Your SlideShare is downloading. ×
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
oneok ONEOK to Present at Lehman CEO Conference
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

oneok ONEOK to Present at Lehman CEO Conference

251

Published on

Published in: Economy & Finance, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
251
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
4
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Lehman Brothers CEO Energy/Power Conference New York City | September 3, 2008 y p
  • 2. John W Gibson W. ONEOK, Inc. | Chief Executive Officer ONEOK Partners, L.P. | Chairman and Chief Executive Officer Page | 2
  • 3. Forward- Forward-Looking Statement Statements contained in this presentation that include company expectations or predictions should be considered forward- looking statements which are covered by the safe harbor provisions of the Securities Act of 1933 and the S ii f th S iti A t f d th Securities and iti d Exchange Act of 1934. It is important to note that the actual results of company earnings could differ materially from those projected in such forward-looking statements. For additional information, refer to ONEOK’s and ONEOK Partners’ Securities and Exchange Commission Filings Filings. Page | 3
  • 4. Agenda • Overview & Vision • Diversified Assets • Financial Highlights • Key Investment Considerations Page | 4
  • 5. Overview & Vision Page | 5
  • 6. ONEOK Today A Premier Energy Company • Three business segments g – ONEOK Partners -- General partner and 47.7 percent owner $624 ONEOK Partners – Distribution -- Three distribution companies serving two million customers – Energy Services -- A leading $186 Distribution marketer of natural gas $142 Energy Services • Expanding participation in Other ($3) energy value chain l hi Operating Income • $4.6 billion market capitalization 2008 Guidance: $949 million Page | 6
  • 7. ONEOK Today Assets That Fit and Work Together ONEOK Distribution ONEOK Energy Services Leased Pipeline Capacity Leased Storage Capacity ONEOK Partners Growth Projects Page | 7
  • 8. Our Vision A Premier Energy Company A premier energy company creating exceptional value for all p gy py g p stakeholders by: • Rebundling services across the value chain, primarily through verticall integration, t provide customers with premium services at ti i t ti to id t ith i i t lower costs • Applying our capabilities — as a gatherer, processor, transporter, marketer and distributor — to natural gas and natural gas liquids… …and other commodities Page | 8
  • 9. Our Vision: A Journey by Design Value Creation Through Rebundling - 1995 Natural Gas Distribution Marketing Power Industrial Exploration & Production Gathering & Processing Pipelines/Storage Markets Natural Gas Liquids Refining Heating Petro- Chemical 1995 Financial Statistics Total revenue: $949.9 million Net income: $42.8 million Gathering & Fractionation Pipelines/Storage Markets Total assets: $1.2 billion Page | 9
  • 10. Our Vision: A Journey by Design Value Creation Through Rebundling - Today Natural Gas Distribution Marketing Power Industrial Exploration & Production Gathering & Processing Markets Pipelines/Storage Natural Gas Liquids Refining Heating Petro- Chemical 2007 Financial Statistics Total revenue: $13.5 billion Net income: $304 9 million N ti $304.9 illi Gathering & Fractionation Pipelines/Storage Markets Total assets: $11.1 billion Page | 10
  • 11. Our Vision: A Journey by Design Applying Our Capabilities to the NGL Business • Established Mid-Continent presence beginning in 2000 • Acquired NGL assets from Koch in 2005 – Gained access to largest NGL g market hubs: Conway, Kansas, and Mont Belvieu,Texas • Extending our reach into the Rockies and Barnett Shale through g internal growth projects – Doubles the business • Acquired NGL and refined petroleum products system to connect to the Midwest markets NGL Storage NGL Pipelines – Provides producers with access to NGL Fractionator NGL Gathering & Fractionation additional markets NGL Market Hub NGL Growth Projects Acquired NGL Pipeline System – First entrance into refined petroleum products market Page | 11
  • 12. Our Key Strategies A Premier Energy Company • Generate consistent growth and sustainable earnings g g – Improve profitability of ONEOK Distribution Companies – Continue focus on physical activities at ONEOK Energy Services – D l and execute internally generated growth projects at Develop d t it ll td th j t t ONEOK Partners • Execute strategic acquisitions that p g q provide long-term value g • Manage our balance sheet and maintain strong credit ratings at or above current level • Operate in a safe and environmentally responsible manner • Attract, develop and retain employees to support strategy p py pp gy execution Page | 12
  • 13. Diversified Assets Distribution Energy Services ONEOK Partners Page | 13
  • 14. Distribution Eighth Largest Natural Gas Distributor in the U.S. • Largest natural g g gas distributor in Oklahoma and Kansas; third largest in Texas • Growth – Efficient investments – Customers, volumes, rate base • Long term focus has led to: Long-term – Unbundling and restructuring in Oklahoma – Weather normalization Kansas Gas Service – Capital recovery Oklahoma Natural Gas Texas Gas Service – Bad-debt recovery Customers 2 million – Margin stability Revenues R $2.1 billi $2 1 billion Asset Base $2.7 billion Rate Base $1.7 billion Page | 14
  • 15. Distribution Integrated Strategy to Improve Profitability Return on equity Closing the Gap • Si ifi Significant progress since 2005 t i 2005: Oklahoma rate case – 2006: Kansas and Texas rate cases Gap Gap – 10.2 2007: Five rate filings in Texas Allowed – ap ap Ga Ga 2008: Texas rate increases of $4 2 $4.2 8.6 86 – 8.5 85 * Return on Equity (%) million; Oklahoma filed bad-debt recovery – Capital recovery mechanisms in all three states – Disciplined approach to capital 53 5.3 n 4.9 investment Expense control and recovery • Expense recovery mechanisms p y – Continuous process improvement – Pipeline integrity management recovery – Total Distribution Companies Pension and other post-employment – 2005 2006 2007 2008G 2008 Allowed benefit costs * ROE calculations are consistent with utility ratemaking in each jurisdiction and not consistent with GAAP returns Page | 15
  • 16. Energy Services Leased Assets Enhance Our Ability to Provide Premium Services to Customers • Deliver natural gas g together with bundled, reliable products and services – Premium, peaking services – Primarily to LDCs • Access to prolific supply Leased Pipeline Leased Storage and high-demand areas Storage 91 Bcf of capacity • Industry knowledge and 2.2 Bcf/d of withdrawal rights 1.4 Bcf/d of injection rights Transportation 1.8 Bcf/d of firm capacity customer relationships Sales 3.3 Bcf/d in 2007 3.1 Bcf/d in 2006 Margin $0.19/MMBtu $0 19/MMBtu in 2007 $0.22/MMBtu in 2006 Page | 16
  • 17. Energy Services Sources of Income Storage Transportation Optimization Retail Trading Utilize leased capacity to meet customers’ customers Enhance storage and Sell natural gas supplies Extract trading baseload, swing and peaking requirements transportation margins and provide risk margins around our through application of management services to physical positions Provide marketing and risk management services market knowledge and commercial and through market risk management skills industrial customers and knowledge, volatility or Capture arbitrage opportunities to consumers who inefficiencies participate in LDC customer choice programs Spread- and demand- Spread- and fee-based Spread-, commodity- Commodity-based Spread-, commodity- based and derivative-based and derivative-based 7% 10% 6% 11% 53% 27% 60% 26% 2008 Operating Income Guidance 2007 Operating Income $142 million $205 million Page | 17
  • 18. Energy Services Operating Income History Range from low of $139 million to high of $229 million of operating income • Seasonal storage differentials and transportation basis differentials have • had the greatest impact $5.00 $5 00 $250 $229 $205 rating Income (Millions) $4.00 $200 $166 $142 $139 $3.00 $ $150 $ $/MMBtu $2.00 $100 Oper $1.00 $50 $- $0 2004 2005 2006 2007 2008 Guidance April - December Storage Differential Rockies to Mid-Continent Basis Differential Operating Income Page | 18
  • 19. ONEOK Partners Overview • Primary growth engine for ONEOK • Aligned interests: ONEOK is general partner and 47.7 percent owner • Value creation through integrated operations • Cash flow is approximately 60 percent fee based Natural Gas Natural Gas Liquids Gathering & Fractionation Pipelines Gathering & Processing Pipelines – Connected to over 90 percent of the Mid- – Stable earnings through diversity Continent region’s processing plants – Diversified supply basins, producers and – Allows us to provide full range of services contracts mitigate earnings volatility t t iti t i l tilit to our customers Page | 19
  • 20. ONEOK Partners Delivering Consistent Growth and Stable Earnings Distribution Growth Unitholder Return 10 increases with ONEOK as sole Unit price increase of 25 percent • • general partner since 2006 Target coverage ratio: 1.05x to 1.15x Total return of 71 percent since • • 2006 137 percent since 2003 ti 2006; Unit Price Total Return Distributions Per Unit $1.06 $70 90% $1.025 $1.04 $69.26 80% $67 60 $67.60 $1.01 $1 01 $60 $1.00 $61.25 $0.99 $0.98 $55.90 $59.77 70% $57.57 $0.97 $50 $0.95 60% $48.00 $40 50% $0.88 40% $30 30% $20 $0.80 20% $10 10% ONEOK Partners Pt Alerian Al i MLP Index Id $0 0% 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 *Unit prices are closing prices at last day of quarter; Third quarter 2008 through closing prices on 8/27/08 Page | 20
  • 21. ONEOK Partners - Roadmap to Growth $2 Billion of Internal Growth Projects Under Way, 2007-2009 Grasslands plant expansion $40-$45 million Guardian II Expansion Fort Union Gas $277-$305 million Gathering Expansion ( (37% owner) NGL & Refined Product System Acquisition Overland Pass $300 million Pipeline $575-$590 million Piceance Lateral $110-$140 million NGL Upgrade Projects Midwestern $230-$240 million Extension $69 million Woodford Extension $30-$35 million 2010 -2015 Internal Growth Projects: Arbuckle Natural Gas Gathering & Processing $300-500 million/year Pipeline Natural Gas Pipelines $340-$360 million Natural Gas Liquids Gathering & Fractionation plus acquisitions l i iti Natural Gas Liquids Pipelines Growth Projects Page | 21
  • 22. ONEOK Partners – Growth Status Complement Existing Infrastructure and Core Operating Capabilities MAJOR PROJECTS*: PROJECTS : Contracts / Volumes Fee Based Expected In Service Long-term supply agreement Overland Pass Pipeline Third Quarter 2008 with Williams Infrastructure upgrades to Related NGL projects In Service accommodate growth g Arbuckle Pipeline Anchor customers committed Early 2009 Dedicated supplies from two Piceance Lateral Second Quarter 2009 Williams plants Dedicated D di t d supplies f li from DDevon Woodford Shale extension In Service and Antero processing plants Supply growth driven by drilling Grasslands Plant expansion Second Half 2008 and production Fort Union Gas Gathering expansion (37%) Fully subscribed In Service Anchored by two 15-year Guardian Pipeline extension Fourth Quarter 2008 agreements Midwestern Extension Mid t E t i Fully b ib d F ll subscribed In Service IS i Page | 22 * Additional project details included in the appendix, slides 52 - 66
  • 23. ONEOK Partners - Growth Contribution Complements Existing Infrastructure and Core Operating Capabilities • $2 billion of internal growth EBITDA* Generated projects through 2009 – Growth projects generate $360 significant cash flow million illi $260 – Growth EBITDA generated is million primarily fee based • $300-$500 million of growth projects per year in 2010-2015 • Incremental acquisition 2009 2010 opportunities * EBITDA contributions assume projects are completed on schedule * Does not include WMB exercising its 50/50 option in OPPL or Piceance Lateral * Offsets natural declines in natural gas gathering and processing supplies Page | 23
  • 24. Growth at OKS benefits OKE How Growth at ONEOK Partners Benefits ONEOK IDR and Capital EBITDA Higher Net Equity Dividends Projects Growth Distributions Income Income Unit Price Appreciation Share Price Appreciation OKS Incremental EBITDA is $1 million Impacts OKE income by $684 thousand (pre-tax) EBITDA • $500 thousand* from incentive distribution rights • Partnership is in “high splits” Growth • $184 thousand* in equity earnings from general • All incremental cash flow is distributed • Annual depreciation is $125 thousand partner interest and limited partner units owned Incentive Distribution Rights* Distribution Every 1 cent quarterly increase Results in $3.5 million annual increase in cash flow Growth and income before taxes Limited Partner Units** Every 1 cent quarterly increase Results in $1.7 million annual increase in cash flow * Assumes “high splits” Page | 24 ** ONEOK owns 42.4 million limited partner units
  • 25. Financial Highlights Page | 25
  • 26. Solid Financial Position Strong Balance Sheet Stable Cash Flow • Strong credit rating • Continued strong free cash flow free-cash available for: – S&P: BBB – Moody’s: Baa2 – Acquisitions – Investment in OKS • Capital Structure – Debt repayment – Share repurchase – Dividend increases – Goal: 50/50 Capitalization Capital Total Debt Expenditures Surplus 54% $182 $180 Equity 46% Dividends $163 $ Stand –Alone Cash Flow Stand –Alone Capitalization 2008 Guidance (Millions) June 30, 2008 Page | 26
  • 27. Shareholder Value Delivering Consistent Growth and Stable Earnings Dividend Growth Shareholder Return 13 dividend increases since Share price increase of 32 • • January 2003 percent since 2006 Target: 50-55 percent of Total Return of 79 percent since • • recurring earnings 2006; 178 percent since 2003 Dividends Per Share Share Price Total Return 120% $0.40 0.38 $50 $ $51.68 $0.36 $0 100% $0.34 $48.53 $45.29 $43.63 $0.32 $44.63 $40 $43.12 $0.30 $0.28 80% $38.25 $0.25 $33.06 $30 $0.23 60% $0.21 $0.19 9 $ $0.18 $0.17 $20 $0.155 40% $10 20% S&P 500 ONEOK, Inc. , $0 0% 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Q4 2002 Q4 2003 Q4 2004 Q4 2005 Q4 2006 Q4 2007 *Share prices are closing prices at last day of quarter; Third quarter 2008 through closing price on 8/27/08 Page | 27
  • 28. Key Investment Considerations • Strong track record of creating value for both customers and g g investors, through rebundling services across the value chain and applying our capabilities to other commodities • St t i assets connecting prolific supply b i and k markets Strategic t ti lifi l basins d key kt • Significant growth potential through continued strategy execution • Demonstrated financial discipline • Experienced and proven management team • Talented workforce dedicated to providing safe and reliable p g service to all our customers Page | 28
  • 29. Questions & Answers Page | 29
  • 30. Page | 30
  • 31. Appendix Page | 31
  • 32. Our Vision: A Journey by Design Value Creation Through Re-bundling – How We Got Here Acquired Oklahoma gathering and Oklahoma Natural Gas Acquired Kansas Gas Acquired Texas processing assets and exploration & Service and Kansas Gas Service Acquired NGL and refined from Koch natural gas pipelines, production are primary petroleum product pipeline businesses storage and marketing system from Ki d tf Kinder Oklahoma Unbundling: Acquired Conway Acquired NGL system from Western Morgan Storage & Gathering NGL assets from from Koch Resources deregulated; Distribution & Texaco Transmission assets become Acquired 85% general partner interest separate utilities in Northern Border Partners 1996 1998 2000 2002 2004 2006 1995 2007 1997 1999 2001 2003 2005 Built NGL pipeline Created ONEOK Partners: from Bushton to Dropped down $3 billion of Conway assets to Northern Border Created Acquired NGL storage and fractionation Partners; became sole Energy Services E Si assets from Kinder Morgan general partner Sold and exited Acquired gathering and processing and 2006 — 2008 exploration & natural gas pipeline, storage and production marketing assets in Texas, Oklahoma Announced $2 billion of internal business and Kansas from Dynegy and Kinder growth projects at ONEOK Morgan g Partners,, Sold Texas $1.4 billion of which are gathering and NGL related processing assets Page | 32
  • 33. Distribution Rate Strategy Progress • Synchronized rate filings y g • Maintain positive relationships with regulators Issue Solution Oklahoma Kansas Texas Margin fluctuations Straight-fixed variable rates Revenue decoupling 1/17 Weather normalization 8/17 Earnings lag More frequent filings Cost f C t of service adjustment i dj t t 8/17 Bad debt Commodity recovery in PGA Filed 4/17 Fixed-price plan 1/17 Average payment plan Financial hedging 7/17 Physical hedging Capital recovery Capital recovery mechanisms 6/17 Return on gas in storage 2/17 Incentive rates Revenue sharing 2/17 Page | 33
  • 34. Energy Services What We Do • Contract with customers to deliver natural gas, together with g,g bundled, reliable products and services • Contract for natural gas supplies • Lease and optimize storage and transportation capacity • Capitalize on market irregularities and inefficiencies ptimization Supply Markets Storage Transportation Trading g Op • Electric • LDC Retail Customers: Generators • Industrial • Trading • Commercial Counterparties • Residential Page | 34
  • 35. ONEOK Partners Diversified Assets Page | 35
  • 36. ONEOK Partners Overview • One of the largest p g publiclyy traded MLPs Natural Gas • Diversified asset base and $269 Gathering & Processing stable cash fl t bl h flows • Value creation through Natural Gas $142 Pipelines integrated operations • Aligned interests: NGL Gathering & $153 Fractionation – ONEOK: General Partner NGL Pipelines $ $68 – ONEOK: 47.7 percent owner Other ($8) Operating Income • $5.4 billion market capitalization 2008 Guidance: $624 million Page | 36
  • 37. ONEOK Partners Overview Natural Gas Gathering & Processing Natural Gas Pipelines Natural Gas Liquids Gathering & Fractionation Natural Gas Liquids Pipelines Page | 37
  • 38. Strong Balance Sheet Disciplined Approach to Raising Capital for Growth • $1 billion revolver • Capital structure – Funds 2008 capital expenditures – Goal: 50/50 capitalization – Strong credit rating • Common unit offering in g March 2008, generating net proceeds of $460 million Debt Equity 50% 50% • Permanent debt financing of $600 million in September S t b 2007 Capitalization: June 30, 2008 Page | 38
  • 39. Stable Cash Flow Cash Flow Stability Managed Within Each Segment • Predominantly fee based y – Large growth projects under way increase fee-based income • Commodity and spread risk is measured and managed – 2008: 74 percent hedged on NGLs and condensate at $1.38/gallon and 54 percent on natural gas at $9.35/MMBtu – 2009: 30 percent hedged on NGLs and condensate at $2.22/gallon Fee Fee Commodity 60% Commodity 55% 29% 27% Spread Spread 16% 13% 2007 Gross Margin: $896 million 2008 Gross Margin Guidance: $1.1 billion Page | 39
  • 40. Natural Gas What We Do • Connect raw natural gas production from the wellhead to markets through: k t th h Gathering and compression via extensive pipeline systems – Processing and treating to remove contaminants and extract natural gas liquids – Storage services through underground caverns – Transportation of residue natural gas via extensive pipeline systems, both intra- – and inter-state Storage & Gathering & Supply Markets Transportation Processing Marketing Distribution Power / Industrial Page | 40
  • 41. Natural Gas Stable Earnings Through Diversity • Two segments Grasslands Plant Expansion E i – Natural Gas Gathering & Guardian II Expansion Processing – Natural Gas Pipelines • Diversified supply basins, Fort Union Gas Gathering Expansion producers and contracts mitigate earnings volatility in gathering and processing • Earnings on pipelines are fee Midwestern based Extension • More than $600 million of internal growth projects under way through 2009 y g Natural Gas Gathering Pipeline Natural Nat ral Gas Interstate Pipeline Natural Gas Intrastate Pipeline Natural Gas Storage Natural Gas Processing Plant Growth Projects Page | 41
  • 42. Natural Gas Gathering & Processing Key Points Stable earnings through diversity g g y Williston • Multiple producing basins effectively offset natural volume Powder River declines Wind River • Supply mix between small and large producers spreads drilling and volume exposure Kansas Uplift • Makeup of contract portfolio: Hugoton Natural Gas Gathering Pipeline – Eliminates material exposure to Natural Gas Processing Plant Anadarko naturall gas price fl t ti t i fluctuations Gathering 14,300 miles of pipe – Spreads NGL exposure among Processing 13 active plants 0.7 Bcf/d capacity six products and revenue streams Production 1,185 BBtu/d gathered Second-quarter 2008 651 BBtu/d processed 40 MBpd NGL sold MB d NGLs ld Page | 42
  • 43. Natural Gas Gathering & Processing Supply Gas Gathered * • Strong supply focus g pp y BBtu/d 1,190 1,188 1,182 1,168 1,171 • New well connects and growth in the Rockies offset naturall d li t declines 805 800 852 910 908 383 371 316 280 274 2004 2005 2006 2007 2008 Year-to-date Rocky Mountain R kM i Mid-Continent Mid C i * Volumes based on existing asset base Page | 43
  • 44. Natural Gas Gathering & Processing Risk Mitigation Contract restructuring has reduced commodity price sensitivity and increased fee-based business • Hedging strategy focuses on long NGL and natural g p gg gy g gas positions • – Second half 2008: 74 percent hedged on NGLs and condensate at $1.38/gallon and 54 percent on natural gas at $9.35/MMBtu – 2009: 30 percent hedged on NGLs and condensate at $2.22/gallon Contract Mix by Volume Commodity Price Sensitivity Margin Impact ($ Millions) 3% 3% $4.8 3% 6% 7% 8% $4.5 1% 10% 1% 6% $3.8 15% 19% $2 1 $2.1 30% 32% 27% $1.6 $1.3 $1.7 $1.1 $1.0 34% 31% $0.4 $0.7 25% $0.5 $0.3 $0.2 -$0.1 -$1.6 $1 6 -$2.7 61% 61% 60% -$3.5 53% 52% 51% 2006 2007 2008 2003 2004 2005 Commodity Sensitivity Natural Gas Liquids 1 cent/gallon increase 2003 2004 2005 2006 2007 2008G Natural Gas 10 cent/MMBtu increase Fee Based Percent of Proceeds Crude Oil $1/barrel increase Page | 44 Keep Whole Keep Whole w/conditioning
  • 45. Natural Gas Pipelines Key Points Provides fee-based income • Viking Gas Transmission – Over 70 percent is demand/firm Pipelines connect to key supply • Northern Border Pipeline aggregation points: Guardian – G ardian Viking and Northern Guardian, Pipeline Border Midwestern Gas Midwestern Gas acts as a • Transmission hub, offering numerous , g interconnects for receipts and deliveries Storage provides premium “swing” • services f iintrastate pipelines i for t t t i li Intrastate pipelines are diversified Natural Gas Interstate Pipeline • Natural Gas Intrastate Pipeline through connections to numerous Natural Gas Storage supply and market points Pipelines 6,920 miles, 5.3 6 920 miles 5 3 Bcf/d peak capacity Storage 51.6 Bcf active working capacity Equity Investment 50% Northern Border Pipeline Page | 45
  • 46. Natural Gas Liquids What We Do Connect raw-blended NGL production from gas processing plants to markets • through: Gathering via extensive pipeline systems – Fractionating to convert raw-blended NGLs to purity products – Storage services through underground caverns – Marketing NGL products to end-users – Distributing purity product to markets – Gathering & Markets Storage Distribution Optimization Fractionation imization Opti Purity Products Ethane Normal Butane Heating NGLs Petrochemical Refining Propane Natural Gasoline Isobutane Page | 46
  • 47. Natural Gas Liquids Largest Gatherer and Fractionator of NGLs in the Mid-Continent • Two segments – NGL Gathering & Fractionation Overland Pass – NGL Pipelines Pipeline • Connected to over 90 percent p of the Mid-Continent region’s Piceance Lateral processing plants • Allows us to provide a full range p g NGL Upgrade of services to our customers Projects Woodford Extension • Integrated asset base creates opportunities for growth through major expansions into new Arbuckle Pipeline supply areas – More than $1.4 billion of internal NGL Storage NGL Pipelines NGL Fractionator NGL Gathering & Fractionation g growth projects under way th j t d NGL Market Hub NGL Growth Projects through 2009 Page | 47
  • 48. NGL Gathering & Fractionation Key Points • Extensive raw NGL gathering system with access t 78 gas t ith to processing plants • Mid-Continent supply growth since July 2005: – Gathering volume up 31 percent – Fractionation volume up 20 percent – Fifteen new gas processing plant g g connections completed • New supply commitments drive infrastructure upgrades and expansions NGL Gathering Pipeline NGL St Storage – Rockies NGL Fractionator NGL Market Hub – Barnett Shale Gathering 2,570 miles of pipe – Woodford Shale Fractionation 399,000 Bpd capacity Isomerization 9,000 Bpd capacity Storage 24.6 MMBbls capacity Page | 48
  • 49. NGL Gathering & Fractionation Supply • Volume growth since acquisition of Koch’s NGL system in July 2005 g q y y – New processing plant connections – Growth from existing connections Gathering Volume Fractionation Volume MBpd MBpd 251 253 385 391 246 371 370 349 232 Up 20% Up 31% 333 326 224 312 319 309 213 208 210 210 275 281 p p 193 193 189 3Q05 Q 1Q06 Q 3Q06 Q 1Q07 Q 3Q07 Q 1Q08 Q 3Q05 Q 1Q06 Q 3Q06 Q 1Q07 Q 3Q07 Q 1Q08 Q Page | 49
  • 50. NGL Gathering & Fractionation Sources of Margin Exchange and Optimization Isomerization Marketing Storage Services Gather, fractionate, transport Obtain highest product price Convert normal butane to Purchase approximately one- and store NGLs and deliver to by directing product isobutane half of exchange volumes in market hubs movement between Conway the Mid-Continent for resale and Mont Belvieu on an index-related basis index related Fee-based Spread-based Spread-based Fee- and Commodity-based 4% 8% 13% 6% 18% 8% 70% 73% 2008 Gross Margin Guidance 2007 Gross Margin Contribution $260 million $206 million Page | 50
  • 51. NGL Pipelines Key Points • Links key NGL market centers at Conway, Kansas, and Mont Belvieu, Texas • Connects Mid-Continent to upper Midwest • Significant supply sources in Mid-Continent – Connected to 23 gas processing plants with access to another 55 – Connected to seven fractionators • Regulation NGL Pipeline NGL Market Hub – FERC-approved tariffs Distribution 3,350 3 350 miles of pipe with 434,000 Bpd capacity Gathering 720 miles of pipe with 93,000 Bpd capacity Page | 51
  • 52. ONEOK Partners Growth Projects Page | 52
  • 53. ONEOK Partners - Growth Complements Existing Infrastructure and Core Operating Capabilities • $2 Billion of internal growth ....................Capital Expenditures.................... projects under way, 2007-2009 $1,314 $84 • Growth EBITDA* generated is primarily fee based $ In Millions $710 – 2009: $260 million $60 $300-$500/year $1,230 – 2010: $360 million $285 $650 $75 • $300 - $500 million of growth $210 projects indentified per 2007 2008 2009 2010-2015 year, 2010 2015 2010-2015 Maintenance Growth * EBITDA contributions assume projects are completed on schedule * Does not include WMB exercising its 50/50 option in OPPL or Piceance Lateral * Offsets natural declines in natural gas gathering and processing supplies Page | 53
  • 54. Natural Gas Gathering & Processing Growth Projects Grasslands Processing Plant Expansion Project Status Costs $40 - $45 Million Completion On line in phases by second half 2008 Dates Phase 1 Phase 2 Processing plant Permits tie-ins completed approved Construction Equipment completed ordered Grasslands Expansion Phase 1: Processing Increased from 63 to 100 MMcf/d capacity Phase 2: Fractionation Increased from 8 to 12 MBpd capacity Page | 54
  • 55. Natural Gas Gathering & Processing Growth Projects Fort Union Gas Gathering Project Status P j t St t Costs $120 - $130 Million (Project Financed) Completion In Service Dates Phase 1 Phase 2 Customers Customers committed * committed * Construction Construction complete complete ONEOK Partners Gathering In service 11/07 In service 7/08 Fort Union (37%) Lost Creek (35%) Big Horn (49%) Bi H • Backed by volume commitments * • Doubled capacity Fort Union Gas Gathering Phase 1: Adds 44 miles of pipe and 200 MMcf/d capacity Phase 2: Adds 104 miles of pipe and 450 MMcf/d capacity Page | 55
  • 56. Natural Gas Pipelines Growth Projects Guardian Pipeline Project Status Costs $277 - $305 Million Completion • Notice to Proceed received May 2008 Date • In service during fourth quarter 2008 Customers Pipe ordered committed * Right of way Pipe delivered possession Construction Permits contracts let Existing Pipeline • Fully subscribed * Proposed Extension • Anchored by two 15-year agreements * Guardian Pipeline Capacity Incremental of 537 MMcf/d to eastern Wisconsin Extension 119 miles from Ixonia to Green Bay Page | 56
  • 57. NGL Pipelines Growth Projects Overland Pass Pipeline Project Status Cost $575 - $590 Million Opal Echo Springs Completion Partial start-up in third quarter 2008, remaining in fourth quarter 2008 Date Anchor customers Pipe ordered committed * Public right of Construction way acquired id contracts l t t t let Permit 730 approved and Construction federal right of complete Overland Pass Pipeline miles way acquired Overland Pass Pipeline • 99/1% joint venture with 50/50 option within two years of first flow Pipeline 760 miles, 14-16” • Dedicated supplies from two Williams plants (~60,000 Bpd) in Wamsutter Capacity • 110,000 Bpd of raw NGLs with two pump Area and two Williams plants in Piceance Basin (~30,000 Bpd) * stations • Additional commitments of 110,000 Bpd in various stages of negotiation • Expandable to 255,000 Bpd with additional pump stations Page | 57
  • 58. Overland Pass Pipeline 760-Mile Natural Gas Liquids Pipeline from Opal, Wyoming, to Conway, Kansas Page | 58
  • 59. Overland Pass Pipeline 760-Mile Natural Gas Liquids Pipeline from Opal, Wyoming, to Conway, Kansas Page | 59
  • 60. NGL Pipelines Growth Projects Piceance Lateral Project Status Cost $110 - $140 Million Completion Second Quarter 2009 Date Anchor Late Permitting customers 2008 expected committed * Right of way g y Mid Construction In I progress acquired 2008 contracts let • 99/1% joint venture with 50/50 option within two years of first flow Overland Pass Pipeline • Dedicated supplies from two Williams plants (~30,000 Bpd) * Piceance Lateral • Additional commitments in various stages of negotiation Piceance Lateral Pipeline 150 miles, 14” Capacity 100,000 Bpd of raw NGLs Page | 60
  • 61. Natural Gas Liquids Growth Projects Infrastructure Upgrades Project Status Cost $230 - $240 Million Expand facility from 80,000 to 150,000 Bpd Bushton Phase I - complete Fractionator • Phase II - third quarter 2008 Upgrade facility to accommodate additional Bushton Storage ethane/propane mix Construction complete Construct 135-mile pipeline with a capacity of Bushton-to- 120,000 Bpd of ethane/propane mix Medford Pipeline Construction complete Expand pipeline by 60,000 Bpd Sterling Expansion gp Construction complete Bushton-to- Expand pipeline by 14,000 Bpd Conway Expansion Construction complete NGL Gathering & Fractionation NGL Pipelines NGL Storage NGL Fractionator NGL Market Hub Page | 61
  • 62. NGL Infrastructure Upgrades Bushton, Kansas Page | 62
  • 63. NGL Infrastructure Upgrades Bushton, Kansas Page | 63
  • 64. NGL Gathering & Fractionation Growth Projects Woodford Shale Pipeline E t Pi li Extension i Project Status Cost $30 - $35 Million Completion In Service Date Anchor Pipe customers delivered committed * Right of way Construction acquired complete NGL Gathering Pipeline Woodford Extension • Connecting to two processing plants, operated by Devon g p gp ,p y NGL Storage Energy and Antero Resources, in southeast Oklahoma NGL Fractionator NGL Market Hub Woodford Shale Pipeline Extension Pipeline 78 miles, 6-8” Expected Volume 25,000 Bpd of raw NGLs Page | 64
  • 65. NGL Pipelines Growth Projects Arbuckle Pipeline Project Status Cost $340 - $360 Million Completion Early 2009 Date Anchor customers Pipe delivered committed * Right of way In progress In progress Construction acquired NGL Gathering Pipeline NGL Pipeline • Expect approximately 65,000 Bpd at start up, and NGL Arbuckle Pipeline indications of interest that could add 145,000 Bpd of NGL Storage supply within the next three to five years NGL Fractionator NGL Market Hub • Major expansion into one of the most active drilling areas in the U.S. • Allows delivery to Gulf Coast fractionators Arbuckle Pipeline Pipeline 440 miles, 12-16” Capacity • 160 000 Bpd of raw NGLs with four pump 160,000 stations • Expandable to 210,000 Bpd with additional pump stations Page | 65
  • 66. NGL Pipelines Strategic Acquisition NGL and Refined Petroleum d R fi d P t l Products System Acquisition Project Status Cost $300 Million Closing Date October 2007 Geographically and in NGL Value Chain: • Connects Bushton and Conway, Kansas, Footprint to Chicago, Illinois Expansion • Adds a refined petroleum products line to our portfolio NGL Pipelines Revenues > 90% fee-based NGL Gathering & Fractionation NGL Growth Acquired NGL Pipeline System • First entrance into refined petroleum products market NGL Storage NGL Fractionator • Creates growth opportunities in Midwest markets NGL Market Hub Pipelines 1,627 miles, primarily 8-10” Capacity for Purity 134,000 Bpd of transport & Refined Products 978,000 Bbl of storage Page | 66

×