ONEOK Inc at Bank of America Energy Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : And maybe we can start out with just broadly maybe give us a high-level overview of the new business now that you have, the legacy Bakken integrated NGL system with the Magellan refined product system.

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : Great. And how are the integration efforts going so far and maybe the key focus areas that you're looking at in terms of priority?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : So maybe we can touch on those commercial synergy numbers because we have a very broad range, right? Maybe $200 million to $700 million on the high side. And then on your last quarter call, it seemed like you have a bunch of opportunities that can maybe be on top of that, maybe I'm putting words in your mouth. But when we think about the range there and the $700 million at the top end, how confident are you on achieving the higher end? And then how would you think about timing? When you kind of put the synergies in there, you said maybe intermediate to longer term. So when would we realize those?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : So we talked about butane blending. The costs are definitely going down from you self-sourcing that. Historically, Magellan has had a nice-sized business in the Mid-Con. Are you looking to expand that in other regions? More scale in the Mid-Con. How would you think about sizing the butane blending business at this point? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2023 / 5:00PM, OKE.N - ONEOK Inc at Bank of America Energy Conference

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : And I think maybe the most misunderstood portion of this is the bundling where I know you have producers in the Bakken, producers in the Permian. You can offer them multiple services, different basins, different products. Can you maybe provide just some clarity on, let's say, where you could bundle refined products and NGLs, crude NGLs, just the different combinations and not specifically naming anybody, but the theory behind it?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : Great. I want Dan to have some dialogue here. So maybe you can turn to the capital allocation, and we can turn back to the Permian a little bit later. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2023 / 5:00PM, OKE.N - ONEOK Inc at Bank of America Energy Conference

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : Great. And then as a larger-scale company with added fee-based earnings, how is your target leverage changed? And what is a good long-term market going forward? I think when you first announced this transaction, you said 3.5x by '26 unless there were some capital projects, which could push that to '27. Has that changed at all? And is that still kind of a long-term leverage target we should be using?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : Can I just follow up with that Moody's 4x. I'm guessing that would mean for the right transaction, you would go above that if you had a path below that very quickly as you did with Magellan. But just in normal course of business, you wouldn't be comfortable with leverage starting to slip above 4x, like just from projects coming online that...

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : Sorry, I think I asked the question the wrong way. Basically, that's the marker for the mid-BBB ratings. Could we -- would we expect you to defend the mid-BBB ratings if you got into that scenario?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : Sorry, I asked that wrong first time. I'll pass it back to...

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : Got you. Daniel?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : And then how are the GPMs trending in terms of NGL content?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : So your argument is with flat crude production going to see rich gas growth for a long time. Is that fair?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : Got it. And obviously, the topic that has come up in the 3Q earnings season has been the Permian NGL pipes announced and your friends at Enterprise will be up here later today with our [Bahia] expansion. So you guys don't have the G&P system in the Permian. And you've been clear that that's something you haven't historically focused on, but you're expanding West Texas low cost to over 700,000 barrels per day. So kind of, let's say, 500,000 barrels per day of increased system capacity. How do you plan to fill that without a G&P system? And what's the strategy there?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : So if I could ask a follow-up to both of you on that. So maybe one of the bundling concepts that hasn't been appreciated, and tell me if I'm putting words in your mouth, is that you have a large producer that has in kind rights in the Bakken. And now you can offer them that a bundled deal to take away their NGL both in the Permian and the Bakken. Is that fair?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : And with WesTex, geographically, can you touch pretty much anywhere in the Midland and the Delaware? Or are you focusing more on one of the basins versus the other? Can the pipe kind of hit anywhere in the Permian that the producer would want to move the barrels of the processing plant?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : And Walt, when you say that G&P can necessarily compete in the stack, what about when you think about all of the downstream benefits, so maybe filling up latent capacity with T&F and then ultimately, if you went to the export business? And if you think about it as the engine that's giving you the volumes that give you growth. Would you look at it as kind of like a stand-alone margin or capital allocation decision? Or could you look at it as, hey, this is really going to allow us to increase frac capacity and get more maybe into the export game longer term?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : And just to round that out, the -- I guess, the present value of the tax benefits that you adjusted for the transaction, that's lower than the full amount you could completely utilize, right? So there are financial transactions you can make to fully utilize the NGLs -- NOLs, sorry...

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : Right. Great. And the last topic I wanted to hit on was the Saguaro natural gas pipeline. You've had great success with Roadrunner in some of other pipes that go down to the border, 20-year contract. And it looks like Mexico Pacific has 2 of the trains contracted. We just saw some news here today that the (inaudible) moderate pipeline that would probably be the impediment is really gaining some traction here that would connect the Permian to the West Coast of Mexico. So when we think about that pipeline, I think you guys have said there's a possible FID around year-end '23. And if you were to go forward with it, you would likely be the operator, but you probably want an equity partner. Maybe you can just expand on that or tell me where? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 15, 2023 / 5:00PM, OKE.N - ONEOK Inc at Bank of America Energy Conference

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : That's right. So there's some major producers that are taking capacity in Mexico Pacific that would likely -- it's some equity volumes to -- Okay, great. Great. And then maybe with -- if anyone has any questions for the last 4 minutes, I can ask a few more and let you guys close out, but anyone in the audience? All right. Well, I'll continue. So the back to the Bakken be possible -- is it possible or probable with Elk Creek expansion? And does that kind of send a message that, hey, the Bakken is continuing to grow? What's the latest on that one?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : Got it. Any last comments for you guys? I'll -- and -- otherwise, I'll leave you with one last one.

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : Walt, maybe this is just for you. So on ONEOK, obviously, great footprint, Bakken, S&P 500 company. It seems like when oil moves you're one of the names that trade up and down based off of that with NGL pricing, and that's not necessarily how your business works. When you think about shareholder value and putting Magellan and ONEOK here together, was part of the rationale really that you have a more stable business that isn't subject to oil prices kind of moving your stock price up and down when the beta shouldn't be there?

Question: Indraneel Mitra - BofA Securities, Research Division - Analyst : All right. I think 12 seconds left, just on time. We really appreciate the time, and thank you for coming.