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ONEOK will turn its natural gas distribution segment into new firm

Tulsa-based ONEOK Inc. said Monday in a guidance announcement that it is on target to complete its spinoff of the company’s natural gas distribution segment into ONE Gas Inc. in the first quarter.

ONEOK listed the effective date for the spinoff as Jan. 1 for guidance purposes, spokeswoman Megan Washbourne said. The actual closing of the transaction will come later, though, she said in a telephone interview.

Washbourne said it has not been determined yet how many of ONEOK’s 1,100 local workers will become part of the new entity.

“There is not expected to be any impact on overall employment, though, and we already are posting some additional positions on our website,” she said.

ONEOK said in July that it planned to separate its natural gas distribution into ONE Gas, which will be its own publicly traded company composed of Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service. ONEOK would be a holding company with control and distribution rights for ONEOK Partners LP as its key asset.

After the spinoff, ONEOK and ONEOK Partners CEO John Gibson is scheduled to be succeeded by President Terry Spencer. Pierce Norton, executive vice president, commercial for ONEOK and ONEOK Partners, will become CEO and president of ONE Gas.

In Monday’s guidance statement, ONE Gas’ 2014 net income is expected to be in the range of $95 million to $105 million.

ONE Gas also expects annual dividend growth of 5 percent between 2014 and 2018, subject to board approval, with an expected target dividend payout ratio of 55 percent to 65 percent of net income.

ONE Gas estimated it will increase its net income by 4 percent to 6 percent annually between 2014 and 2018, compared with 2014 earnings guidance.

ONE Gas’ rate base is expected to grow an average of 5 percent to 6 percent per year between 2013 and 2018, officials said.

For the company overall, ONEOK officials said 2014 cash flow available for dividends is expected to be in the range of $560 million to $640 million.

The 2014 guidance also includes a projected 53 percent increase in ONEOK’s 2014 dividend declared to $2.33 per share, compared with $1.52 per share declared for 2013.

On a dividend-paid basis, the 2014 dividend is expected to be $2.125 per share, compared with $1.48 per share in 2013, an increase of 44 percent.

ONEOK also has estimated an average annual dividend declared increase of 20 percent to 25 percent between 2013 and 2016, which includes the planned increase in 2014 and 10 percent annual increases in 2015 and 2016.

“Our 2014 guidance reflects higher cash distributions as a result of ONEOK Partner’s capital growth projects that will be placed into service later this year and in 2014 from the partnership’s previously announced $6.0 billion to $6.4 billion growth program through 2016,” Gibson said in a press release.

“As a pure-play general partner following the completion of the ONE Gas separation, ONEOK’s performance will be more in line with other pure-play general partner peers.”

Meanwhile, ONEOK Partners LP said its 2014 net income is expected to increase 27 percent, compared with the partnership’s last updated earnings guidance.

ONEOK Partners’ 2014 net income is expected to be in the range of $975 million to $1.075 billion, compared with its current 2013 earnings guidance range of $790 million to $830 million.

“Continued volume growth in our natural gas gathering and processing, and natural gas liquids segments from completed capital growth projects in 2013 and projects that will be completed in 2014 are driving our higher 2014 earnings guidance,” Gibson said.


John Stancavage 918-581-8314

john.stancavage@tulsaworld.com

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