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JP Morgan Energy Infrastructure – Oneok Partners, L.P.

Oneok Partners, L.P. · Jun 12, 2014 · 76 slides

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Slides

  1. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 1
    J.P. Morgan Energy Infrastructure/MLP Corporate Access Day Chicago June 12, 2014
  2. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 2
    Terry K. Spencer President and Chief Executive Officer Page 2
  3. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 3
    What Well Cover Key Points Vision and Mission Creating exceptional value for all stakeholders and providing reliable energy and energy-related services in a safe and environmentally responsible manner Well-positioned assets…
  4. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 4
    Vision and Mission Page 5
  5. JP Morgan Energy Infrastructure – 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. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 6
    Our Key Strategies ONEOK Partners A Premier Energy Company Growth Increase distributable cash flow per unit through investments in internal growth projects and strategic acquisitions Continue to grow/expand our integrated natural…
  7. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 7
    Well-Positioned Assets Page 8
  8. JP Morgan Energy Infrastructure – 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 Generates predominantly fee-based…
  9. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 9
    Asset Overview Natural Gas Gathering and Processing Non-discretionary services to producers Gathering, compression, treating and processing Williston Basin Diverse contract portfolio More than 2,000 contracts Powder River Wind…
  10. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 10
    Asset Overview Natural Gas Liquids Provides non-discretionary, fee- based services to natural gas processors and customers Gathering, fractionation, transportation, marketing and storage Extensive NGL gathering system Connected…
  11. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 11
    Asset Overview Natural Gas Pipelines Predominantly fee-based income Viking Gas Northern Border Transmission 88% of transportation capacity Pipeline contracted under demand-based rates in 2014 Guardian Pipeline 84% of contracted…
  12. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 12
    Predominantly Fee-Based Earnings Percent of Margin Commodity price risk Sources of Margin Exists primarily in natural gas gathering and processing segment 1.2 B 1.6 B 1.6 B 1.7 B 2.1 B 9% 11% 13% Mitigated by hedging 20% 31%…
  13. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 13
    Disciplined Growth Continues Page 14
  14. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 14
    Disciplined Growth Continues 11 to 12 Billion in Capital Investments Approximately 6.0 to 6.4 billion in growth projects and strategic acquisitions in 2010-2016 Approximately 3.9 billion completed to date Announced 1.2 billion of…
  15. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 15
    Announced Capital Investments 6.0 to 6.4 Billion By Region* By Segment* 1.0 1.6 3.6 3.1 3.1 Williston Basin to Bushton, Kansas Natural Gas Gathering and Processing Mid-Continent to Mont Belvieu, Texas Natural Gas…
  16. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 16
    Williston Basin Crude-oil- and NGL-driven Economics Largest independent natural gas gatherer and processor Extensive infrastructure Williston Basin Bakken Shale Best positioned to provide critical midstream capability…
  17. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 17
    Williston Basin Natural Gas Gathering and Processing Investments Six new plants and related infrastructure Garden Creek 100 MMcf/d 2.3 billion to 2.5 billion In service December 2011 Stateline I 100 MMcf/d In service September 2012…
  18. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 18
    Williston Basin Lonesome Creek Natural Gas Gathering and Processing Investments Lonesome Creek plant 550 million to 680 million 320-390 million 200 MMcf/d natural gas Williston Basin processing facility, our largest in Bakken…
  19. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 19
    Sage Creek Acquisition Powder River Basin Sage Creek acquisition Approximately 440 million 305 million investment 50 MMcf/d natural gas processing facility and related natural gas gathering and NGL infrastructure Acquired in…
  20. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 20
    Williston Basin Related Investments Natural Gas Liquids Approximately 890 million Bakken NGL Pipeline Expansion 100 million to expand capacity to 135,000 bpd from 60,000 bpd with additional pump stations; Williston Basin Bakken…
  21. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 21
    Sterling NGL Pipelines Investments 760 million to 790 million Sterling III pipeline Flexibility to transport NGL purity products and unfractionated NGLs 550-plus miles, 16-inch diameter 193,000 bpd, expandable to 260,000 bpd 75%…
  22. JP Morgan Energy Infrastructure – 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 in December 2013 100% of available capacity committed MB-3 fractionator - 75,000 bpd…
  23. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 23
    Cana-Woodford - Canadian Valley Plant Natural Gas Gathering and Processing Investments Canadian Valley Plant Approximately 350 million 190 million 200 MMcf/d natural gas processing facility Completed in March 2014 Well…
  24. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 24
    Routine Growth Capital The Other Stuff Routine Growth Capital Expenditures Smaller projects included in 2014 by Segment (Millions) capital expenditure guidance but not announced specifically 18 Well connections 94 NGL storage…
  25. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 25
    Future Growth 3 to 4 Billion Backlog Increased backlog range to 3 billion to 4 billion Lengthy backlog of unannounced growth projects Natural gas, NGL and crude-oil related infrastructure projects, including: Natural gas processing…
  26. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 26
    Demonstrated Ability to Create Value Page 27
  27. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 27
    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, when a wholly owned subsidiary of ONEOK became…
  28. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 28
    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 Considerations 949 946 190 18 1,115 Capital project…
  29. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 29
    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: 2.02 billion 1.9 billion in growth…
  30. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 30
    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…
  31. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 31
    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% 53% 52% 54%…
  32. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 32
    Key Investment Considerations Premier Energy Companies Strategic assets connecting prolific supply basins and key markets Non-discretionary services to producers, processors and customers Focused on creating value for both customers…
  33. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 33
    Questions Page 34
  34. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 34
    Index Overview Vision and mission 5 Well-positioned assets 8 Disciplined growth continues 14 Demonstrated ability to create value 27 Appendix ONEOK Partners growth projects 36 Natural Gas Gathering & Processing 43 Natural Gas…
  35. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 35
    Appendix ONEOK Partners Growth Projects Page 36
  36. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 36
    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…
  37. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 37
    Williston Basin Natural Gas Flaring Results in loss of NGL and natural gas value uplift 33% of North Dakotas natural gas production was flared in March North Dakota Petroleum Council Flaring Task Force recommendations target a…
  38. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 38
    Williston Basin Drilling Economics More than 90% of producer Producer Economics economics come from crude- Natural oil production NGLs gas Drilling is economical with 4% 2% crude-oil prices (WTI) as low as 55-70 per barrel…
  39. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 39
    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…
  40. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 40
    Mid-Continent-Gulf Coast-related Project Status 2010-2015 Contract Major Project Contracting Status Committed Completed Type Sterling I expansion Capacity available for optimization 100% Differential November 2011 or fee based…
  41. JP Morgan Energy Infrastructure – 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 of these projects contributing EBITDA Two-thirds of investments were fee-based, NGL-related projects Set the stage for next…
  42. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 42
    Appendix Natural Gas Gathering and Processing Page 43
  43. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 43
    Natural Gas Gathering and Processing Well Connections Well Connections by Region 2014 well connections expected to increase 12% 1,300 from 2013 and quadruple 1,160 175 145 from 2010 940 Approximately 800 well 180 connections in…
  44. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 44
    Natural Gas Gathering and Processing Gathered Volumes 2014 volumes gathered Natural Gas Gathered (BBtu/d) expected to increase 12% CAGR 1,700 26% from 2013 Largest volume growth 1,347 expected in the Rocky 1,067 1,119 1,000…
  45. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 45
    Natural Gas Gathering and Processing Processed Volumes 2014 processed volumes Natural Gas Processed (BBtu/d) are expected to increase 20% CAGR 1,410 29% from 2013 Higher volumes in Williston Basin and Mid-Continent 1,094…
  46. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 46
    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 4.1 (in Millions) 115,600 MMBtu/d of…
  47. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 47
    Natural Gas Gathering and Processing Contract Portfolio Current contract mix aligns our interests with producers Primarily percent-of-proceeds contracts with a fee-based component Minimal keep-whole contracts Contract Mix by…
  48. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 48
    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…
  49. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 49
    Appendix Natural Gas Liquids Page 50
  50. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 50
    Natural Gas Liquids Gathered and Fractionated Volumes 2014 NGL gathered volumes estimated to increase by 15% compared with 2013 2014 NGL fractionated volumes estimated to increase by 10% compared with 2013 MB-2 fractionator in…
  51. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 51
    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 & 59% Storage Services…
  52. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 52
    Ethane Outlook Supply and Demand are Key Drivers Ethane rejection is expected to continue at least through much of 2016 until new world-scale ethylene cracking capacity begins coming on line Ethane prices will remain under pressure…
  53. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 53
    Fractionation Capacity Natural Gas Liquids Currently 744,000 bpd of capacity available Increased our fractionation capacity MB-2 75,000 bpd fractionator in service in December 2013 Bushton 60,000 bpd expansion in service in…
  54. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 54
    Appendix Natural Gas Pipelines Page 55
  55. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 55
    Northern Border Pipeline 50-Percent Equity Investment Links natural gas supply from Williston Basin western Canada and the Bakken Shale Williston Basin to Midwest markets Powder River Basin Bison Pipeline interconnection…
  56. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 56
    Appendix ONEOK Partners Financial Page 57
  57. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 57
    ONEOK Partners 2014 Operating Income and Equity Earnings Guidance by Segment Natural Gas Gathering Natural Gas Liquids Natural Gas Pipelines and Processing 23% 61% 16% 308 million 803 million 206 million Page 58
  58. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 58
    OKS 2014 Financial Guidance By Segment Natural gas gathering and processing: Operating Income and Equity Earnings ( in Millions) Higher gathered and processed 14% CAGR natural gas volumes Benefit from completion of new 308…
  59. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 59
    Appendix - ONEOK Page 60
  60. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 60
    ONEOK as Pure-Play General Partner Overview ONEOK now consists of the general partner (GP) and limited partner (LP) interests in OKS ONEOK is one of the largest pure- play, publicly traded GPs Significant free cash flow driven by…
  61. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 61
    ONEOK Vision and Mission Our Vision Has Changed A pure-play General Partner that creates exceptional value for all stakeholders through our ownership in ONEOK Partners by: Providing management and resources to ONEOK Partners,…
  62. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 62
    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…
  63. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 63
    Creating OKE Shareholder Value Dividend Growth 53% increase in 2014 dividends declared compared with 2013 Increased to 56 cents per share in April 2014, following the separation ONEOKs natural gas distribution segment into ONE Gas…
  64. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 64
    Appendix - ONEOK Financial Page 65
  65. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 65
    OKE Financial Guidance Summary 2014 Cash flow available for dividends: 560-640 million Dividends: 53% increase in dividends declared for 2014 compared with 2013 Increased to 56 cents per share in April 2014, following the separation…
  66. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 66
    ONEOK Income Taxes Assumes bonus depreciation not renewed for 2014 or beyond 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…
  67. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 67
    Appendix - Energy Services Page 68
  68. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 68
    Accelerated Wind Down Energy Services Completed an accelerated wind down process on March 31, 2014 Expected future cash payments for released transportation and storage capacity contracts of approximately 68 million on an after-tax…
  69. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 69
    Non-GAAP Reconciliations ONEOK Page 70
  70. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 70
    Non-GAAP Reconciliations ONEOK, Inc. Stand-Alone ONEOK has disclosed in this presentation cash available for dividends and free cash flow, all amounts that are non-GAAP financial measures. Management believes these measures provide…
  71. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 71
    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…
  72. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 72
    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…
  73. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 73
    Non-GAAP Reconciliations ONEOK Partners Page 74
  74. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 74
    Non-GAAP Reconciliations ONEOK Partners ONEOK Partners has disclosed in this presentation historical and anticipated Adjusted EBITDA, Distributable Cash Flow (DCF) and coverage ratio that are used as measures of the partnerships…
  75. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 75
    OKS Non-GAAP Reconciliations Adjusted EBITDA and Distributable Cash Flow ( in Millions) 2006 2007 2008 2009 2010 2011 2012 2013 2014G* Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow Net Income 445 408 626…
  76. JP Morgan Energy Infrastructure – Oneok Partners, L.P. – slide 76

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