ONEOK Looking for Ways to Cut Inefficiency Caused by Deregulation

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Researched by Industrial Info Resources (Sugar Land, Texas)-- ONEOK Incorporated (NYSE:OKE) (Tulsa, Oklahoma) and ONEOK Partners LP (NYSE:OKS) (Tulsa) continue to maintain growth and presented their "Journey by Design" presentation in an annual analyst on October 2 in New York City. John Gibson, Chairman and CEO of ONEOK Partners and CEO of ONEOK, said ONEOK is continuing to look for opportunities to rebundle the value chain. Because of deregulation, he said that the value chain was broken up and that much inefficiency was created. "We've looked for opportunities to bring those pieces back together and create value for our shareholders and customers by providing services that are necessary in the value chains at a lower cost than our competitors," Gibson said. He added that in terms of natural gas liquids (NGL), the company has continued to apply methods that have been working well to other commodities. For example, Gibson said the company has created notable value by bringing methods from the natural gas side and utilizing them on the NGL side.

Key strategies include:

• Generate consistent growth and sustainable earnings
• Develop and execute internally generated growth projects at ONEOK Partners
• Improve profitability of ONEOK Distribution Companies
• Continue focus on physical activities at ONEOK Energy Services
• Execute strategic acquisitions that provide long-term value
• Manage balance sheet and maintain strong credit ratings at or above current level
• Operate in a safe and environmentally responsible manner
• Attract, develop and retain employees to support strategy execution

Gibson said that attracting, developing and retaining employees is challenging but key for ONEOK, as well as for many in the energy business. He said that many of the company's employees are baby boomers who are retiring in the next 20 years or so. "That's a real challenge for us and one that we remain focused on," he said.

Pierce North II, Executive Vice President for natural gas, said ONEOK currently has more than 2,000 contracts and that none of the contracts accounts for more than 10% of volume. The company restructured its contracts over the last few years. "By changing our contract mix over the years, we have significantly reduced our sensitivity to movement in commodity prices," North said. Gibson said there is about $2 billion worth of projects under way in the 2007-09 period at ONEOK Partners. About $1.2 billion-$1.3 billion of the projects have been completed.

As part of our North American Project Database, Industrial Info is tracking 13 active projects involving ONEOK or one of its business units. The projects range from a $1 million turnaround to a $425 million grassroot NGL pipeline.

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