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1818thth Annual Wachovia Equity ConferenceAnnual Wachovia Equity Conference1818 Annual Wachovia Equity ConferenceAnnual Wachovia Equity ConferenceNantucket, Massachusetts | June 24, 2008
John W GibsonJohn W GibsonJohn W. GibsonJohn W. GibsonONEOK, Inc. | Chief Executive OfficerONEOK Partners, L.P. | Chairman and Chief Executive Officer
Page | 2
ONEOK Partners, L.P. | Chairman and Chief Executive Officer
ForwardForward--Looking StatementLooking Statement
Statements contained in this presentation that include company Statements contained in this presentation that include company expectations or predictions of the future are forward-looking statements intended to be covered by the safe harbor
i i f th S iti A t f 1933 d th S iti provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. It is important to note that the actual results of company earnings could differ materially from those projected in any forward-looking statements. For additional information, refer to ONEOK’s and ONEOK Partners’ Securities and Exchange Commission Filingsand Exchange Commission Filings.
Page | 3
AgendaAgenda
• Overview & Vision• Overview & Vision• Diversified Assets
Page | 4
• Financial Highlights
Overview & VisionOverview & Vision
Page | 5
ONEOK TodayONEOK Today
• Three business segments
A Premier Energy Company
g– Distribution -- Three distribution
companies serving two million customers $521 ONEOK Partners
– Energy Services -- A leading marketer of natural gas
– ONEOK Partners -- General
$521 ONEOK Partners
ONEOK Partners General partner and 47.7 percent owner
• Expanding participation in l h i
$180
$180 Distribution
Energy ServicesOth ($2)energy value chain
• $5.2 billion market capitalization Operating Income2008 Guidance: $879 million
Other ($2)
Page | 6
ONEOK TodayONEOK TodayAssets That Fit and Work Together
ONEOK DistributionONEOK Energy Services
Leased Pipeline CapacityLeased Storage Capacity
Page | 7
Leased Storage Capacity ONEOK Partners
Growth Projects
Our VisionOur Vision
A premier energy company creating exceptional value for all
A Premier Energy Company
p gy p y g pstakeholders by:• Re-bundling services across the value chain, primarily through
ti l i t ti t id t ith i i t vertical integration, to provide customers with premium services at lower costs
• Applying our capabilities — as a gatherer, processor,Applying our capabilities as a gatherer, processor,transporter, marketer and distributor — to natural gas and natural gas liquids…
…and other commodities
Page | 8
Our Vision: A Journey by DesignOur Vision: A Journey by DesignValue Creation Through Re-bundling - 1995
Natural Gas
Marketing
Power Industrial
Distribution
Exploration & Production Gathering & Processing Pipelines/Storage Markets
Refining
Natural Gas Liquids
Petro-Chemical
Refining
Heating
1995 Financial Statistics
Total revenue: $949.9 million
Page | 9
Pipelines/Storage MarketsGathering & FractionationNet income: $42.8 millionTotal assets: $1.2 billion
Our Vision: A Journey by DesignOur Vision: A Journey by DesignValue Creation Through Re-bundling - Today
Natural GasNatural Gas
Power Industrial
MarketingDistribution
Exploration & Production Gathering & Processing Pipelines/Storage Markets
Refining
Natural Gas LiquidsNatural Gas Liquids
Petro-Chemical
Refining
Heating
2007 Financial Statistics
Total revenue: $13.5 billionN t i $304 9 illi
Page | 10
Pipelines/StorageGathering & Fractionation MarketsNet income: $304.9 millionTotal assets: $11.1 billion
Our Vision: A Journey by DesignOur Vision: A Journey by Design
• Established Mid-Continent presence beginning in 2000
Applying Our Capabilities to the NGL Business
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 ginternal growth projects
– Doubles the business• Acquired NGL and refined petroleum
products system to connect to the products system to connect to the Midwest markets
– Provides customers with access to suppliesFirst entrance into refined
NGL PipelinesNGL Gathering & FractionationNGL Growth ProjectsAcquired NGL Pipeline System
NGL StorageNGL FractionatorNGL Market Hub
Page | 11
– First entrance into refined petroleum products market
Our Key StrategiesOur Key Strategies
• Generate consistent growth and sustainable earnings
A Premier Energy Company
g g– Improve profitability of ONEOK Distribution Companies– Continue focus on physical activities at ONEOK Energy Services
D l d t i t ll t d th j t t – Develop and execute internally generated growth projects at ONEOK Partners
• Execute strategic acquisitions that provide long-term valueg q p 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
Page | 12
p p y pp gyexecution
Diversified AssetsDiversified Assets
DistributionDistributionEnergy Services
Page | 13
ONEOK Partners
DistributionDistribution
• Largest natural gas
Eighth Largest Natural Gas Distributor in the U.S.
g gdistributor in Oklahoma and Kansas; third largest in Texas
• GrowthGrowth– Efficient investments– Customers, volumes, rate base
• Long term focus has led to:• Long-term focus has led to:– Unbundling and restructuring
in OklahomaWeather normalization– Weather normalization
– Capital recovery– Bad-debt recovery
Margin stabilityCustomers 2 millionR $2 1 billi
Kansas Gas ServiceOklahoma Natural GasTexas Gas Service
Page | 14
– Margin stability Revenues $2.1 billionAsset Base $2.7 billionRate Base $1.7 billion
DistributionDistribution
• Return on equity
Integrated Strategy to Improve Profitability
Closing the GapSi ifi t i 2005– 2005: Oklahoma rate case
– 2006: Kansas and Texas rate cases– 2007: Five rate filings in Texas
2008: First quarter approved rate ap ap
Gap
Significant progress since 2005
Gap
Allowed
8 5 8 6
10.2
– 2008: First quarter approved rate increases of $4.2 million in Texas
– Capital recovery mechanisms in allthree statesDisciplined approach to capital
Ga Ga
n on
Equ
ity(%
)
5 3
8.5 8.6
– Disciplined approach to capital investment
• Expense control and recovery– Expense recovery mechanisms
* Ret
urn
4.9 5.3
p y– Continuous process improvement– Pipeline integrity management recovery– Pension and other post-employment
benefit costs
Total Distribution Companies2005 2006 2007 2008G 2008 Allowed
Page | 15
benefit costs
* ROE calculations are consistent with utility ratemaking in each jurisdiction and not consistent with GAAP returns
Energy ServicesEnergy Services
• Access to prolific supply
Leased Assets Enhance Our Ability to Provide Premium Services to Customers
p pp yand high-demand areas
• Industry knowledge and customer relationshipscustomer relationships
• Deliver natural gas together with bundled ,reliable products and services – Premium, no-notice Storage 96 Bcf of capacity
Leased PipelineLeased Storage
Premium, no notice services
– Primarily to LDCs
Storage 96 Bcf of capacity2.4 Bcf/d of withdrawal rights1.6 Bcf/d of injection rights
Transportation 1.8 Bcf/d of firm capacitySales 3.3 Bcf/d in 2007
3.1 Bcf/d in 2006Margin $0 19/MMBtu in 2007
Page | 16
Margin $0.19/MMBtu in 2007 $0.22/MMBtu in 2006
Energy ServicesEnergy Services
Storage Transportation Optimization Retail TradingUtilize leased capacity to meet customers’ Enhance storage and Sell natural gas supplies Extract trading
Sources of Income
Utilize leased capacity to meet customers baseload, swing and peaking requirements
Provide marketing and risk management services
Capture arbitrage opportunities
Enhance storage and transportation margins through application of market knowledge and risk management skills
Sell natural gas supplies and provide risk management services to commercial and industrial customers and to consumers who participate in LDC
Extract trading margins around our physical positions through market knowledge, volatility or inefficiencies
participate in LDC customer choice programs
Spread- and demand-based
Spread- and fee-based Spread-, commodity-and derivative-based
Commodity-based Spread-, commodity-and derivative-based
54%11% 8%
27%
6% 7%
54%27%60%27%
Page | 17
2008 Operating Income Guidance $180 million
2007 Operating Income$205 million
ONEOK PartnersONEOK Partners
• Primary growth engine for ONEOK
Overview
• Aligned interests: ONEOK is general partner and 47.7 percent owner• Value creation through integrated operations• Cash flow is more than 60 percent fee based
Natural Gas Natural Gas Liquids
PipelinesGathering & Processing Gathering & Fractionation Pipelines
– Stable earnings through diversity– Diversified supply basins, producers and
t t iti t i l tilit
– Connected to over 90 percent of the Mid-Continent region’s processing plantsAllows us to provide full range of services
Page | 18
contracts mitigate earnings volatility – Allows us to provide full range of services to our customers
ONEOK PartnersONEOK Partners
Distribution Growth
Delivering Consistent Growth and Stable Earnings
Unitholder Return• Nine increases with ONEOK as
general partner• Target coverage ratio: 1.05x to
• Unit price increase of 27 percent since 2006
• Total return of 71 percent since 1.15x
$67 60$69.26
80%
90%
$60
$70Unit Price Total Return
$1 025 $1.04
Distributions Per Unit
2006; 137 percent since 2003
$48.00
$57.57
$67.60$61.25 $57.50 $60.90
50%
60%
70%
80%
$40
$50
$60
$0 88
$0.95 $0.97 $0.98 $0.99 $1.00 $1.01
$1.025
10%
20%
30%
40%
$10
$20
$30
ONEOK P t Al i MLP I d
$0.80
$0.88
Page | 19
0%$01Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08
ONEOK Partners Alerian MLP Index
1Q06 3Q06 1Q07 3Q07 1Q08
*Unit prices are closing prices at last day of quarter; Second quarter 2008 through closing price on 6/16/08
ONEOK Partners ONEOK Partners -- Roadmap to GrowthRoadmap to Growth$1.6 Billion of Internal Growth Projects Under Way, 2007-2009
Grasslands plant expansion expansion
$30 million Guardian II Expansion
$277 millionFort Union Gas Gathering Expansion
(37% owner) Bison Pipeline(50% owner)
Piceance Lateral Piceance Lateral
Overland Pass Pipeline
$535 million
NGL & Refined Product System Acquisition$300 million
$120 millionNGL Upgrade Projects
$216 million
Woodford Extension Woodford Extension $25 million 2010 -2015 Internal Growth Projects:
$300-500 million/year
Arbuckle Pipeline $260 million
Natural Gas Gathering & ProcessingNatural Gas PipelinesNatural Gas Liquids Gathering & FractionationNatural Gas Liquids Pipelines
yplus acquisitions
Page | 20
q pGrowth Projects
ONEOK Partners ONEOK Partners –– Growth StatusGrowth Status
MAJOR PROJECTS*: Contracts / Volumes Fee Based Expected In Service
Complement Existing Infrastructure and Core Operating Capabilities
pOverland Pass Pipeline Long-term supply agreement
with Williams Third Quarter 2008
Related NGL projects Infrastructure upgrades to accommodate growth Second Quarter 2008
Arbuckle Pipeline Anchor customers committed Early 2009
Piceance Lateral Dedicated supplies from two Williams plants Second Quarter 2009
Dedicated supplies from DevonWoodford Shale extension Dedicated supplies from Devonand Antero processing plants Second Quarter 2008
Grasslands Plant expansion Supply growth driven by drilling and production Second Half 2008
Fort Union Gas Gathering e pansion (37%) F ll s bscribed Phase I – CompleteFort Union Gas Gathering expansion (37%) Fully subscribed pPhase II – 2Q 2008
Guardian Pipeline extension Anchored by two 15-year agreements Fourth Quarter 2008
Bison Pipeline (50%) Anchor customer committed Fourth Quarter 2010
Page | 21
Bison Pipeline (50%) Anchor customer committed Fourth Quarter 2010
* Additional project details included in the appendix, slides 53 - 69
ONEOK Partners ONEOK Partners -- Growth ContributionGrowth Contribution
• $1 6 billion of internal growth
Complements Existing Infrastructure and Core Operating Capabilities
• $1.6 billion of internal growth projects through 2009– Growth projects generate $300+
EBITDA* Generated
significant cash flow– Growth EBITDA generated is
primarily fee based$125-$150
$260+
Mill
ions
• $300-$500 million in growth projects for 2010-2015
• Incremental acquisition 2008 2009 2010$
In M
• Incremental acquisition opportunities
2008 2009 2010
Page | 22
* 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
Growth at OKS benefits OKEGrowth at OKS benefits OKEHow Growth at ONEOK Partners Benefits ONEOK
DividendsNet Income
IDR and Equity Income
Higher Distributions
EBITDA Growth
Capital Projects
Unit Price AppreciationUnit Price Appreciation Share Price AppreciationShare Price Appreciation
EBITDAGrowth
OKS Incremental EBITDA is $1 million• Partnership is in “high splits”• All incremental cash flow is distributed• Annual depreciation is $125 thousand
Impacts OKE income by $684 thousand (pre-tax)• $500 thousand* from incentive distribution rights• $184 thousand* in equity earnings from general
partner interest and limited partner units owned
DistributionGrowth
Incentive Distribution Rights*
Limited Partner Units**
Every 1 cent quarterly increase Results in $3.5 million annual increase in cash flow and income before taxes
Page | 23
Every 1 cent quarterly increase Results in $1.7 million annual increase in cash flow
* Assumes “high splits”** ONEOK owns 42.4 million limited partner units
Financial HighlightsFinancial Highlights
Page | 24
Investing in ONEOK PartnersInvesting in ONEOK Partners
ONEOK: ONEOK Partners:
GrowthRedeploys $1 Billion
Raises $1 Billion
• Repurchased 7.5 million shares for $370million in June 2007P id $402 illi f t i d bt i
To finance $1.6 billion of internal growth projects:• Permanent debt financing of $600 million in
S t b 2007• Paid $402 million of maturing debt in February 2008
• Purchased 5.4 million OKS common units for $303 million in March 2008
September 2007• Common unit offering, generating net
proceeds of $460 million, in March 2008 – 2 5 million units public offering
– Increased ownership to 47.7 percent– Contributed $9.6 million to maintain 2
percent general partner
2.5 million units public offering– 5.4 million units sold to ONEOK
Page | 25
Solid Financial PositionSolid Financial PositionStrong Balance Sheet• Strong credit rating
Stable Cash Flow• Continued strong free cash flow • Strong credit rating
– S&P: BBB– Moody’s: Baa2
• Capital Structure
• Continued strong free-cash flow available for:
– Acquisitions– Debt repayment
– Investment in OKS– Share repurchase• Capital Structure
– Goal: 50/50 Capitalization
– Debt repayment– Dividend increases
Capital
– Share repurchase
Total Debt48%
Equity52%
Surplus $160
Capital Expenditures
$182
Dividends $163
Stand –Alone Capitalization Stand –Alone Cash Flow
$163
Page | 26
March 31, 2008 2008 Guidance (Millions)
Shareholder ValueShareholder Value
Dividend Growth Shareholder Return
Delivering Consistent Growth and Stable Earnings
• 12 dividend increases since January 2003
• Target: 50-55 percent of
• Share price increase of 49 percent since 2006
• Total Return of 100 percent since recurring earnings 2006; 209 percent since 2003
$51.68$51.68
120%$502 0.
34
$0.3
6
$0.3
8Dividends Per Share Share Price Total Return
$33.06$33.06$38.25$38.25
$43.12$43.12$45.29$45.29
$$$48.53$48.53
$44.63$44.63 $49.11$49.11
60%
80%
100%
$30
$40
7 0.19 $0
.21
$0.2
3$0
.25
$0.2
8
$0.3
0$0
.32
$0 $
18
0%
20%
40%
$0
$10
$20
$0.1
55 $0.1
7
$0$0.1
S&P 500ONEOK, Inc.
Page | 27
0%$01Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08Q4 2002 Q4 2003 Q4 2004 Q4 2005 Q4 2006 Q4 2007
*Share prices are closing prices at last day of quarter; Second quarter 2008 through closing price on 6/16/08
Why Invest in ONEOK?Why Invest in ONEOK?
• Strong track record of creating value for both customers and
Key Investment Considerations
g ginvestors, through rebundling services across the value chain and applying our capabilities to other commoditiesSt t i t ti lifi l b i d k k t • Strategic assets connecting prolific supply basins and key markets
• Significant growth potential through continued strategy execution• Demonstrated financial discipline• 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
Questions & AnswersQuestions & AnswersQuestions & AnswersQuestions & Answers
Page | 29
Page | 30
AppendixAppendix
Page | 31
Our Vision: A Journey by DesignOur Vision: A Journey by DesignValue Creation Through Re-bundling – How We Got Here
Acquired NGL and refined petroleum product pipeline
t f Ki d
Acquired Texas Gas Service
Oklahoma Natural Gas and exploration &
production are primary businesses
Acquired Oklahoma gathering and
processing assets from Koch
Acquired Kansas Gas Service and Kansas natural gas pipelines
storage and marketing ,
system from Kinder Morgan
Acquired Conway NGL assets from
Texaco
businesses
1996 1998 2000 2002 2004 2006
Oklahoma Unbundling: Storage & Gathering
deregulated; Distribution & Transmission assets become
separate utilitiesAcquired 85% general partner interest
in Northern Border Partners
Acquired NGL system from Koch
storage and marketing from Western
Resources
Created ONEOK Partners: Dropped down $3 billion of assets to Northern Border
Partners; became sole
Built NGL pipeline from Bushton to
ConwayAcquired NGL storage and fractionation
199519951996
1997
1998
1999
2000
2001
2002
2003
2004
2005
200620072007
Created E S i
Sold and exited exploration &
production business
Partners; became sole general partner
assets from Kinder Morgan
Acquired gathering and processing and natural gas pipeline, storage and
marketing assets in Texas, Oklahoma and Kansas from Dynegy and Kinder
Morgan
Announced $1.6 billion of internal growth projects at
ONEOK Partners,
2006 — 2007
Energy Services
Page | 32
Sold Texas gathering and
processing assets
g ,$1.2 billion of which are
NGL related
DistributionDistribution
• Synchronized rate filings
Rate Strategy Progress
y g• Maintain positive relationships with regulators
Issue Solution Oklahoma Kansas TexasMargin fluctuations Straight-fixed variable ratesMargin fluctuations Straight-fixed variable rates
Revenue decoupling 1/17Weather normalization 8/17
Earnings lag More frequent filings
C t f i dj t t 8/17Cost of service adjustment 8/17
Bad debt Commodity recovery in PGA 4/17
Fixed-price plan 1/17Average payment plan
Financial hedging 7/17Physical hedging
Capital recovery Capital recovery mechanisms 6/17Return on gas in storage 2/17
Page | 33
Incentive rates Revenue sharing 2/17
Energy ServicesEnergy Services
• Contract with customers to deliver natural gas, together with
What We Do
g , gbundled, reliable products and services
• Contract for natural gas supplies• Lease and optimize storage and transportation capacity• Capitalize on market irregularities and inefficiencies
g ptim
izatio
n
MarketsTransportationStorageSupply
Trad
ing
Op
• LDC • Electric Generators
• Trading Counterparties
Retail Customers:• Industrial• Commercial• Residential
Page | 34
Energy ServicesEnergy Services
• Utilize storage and transportation assets to enhance our ability to provide i i t t
Operating Income Sensitivities
premium services to customers• Utilize hedging related to location and seasonal spreads to capture
incremental margins
$229 $205
$200
$250
$4.00
$5.00
illion
s)
$139 $166
$ 05$180
$100
$150
$2.00
$3.00
ing
Inco
me (
Mi
$/MMB
tu
$-
$50
$-
$1.00
2004 2005 2006 2007 2008 Outlook
Oper
ati
Page | 35
2004 2005 2006 2007 2008 OutlookApr. - Dec. Storage Spread Rockies to Mid-Continent Basis Spread Operating Income
ONEOK PartnersONEOK Partners
Diversified AssetsDiversified Assets
Page | 36
ONEOK PartnersONEOK Partners
• One of the largest publicly
Overview
g p ytraded MLPs
• Diversified asset base and t bl h fl
$217Natural Gas Gathering & Processing
stable cash flows– More than 60 percent fee based
• Value creation through $110 Natural Gas
Pipelines
Value creation through integrated operations
• Aligned interests: $92
$105 NGL Gathering & Fractionation
NGL Pipelines
Other ($3)– ONEOK: General Partner– ONEOK: 47.7 percent owner
• $5.5 billion market capitalization
Operating Income2008 Guidance: $521 million
Other ($3)
$5.5 billion market capitalization
Page | 37
ONEOK PartnersONEOK PartnersOverview
Natural Gas Gathering & ProcessingNatural Gas PipelinesNatural Gas Liquids Gathering & Fractionation
Page | 38
Natural Gas Liquids Gathering & FractionationNatural Gas Liquids Pipelines
Natural GasNatural Gas
• Connect raw natural gas production from the wellhead to k t th h
What We Do
markets through:– 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
MarketsStorage & Transportation
Gathering & Processing
Supply
Distribution Marketing Power / Industrial
Page | 39
Natural GasNatural Gas
• Two segments
Stable Earnings Through Diversity
Grasslands Plant E i
– Natural Gas Gathering & Processing
– Natural Gas Pipelines
ExpansionGuardian II Expansion
Bison Pipeline
• Diversified supply basins producers and contracts mitigate earnings volatility in
Fort Union Gas Gathering Expansion,
,
gathering and processing• Earnings on pipelines are fee
based• More than $400 million of
internal growth projects under way through 2009 Natural Gas Gathering Pipeline
Nat ral Gas Interstate Pipeline
Page | 40
y gNatural Gas Interstate PipelineNatural Gas Intrastate PipelineNatural Gas Storage Natural Gas Processing PlantGrowth Projects
Natural Gas Gathering & ProcessingNatural Gas Gathering & Processing
Stable earnings through diversity
Key Points
Willistong g y• Multiple producing basins
effectively offset natural volume declines Wind River
Powder Riverdeclines• Supply mix between small and
large producers spreads drilling and volume exposureand volume exposure
• Makeup of contract portfolio: – Eliminates material exposure to
t l i fl t tiAnadarko
Kansas UpliftHugoton
Natural Gas Gathering PipelineNatural Gas Processing Plant
natural gas price fluctuations– Spreads NGL exposure among
six products and revenue streams
Gathering 14,300 miles of pipeProcessing 13 active plants
0.7 Bcf/d capacityProduction At first quarter 2008
1,192 BBtu/d gathered624 BBtu/d processed38 MB d NGL d d38 MBpd NGLs produced
Page | 41
Natural Gas Gathering & ProcessingNatural Gas Gathering & Processing
• Strong supply focus
SupplyGas Gathered *
BBtu/dg pp y• New well connects and
growth in the Rockies offset t l d li
1,1711,1681,1821,190 1,192
natural declines910 908 852 800 803
280 274 316 371 389
2004 2005 2006 2007 1Q08Rocky Mountain Mid-Continent
* Volumes based on existing asset base
Page | 42
g
Natural Gas Gathering & ProcessingNatural Gas Gathering & Processing
• Contract restructuring has reduced commodity price sensitivity and increased fee-based business
Risk Mitigation
• Hedging strategy focuses on long NGL and natural gas positions– 2008: 72 percent hedged on NGLs and condensate at $1.39/ gallon and 78 percent on natural gas
at $9.23/MMBtu Commodity Price SensitivityContract Mix by Volume
27% 30% 31%
19% 15% 10% 6% 1% 1%3% 3% 3% 6% 8% 7% $4.8 $4.5
$3.8
$2.1$1 7 $1.6$1 1 $1 3 $1 0
Co od ty ce Se s t tyMargin Impact ($ Millions)
Co t act by o u e
25% 31% 34%
-$1.6
-$0.1 $0.3 $0.3
$1.7 $1.6$1.1 $1.3 $1.0$0.4 $0.5 $0.7
52% 51% 53%61% 61% 61%
2003 2004 2005 2006 2007 2008
Commodity SensitivityN t l G Li id 1 t/ ll i
-$3.5-$2.7
2003 2004 2005 2006 2007 2008Fee Based Percent of ProceedsKeep Whole Keep Whole w/conditioning
Page | 43
Natural Gas Liquids 1 cent/gallon increase
Natural Gas 10 cent/MMBtu increase
Crude Oil $1/barrel increase
Natural Gas PipelinesNatural Gas Pipelines
• Provides fee-based income
Key Points
Viking Gas Transmission
– Over 75 percent is demand/firm• Pipelines connect to key supply
aggregation points:G ardian Viking and Northern Guardian
Northern Border Pipeline
Transmission
– Guardian, Viking and Northern Border
• Midwestern Gas acts as a hub, offering numerous
Midwestern Gas Transmission
Pipeline
, ginterconnects for receipts and deliveries
• Storage provides premium “swing” i f i t t t i liservices for intrastate pipelines
• Intrastate pipelines are diversified through connections to numerous supply and market points
Natural Gas Interstate PipelineNatural Gas Intrastate PipelineNatural Gas Storage
Pipelines 6 920 miles 5 3 Bcf/d peak capacity
Page | 44
supply and market points Pipelines 6,920 miles, 5.3 Bcf/d peak capacityStorage 51.6 Bcf active working capacityEquity Investment 50% Northern Border Pipeline
Natural Gas LiquidsNatural Gas Liquids
• Connect raw-blended NGL production from gas processing plants to markets
What We Do
through:– Gathering via extensive pipeline systems– Fractionating to convert raw-blended NGLs to purity products
Storage services through underground caverns– Storage services through underground caverns– Marketing NGL products to end-users– Distributing purity product to markets
imiza
tion
imiza
tionMarkets
Gathering & Fractionation Storage Distribution
Opt
Opti
Petrochemical Heating RefiningNGLs EthanePropaneIsobutane
Normal ButaneNatural Gasoline
Purity Products
Page | 45
Natural Gas LiquidsNatural Gas Liquids
• Two segments
Largest Gatherer and Fractionator of NGLs in the Mid-Continent
– NGL Gathering & Fractionation– NGL Pipelines
• Connected to over 90 percent
Overland Pass Pipeline
Overland Pass Pipeline
pof the Mid-Continent region’s processing plants
• Allows us to provide a full range
Piceance Lateral
NGL Upgrade
Piceance Lateral
NGL Upgrade p gof services to our customers
• Integrated asset base creates opportunities for growth through
NGL Upgrade Projects
NGL Upgrade Projects Woodford Extension
major expansions into new supply areas– More than $1.2 billion of internal
th j t d
Arbuckle PipelineArbuckle Pipeline
NGL PipelinesNGL Gathering & Fractionation
NGL StorageNGL Fractionator
growth projects under way through 2009
gNGL Growth Projects NGL Market Hub
Page | 46
NGL Gathering & FractionationNGL Gathering & Fractionation
• Extensive raw NGL gathering t ith t 78
Key Points
system with access to 78 gas processing plants
• Mid-Continent supply growth since July 2005: July 2005: – Gathering volume up 30 percent– Fractionation volume up 27 percent– Fifteen new gas processing plant g g
connections completed• New supply commitments drive
infrastructure upgrades and expansions NGL Gathering Pipeline
NGL Stexpansions– Rockies– Barnett Shale– Woodford Shale
Gathering 2,570 miles of pipeFractionation 399,000 Bpd capacity
NGL StorageNGL FractionatorNGL Market Hub
Isomerization 9,000 Bpd capacityStorage 24.6 MMBbls capacity
Page | 47
NGL Gathering & FractionationNGL Gathering & Fractionation
• Volume growth since acquisition of Koch’s NGL system in July 2005
Supply
g q y y– New processing plant connections– Growth from existing connections
246246251251
370370385385 391391
Gathering VolumeMBpd
Fractionation VolumeMBpd
213213208208 210210 210210
224224232232
309309
275275 281281
333333 326326312312 319319
349349370370
p 30
%p
30%
p 27
%p
27%
193193 189189 193193
3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08
Up
Up Up
Up
Page | 48
Q Q Q Q Q Q Q Q Q Q Q Q
NGL Gathering & FractionationNGL Gathering & FractionationSources of Margin
Exchange and Optimization Isomerization MarketingStorage Services Optimization Isomerization Marketing
Gather, fractionate, transport and store NGLs and deliver to market hubs
Obtain highest product price by directing product movement between Conway and Mont Belvieu
Convert normal butane to isobutane
Purchase approximately one-half of exchange volumes in the Mid-Continent for resale on an index-related basisand Mont Belvieu on an index related basis
Fee-based Spread-based Spread-based Fee- and Commodity-based
73%8%6% 13%79%
8%2% 11%
2007 Gross Margin Contribution$206 million
2008 Gross Margin Guidance$214 million
Page | 49
$206 million $214 million
NGL PipelinesNGL Pipelines
• Links key NGL market centers
Key Points
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
fractionatorsfractionators• Regulation
– FERC-approved tariffsNGL PipelineNGL Market Hub
Distribution 3 350 miles of pipe withDistribution 3,350 miles of pipe with 434,000 Bpd capacity
Gathering 720 miles of pipe with 93,000 Bpd capacity
Page | 50
Strong Balance SheetStrong Balance Sheet
• $1 billion revolver
Disciplined Approach to Raising Capital for Growth
• Capital structure $1 billion revolver – Funds 2008 capital expenditures
• Permanent debt financing
Capital structure – Goal: 50/50 capitalization– Strong credit ratingg
of $600 million in September 2007 EquityDebt
• Common unit offering in March 2008, generating net
d f $460 illi
y51%49%
proceeds of $460 millionCapitalization: March 31, 2008
Page | 51
Stable Cash FlowStable Cash Flow
• Predominantly fee based
Cash Flow Stability Managed Within Each Segment
Predominantly fee based – Large growth projects under way increase fee-based income
• Commodity and spread risk is measured and managed – 2008: 72 percent hedged on NGLs and condensate at $1.39/gallon
and 78 percent on natural gas at $9.23/MMBtu
Fee60% Commodity
27%Spread
Fee63% Commodity
26%SpreadSpread13%
2007 Gross Margin: $896 million
Spread11%
2008 Gross Margin: $1.0 billion
Page | 52
2007 Gross Margin: $896 million 2008 Gross Margin: $1.0 billion
ONEOK PartnersONEOK Partners
Growth ProjectsGrowth Projects
Page | 53
ONEOK Partners ONEOK Partners -- Growth ContributionGrowth Contribution
• Growth projects generate significant cash flow
Complements Existing Infrastructure and Core Operating Capabilities
p j g g• Growth EBITDA generated is primarily fee based• Incremental acquisition opportunities
$260+ $300+
$91 $1,088
…………….Capital Expenditures…...………… …………….EBITDA* Generated…...…………
$125-$150
$
In M
illio
ns
In M
illio
ns$650
$997
$60 $710
$300-$500/year
2008 2009 2010
$ I
$ I$650
$105 $60
2007 2008 2009 2010-2015M i t G th
$165
Page | 54
* 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
Maintenance Growth
Growth Projects: StatusGrowth Projects: Status
Natural Gas Liquids
Coming Online During Second-quarter 2008
Natural Gas q• $216 million Infrastructure upgrades
– Accommodates Overland Pass Pipeline supply
• $110 million Fort Union Gas Gathering expansion– 37 percent owner Pipeline supply
– Bushton fractionator expansion– Pipeline capacity expansion between
Conway, Medford and Mont Belvieu
– 37 percent owner– Fee-based earnings– Doubles capacity, fully subscribed
y• $25 million Woodford Shale extension
– 78-mile extension of Oklahoma gathering systemg g y
– Connects two processing plants capable of producing 25,000 Bpd of NGLs
Page | 55
Natural Gas Gathering & ProcessingNatural Gas Gathering & Processing
Grasslands Processing Plant Expansion
Growth Projects
Plant ExpansionProject Status
Costs $30 Million
Completion Dates
On line in phases by second half 2008
Phase 1 Phase 2
Grasslands Expansion
Processing plant tie-ins completed
Permits approved
Construction completed
Equipment ordered
Phase 1: Processing Increased from 63 to 100 MMcf/d capacity
Phase 2: Fractionation Increased from 8 to 12 MBpd capacity
Page | 56
Natural Gas Gathering & ProcessingNatural Gas Gathering & ProcessingGrowth Projects
Fort Union Gas GatheringP j t St tProject Status
Costs $110 Million (Project Financed)
Completion Dates
• Phase 1 – In service • Phase 2 Second Quarter 2008Dates • Phase 2 –Second Quarter 2008
Phase 1 Phase 2
Customerscommitted *
Customerscommitted *
Right of way cleared
Right of way acquired
Pipe delivered Pipe delivered
St t d 11/07 Construction
ONEOK Partners GatheringFort Union (37%)Lost Creek (35%)Bi H (49%) Started up 11/07 Construction
contracts let
• Backed by volume commitments *• Doubles capacity
Big Horn (49%)
Fort Union Gas GatheringPhase 1: Adds 44 miles of pipe and 200 MMcf/d capacity
Phase 2: Adds 104 miles of pipe and 450 MMcf/d capacity
Page | 57
Natural Gas PipelinesNatural Gas Pipelines
Guardian Pipeline
Growth Projects
Project Status
Costs $277 Million
Completion Date
• Notice to Proceed received May 1, 2008• In service during fourth quarter 2008
Customerscommitted * Pipe ordered
In Progress Right of way acquired Pipe delivered
Permits Construction contracts let
• Fully subscribed *• Anchored by two 15-year agreements *
Guardian PipelineCapacity Incremental of 537 MMcf/d to eastern WisconsinExtension 119 miles from Ixonia to Green Bay
Existing PipelineProposed Extension
Page | 58
Extension 119 miles from Ixonia to Green Bay
Natural Gas PipelinesNatural Gas Pipelines
Bison Pipeline
Growth Projects
Project StatusCosts $498 Million
Proposed interstate pipeline that would extend
ProjectProposed interstate pipeline that would extend from natural gas gathering facilities located in the Powder River Basin to a point of interconnection with Northern Border Pipeline.
CompletionCompletion Date Projected in service November 2010
CustomersCommitted
Letter agreement reached for 250 MMcf/d foundation shipper
Bi Pi li
Bison Pipeline
Equity Investment 50% Northern Border Pipeline
Bison PipelinePipeline 289 miles, 24”Capacity • Initial 400 MMcf/d
• Maximum of 660 MMcf/d
Page | 59
NGL PipelinesNGL PipelinesGrowth Projects
Overland Pass Pipeline
Project StatusCost $535 Million
Completion Date Third Quarter 2008
OpalEcho Springs
DateAnchor customers committed *
Pipe ordered
Public right of i d
Constructiont t l t
Overland Pass Pipeline
Overland Pass Pipeline
way acquired contracts let
Permit approved and federal right of way acquired
700 miles
Construction complete
Overland Pass Pipeline
Pipeline 760 miles, 14-16”
Capacity • 110,000 Bpd of raw NGLs with two pump stations
• Expandable to 220,000 Bpd with additional pump stations
• 99/1% joint venture with 50/50 option within two years of first flow
• Long-term supply agreement with Williams (~60,000 bpd) *• Additional commitments of 50,000 Bpd in various stages of
negotiation
Page | 60
Overland Pass PipelineOverland Pass Pipeline760-Mile Natural Gas Liquids Pipeline from Opal, Wyoming, to Conway, Kansas
Page | 61
Overland Pass PipelineOverland Pass Pipeline760-Mile Natural Gas Liquids Pipeline from Opal, Wyoming, to Conway, Kansas
Page | 62
NGL PipelinesNGL PipelinesGrowth Projects
Piceance Lateral
Cost $120 Million
Completion Second Quarter 2009
Project Status
Date Second Quarter 2009
Anchor customers committed *
Late2008
Permitting expected
I Right of way Mid ConstructionIn progress g yacquired 2008 contracts let
• 99/1% joint venture with 50/50 option within first two years of first flow
• Dedicated supplies from two Williams plants (~30,000 Bpd) *Overland Pass PipelinePiceance Lateral
Piceance LateralPipeline 150 miles, 14”Capacity 100,000 Bpd of raw NGLs
• Additional commitments in various stages of negotiation
Page | 63
Natural Gas LiquidsNatural Gas LiquidsGrowth Projects
Infrastructure Upgrades
Cost $216 Million
Project Status
Infrastructure Upgrades
Bushton Fractionator
Expand facility from 80,000 to 120,000 BpdPermit approvedConstruction under way
Bushton StorageUpgrade facility to accommodate raw NGLs and ethane/propane mix
Construction under way
Bushton-to-Medford Pipeline
Construct 135-mile pipeline with a capacity of 120,000 Bpd of ethane/propane mix
Construction complete
Sterling Expansion Expand pipeline by 60,000 BpdConstruction under wayg p Construction under way
Bushton-to-Conway Expansion
Expand pipeline by 14,000 BpdEquipment ordered
NGL Gathering & FractionationNGL PipelinesNGL Storage
Page | 64
NGL FractionatorNGL Market Hub
NGL Infrastructure UpgradesNGL Infrastructure UpgradesBushton, Kansas
Page | 65
NGL Infrastructure UpgradesNGL Infrastructure UpgradesBushton, Kansas
Page | 66
NGL Gathering & FractionationNGL Gathering & FractionationGrowth Projects
Woodford Shale Pi li E t i
Cost $25 Million
Project Status
Pipeline Extension
Completion Date Second Quarter 2008
Anchor customers committed *
Pipe delivered
Public right of way acquired
In Progress Construction
• Connecting to two processing plants, operated by Devon
NGL Gathering PipelineWoodford Extension g p g p , p y
Energy and Antero Resources, in southeast Oklahoma
Woodford Shale Pipeline Extension
NGL StorageNGL FractionatorNGL Market Hub
Page | 67
Pipeline 78 miles, 6-8”Expected Volume 25,000 Bpd of raw NGLs
NGL PipelinesNGL PipelinesGrowth Projects
Arbuckle Pipeline
Cost $260 Million
Completion
Project Status
Completion Date Early 2009
Anchor customers committed *
Pipe delivered
In progress Right of way acquired Mid 2008 Construction
contracts let
• Expect approximately 65,000 Bpd at start up, and additional commitments of 20,000 Bpd are in various stages of negotiation *
NGL Gathering PipelineNGL PipelineNGL Arbuckle PipelineNGL Storage
stages of negotiation • Major expansion into one of the most active drilling areas
in the U.S. • Allows delivery to Gulf Coast fractionatorsArbuckle Pipeline
Pipeline 440 miles, 12-16”Capacity • 160 000 Bpd of raw NGLs with four pump
NGL FractionatorNGL Market Hub
Page | 68
Capacity • 160,000 Bpd of raw NGLs with four pump stations
• Expandable to 210,000 Bpd with additional pump stations
NGL PipelinesNGL PipelinesStrategic Acquisition
NGL d R fi d P t l
Project Status
NGL and Refined PetroleumProducts System Acquisition
Cost $300 Million
Closing Date October 2007
Geographically and in NGL Value Chain:
Footprint Expansion
• Connects Bushton and Conway, Kansas,to Chicago, Illinois
• Adds a refined petroleum products line to our portfolio
Revenues > 90% fee-basedNGL PipelinesNGL Gathering & Fractionation
• First entrance into refined petroleum products market
• Creates growth opportunities in Midwest markets
NGL GrowthAcquired NGL Pipeline SystemNGL StorageNGL FractionatorNGL Market Hub
Page | 69
Pipelines 1,627 miles, primarily 8-10”Capacity for Purity & Refined Products
134,000 Bpd of transport 978,000 Bbl of storage