U.S. Capital Advisors Midstream Access Day Houston, Texas Jan. 27, 2015
INDEX Overview ONEOK 4 ONEOK Partners 8 2015 Outlook 16 Disciplined Growth Continues Williston Basin 22 Powder River Basin 27 Mid-Continent 32 Permian Basin 36 Fractionation Capacity 40 Appendix Vision and Mission 43…
ONEOK OVERVIEW
ONEOK AS PURE-PLAY GP CORPORATE STRUCTURE IS WORKING Simplified capital allocation ONEOK, Inc. Earnings and cash flow underpinned by 38.3% GP and LP interest as of Sept. 30, 2014 investment-grade MLP with fee-based business model…
ONEOK DELIVERING VALUE TO SHAREHOLDERS 14% increase expected in 2015 dividends declared compared with 2014 Projected 2.25-cent-per-share-per-quarter increase for 2015 12% 15% expected average annual dividend growth between 2014…
OKS GROWTH BENEFITS OKE VALUE OF GP INTEREST TO ONEOK ONEOK Partners capital-growth Distributions Declared to ONEOK projects and strategic ( in Millions) 20% CAGR 762 acquisitions expected to drive continued distribution growth…
ONEOK PARTNERS OVERVIEW
ONEOK PARTNERS ASSET OVERVIEW Owns and operates strategically located assets in midstream natural gas and natural gas liquids businesses Provides nondiscretionary services to producers, processors and customers Operates a 36,000…
ONEOK PARTNERS DISTRIBUTION GROWTH CONTINUES 8% increase expected in 2015 distributions declared compared with 2014 Projected 1.5-cent-per-unit-per-quarter increase for 2015 6% 8% expected average annual distribution growth between…
ONEOK PARTNERS KEY POINTS Disciplined growth continues, driven by volume increases from organic growth projects and strategic acquisitions Fee-based earnings will continue gather, process, fractionate, store and transport Supply…
DISCIPLINED GROWTH CONTINUES 14 BILLION TO 16 BILLION IN CAPITAL GROWTH PROJECTS Completed 8 billion of capital-growth projects and acquisitions from 2006 2014 Capital-growth projects in progress of nearly 3 billion and growing 4 to…
FUTURE GROWTH 4 BILLION 5 BILLION BACKLOG Future growth across multiple supply basins Development of supply basins over the next two decades will require significant infrastructure Backlog of unannounced growth projects includes:…
ONEOK PARTNERS INCREASING 2015 DISTRIBUTABLE CASH FLOW 11% 26% expected increase in 2015 DCF driven by volume growth compared with 2014 Commodity price environment not expected to significantly impact supply Ethane optimization…
OUR KEY STRATEGIES A PREMIER ENERGY COMPANY GROWTH Increase distributable cash flow through investments in organic growth projects and strategic acquisitions Continue to grow/expand our integrated natural gas and natural gas liquids…
2015 OUTLOOK Volume Growth Continues
NATURAL GAS GATHERING AND PROCESSING GATHERED VOLUMES 2015 volumes gathered expected to increase 17% from 2014 Significant acreage dedications in core, higher return areas targeted by producers Improved drilling efficiencies drive…
NATURAL GAS GATHERING AND PROCESSING PROCESSED VOLUMES Natural Gas Processed (BBtu/d) 2015 processed volumes expected to increase 21% CAGR since 2010 17% from 2014 1,760 Higher volumes in Williston Basin Garden Creek II in service…
NATURAL GAS LIQUIDS GATHERING AND FRACTIONATION VOLUMES Increasing estimated 2015 gathering volumes by 14%, excluding the WTLPG acquisition, and increasing 58% including the acquisition, compared with 2014; fractionation volumes…
ONEOK PARTNERS SOURCES OF MARGIN PERCENT OF MARGIN Sources of Margin Expect to remain two-thirds fee based 1.2 B 1.6 B 1.6 B 1.7 B 2.1 B 2.6 B Commodity price risk 9% 11% 13% 11% Exists primarily in natural gas gathering and 20%…
DISCIPLINED GROWTH CONTINUES IN MULTIPLE BASINS
WILLISTON BASIN
WILLISTON BASIN DRILLING ECONOMICS Producer Economics Approximately 97% of producer Natural economics from crude-oil and NGL NGLs gas production 4% 3% Drilling is economical with crude-oil prices (WTI) as low as 4560 per barrel…
WILLISTON BASIN REDUCED FLARING AND VOLUME BACKLOG Flaring results in loss of NGL and natural gas value uplift 25% of North Dakotas natural gas production was flared in November 2014 North Dakota Industrial Commission (NDIC) policy…
OKS IN THE WILLISTON BASIN A LEADING SERVICE PROVIDER TO PRODUCERS Largest independent natural gas gatherer and processor in the Williston Basin. 3+ million Acreage net acres Dedications 60% of total acreage footprint…
WILLISTON BASIN CAPITAL INVESTMENTS 2015 2016 CapEx Expected Project ( in millions) Completion Lonesome Creek plant 1 and related infrastructure 550680 Q4 2015 200 MMcf/d Bear Creek plant and 2 related infrastructure 230330 Q2…
POWDER RIVER BASIN
POWDER RIVER BASIN DRILLING ECONOMICS Approximately 83% of producer Producer Economics economics from crude-oil and NGL production NGLs 11% Drilling is economical with crude-oil prices (WTI) as low as 6070 per Natural barrel gas…
OKS IN THE POWDER RIVER BASIN EXPANDING OPERATIONS IN GROWING BASIN Strategic growth in the NGL-rich formations in the Powder River Basin. 130,000 net acres Acreage Dedications 23% of total acreage footprint Processing 50…
POWDER RIVER BASIN CAPITAL INVESTMENTS 2015 2016 Strategic expansion of existing basin footprint. CapEx Expected Project ( in millions) Completion Sage Creek plant and 50 Q4 2015 infrastructure upgrades Bronco plant and…
WILLISTON AND POWDER RIVER BASIN NATURAL GAS LIQUIDS TAKEAWAY Approximately 1 billion Bakken NGL Pipeline expansion Expand capacity to 135,000 bpd from 60,000 Williston Basin Bakken Shale bpd with additional pump stations;…
MID-CONTINENT
MID-CONTINENT DRILLING ECONOMICS Approximately 85% of producer Producer Economics economics from crude-oil and NGL production NGLs Drilling is economical with crude-oil 15% prices (WTI) as low as 4570 per barrel in the SCOOP…
MID-CONTINENT INTEGRATED ASSETS AT WORK 500,000+ Acreage net acres Dedications 28% of total acreage footprint 700 MMcf/d currently Processing 900 MMcf/d Capacity expected by 2016 Natural Gas plants Natural Gas gathering NGL…
SCOOP KNOX PLANT KNOX NATURAL GAS PROCESSING PLANT Knox plant 365 million to 470 million 175 million to 240 million 200 MMcf/d natural gas processing facility Expected to be completed in the fourth quarter 2016 Related natural…
PERMIAN BASIN
PERMIAN DRILLING ECONOMICS Producer Economics Approximately 78% of producer economics from crude-oil and NGL production NGLs Drilling is economical with crude-oil 23% prices (WTI) as low as 4761 per barrel in the Delaware…
WEST TEXAS LPG AND MESQUITE PIPELINES NATURAL GAS LIQUIDS ACQUISITION 2,600 miles of NGL gathering pipeline 800 million 230,000 bpd, net Acquisition closed in November 2014 Expands NGL segments portfolio of assets NGL gathering…
NATURAL GAS PIPELINES GROWING EXPORTS TO MEXICO Proposed project: 208 miles of 30-inch pipeline from the Waha Hub area to a delivery point near San Elizario, Texas 450 million - 550 million Provide 500 600 MMcf/d capacity to…
FRACTIONATION CAPACITY
FRACTIONATION CAPACITY NATURAL GAS LIQUIDS Increased our fractionation capacity MB-2 75,000 bpd fractionator in service in December 2013 MB-3 75,000 bpd fractionator completed in December 2014 820,000 bpd of capacity…
APPENDIX Page 42
ONEOK VISION AND MISSION Our Vision 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, enabling it to…
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…
APPENDIX ONEOK PARTNERS FINANCIALS
ONEOK PARTNERS 2015 OPERATING INCOME AND EQUITY EARNINGS GUIDANCE BY SEGMENT Natural Gas Gathering and Processing Natural Gas Liquids Natural Gas Pipelines 25% 61% 14% 379 million 933 million 215 million Page 46
CREATING OKS UNITHOLDER VALUE DISTRIBUTION GROWTH 8% increase in 2015 distributions declared compared with 2014 Projected 1.5-cent-per-unit-per-quarter increase for 2015 6% 8% expected average annual distribution growth between 2014…
OKS 2015 FINANCIAL GUIDANCE BY SEGMENT Operating Income and Equity Earnings Natural gas gathering and processing: ( in Millions) Higher gathered and processed volumes 17% CAGR since 2010 1,527 Benefit of new processing plants and…
OKS STRONG BALANCE SHEET INVESTMENT GRADE Committed to investment-grade credit ONEOK Partners ratings Long-Term Debt-to-Capitalization Ratio S&P: BBB (stable) Moodys: Baa2 (stable) 46% 53% 52% 55% 51% Capital structure targets…
APPENDIX ONEOK FINANCIALS
CREATING OKE SHAREHOLDER VALUE DIVIDEND GROWTH 14% increase expected in 2015 dividends declared compared with 2014 Projected 2.25-cent-per-share-per-quarter increase for 2015 12% 15% expected average annual dividend growth between…
OKE FINANCIAL GUIDANCE SUMMARY 2015 Cash flow available for dividends: 580 million 660 million Free cash flow: 50 million 80 million after capital expenditures and dividends No expected borrowings; 300 million credit facility…
ONEOK INCOME TAXES Taxes on GP distributions at full corporate tax rate Taxes on LP distributions have been 100% deferred in recent years Cash tax rate expected to be 20% 25% of total distributions from ONEOK Partners beyond 2015…
APPENDIX ONEOK PARTNERS GROWTH PROJECTS
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…
WILLISTON BASIN-RELATED GROWTH PROJECTS 2010 2014 (2.5 BILLION IN PROJECTS) CapEx Contract Major Project Scope Completed ( Millions) Type Garden Creek plant and related 120 MMcf/d* capacity 360 POP with fee December 2011…
WILLISTON BASIN-RELATED GROWTH PROJECTS 2015 2016 (2.2 BILLION IN PROJECTS) CapEx Contract Major Project Scope Timing ( Millions) Type Lonesome Creek plant and related 200 MMcf/d* capacity 550680 POP with fee Fourth quarter…
MID-CONTINENT-GULF COAST-RELATED GROWTH PROJECTS 2010 2014 (2.3 BILLION IN PROJECTS) Major Project Scope CapEx Contract Completed ( Millions) Type Sterling I expansion Installed 7 additional pump stations to increase capacity by…
MID-CONTINENT-GULF COAST-RELATED GROWTH PROJECTS 2015 2016 (600 MILLION IN PROJECTS) Major Project Scope CapEx Contract Timing ( Millions) Type Hutchinson to Medford NGL 95-mile NGL pipeline between existing NGL fractionation at…
ACQUISITIONS 2013 2014 (1.2 BILLION) Major Project Scope CapEx Contract Timing ( Millions) Type West Texas Pipeline & 2,600 total mile NGL gathering pipeline acquisition 800 Fee based November Mesquite Pipeline Permian Basin 2014…
OKS GROWTH: 2006 2009 MORE THAN 2 BILLION OF GROWTH PROJECTS COMPLETED 2010 was first full year of all of these projects contributing Grasslands Plant Expansion EBITDA Two-thirds of investments Fort Union Gas Guardian II…
APPENDIX NATURAL GAS GATHERING AND PROCESSING
ASSET OVERVIEW NATURAL GAS GATHERING AND PROCESSING Nondiscretionary services to producers Gathering, compression, treating and processing Williston Basin Diverse contract portfolio More than 2,000 contracts Powder River Primarily…
NATURAL GAS GATHERING AND PROCESSING CONTRACT PORTFOLIO Current contract mix aligns interests with customers Primarily percent-of-proceeds contracts with a fee-based component Bakken volume growth has increased commodity exposure…
NATURAL GAS GATHERING AND PROCESSING COMMODITY PRICE RISK MITIGATION 2015 hedged positions** 2016 hedged positions** Natural gas: 75% at 4.03/MMBtu All commodities: Unhedged 149,800 MMBtu/d of estimated equity volumes Natural gas:…
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 second quarter 2016 Natural gas…
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…
WILLISTON BASIN LONESOME CREEK NATURAL GAS GATHERING AND PROCESSING INVESTMENTS Lonesome Creek plant 550 million to 680 million 320 million 390 million 200 MMcf/d natural gas processing facility Expected to be completed in fourth…
POWDER RIVER BASIN BRONCO NATURAL GAS GATHERING AND PROCESSING INVESTMENTS Bronco plant 170 million to 245 million 215 million to 305 million 100 MMcf/d Expected to be completed in third quarter 2016 Natural gas liquids pipeline…
ONEOK PARTNERS COMMODITY PRICE ASSUMPTIONS ONEOK Partners' 2015 composite NGL barrel is: approximately 10 to 15 percent ethane priced at the Mont Belvieu, Texas, and Conway, Kansas, market hubs reduced natural gasoline weighting,…
APPENDIX NATURAL GAS LIQUIDS
ASSET OVERVIEW NATURAL GAS LIQUIDS Provides nondiscretionary, fee-based services to natural gas processors and customers Gathering, fractionation, transportation, marketing and storage Extensive NGL gathering system Connected to…
NATURAL GAS LIQUIDS MARGIN PROFILE MIX Exchange & Storage Services Gather, fractionate, transport and store NGLs Exchange & and deliver to market hubs; primarily fee based 50% 55% Storage Services Transportation Transportation 77%…
WILLISTON BASIN SERVING NEW ETHANE MARKETS De-ethanization facilities adjacent Stateline Natural Gas Processing plants to ONEOK Partners Stateline natural gas processing plants Approximately 70 million Gas Residue Gas Natural Gas…
STERLING NGL PIPELINES EXPANDING ACCESS TO GULF COAST MARKETS Sterling III pipeline Approximately 800 million Flexibility to transport NGL purity products and unfractionated NGLs 550-plus miles, 16-inch diameter 193,000 bpd,…
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 capacity…
ETHANE REJECTION ASSUMPTIONS 2014 2017 Ethane rejection continues at existing Mid-Continent, Rockies and Williston Basin natural gas processing plants that supply ONEOK Partners NGL assets Estimated Ethane Rejection (MBbl/d) 40…
ETHANE MARKETS SUPPLY AND DEMAND ASSUMPTIONS Ethane rejection is expected to continue until new world-scale ethylene cracking capacity comes on line beginning in 2017 Low price ethane environment is attracting future growth in…
FIRM PETROCHEMICAL ANNOUNCEMENTS APPROXIMATELY 500,000 BPD OF NEW ETHANE DEMAND Ethane Capacity Company Project Location Start-up (bpd) Williams Expansion 20,000 Geismar, La. 2014 LyondellBassell Expansion 26,000 Corpus Christi…
POTENTIAL PETROCHEMICAL ANNOUNCEMENTS APPROXIMATELY 336,000 BPD OF POTENTIAL ETHANE DEMAND Ethane Capacity Company Project Location Start-up (bpd) Aither Chemicals New Build 16,000 West Virginia 2017 Shell Appalachia New Build…
ETHANE EXPORTS FIRM AND POTENTIAL ETHANE EXPORTS Firm Ethane Export Demand Company Export Ethane Capacity (bpd) Location Start-up Cochin (EP) PIPELINE 8,000 Conway, KS to Sarnia current Vantage PIPELINE 60,000 Tioga, ND to Alberta…
APPENDIX NATURAL GAS PIPELINES
ASSET OVERVIEW NATURAL GAS PIPELINES Viking Gas Northern Border Transmission Primarily fee-based income Pipeline 92% of transportation capacity contracted under demand-based rates in 2015 Guardian Pipeline 79% of contracted…
NORTHERN BORDER PIPELINE 50 PERCENT EQUITY INVESTMENT Links natural gas supply from Williston Basin western Canada and the Williston Bakken Shale Basin to Midwest markets Bison Pipeline interconnection Powder River Basin…
NON-GAAP RECONCILIATIONS ONEOK
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…
OKE FINANCIAL MEASURES CASH FLOW AVAILABLE FOR DIVIDENDS ( in Millions) 2014G* 2015G* Recurring cash flows: Distributions received from ONEOK Partners declared 636 762 Interest expense, excluding non cash items (68) (63) Cash…
OKE NON-GAAP RECONCILIATION CASH FLOW AVAILABLE FOR DIVIDENDS AND FREE CASH FLOW ( in Millions) 2014G* 2015G* Net income attributable to ONEOK 316 393 Depreciation and amortization 3 3 Deferred income taxes 133 181 Equity in…
NON-GAAP RECONCILIATIONS ONEOK PARTNERS
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…
OKS NON-GAAP RECONCILIATIONS ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW ( in Millions) 2010 2011 2012 2013 2014G* 2015G* Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow Net Income 473 831 888 804 940…
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