Credit Suisse Energy Summit Vail, Colorado Feb. 26, 2015
INDEX Overview ONEOK 4 ONEOK Partners 7 2015 Outlook 13 Disciplined Growth Continues Williston Basin 19 Powder River Basin 24 Mid-Continent 29 Permian Basin 32 Fractionation Capacity 36 Appendix Vision and Mission 39…
ONEOK OVERVIEW
ONEOK AS PURE-PLAY GP CORPORATE STRUCTURE IS WORKING Simplified capital allocation ONEOK, Inc. Earnings and cash flow underpinned by 37.8% GP and LP interest as of Dec. 31, 2014 investment-grade MLP with fee-based business model…
OKS GROWTH BENEFITS OKE VALUE OF GP INTEREST TO ONEOK ONEOK Partners capital-growth Distributions Declared to ONEOK projects and strategic ( in Millions) 17% CAGR 694 acquisitions expected to drive 633 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 WELL-POSITIONED TO WITHSTAND CHALLENGING MARKET CONDITIONS Disciplined growth continues, driven by volume increases from organic growth projects and strategic acquisitions Fee-based earnings will continue gather,…
DISCIPLINED GROWTH CONTINUES 14 BILLION TO 16 BILLION IN CAPITALGROWTH PROJECTS Completed nearly 8 billion of capital-growth projects and acquisitions from 2006 2014 Announced capital-growth projects of nearly 3 billion 4 to 5 14 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:…
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 in Challenging Environment
NATURAL GAS GATHERING AND PROCESSING GATHERED VOLUMES 2015 volumes gathered expected to increase 10% 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 20% CAGR since 2010 8% from 2014 1,660 Higher volumes in Williston Basin 1,534 Garden Creek II…
NATURAL GAS LIQUIDS GATHERING AND FRACTIONATION VOLUMES Increasing estimated 2015 gathering volumes by 56% compared with 2014, due primarily to the West Texas LPG pipeline system acquisition; fractionation volumes are relatively flat…
ONEOK PARTNERS SOURCES OF MARGIN PERCENT OF MARGIN Sources of Margin 2015 fee based margin increased to 75% due to 1.2 B 1.6 B 1.6 B 1.7 B 2.1 B 2.3 B low commodity prices 9% 9% 11% 12% Commodity price risk 20% 31% 16% Exists…
DISCIPLINED GROWTH CONTINUES IN MULTIPLE BASINS
WILLISTON BASIN
WILLISTON BASIN DRILLING ECONOMICS Producer Economics Approximately 97% of producer economics Natural from crude-oil and NGL production gas NGLs Drilling is economical with crude-oil prices 4% 3% (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 24% of North Dakotas natural gas production was flared in December 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 ANNOUNCED CAPITAL INVESTMENTS CapEx Expected Project ( in millions) Completion Lonesome Creek plant 1 and related infrastructure 550680 Q4 2015 200 MMcf/d Additional compression 80100 Q4 2015 Stateline…
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 OPERATIONS IN NGL-RICH BASIN 130,000 Acreage net acres Dedications 23% of total acreage footprint Processing 50 MMcf/d current Capacity 50 MMcf/d announced Existing Gathering Pipeline Bronco…
POWDER RIVER BASIN ANNOUNCED CAPITAL INVESTMENTS CapEx Expected Project ( in millions) Completion Sage Creek plant and 50 Q4 2015 infrastructure upgrades Bronco plant and related 130200 Suspended* infrastructure 50 MMcf/d…
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 Processing 700 MMcf/d currently Capacity 200 MMcf/d announced Integrated assets Natural Gas plants Natural Gas…
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 PIPELINE SYSTEM NATURAL GAS LIQUIDS ACQUISITION 2,600 miles of NGL gathering pipeline 800 million 285,000 bpd, gross Acquisition closed in November 2014 Expands NGL segments portfolio of assets NGL gathering system…
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 Total capacity 840,000 bpd…
APPENDIX Page 38
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 14% 68% 18% 180 million 864 million 225 million Page 42
CREATING OKS UNITHOLDER VALUE DISTRIBUTION GROWTH 3% 5% increase expected in 2015 distributions declared compared with 2014 Long-term distribution growth rate will be re-evaluated as the environment becomes more stable…
OKS FINANCIAL GUIDANCE SUMMARY 2015 Adjusted EBITDA range: 1.51 billion 1.73 billion Net income range: 845 million 1.01 billion Distributable cash flow range: 1.08 billion 1.26 billion Capital expenditures: 1.0 billion 1.4 billion…
OKS 2015 FINANCIAL GUIDANCE BY SEGMENT Operating Income and Equity Earnings* Natural gas gathering and processing: ( in Millions) Higher gathered and processed volumes 13% CAGR since 2010 Benefit of new processing plants and 1,269…
OKS STRONG BALANCE SHEET INVESTMENT GRADE Committed to investment-grade credit ratings Total Debt-to-Capitalization Ratio S&P: BBB (stable) Moodys: Baa2 (stable) 50% 53% 52% 55% 54% Capital structure targets 50/50…
APPENDIX ONEOK FINANCIALS
CREATING OKE SHAREHOLDER VALUE DIVIDEND GROWTH 4% 8% increase expected in 2015 dividends declared compared with 2014 Long-term dividend growth rate will be re-evaluated as the environment becomes more stable Target long-term annual…
OKE FINANCIAL GUIDANCE SUMMARY 2015 Cash flow available for dividends: 570 million 650 million Free cash flow: 90 million 120 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 Bonus depreciation renewed in 2014 2015 cash taxes expected to be zero Page 50
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 COMPLETED 2.4 BILLION IN PROJECTS CapEx Contract Major Project Scope Completed ( Millions) Type Garden Creek I plant and related 120 MMcf/d* capacity 360 POP with fee December 2011…
WILLISTON BASIN-RELATED GROWTH PROJECTS 2.0 BILLION ANNOUNCED CapEx Contract Major Project Scope Timing ( Millions) Type Lonesome Creek plant and related 200 MMcf/d* capacity 550680 POP with fee Fourth quarter infrastructure…
MID-CONTINENT-GULF COAST-RELATED GROWTH PROJECTS 2.3 BILLION IN PROJECTS COMPLETED 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 470 MILLION ANNOUNCED Major Project Scope CapEx Contract Timing ( Millions) Type Hutchinson to Medford NGL 95-mile NGL pipeline between existing NGL fractionation at Hutchinson,…
ACQUISITIONS 1.2 BILLION Major Project Scope CapEx Contract Timing ( Millions) Type Sage Creek natural gas 50 MMcf/d* natural gas processing capacity 305 POP with fee September 2013 processing plant Powder River Basin components…
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 2015 fee based margin increased due to low commodity…
NATURAL GAS GATHERING AND PROCESSING COMMODITY PRICE RISK MITIGATION 2015 hedged positions* 2016 hedged positions* Natural gas: 80% at 4.03/MMBtu All commodities: Unhedged 141,600 MMBtu/d of estimated equity Natural gas: 172,700…
NATURAL GAS GATHERING AND PROCESSING COMMODITY PRICE SENSITIVITIES 2015 Volume* Assumed Prices Annual Contribution Net Margin ( in millions) Impact of 10% Price Movement ** ( in millions) Natural gas (MMBtu/d) 28,800 3.50 / MMbtu…
WILLISTON BASIN BEAR CREEK NATURAL GAS GATHERING AND PROCESSING AND NGL INVESTMENTS Bear Creek plant and related natural 265 million to 375 million gas infrastructure 230 million to 330 million 80 MMcf/d Expected to be completed…
WILLISTON BASIN DEMICKS LAKE NATURAL GAS GATHERING AND PROCESSING AND NGL INVESTMENTS Demicks Lake plant and related natural gas 565 million to 785 million infrastructure 475 million to 670 million 200 MMcf/d natural gas processing…
WILLISTON BASIN LONESOME CREEK NATURAL GAS GATHERING AND PROCESSING INVESTMENTS Lonesome Creek plant and upgrades and expansions of existing infrastructure 550 million 680 million 200 MMcf/d natural gas processing facility…
POWDER RIVER BASIN BRONCO NATURAL GAS GATHERING AND PROCESSING INVESTMENTS Bronco plant 175 million to 260 million 130 million to 200 million 50 MMcf/d Suspended Natural gas liquids pipeline connecting the Bronco plant to the…
SCOOP KNOX PLANT KNOX NATURAL GAS PROCESSING PLANT Knox plant and related natural gas infrastructure, including natural gas gathering pipelines and natural gas compression 240 million to 470 million 200 MMcf/d natural gas…
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 77% Storage Services Transportation 68% 74% Transportation…
WILLISTON BASIN SERVING NEW ETHANE MARKETS De-ethanization facilities adjacent to Stateline Natural Gas Processing plants ONEOK Partners Stateline natural gas processing plants Gas Residue Gas Approximately 60 million - 80 million…
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 945 million to 965 million 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) 45…
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 85% of contracted…
NORTHERN BORDER PIPELINE 50 PERCENT EQUITY INVESTMENT Links natural gas supply from Williston Basin Bakken Shale western Canada and the Williston 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) 2014 2015G* Recurring cash flows: Distributions received from ONEOK Partners declared 633 694 Interest expense, excluding non cash items (69) (63) Cash income…
OKE NON-GAAP RECONCILIATION CASH FLOW AVAILABLE FOR DIVIDENDS AND FREE CASH FLOW ( in Millions) 2014 2015G* Net income attributable to ONEOK 314 317 Depreciation and amortization 15 3 Deferred income taxes 141 173 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 2014 2015G* Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow Net Income 473 831 888 804 911 935…
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