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Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc.

One Gas, Inc. · Dec 10, 2014 · 35 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 Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 1
    New York City December 10, 2014 Wells Fargo Securities 13th Annual Energy Symposium
  2. Wells Fargo Securities 13 Annual Energy Symposium – 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. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 3
    Competitive Strengths Page 4
  4. Wells Fargo Securities 13 Annual Energy Symposium – 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 87% market share Third largest publicly traded…
  5. Wells Fargo Securities 13 Annual Energy Symposium – 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. Wells Fargo Securities 13 Annual Energy Symposium – 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 Annual Heating 4,860 3,316 1,785 - Degree Days Normal Weather Normalization 100% 100% 62% 87%…
  7. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 7
    Proximity to Natural Gas Supply Location Supports Sustainability Kansas Topeka City Close proximity to significant Mississippian Wichita Lime natural gas reserves Granite Wash Tulsa Delivered natural gas costs are Cana- Oklahoma…
  8. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 8
    Regulatory Overview Page 9
  9. Wells Fargo Securities 13 Annual Energy Symposium – 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. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 10
    Regulatory Filing Timeline 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. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 11
    Regulatory Filing Timeline Texas El Paso Service Area El Paso Annual Rate Review (EPARR) filing annually, with new rates effective each August, if applicable Gas Reliability Infrastructure Program (GRIP) filings in remainder of…
  12. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 12
    Regulatory Update Recent Activity Oklahoma August 2014: New rates approved, includes an increase in base rates of approximately 13.7 million and an energy- efficiency program true-up and a utility incentive adjustment of 0.9 million…
  13. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 13
    Opportunity to Narrow the Gap Return on Equity Goal: Minimize the gap between allowed and actual returns* 2015 ROE estimate: 7.4% 2014 ROE estimate: 7.6% 2013 ROE achieved: 8.0% 2012 ROE achieved: 8.3% * ROE calculations are…
  14. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 14
    Financial Overview Page 15
  15. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 15
    Financial Highlights Commitment to Strong Investment-Grade Ratings Strong investment-grade credit ratings, consistent with peers Moodys: A2 (Stable) S&P: A- (Stable) Strong liquidity position will support capital expenditure and…
  16. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 16
    2014 Guidance Increased Financial Net income: increased range to Operating Income 105-110 million 223 Colder-than-normal weather 220* 216 Residential customer growth (in millions) Lower interest expense 200 Higher operating…
  17. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 17
    2014 Cash Flow Sources and Uses Target dividend payout ratio of 55- 65% of net income 329 329 Short-term debt: 35 Capital expenditures primarily Cash funded by cash flow from 60 (in millions) operations Capital expenditures…
  18. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 18
    2015 Guidance Issued December 2014 Net income: range of 108-118 million Operating Income Earnings growth driven by new rates and customer growth 233 Separation costs in 2014 Higher depreciation driven by capital investments 223…
  19. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 19
    Five-year Financial Outlook Updated December 2014 Expected average annual net income growth of 5-8% comparing 2014 earnings guidance with 2019 Driven by capital investments and customer growth Rate base expected to grow an average of…
  20. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 20
    Capital Expenditures Capital Spending Exceeds Depreciation 300 280 287 285* Majority of capital expenditures for safety, 243 reliability and efficiency 213 System integrity and replacements 219 195 172 (in millions) 182…
  21. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 21
    Creating value for stakeholders Page 22
  22. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 22
    Creating Value for Stakeholders Identify and Pursue Growth Opportunities Capital investments targeted toward safety, reliability and efficiency Approximately 70% of annual forecast Efficiency projects reduce expenses to sustainable…
  23. Wells Fargo Securities 13 Annual Energy Symposium – 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 45 retail and 36 One vehicle is equivalent to one home…
  24. Wells Fargo Securities 13 Annual Energy Symposium – 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. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 25
    Appendix Page 26
  26. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 26
    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…
  27. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 27
    Projected Rate Base By State 2014 Rate Base* Projected rate base consists of: Total: 2.5 billion** + Property, plant and equipment + Working capital 25% + +/ Other rate base items 42% Accumulated deferred income taxes…
  28. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 28
    Regulatory Information By State as of Sept. 30, 2014 Rate Base Authorized Authorized (in millions) Rate of Return Return on Equity Oklahoma Natural Gas 938 8.535% 10-11% Kansas Gas Service 781 N/A N/A Texas Gas Service 542 8.55%…
  29. Wells Fargo Securities 13 Annual Energy Symposium – 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. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 30
    Capital Expenditures By State Oklahoma Kansas Texas 133 126 123 127 100 86 90 85 82 79 79 74 75 (in millions) 62 68 68 53 57 49 52 41 42 42 45 39 21 25 16 18 20 2011 2012 2013 2014G* 2015G 2011 2012 2013 2014G*…
  31. Wells Fargo Securities 13 Annual Energy Symposium – 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. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 32
    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…
  33. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 33
    Non-GAAP Information ONE Gas has disclosed in this presentation cash flow from operations before changes in working capital, which is a non-GAAP financial measure. Cash flow from operations before changes in working capital is used as a…
  34. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 34
    Cash Flow From Operations Before Changes In Working Capital* Updated 2015 (Millions of dollars) 2014 Change Guidance Guidance Net Income 113 107 6 Depreciation and amortization 135 127 8 Non-cash pension and other benefit costs…
  35. Wells Fargo Securities 13 Annual Energy Symposium – One Gas, Inc. – slide 35

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