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CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P.

Oneok Partners, L.P. · Feb 11, 2012 · 72 slides

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Slides

  1. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 1
    Credit Suisse Energy Summit Vail, Colorado February 11-12, 2014
  2. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 2
    Index Overview Vision and Mission 5 Well-positioned assets 8 Disciplined growth continues 14 ONEOK Overview 27 Appendix ONEOK Partners Financial 32 Growth projects 41 Natural Gas Gathering & Processing 47 Natural Gas Liquids…
  3. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 3
    What Well Cover Key Points Vision and Mission Premier energy companies Well-positioned assets Connecting prolific supply basins to key markets Disciplined growth continues Investing in new and existing infrastructure Proven…
  4. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 4
    Vision and Mission Page 5
  5. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 5
    ONEOK Partners Vision and Mission Our Vision Creating exceptional value for all stakeholders by: Re-bundling services across the energy value chain, primarily through vertical integration, to provide customers with premium services…
  6. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 6
    Our Key Strategies A Premier Energy Company ONEOK Partners Increase distributable cash flow per unit through investments in internal growth projects and acquisitions Financial Manage our balance sheet and maintain investment-grade…
  7. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 7
    Well-Positioned Assets Page 8
  8. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 8
    ONEOK Partners Asset Overview Owns and operates assets in midstream natural gas and natural gas liquids businesses Provides non- discretionary services to producers, processors and customers Predominantly fee-based earnings…
  9. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 9
    Well Positioned in Shale Plays Our Fairway Active in and evaluating numerous shale plays Producer supply commitments are key Exposure to NGL-rich resource development Provides platform for future growth Bakken Shale Williston…
  10. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 10
    Asset Overview Natural Gas Gathering and Processing Non-discretionary services to Williston Basin producers Gathering, compression, treating and processing Diverse contract portfolio Wind River Powder River More than 2,000…
  11. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 11
    Asset Overview Natural Gas Liquids Provides non-discretionary, fee- based services to processors and customers Gathering, fractionation, transportation, marketing and storage Extensive NGL gathering system Connected to…
  12. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 12
    Asset Overview Natural Gas Pipelines Predominantly fee-based Viking Gas Northern Border Transmission income Pipeline Assumes 88% of transportation Guardian capacity contracted under Pipeline demand-based rates in 2014 84% of…
  13. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 13
    Disciplined Growth Continues Page 14
  14. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 14
    Disciplined Growth Continues 10 to 11 Billion in Capital Investments Completed more than 2 billion in growth projects (2006-2009) Approximately 6.0 to 6.4 billion in growth projects and acquisition in 2010-2016 Approximately 2.7…
  15. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 15
    Announced Capital Investments 6.0 to 6.4 Billion By Region* By Segment* 1.0 1.5 3.1 3.1 3.7 Williston Basin to Bushton, Kan. Natural Gas Gathering and Processing Mid-Continent to Mont Belvieu, Texas Natural Gas Liquids…
  16. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 16
    Williston Basin Strategic Fit Largest independent natural gas gatherer and processor Extensive infrastructure Williston Basin Bakken Shale Best positioned to provide critical midstream capability Knowledgeable workforce and…
  17. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 17
    Williston Basin Natural Gas Gathering and Processing Investments Six new plants and related 2.3 billion to 2.5 billion infrastructure Garden Creek 100 MMcf/d Williston Basin In service December 2011 Bakken Shale Stateline I 100…
  18. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 18
    Williston Basin Lonesome Creek Natural Gas Gathering and Processing Investments Lonesome Creek plant 200 MMcf/d natural gas Williston Basin Bakken Shale processing facility, our largest in North Dakota Expected to be completed by…
  19. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 19
    Sage Creek Acquisition Powder River Basin Sage Creek acquisition 305 million investment Approximately 440 million 50 MMcf/d natural gas processing facility and related natural gas gathering and NGL infrastructure Completed…
  20. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 20
    Williston Basin Natural Gas Liquids Investments 840 million to 880 million Bakken NGL Pipeline Expansion 100 million to expand to 135,000 bpd from 60,000 bpd with additional pump stations; Williston Basin Bakken Shale expected to…
  21. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 21
    Sterling NGL Pipelines Investments 700 million to 800 million Sterling III pipeline Flexibility to transport NGL purity products and unfractionated NGLs 540 plus miles, 16-inch diameter 193,000 bpd, expandable to 250,000 bpd 75%…
  22. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 22
    New Fractionators and E/P Splitter Investments at Mont Belvieu 950 million to 1.0 billion MB-2 fractionator - 75,000 bpd capacity In service December 2013 100% of available capacity committed MB-3 fractionator - 75,000 bpd capacity…
  23. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 23
    Cana-Woodford - Canadian Valley Plant Natural Gas Gathering and Processing Investments Canadian Valley Plant 200 MMcf/d natural gas processing Mississippian facility Lime Expected to be completed in January 2014 190 million…
  24. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 24
    Routine Growth Capital The Other Stuff Routine Growth Capital Expenditures Smaller projects included in by Segment (Millions) capital guidance but not announced specifically 18 Well connections 94 NGL storage expansions and 27…
  25. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 25
    Future Growth 2 to 3 Billion Backlog Lengthy backlog of unannounced growth projects Includes natural gas, NGL and crude-oil-related infrastructure projects, including: Natural gas processing plants Natural gas pipelines NGL…
  26. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 26
    ONEOK Overview Page 27
  27. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 27
    ONEOK Vision and Mission Our Vision A pure-play General Partner that creates exceptional value for all stakeholders through our ownership in ONEOK Partners Providing management and resources enabling ONEOK Partners to execute its…
  28. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 28
    ONEOK as Pure-Play General Partner Overview ONEOK consists of the general partner (GP) and limited partner (LP) interests in OKS post ONE Gas separation in January 2014 Discontinuation of Energy Services by April 2014 ONEOK is…
  29. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 29
    OKS Growth Benefits OKE Value of GP Interest to ONEOK ONEOK Partners growth Distributions Paid to ONEOK ( in Millions) projects expected to 20% CAGR drive continued OKS 607 distribution growth 536 Two-thirds of every incremental…
  30. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 30
    Creating OKE Shareholder Value Dividend Growth 53% increase in 2014 dividends declared compared with 2013 Excludes expected ONE Gas dividend from separation of natural gas distribution business 20-25% average annual growth between…
  31. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 31
    Appendix ONEOK Partners Financial Page 32
  32. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 32
    OKS Financial Guidance Summary 2014 Net income: range of 975 million - 1.075 billion EBITDA: range of 1.565 - 1.665 billion Distributable cash flow: range of 1.15 - 1.25 billion Capital expenditures: 2.25 billion 2.1 billion in…
  33. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 33
    OKS Three-year Financial Outlook 2013-2016 Expected average annual EBITDA growth of 15-20% between 2013-2016 Driven by earnings from completed capital projects Sustainable distribution growth Projected 1.5-cent-per-unit per-quarter…
  34. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 34
    ONEOK Partners 2014 Operating Income and Equity Earnings by Segment Natural Gas Gathering Natural Gas Liquids Natural Gas Pipelines and Processing 23% 61% 16% 308 million 803 million 206 million Page 35
  35. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 35
    OKS 2014 Financial Guidance By Segment Natural gas gathering and processing: Operating Income and Equity Earnings ( in Millions) Higher gathered and processed 14% CAGR volumes Benefit of new processing plants 308 on line 211 240…
  36. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 36
    OKS Distribution Coverage Financial Discipline Distributable Cash Flow (DCF) Target long-term annual ( in Millions) 16% CAGR coverage ratio of 1.05x 1,202 to 1.15x 87 1,008 955 Considerations 946 190 8 1,115 Capital project…
  37. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 37
    Creating OKS Unitholder Value Distribution Growth 6-8% expected annual distribution growth between 2013-2016 29% increase in distributions paid since 2011 67% increase since 2006 Distributions Declared Per Unit Per Year…
  38. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 38
    OKS Predominantly Fee-Based Earnings Percent of Margin Commodity price risk Sources of Margin Exists primarily in natural gas 1.2 B 1.6 B 1.6 B 1.7B 2.1 B gathering and processing segment 9% 12% 13% Mitigated by hedging 20% 31%…
  39. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 39
    OKS Strong Balance Sheet Investment Grade Committed to investment-grade credit ONEOK Partners rating Long-Term Debt-to-Capitalization Ratio S&P: BBB (stable) Moodys: Baa2 (stable) Capital structure targets 47% 51% 46% 52% 54% 53%…
  40. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 40
    Appendix ONEOK Partners Growth Projects Page 41
  41. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 41
    OKS Growth: 2006-2009 More than 2 Billion of Growth Projects Completed 2010 was first full year of all projects contributing EBITDA Two-thirds of investments were fee-based, NGL-related projects Set the stage for next tranche of…
  42. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 42
    Williston Basin Natural Gas Flaring Producers are currently flaring 28% of natural gas production Results in loss of NGL and natural gas value uplift North Dakota Monthly Natural Gas Flared Garden Creek Percent of Production startup…
  43. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 43
    Williston Basin Drilling Economics More than 90% of producer Producer Economics economics from crude-oil Natural production NGLs gas Drilling is economical with 4% 2% crude-oil prices (WTI) as low as 55-70 per barrel Increased…
  44. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 44
    Williston Basin-related Project Status 2010-2016 Major Project Contracting Status Committed Contract Type Completed Garden Creek plant and related Backed by acreage dedications Acreage dedications POP with fee December 2011…
  45. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 45
    Mid-Continent-Gulf Coast-related Project Status 2010-2015 Contract Major Project Contracting Status Completed Committed Type Sterling I expansion Capacity available for optimization 100% Differential November 2011 or fee based…
  46. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 46
    Appendix Natural Gas Gathering and Processing Page 47
  47. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 47
    Natural Gas Gathering and Processing Gathered Volumes 2014 volumes gathered expected to increase 26% from 2013 Well connections have quadrupled since 2010 Well Connections by Region Natural Gas Gathered (BBtu/d) 1,700 1,300…
  48. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 48
    Natural Gas Gathering and Processing Processed Volumes 2014 processed volumes Natural Gas Processed (BBtu/d) expected to increase 30% from 2013 1,410 Higher volumes in Williston Basin Stateline II in service April 2013 1,085 780…
  49. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 49
    Natural Gas Gathering and Processing Commodity Price Risk Mitigation Commodity Price Sensitivity Before Hedging 2014 hedged positions* Margin Impact Natural gas: 75% at 4.06/MMBtu 110,600 MMBtu/d estimated total equity (in…
  50. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 50
    Natural Gas Gathering and Processing Contract Portfolio Current contract mix aligns interests with producers Minimal keep-whole contracts Contract Mix by Margin 65% 69% 66% 60% 68% 35% 34% 40% 32% 31% 2010 2011 2012…
  51. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 51
    ONEOK Partners Commodity Price Point-of-View Price Assumptions (Unhedged) 2014 2015 2016 NYMEX crude oil/Bbl 93.84 95.72 98.00 NYMEX natural gas/ MMBtu 4.10 4.50 4.80 NGL composite/gallon* 1.25 0.99 0.92 Conway-to-Mont Belvieu…
  52. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 52
    Appendix Natural Gas Liquids Page 53
  53. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 53
    Natural Gas Liquids Gathering and Fractionation Volumes 2014 gathering volumes estimated to increase by 13%; fractionation volumes estimated to increase by 8% MB-2 fractionator in service December 2013 MB-3 fractionator expected to…
  54. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 54
    Natural Gas Liquids Margin Profile Margin Profile Mix Exchange & Storage Services Gather, fractionate, transport and store NGLs and deliver to market hubs; primarily fee based 68% 55% Exchange & Transportation 59% Storage…
  55. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 55
    Ethane Outlook Supply and Demand are Key Drivers Ethane rejection, particularly in markets distant from Mont Belvieu, is expected to continue through 2016 until new world-scale ethylene cracking capacity comes on line in 2017 Ethane…
  56. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 56
    Fractionation Capacity Natural Gas Liquids Currently 684,000 bpd, net ownership Increased capacity by: 60,000 bpd of fractionation services from Targa began in second quarter 2011 Bushton 60,000 bpd expansion in service…
  57. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 57
    Appendix Natural Gas Pipelines Page 58
  58. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 58
    Northern Border Pipeline 50-Percent Equity Investment Links natural gas supply from the Williston Basin and western Canada to Midwest Williston Basin Bakken Shale markets Bison Pipeline interconnection Powder Supply diversity…
  59. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 59
    Appendix - ONEOK Financial Page 60
  60. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 60
    OKE Financial Guidance Summary 2014 Cash flow available for dividends 560-640 million Dividend: 53% increase in dividends declared for 2014 compared with 2013 56 cent-per-share increase in April 2014, following the separation ONEOKs…
  61. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 61
    ONEOK Income Taxes Assumes bonus depreciation expires in 2013 Taxes on GP earnings at full corporate tax rate Taxes on LP distributions have been 100% deferred in recent years No cash taxes expected to be paid in 2014 Beyond 2014,…
  62. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 62
    Appendix - Energy Services Page 63
  63. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 63
    Accelerated Wind Down Energy Services Discontinue segment through an accelerated wind down process and release a significant portion of its nonaffiliated third-party natural gas transportation and storage contracts to third parties…
  64. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 64
    Non-GAAP Reconciliations ONEOK Partners Page 65
  65. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 65
    Non-GAAP Reconciliations ONEOK Partners ONEOK Partners has disclosed in this presentation historical and anticipated EBITDA, Distributable Cash Flow (DCF) and coverage ratio levels that are non-GAAP financial measures. EBITDA, DCF…
  66. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 66
    OKS Non-GAAP Reconciliations EBITDA and Distributable Cash Flow ( in Millions) 2006 2007 2008 2009 2010 2011 2012 2013G* 2014G* Reconciliation of Net Income to EBITDA and Distributable Cash Flow Net Income 445 408 626 435 473 831 888…
  67. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 67
    Non-GAAP Reconciliations ONEOK Page 68
  68. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 68
    Non-GAAP Reconciliations ONEOK, Inc. Stand-Alone ONEOK has disclosed in this presentation stand-alone cash flow, before changes in working capital, cash available for dividends and free cash flow, all amounts that are non-GAAP…
  69. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 69
    OKE Financial Measures Cash Flow Available for Dividends ( in Millions) 2014G* Recurring cash flows: Distributions received from ONEOK Partners declared 636 Interest expense (60) Cash taxes - Energy services cash flow 39…
  70. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 70
    OKE Non-GAAP Reconciliation Cash Flow Available for Dividends and Free Cash Flow ( in Millions) 2014G* Net income attributable to ONEOK 285 Depreciation and amortization 4 Deferred income taxes 178 Equity in earnings of ONEOK…
  71. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 71
    Non-GAAP Reconciliations Stand-Alone Cash Flow, Before Changes in Working Capital and Free Cash Flow ( in Millions) 2008 2009 2010 2011 2012 2013G* Net income attributable to ONEOK 312 305 335 361 361 260 Charges attributable to exit…
  72. CREDIT SUISSE ENERGY SUMMIT – Oneok Partners, L.P. – slide 72

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