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MLPA Investor Conference – Oneok Inc.

Oneok Inc. · Jun 2, 2016 · 58 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. MLPA Investor Conference – Oneok Inc. – slide 1
    MLPA INVESTOR CONFERENCE Orlando, FL June 1-2, 2016
  2. MLPA Investor Conference – Oneok Inc. – slide 2
    TERRY K. SPENCER President and Chief Executive Officer
  3. MLPA Investor Conference – Oneok Inc. – slide 3
    WHAT WELL COVER KEY POINTS ONEOK Partners overview Connecting prolific supply basins to key markets Business segment overview Enhancing fee-based earnings Volume growth continues Continues in challenging environment Driven by…
  4. MLPA Investor Conference – Oneok Inc. – slide 4
    ONEOK PARTNERS OVERVIEW
  5. MLPA Investor Conference – Oneok Inc. – slide 5
    ONEOK PARTNERS ASSETS UNIQUELY POSITIONED Owns and operates strategically located assets in midstream natural gas liquids and natural gas businesses Provides nondiscretionary services to producers, processors and customers…
  6. MLPA Investor Conference – Oneok Inc. – slide 6
    ONEOK PARTNERS SOURCES OF EARNINGS PERCENT OF EARNINGS TRANSFORMED TO MORE FEE BASED Volume risk Sources of Earnings Exists primarily in natural gas gathering and ( in billions) processing and natural gas liquids segments 1.6 B 1.7…
  7. MLPA Investor Conference – Oneok Inc. – slide 7
    ONEOK PARTNERS UNIQUELY POSITIONED TO CREATE LONG-TERM VALUE Increasing fee-based earnings through gathering, processing, fractionation, storage and transport services ONEOK Partners fee-based earnings are expected to increase to…
  8. MLPA Investor Conference – Oneok Inc. – slide 8
    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…
  9. MLPA Investor Conference – Oneok Inc. – slide 9
    ONEOK PARTNERS BUSINESS SEGMENTS
  10. MLPA Investor Conference – Oneok Inc. – slide 10
    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 Second largest…
  11. MLPA Investor Conference – Oneok Inc. – slide 11
    NATURAL GAS LIQUIDS EARNINGS PROFILE MIX PREDOMINANTLY FEE BASED Exchange Services - Primarily fee based Gather, fractionate and transport raw NGL feed to Exchange Services storage and market hubs Transportation & Storage Services…
  12. MLPA Investor Conference – Oneok Inc. – slide 12
    NATURAL GAS LIQUIDS VOLUME UPDATE Gathered Volume (MBbl/d) 2016 volume growth weighted toward the second 175-200 half of the year 155 800-870 First quarter volumes impacted by significantly 769 105 lower spot volumes and higher…
  13. MLPA Investor Conference – Oneok Inc. – slide 13
    ETHANE RECOVERY BY BASIN INCREMENTAL ETHANE DEMAND CAPACITY 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…
  14. MLPA Investor Conference – Oneok Inc. – slide 14
    NATURAL GAS PIPELINES ASSET OVERVIEW Predominantly fee-based income 92% of transportation capacity contracted under demand-based rates in 2015 83% of contracted system transportation capacity serves end-use markets in 2015…
  15. MLPA Investor Conference – Oneok Inc. – slide 15
    NATURAL GAS PIPELINES PERCENT OF EARNINGS PREDOMINANTLY FEE BASED Nearly 100% of earnings is firm, fee-based Sources of Earnings Firm demand-based contracts serving primarily 6% 4% 8% 2% 4% investment-grade utility customers…
  16. MLPA Investor Conference – Oneok Inc. – slide 16
    NATURAL GAS PIPELINES SERVING MOSTLY INVESTMENTGRADE UTILITIES 2016 Percent of Revenues from Firm, Fee Contracts 2016 Largest Pipeline Customers (wholly-owned) Guardian Pipeline 95% AGL Resources Viking Gas Transmission 98% Atmos…
  17. MLPA Investor Conference – Oneok Inc. – slide 17
    NATURAL GAS PIPELINES STORAGE REVENUE AND CAPACITY Revenues have remained stable, despite a decrease in contracted storage capacity since 2012 Customers are paying increased rates for deliverability 85 81.4 100% 78.7 78.0 73.5…
  18. MLPA Investor Conference – Oneok Inc. – slide 18
    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 Percent of…
  19. MLPA Investor Conference – Oneok Inc. – slide 19
    NATURAL GAS GATHERING AND PROCESSING CONTRACT PORTFOLIO PRIMARILY FEE BASED Achieving increased fee-based contract mix by restructuring percent-of-proceeds (POP) contracts with a fee component to include a higher fee rate Increasing…
  20. MLPA Investor Conference – Oneok Inc. – slide 20
    NATURAL GAS GATHERING AND PROCESSING VOLUME UPDATE Gathered Volumes (MMcf/d) 1,700 1,800 Rocky Mountain 1,524 1,404 First-quarter 2016 processed volumes increased 6%, 9501,000 compared with the fourth quarter 2015 862 Lonesome…
  21. MLPA Investor Conference – Oneok Inc. – slide 21
    WILLISTON BASIN VOLUME UPDATE* Natural gas gathered volumes expected to increase in 2016 Higher natural gas capture percentage (reduced flaring) as a result of pipelines, compression, processing plant placed in-service in late 2015…
  22. MLPA Investor Conference – Oneok Inc. – slide 22
    FINANCIAL STRENGTH
  23. MLPA Investor Conference – Oneok Inc. – slide 23
    OKS STRONG BALANCE SHEET COMMITTED TO INVESTMENT-GRADE CREDIT RATING ONEOK Partners Capital structure targets 50/50 capitalization Debt-to-Adjusted EBITDA ratio < 4.0x GAAP Debt-to-EBITDA Ratio Committed to taking necessary steps…
  24. MLPA Investor Conference – Oneok Inc. – slide 24
    CUSTOMER CREDIT INVESTMENT-GRADE PROFILE REDUCED RISK ONEOK Partners No single customer represents more than 10% of 2015 revenues, only 15 customers individually represented 1% or more of 2015 revenues The ten largest customers…
  25. MLPA Investor Conference – Oneok Inc. – slide 25
    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…
  26. MLPA Investor Conference – Oneok Inc. – slide 26
    QUESTIONS
  27. MLPA Investor Conference – Oneok Inc. – slide 27
    INDEX ONEOK Partners Overview 5 ONEOK Partners Business Segments 10 Financial Strength 23 Appendix 29 ONEOK Partners 30 Natural Gas Liquids 33 Natural Gas Pipelines 35 Natural Gas Gathering and Processing 38 ONEOK Partners…
  28. MLPA Investor Conference – Oneok Inc. – slide 28
    APPENDIX Page 29
  29. MLPA Investor Conference – Oneok Inc. – slide 29
    ONEOK PARTNERS
  30. MLPA Investor Conference – Oneok Inc. – slide 30
    ONEOK PARTNERS UNIQUELY POSITIONED Natural Gas Liquids segment, the second-largest natural gas liquids gathering and fractionation system in the U.S., uniquely positioned: 90% In the Mid-Continent, levered to Cana-Woodford, STACK and…
  31. MLPA Investor Conference – Oneok Inc. – slide 31
    ONEOK PARTNERS STRENGTHENING OUR POSITION IN CHALLENGING TIMES Increased expected 2016 fee-based earnings to approximately 85 percent, compared with 66 percent in 2014 Restructured gathering and processing segments contracts and…
  32. MLPA Investor Conference – Oneok Inc. – slide 32
    APPENDIX NATURAL GAS LIQUIDS
  33. MLPA Investor Conference – Oneok Inc. – slide 33
    NATURAL GAS LIQUIDS ETHANE SUPPLY AND DEMAND FORECASTS* New world-scale petrochemical facilities expected to significantly increase ethane demand in early 2017 and beyond Announced petrochemical facilities will create an incremental…
  34. MLPA Investor Conference – Oneok Inc. – slide 34
    APPENDIX NATURAL GAS PIPELINES
  35. MLPA Investor Conference – Oneok Inc. – slide 35
    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…
  36. MLPA Investor Conference – Oneok Inc. – slide 36
    NATURAL GAS PIPELINES 2016 Guidance Earnings to remain more than 95% fee-based in 2016 92% of transportation capacity contracted under demand-based rates in 2016 83% of contracted system transportation capacity serves end- use…
  37. MLPA Investor Conference – Oneok Inc. – slide 37
    APPENDIX NATURAL GAS GATHERING AND PROCESSING
  38. MLPA Investor Conference – Oneok Inc. – slide 38
    WILLISTON BASIN INCREASED GAS CAPTURE AND VOLUME BACKLOG BENEFITS OKS Increased natural gas capture results in increased NGL and natural gas value uplift More than 90% of North Dakotas natural gas production was captured in March…
  39. MLPA Investor Conference – Oneok Inc. – slide 39
    NATURAL GAS GATHERING AND PROCESSING COMMODITY PRICE RISK MITIGATION 2016 (6 month remaining Jul-Dec) 2017 hedged positions* hedged positions* Natural gas**: 74% at 2.66/MMBtu Natural gas**: 94% at 2.81/MMBtu 98,000 MMBtu/d of…
  40. MLPA Investor Conference – Oneok Inc. – slide 40
    NATURAL GAS GATHERING AND PROCESSING COMMODITY PRICE SENSITIVITIES 2016 Commodity Price Sensitivity After Hedging Commodity Sensitivity Net Margin Impact* ( in Millions) Natural Gas 0.10 / MMBtu 0.1 Natural gas liquids 0.01 /…
  41. MLPA Investor Conference – Oneok Inc. – slide 41
    APPENDIX ONEOK PARTNERS GROWTH PROJECTS
  42. MLPA Investor Conference – Oneok Inc. – slide 42
    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…
  43. MLPA Investor Conference – Oneok Inc. – slide 43
    WILLISTON BASIN-RELATED GROWTH PROJECTS 500 MILLION 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…
  44. MLPA Investor Conference – Oneok Inc. – slide 44
    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…
  45. MLPA Investor Conference – Oneok Inc. – slide 45
    PERMIAN GROWTH PROJECTS 540 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…
  46. MLPA Investor Conference – Oneok Inc. – slide 46
    PETROCHEMICAL ANNOUNCEMENTS APPROXIMATELY 593,000 BPD OF NEW ETHANE DEMAND Company Project Ethane Capacity (bpd) Location Start-up LyondellBasell Expansion 21,000 Corpus Christi, TX Q2 2016 Dow Debottleneck 17,000 Plaquemine, LA Q2…
  47. MLPA Investor Conference – Oneok Inc. – slide 47
    POTENTIAL PETROCHEMICAL ANNOUNCEMENTS APPROXIMATELY 404,000 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…
  48. MLPA Investor Conference – Oneok Inc. – slide 48
    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 Ontario Current Vantage Pipeline 60,000 Tioga, ND to…
  49. MLPA Investor Conference – Oneok Inc. – slide 49
    ONEOK OVERVIEW
  50. MLPA Investor Conference – Oneok Inc. – slide 50
    OKS GROWTH BENEFITS OKE VALUE OF GP INTEREST TO ONEOK ONEOK Partners capital-growth Distributions Declared to ONEOK projects and strategic ( in Millions) 790 18% CAGR acquisitions expected to drive 735 continued distribution…
  51. MLPA Investor Conference – Oneok Inc. – slide 51
    ONEOK STRENGTHENING OUR POSITION IN CHALLENGING TIMES Enhanced our liquidity and financial flexibility through increased investment in ONEOK Partners Invested 650 million in the partnership, which increased ownership to 41.2 percent…
  52. MLPA Investor Conference – Oneok Inc. – slide 52
    NON-GAAP RECONCILIATIONS ONEOK
  53. MLPA Investor Conference – Oneok Inc. – slide 53
    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…
  54. MLPA Investor Conference – Oneok Inc. – slide 54
    OKE FINANCIAL MEASURES CASH FLOW AVAILABLE FOR DIVIDENDS ( in Millions) 2014 2015 2016G Recurring cash flows: Distributions from ONEOK Partners declared 633 735 790 Interest expense, excluding non-cash items (69) (78) (105) Cash…
  55. MLPA Investor Conference – Oneok Inc. – slide 55
    OKE NON-GAAP RECONCILIATION CASH FLOW AVAILABLE FOR DIVIDENDS AND FREE CASH FLOW ( in Millions) 2014 2015 2016G Net income attributable to ONEOK 314 245 360 Depreciation and amortization 15 2 5 Deferred income taxes 141 133 200…
  56. MLPA Investor Conference – Oneok Inc. – slide 56
    NON-GAAP RECONCILIATIONS ONEOK PARTNERS
  57. MLPA Investor Conference – Oneok Inc. – slide 57
    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…
  58. MLPA Investor Conference – Oneok Inc. – slide 58
    OKS NON-GAAP RECONCILIATIONS ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW ( in Millions) 2011 2012 2013 2014 2015 2016G Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow Net Income 831 888 804 911 598 1,120…

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