measures. Management believes these…
Non-GAAP Reconciliations EBITDA and Distributable Cash Flow ( in Millions) 2006 2007 2008 2009 2010 2011 2012 2013G* Reconciliation of Net Income to EBITDA and Distributable Cash Flow Net Income 445 408 626 435 473 831 888 830 Interest…
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