Wyoming pipeline authority october 28 2003
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Wyoming Pipeline Authority October 28, 2003. Mark Quinlan Director Marketing. ONEOK – A Diversified Energy Company. Operate existing assets to improve returns Acquire assets that compliment and strengthen our core business Achieve an average growth of 10 percent in earnings annually.

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Wyoming Pipeline Authority October 28, 2003

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Wyoming pipeline authority october 28 2003

Wyoming Pipeline Authority October 28, 2003

Mark Quinlan

Director Marketing.


Oneok a diversified energy company

ONEOK – A Diversified Energy Company

  • Operate existing assets to improve returns

  • Acquire assets that compliment and strengthen our core business

  • Achieve an average growth of 10 percent in earnings annually

Production

Gathering &

Processing

Transportation

& Storage

Marketing

& Trading

Distribution

Business Strategy


Production strategy

ProductionStrategy

  • Acquire and develop reserves

  • Expand footprint

    • Looking for Rockies Play

  • Exploitation Company

Production Areas


Production

Production

Total Production & Reserves (Bcfe)


Gathering processing strategy

Gathering & ProcessingStrategy

  • Consolidate and rationalize assets

  • Business focus

    • Fee-based versus commodity spread

  • Mitigate processing margin volatility

    • Contract renegotiations

    • Change in operation

ONEOK Processing Plants

ONEOK Gathering Areas


Transportation storage strategy

Transportation & StorageStrategy

  • Increase throughput and margins

  • Maintain competitive cost structure

  • Strategically expand network of storage and pipeline assets

Storage

Transportation


Distribution strategy

DistributionStrategy

  • Focus on costs per customer

  • Look for acquisition opportunities

Kansas Gas Service Company

Oklahoma Natural Gas Company

Texas Gas Service Company


Financial review

Financial Review


Cash flow net of acquisition capital

Cash FlowNet of Acquisition Capital

($Million)

$232.5 (a)

$215

$341.6(a)

$311.4(a)

2000

2001

2002

Estimated 2003

Surplus

Dividends

Shortage

CapEx

(a) Includes amounts reported as discontinued operations in 2002 Form 10-K.


Operating income diversity

Operating Income Diversity

Gathering &

Processing

6%

Distribution

26%

Transportation & Storage

15%

Production

6%

Marketing & Trading

47%

2002 Est.

$386 Million


Strong credit quality

Strong Credit Quality

2001

2003

Equity35%

Equity51%

  • Focus on maintaining strong credit ratings

    • A /Baa1 (S&P / Moody’s)

  • Focus on maintaining solid liquidity

Debt49%

Debt65%


Forward looking statement

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 Securities and Exchange Commission filings.


Marketing trading

Marketing & Trading

  • Market and trade natural gas, natural gas liquids, crude oil and electricity

  • Trade around asset base to optimize margins

  • Lease gas storage and pipeline capacity assets

  • Located in the heart of the natural gas producing area

  • Provide service to most of the U.S.


Marketing trading strategy

Marketing & TradingStrategy

  • Increase leased storage and pipeline capacity

  • Grow markets served

Leased Storage


Marketing trading operating revenues

Marketing & TradingOperating Revenues


Marketing trading storage revenue streams

Marketing & TradingStorage Revenue Streams

  • Winter and summer spread

  • Demand peaking business

  • Call option strategy


Oemt strategy

OEMT Strategy

Firm

Storage

Firm

Transportation

Supply/Market

Split Connected

  • OEMT’s success is derived from its ability to optimize and trade around assets

Arbitrage

ONEOK

$

Reliability

Optionality


Oemt s pricing methods

OEMT’s Pricing Methods

  • OEMT’s Pricing is Market sensitive and Producer Friendly

    • OEMT can create a portfolio of pricing if desired by the producer

  • OEMT’s utilizes a variety of pricing methods

    • Fixed price

    • Inside FERC first of the month index

    • Gas Daily index

    • NYMEX/Basis triggers


Oemt purchases

OEMT Purchases

  • Volumes are purchased to fill OEMT’s transportation position and market commitments.

  • Purchases are not weather driven.

  • OEMT purchases baseload and swing volumes.

  • OEMT provides a reliable market for its producers.


Rockies transportation

Rockies Transportation

  • OEMT holds a significant amount of long term transportation on KMIGT, WIC, Trailblazer, and Cheyenne Plains

    PipelineVolumeTerm

    - KMIGT150,000MMBtu/day 9/30/07

    • WIC 40,000 MMBtu/day12/31/07

    • Trailblazer 50,000 MMBtu/day 3/31/18

    • Cheyenne Plains 95,000 MMBtu/day 3/31/15

      - CIG 5,800 MMBtu/day 10/31/23


Wyoming pipeline authority october 28 2003

Raton Basin

MT

Powder

River

Basin

WY

Bighorn Basin

Wind River Basin

Wind River Basin

Glen Rock

Denver-Julesburg

Basin

Green River Basin

Kanda

Cheyenne Hub

KS

KS

KS

Uinta Basin

Uinta Basin

Denver

Piceance

Basin

Anadarko

Basin

UT

CO

AZ

AZ

NM

Raton Basin

TX

TX

TX

CIG

WIC

PEPL

NGPL

Cheyenne Plains

Trail Blazer

Southern Star

KN/Pony Express

3


Mastio company s

Mastio & Company’s

Natural Gas Marketer Customer Satisfaction Study

ONEOK Energy Marketing & Trading was rated 3rd in the Major Marketer Index for 2002.


Oemt conclusion

OEMT Conclusion

  • Expand Physical Trading

  • Grow Financial Trading

  • Emphasize Growth in the Rockies

    • Secure long term supply

    • Maximize transportation position to the Mid-continent


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