Oge Energy Corp · NYSE:OGE
Oge Energy — Edison Electric Institute Financial Conference 2012
28 slides from Oge Energy's conference presentation, Nov 9, 2012
Slide 1: Edison Electric Institute Financial Conference, November 11-14, 2012
November 11-14, 2012 Edison Electric Institute Financial Conference
Slide 2: Safe Harbor
® Safe Harbor 2 Some of the matters discussed in this presentation may contain forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate", "believe", "estimate",
Slide 3: OGE has a clear, conservative and achievable set of financial objectives
OGE has a clear, conservative and achievable set of financial objectives centered around investment grade credit ratings, 5-7% long-term EPS growth and conservative, yet steady, dividend growth 3 • Well positioned regulated utility with significant growth opportunities in transmission • Economic con
Slide 4: Focus for OG&E
Focus for • Execute on the $700 million of transmission spend over the next 3 years • Developing compliance strategy for environmental regulations specifically, Regional Haze and MATS • Continue to develop energy management solutions to OG&E’s customers through the Smart Grid program • Manage spendi
Slide 5: OG&E's committed transmission capex is spread over many projects
OG&E’s committed transmission capex is spread over many projects 5 5 ` Project 2012 2013 2014 Total Miles Allocation to OG&E Retail Customers Projected In-Service Date Sunnyside to Hugo 25 - - 25 124 ~25% Completed Sooner to Rose Hill 5 - - 5 44 ~25% Completed 3E - Sooner to Cleveland 35 - - 35 39 ~
Slide 6: OG&E 345kV transmission projects map
Woodward (OG&E) Hitchland (SPS) Tuco (SPS) Sooner (OG&E) Cleveland (GRDA) Hugo (ITC / Western Farmers) Anadarko (OG&E) Seminole (OG&E) Muskogee (OG&E) Sunnyside (OG&E) Rose Hill (Westar) Medicine Lodge (Westar) OG&E Ownership Non-OG&E Ownership Current OG&E 345kV projects Completed OG&E Line 6 Condi
Slide 7: Summary of current environmental regulations and timing for OG&E
Summary of current environmental regulations and timing for OG&E • Regional Haze • EPA rejected state SIP (4 low Nox burners – only common thread between SIP and FIP), FIP is 4 scrubbers or convert 4 units to gas, 3-years from final order. • Stay granted with 10th Circuit Court of Appeals June 22, 2
Slide 8: Potential Timing of Environmental Compliance Plan
8 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 Q4 Q2 Q3 2016 2017 FGD FGD FGD FGD Regional Haze Compliance Date Reflecting Stay 2013 2014 LNB LNB LNB LNB 2015 MATS Potential Extension Date ACI ACI DSI ACI ACI ACI Potential Timing of Environmental Compliance Plan Sooner Q2 Q3 Q4 LNB Decision DSI Decision ACI Dec
Slide 9: Projected Rate Base
Projected Rate Base* *Year end estimate only. Does not assume timing regarding regulatory recovery. $3.8 $4.0 $4.1 $4.1 $4.1 $4.1 $0.2 $0.4 $0.7 $0.8 $0.8 $0.8 $0.4 $0.4 $0.4 $0.4 $0.4 $0.4 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 2011 2012 2013 2014 2015 2016 OK Rate Base FERC Rate Base AR Rate Base 9 $
Slide 10: Focus for Enogex
Focus for 10 • Grow the business and provide attractive financial returns through efficient operations and commercial management • Capture growth opportunities through expansion projects, increased utilization of existing infrastructure • Execution of system expansion projects including increased pr
Slide 11: Enogex's Expanding Position in the Mid-Continent
11 Enogex’s Expanding Position in the Mid-Continent Greater Granite Wash Includes: • Cleveland • Granite Wash • Marmaton • Tonkawa Counties with Acreage Dedications
Slide 12: Enogex Processing Super Header Under Construction
12 Enogex Processing Super Header Under Construction
Slide 13: Enogex has successfully increased fixed-fee processing volumes
Enogex has successfully increased fixed-fee processing volumes 73% 68% 54% 35% 31% 25% 20% 1% 5% 6% 5% 7% 16% 19% 24% 31% 39% 35% 37% 24% 8% 7% 10% 20% 29% 31% 40% 0% 25% 50% 75% 100% 2006 2007 2008 2009 2010 2011 2012F Keep Whole POP POL FF 13
Slide 14: OGE's gross margin is forecasted to remain dominated by the utility
14 OGE’s gross margin is forecasted to remain dominated by the utility and approximately 89% utility and fee-based $1,198 $1,225 $306 $316 $135 $192 400 600 800 1000 1200 1400 1600 1800 2011 2012F* Utility Fee Based and Hedged Unhedged *Based on the midpoint of 2012 earnings guidance and assuming no
Slide 15: Consistent dividend growth
Consistent dividend growth *Annual dividend rate declared by the Board of Directors in December 2011 $1.33 $1.36 $1.39 $1.42 $1.45 $1.50 $1.57 $1.20 $1.25 $1.30 $1.35 $1.40 $1.45 $1.50 $1.55 $1.60 2006 2007 2008 2009 2010 2011 2012* Annual Dividend 15
Slide 16: Solid credit ratings with stable outlook
16 Solid credit ratings with stable outlook Moody’s S&P Fitch Outlook OG&E A2 BBB+ A+ Stable Enogex LLC Baa3 BBB- BBB Stable OGE Energy Corp. Baa1 BBB A- Stable
Slide 17: Appendix
OG:E Appendix
Slide 18: High liquids content provides increased revenues to producers
High liquids content provides increased revenues to producers Dry Gas Well Unprocessed Liquids Rich Gas Well Processed Liquids Rich Gas Well 1,000 Mcf Wellhead Gas 1,000 Btu Content Value = $2,500 1,000 Mcf Wellhead Gas 1,260 Btu Content Value = $3,150 50 Bbls of Condensate Value = $4,500 50 Bbls of
Slide 19: The active areas Enogex serves have the highest returns for producers
19 The active areas Enogex serves have the highest returns for producers in all price environments
Slide 20: Third Quarter EPS Results
® Third Quarter EPS Results 20 3Q 2012 3Q 2011 OG&E $1.69 $1.60 OGE Enogex Holdings 0.18 0.19 Hold. Co. - 0.01 Consolidated $1.87 $1.80
Slide 21: Third Quarter Results – OG&E
Third Quarter Results – OG&E In Millions of $ 3Q 2012 3Q 2011 Variance Fav/(Unfav) Gross Margin 449.2 440.1 9.1 Operation & Maintenance 108.6 108.3 (0.3) Depreciation & Amortization 63.5 54.9 (8.6) Interest Expense 31.2 28.8 (2.4) Income Tax Expense 58.4 70.9 12.5 Net income for OG&E was $167.2 mill
Slide 22: Third Quarter Results - OG&E Gross Margin
Third Quarter Results - OG&E Gross Margin 22 $449.2 $440.1 $420 $430 $440 $450 $460 2012 2011 Millions of $ Gross Margin Drivers: •Key Utility Investments •Transmission Revenues •Growth •Weather
Slide 23: Third Quarter Results – Enogex Holdings
Third Quarter Results – Enogex Holdings In Millions of $ 3Q 2012 3Q 2011 Variance Fav/(Unfav) Gross Margin 123.8 113.6 10.2 Operation & Maintenance 42.3 43.5 1.2 Depreciation & Amortization 26.5 18.6 (7.9) Taxes Other Than Income 9.8 5.4 (4.4) Interest Expense 8.7 5.1 (3.6) Enogex Holdings Net Incom
Slide 24: Third Quarter Results - Enogex Holdings Gross Margin
Third Quarter Results - Enogex Holdings Gross Margin $51.6 $40.4 $36.7 $31.3 $29.5 $36.9 $6.0 $5.0 $0 $50 $100 $150 2012 2011 Processing Gathering Transportation Storage Gross Margin Drivers: •Processed Volumes up 24% •Increased Gathering Fees •Condensate Volumes up 29% Millions of $ $123.8 $113.6 2
Slide 25: 2012 Outlook
2012 Outlook • The Company’s 2012 earnings guidance is unchanged between approximately $337 million and $357 million of net income, or $3.40 to $3.60 per average diluted share assuming 99.1 million average diluted shares outstanding. • OG&E is projected to be at the upper end of the earnings project
Slide 26: Reconciliation of estimated EBITDA to projected net income attributable to Enogex Holdings
Reconciliation of estimated EBITDA to projected net income attributable to Enogex Holdings 26 (A) As of November 1, 2010, Enogex Holdings' earnings are no longer subject to tax (other than Texas state margin taxes) and are taxable at the individual partner level. (B) Includes amortization of certain
Slide 27: Reconciliation of EBITDA to net income attributable to Enogex Holdings
Reconciliation of EBITDA to net income attributable to Enogex Holdings 27 (A) Based on midpoint of 2012 guidance. (B) As of November 1, 2010, Enogex Holdings' earnings are no longer subject to tax (other than Texas state margin taxes) and are taxable at the individual partner level. (C) Includes amo
Slide 28: Projected Capital Expenditures 2012-2016
Projected Capital Expenditures 2012-2016 28 Dollars in millions 2012 2013 2014 2015 2016 OG&E Base Transmission 70$ 50$ 50$ 50$ 50$ OG&E Base Distribution 175 175 175 175 175 OG&E Base Generation 80 75 75 75 75 OG&E Other 10 15 15 15 15 Total OG&E Base T&D, Gen & Other 335 315 315 315 315 OG&E Known
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