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Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc.

One Gas, Inc. · Aug 12, 2014 · 38 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. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 1
    New York City August 12, 2014 Goldman Sachs Power, Utilities, MLP and Pipeline Conference
  2. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 2
    Key Points Highlights Competitive Strengths 100% regulated natural gas utility focus Third largest publicly traded natural gas distributor Regulatory Overview Mechanisms and timelines Financial Maintain conservative financial…
  3. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 3
    Competitive Strengths Page 4
  4. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 4
    Competitive Strengths Sustainable Business Kansas City Topeka 69% market share Focused business strategy Wichita 100% regulated natural gas distribution utility Tulsa Oklahoma City Third largest publicly traded natural gas…
  5. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 5
    Significant Scale High Percentage of Residential Customers Net Sales Margin* Customer Count 2013 2013 1% 7% 1% 16% 83% Customer Type 92% Residential Commercial/Industrial Other * Excludes transportation margin Page 6
  6. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 6
    Significant Scale High Percentage of Fixed Charges Kansas Oklahoma Texas Total Fixed Charges Sales 51% 83% 70% 69% customers Average Heating 4,860 3,316 1,785 - Degree Days Normal Weather Normalization 100% 100% 62% 87% Kansas…
  7. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 7
    Proximity to Natural Gas Supply Location Supports Sustainability Kansas Topeka City Close proximity to significant natural gas reserves Mississippian Wichita Lime Delivered natural gas costs are comprised primarily of: Granite Wash…
  8. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 8
    Regulatory Overview Page 9
  9. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 9
    Regulatory Mechanisms Overview Oklahoma Natural Gas Performance-based rate structure with a targeted ROE between 10-11 percent that provides for annual rate reviews between rate cases Kansas Gas Service Gas System Reliability…
  10. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 10
    Regulatory Filing Overview Oklahoma & Kansas New performance-based rates Pending outcome of rate case, performance-based approved and effective August 2014 rates change filing anticipated March 2017 2014 2015 2016 2017 2018 ONG…
  11. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 11
    Regulatory Update Recent Activity Oklahoma March 2014: Filed a Performance-Based Rate Change application requesting an increase in base rates August 2014: New rates approved, includes an increase in base rates of approximately 13.7…
  12. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 12
    Projected Rate Base By State Projected rate base consists of: 2014 Rate Base* Total: 2.5 billion + Accumulated capital expenditures + Accumulated working capital + +/ Other rate base items 26% 41% Accumulated deferred income…
  13. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 13
    Opportunity to Narrow the Gap Return on Equity Goal: Minimize the gap between allowed and actual returns* 2014 ROE estimate: 7.4% 2013 ROE achieved: 8.0% 2012 ROE achieved: 8.3% *ROE calculations are consistent with utility…
  14. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 14
    Financial Overview Page 15
  15. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 15
    Financial Highlights Maintain Conservative Posture ONE Gas will maintain a conservative financial posture Prudent capital investment results in steady rate base growth Financial metrics necessary to maintain strong investment-grade…
  16. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 16
    Balance Sheet Commitment to Strong Investment-Grade Ratings Strong investment-grade credit ratings, consistent with peers Moodys: A2 (Stable) S&P: A- (Stable) Capital structure Long-term debt-to-capitalization ratio of 40% Long-term…
  17. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 17
    Cash Flow 2014 Sources and Uses Target dividend payout ratio of 55- 65% of net income 321 321 Short-term debt: 25 Capital expenditures primarily Cash funded by cash flow from 60 (in millions) operations Capital expenditures…
  18. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 18
    2014 Guidance Financial Net income: range of 95-105 Operating Income million 220* Cash flows from operations 216 217 (in millions) midpoint: 236 million Capital expenditures expected at 200 high end of 240-285 million range…
  19. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 19
    Five-year Financial Outlook Expected average annual net income growth of 4-6% between 2014- 2018 Driven by regulatory filings Rate base expected to grow an average of 5-6% per year between 2013-2018 Expected average annual dividend…
  20. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 20
    Capital Expenditures Capital Spending Exceeds Depreciation 280 287 Majority of capital expenditures for safety, 263* 243 reliability and efficiency System integrity and replacements 219 195 (in millions) 182 186 Efficiency…
  21. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 21
    Creating value for stakeholders Page 22
  22. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 22
    Creating Value for Stakeholders Identify and Pursue Growth Opportunities Capital investments targeted toward safety, reliability and efficiency Results in steady rate base growth Efficiency projects reduce expenses to sustainable…
  23. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 23
    Compressed Natural Gas (CNG) Current Environment Currently operate 27 fueling stations Benefits accessible to the public Use of CNG increases load Currently providing supply to 39 retail and 35 One vehicle is equivalent to one home…
  24. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 24
    Summary Key Investment Considerations Focused business strategy 100% regulated natural gas distribution utility Constructive regulatory environment Multiple mechanisms and riders Significant scale 2.1 million customers High…
  25. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 25
  26. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 26
    Appendix Page 27
  27. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 27
    Customer and Asset Mix Key Statistics as of Dec. 31, 2013 Kansas Oklahoma Texas Total Average Number of Customers 632,638 847,023 634,251 2,113,912 Number of Employees 1,000 1,100 700 3,100* Miles of Service Lines 8,000 4,600 5,700…
  28. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 28
    Regulatory Information By State as of June 30, 2014 Rate Base Authorized Authorized (in millions) Rate of Return Return on Equity Oklahoma Natural Gas 896 8.535% 10-11% Kansas Gas Service 770 N/A N/A Texas Gas Service 579 8.55%…
  29. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 29
    Authorized Rate Base Historical by State Oklahoma Kansas Texas CAGR 6.3% CAGR 1.7% CAGR 21.9% 896 843 793 744 764 770 (in millions) 504 416 339 2011 2012 2013 2011 2012 2013 2011 2012 2013 Rate bases presented in…
  30. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 30
    Capital Expenditures By State Oklahoma Kansas Texas 126 123 114 100 86 90 74 75 75 (in millions) 74 68 68 53 57 49 52 41 42 39 42 18 20 21 16 2011 2012 2013 2014G 2011 2012 2013 2014G 2011 2012 2013 2014G…
  31. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 31
    Regulatory Constructs By State Mechanism Oklahoma Kansas Texas* Performance-based rates X Capital investments; safety-related riders X** X X Weather normalization X X X Purchased Gas Adjustment/Cost of Gas riders X X X Energy…
  32. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 32
    Heating Degree Days Second Quarter 2014 Three months ended June 30, Variance to Variance to Normal 2014 2013 Normal (%) Last Year (%) Oklahoma Natural Gas 195 228 381 16.9 (40.2) Kansas Gas Service 411 409 586 (0.5) (30.2) Texas…
  33. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 33
    Heating Degree Days YTD 2014 Six months ended June 30, Variance to Variance to Normal 2014 2013 Normal (%) Last Year (%) Oklahoma Natural Gas 1,998 2,370 2,282 18.6 3.9 Kansas Gas Service 2,913 3,288 3,156 12.9 4.2 Texas Gas…
  34. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 34
    Heating Degree Days Annual Year ended December 31, Variance to Variance to Normal 2013 2012 Normal (%) Last Year (%) Oklahoma Natural Gas 3,316 3,848 2,721 16.0 41.4 Kansas Gas Service 4,860 5,246 3,796 7.9 38.2 Texas Gas Service…
  35. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 35
    Stable Economic Environment High-Quality Service Territories Unemployment rate below national average 2013: 29% below national average Population growth above national average 2013: 32% above national average Unemployment Rate (%)…
  36. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 36
    Cost of Gas Passed Through to Customers Actual costs of the commodity, transportation and storage of natural gas are passed through to customers without markup Natural gas used in operations is recovered in Purchased Gas or Cost of…
  37. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 37
    Non-GAAP Reconciliations ONE Gas has disclosed in this presentation targeted long-term debt-to-EBITDA and EBIT-to-interest ratios, which are calculated using amounts disclosed in our financial statements in accordance with generally…
  38. Goldman Sachs Power Utilities MLP and Pipeline Conference – One Gas, Inc. – slide 38

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