Good day, ladies and gentlemen. And welcome to the ONEOK Fourth Quarter 2007 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later there will be a question-and-answer session, and instruction for follow at that time. [Operator Instructions]. I would now like to introduce your host for today's conference, Mr. Dan Harrison. Sir, you may begin your conference.

Good morning and welcome everyone. As we begin this morning's conference call, I remind you that any statements that might include ONEOK or ONEOK Partners expectations or predictions should be considered forward-looking statements, which are covered by the Safe Harbor provision of the Securities Act of 1933 and 1934. It's important to note that actual results could differ materially from those projected in such forward-looking statements. For a discussion of factors that could cause actual results to differ, please refer ONEOK and ONEOK Partners filings with the Securities and Exchange Commission. And now John Gibson, who serves as CEO of ONEOK, and Chairman and President and CEO of ONEOK Partners, John? John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Thanks, Dan; and good morning everyone, and many thanks for participating in our call. Joining me today are Jim Kneale, ONEOK's President and Chief Operating Officer; Curtis Dinan, Senior Vice President and Chief Financial Officer for both ONEOK and ONEOK Partners; Pierce Norton ONEOK Partners Executive Vice President of Natural Gas; and Terry Spencer, ONEOK Partners Executive Vice President of Natural Gas Liquids. Here is our agenda this morning. Following a few opening remarks, we will discuss ONEOK Partners first, and then review ONEOK. Curtis will start us off and review ONEOK Partners financial performance followed by Pierce and Terry, who will review the partnerships operating performance. Then Curtis will return to review ONEOK's financial performance and Jim will review ONEOK's operating performance. Then I will make a few closing comments before we take your questions. ONEOK had an exceptional fourth quarter with net income increasing almost 40%. For the year after adjusting for the one-time gain that occurred in ONEOK Partners in 2006 on the sale of 20% interest in…

Thank you, John and good morning. ONEOK Partners continued its outstanding performance in 2007 with a really strong fourth quarter. Net income in the fourth quarter of 2007 was $122 million or $1.27 per unit compared with $80 million or $0.82 per unit in the fourth quarter of 2006. During the fourth quarter of 2007, our gathering and processing segment benefited from strong commodity prices. Our natural gas liquids pipeline segment benefited from the North System acquisition that was completed during the quarter and increased throughput related to new NGL supply connections. Full year 2007 net income was $408 million or $4.21 per unit, excluding a gain from the sale of a 20% interest in Northern Border Pipeline during 2006, net income for 2007 increased $76 million or 23% over 2006. For the year, distributable cash flow increased 27% to $466 million or $4.92 per unit. During 2007, our natural gas liquids businesses grew from the connection of new NGL supplies and our gathering and processing business delivered higher results despite lower processed volumes due to contract terminations in late 2006. During 2007, the partnership completed the $300 million North System acquisition and spent $650 million on capital expenditures for its growth projects including the Overland Pass pipeline and related NGL infrastructure upgrades. The Guardian II expansion and the Midwestern extension; these expenditures have been financed with available cash, our revolving credit agreement and the issuance of $600 million of 30 year notes. ONEOK Partners ended 2007 with 900 million available under our $1 billion revolving credit agreement. The partnership remains well positioned to execute its growth capital program that is expected to contribute incremental EBITDA during the second quarter of this year as Overland Pass pipeline and related infrastructure, upgrades, and expansions come online. Recently, ONEOK Partners increased its quarterly distribution to an annualized rate of $4.10 per unit. This is the eighth consecutive distribution increase since the dropdown of the ONEOK assets in April of 2006. During this period, the partnership has increased distributions by 28%, demonstrating our commitment to growing unit holder distributions. At the new annualized distribution rate of $4.10, our distribution coverage ratio for 2007 was 1.2 times providing the opportunity to consider additional distribution increases in future. John, that concludes my remarks regarding the partnerships financials. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Thanks, Curtis. Now let's review the operating results of ONEOK Partners, which as you recall now consisted of four segments, two in natural gas and two in natural gas liquids. First, Pierce Norton will discuss the two natural gas segments, gathering and processing and natural gas pipelines. Pierce?

Thanks John. and good morning. The natural gas gathering and processing segment had an exceptional quarter and a very solid year. This segment is based on diversity contributed to volume stability with growth in the Rockies continuing to offset decline in the mid-continent region. In the fourth quarter of 2007, the segment's operating income increased by more than $35 million primarily from high-realized commodity prices, which added $19.8 million. The quarter also benefited from an $8.6 million contract settlement that results several outstanding issues that had occurred over a number of years. This settlement was tied to a contract renegotiation with one of our producers. These events happen frequently in this business that are not usually this large. The important takeaway in this instance is that the new contract is in place on the same volume and no future earnings were affected by this settlement. When looking at the full year 2007, the gathering and processing segment contributed slightly more income than in 2006. A notable feed considering the decline in process volumes from the anticipated contract terminations in late 2006. Through a combination of our employees' commercial efforts and a strong focus on controlling operating cost, we were able to exceed the prior year's record performance. Recently processing spreads have tightened, giving us a good reason to talk about its impact on this segment. Our contract mix by volume currently stands at 61% fee, 30% is percent of proceeds and only 9% is keep hold, which are the contracts that are affected by processing spreads. As a result, the processing spread has less impact on our earnings in this segment. In addition to having less than 10% of our volume susceptible to the processing spread, we ended the year with more than 84% of our keep hold contracts containing…

Thanks John, and good morning everyone. The natural gas liquids businesses had another outstanding quarter topping up a great year. We continue to see NGL volume growth positively affecting both segments and as drilling and exploration activity drive new natural gas process and plan developments particularly in Oklahoma, and Texas Panhandle. Now let's take a look at each natural gas liquid segment. The natural gas liquid gathering and fractionation segments, fourth quarter results benefited from higher volumes, driven by both new NGL supplies connected to our system, and growth from existing plant connections, and higher product price spreads. Gathered volumes were up 17% and fractionated volumes were up 23% over the same period last year. During the fourth quarter, we connected one new processing plant to our Mid-Continent System, bringing the total to four new plants connected in 2007, adding approximately 16,000 barrels per day new NGL supplies, and 15 new connections adding over 60,000 barrels per day, since we acquire these assets back in July 2005. For the year the gathering and fractionation segments EBITDA increased 22%, again primarily driven by increased NGL volumes from new supply connections as well as higher throughput at our Mont Belvieu fractionator. In 2007, we also saw higher spreads between products and locations. In 2008, we will continue to stay focussed on adding new NGL supplies to our Mid-Continent gathering and fractionation systems. And in fact work is under way to connect as many as seven new gas processing plants during the year, adding approximately 36,000 barrels per day. To accommodate some of this growth, we recently announced a $25 million expansion over Oklahoma NGL gathering system to connect two new gas processing plants, operated by Devon Energy and Antero Resources in the Woodford Shale Play in southeast Oklahoma. These two plants will…

Thanks, John. ONEOK's net income in the fourth quarter of 2007 was $103 million or $0.98 per share compared with net income of $75 million or $0.66 per share in 2006. All of ONEOK's segments performed very well during the quarter. In addition to the results for ONEOK Partners that were previously discussed, our distribution segment benefited from rate increases. Our energy services segment benefited from improved transportation margins and higher storage and marketing margins resulting from higher seasonal storage spreads. Full year 2007 net income was $305 million or $2.79 per share. Excluding ONEOK share of ONEOK Partners gain from the sale of a 20% interest in Northern Border Pipeline during 2006, net income for 2007 increased $31 million or 11% over 2006. As previously described, our ONEOK Partners segment performed very well during the year. The partnerships for distribution increases for 2007 have increased with annualized distribution by $0.18. These distribution increases create an additional 6.7 million of annual cash flow from the limited partner unit that ONEOK owns. It also increases the incentive distributions to ONEOK's general partner interest by $15 million annually. With the growth forecast by ONEOK Partners from its 1.6 billion of internal growth projects and the recently completed North System acquisition, we expect future distribution increases will continue to create earnings and cash flow growth for ONEOK. On a standalone basis, ONEOK ended 2007 with a debt-to-capital ratio of 51%. Last week, ONEOK retired 402 million of maturing long-term debt primarily with available cash that reduced our debt-to-capital ratio to approximately 47%. During 2007, standalone cash flows from operations excluding the effects of working capital exceeded capital expenditures and dividends by $182. Looking forward to 2008, we anticipate that free cash flows will continue to be in $160 million to $200 million range. John, that concludes my remarks. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Thanks, Curtis. Now Jim Kneale will review ONEOK's operating performance. Jim?

Thank you John, and good morning. Pierce, Terry, and Curtis have already discussed ONEOK Partners 2007 results and the partnerships expected earnings growth, so I won't spend any time on those issues. However, I will remind you that growth and earnings at ONEOK Partners has and will continue to resolve in significant additional earnings growth at ONEOK because of our 45% ownership position in the partnership and our role as general partner. Looking at our distribution segment, we had solid performance in the fourth quarter and the full year. In the fourth quarter, operating income increased to $61 million, which is 24% over last year. The increase was due to implementation of new rates scheduled in Kansas and Texas and lower operating costs partially offset by reduced volumes in Oklahoma as a result of the December ice storm when many of our customers were without electricity. For the year, the story is similar. Operating income improved to $174 million compared with $118 million in 2006. New rates are returned to more normal weather and a continued emphasis on cost control were the primary drivers. The significant improvement in margins over last year was primarily the result of the implementation of new rate schedules in Kansas and Texas as well as higher residential and commercial sales volumes. Operating cost for the year increased slightly affected by higher bad debt expense in Oklahoma. However, our bad debt expense still remains below industry averages. Although property taxes were higher in Kansas, there is an offset in margins as they are recovered to a surcharge mechanism. Our efforts to control expenses through process improvement and other initiatives continued to show results across all three distribution companies. Our efficiency in metrics such as the number customers per employee increased in both the quarter and the…

[Operator Instructions]. The first question is from Ted Chung [ph] from Bear Stearns.

Hi. Good morning, thanks for your earnings call and congratulations. I had two questions; one is regarding the comments you just made at the end about the growth initiatives and acquisition strategy. Where would you see within the context of those comments, your... where would you see your ratings or where would you be willing to let your credit ratings go or not go. And then the second question is if you could address whether or not you have any debt issuance plans or the probability of capital markets transactions this year of both the partnership and the parent? John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Ted, this is John Gibson. I will answer you this way and then turn it to Curtis for more detail. But as far as our credit ratings, we have stated many times, we have an investment grade rating and we intend to keep that it's very important to us as we manage and grow this portfolio of assets. Curtis, is there anything you like to add to that point?

Ted, this is Curtis. Just to echo what John said, and as I mentioned in my remarks, we have finished 2007 with capacity of about 900 million on our revolving credit agreement. We just completed the $600 million offering last fall, which was used to finance the North System acquisition and to at that completely pay down the revolver. We are now into the revolver at about a $200 million level. So it's going up a little bit since year-end, but that leaves, $800 billion available to finance projects that we have coming through the balance of 2008. Ted, did that answer for your question?

Yes, yes. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: More questions?

No that's great. Thank you. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: You are welcome.

[Operator Instructions]. The next question is from Louis Shimmy [ph] from Zimmer Lucas.

Hi, good afternoon everybody; congratulation on strong year. My question was regarding your expected NGL volumes for the next year. What was implied by the hedging guidance that you gave was something like a 177 million gallons expected productions for 2008. I am just wondering how that compares to your 2007 numbers? John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Louis, it's John. I am not sure that I've got those numbers in gallons, but I will refer this to Terry, and I am not even sure what we put in the guidance. But I am not sure that we put an expected volume.

I am just using the amount of NGLs that you hedged in the 70% numbers that? John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: You've got two different issues here. So, let me try it up.

Sure. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Separate those and clarify. The first is the liquids that were hedged are in the... are the equity NGL barrels or gallons that are produced and owned by the gathering and processing segment. So, those are different from all of the barrels that we gather and fractionate and market inside of our gathering and fractionation segment in our NGL business.

I understand that, I guess what I am asking is of those equity volumes, how does your expectation for 2008 compared to the equity volumes that you took on in 2007? John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: I am sorry; Louis, you are talking about the price expectations. Is that correct?

No, the volume expectations. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Volume expectations; well, I will get the question right here in a minute.

Okay. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Let me... since I am not doing a very good job, this I will flip it to Pierce.

Well, Louis, the way I would answer that is that the volume expectations that we used in the guidance is the same ones that we go back to look at for what the amount that we hedged. So those volumes actually are in support of what were in the guidance and what we hedged.

Okay, and historically for the year that has just ended, what would the comparable numbers be? Would it be higher or lower than what you are expecting?

The hedges that are in place are inline and supportive of their guidance.

Okay, thanks a lot. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Thank you, Louis.

The next question is from Faisel Khan from Citigroup.

Good morning. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Good morning, Faisel, how are you?

All right. How are you doing? John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Fine, thank you.

Okay. Wondering if you could talk a little bit about NGL demand, kind of higher level in terms of what you are seeing your customers? Is there any softness in demand, given the supposed slowdown in the economy that we are seeing or how your customers reacting to current price? John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Faisel, it's John. The short answer is we've not seen any degradation in our... in the demand whether that be in the refining business or petrochemical business, but perhaps Terry could share a bit more detail on that.

John, what I can add to that is that the outlook... you read the reports and studies on the petrochemical side, particularly which is a bulk of the demand. And you do see some outlook for some degradation driven by the economy. But we are... right now, the signals are mixed, I mean we are seeing still... continue to see strong demand and consumption. The utilization rates at crackers are as high as they have ever been; international demand is still very strong. So you are getting kind of mixed signals. Where that lead us, we don't know? John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Faisel,the other thing I would add is the component of the barrel that is on the margin from the demand standpoint is as it has been in the past, ethane. But I think it goes without saying that all components other than ethane remain very strong. Ethane for... in general is about a third of anybody's barrel.

Right. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: And so we keep a very watchful eye on ethane.

Okay.

Faisel,on the heavy side, we are seeing very strong demand across the board on heavy products.

Right. Mostly from your refining customers, I would take it. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Would you mind repeating that?

Mostly from your refining customers?

Right. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Yes, right, correct.

And then in terms of the Overland Pass pipeline, everything is... is everything on time in our budget compared to your last estimates?

So far, everything is looking good. I did indicate in my statement this issue with the Bureau Land Management and we are working with them very closely to get back into some of these sensitive areas, but right now the project is making very good headway, particularly in Colorado and Kansas; and right now our expectation still for the pipeline to be operational in second quarter.

And then in terms of the $1.6 billion of growth projects you have underway, is there any... is that a firm number or is there any room for inflation in those numbers or costs? John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Overall, those $1.6 billion represents the dollars we anticipate spending in total for all of those. So, if you would... any contingency that we expect or have planned are in those numbers as I think Terry or may be Pierce pointed out in their remarks, anytime you are in aggressive building campaign with particularly large projects. You always stay on the opportunity, unfortunately or the risk for unforeseen things to happen. But we don't have any of those dollars in there, because quite candidly, I don't know exactly how you would deal with that uncertainty.

Okay. How does your procurement for those materials work? Have you ordered close to the pipe and compression and pumping equipment or -- John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Yes,what you are dealing with right now is just like to for example what Terry is pointing out is lot of snow, particularly on Overland Pass. But all the materials have been acquired, the long lead items... in many cases we are already on ground, we've got pipe for Arbuckle, which is already sitting on the ground. We are in the process of acquiring right of way for all the pipelines that we have announced. And again, as it stands right now, we are... we feel very confident in our numbers and in our schedule.

Great, thanks for the time. I appreciate it. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: You bet, Faisel.

[Operator Instructions]. There are no further questions. John W. Gibson - Chief Executive Officer, ONEOK, Inc.; Chairman, President and Chief Executive Officer, ONEOK Partners, L.P.: Okay. Well, thank you all very much. This concludes the ONEOK and ONEOK Partners call. As a reminder, our quiet period for the first quarter will start when we close our books in early April and will extend until the earnings are released. We will provide a reporting date and conference call information for the first quarter at a later date. Christy Williamson and I will be available throughout the day for any follow-up questions. Thanks for joining us and have a good day.

Ladies and gentlemen, thank you participating in today's conference. This concludes the program; you may now disconnect.