2. John W. Gibson
Chief Executive Officer
ONEOK, Inc.
President and Chief Executive Officer
ONEOK Partners, L.P.
3. Forward Looking Statement
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
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 filings.
4. A Transforming Transaction
April 2006
• Purchased 17.5 percent of general partner interest
from TransCanada
– Became sole general partner
• ONEOK sold $3 billion in assets to Northern Border
Partners
– Received $1.35 billion in cash and 36.5 million units
($1.65 billion)
– ONEOK owns 45.7 percent of the partnership
• Partnership sold 20 percent of Northern Border
Pipeline to TransCanada
– Transferred operating responsibility on April 1, 2007
• Changed name to ONEOK Partners
4
5. A Structural Change
January 2006
Northern Border Partners
ONEOK
Pipelines & Storage
Gathering & Gathering & Processing
70% of Northern Border
Distribution
Processing Pipeline
Energy Services Natural Gas Liquids Interstate Pipelines
Northern Border Partners
• 82 5% of GP
82.5%
• 500,000 units
April 2006
ONEOK Partners
ONEOK
Distribution Energy Services Natural Gas Liquids
Gathering & Pipelines & Storage
Processing
ONEOK Partners 50% of Northern
Interstate Pipelines
• 100% of GP Border Pipeline
• 37 million units
5
6. ONEOK and ONEOK Partners -- Key Strategies
• Consistent growth and sustainable earnings
• Develop and execute internally generated growth projects at ONEOK Partners
• Improve profitability of ONEOK Distribution Companies
• Continue focus on physical activities at ONEOK Energy Services
• Execute strategic acquisitions that provide long term value
long-term
• 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 execution
6
8. ONEOK Partners Internal Growth Focus
• More than $1.5 billion through 2009 • Spend approximately $824 million in
capital in 2007
– Major Projects
–$$759 million for Growth
• Overland Pass Pipeline ($433 million)
– $65 million for Maintenance
• Related NGL projects ($216 million)
• Arbuckle Pipeline ($260 million) • Provides significant cash flow growth *
• Pi
Piceance Laterall ($120 million)
Lt illi )
– 2008 EBITDA contribution: >$150 million
• Guardian II ($250 million)
– 2009 EBITDA contribution: >$260 million
• Midwestern extension ($41 million)
– 2010 EBITDA contribution: >$300 million
– Other projects ($267 million)
* EBITDA contributions assume projects are completed on schedule
* Does not include WMB exercising its 50/50 option in OPPL or Piceance Lateral 8
9. Creating Value Through Acquisitions and Internal Projects
Purchase of Koch’s NGL assets for $1.35
billion created a path for internal growth
• Overland Pass: $433 million
• Related NGL Projects: $216 million
• Acquired/upgraded NGL storage: $40 million
• Arbuckle Pipeline: $260 million
• Piceance Lateral: $120 million
Doubles the size of the business
9
10. ONEOK Partners -- Strong Balance Sheet
• $750 million revolver with $740 million available; expandable to $1 billion
• Goal: 50/50 capital structure
Capitalization: March 31, 2007
Total Debt Equity
48% 52%
10
11. ONEOK Partners Distribution and Unit Price Growth
• Fi di t ib ti increases with OKE as GP
Five distribution i ith • Internal growth projects provide significant
opportunities for future distribution growth
– 24 percent growth
• Unit price increase of 67 percent since 2006
– Indicated annual rate of $3.96
Distribution G
Growth Unit Price Growth *
$70
$1.00
0.99 69.99
67.50
0.98
$0.90 0.97
0.95
$60 63.34
0.88
0 88
$0.80 56.35
0.80
$50
$0.70
49.35
47.92
$0.60
$40 42.00
$0.50
$30
24% Growth 67% Growth
$0.40
$20
$0.30
$0.20
$10
$0.10
$0
$0.00
Q4 Q1 Q2 Q3 Q4 Q1 Q2
Q1 2006 Q2 Q3 Q4 Q1 2007 Q2 11
2005 2006 2007
* Closing price on last day of quarter; Q2 2007 price is closing on 4/25/07
12. ONEOK Partners First-quarter Results
• EBITDA: $157.2 million versus $160.1 million
• DCF: $116.8 million versus $52.9 million
• EPU: $1.00 versus $
$ $0.67 (2007 EPU guidance: $
( g $3.06 - $3.46 p unit)
$ per )
• Strong performance in NGL business
$175
EBITDA
$150 157.2 160.1
157 2 160 1
$125
$100
$75
63.1
$50
47.4 43.0
36.2 36.9
37.7
$25 34.3
22.4
$0
ate
P L L
S
G& TA
NG P& rst TO
Inte
12
Q1 2007 Q1 2006
14. ONEOK Distribution – Integrated Strategy to Improve Profitability
642,000
• Rates, regulatory and legislative customers
– Synchronized filings
• Growth
– Efficient investment 821,000
customers
• Operations and maintenance cost control 573,000
customers
– Continuous process improvement
– Technology
• Customer service and programs
– Reduce seasonality
14
15. ONEOK Distribution Segment Rate Base Growth
• Efficient investment in all three states
• Extensions, service lines and technology deployment
4.8 % CAGR
• Enhanced capital recovery mechanisms in Texas and Kansas
$1,600,000 $301,855
$286,238
$269,575
$265,703
$1,400,000
$258,161 $,
$261,524
$1,200,000 $249,428
$242,344
$709,904
$699,863
$702,054
$1,000,000 $687,856
$639,622 $660,421
$800,000 $545,746
$530,735
$600,000
$400,000 $675,306
$655,315
$635,393
$623,842
$504,403
$482,111 $467,116
$446,604
$200,000
$0
2000 2001 2002 2003 2004 2005 2006 2007G
15
Oklahoma Natural Gas Kansas Gas Service Texas Gas Service
16. ONEOK Distribution – Continuing to Close the Gap
• Significant progress since 2005
• 2006 Kansas and Texas rate cases
12
helped close the operating income gap
• Work continues on: 10
– Pension and OPEB costs
eturn on Equity (%)
8
– Capital recovery mechanisms 10.2
0
– Cost-of-service rate mechanisms 6
8.0
– Cost control – continuous process
4
improvement
p
* Re 5.3
4.9
2
0
Total Distribution Companies
2005 2006 2007 G 2007 Allowed 16
* ROE calculations are consistent with utility ratemaking in each jurisdiction and not consistent with GAAP returns
17. ONEOK Energy Services Strategies
• Acquire transportation and storage
capacity
– Connects major supply and demand
centers
• Deliver bundled, reliable products and
services
– For premium value, primarily to LDCs
• Optimize storage and transportation
capacity
– Market knowledge and effective risk
management t
• Grow earnings in our retail business
– Increase market share, maintain margins
•E
Execute trading arbitrage opportunities
t t di bit t iti
– Using knowledge and positions
17
18. ONEOK -- Strong Cash Flow and Balance Sheet
• $163 million in free cash flow
ONEOK Stand-alone C h Flow
St d l Cash Fl
Capital
Surplus Expenditures
$163 million $174 million
Dividends
$153 million
illi
2007 Guidance 18
19. ONEOK -- Dividend and Share Price Growth
• Ten dividend increases since January 2003 • Dividend target: 50-55 percent of recurring
earnings
– 119 percent increase during that period
• 77 percent share price increase since 2006
– 21 percent increase since 2006
Share Price Growth*
Dividend Growth
$50
$0.35
$45 47.15
0.34
0.34 45.00
$0.30 0.32
0.32
0 32 43.12
43 12
$40
0.30
0.28 37.79
$35
$0.25
34.04
32.25
$30
$0.20
$25 26.63
26 63
$0.15 $20
$15
$0.10
77% Growth
21% Growth $10
$0.05 $5
$0
$0.00
Q4 Q1 Q2 Q3 Q4 Q1 Q2
Q1 2006 Q2 Q3 Q4 Q1 2007 Q2 19
2005 2006 2007
• Closing price on last day of quarter; Q2 2007 closing price is on 4/25/07
20. ONEOK First-quarter Results
• EPS:$1.36 versus $1.17 (2007 Q1 guidance: $1.31 - $1.41)
• All three segments performed well
• Distribution segment benefited from Kansas rate case
g
• Energy Services had an exceptionally strong quarter
$160
Operating Income *
p g 152.9
$120 129.5
120.1
103.2
104.4 100.2
93.3
$
$80
76.8
$40
$0
ers es
n L*
utio rvic
rtn TA
Pa trib Se TO
Di s
OK rgy 20
E e
En
ON Q1 2007 Q1 2006
* Total is net income
21. How Growth at ONEOK Partners Benefits ONEOK
CREATING VALUE
ONEOK Partners ONEOK
cts
me
Equity Incom
ributions
s
Net Income
e
Capita Projec
vidends
BITDA
IDR
al
EB
Div
Distr
Share Price Appreciation
Unit Price Appreciation
21
22. ONEOK Is Undervalued
• E i value per share: $ 91
Equity l h $57.91
• Growth at OKS benefits OKE
– $0.05/quarter OKS distribution increase = $4.60/share value to OKE
– $5/unit p
$ price increase at OKS = $
$1.65/share value to OKE
EBITDA Enterprise
(Millions of Dollars and Shares) EBIT * Depreciation EBITDA Multiple Value
Distribution $ 161 $ 110 $ 271 9.0 $ 2,439
Energy Services
Physical $ 205 $ 2 $ 207 6.0
60 $ 1,242
1 242
Trading $ - $ - $ - $ -
Total $ 205 $ 2 $ 207 $ 1,242
ONEOK Partners **
Limited Partner Units $ - $ - $ 2,590
General Partner Interest $ 53 $ - $ 53 23 $ 1,219
1 219
$ 53 $ - $ 53 $ 3,809
Total $ 419 $ 112 $ 531 $ 7,490
Long-term Debt, net of cash & gas in storage $ 1,004
Equity value $ 6,486
Outstanding shares 112
Equity value per share $ 57.91
Implied P/E 22.7 22
* 2007 Guidance
Current P/E-based on closing stock price at 04/25/07 17.8
** Based on unit price of $69.99 and annual distributions of $3.96
26. ONEOK Partners Growth Benefits ONEOK
EBITDA Growth Distribution Growth
• Assumptions • Incentive Distribution Rights
g
– $1 million incremental EBITDA – Assumes “high splits”
– Partnership is in the “high splits” – Every one cent quarterly increase results in a
$3.3 million increase in ONEOK’s annual cash
– All incremental cash flow is distributed
flow and income before taxes
– Annuall depreciation of $12 000
A d ii f $125,000
• Limited Partner Units
• Impact on ONEOK income is $664,000
– ONEOK owns 37 million limited partner units
(pretax)
– Every one cent quarterly increase results in an
–A
Approximately $500 000 from Incentive Distribution
i t l $500,000 f I ti Di t ib ti
additional $1.5 million in ONEOK’s annual cash
Rights
flow
– Approximately $164,000 equity earnings related to
limited partner units owned by ONEOK
26
27. OKS Cash Flow Diversity
• Predominantly fee based
– 63 percent of margin comes from fee-based business
•C
Commodity and spread risk is measured and managed
• Cash flow stability managed within each segment
Pre-AssetSpread
Dropdown Post-Asset Dropdown
0% Spread
Commodity 9%
Fee Based
Commodity
20% Fee Based
63%
28%
80%
Total gross margin: $511 million Total gross margin: $809 million
2007 Guidance
2005
27
28. ONEOK Partners Highlights
• Integrated operations contribute to value creation
– Commercial and operating synergies through a
common f t i t
footprint
– In compliance with FERC and other regulatory rules
– Shared corporate services
• Stable cash flow generated from diverse asset mix
– Supported by commercial and risk-management
strategies
• $1.5 billion in growth projects 2007 – 2009
– Grows distributions to unitholders
– Efficient use of capital
• Aligned interest
– As ONEOK Partners grows, ONEOK grows 28
29. ONEOK Partners Growth Projects -- Capital and EBITDA Timing
CAPITAL EXPENDITURES *** 2007 2008 2009 TOTAL
MAJOR PROJECTS
* Overland Pass $ 256 $ 131 $ 387
* Related NGL projects 185 15 200
Arbuckle Pipeline 70 180 10 260
Piceance Lateral 15 105 120
* Guardian II extension 85 153 238
* Midwestern extension 27 27
Sub-total $ 1,232
OTHER PROJECTS
Gathering & Processing ** $ 91 $ 58 $ 64 $ 213
Natural Gas Liquids 25 10 4 39
Pipelines & Storage 4 3 1 8
Interstate Pipelines 1 3 3 7
Sub-total $ 267
TOTAL GROWTH CAPITAL $ 759 $ 658 $ 82 $ 1,499
Investment * Capital was spent for project in 2006
29
EBITDA Contribution - assumes on-time completion ** Does not include Fort Union gas gathering project
*** Does not include AFUDC/IDC
30. OKS Internal Growth -- Overland Pass Pipeline
• $433 million
• A 99/1 percent joint venture with 50/50 option
• 750 mile 14-16 inch line
750-mile, 14 16
• 110,000 bpd of raw NGL capacity
– Expandable to 150,000 bpd with minimal capital
• Efficient alternative due to low fuel costs
• Supply growth expected primarily from new drilling
• Long-term supply agreement with Williams
Long term
(~ 60,000 bpd)
• Construction: Fall 2007
• Completion: Early 2008
30
31. OKS Internal Growth -- Overland Pass-related NGL Projects
• Associated with Overland Pass Pipeline project, an
additional $216 million in infrastructure upgrades
and expansions are underway:
– Upgrade and expand the Bushton facilities from
80,000 bpd to 120,000 bpd
– Upgrade the Bushton storage facility to
accommodate ethane/propane mix and raw NGLs
– Install 135 miles of 14-inch pipe from Bushton to
Medford with a capacity of 120,000 bpd of
ethane/propane mix
– Expand the Sterling pipeline capacity south to Mont
Belvieu by 60,000 bpd
– Add additional pump capacity to increase deliveries
on the Bushton-to-Conway pipeline
Bushton to Conway
31
32. ONEOK Partners Internal Growth -- Arbuckle Pipeline
• $260 million
• Marks another major expansion into one of the
most active drilling areas in the U S
U.S.
• 160,000 bpd of raw NGL capacity
• 440-mile, 12-16-inch line
• Finalizing dedicated supply commitments f
from
a number of NGL producers
– NGL basins in Oklahoma
– Barnett Shale in Texas
• Capability to deliver to Gulf Coast fractionators
• Completion in early 2009
32
33. ONEOK Partners Internal Growth -- Piceance Lateral
• $120 million
• A 99/1 percent joint venture with
50/50 option
p
• 100,000 bpd of raw NGL capacity
• 150-mile, 14-inch line
• D di t d supplies f
Dedicated li from t
two
Williams plants
• Other supplies being negotiated
•C
Completion in early 2009
33
34. OKS Internal Growth -- Guardian Pipeline
• $250 million
• 106-mile extension from Ixonia to Green Bay,
y
Wisconsin
• Incremental capacity of 537,000 Dth/day to
eastern Wisconsin
• Project anchored by two 15-year agreements
with:
– We Energies
– Wisconsin Public Service
• FERC certified in fall 2007
• Construction to begin early 2008
• November 2008 completion
34
35. ONEOK Partners Internal Growth -- Grasslands Expansion
• $30 million expansion
• Increase processing capacity to 100 MMcfd
• Increase fractionation capacity to 10 Mbpd
• Keep pace with growth
• Completed in phases
– Summer of 2007
– First quarter 2008
• Part of $ million in gathering and processing
$90
growth projects
35
36. OKS Gathering & Processing Key Points
• Asset diversity with balance among
basins, producers and contracts
• Growth opportunities in Mid-Continent and
Rocky Mountains
– Well connects (725 in 2006)
– Internal projects
– Strategic acquisitions
• Basin diversity effective in offsetting
naturall production d li
t d ti declines
• Commodity and spread risk mitigated
significantly
36
38. OKS Gathering & Processing Risk Mitigation
• In 2007, keep-whole volumes are forecast at:
2007
– 9 percent of total contract mix (50 percent of these volumes have conditioning language)
– Q1 2007: 6 percent of net margin
• Hedging:
– 2007: 43 percent of NGLs under POP; 52 percent of gross processing spread
– 2008: 8 percent of NGLs under POP; 9 percent of gross processing spread
– Ceiling: up to 75 percent of commodity position
• Sensitivities, excluding hedging:
2007 2006 2005 2004 2003
COMMODITY SENSITIVITY Margin Impact ($ millions)
Natural Gas 10 cent/MMBtu increase +$0.2 -$0.1 -$1.6 -$2.7 -$3.5
Natural G Li id
N t l Gas Liquids 1 cent/gallon i
t/ ll increase +$1.9
$1 9 +$2.1
$2 1 +$3.8
$3 8 +$4.5
$4 5 +$4.8
$4 8
Crude Oil $1/barrel increase +$0.5 +$0.4 +$1.0 +$1.3 +$1.1
38
39. OKS Natural Gas Liquids -- Key Points
• Growing NGL supply through an aggressive plant
connection program
– Connected to majority of pipeline-connected gas plants
in Oklahoma, Kansas and Texas Panhandle
– Many new gas processing plants are being developed in
ou core area
our co e a ea
• Increasing value in the services provided
• Primarily a fee-based business
– M th 80 percent of gross margin
More than tf i
39
40. OKS Natural Gas Liquids -- Mid-Continent Activities
• Exchange and Storage Services
– Gather, fractionate and transport NGLs Isomerization
from processing plants to storage and 4%
market hubs Marketing
– Fee-based contracts 12%
Optimization
• Optimization 4% Exchange &
– Obtain highest p
g product p
price by directing
y g Storage
product movement between Conway and 80
Mont Belvieu
• Isomerization
– Converts normal butane to iso butane
iso-butane
– Fee-based contracts
Gross Margin Contribution
• Marketing
2007 Guidance: $173 million
– We purchase approximately one half of
one-half
fee-exchange volumes in the Mid-Continent
for resale on an index-related basis
40
41. OKS Pipelines & Storage -- Key Points
• Pipelines and Storage produces a steady earnings stream
– 40 percent fixed rate (demand based)
– 60 percent variable rate (commodity rate)
• Overland Pass and Arbuckle pipelines are significant
growth opportunities
• Ab d
Abundance of internall growth projects
fi t th j t
– Natural gas storage expansion and acquisition
– Pipeline expansions
– New projects
41
42. OKS Interstate Pipelines -- Key Points
• Provide fee-based income
(demand-charge revenues) Viking Gas
• Access to diverse supply sources Transmission
with connections to growing
markets Guardian
Northern Border
• High utilization rates Pipeline
Pipeline
• Transferred operating
responsibility of Northern Border
Pipeline to TransCanada affiliate
– Own 50 percent Midwestern Gas
Transmission
42
43. OKE Distribution -- Operating Statistics
642,000
• Largest natural gas distributor in customers
Oklahoma and Kansas and third largest
in Texas
– 2,036,000 customers
821,000
• Revenues: $1.9 billion customers
573,000
• Asset base: $2.8 billion customers
• Rate base: $1.7 billion
• Approximately 2,850 employees
pp y, py
43
Year-end 2006 statistics
44. OKE Distribution -- Rate Strategies
• Synchronized rate filings
• Maintain positive relationships with regulators
Issue Solution Oklahoma Kansas Texas
Bad Debt Commodity recovery in PGA 2/17
Fixed-price Plan 1/17
Average Payment Plan
g y 17/17
Financial Hedging 6/17
Physical Hedging 17/17
Earnings Lag More frequent filings
Lag in Capital Recovery Accelerated capital recovery 5/17
Capital Recovery Return on gas in storage 2/17
Volumetric sensitivity Two-tier rate plan
Decoupling
D li 1/17
Margin Fluctuation Weather Normalization 7/17
Optimize capacity Revenue sharing 2/17 44
45. OKE Distribution -- Oklahoma Natural Gas
• Three commissioners elected to six-year
staggered terms
• Largest customer base
• 2005 rate case decision
– Increased revenues by $57.5 million
• Straight fixed-variable rate design
• Customer Choice rate design
• Weather normalization
45
46. OKE Distribution -- Kansas Gas Service
• Three commissioners appointed by
governor to four-year terms
• Coldest jurisdiction
• $73.3 million rate case filed in May 2006
– $52 million approved in November
pp
– Adds $45 million to 2007 operating income
• Bad debt recovery mechanism
• W th normalization
Weather li ti
• Capital recovery mechanism
• Revenue sharing mechanism
g
46
47. OKE Distribution -- Texas Gas Service
• Home rule regulation in 93 communities, 17 rate
jurisdictions, with Texas Railroad Commission the
appellate authority – diversifies risk
• Highest potential growth area
• 2006 approved rate filings of $4.8 million in
three jurisdictions
• Annual Cost of Service Filings in six cities
• El Paso rate case in 2007
• Bad debt recovery mechanism
• Capital recovery mechanism in five jurisdictions
• Revenue sharing mechanism
• 78 percent of revenue insensitive to weather
47
48. OKE Energy Services -- Operating Statistics
Margin
• $0.22 MMBtu in 2006
• $0.14/MMBtu in 2005
Storage
g
• Capacity of 96 Bcf
– 23 facilities under lease
– Geographic diversity
• Deliverability
y
– 2.3 Bcf/d of withdrawal rights
– 1.5 Bcf/d of injection rights
Transportation
• Over 1.8 Bcf/d of firm capacity
O e 8 c /d o capac ty
Sales
• Averaged approximately 3.1 Bcf/d of natural gas Wholesale Offices
sales in 2006 Leased Storage
Staff Retail Offices
• 17 regional wholesale and retail offices
• 101 employees 48
49. OKE Energy Services -- Sources of Margin
• Storage: Winter/summer spread, demand revenues, storage financial arbitrage
spread revenues
• Transportation: basis hedging, optionality, marketing services
• Optimization: daily/monthly from storage, transportation, split connect supplies
• Retail: customer choice programs, LDC unbundling, small commercial and industrial
• Trading: based on knowledge and opportunities to extract trading margins
2006 Operating Income 2007 G id
Guidance
Retail
Optimization
Optimization Trading Retail
7%
11%
5% 8% 7%
Storage Storage
48% 48%
Transportation Transportation
32% 34%
$229 million $205 million 49
