ONEOK Announces Second Expansion of the West Texas LPG Pipeline System

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Sep 10, 2018, 16:15 ET

TULSA, Okla., Sept. 10, 2018 /PRNewswire/ -- ONEOK, Inc. (NYSE: OKE) today announced plans to invest approximately $295 million to expand its West Texas LPG Limited Partnership (West Texas LPG) pipeline system, which provides natural gas liquids (NGL) takeaway capacity for Permian Basin producers.

The expansion project, which is expected to be completed in the first quarter 2020, is supported by long-term dedicated NGL production from six third-party natural gas processing plants in the Permian Basin that are expected to produce up to 60,000 barrels per day (bpd) of NGLs.

The expansion includes the construction of:

Four new pump stations, two pump station upgrades and pipeline looping that will increase the West Texas LPG mainline capacity by 80,000 bpd.
Additional infrastructure to connect West Texas LPG with ONEOK's previously announced Arbuckle II Pipeline project.

"This second expansion of the West Texas LPG Pipeline system will serve continued growth in the Permian Basin and positions ONEOK for additional future expansion opportunities in the Permian," said Terry K. Spencer, ONEOK president and chief executive officer.

Based on the initial contracted volume, the expansion project is expected to generate an adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) multiple of four to six times. ONEOK continues discussions with producers and processors in the region for additional potential volume commitments.

ONEOK's previously announced 110,000 bpd pipeline lateral extension of the West Texas LPG system into the Delaware Basin and expansion of the existing mainline system is currently under construction and expected to be in service this month.

The West Texas LPG Pipeline is an NGL pipeline system that provides takeaway capacity to Permian Basin producers and consists of approximately 2,600 miles of NGL pipeline in Texas and New Mexico. The system provides transportation services to the Mont Belvieu market center from nearly 40 third-party natural gas processing plants located in the Permian Basin. The Permian Basin in southeastern New Mexico and western Texas is the largest crude oil and natural gas producing basin in the U.S.

NON-GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) FINANCIAL MEASURES:

ONEOK has disclosed in this news release forward-looking estimates for adjusted EBITDA expected to be generated by the announced capital-growth projects. Adjusted EBITDA is a non-GAAP financial metric used to measure the company's financial performance. Adjusted EBITDA is defined as net income from continuing operations adjusted for interest expense, depreciation and amortization, noncash impairment charges, income taxes, noncash compensation expense, allowance for equity funds used during construction (equity AFUDC), and other noncash items.

Adjusted EBITDA is useful to investors because it and similar measures, are used by many companies in the industry as a measure of financial performance and commonly employed by financial analysts and others to evaluate ONEOK's financial performance and to compare the financial performance of ONEOK with the performance of other companies within its industry. Adjusted EBITDA should not be considered in isolation or as a substitute for net income or any other measure of financial performance presented in accordance with GAAP. Additionally, this calculation may not be comparable with similarly titled measures of other companies.

A reconciliation of estimated adjusted EBITDA to GAAP net income is not provided because the GAAP net income generated by the projects is not available without unreasonable efforts.

ONEOK, Inc. (pronounced ONE-OAK) (NYSE: OKE) is a leading midstream service provider and owner of one of the nation's premier natural gas liquids (NGL) systems, connecting NGL supply in the Mid-Continent, Permian and Rocky Mountain regions with key market centers and an extensive network of natural gas gathering, processing, storage and transportation assets.

ONEOK is a FORTUNE 500 company and is included in the S&P 500.

For information about ONEOK, visit the website: www.oneok.com.

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Some of the statements contained herein are forward-looking statements as defined under federal securities laws. The forward-looking statements relate to our anticipated financial performance (including projected net income, capital expenditures, cash flow and projected levels of dividends), liquidity, management's plans and objectives for our future growth projects and other future operations (including plans to construct additional natural gas and natural gas liquids facilities and related cost estimates), our business prospects, the outcome of regulatory and legal proceedings, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under federal securities legislation and other applicable laws.

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