BARCLAYS CEO ENERGY CONFERENCE New York Sept. 6-7, 2016
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 segments overview Continue to enhance fee-based earnings Volume growth continues Continues in challenging…
ONEOK OVERVIEW
OKS GROWTH BENEFITS OKE VALUE OF GP INTEREST TO ONEOK ONEOK Partners completed Distributions Declared to ONEOK capital-growth projects and ( in Millions) 790 18% CAGR strategic acquisitions expected 735 to drive distribution…
ONEOK PARTNERS OVERVIEW
ONEOK PARTNERS GEOGRAPHICALLY DIVERSE ASSETS Owns and operates strategically located assets in midstream natural gas liquids and natural gas businesses Provides nondiscretionary services to producers, processors and customers…
OKS GROWTH: 2006 2016 COMPLETED 9 BILLION OF GROWTH PROJECTS AND ACQUISITIONS 1. Bakken/Williston Basin 2. Niobrara/Powder River Basin 1 Plants: Garden Creek I, II and III; Grasslands Niobrara NGL Lateral Plant Expansion; Stateline I…
ONEOK PARTNERS SOURCES 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 B 2.1 B 2.1 B 2.5 B…
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…
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 BUSINESS SEGMENTS
NATURAL GAS LIQUIDS
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…
NATURAL GAS LIQUIDS 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 - Fee based…
NATURAL GAS LIQUIDS VOLUME UPDATE Gathered Volume (MBbl/d) Approximately one-third of all U.S. ethane being rejected is on ONEOK Partners NGL system 175-200 155 Potential annual earnings uplift from full ethane recovery 800-870…
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…
STACK AND SCOOP PLAYS POSITIONED AS A CRITICAL NGL TAKEAWAY PROVIDER Approximately 140,000 bpd of ethane opportunity on our NGL system 110 third-party plant connections in the Mid-Continent Expect incremental 100,000 bpd of NGLs…
NATURAL GAS GATHERING AND PROCESSING
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…
NATURAL GAS GATHERING AND PROCESSING 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 fee-based earnings…
NATURAL GAS GATHERING AND PROCESSING VOLUME UPDATE Gathered Volumes (MMcf/d) 1,700 1,800 Mid-Continent 1,524 STACK/SCOOP production continues to increase 1,404 Initial production (IP) rates higher than other areas 9501,000 862…
NATURAL GAS PIPELINES
NATURAL GAS PIPELINES ASSET OVERVIEW Predominantly fee-based income 92% of transportation capacity contracted under firm demand-based rates in 2015 83% of contracted system transportation capacity serves end-use markets in 2015…
NATURAL GAS PIPELINES 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 Roadrunner Gas Transmission…
NATURAL GAS PIPELINES SERVING MOSTLY INVESTMENTGRADE UTILITIES 2016 Percent of Revenues From Firm, Fee Contracts* 2016 Largest Pipeline Customers* Roadrunner Gas Transmission** 100% AGL Resources Guardian Pipeline 98% Atmos Energy…
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…
FINANCIAL STRENGTH
STRONG BALANCE SHEETS COMMITTED TO OKS INVESTMENT-GRADE CREDIT RATING ONEOK Partners OKS Adjusted EBITDA Growth Capital structure targets ( in Billions) 1.9 1.6 1.6 50/50 capitalization 1.2 1.3 1.3 Debt-to-Adjusted EBITDA ratio <…
TOTAL SHAREHOLDER RETURN ONEOK AND ONEOK PARTNERS PROVEN LONG-TERM VALUE Long-term investors have experienced high returns from both ONEOK and ONEOK Partners 10-year returns for both investments outperformed the S&P 500 Index…
ONEOK PARTNERS EARNINGS ABILITY TO GROW DURING CHALLENGING ENVIRONMENTS Increased fee-based business model and infrastructure investments allow ONEOK Partners to grow earnings Q2 2016 vs. Q2 2014: Net income and adjusted EBITDA: more…
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…
QUESTIONS
INDEX ONEOK Overview 5 ONEOK Partners Overview 7 ONEOK Partners Business Segments Natural Gas Liquids 14 Natural Gas Gathering and Processing 20 Natural Gas Pipelines 24 Financial Strength 29 Appendix ONEOK Non-GAAP…
APPENDIX Page 36
NATURAL GAS GATHERING AND PROCESSING
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 88% of North Dakotas natural gas production was captured in May 2016…
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 plants placed in-service in late 2015…
NATURAL GAS GATHERING AND PROCESSING COMMODITY PRICE RISK MITIGATION Six Months Ending December 31, 2016 Commodity Volumes Hedged Average Price Percent Hedged Natural Gas* (MMBtu/d) 79,100 2.81 / MMBtu 93% Condensate (bpd) 1,800…
NATURAL GAS GATHERING AND PROCESSING COMMODITY PRICE SENSITIVITIES 2016 Commodity Price Sensitivity After Hedging Commodity Sensitivity Earnings Impact* ( in Millions) Natural Gas 0.10 / MMBtu 0.1 Natural gas liquids 0.01 / gallon…
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 2015 2016G Recurring cash flows: Distributions from ONEOK Partners declared 633 735 790 Interest expense (69) (78) (105) Released contracts from the…
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…
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 2015 2016G Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow Net Income 831 888 804 911 598 1,120…
OKS NON-GAAP RECONCILIATIONS ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW 2014 2015 2016 ( in Millions) Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow Net Income 215 167 264 147…
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