Andrew Ziola – Vice President Investor Relations and Public Affairs Pierce H. Norton – President and Chief Executive Officer Curtis L.

Dinan – Senior Vice President, Chief Financial Officer and Treasurer

Thank you, and welcome to the ONE Gas second quarter 2014 earnings conference call. This call is also being webcast live on the Internet, with a replay available.

After our prepared remarks, we’ll be happy to take your questions. A reminder that statements made during this call that might include ONE Gas’ expectations or predictions should be considered forward-looking statements and are covered by the Safe Harbor provision of the Securities Acts of 1933 and 1934.

Actual results could differ materially from those projected in any forward-looking statements. For a discussion of factors that could cause actual results to differ, please refer to our SEC filings.

Our first speaker is Pierce Norton, President and Chief Executive Officer of ONE Gas. Pierce?

Thanks, Andrew. Good morning, everyone, and thank you for joining us for the ONE Gas second quarter 2014 earnings call.

We appreciate your interest and investment in our Company. Joining me on the call today is Curtis Dinan, our Chief Financial Officer.

On this morning’s call, we will review the second quarter 2014 results, discuss our 2014 guidance, provide a regulatory update in our three states, and then we’ll be happy to answer your questions. Although our quarter-over-quarter comparisons were lower compared with the same last quarter last year, we had a solid second quarter.

And we continue our optimism for the direction of our Company and the commitment to our business strategies. Our net margin results benefited from new rates in Texas, residential customer growth and commercial customer line extensions, all positive trends.

When compared to the second quarter of 2013, these positive results were offset due to colder weather last year that Curtis will explain in more detail. Our physical separation from ONEOK is going very well, thanks to the effort of our employees and many people at ONEOK.

By the end of this month we will completely be relocated to our new corporate headquarters in downtown Tulsa. As a reminder, we previously announced our 2014 net income guidance range of $95 million to $105 million and remain confident and on target to meet this guidance.

Curtis will now review the financial highlights for the quarter and 2014 guidance. Curtis?

Thanks, Pierce, and good morning. Second quarter net income was $9.5 million or $0.18 per diluted share, compared with $15 million or $0.29 per diluted share for the same period last year.

Operating income decreased due primarily to higher operating costs, which I will discuss in detail in a moment, and lower variable margin as residential volume sold declined 17% due to unseasonably cold weather in the second quarter of 2013. And in particular, the cold weather occurred outside of our weather normalization periods, which end in March for Kansas and in April for Oklahoma.

Overall, weather in our service areas was 5% colder than normal this past quarter, but was 33% warmer than last year. As an example, the weather we experienced in Kansas during the second quarter of 2013 was the coldest second quarter in more than 10 years.

More than offsetting the warmer weather impact on net margin was a combination of new rates in Texas, continued residential customer growth and increased line extension revenue. As a reminder, approximately 70% of the margin from sales customers is generated by fixed charges on an annual basis.

We also had a decrease in net margin of $2.8 million due primarily to lower rider and surcharge recoveries in Kansas and the expiration of a take-or-pay rider in Oklahoma. However, both of these items are offset by lower amortization expense.

Operating cost increased compared with the same period last year, due primarily to the following: higher employee-related expenses that include share-based compensation. This quarter-over-quarter variance was driven primarily by reduced expenses in the second quarter of 2013 related to the decrease in ONEOK share price, higher outside service expenses related to the timing of pipeline maintenance activities and the expiration of a pipeline maintenance rider in El Paso.

Those expenses are now recovered through the El Paso Annual Rate Review mechanism or EPARR. Costs associated with the separation from ONEOK and an increase in insurance and IT expenses, which is a part of the previously disclosed annual increase of $11 million, we expect to incur as a stand-alone company.

These increases were offset partially by a decrease in benefit expenses, related primarily to lower pension and other post-retirement benefit costs. The overall increase in operating cost affected our second quarter results compared with 2013, but was consistent with our expectations.

As previously indicated, we expect to complete the separation of most our IT systems from one ONEOK during 2014. A major part of that process will be completed during the third quarter.

And we remain on budget both from a capital and O&M perspective. ONE Gas generated operating cash flow of $80 million in the second quarter and ended the quarter with $161 million of cash and cash equivalents and no borrowings under our $700 million credit facility.

Last month, the ONE Gas Board of Directors declared our second dividend of $0.28 per share, consistent with the guidance we provided last December of $1.12 annual dividend. This dividend level is consistent with the Company’s expected 55% to 65% dividend payout ratio.

At June 30, we had 31 Bcf of natural gas in storage, in line with our plan. And for the 2014-2015 heating season, we have leased 52 Bcf of natural gas storage.

Our current cash position and available credit facility provide ample liquidity to meet our injection season needs. We ended the second quarter with a debt-to-capitalization ratio of approximately 40%, the same as it was at the end of the first quarter.

As Pierce mentioned, we affirmed our 2014 net income guidance range of $95 million to $105 million. As discussed in our first quarter call, we expect higher operating costs in 2014 compared with our original guidance due to the timing of certain IT separation costs previously assumed to occur in 2015 that will be incurred in 2014.

As previously indicated, longer term ONE Gas expects an average annual increase in net income of 4% to 6% between 2014 and 2018 through continued capital investment and system integrity and reliability. Also, to reiterate, we expect to be at the high end of our capital expenditure range of $240 million to $285 million for 2014.

At June 30, our current authorized rate base defined as the rate base established in our latest regulatory proceedings, including full rate cases and interim rate filings is approximately $2.25 billion. Considering additional investments in our system and other changes in the components of our rate base that have occurred since those regulatory filings, we project that our rate base in 2014 will average approximately $2.5 billion, with approximately 40% of that being our rate base in Oklahoma, approximately 35% in Kansas and 25% in Texas.

Pierce, that concludes my remarks.

Thanks, Curtis. Now for the regulatory updates of our three states in what has proven to be a active regulatory quarter.

In March of this year, Oklahoma Natural Gas filed a Performance-Based Rate Change application, requesting an increase in base rates. This application was driven primarily by capital investments of $122 million.

In June, a joint stipulation and settlement was reached and contained an increase in base rates of $13.7 million. This agreement is on the signing agenda for today, August 5 at the Oklahoma Corporation Commission and we’ll provide an update on the outcome in our 10-Q that will be filed this week.

Oklahoma Natural Gas will file a general rate case in 2015 based on a test year consisting of 12 months ending March 31 of 2015. We expect the outcome of this case to be reflected in our financials in early 2016.

This will be the first full rate case post separation. Now onto Texas.

In May of this year, the Austin City Council approved Texas Gas Service’s request for interim rate relief under the Gas Reliability Infrastructure Program or GRIP statute for $5.2 million, representing $39 million of capital investments since the last filing. Last week, the City of El Paso approved an annual increase in revenues of $3.5 million, resulting from the EPARR filing.

The GRIP filing for the remainder of the El Paso service area was approved with an increase in revenues of $0.6 million. In some other Texas jurisdiction, Texas Gas Service received approval this quarter for interim rate relief under GRIP and cost-of-service adjustments totaling approximately $2.1 million, driven by capital investments and changes in cost-of-service.

For Kansas, we expect to file our annual request for interim rate relief under the Gas System Reliability Surcharge or GSRS rider in the third quarter 2014, and new rates to be effective January of 2015. GSRS is a capital-recovery mechanism that allows for a rate adjustment for safety-related and government-mandated capital investments made between rate cases.

The next general rate case filing is expected to be in 2016 for Kansas using 2015 as a test year, with new rates effective in January 2017 and will be the first full rate case post separation. Before we take your questions, I’d like to reiterate the commitments we have made and discussed as we’ve evolved into a new stand-alone, 100% regulated natural gas utility.

Our first and most important commitment is to the safety and well-being of our employees, customers and the public. This will not change.

Second, we will continue to target our capital investments primarily towards system integrity and reliability. These expenditures allow us to operate in a safe and reliable manner while bringing an energy alternative to our customers.

Finally, we are committed to minimizing the gap between our actual and our allowed returns, lowering expenses to sustainable levels, recovering our expenses and developing incremental sources of regulated revenue. We’re focused on being 100% regulated utility, setting us apart from our peers.

In closing, I’d like to thank our more than 3,000 employees whose hard work, dedication and commitment to our customers enables us and our assets to operate safely, reliably and environmentally responsible every single day. I’d like to especially recognize Oklahoma Natural Gas, named the most trusted natural gas utility nationwide in the 2014 Utility Trusted Brand & Customer Engagement Study conducted by Cogent Reports.

Operator, we’re now ready for questions.

Okay. Well, thank you everybody for joining this morning.

I guess nobody gets the $5 the Starbucks gift card I was offering to the first caller. However, seriously our quiet period for the third quarter starts when we close our books in early October and extend until earnings are released after the market closes on November 3, followed by our conference call at 11 AM Eastern, 10 AM Central on November 4.

We’ll provide those details on the call at a later date. Thank you everybody.

Have a great day.

Thank you, all.