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Wells Fargo Energy Symposium – Oneok Inc.

Oneok Inc. · Dec 15, 2015 · 53 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. Wells Fargo Energy Symposium – Oneok Inc. – slide 1
    WELLS FARGO ENERGY SYMPOSIUM New York Dec. 8, 2015
  2. Wells Fargo Energy Symposium – Oneok Inc. – slide 2
    TERRY K. SPENCER President and Chief Executive Officer Page 2
  3. Wells Fargo Energy Symposium – Oneok Inc. – slide 3
    WHAT WELL COVER KEY POINTS ONEOK and ONEOK Partners overview Connecting prolific supply basins to key markets Business segment overview Enhancing fee-based earnings Volume growth continues Continues in challenging environment…
  4. Wells Fargo Energy Symposium – Oneok Inc. – slide 4
    ONEOK OVERVIEW
  5. Wells Fargo Energy Symposium – Oneok Inc. – slide 5
    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…
  6. Wells Fargo Energy Symposium – Oneok Inc. – slide 6
    ONEOK PARTNERS OVERVIEW
  7. Wells Fargo Energy Symposium – Oneok Inc. – slide 7
    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…
  8. Wells Fargo Energy Symposium – Oneok Inc. – slide 8
    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 9
  9. Wells Fargo Energy Symposium – Oneok Inc. – slide 9
    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 2.3 B processing and natural gas liquids segments 9% 9% 11% 12% Ethane…
  10. Wells Fargo Energy Symposium – Oneok Inc. – slide 10
    ONEOK PARTNERS WELL-POSITIONED TO CREATE LONG-TERM VALUE Increasing fee-based earnings through gathering, processing, fractionation, storage and transport services Gathering and processing segment fee-based margin expected to…
  11. Wells Fargo Energy Symposium – Oneok Inc. – slide 11
    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 Continue to grow/expand…
  12. Wells Fargo Energy Symposium – Oneok Inc. – slide 12
    ONEOK PARTNERS BUSINESS SEGMENTS
  13. Wells Fargo Energy Symposium – Oneok Inc. – slide 13
    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…
  14. Wells Fargo Energy Symposium – Oneok Inc. – slide 14
    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% 72% Transportation…
  15. Wells Fargo Energy Symposium – Oneok Inc. – slide 15
    NATURAL GAS PIPELINES ASSET OVERVIEW Primarily fee-based income 92% of transportation capacity contracted under demand-based rates in 2015 85% of contracted system transportation capacity serves end-use markets in 2015 Connected…
  16. Wells Fargo Energy Symposium – Oneok Inc. – slide 16
    NATURAL GAS PIPELINES PERCENT OF MARGIN Nearly 100% of margin is fee-based Sources of Margin 8% 6% 6% 4% 8% 4% Minimal volume risk Backed by firm demand contracts Connect directly to end-use markets Local natural gas distribution…
  17. Wells Fargo Energy Symposium – Oneok Inc. – slide 17
    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…
  18. Wells Fargo Energy Symposium – Oneok Inc. – slide 18
    NATURAL GAS GATHERING AND PROCESSING CONTRACT PORTFOLIO Achieving increased fee-based contract mix by restructuring existing percent-of-proceeds (POP) contracts to increase the fee-based component Increasing fee-based margin while…
  19. Wells Fargo Energy Symposium – Oneok Inc. – slide 19
    VOLUME OUTLOOK Volume Growth Continues in Challenging Environment
  20. Wells Fargo Energy Symposium – Oneok Inc. – slide 20
    NATURAL GAS LIQUIDS ETHANE UPSIDE New world-scale petrochemical facilities expected to significantly increase ethane demand in 2017 and beyond Incremental ethane transported and fractionated volume potential greater than 150,000…
  21. Wells Fargo Energy Symposium – Oneok Inc. – slide 21
    NATURAL GAS LIQUIDS VOLUME UPDATE Bakken NGL Pipeline and Mid-Continent volumes gathered 2015 fractionated volumes: increased from previous target Expected to reach 645,000* bpd in fourth quarter Continued volume growth in the…
  22. Wells Fargo Energy Symposium – Oneok Inc. – slide 22
    NATURAL GAS PIPELINES INCREMENTAL FEE-BASED EARNINGS Converting coal-fired electric generators to Viking Gas cleaner natural gas Northern Border Transmission Pipeline Low natural gas pricing environment providing many opportunities…
  23. Wells Fargo Energy Symposium – Oneok Inc. – slide 23
    WILLISTON BASIN INITIAL PRODUCTION RATES AND STATE-WIDE PRODUCTION North Dakota Crude Oil and Natural Gas Production** 1,800,000 1,700,000 Max Monthly Production, Mcfd* 1,600,000 1,500,000 1,400,000 1,300,000 1,200,000…
  24. Wells Fargo Energy Symposium – Oneok Inc. – slide 24
    NATURAL GAS GATHERING AND PROCESSING VOLUME UPDATE Williston Basin significant supply backlog Volumes significantly increased from previous target Natural Gas Gathered Volumes* (MMcf/d) 5% increase in Q3; 4% increase in Q4 expected…
  25. Wells Fargo Energy Symposium – Oneok Inc. – slide 25
    FINANCIAL STRENGTH
  26. Wells Fargo Energy Symposium – Oneok Inc. – slide 26
    OKS STRONG BALANCE SHEET INVESTMENT GRADE ONEOK Partners Total Debt-to-Capitalization Ratio Capital structure targets 50/50 capitalization Debt-to-Adjusted EBITDA ratio < 4.0x 50% 53% 52% 55% 54% 51% Committed to investment-grade…
  27. Wells Fargo Energy Symposium – Oneok Inc. – slide 27
    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…
  28. Wells Fargo Energy Symposium – Oneok Inc. – slide 28
    QUESTIONS
  29. Wells Fargo Energy Symposium – Oneok Inc. – slide 29
    INDEX Overview ONEOK 5 ONEOK Partners 7 ONEOK Partners Business Segments 13 Volume Outlook 20 Financial Strength 26 Appendix Natural Gas Gathering and Processing 32 Disciplined Growth Continues 38 Recent Projects 40 ONEOK…
  30. Wells Fargo Energy Symposium – Oneok Inc. – slide 30
    APPENDIX Page 31
  31. Wells Fargo Energy Symposium – Oneok Inc. – slide 31
    APPENDIX NATURAL GAS GATHERING AND PROCESSING
  32. Wells Fargo Energy Symposium – Oneok Inc. – slide 32
    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…
  33. Wells Fargo Energy Symposium – Oneok Inc. – slide 33
    WILLISTON BASIN INCREASED GAS CAPTURE AND VOLUME BACKLOG BENEFITS OKS Increased natural gas capture results in increased NGL and natural gas value uplift 79% of North Dakotas natural gas production was captured in September 2015…
  34. Wells Fargo Energy Symposium – Oneok Inc. – slide 34
    WILLISTON BASIN Additional compressor stations expected to add 300 MMcf/d of gathering capacity Existing OKS plants Compressor stations completed in 2015 Compressor stations expected to be completed by year-end 2015 Lonesome…
  35. Wells Fargo Energy Symposium – Oneok Inc. – slide 35
    NATURAL GAS GATHERING AND PROCESSING COMMODITY PRICE RISK MITIGATION 2016 natural gas equity volumes are expected to be lower due to contract restructuring efforts. As contracts become more fee-based, the partnerships exposure to…
  36. Wells Fargo Energy Symposium – Oneok Inc. – slide 36
    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) 4,100 3.50 / MMbtu…
  37. Wells Fargo Energy Symposium – Oneok Inc. – slide 37
    APPENDIX DISCIPLINED GROWTH CONTINUES IN MULTIPLE BASINS
  38. Wells Fargo Energy Symposium – Oneok Inc. – slide 38
    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…
  39. Wells Fargo Energy Symposium – Oneok Inc. – slide 39
    APPENDIX RECENT PROJECTS
  40. Wells Fargo Energy Symposium – Oneok Inc. – slide 40
    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…
  41. Wells Fargo Energy Symposium – Oneok Inc. – slide 41
    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…
  42. Wells Fargo Energy Symposium – Oneok Inc. – slide 42
    APPENDIX ONEOK PARTNERS GROWTH PROJECTS
  43. Wells Fargo Energy Symposium – Oneok Inc. – slide 43
    WILLISTON BASIN-RELATED GROWTH PROJECTS COMPLETED 1.5 BILLION IN PROJECTS CapEx Contract Major Project Scope Completed ( Millions) Type Bakken NGL Pipeline Bakken NGL Pipeline: 600-mile, 12-inch NGL pipeline with initial 90 Fee…
  44. Wells Fargo Energy Symposium – Oneok Inc. – slide 44
    WILLISTON BASIN-RELATED GROWTH PROJECTS 1.5 BILLION ANNOUNCED CapEx Contract Major Project Scope Timing ( Millions) Type Natural gas compression 100 MMcf/d* total additional processing capacity at existing Garden 80 - 90 POP with…
  45. Wells Fargo Energy Symposium – Oneok Inc. – slide 45
    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…
  46. Wells Fargo Energy Symposium – Oneok Inc. – slide 46
    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…
  47. Wells Fargo Energy Symposium – Oneok Inc. – slide 47
    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…
  48. Wells Fargo Energy Symposium – Oneok Inc. – slide 48
    NON-GAAP RECONCILIATIONS ONEOK
  49. Wells Fargo Energy Symposium – Oneok Inc. – slide 49
    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…
  50. Wells Fargo Energy Symposium – Oneok Inc. – slide 50
    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…
  51. Wells Fargo Energy Symposium – Oneok Inc. – slide 51
    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…
  52. Wells Fargo Energy Symposium – Oneok Inc. – slide 52
    NON-GAAP RECONCILIATIONS ONEOK PARTNERS
  53. Wells Fargo Energy Symposium – Oneok Inc. – slide 53
    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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