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. Agenda
• Strategy Gibson
• ONEOK Partners Gibson
• Distribution Kneale
• Energy Services Kneale
• Financial Review Kneale
• Questions and Answers Gibson/Kneale
4
5. Key Strategies
• Consistent growth and sustainable earnings, manage our balance sheets
• Strategic acquisitions that provide long-term value
• ONEOK Partners anticipated to be ONEOK’s primary growth vehicle
• Improve profitability at ONEOK Distribution Companies
• Continue focus on physical activities in ONEOK Energy Services
• Operate in a safe and environmentally responsible manner
• Attract, develop and retain employees to support strategy execution
5
10. ONEOK Partners Key Points
• Integrated operations contribute to value creation
– Commercial and operating synergies through a
common 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
• The partnership is well positioned to grow
• Operating philosophy reduces asset reliability
risks
10
11. Cash Flow Diversity
• Predominantly fee based
– 65 percent of margin comes from fee-based business
• Commodity and spread risk is measured and managed
• Cash flow stability managed within each segment
Pre-AssetSpread
Dropdown Post-Asset Dropdown
0% Spread
Commodity 7%
20% Commodity Fee Based
Fee Based
28% 65%
80%
Total gross margin: $511 million Total gross margin: $834 million
2005 Actual 2006 Guidance 11
12. Internal Growth
• Significant growth opportunities
• Efficient use of capital
• Projects underway in excess of $1.1 billion
– Overland Pass Pipeline ($433 million)
– Related NGL projects ($173 million)
– Guardian II ($260 million)
– Midwestern extension ($37 million)
– Other projects ($240 million)
• More than 25 active projects announced, under evaluation or negotiation
• Capital guidance for 2006
– $178 million for Growth
– $63 million for Maintenance
12
13. Growth Projects – Capital and EBITDA Timing
• Over $1.1 billion of internally generated growth projects
• EBITDA contributions begin in 2006
• Attractive returns – CAPEX as a multiple of EBITDA in the 3-6 times range
• 2008 EBITDA contribution greater than $150 million; increasing in 2009 and beyond
CAPITAL EXPENDITURES 2006 2007 2008 2009 + TOTAL
MAJOR PROJECTS
Overland Pass 38 251 144 433
Related NGL projects 22 113 38 173
Guardian II extension 8 90 162 260
Midwestern extension 18 19 37
Sub-total 903
OTHER PROJECTS
Gathering & Processing 65 65 58 188
Natural Gas Liquids 17 11 6 34
Pipelines & Storage 7 1 1 9
Interstate Pipelines 3 3 3 9
Sub-total 240
TOTAL GROWTH CAPITAL 178 553 412 1143
13
Investment
EBITDA Contribution
14. Internal Growth – Overland Pass Pipeline
• A 99/1 percent joint venture with Williams for
$433 million with 50/50 option
• 110,000 bpd capacity – easily expandable to
150,000 bpd
• Efficient alternative due to low fuel costs
• Supply growth expected primarily from new drilling
– Current pipeline infrastructure expected to be at capacity
• Long-term supply agreement with Williams (~ 60,000 bpd)
• In negotiations for additional supplies
• 750 miles, 14-16 inch line
• Construction: Summer 2007
• Completion: Early 2008
14
15. Internal Growth – Overland Pass-related NGL Projects
• Associated with Overland Pass Pipeline project, an additional $173 million in other
downstream infrastructure upgrades and expansions are underway:
– Upgrade and expand the Bushton facilities from 80,000 bpd to 160,000 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 ONEOK Partners Bushton-to-Conway
pipeline
15
16. Internal Growth – Guardian Pipeline
• 106-mile extension from Ixonia to Green Bay,
Wisconsin
• Incremental capacity of 537,000 Dth/day to
eastern Wisconsin
• Capital expenditures estimated to be $260 million
• Project anchored by two 15-year agreements with:
– Wisconsin Energy
– WPS Resources
• Construction to begin after FERC approval,
expected early 2008
• Target completion November 2008
16
17. Acquisition – Natural Gas Liquids Storage
• $40 million to purchase and
invest in related infrastructure
improvements in Mont Belvieu,
Texas
• Adds 14.6 million barrels of
capacity
• Currently connected to existing
NGL infrastructure
• Enhances value of our existing
assets and allows us to provide
our customers with additional
services
17
19. Distribution
Distribution Strategies
647,000
Improve profitability through: customers
• Rate filings
• Cost Control
820,000
• Business Process Improvement
customers
576,000
• Customer programs customers
19
20. Distribution
Rate Strategies
• More frequent and synchronized rate filings
• Maintain positive relationships with regulators
Issue Solution Oklahoma Kansas Texas
Bad Debt Commodity recovery in PGA 2/17
Fixed-price Plan
Average Payment Plan
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
Volumetric sensitivity Two-tier rate plan
Decoupling 1/17
Margin Fluctuation Weather Normalization 7/17
Optimize capacity Revenue sharing 2/17
20
21. Distribution
Kansas Gas Service – Rate Case
• $52.0 million settlement approved
November 16th
– Adds $44-47 million in 2007 operating
income
• Implementation January 1, 2007
• As a result, the Distribution segment
will now earn 8.5 percent return on
equity
21
22. Energy Services
Energy Services Key Points
• Deliver bundled, reliable products and
services in exchange for premium value,
primarily to LDCs
• Lease transportation and storage capacity,
connecting the industry’s major supply and
demand centers
• Optimize our storage and transportation
capacity through the daily application of
market knowledge and effective risk
management techniques
• Grow earnings in our retail business by
increasing market share, while maintaining
current per-unit margins
• Execute trading arbitrage opportunities
around our knowledge and positions
22
23. Energy Services
Energy Services: Sources of Margin
• Storage: Winter/summer spread, demand revenues, storage financial arbitrage
• 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
Operating Income Operating Income
2006 Guidance 2007 Guidance
Trading Retail
Retail
8% Optimization 7%
7%
Optimization 8%
Storage Storage
12%
41% 50%
Transportation
Transportation
35%
32%
23
24. 2007 Guidance:
• Increased 2006 guidance
– Includes gain on sale
• Announced preliminary guidance for 2007
2006 2006 2007
Previous Revised Preliminary
ONEOK, Inc. $2.50 - $2.60 $2.60 - $2.70 $2.35 - $2.75
Gain on sale $0.28 $0.28 -
$2.22 - $2.32 $2.32 - $2.42 $2.35 - $2.75
Adjusted
ONEOK Partners, L.P. $4.77 - $4.90 $4.92 - $5.02 $3.06 - $3.46
Gain on sale $1.51 $1.51 -
$3.26 - $3.39 $3.41 - $3.51 $3.06 - $3.46
Adjusted
24
25. ONEOK Partners Distribution Growth to Unit Holders
• Three increases in 2006; first increase since 2002
• 21 percent growth in 2006
$4.00
$0.97
$3.00 $0.80 $0.80 $0.80 $0.80
$0.7625
$0.95
$2.00 $0.80
$0.80 $0.80 $0.80
$0.7625
$0.88
$0.80 $0.80 $0.80 $0.80
$0.7625
$1.00
$0.80 $0.80 $0.80 $0.80 $0.80
$0.70
$0.00
2001 2002 2003 2004 2005 2006
Q1 Q2 Q3 Q4
25
26. ONEOK Partners Growth Benefits ONEOK
EBITDA Growth Distribution Growth
• Assumptions • Limited Partner Units
– $1 million incremental EBITDA – ONEOK owns 37 million limited partner units
– Partnership is in the “high splits” – Every one cent increase results in an additional
$1.5 in ONEOK’s annual cash flow
– All incremental cash flow is distributed
• Incentive Distribution Rights
– Annual depreciation of $125,000
– Assumes “high splits”
• Impact on ONEOK income is $664,000
(pretax) – Every one cent increase results in a $3.3 million
increase in ONEOK’s annual cash flow and
– Approximately $500,000 from Incentive
income before taxes
Distribution Rights
– Approximately $164,000 equity earnings related
to limited partner units owned by ONEOK
26
27. ONEOK Is Undervalued
• Enterprise value of $7.1 billion; equity value of $6.1 billion
• Equity value per share: $55.08
• Implied P/E of 21.6
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 6.5 1,346
Trading - - - -
Total 205 2 207 1,346
ONEOK Partners **
Limited Partner Units - - 2,223
General Partner Interest 46 - 46 23 1,058
46 - 46 3,281
Total $ 412 $ 112 $ 524 $ 7,065
Long-term Debt, net of cash & gas in storage 1,007
Equity value $ 6,058
Outstanding shares 110
Equity value per share $ 55.08
Implied P/E 21.6
Current P/E-based on closing stock price at 11/27/06 16.3
27
* 2007 Guidance
** Based on price of $60.08 and annual distributions of $3.88.
31. Gathering & Processing
Gathering & Processing Risk Mitigation
• Year to date, reduced keep-whole volumes to:
– 11 percent of total contract mix (47 percent of these volumes have conditioning language)
– 16 percent of net margin for 9 months 2006
• Hedging:
– 2006: 75 percent of margin associated with POP and keep-whole contracts
– 2007: 25 percent of keep-whole spread
– Ceiling: up to 75 percent of POP and keep-whole exposure
• Sensitivities:
2006 2005 2004 2003
COMMODITY SENSITIVITY Margin Impact ($ millions)
Natural Gas 10 cent/MMbtu increase -$0.1 -$1.6 -$2.7 -$3.5
Natural Gas Liquids 1 cent/gallon increase +$2.3 $3.8 $4.5 $4.8
Crude Oil $1/barrel increase +$0.3 $1.0 $1.3 $1.1
31
32. Natural Gas Liquids
Natural Gas Liquids Key Points
• Growing NGL supply through an aggressive plant
connection program
– Connected to 90% of pipeline-connected gas plants in
Oklahoma, Kansas and Texas Panhandle
• Increasing value in the services provided
• Is primarily a fee-based business
– More than 80% of gross margin
32
33. Natural Gas Liquids
Mid-Continent Activities
• Exchange and Storage Services
– Gather, fractionate and transport NGLs from Gross Margin Contribution
processing plants to storage and market hubs
Isomerization Marketing
– Fee-based contracts 5% 9%
Optimization
Exchange &
• Optimization 9%
Storage
– Obtain highest product price by directing 77%
product movement between Conway and
Mont Belvieu
• Isomerization
– Converts normal butane to iso-butane
– Fee-based contracts 9 Months 2006 YTD
• Marketing
– We purchase approximately one-half of fee-
exchange volumes in our Mid-Continent for
resale on an index-related basis 33
34. Pipelines & Storage
Pipelines & Storage Key Points
• Pipelines and Storage produces a steady earnings
stream
– 48% fixed rate (demand based)
– 52% variable rate (commodity rate)
• Overland Pass is a significant growth opportunity
• Abundance of internal growth projects
– Natural gas storage expansion and acquisition
– Pipeline expansions
– New projects
34
35. Interstate Pipelines
Interstate Pipelines Key Points
• Provide fee-based income (demand-charge
Viking Gas
revenues) Transmission
• Access to diverse supply sources with
connections to growing markets Northern Border
Pipeline
• High utilization rates Guardian
Pipeline
Midwestern Gas
Transmission
35
