Oneok, Inc. · NYSE:OKE

Oneok — Investor Presentation (November 2017)

53 slides from Oneok's investor presentation, November 2017

  1. Slide 1: Investor Update November 2017

    I N V E S TO R U P D AT E November 2017

  2. Slide 2: Forward-Looking Statements

    FO RWARD -LO O KING 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 imp

  3. Slide 3: Index

    INDE X ONEOK OVERVIEW 4 GUIDANCE 12 APPENDIX 19 • STACK and SCOOP 21 • Permian Basin 27 • Williston Basin 32 • Powder River Basin 37 • Natural Gas Liquids 39 • Natural Gas Gathering and Processing 41 • Natural Gas Pipelines 45 NON-GAAP RECONCILIATIONS 47 Mont Belvieu I fractionator — Gulf Coast

  4. Slide 4: ONEOK Overview

    O NEO K O VERVIEW Garden Creek plant — North Dakota

  5. Slide 5: Key Investment Considerations

    KEY INVESTMENT CO NSIDERATIO NS A PREMIER ENERGY COMPANY Sources of Earnings STRATEGIC, INTEGRATED ASSETS ($ in billions) • One of the largest energy midstream service providers in the U.S. $2.8 B • Well-positioned in NGL-rich plays and major market areas $2.6 B ~5% • Significant growth potential –

  6. Slide 6: Integrated. Reliable. Diversified.

    INTEG RATED. 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

  7. Slide 7: Natural Gas Liquids

    NATURAL G AS LIQ UIDS PREDOMINANTLY FEE BASED Sources of Earnings ($ in billions) $1.5 B ◆ Exchange Services – Primarily fee based $1.4 B  Gather, fractionate and transport raw NGL feed to storage and $1.3 B market hubs $1.1 B ◆ Transportation & Storage Services – Fee based  Transport NGL products

  8. Slide 8: Natural Gas Gathering and Processing

    NATURAL G AS G ATHERING AND PRO CESSING PREDOMINANTLY FEE BASED ◆ Achieved 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 customers  Expect f

  9. Slide 9: Natural Gas Pipelines

    NATURAL G AS 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% ~ 3% 8% pipeline expansion enhance export capability to Mexico  Completed in 2016

  10. Slide 10: Announced Growth Projects

    ANNO UNCED G RO WTH PRO JECTS SINCE JUNE 2017 CapEx Expected Project Scope ($ in millions) Completion • Additional 200 MMcf/d processing capacity through long- Additional STACK processing term processing services agreement with third party $40 Q4 2017 capacity • 30-mile natural gas gathering pipelin

  11. Slide 11: Projects Under Development

    PRO JECTS UNDER DEVELO PMENT ORGANIC GROWTH – PRIMARILY FEE-BASED ◆ Across multiple supply basins and major market areas ◆ Target adjusted EBITDA multiples of five to seven times ◆ $2.5 billion - $3.5 billion inventory of capital-growth projects under development:  NGL pipelines, fractionation and

  12. Slide 12: Guidance

    G UIDANCE Mont Belvieu II fractionator — Gulf Coast

  13. Slide 13: 2017 Financial Guidance Summary

    2017 FINANCIAL G UIDANCE SUMMARY UPDATED AUG. 1, 2017 Dividends Paid Per Share Per Year ◆ Adjusted EBITDA: $1,885 million – $2,055 million 19% CAGR since 2013 ◆ Distributable cash flow: $1,275 million – $1,435 million  Target dividend coverage ratio of ≥1.2 times $2.98 $2.13 $2.43 $2.46 ◆ Net incom

  14. Slide 14: Natural Gas Liquids Volume Update

    NATURAL G AS LIQ UIDS VOLUME UPDATE G a t h e r e d Vo l u m e ( M B b l / d ) ◆ 2017 processing plant connections:  Six completed in 2017: ◇ Three in the first quarter: Mid-Continent region (1), Permian Basin (1), Rocky Mountain region (1) ◇ Two in the second quarter: Mid-Continent region 800-850

  15. Slide 15: Ethane Recovery by Basin

    ETHANE RECO VERY BY BASIN INCREMENTAL ETHANE DEMAND ◆ ONEOK’s NGL infrastructure connects supply to Gulf Coast region  Incremental ethane transported and fractionated volume potential of 175,000 – 200,000 bpd  Potential annual earnings uplift from full ethane recovery estimated to Williston Basin/

  16. Slide 16: Natural Gas Gathering and Processing

    NATURAL G AS G ATHERING AND PRO CESSING 2017 VOLUME EXPECTATIONS G a t h e r e d Vo l u m e s ( M M c f / d ) 1,561 1,575 – 1,680 Williston Basin 1,404 1,524 130 well connects completed in the third quarter 2017; 313 through the 781 775-850 ◆ 862 917 first nine months of 2017  Approximately 400 exp

  17. Slide 17: Natural Gas Pipelines

    NATURAL G AS 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 2017, and:  Approximately 93 percent of transportation capacity contracted  More than 60 percent of natural ga

  18. Slide 18: Strong Balance Sheet

    STRO NG BALANCE SHEET COMMITTED TO INVESTMENT-GRADE CREDIT RATING ◆ Leverage target ◆ Credit ratings:  GAAP debt-to-EBITDA ratio < 4.0x  S&P: BBB (stable) ◆ Committed to taking necessary steps to maintain investment-  Moody’s: Baa3 (stable) grade credit ratings ◆ $2.5 billion revolving credit fac

  19. Slide 19: Appendix

    APPENDIX WesTex Pipeline — Permian Basin

  20. Slide 20: ONEOK Growth: 2006-2016

    O NEO K G RO WTH: 2006 -2016 $9 BILLION INVESTED IN INFRASTRUCTURE 1. Bakken/Williston Basin 1 2. Niobrara/Powder River Basin • 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

  21. Slide 21: STACK and SCOOP

    STACK AND SCO O P Mustang Pipeline — Oklahoma

  22. Slide 22: STACK and SCOOP Production

    STACK AND SCO O P PRO DUCTIO N 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 Averag

  23. Slide 23: STACK and SCOOP Plays

    STACK AND SCO O P PLAYS* RELIABLE FULL-SERVICE PROVIDER Natural Gas Liquids ◆ Approximately 100 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 en

  24. Slide 24: STACK and SCOOP Plays

    STACK AND SCO O P PLAYS FULL-SERVICE CAPABILITY Natural Gas Liquids ◆ Currently gathering approximately 150,000 – 200,000 bpd of NGLs ◆ More than 110 existing natural gas processing plant connections in the Mid-Continent  Three new processing plant connections in 2017 ◆ Expect an incremental 100,00

  25. Slide 25: STACK and SCOOP Plays

    STACK AND SCO O P 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 pr

  26. Slide 26: STACK and SCOOP Plays

    STACK AND SCO O P 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 Tran

  27. Slide 27: Permian Basin

    PERMIAN BASIN Roadrunner Pipeline — Permian Basin

  28. Slide 28: Permian Basin

    PERMIAN BASIN RELIABLE SERVICE PROVIDER Natural Gas Liquids ◆ Nearly 40 third-party natural gas processing plant connections in the Permian Basin  Two new plant connections completed in 2017 ◆ West Texas LPG pipeline system expandable through additional pump stations and pipeline looping  Current

  29. Slide 29: Permian Basin

    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

  30. Slide 30: West Texas LPG Expansion

    WEST TEXAS LPG EXPANSIO N 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 product

  31. Slide 31: Permian Basin

    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

  32. Slide 32: Williston Basin

    WILLISTO N BASIN Bakken NGL Pipeline — North Dakota

  33. Slide 33: Increasing Gas-to-Oil Ratios

    WILLISTO N BASIN INCREASING GAS-TO-OIL RATIOS (GOR) ◆ 55 percent of North Dakota rigs are on ONEOK’s dedicated acreage ◆ North Dakota continues to report record levels of natural gas production:  August 2017: 1.9 Bcf/d  August 2016: 1.6 Bcf/d 2,000 Oil Bbld / Gas Mcfd (in thousands) 1,500 1.79 GOR

  34. Slide 34: Williston Basin

    WILLISTO N BASIN PROVIDING VALUABLE TAKEAWAY CAPACITY Natural Gas Liquids ◆ Four third-party natural gas processing plant connections in the Williston Basin ◆ Highest margin NGL barrel with average bundled fee rates of approximately 30 cents per gallon ◆ Approximately 35,000 bpd incremental ethane o

  35. Slide 35: Williston Basin

    WILLISTO N 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 ◆ Nearly 1 Bcf/d of natural gas processing capacity  Approximately 125 MMcf/d available ◆ Increased producer dril

  36. Slide 36: Increased Natural Gas Capture Results

    WILLISTO N BASIN INCREASED NATURAL GAS CAPTURE RESULTS ◆ Increased NGL and natural gas value uplift ◆ Approximately 83% of North Dakota’s natural gas production was captured in September 2017 ◆ North Dakota Industrial Commission (NDIC) policy targets:  Increase natural gas capture to: 85% by Nov. 2

  37. Slide 37: Powder River Basin

    PO WDER RIVER BASIN Lonesome Creek plant — North Dakota

  38. Slide 38: Powder River Basin

    PO WDER 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 ◆ Two third-party natural gas processing plant connections  One connected in first q

  39. Slide 39: Natural Gas Liquids

    NATURAL G AS LIQ UIDS Mont Belvieu II fractionator — Gulf Coast

  40. Slide 40: One of the Largest Integrated NGL Service Providers

    NATURAL G AS LIQ UIDS 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 i

  41. Slide 41: Natural Gas Gathering and Processing

    NATURAL GAS G ATHERING AND PRO CESSING Garden Creek plant — North Dakota

  42. Slide 42: Serving Producers in Key Basins

    NATURAL G AS G ATHERING AND PRO CESSING 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

  43. Slide 43: Volumes Hedged as of Sept. 30, 2017

    NATURAL G AS G ATHERING AND PRO CESSING VOLUMES HEDGED AS OF SEPT. 30, 2017 Three Months Ending December 31, 2017 Commodity Volumes Hedged Average Price Percent Hedged Natural Gas* (BBtu/d) 72.9 $2.63 / MMBtu 89% Condensate (MBbl/d) 1.8 $44.88 / Bbl 66% Natural Gas Liquids** (MBbl/d) 8.0 $0.51 / gal

  44. Slide 44: Commodity Price Sensitivities After Hedging

    NATURAL G AS G ATHERING AND PRO CESSING COMMODITY PRICE SENSITIVITIES AFTER HEDGING* Earnings Impact* Earnings Impact* Earnings Impact* ($ in Millions) ($ in Millions) ($ in Millions) Commodity Sensitivity 2017** 2018*** 2019*** Natural Gas $0.10 / MMBtu $0.1 $0.5 $2.8 Natural Gas Liquids $0.01 / ga

  45. Slide 45: Natural Gas Pipelines

    NATURAL G AS PIPELINES WesTex Pipeline — Permian Basin

  46. Slide 46: Connectivity to Key Markets

    NATURAL G AS PIPELINES CONNECTIVITY TO KEY MARKETS ◆ Predominantly fee-based income ◆ 93% of transportation capacity contracted under firm demand- based rates expected in 2017 ◆ 82% of contracted system transportation capacity serves end- use markets in 2016  Connected directly to end-use markets ◇

  47. Slide 47: 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

  48. Slide 48: Non-GAAP Reconciliations

    NO N -G AAP RECO NCILIATIO NS 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

  49. Slide 49: Net Income to Adjusted EBITDA

    NO N -G AAP RECO NCILIATIO N NET INCOME TO ADJUSTED EBITDA ($ in Millions) 2013 2014 2015 2016 Reconciliation of Income from Continuing Operations to Adjusted EBITDA Net income from continuing operations $589 $669 $385 $746 Interest expense, net of capitalized interest 271 356 417 470 Depreciation a

  50. Slide 50: Non-GAAP Reconciliation

    NO N -G AAP RECO NCILIATIO N 2015 2016 2017 ($ in Millions) Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Reconciliation of Net Income to Adjusted EBITDA Net income from continuing operations $96 $151 $165 ($27) $385 $176 $180 $195 $195 $746 $186 $176 $167 Interest expense 97 102 107 111 417 118 119 118 11

  51. Slide 51: Net Income to Adjusted EBITDA and DCF

    NO N -G AAP RECO NCILIATIO N NET INCOME TO ADJUSTED EBITDA AND DCF Original 2017 Updated 2017 Guidance Range* Guidance Range** (Millions of dollars) Reconciliation of Income from Continuing Operations to Adjusted EBITDA and Distributable Cash Flow Net income from continuing operations $ 575 - $ 755

  52. Slide 52: Segment Adjusted EBITDA to Adjusted EBITDA

    NO N -G AAP RECO NCILIATIO N SEGMENT ADJUSTED EBITDA TO ADJUSTED EBITDA Original 2017 Updated 2017 Guidance Range* Guidance Range** (Millions of dollars) Reconciliation of segment adjusted EBITDA to adjusted EBITDA Segment adjusted EBITDA: Natural Gas Liquids $ 1,110 - $ 1,310 $ 1,135 - $ 1,235 Natu

  53. Slide 53: Bear Creek plant — Williston Basin

    Bear Creek plant — Williston Basin

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