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RBC Capital Markets MLP Conference – Oneok Partners, L.P.

Oneok Partners, L.P. · Nov 20, 2014 · 80 slides

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Slides

  1. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 1
    RBC Capital Markets MLP Conference Dallas, Texas November 20, 2014
  2. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 2
    Index Overview Vision and mission 5 Well-positioned assets 8 Disciplined growth continues 14 Demonstrated ability to create value 32 Appendix ONEOK Partners growth projects 40 Natural Gas Gathering & Processing 47 Natural Gas…
  3. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 3
    What Well Cover Key Points Vision and Mission As a pure-play general partner, creating exceptional value through our ownership in ONEOK Partners by maximizing the dividend payout of ONEOK Well-positioned assets Connecting prolific…
  4. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 4
    Vision and Mission Page 5
  5. RBC Capital Markets MLP Conference – 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. RBC Capital Markets MLP Conference – 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. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 7
    Well-Positioned Assets Page 8
  8. RBC Capital Markets MLP Conference – 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. RBC Capital Markets MLP Conference – 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. RBC Capital Markets MLP Conference – 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. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 11
    Asset Overview Natural Gas Pipelines Predominantly fee-based income Viking Gas Northern Border Transmission 90% of transportation capacity Pipeline contracted under demand-based rates in 2014 Guardian Pipeline 79% of contracted…
  12. RBC Capital Markets MLP Conference – 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. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 13
    Disciplined Growth Continues Page 14
  14. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 14
    Disciplined Growth Continues 14 to 16 Billion in Capital Investments Approximately 8.3 to 9 billion in growth projects and strategic acquisitions in 2010-2016 Approximately 4.7 billion of projects completed to date Approximately 3.6…
  15. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 15
    Announced Capital Investments 8.3 to 9.0 Billion By Region* By Segment* 1.0 0.8 4.1 4.9 4.6 2.0 Williston Basin to Bushton, Kansas Natural Gas Gathering and Processing Mid-Continent to Mont Belvieu, Texas Natural Gas…
  16. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 16
    Williston Basin Drilling Economics More than 90% of producer Producer Economics economics come from crude- Natural NGLs gas oil production 4% 2% Drilling is economical with crude-oil prices (WTI) as low as 45-60 per barrel High…
  17. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 17
    Williston Basin Crude-oil- and NGL-driven Economics One of the largest independent natural gas gatherers and processors Extensive infrastructure Williston Basin Best positioned to provide critical Bakken Shale midstream…
  18. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 18
    Williston Basin Natural Gas Gathering and Processing Investments Existing and announced natural gas processing 3.0 billion to 3.4 billion plants will provide more than 1.2 Bcf/d of capacity Eight new plants and related…
  19. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 19
    Williston Basin Bear Creek Natural Gas Gathering and Processing and NGL Investments Bear Creek plant 265 million to 375 million 230 million to 330 million 80 MMcf/d Expected to be completed in Williston Basin Bakken Shale second…
  20. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 20
    Williston Basin Demicks Lake Natural Gas Gathering and Processing Investments Demicks Lake plant 595 million to 770 million 330 million to 430 million 200 MMcf/d natural gas processing facility Expected to be completed in third…
  21. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 21
    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 processing facility Williston Basin Bakken Shale Expected to be…
  22. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 22
    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 NGL-rich area of…
  23. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 23
    Powder River Basin Bronco Plant Natural Gas Gathering and Processing and NGL Investments Bronco plant 215 million to 305 million 170 million to 245 million 100 MMcf/d Expected to be completed in third quarter 2016 Natural gas…
  24. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 24
    SCOOP Knox Plant Natural Gas Gathering and Processing Investments Knox plant 175 million to 240 million 200 MMcf/d natural gas processing facility 365 million to 470 million Expected to be completed in the fourth quarter 2016…
  25. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 25
    Cana-Woodford Canadian Valley Plant Natural Gas Gathering and Processing Investments Canadian Valley Plant 200 MMcf/d natural gas processing Approximately 300 million facility Well connections, upgrades and expansions to existing…
  26. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 26
    Williston Basin Related Investments Natural Gas Liquids Demicks Lake NGL infrastructure Approximately 1 billion 10-15 million to connect the Demicks Lake plant to the Bakken NGL pipeline Expected to be completed in third quarter…
  27. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 27
    Sterling NGL Pipelines Investments Approximately 810 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%…
  28. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 28
    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…
  29. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 29
    West Texas LPG and Mesquite Pipeline Natural Gas Liquids Acquisition 2,600 miles of NGL gathering pipeline 800 million 230,000 bpd Expected to close fourth quarter 2014 Will expand NGL segments portfolio of assets NGL gathering…
  30. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 30
    Future Growth Increased Backlog Range to 4 Billion to 5 Billion Lengthy backlog of unannounced growth projects Natural gas, NGL and crude-oil related infrastructure projects, including: Natural gas processing plants Natural gas…
  31. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 31
    Demonstrated Ability to Create Value Page 32
  32. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 32
    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…
  33. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 33
    OKS Distribution Coverage Financial Discipline Distributable Cash Flow (DCF) Target long-term annual ( in Millions) 16% CAGR coverage ratio of 1.05x 1,185 to 1.15x 70 1,008 Considerations 946 949 190 18 1,115 Capital project…
  34. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 34
    OKS Financial Guidance Summary* 2014 Net income: range of 910 million-970 million Adjusted EBITDA: range of 1.55-1.61 billion Distributable cash flow: range of 1.155-1.215 billion Capital expenditures: 1.7 billion 1.6 billion in…
  35. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 35
    OKS Three-year Financial Outlook 2013-2016 Expected average annual adjusted EBITDA growth of 15-20% between 2013-2016 Driven by earnings from completed capital projects Sustainable distribution growth 6-8% average annual growth…
  36. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 36
    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%…
  37. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 37
    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…
  38. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 38
    Questions Page 39
  39. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 39
    Appendix ONEOK Partners Growth Projects Page 40
  40. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 40
    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…
  41. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 41
    Williston Basin Natural Gas Flaring Results in loss of NGL and natural gas value uplift 24% of North Dakotas natural gas production was flared in September North Dakota Petroleum Council Flaring Task Force goal to reduce flaring to…
  42. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 42
    Routine Growth Capital The Other Stuff Routine Growth Capital Expenditures by Segment Smaller projects included in (Millions) 2014 capital expenditure guidance but not announced 35 specifically 80 Well connections 56 62 NGL…
  43. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 43
    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 components December 2011…
  44. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 44
    Mid-Continent-Gulf Coast-related Project Status 2010-2016 Contract Major Project Contracting Status Committed Completed Type Sterling I expansion Capacity available for optimization 100% Differential November 2011 or fee based…
  45. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 45
    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…
  46. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 46
    Appendix Natural Gas Gathering and Processing Page 47
  47. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 47
    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…
  48. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 48
    Natural Gas Gathering and Processing Gathered Volumes 2014 volumes gathered Natural Gas Gathered (BBtu/d) expected to increase 13% CAGR 1,720 28% from 2013 Largest volume growth 1,347 expected in the Rocky 1,067 1,119 1,030…
  49. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 49
    Natural Gas Gathering and Processing Processed Volumes 2014 processed volumes are Natural Gas Processed (BBtu/d) expected to increase 38% from 22% CAGR 1,510 2013 Higher volumes in Williston Basin and Mid-Continent 1,094 860…
  50. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 50
    Natural Gas Gathering and Processing Commodity Price Risk Mitigation Commodity Price Sensitivity Before Hedging 2014 hedged positions* Margin Impact Natural gas: 73% at 4.07/MMBtu 5.1 (in Millions) 131,500 MMBtu/d of estimated…
  51. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 51
    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…
  52. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 52
    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…
  53. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 53
    Appendix Natural Gas Liquids Page 54
  54. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 54
    Natural Gas Liquids Gathered and Fractionated Volumes 2014 NGL gathered and fractionated volumes impacted by severe cold weather in the first quarter 2014, slower ramp up of previously connected plants and increased ethane rejection…
  55. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 55
    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…
  56. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 56
    Ethane Outlook Supply and Demand are Key Drivers Ethane rejection is expected to continue at least through 2016 until new world-scale ethylene cracking capacity begins coming on line Ethane prices will remain under pressure until new…
  57. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 57
    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…
  58. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 58
    Appendix Natural Gas Pipelines Page 59
  59. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 59
    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 Bison Pipeline interconnection Basin…
  60. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 60
    Appendix ONEOK Partners Financial Page 61
  61. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 61
    ONEOK Partners 2014 Operating Income and Equity Earnings Guidance by Segment** Natural Gas Gathering Natural Gas Liquids Natural Gas Pipelines and Processing 21% 59% 20% Pending WTLPG Acquisition 250 million* 720 million 248…
  62. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 62
    OKS 2014 Financial Guidance By Segment Natural gas gathering and processing: Operating Income and Equity Earnings ( in Millions) Higher gathered and processed 12% CAGR natural gas volumes 250 Benefit from completion of new 211…
  63. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 63
    Appendix - ONEOK Page 64
  64. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 64
    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…
  65. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 65
    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,…
  66. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 66
    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 Approximately two-thirds of…
  67. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 67
    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 of ONEOKs natural gas distribution segment into ONE…
  68. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 68
    Appendix - ONEOK Financial Page 69
  69. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 69
    OKE Financial Guidance Summary* 2014 Cash flow available for dividends: 590-640 million Dividends: 53% increase in dividends declared for 2014 compared with 2013 Increased to 56 cents per share in April 2014, following the…
  70. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 70
    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…
  71. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 71
    Appendix - Energy Services Page 72
  72. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 72
    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 53 million on an after-tax…
  73. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 73
    Non-GAAP Reconciliations ONEOK Page 74
  74. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 74
    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…
  75. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 75
    OKE Financial Measures Cash Flow Available for Dividends ( in Millions) 2014G* Recurring cash flows: Distributions received from ONEOK Partners declared 636 Interest expense, excluding non-cash items (68) Cash income taxes -…
  76. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 76
    OKE Non-GAAP Reconciliation Cash Flow Available for Dividends and Free Cash Flow ( in Millions) 2014G* Net income attributable to ONEOK 316 Depreciation and amortization 3 Deferred income taxes 133 Equity in earnings of ONEOK…
  77. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 77
    Non-GAAP Reconciliations ONEOK Partners Page 78
  78. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 78
    Non-GAAP Reconciliations ONEOK Partners ONEOK Partners has disclosed in this presentation its historical and anticipated adjusted EBITDA, distributable cash flow (DCF) and coverage ratio, which are non-GAAP financial metrics, used to…
  79. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 79
    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…
  80. RBC Capital Markets MLP Conference – Oneok Partners, L.P. – slide 80

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