U.S. CAPITAL ADVISORS MIDSTREAM ACCESS DAY Houston, Texas Jan. 26, 2016
INDEX ONEOK Partners Overview 4 ONEOK Partners 2016 Guidance 9 Financial Strength 24 ONEOK Overview and 2016 Guidance 26 Appendix ONEOK Partners Business Segments 30 2015 Volume Outlook 35 Natural Gas Liquids 40 Natural Gas…
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…
BUSINESS SEGMENTS INTEGRATION OUR COMPETITIVE ADVANTAGE Supply Diversification Predominantly Fee-Based Value Chain Long-term Growth Opportunities Natural Gas Pipelines Natural Gas Pipelines Connected to 50 transmission Nearly…
ONEOK PARTNERS WELL-POSITIONED TO CREATE LONG-TERM VALUE Increasing fee-based earnings through gathering, processing, fractionation, storage and transport services ONEOK Partners fee-based margin is expected to increase to…
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…
ONEOK PARTNERS 2016 GUIDANCE
ONEOK PARTNERS 2016 GUIDANCE SUMMARY ONEOK Partners expects: No public debt or equity offerings well into 2017 Distribution coverage at 1.0x or better*, and distributions to remain flat compared with 2015 Capital-growth expenditures…
ONEOK PARTNERS SOURCES OF MARGIN PERCENT OF MARGIN Fee-based margin expected to increase to approximately Sources of Margin 85% in 2016 1.6 B 1.6 B 1.7 B 2.1 B 2.3 B 2.5 B Volume risk 9% 5% 11% 12% Exists primarily in natural gas…
NATURAL GAS LIQUIDS MARGIN PROFILE MIX Exchange & Storage Services Gather, fractionate, transport and store NGLs and Exchange & deliver to market hubs; primarily fee based 50% Storage Services 74% Transportation 72% 78%…
NATURAL GAS PIPELINES PERCENT OF MARGIN Sources of Margin Nearly 100% of margin is fee- 6% 6% 4% 8% 4% 4% based Minimal volume risk Backed by firm demand contracts Roadrunner Gas Transmission 94% 94% 96% 96% 96% pipeline project…
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…
NATURAL GAS LIQUIDS 2016 VOLUME GUIDANCE Gathered volumes expected to average approximately 800,000 870,000 bpd; fractionation volumes expected to average approximately 540,000 590,000 bpd Lonesome Creek natural gas processing plant…
NATURAL GAS LIQUIDS ETHANE UPSIDE New world-scale petrochemical facilities expected to significantly increase ethane demand in 2017 and beyond Petrochemical announcements will create an incremental 565,000 bpd of ethane demand by…
ETHANE RECOVERY BY BASIN INCREMENTAL ETHANE DEMAND Approximately one-third of all U.S. ethane being rejected is on ONEOK Partners NGL system ONEOK Partners NGL infrastructure already connects supply to Gulf Coast region Incremental…
NATURAL GAS PIPELINES 2016 GUIDANCE Earnings to remain more than 95% fee-based 92% of transportation capacity contracted under demand-based rates 76% of natural gas storage capacity contracted under firm, fee-based arrangements…
NATURAL GAS GATHERING AND PROCESSING 2016 VOLUME GUIDANCE Natural Gas Gathered Volumes (MMcf/d) Gathered volumes expected to average approximately 1,700- 1,700 - 1,800 1,800 MMcf/d or 2,2002,300 BBtu/d; processed volumes 1,499…
WILLISTON BASIN VOLUME UPDATE Natural gas gathered volume increases in 2016 even as natural gas production remains relatively flat Full-year benefit of the Lonesome Creek processing plant and additional compression which was placed in…
WILLISTON BASIN VOLUME UPDATE Natural gas gathered volume expected to increase in 2016 Higher natural gas capture percentage (reduced flaring) as a result of pipelines, compression and processing plant placed in- service in late…
WILLISTON BASIN VOLUME UPDATE Natural gas gathered volume increases in 2016 even as natural gas production remains relatively flat Higher natural gas capture percentage (reduced flaring) as result of pipelines, compression and…
WILLISTON BASIN VOLUME UPDATE BASIN WIDE North Dakota Natural Gas Production, Case 1 and 2 2,400,000 Due to high-grading of rigs to most 2,200,000 prolific areas, the natural gas 2,000,000 1,800,000 volume does not decline in…
FINANCIAL STRENGTH
OKS STRONG BALANCE SHEET INVESTMENT GRADE ONEOK Partners Capital structure targets GAAP Debt-to-EBITDA Ratio 50/50 capitalization Debt-to-Adjusted EBITDA ratio < 4.0x 4.8x 4.7x Committed to investment-grade credit ratings 4.5x…
ONEOK OVERVIEW AND 2016 GUIDANCE
OKS GROWTH BENEFITS OKE VALUE OF GP INTEREST TO ONEOK ONEOK Partners capital-growth Distributions Declared to ONEOK projects and strategic ( in Millions) 18% CAGR 790 acquisitions expected to drive 694 continued distribution growth…
ONEOK 2016 GUIDANCE SUMMARY ONEOK expects: Dividend to remain flat Cash flow available for dividends of approximately 675 million Dividend coverage ratio of approximately 1.3x Free cash flow after dividends and cash on hand…
KEY INVESTMENT CONSIDERATIONS PREMIER ENERGY COMPANIES ONEOK Stable cash flow Cash flow underpinned by investment-grade MLP with fee-based business model GP and LP distributions from ONEOK Partners drive significant cash flow…
APPENDIX Page 30
APPENDIX 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 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…
NATURAL GAS GATHERING AND PROCESSING ASSET OVERVIEW Nondiscretionary services to producers Williston Basin Gathering, compression, treating and processing Diverse contract portfolio More than 2,000 contracts Powder River Primarily…
APPENDIX 2015 VOLUME GUIDANCE Volume Growth Continues in Challenging Environment
NATURAL GAS LIQUIDS 2015 QUARTERLY VOLUME 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…
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…
WILLISTON BASIN INITIAL PRODUCTION RATES AND STATE-WIDE PRODUCTION North Dakota Crude Oil and Natural Gas Production** 1,800,000 1,700,000 1,600,000 Max Monthly Production, Mcfd* 1,500,000 1,400,000 1,300,000 1,200,000…
NATURAL GAS GATHERING AND PROCESSING 2015 QUARTERLY VOLUME 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…
APPENDIX NATURAL GAS LIQUIDS
PETROCHEMICAL ANNOUNCEMENTS APPROXIMATELY 565,000 BPD OF NEW ETHANE DEMAND Ethane Capacity *Potential Ethane Company Project Location Start-up (bpd) Recovery Basin LyondellBasell Expansion 21,000 Corpus Christi Q2 2016 Texas &…
POTENTIAL PETROCHEMICAL ANNOUNCEMENTS APPROXIMATELY 430,000 BPD OF POTENTIAL ETHANE DEMAND Ethane Capacity Company Project Location Start-up (bpd) Aither Chemicals New Build 16,000 West Virginia 2017+ Shell Appalachia New Build…
ETHANE EXPORTS ANNOUNCED AND POTENTIAL ETHANE EXPORTS Ethane Export Capacity Company Export Ethane Capacity (bpd) Location Start-up Cochin (EP) Pipeline 8,000 Conway, KS to Sarnia current Vantage Pipeline 60,000 Tioga, ND to…
APPENDIX NATURAL GAS GATHERING AND PROCESSING
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…
WILLISTON BASIN INCREASED GAS CAPTURE AND VOLUME BACKLOG BENEFITS OKS Increased natural gas capture results in increased NGL and natural gas value uplift 84% of North Dakotas natural gas production was captured in November 2015 North…
NATURAL GAS GATHERING AND PROCESSING COMMODITY PRICE RISK MITIGATION 2016 natural gas equity volumes are expected to be lower than in 2015 due to contract restructuring efforts. As contracts continue to become more fee-based, the…
APPENDIX DISCIPLINED GROWTH CONTINUES IN MULTIPLE BASINS
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 capacity Expands NGL segments portfolio of assets NGL gathering system…
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 1.5 BILLION COMPLETED CapEx Contract Major Project Scope Completed ( Millions) Type Bakken NGL Pipeline Bakken NGL Pipeline: 600-mile, 12-inch NGL pipeline with initial 90 Fee based September…
WILLISTON BASIN-RELATED GROWTH PROJECTS 1.3 BILLION ANNOUNCED CapEx Contract Major Project Scope Timing ( Millions) Type Stateline de-ethanization facilities 26,000 barrels per day (bpd) of ethane produced at Stateline I and II…
MID-CONTINENT AND GULF COAST-RELATED GROWTH PROJECTS 1.8 BILLION 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 ANNOUNCED 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…
ACQUISITIONS 1.2 BILLION COMPLETED 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…
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* 2016G Recurring cash flows: Distributions from ONEOK Partners declared 633 694 790 Interest expense, excluding non cash items (69) (63) (105) Cash…
OKE NON-GAAP RECONCILIATION CASH FLOW AVAILABLE FOR DIVIDENDS AND FREE CASH FLOW ( in Millions) 2014 2015G* 2016G Net income attributable to ONEOK 314 317 360 Depreciation and amortization 15 3 5 Deferred income taxes 141 173 200…
NON-GAAP RECONCILIATIONS ONEOK PARTNERS
NON-GAAP RECONCILIATIONS ONEOK PARTNERS ONEOK Partners has disclosed in this presentation its historical and anticipated adjusted EBITDA, distributable cash flow (DCF) and cash distribution coverage ratio, which are non-GAAP financial…
OKS NON-GAAP RECONCILIATIONS ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW ( in Millions) 2011 2012 2013 2014 2015G* 2016G Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow Net Income 831 888 804 911 935 1,120…
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