ONEO K, INC. 2013 ANNUAL 2013 REP ORT | FORM 10-K | OKE CREATING A NEW ONEOK. ONEOK, INC. ANNUAL REPORT 2013 100 West Fifth Street Post Office Box 871 Tulsa, OK 74103-4298 Tulsa, OK 74102-0871 www.oneok.com GLOSSARY Master Limited Partnership (MLP): A limited partnership business that Units of Measure: is publicly traded on an exchange, such as the New York Stock Exchange. MMcf = Million cubic feet ONEOK, Inc. (pronounced ONE-OAK) is the sole general partner and as of December 31, 2013, 41.2 percent owner of MLPs have one or more general partners that manage the business and MBbls = Thousand barrels ONEOK Partners, L.P., a publicly traded master limited partnership engaged in the natural gas gathering and processing, assume its legal debts and obligations. Bcf = Billion cubic feet BBtu = Billion British thermal units natural gas liquids and natural gas pipelines businesses. Natural Gas Liquids (NGL): Liquid hydrocarbons that are extracted and bpd = Barrels per day separated from the natural gas stream. NGL products include ethane, ethane/propane mix, propane, iso-butane, butane and natural gasoline. Partnership Units: The ownership interests owned by partners – the investors – in a partnership; similar to owning shares of stock in a corporation. Risk: Exposure to commodity-price, interest-rate and throughput volatility, as well as disruptions in the operations of the company’s assets. CORPORATE INFORMATION ONEOK is the sole general partner and as of December 31, 2013, owns Transfer Agent, Registrar and Dividend-paying Agent 41.2 percent of ONEOK Partners, L.P. (NYSE: OKS), a publicly traded master Wells Fargo Shareowner Services limited partnership engaged in the natural gas gathering and processing, P.O. Box 64874 natural gas liquids and natural gas pipelines businesses. St. Paul, MN 55164-0854 866-235-0232 FINANCIAL HIGHLIGHTS ONEOK is listed on the New York Stock Exchange under the symbol OKE. Year Ended December 31, 2013 www.shareowneronline.com 2013 2012 2011 The company was founded in 1906 as an intrastate natural gas pipeline Credit Rating business in Oklahoma. Consolidated financial information (millions of dollars) Standard & Poor’s BB+ (stable) Annual Meeting Moody’s Investors Service Baa3 (stable) Net margin $ 2,289.7 $ 2,350.8 $ 2,380.4 The 2014 annual meeting of shareholders will be held Wednesday, Master Limited Partnership Units Operating income $ 926.7 $ 1,102.5 $ 1,158.9 May 21, 2014, at 9 a.m. Central Daylight Time at ONEOK Plaza, Common units for ONEOK Partners, L.P. trade on the New York Stock 100 West Fifth Street, Tulsa, Oklahoma. Net income $ 577.0 $ 743.5 $ 759.7 Exchange under the symbol OKS. Auditors Net income attributable to ONEOK, Inc. $ 266.5 $ 360.6 $ 360.6 Investor Relations PricewaterhouseCoopers LLP T.D. Eureste, manager – investor relations, by phone at Two Warren Place Total assets $ 17,707.6 $ 15,855.3 $ 13,696.6 918-588-7167 or by email at [email protected]. 6120 South Yale Avenue, Suite 1850 Tulsa, OK 74136 Megan Lewis, senior investor relations consultant, by phone at Stand-alone financial information 918-561-5325 or by email at [email protected]. * Direct Stock Purchase and Dividend Reinvestment Plan Long-term debt to capitalization 42% 45% 31% The company’s Direct Stock Purchase and Dividend Reinvestment Plan Corporate Website Capital expenditures (millions of dollars) $ 317.3 $ 305.6 $ 272.7 provides investors the opportunity to purchase shares of common stock ONEOK business and financial information is available without payment of any brokerage fees or service charges and to reinvest at www.oneok.com. dividends automatically. Common stock data+ Shares outstanding 206,618,877 204,935,043 206,509,960 Data per common share+ FORWARD-LOOKING STATEMENT Net earnings – basic $ 1.29 $ 1.75 $ 1.72 The statements in this annual report that are not historical information, including statements concerning plans and objectives of management for future Net earnings – diluted $ 1.27 $ 1.71 $ 1.68 operations, economic performance or related assumptions, are forward-looking statements. Forward-looking statements may include words such as Dividends paid $ 1.48 $ 1.27 $ 1.08 “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “should,” “goal,” “forecast,” “guidance,” “could,” “may,” “continue,” “might,” “potential,” “scheduled” and other words and terms of similar meaning. Market price range+ Although we believe that our expectations regarding future events are based on reasonable assumptions, we can give no assurance that such expectations or assumptions will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements are High $ 62.18 $ 49.39 $ 43.35 described under Part I, Item 1A, Risk Factors and Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operation Low $ 40.00 $ 39.49 $ 27.6 9 and “Forward-Looking Statements” in the ONEOK, Inc. Annual Report on Form 10-K for the year ended December 31, 2013, included in this annual report. Year-end $ 62.18 $ 42.75 $ 43.35 Number of employees 1,927** 4,859 4,795 * Excluding ONEOK Partners On the Cover: Construction at ONEOK Partners’ ** As of February 1, 2014 MB-3 NGL fractionator in Mont Belvieu, Texas. + Split adjusted ONEOK, Inc. S&P 500 Utilities 1-YEAR Total Return* S&P 500 Index 3-YEAR Total Return* 100% 5-YEAR Total Return* 200% 50 50% 145 32 10-YEAR 411 Total Return* 13 400% 100% 704 57 0% 37 600% 200% 128 0% 62 300% 0% 141 As of December 31, 2013 104 * Total return represents 0% share-price appreciation and the reinvestment of dividends. Letter to Shareholders ONE COMPANY BECOMES TWO Welcome to the new ONEOK. Earlier this year, a new ONEOK was created when we separated our natural gas distribution business into a separate, stand-alone publicly traded company called ONE Gas, Inc. By having two separate companies, each will have a much greater focus on its individual strategy, financial strength and growth potential. 1 Construction at ONEOK Partners’ Canadian Valley natural gas processing plant in western Oklahoma. The separation of the natural gas distribution business grew its natural gas and natural gas liquids businesses. from ONEOK to create ONE Gas is consistent with our Today, ONEOK Partners is in the midst of a more than commitment to create long-term, sustainable shareholder $6 billion capital-growth program, building additional natural value and is the result of a shift in business mix that has gas- and NGL-related projects. occurred at ONEOK as it has grown over the years. (See ONEOK benefited and continues to benefit greatly from page 6 of this report for more information on the separation growth at ONEOK Partners. Through our ownership position of ONEOK’s natural gas distribution business into a in the partnership, we receive cash distributions, which grew separate, publicly traded company.) to $536 million in 2013 from $145 million in 2006, when we For more than a century, ONEOK has provided safe, became the sole general partner of ONEOK Partners. These reliable natural gas service to our residential, industrial growing distributions have enabled us to increase our annual and commercial customers. Our roots can be traced back dividend paid to ONEOK shareholders by 143 percent – to to 1906, when we built an intrastate natural gas pipeline $1.48 per share in 2013 from 61 cents per share in 2006, from Tulsa to Oklahoma City – a pipeline that remains a when we became sole general partner of ONEOK Partners. part of our ONEOK Partners segment today. Throughout We anticipate increasing the dividend by 53 percent in 2014, most of our history, we were primarily a natural gas utility in compared with 2013, and by an annual average of 20 to Oklahoma, with a modest amount of natural gas gathering 25 percent between 2013 and 2016. and processing assets. Over the years, we grew our natural Increased earnings and growth at ONEOK Partners changed gas distribution business and expanded our operations into the earnings makeup of our company, leading us to ask Kansas and Texas, with the acquisitions of Kansas Gas what kind of company ONEOK is. The natural gas distribution Service in 1997 and Texas Gas Service in 2003. business provided stable earnings, while ONEOK Partners Transforming the Company: Purchasing offered tremendous growth opportunities and attractive Natural Gas Liquids Assets and Managing returns on investment for future growth in its midstream businesses. a Master Limited Partnership A series of transactions from 2004 to 2006 transformed our One of the challenges that our natural gas distribution company and positioned us for future growth. In 2004, we business faced was competing with ONEOK Partners for purchased the majority general partner interest in Northern capital dollars to fund its growth. Resolving this internal Border Partners. We then entered the natural gas liquids allocation of capital through the separation gives us the business in 2005 by purchasing natural gas liquids (NGL) opportunity to maximize ONEOK’s dividends to shareholders assets in the largest acquisition in our company’s history. and allows ONE Gas to sustain its lower-risk, stable And in 2006, we became the sole general partner of performance by investing in and growing its rate base. Northern Border Partners and renamed it ONEOK Partners. Creating a “New ONEOK” As one of the nation’s largest master limited partnerships, The decision to separate our company did not come easily, ONEOK Partners became our growth engine – and grow it and it was not made hastily. Previous company leaders, did. From 2006 to 2009, the partnership executed a more including Larry Brummett, who served as chairman and chief than $2 billion capital-growth program that significantly executive officer of ONEOK from 1994 through his death in 2 2000, and David Kyle, ONEOK chairman, president and chief executive officer from 2000 to 2007, recognized that in order TRIBUTE TO JOHN GIBSON for ONEOK to grow, it would need to become more than a After seven years as chief executive officer and natural gas distribution company.