BARCLAYS CEO ENERGY CONFERENCE New York September 8-9, 2015
TERRY K. SPENCER President and Chief Executive Officer Page 2
WHAT WELL COVER KEY POINTS ONEOK and ONEOK Partners overview Connecting prolific supply basins to key markets Business segment overview Continue to enhance fee-based earnings Volume growth in NGL-rich plays Continues in…
ONEOK OVERVIEW
ONEOK AS PURE-PLAY GP CORPORATE STRUCTURE Capital allocation ONEOK, Inc. Earnings and cash flow underpinned by 41.2% GP and LP interest as of Aug. 21, 2015 investment-grade MLP with fee-based business model Significant cash flow…
OKS GROWTH BENEFITS OKE VALUE OF GP INTEREST TO ONEOK ONEOK Partners capital-growth Distributions Declared to ONEOK projects and strategic ( in Millions) 17% CAGR 694 acquisitions expected to drive 633 continued distribution growth…
ONEOK PARTNERS OVERVIEW
ONEOK PARTNERS ASSET OVERVIEW Owns and operates strategically located assets in midstream natural gas liquids and natural gas businesses Provides nondiscretionary services to producers, processors and customers Extensive…
ONEOK PARTNERS 2015 OPERATING INCOME AND EQUITY EARNINGS GUIDANCE BY SEGMENT Natural Gas Gathering and Processing Natural Gas Liquids Natural Gas Pipelines 14% 68% 18% 180 million 864 million 225 million Page 10
ONEOK PARTNERS SOURCES OF MARGIN PERCENT OF MARGIN Volume risk Sources of Margin Exists primarily in natural gas gathering and 1.2 B 1.6 B 1.6 B 1.7 B 2.1 B 985 M processing and natural gas liquids segments 9% 11% 5% 12% Ethane…
ONEOK PARTNERS WELL-POSITIONED TO WITHSTAND CHALLENGING MARKET CONDITIONS Disciplined growth continues, driven by volume increases from supply and market driven organic growth projects and strategic acquisitions Continuing to enhance…
OUR KEY STRATEGIES A PREMIER ENERGY COMPANY GROWTH Increase distributable cash flow through investments in organic growth projects and strategic acquisitions Continue to increase NGL and natural gas volume resulting in fee-based…
ONEOK PARTNERS BUSINESS SEGMENTS
NATURAL GAS LIQUIDS ASSET OVERVIEW Provides nondiscretionary, fee-based services to natural gas processors and customers Gathering, fractionation, transportation, marketing and storage Extensive NGL gathering system Connected to…
NATURAL GAS LIQUIDS MARGIN PROFILE MIX Exchange & Storage Services Gather, fractionate, transport and store NGLs Exchange & and deliver to market hubs; primarily fee based Storage Services Transportation 68% 77% Transportation 50%…
NATURAL GAS PIPELINES ASSET OVERVIEW Primarily fee-based income 92% of transportation capacity contracted under demand-based rates in 2015 to date 85% of contracted system transportation capacity serves end-use markets in 2015 to…
NATURAL GAS PIPELINES PERCENT OF MARGIN Nearly 100% of margin is fee-based Sources of Margin 8% 6% 6% 4% 8% 3% Minimal volume risk Backed by firm demand contracts Connect directly to end-use markets Local natural gas distribution…
NATURAL GAS GATHERING AND PROCESSING ASSET OVERVIEW Nondiscretionary services to producers Gathering, compression, treating and processing Williston Basin Diverse contract portfolio More than 2,000 contracts Powder River…
NATURAL GAS GATHERING AND PROCESSING CONTRACT PORTFOLIO Current contract mix aligns interests with customers Primarily percent-of-proceeds contracts with a fee-based component Achieving an increased fee-based contract mix by…
VOLUME OUTLOOK Volume Growth Continues in Challenging Environment
NATURAL GAS LIQUIDS VOLUME UPDATE Connected to approximately 180 processing plants 2015 fractionated volumes: More than 160 plants are operated by third parties Reached more than 600,000 bpd in July Processing plant connections in…
NATURAL GAS PIPELINES INCREMENTAL FEE-BASED EARNINGS Converting coal-fired electric generators to Viking Gas cleaner natural gas Northern Border Pipeline Transmission Low natural gas pricing environment providing many…
NATURAL GAS GATHERING AND PROCESSING WILLISTON BASIN ACTIVITY IN THE CORE May 2014 June 2015 Williams Williams McKenzie McKenzie Dunn Dunn Source: North Dakota Pipeline Authority Page 24
WILLISTON BASIN Significant number of drilled but not completed wells are located in our asset footprint and acreage dedications Represents 5 wells waiting on completion* Existing OKS plants Compressor Lonesome Creek plant to…
NATURAL GAS GATHERING AND PROCESSING WILLISTON BASIN INITIAL PRODUCTION RATES Wells continue to exhibit significant Max Monthly Production, Mcfd* performance improvements Fewer, more strategic rigs expected to further amplify…
WILLISTON BASIN REDUCED FLARING AND VOLUME BACKLOG BENEFITS OKS Reduced flaring results in increased NGL and natural gas value uplift 17% of North Dakotas natural gas production was flared in June 2015 North Dakota Industrial…
WILLISTON BASIN Additional compressor stations expected to add 300 MMcf/d of gathering capacity Existing OKS plants Compressor stations Lonesome Creek plant to be completed in the fourth quarter 2015 OKS gathering…
NATURAL GAS GATHERING AND PROCESSING VOLUME UPDATE Williston Basin 2015 volumes gathered expected to increase 39% from 2014; 2016 volumes gathered expected to increase 27% Natural Gas Gathered Volumes * (MMcf/d) from 2015…
ONEOK AND ONEOK PARTNERS RECENT TRANSACTION
TRANSACTION OVERVIEW 750 MILLION INVESTMENT IN ONEOK PARTNERS ONEOK 650 million investment from ONEOK - financed by 7.5 percent 500 million senior notes and cash on hand 100 million investment from funds managed by Kayne Anderson…
OKS STRONG BALANCE SHEET INVESTMENT GRADE Total Debt-to-Capitalization Ratio Capital structure targets 50/50 capitalization Debt-to-Adjusted EBITDA ratio < 4.0x 50% 50% 53% 52% 55% 54% 56% Committed to investment-grade credit…
KEY INVESTMENT CONSIDERATIONS PREMIER ENERGY COMPANIES ONEOK Stable cash flow Cash flow under pinned by investment-grade MLP with fee-based business model GP and LP distributions from ONEOK Partners drive significant cash flow…
QUESTIONS
INDEX Overview ONEOK 5 ONEOK Partners 8 ONEOK Partners Business Segments 14 Volume Outlook 21 ONEOK and ONEOK Partners Recent Transaction 30 Appendix ONEOK Partners Financials 37 Disciplined Growth Continues 40 Recent Projects…
APPENDIX Page 36
APPENDIX ONEOK PARTNERS FINANCIALS
NATURAL GAS GATHERING AND PROCESSING COMMODITY PRICE RISK MITIGATION Six month forward 2015 hedged positions* 2016 hedged positions* Natural gas: 88% at 3.88/MMBtu Natural gas: 69% at 3.10/MMBtu 140,600 MMBtu/d of estimated equity…
NATURAL GAS GATHERING AND PROCESSING COMMODITY PRICE SENSITIVITIES 2015 Volume** Assumed Prices Annual Contribution Net Margin ( in millions) Impact of 10% Price Movement *** ( in millions) Natural gas (MMBtu/d) 17,600 3.50 / MMbtu…
APPENDIX DISCIPLINED GROWTH CONTINUES IN MULTIPLE BASINS
DISCIPLINED GROWTH CONTINUES 14 BILLION TO 16 BILLION IN CAPITALGROWTH PROJECTS Completed nearly 8 billion of capital-growth projects and acquisitions since 2006 Announced capital-growth projects of nearly 3 billion Doubled…
FUTURE GROWTH 4 BILLION 5 BILLION BACKLOG Project backlog: approximately 60% natural gas liquids primarily fee based, 25% natural gas pipelines primarily fee based and 15% natural gas gathering and processing Future growth across…
APPENDIX RECENT PROJECTS
OKS IN THE PERMIAN WEST TEXAS LPG PIPELINE SYSTEM 2,600 miles of NGL gathering pipeline 800 million acquisition closed in November 2014 285,000 bpd, gross Expands NGL segments portfolio of assets NGL gathering system mileage…
OKS IN THE PERMIAN GROWING EXPORTS TO MEXICO Roadrunner Gas Transmission 50-50 joint venture with Fermaca 200 miles of 30-inch diameter pipeline Provide up to 640 MMcf/d capacity to existing El Paso, Texas, markets and up to 570…
APPENDIX ONEOK PARTNERS GROWTH PROJECTS
WILLISTON BASIN-RELATED GROWTH PROJECTS COMPLETED 800 MILLION IN PROJECTS CapEx Contract Major Project Scope Completed ( Millions) Type Bakken NGL Pipeline Bakken NGL Pipeline: 600-mile, 12-inch NGL pipeline with initial 75-90 Fee…
WILLISTON BASIN-RELATED GROWTH PROJECTS 2.0 BILLION ANNOUNCED CapEx Contract Major Project Scope Timing ( Millions) Type Lonesome Creek plant and related 200 MMcf/d* capacity 550680 POP with fee Fourth quarter infrastructure…
MID-CONTINENT AND GULF COAST-RELATED GROWTH PROJECTS 1.8 BILLION IN PROJECTS COMPLETED Major Project Scope CapEx Contract Completed ( Millions) Type Sterling III pipeline and 550-mile, 16-inch NGL pipeline 808 Fee based March 2014…
PERMIAN GROWTH PROJECTS 560 MILLION Approximate Contract Major Project Scope Costs Type Timing ( Millions) WesTex Transmission Pipeline Expansion Constructing two new and upgrading three 70-100 Fee based First quarter 2017…
ACQUISITIONS 1.2 BILLION Major Project Scope CapEx Contract Timing ( Millions) Type Sage Creek natural gas 50 MMcf/d* natural gas processing capacity 305 POP with fee September 2013 processing plant Powder River Basin components…
NON-GAAP RECONCILIATIONS ONEOK
NON-GAAP RECONCILIATIONS ONEOK, INC. ONEOK has disclosed in this presentation anticipated cash flow available for dividends, free cash flow and dividend coverage ratio, all amounts that are non-GAAP financial measures. Management…
OKE FINANCIAL MEASURES CASH FLOW AVAILABLE FOR DIVIDENDS ( in Millions) 2014 2015G* Recurring cash flows: Distributions received from ONEOK Partners declared 633 694 Interest expense, excluding non cash items (69) (63) Cash income…
OKE NON-GAAP RECONCILIATION CASH FLOW AVAILABLE FOR DIVIDENDS AND FREE CASH FLOW ( in Millions) 2014 2015G* Net income attributable to ONEOK 314 317 Depreciation and amortization 15 3 Deferred income taxes 141 173 Equity in…
NON-GAAP RECONCILIATIONS ONEOK PARTNERS
OKS NON-GAAP RECONCILIATIONS ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW ( in Millions) 2010 2011 2012 2013 2014 2015G* Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow Net Income 473 831 888 804 911 935…
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