ONE Gas (OGS) Issues 2020 Financial Guidance and Narrows 2019 Guidance

ONE Gas, Inc. (NYSE: OGS) today announced that its 2020 net income is expected to be in the range of $186 million to $198 million, or $3.44 to $3.68 per diluted share. The midpoint of 2020 net income guidance for ONE Gas (the Company) is $192 million, or $3.56 per diluted share.

(*Consensus sees FY19 EPS of $3.49 and FY20 EPS of $3.65)

The Company also narrowed its 2019 guidance to earnings of $3.49 to $3.53 per diluted share from the previous range of $3.39 to $3.57 per diluted share. Capital expenditures, including asset removal costs, are expected to be approximately $470 million in 2019.

The Company's 2020 earnings guidance includes the benefit of new rates, offset by higher depreciation expense from capital investments and assumes normal weather. For 2019, the Company's preliminary estimate is that the net income impact of colder weather on sales volumes, net of weather normalization mechanisms, was an increase of $4.9 million.

Capital expenditures, including asset removal costs, are expected to be approximately $475 million in 2020, with approximately 70% of these expenditures targeted for system integrity and replacement projects.

The Company expects to achieve an 8.4% return on equity in 2020, which assumes an average rate base of $3.9 billion calculated consistent with utility ratemaking in each jurisdiction.

Earnings per share is expected to increase by an average of 5% to 7% annually between 2019 and 2024; however, the timing and frequency of regulatory filings will impact the growth rate in any individual year.

Capital expenditures, including asset removal costs, are expected to be in the range of $475 million to $525 million per year between 2020 and 2024, leading to rate base growth averaging 7% per year between 2019 and 2024.

The average annual dividend growth rate is expected to be 6% to 8% between 2019 and 2024, with a target dividend payout ratio of 55% to 65% of net income, all subject to board of directors' approval.

See Table 1 below for details of 2020 earnings guidance. Additional information can be found in the 2020 Financial Guidance investor presentation on the ONE Gas website at https://www.onegas.com/ investors/financials-and-filings/guidance.

Guidance estimates may be impacted by the variables in the forward-looking statements listed below.

ONE Gas, Inc. (NYSE: OGS) is a 100% regulated natural gas utility, and trades on the New York Stock Exchange under the symbol "OGS." ONE Gas is included in the S&P MidCap 400 Index and is one of the largest natural gas utilities in the United States.

ONE Gas, headquartered in Tulsa, Oklahoma, provides natural gas distribution services to more than 2 million customers in Kansas, Oklahoma and Texas. Its divisions include Kansas Gas Service, the largest natural gas distributor in Kansas; Oklahoma Natural Gas, the largest in Oklahoma; and Texas Gas Service, the third largest in Texas, in terms of customers.

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