ONEOK's CEO Presents At The Barclays CEO Energy/Power Conference (Transcript)


Barclays CEO Energy/Power Conference

September 05, 2012 08:25 am ET


John Gibson - Chairman and Chief Executive Officer


Rick Gross - Barclays


Rick Gross - Barclays

Next up is ONEOK. I know it's early in the morning, but I am going to need a little problem solving some math, and so I was hoping the audience would help me out.

Last year these guys were here, and they indicated that they had announced capital projects totaling $3.4 billion to $4.4 billion. So far this year, they have added $2.9 billion to $3.2 billion to that total. They started with an unannounced backlog of $2 billion, and they continue to have an unannounced backlog of $2 billion, so I was really happy that Terry Spencer, President of ONEOK is here to kind of help me out with that, and I am also glad that he brought an awful lot of people, because I know it's a hard problem, where he brought Robert Martinovich to help him with the CFO questions and Dan Harrison to help him with administration and help you folks with some of the IR things, and we appreciate these guys being here to solve the problem.

John Gibson

Thanks, Rick. It's pleasure to be here today. Thanks for your interest in ONEOK and ONEOK Partners.

Before we get started today, I want to introduce few folks here to my right. Robert Martinovich, our Chief Financial Officer. I can't miss him, and Dan Harrison, our Senior Vice President of Communications and Investor Affairs and Human Resources, now. Then Andrew Ziola, our Director of Investor Affairs and Communications is back here somewhere with us, so. Thanks to appreciate having them along.

Let's get rolling here, and I won't spend any time on the forward-looking statement. You all know that very well. We are going to cover a number of topics today, and we've done this before. A number of times, we've talked about our vision and strategy. We will get into some detail about our assets and well we are positioned we'll talk about our track record and commitment to disciplined growth and we'll talk about our proven ability to create value for all of our stakeholders.

Touching on our vision, we over the past decade, whether it's through internal projects or acquisitions have been the result of executing our vision. Two main points about our vision, we have re-bundled services across the value chain to provide our customers with premium services. We have also applied our capabilities as a natural gatherer, transporter and marketer and distributor to other products in particular natural gas liquids and crude oil. We do this while providing non-discretionary services to our producers, our processor customers, which means the services are required to get their products to market. We'll talk about that here in a bit more detail and what I mean by non-discretionary services.

Our key strategies include growing ONEOK Partners, which is our primary growth engine and we are two-thirds of each incremental EBITDA dollar at ONEOK Partners is return to ONEOK's cash, enabling ONEOK to continue to grow it's free cash flow. For opportunities such as potentially growing the ONEOK dividend by 40% from 2012 to 2014, and buying back ONEOK shares and we'll talk some more about that here in a moment.

We've successively improved our returns at ONEOK's three regulated utilities and continue to shrink our contracted transportation and storage capacity at our energy services business while rebasing our cost structure there. We continue to evaluate acquisition opportunities that either of the entities and we do this while maintaining a strong balance sheet and investment grade credit ratings at both, ONEOK and ONEOK Partners.

Touching on our assets, we are very well positioned. We have assets to fit, work well together, connecting prolific supply bases to the key market hubs, with proven growth in and around our operating footprint which now, as Rick indicated, is approximately $6 billion in investments in the partnership planned through 2015, and a $2 billion-plus backlog of unannounced projects. We also have a demonstrated ability to create value for our investors and customers.

What we've got three primary business segments at ONEOK. ONEOK Partners, of course, provides the non-discretionary services that I indicated earlier to our producer, processors and customers generating predominantly fee-based earnings and significant cash to ONEOK. The distribution segment provides value by generating and anchoring our investment grade credit rating. The execution of right strategies over the past few years have led to an increase in sustainable earnings and close the gap between actual and allowed returns on equity. Our Energy Services segment adds value by providing utilities with secure and reliable supplies of natural gas.

At ONEOK Partners, our integrated operations connect prolific supplies to key markets, and as you will see later, we continue to expand our operations into growing areas of supply, and we'll talk a bit more about some of the shale plays here in a moment.

Our earnings at the partnership, as I indicated earlier, are predominately fee-based and have range between 50% and 68% since 2007, and we have a financially strong and supported general partner in ONEOK, which sounds more than 43% of our outstanding units.

This map really tells the story before you hear. We are active in a number of prolific shale plays across the U.S. In particular the Bakken Shale in the Williston Basin in North Dakota has provided us with a number of opportunities to develop both, natural gas and NGL-related infrastructure and as well crude oil.

Read the rest of this transcript for free on