One Gas, Inc. · NYSE:OGS
One Gas — Jefferies Gas Utilities Mini-Conference (December 2024)
43 slides from One Gas's conference presentation, Dec 11, 2024
Slide 1: Investor Update
Investor Update December 2024
Slide 2: About Us
71% market share, the largest in Kansas About Us ONE Gas, Inc. (NYSE: OGS) is a 100-percent regulated natural gas utility 89% market share, the largest and is one of the largest natural gas utilities in the United States. in Oklahoma ONE Gas provides natural gas distribution services to approximatel
Slide 3: Recent Highlights
Recent Highlights Creating Value for a Better Tomorrow 2025 EPS guidance We estimate On track to replace ~23,000 new meter of $4.20-$4.32 $750 million in over 400 miles of sets on a TTM basis & 2025-29 EPS 2025 capital transmission, main as of November 30, growth of 4-6%* investments and service lin
Slide 4: Our Strategy
Our Strategy G ONE Gas
Slide 5: Serving a Growing Customer Base
Serving a Growing Customer Base Growing Demand for Natural Gas Provides Long-Term Growth Opportunity WSJ Top 25 “Hottest Job Economic growth creates durable residential and Markets” lists 4 cities in ONE commercial development and drives system Gas service territory1 expansion #5 Oklahoma City #7 Au
Slide 6: Enhancing Capacity & Improving Operational Efficiency
Enhancing Capacity & Improving Operational Efficiency Constructing a Foundation for Growth Improved processes and workforce investments increase operating capacity and capabilities Investment in workforce development fosters strong performance and retention Managing expenses helps preserve customer
Slide 7: Financial Outlook
Financial Outlook
Slide 8: 2025 Guidance Summary
2025 Guidance Summary1 Creating long-term value and serving a growing customer base EARNINGS OUTLOOK • Net income for 2025 in a range of $254 - $261 million • EPS range of $4.20 - $4.32 per diluted share • Assumes 60.5 million diluted shares outstanding CAPITAL INVESTMENTS • 2025 capital investments
Slide 9: Financing Requirements
Financing Requirements Maintaining Balance Sheet Strength 2025 dividends and capital investments primarily funded by cash flow from operations of approximately $600-$650 million1 • Expected 2025 short- and long-term financing need of $270-$300 million ~$1.5 billion net long-term financing needs thro
Slide 10: Five-Year Financial Highlights
Five-Year Financial Highlights Investing in a Reliable and Growing System CAPITAL INVESTMENTS & RATE BASE AVERAGE ANNUAL GROWTH RATES • Capital investments of approximately $4.0 billion • Based off 2024 updated guidance midpoint of $3.90 ̶ $2.8 billion investment in system integrity and • Long-term
Slide 11: Long-Term EPS Performance & Outlook
Long-Term EPS Performance & Outlook EPS CAGR 4-6% $5.50 EPS CAGRs $5.22 5-Year Forecast (2024G - 2029*) ~6.0% $5.00 10-Year (2014 - 2024G) 6.5% 10-Year (2015 - 2025G) 6.6% $4.50 15-Year (2014 - 2029*) 6.3% $4.26 $4.08 $4.14 $4.00 $3.85 $3.90 $3.68 $3.51 $3.50 $3.25 $3.08 $3.00 $2.65 $2.50 $2.24 $2.0
Slide 12: Balance Sheet Strength
Balance Sheet Strength Strong credit rating and financing flexibility * REVOLVING CREDIT FACILITY SENIOR DEBT MATURITIES (MILLIONS) • $1.35 billion limit • Expires March 2028 COMMERCIAL PAPER PROGRAM • $1.35 billion limit * Excluding KGSS-I long-term debt associated with Winter Storm Uri of ~$287M a
Slide 13: Capital Investments
Capital Investments G ONE Gas
Slide 14: Well-Defined Capital Investment Plan
Well-Defined Capital Investment Plan Investments ~ 3x Depreciation CAPITAL INVESTMENTS 2025G CAPITAL INVESTMENTS (MILLIONS) BY STATE (MILLIONS) $729 ~$750 ~$750 $26 $31 $26 $658 $32 $172 $179 $178 Kansas $542 $21 $177 $552 $151 $525 $540 $138 Texas $449 $311 $383 $252 $283 Oklahoma $216 $234 $288 $2
Slide 15: Capital Investments
Capital Investments KANSAS OKLAHOMA TEXAS 2024G: 2.0X DEPRECIATION 2024G: 2.9X DEPRECIATION 2024G: 4.2X DEPRECIATION $286 $293 $288 $311 $288 $257 $256 $242 $215 $185 $188 $159 $169 $151 $139 (MILLIONS) $83 $108 $63 $69 $92 $93 $100 $53 $83 $82 $88 $48 $72 $75 $78 2021 2022 2023 2024G 2025G 2021 202
Slide 16: Rate Base
Rate Base AVERAGE RATE BASE* 2025G AVERAGE RATE BASE* (BILLIONS) BY STATE TOTAL: $5.8 BILLION $5.55 $5.80 $5.15 $4.69 $1.38 billion $4.25 $1.85 billion $2.57 billion 2021 2022 2023 2024G 2025G Kansas Oklahoma Texas * See Appendix for definition ~5% growth expected in 2025 CAPITAL INVESTMENTS | 16
Slide 17: Regulatory Update
Regulatory Update G ONE Gas
Slide 18: Recent Regulatory Filings
Recent Regulatory Filings APPROVED RATES EFFECTIVE EQUITY RETURN ON JURISDICTION (MILLIONS) DATE RATIO EQUITY Central-Gulf – Rate Case $19.3 M Dec-2024 59.58% 9.7% Kansas – Rate Case $35.0 M (net) Nov-2024 N/A N/A* Rio Grande Valley – GRIP $3.6 M Sep-2024 59.10% 9.7% COMPLETED Oklahoma – PBRC $31.4
Slide 19: Oklahoma Natural Gas
Oklahoma Natural Gas PBRC approved August Performance-based rate change (PBRC) interim filing for annual rate reviews between full rate cases allows recovery of capital investments and operating expenses 2024 PBRC FILING File PBRC annually in Incremental Revenue $31.4 million annual revenue increase
Slide 20: Kansas Gas Service
Kansas Gas Service Settlement Agreement approved October; rates effective November 2024 RATE CASE FILING $35 million net increase; $70 million total increase ($35 million File GSRS Annually in Incremental Revenue already recovered through GSRS) August, rate case filing as needed. Next rate Return on
Slide 21: Texas Gas Service
Texas Gas Service Settlement Agreement approved November; rates effective December CENTRAL-GULF 2024 RATE CASE FILING Incremental Surcharge Revenue $19.3 million annual revenue approved File GRIP Annually in Capital Expenditures $0 million1 February, rate case Pre-Tax Rate of Return 9.09%2 filing as
Slide 22: Texas Gas Service
Texas Gas Service Rio Grande Valley GRIP approved August; rates effective September Gas Reliability Infrastructure Program (GRIP) allows for recovery of capital investments made between rate cases RIO GRANDE VALLEY 2024 GRIP FILING File GRIP Annually in Incremental Surcharge Revenue $3.6 million ann
Slide 23: Texas Gas Service
Texas Gas Service West-North GRIP approved June; rates effective July Gas Reliability Infrastructure Program (GRIP) allows for recovery of capital investments made between rate cases WEST-NORTH GRIP FILING File GRIP Annually in Incremental Surcharge Revenue $8.5 million annual revenue increase appro
Slide 24: Texas Gas Service
Texas Gas Service Central-Gulf GRIP approved May; rates effective June Gas Reliability Infrastructure Program (GRIP) allows for recovery of capital investments made between rate cases CENTRAL-GULF 2024 GRIP FILING File GRIP Annually in Incremental Surcharge Revenue $12.2 million annual revenue appro
Slide 25: Customer Affordability
Customer Affordability G ONE Gas
Slide 26: 2.6-to-1 Average Advantage in ONE Gas Territories
2.6-to-1 Average Advantage in ONE Gas Territories 3 Natural Gas Price Advantage Over Electricity KWH EQUIVALENT ELECTRICITY VS. NATURAL GAS 14.32¢ 13.62¢ 12.28¢ 2.3x advantage3 2.6x advantage3 2.8x advantage3 6.17¢ 4.70¢ 4.79¢ Texas Oklahoma Kansas ¹ Avg. retail price of electricity/kWh ² ONE Gas de
Slide 27: Average Annual Residential Customer Bill
Average Annual Residential Customer Bill AVERAGE MONTHLY Cash Flow Stability RESIDENTIAL CUSTOMER BILL • ~92% of customers are residential $81 • ~70% of revenue less the cost of gas is fixed $73* $71* charges $67* $60 $58 $55 $54 $43 $25 $50 $51 $50 $33 $25 $46 Gas Prices Remain Stable into 2025 $32
Slide 28: Clean Energy Solutions
— 4 —_, Solutions/ G ONE Gas | a | |
Slide 29: Reducing Emissions
Reducing Emissions Operating in an environmentally responsible manner Emissions Reduction Goal By 2035, we expect to achieve a 55% reduction in Scope 1 emissions due to leaks from mains and services, measured from a 2005 baseline and accounting for projected system growth. As of December 31, 2023, w
Slide 30: Emissions Reduction Strategy
Emissions Reduction Strategy Aligned with overall strategy Tightening our system • Pipeline replacement and protection replaces higher emitting pipe with lower-emitting pipe • Advanced leak detection reduces time leaks are active Reducing customer gas usage • Expansion of energy efficiency programs
Slide 31: ESG Ratings & Company Recognition
ESG Ratings & Company Recognition Robust Disclosures RATING ORGANIZATION 2024 2023 2022 • Full alignment with SASB • Following TCFD recommendations MSCI AAA AA AA • Disclosure of Scope 1 and 2 emissions Sustainalytics 25.8 28.6 30.9 Additional governance documents and reports ISS Corporate Rating C+
Slide 32: Appendix
Appendix G ONE Gas
Slide 33: Sustainable Business Model
Sustainable Business Model Focused Business Capital Regulatory Cash Flow Strategy Investments Construct Stability ▪ 100% regulated natural ▪ 20+ year vintage ▪ 3 states, multiple ▪ ~ 70% of fixed charges gas distribution utility pipeline replacement jurisdictions for recovery of revenue ▪ Conservati
Slide 34: Sustainable Business Model
Sustainable Business Model Customer Safe & Reliable Clean Energy Affordability Energy Solutions ▪ Customer growth helps ▪ Industry-leading ▪ Committed moderate per-customer performance in to sustainability costs employee safety ▪ Energy efficiency and ▪ Leveraging technology ▪ Demonstrated system ed
Slide 35: Corporate Structure and State Figures
Corporate Structure and State Figures INCORPORATED ENTITY 100% regulated natural gas distribution No levered holding company; all debt issued by ONE Gas, Inc. 1 Division capital structures match Corporate capital structure KEY FIGURES 2: Average Number of Customers 648,000 918,000 699,000 Distributi
Slide 36: Authorized Rate Base
Authorized Rate Base As of November 30, 2024 KANSAS* OKLAHOMA TEXAS $2,273 $2,067 $1,854 (MILLIONS) $1,616 $1,726 $1,528 $1,720 $1,330 $1,412 $1,133 $1,197 $1,261 $1,239 $1,336 $1,047 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 2020 2021 2022 2023 2024 * Kansas Gas Service’s most recent comple
Slide 37: Rate Base Definition
Rate Base Definition Authorized Rate Base $5.4 billion (as of Nov. 30, 2024) • Includes capital investments authorized in most recent rate cases and interim filings • Excludes any capital investments since last approved rate cases or filings 2025 Estimated Average Rate Base $5.8 billion • Average of
Slide 38: Comprehensive Regulatory Mechanisms
Comprehensive Regulatory Mechanisms KEY MECHANISMS: KANSAS OKLAHOMA TEXAS Central-Gulf as needed West-North Dec. 2028 General Rate Case Filing Deadline 2030 June 2027 Rio Grande Feb. 2030 Valley Interim capital recovery GSRS PBRC GRIP Weather normalization ✓ ✓ ✓ Purchased gas riders (including gas c
Slide 39: Regulatory Construct
Regulatory Construct Governance KANSAS OKLAHOMA TEXAS “Home Rule” with three jurisdictions; Texas Kansas Corporation Commission Oklahoma Corporation Commission Railroad Commission has appellate authority Appointed by the governor to four-year staggered Railroad Commission elected to six-year Elected
Slide 40: ESG Highlights
ESG Highlights Environmental Vintage Pipe Renewable Natural Innovation & End-Use Conservation Replacement Gas Technology • Reduce emissions through • Provide CNG fueling • Expand energy • Facilitate customer access to • Engage and evaluate new Strategy vintage pipeline replacement for fleet and tran
Slide 41: ESG Highlights
ESG Highlights Social & Governance Community Governance Employee Engagement Customer Care Investment Practices • Support employees through physical, • Improve customer experience through • ONE Gas Foundation and • Maintain best practices in social emotional and financial programs innovation and tech
Slide 42: Non-GAAP Reconciliation
Non-GAAP Reconciliation Cash Flow From Operations Before Changes in Working Capital (MILLIONS) 2025 GUIDANCE* Net income $ 257 Depreciation and amortization 298 Deferred taxes 50 Other 23 Cash flow from operations before changes in working capital $ 628 * Amounts shown are estimated midpoints as con
Slide 43: Investor Information
Investor Information Contact Information and Forward-looking Statements Statements contained in this presentation that include or refer to Company expectations, our business outlook, our future plans or predictions relating to any matters should be considered forward-looking statements that are cove
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