Slide 1: Investor Update March 2018
ONEOK INVESTOR UPDATE MARCH 2018
Slide 2: Forward-Looking Statements
FORWARD -LOOKING STATEMENTS Statements contained in this presentation that include company expectations or predictions should be considered forward-looking statements that are covered by the safe harbor protections provided under federal securities legislation and other applicable laws. It is import
Slide 3: Index
INDEX FUTURE GROWTH 4 OVERVIEW 12 GUIDANCE 19 APPENDIX 25 • STACK and SCOOP 27 • Permian Basin 33 • Williston Basin 37 • Powder River Basin 42 • Business Segments 44 NON-GAAP RECONCILIATIONS 50 Mont Belvieu II fractionator – Gulf Coast
Slide 4: Future Growth
FUTURE GROWTH Bakken NGL Pipeline — North Dakota
Slide 5: Producer-Driven Need for More Infrastructure
PRODUCER -DRIVEN NEED FOR MORE INFRASTRUCTURE CAPACITY EXPANSIONS CRITICAL TO MEETING GROWING PRODUCTION Permian NGL Production Growth(Mb/d) STACK/SCOOP 2,000 NGL Production Growth (Mb/d) 1,000 1,600 800 1,200 600 800 ◆ Volume forecasts across the basins 400 where we operate show significant 400 200
Slide 6: Natural Gas Liquids Growth Projects
NATURAL GAS LIQUIDS GROWTH PROJECTS $3.6 BILLION ANNOUNCED SINCE JUNE 2017 CapEx Expected Project Scope ($ in millions) Completion • 120-mile pipeline lateral extension with capacity of 110,000 bpd in the Delaware Basin West Texas LPG Pipeline • Supported by long-term dedicated NGL production from t
Slide 7: Gathering and Processing Growth Projects
GATHERING AND PROCESSING GROWTH PROJECTS $600 MILLION ANNOUNCED SINCE JUNE 2017 CapEx Expected Project Scope ($ in millions) Completion Additional STACK • 200 MMcf/d processing capacity through long-term processing services agreement with third party $40 In Service processing capacity • 30-mile natu
Slide 8: Demicks Lake Plant
DEMICKS LAKE PLANT PROCESSING CAPACITY TO SUPPORT PRODUCER GROWTH AND HELP MEET GAS CAPTURE TARGETS ◆ Williston Basin growth continues with enhanced well-completion techniques driving increased production and lower breakeven economics One-third of the rigs needed today to develop the same volume p
Slide 9: Elk Creek Pipeline Project
ELK CREEK PIPELINE PROJECT COMPELLING STRATEGIC RATIONALE ◆ Existing Bakken NGL Pipeline and Overland Pass Pipeline operating at full capacity ◆ Growing production in the region drives need for increased NGL takeaway Producer drilling and completion improvements driving break-evens lower Increas
Slide 10: Arbuckle II Pipeline and MB-4 Fractionator
ARBUCKLE II PIPELINE AND MB -4 FRACTIONATOR CRITICAL INFRASTRUCTURE TO SERVE GROWING PRODUCTION ◆ Volume growth expected across ONEOK footprint, particularly in STACK and SCOOP areas and Williston Basin, creating a need for additional capacity ◆ Pipeline and fractionator projects serving producer ne
Slide 11: West Texas LPG Expansion
WEST TEXAS LPG EXPANSION EXTENDING REACH INTO PROLIFIC DELAWARE BASIN ◆ Approximately 120-mile, 16-inch pipeline extension with initial capacity of 110,000 bpd Supported by long-term dedicated NGL production from two planned third-party natural gas processing plants ◇ Up to 40,000 bpd NGL producti
Slide 12: Overview
OVERVIEW Mont Belvieu II fractionator — Gulf Coast
Slide 13: Key Investment Considerations
KEY INVESTMENT CONSIDERATIONS A PREMIER ENERGY COMPANY Adjusted EBITDA Growth ($ in billions) $2.3 $2.0 $1.8 STRATEGIC, INTEGRATED ASSETS $1.6 $1.6 • One of the largest energy midstream service providers in the U.S. $1.2 • Well-positioned in NGL-rich plays and major market areas • Significant growth
Slide 14: Integrated. Reliable. Diversified.
INTEGRATED. RELIABLE. DIVERSIFIED. ◆ Approximately 38,000-mile network of natural gas liquids and natural gas pipelines ◆ Provides midstream services to producers, processors and customers ◆ Significant basin diversification ◆ Growth expected to be driven by: Industry fundamentals from increased p
Slide 15: Natural Gas Liquids
NATURAL GAS LIQUIDS PREDOMINANTLY FEE BASED Sources of Earnings ◆ Exchange Services – Primarily fee based Gather, fractionate and transport raw NGL feed to storage and market hubs ◆ Transportation & Storage Services – Fee based Transport NGL products to market centers and provide storage service
Slide 16: Natural Gas Gathering and Processing
NATURAL GAS GATHERING AND PROCESSING PREDOMINANTLY FEE BASED ◆ Increased fee-based contract mix by restructuring percent-of-proceeds (POP) contracts with a fee component to include a higher fee rate Increasing fee-based earnings while providing enhanced services to producers Expect fee rate to a
Slide 17: Natural Gas Pipelines
NATURAL GAS PIPELINES PREDOMINANTLY FEE BASED ◆ Firm demand-based contracts serving primarily investment- Sources of Earnings grade utility customers ◆ Roadrunner Gas Transmission pipeline project and WesTex 4% 2% 4% 4% <5% 8% pipeline expansion enhance export capability to Mexico Completed in 201
Slide 18: Strong Balance Sheet
STRONG BALANCE SHEET POSITIONING ONEOK FOR CONTINUED GROWTH ◆ Funding highly accretive growth while maintaining de- Adjusted EBITDA Growth ($ in billions) leveraging target of < 4.0x $2.3 $2.5 billion revolving credit facility $2.0 $1.8 January 2018 equity offering: $1.6 $1.6 ◇ $1.2 billion in g
Slide 19: Guidance
GUIDANCE Canadian Valley plant - Oklahoma
Slide 20: 2018 Financial Guidance Summary
2018 FINANCIAL GUIDANCE SUMMARY D ivid en d s Paid Per Sh are Per Year ◆ Adjusted EBITDA: $2,215 million – $2,415 million $3.25 - $3.31 ◆ Distributable cash flow: $1,615 million – $1,815 million $2.43 $2.46 $2.72 $2.13 Target dividend coverage ratio of ≥1.2 times ◆ Net income: $955 million – $1,15
Slide 21: Natural Gas Liquids Volume Update
NATURAL GAS LIQUIDS VOLUME UPDATE ◆ 2018 volume growth expected to be driven primarily by increased G a t h e r e d Vo l u m e ( M B b l / d ) producer activity in the STACK and SCOOP areas and increased ethane recovery in the Mid-Continent 850–1,000 ◆ Ethane rejection on ONEOK’s system expected to
Slide 22: Ethane Recovery by Basin
ETHANE RECOVERY BY BASIN INCREMENTAL ETHANE DEMAND ◆ ONEOK’s NGL infrastructure connects supply to the Gulf Coast market Incremental ethane transported and fractionated volume potential of 175,000 – 200,000 bpd Approximately $100 million of incremental adjusted EBITDA expected Williston Basin/ d
Slide 23: Natural Gas Gathering and Processing Volume Update
NATURAL GAS GATHERING AND PROCESSING VOLUME UPDATE G a t h e r e d Vo l u m e s ( M M c f / d ) Williston Basin 1,840 – 2,050 ◆ 117 well connects completed in the fourth quarter 2017; 430 for the full year 2017 1,524 1,561 1,680 ◆ Approximately 25 rigs on ONEOK’s dedicated acreage 965-1,075 781 839
Slide 24: Natural Gas Pipelines
NATURAL GAS PIPELINES WELL-POSITIONED AND MARKET-CONNECTED N a t u r a l G a s Tr a n s p o r t a t i o n Capacity Contracted (MDth/d) ◆ Expect more than 95 percent fee-based earnings in 2018, and: Approximately 95 percent of transportation capacity contracted Approximately 65 percent of natural
Slide 25: Appendix
APPENDIX Mont Belvieu II fractionator — Gulf Coast
Slide 26: ONEOK Growth: 2006-2016
ONEOK GROWTH: 2006 -2016 $9 BILLION INVESTED IN INFRASTRUCTURE 1. Bakken/Williston Basin 2. Niobrara/Powder River Basin 1 • Plants: Garden Creek I, II and III; Grasslands Plant • Niobrara NGL Lateral Expansion; Stateline I and II; Lonesome Creek; and • OPPL Expansion Bear Creek • Sage Creek and NGL
Slide 27: STACK and SCOOP
STACK AND SCOOP Mustang Pipeline — Oklahoma
Slide 28: STACK and SCOOP Production
STACK AND SCOOP PRODUCTION ONEOK ASSETS: WELL POSITIONED IN HIGH ACTIVITY AREAS ◆ Higher levels of proppant injection may be a leading indicator for ◆ Producers continue to expand their areas of focus based on production activity production results Average Proppant Injection Levels 30-Day Average Oi
Slide 29: STACK and SCOOP Plays: Reliable Full-Service Provider
STACK AND SCOOP PLAYS RELIABLE FULL-SERVICE PROVIDER Natural Gas Liquids ◆ Approximately 110 third-party natural gas processing plant connections in Mid-Continent ◆ Approximately 140,000 bpd incremental ethane opportunity out of the Mid-Continent ◆ Incremental 100,000 bpd of expected supply by end o
Slide 30: STACK and SCOOP Plays: Full-Service Capability
STACK AND SCOOP PLAYS FULL-SERVICE CAPABILITY Natural Gas Liquids ◆ Currently gathering approximately 200,000 – 250,000 bpd of NGLs ◆ More than 110 existing natural gas processing plant connections in the Mid-Continent ◆ Recently announced growth projects to accommodate accelerated producer investme
Slide 31: STACK and SCOOP Plays: Gathering and Processing Assets
STACK AND SCOOP PLAYS WELL-POSITIONED GATHERING AND PROCESSING ASSETS Natural Gas Gathering and Processing ◆ More than 300,000 acres dedicated in the STACK and SCOOP ◆ Producer results continue to improve through enhanced well completions and rig efficiencies ◆ Integrated network of natural gas proc
Slide 32: STACK and SCOOP Plays: Providing Connectivity
STACK AND SCOOP PLAYS PROVIDING CONNECTIVITY Natural Gas Pipelines ◆ Connected to 34 natural gas processing plants in Oklahoma with a total capacity of 1.8 Bcf/d ◆ Access to on-system utility and industrial markets with peak demand of approximately 2.4 Bcf/d ◆ Westbound expansion of ONEOK Gas Transm
Slide 33: Permian Basin
PERMIAN BASIN Roadrunner Pipeline — Permian Basin
Slide 34: Permian Basin: Reliable Service Provider
PERMIAN BASIN RELIABLE SERVICE PROVIDER Natural Gas Liquids ◆ Approximately 40 third-party natural gas processing plant connections in the Permian Basin ◆ West Texas LPG pipeline system expandable through additional pump stations and pipeline looping Current capacity: 285,000 bpd* Recently annou
Slide 35: Permian Basin: Full-Service Capability
PERMIAN BASIN FULL-SERVICE CAPABILITY Natural Gas Liquids ◆ Extensive network of natural gas liquids pipelines connecting supply to Gulf Coast and Conway, Kansas, market centers ◆ Ability to offer transportation and fractionation services to new customers in the basin Natural Gas Liquids Third-party
Slide 36: Permian Basin: Providing Connectivity
PERMIAN BASIN PROVIDING CONNECTIVITY Natural Gas Pipelines ◆ Connected to more than 25 natural gas processing plants serving the Permian Basin with a total capacity of 1.9 Bcf/d ◆ Well-positioned in the Delaware Basin with a significant position in the Midland Basin ◆ 2,500-mile network of natural g
Slide 37: Williston Basin
WILLISTON BASIN Garden Creek plant — North Dakota
Slide 38: Williston Basin: Increasing Gas-to-Oil Ratios
WILLISTON BASIN INCREASING GAS-TO-OIL RATIOS (GOR) DRIVING VOLUME GROWTH ◆ Producer efficiencies across the basin leading to increasing ◆ North Dakota reported record levels of natural gas production production with fewer rigs in 2017: December 2017: 2.1 Bcf/d December 2016: 1.5 Bcf/d 2,500 2,00
Slide 39: Williston Basin: Providing Valuable Takeaway Capacity
WILLISTON BASIN PROVIDING VALUABLE TAKEAWAY CAPACITY Natural Gas Liquids ◆ Elk Creek Pipeline will add 240,000 bpd of NGL takeaway capacity by year-end 2019 Expandable to 400,000 bpd ◆ Four third-party natural gas processing plant connections ◆ Highest margin NGL barrel with average bundled fee ra
Slide 40: Williston Basin: Competitively Advantaged Asset Footprint
WILLISTON BASIN COMPETITIVELY ADVANTAGED ASSET FOOTPRINT Natural Gas Gathering and Processing ◆ More than 3 million acres dedicated to ONEOK Approximately 1 million acres in the core ◆ More than 1 Bcf/d of natural gas processing capacity ONEOK’s Demicks Lake plant will increase capacity to more
Slide 41: Williston Basin: Increased Natural Gas Capture Results
WILLISTON BASIN INCREASED NATURAL GAS CAPTURE RESULTS ◆ Increased NGL and natural gas value uplift ◆ Approximately 87% of North Dakota’s natural gas production was captured in December 2017 ◆ North Dakota Industrial Commission (NDIC) policy targets: Natural gas capture: currently 85%, increasing t
Slide 42: Powder River Basin
POWDER RIVER BASIN Lonesome Creek plant — North Dakota
Slide 43: Powder River Basin: Providing Valuable Takeaway Capacity
POWDER RIVER BASIN PROVIDING VALUABLE TAKEAWAY CAPACITY Natural Gas Liquids ◆ Assets located in NGL-rich Niobrara, Sussex and Turner formations ◆ NGL takeaway through Bakken NGL Pipeline and Overland Pass Pipeline Elk Creek Pipeline will provide additional capacity once complete ◆ Two third-party
Slide 44: Business Segments
BUSINESS SEGMENTS Mont Belvieu II fractionator — Gulf Coast
Slide 45: Natural Gas Liquids: Largest Integrated NGL Service Providers
NATURAL GAS LIQUIDS ONE OF THE LARGEST INTEGRATED NGL SERVICE PROVIDERS ◆ Provides fee-based services to natural gas processors and customers Gathering, fractionation, transportation, marketing and storage ◆ Extensive NGL gathering system Connected to nearly 200 natural gas processing plants in
Slide 46: Natural Gas Gathering and Processing: Serving Producers
NATURAL GAS GATHERING AND PROCESSING SERVING PRODUCERS IN KEY BASINS ◆ Provides gathering, compression, treating and processing services to producers ◆ Diverse contract portfolio More than 2,000 contracts Percent of proceeds (POP) with fees ◇ Restructured significant POP with fee contracts to in
Slide 47: Natural Gas Gathering and Processing Hedges
NATURAL GAS GATHERING AND PROCESSING Year Ending December 31, 2018 Commodity Volumes Hedged Average Price Percent Hedged Natural Gas* (BBtu/d) 67.2 $2.79 / MMBtu 83% Condensate (MBbl/d) 2.4 $52.65 / Bbl 77% Natural Gas Liquids** (MBbl/d) 8.1 $0.66 / gallon 79% Year Ending December 31, 2019 Commodity
Slide 48: Commodity Price Sensitivities After Hedging
NATURAL GAS GATHERING AND PROCESSING COMMODITY PRICE SENSITIVITIES AFTER HEDGING* Earnings Impact Earnings Impact ($ in Millions) ($ in Millions) Commodity Sensitivity 2018** 2019** Natural Gas $0.10 / MMBtu $0.5 $2.8 Natural Gas Liquids $0.01 / gallon $1.9 $2.9 Crude Oil $1.00 / barrel $0.5 $0.6 *A
Slide 49: Natural Gas Pipelines: Connectivity to Key Markets
NATURAL GAS PIPELINES CONNECTIVITY TO KEY MARKETS ◆ Predominantly fee-based income ◆ 94% of transportation capacity contracted under firm demand- based rates in 2017 ◆ 83% of contracted system transportation capacity served end- use markets in 2017 Connected directly to end-use markets ◇ Local nat
Slide 50: Non-GAAP Reconciliations
NON-GAAP R E C O N C I L I AT I O N S Mont Belvieu II fractionator — Gulf Coast
Slide 51: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS ONEOK has disclosed in this presentation adjusted EBITDA, distributable cash flow (DCF) and dividend coverage ratio, which are non-GAAP financial metrics, used to measure ONEOK’s financial performance, and are defined as follows: Adjusted EBITDA is defined as net income from
Slide 52: Net Income to Adjusted EBITDA
NON-GAAP RECONCILIATION NET INCOME TO ADJUSTED EBITDA ($ in Millions) 2013 2014 2015 2016 2017 Reconciliation of Income from Continuing Operations to Adjusted EBITDA Income from continuing operations $589 $669 $385 $746 $594 Interest expense, net of capitalized interest 271 356 417 470 486 Depreciat
Slide 53: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION 2016 2017 ($ in Millions) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Reconciliation of Income from Continuing Operations to Adjusted EBITDA Income from continuing operations $176 $180 $195 $195 $746 $186 $176 $167 $65$594 Interest expense, net of capitalized interest 118 119 118 115 470 1
Slide 54: Net Income to Adjusted EBITDA and DCF
NON-GAAP RECONCILIATION NET INCOME TO ADJUSTED EBITDA AND DCF 2018 Guidance Range (Millions of dollars) Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow Net Income $ 955 - $ 1,155 Interest expense, net of capitalized interest 495 - 455 Depreciation and amortization 425 - 4
Slide 55: Segment Adjusted EBITDA to Adjusted EBITDA
NON-GAAP RECONCILIATION SEGMENT ADJUSTED EBITDA TO ADJUSTED EBITDA 2018 Guidance Range (Millions of dollars) Reconciliation of segment adjusted EBITDA to adjusted EBITDA Segment adjusted EBITDA: Natural Gas Liquids $ 1,300 - $ 1,430 Natural Gas Gathering and Processing 575 - 625 Natural Gas Pipeline
Slide 56: Bear Creek plant — Williston Basin
Bear Creek plant — Williston Basin