ONEOK Spins Off Natural Gas Distribution Business, Reduces Debt

To separate natural gas distribution business creating a stand-alone company.

ONEOK Inc. (NYSE: OKE) will separate its natural gas distribution business creating ONE Gas Inc., a stand-alone company, at the end of January.

The board of directors of ONEOK, headquartered in Tulsa, Okla., unanimously approved the separation on Jan. 8.

ONE Gas will consist of Kansas Gas Service, Oklahoma Natural Gas Co. and Texas Gas Service, and will be headquartered in Tulsa, Okla. It will be one of the largest natural gas utilities in the U.S., serving more than 2 million customers in three states, and will be a 100% regulated, publicly traded natural gas utility. ONE Gas common stock is expected to begin "regular-way" trading on the New York Stock Exchange on Feb. 3, under the symbol "OGS."

ONEOK will reduce its long-term debt with the proceeds from a one-time cash payment from ONE Gas – estimated to be $1.13 billion – as part of the transfer of the natural gas distribution business to ONE Gas from ONEOK. ONE Gas will fund this transfer to ONEOK by issuing its own long-term debt in mid-January. ONE Gas is expected to have $1.2 billion in total long-term debt outstanding.

Upon completion of the debt reduction, ONEOK expects to have $1.1 billion in total long-term debt outstanding.

ONEOK will continue to hold its interests in ONEOK Partners LP, which include the sole general partner and limited partner interests that together represent 41.2% of the outstanding partnership interests, as of Dec. 31. No material impact to ONEOK Partners is expected as a result of this transaction.

The transaction is expected to close Jan. 31.