OGS

Strategic Growth Positioning

• OneGas operates as a 100% regulated utility across Kansas, Oklahoma, and Texas, with a strategy of disciplined infrastructure investment, balanced with long-term customer bill growth aligned to inflation and consistent dividend growth
• Strong demand growth from large-load customers (gas-fired generation, data centers, advanced manufacturing) has increased meaningfully, supported by business-friendly regulatory frameworks and abundant natural gas resources in the operating region
• 3 high-volume large-load projects are currently under contract, representing ~$15 million in incremental annual revenue and $175 million in associated capital, with service dates spanning H2 2026 through 2028. 5 additional projects are in late-stage discussions, and 17 more are in early evaluation

Regulatory Updates

• Oklahoma Natural Gas: A $28.7 million rate increase application was recommended for approval by the administrative law judge in June, with interim rates implemented in late June. No full rate case is planned before the required 2027 Oklahoma rate case
• Texas Gas Service: A $36.9 million revenue increase request under the gas reliability infrastructure program (GRIP) was approved by the Texas Railroad Commission, with new rates effective July 2026. This was the first statewide GRIP filing to reflect expanded benefits from Texas House Bill 4384
• Kansas Gas Service: A $14.3 million increase application was filed under the expanded gas reliability surcharge statute in July 2026, with rates expected to take effect October 2026. Expanded provisions include broader eligible investments, higher maximum residential surcharges, and a shorter review period

Operational Excellence Initiatives

• Insourcing of core functions is ongoing: the line locating function is already insourced, driving a 7% year-over-year increase in activity with a 6% decline in damages. 40% of Oklahoma's watch and protect function is now insourced, with full insourcing targeted by end of 2026. Insourcing improves safety, system integrity, and long-term O&M cost management
• System integrity investment represents 60-70% of the annual capital budget, prioritized independently of regulatory treatment to meet system replacement and reliability needs

Financial Strategy

• The Board of Directors declared a quarterly dividend of 68 cents per share, unchanged from the prior quarter. Current long-term policy targets 1-2% annual dividend growth through 2030 to support self-funding of capital investment and higher EPS growth. The payout ratio has fallen from 68% to an implied 57% (GAAP) under this strategy

• Full year 2026 adjusted net income guidance range is maintained at $306 million to $314 million, and adjusted EPS guidance is maintained at $4.83 to $4.95. Management now expects to achieve results in the upper half of this range ($310 million to $314 million adjusted net income, $4.89 to $4.95 adjusted EPS), upgraded from the prior full-range expectation
• Texas House Bill 4384 is now expected to contribute approximately 42 cents to full year 2026 adjusted EPS, up from prior estimates
• Long-term annual O&M expense growth guidance is maintained at 3-4%, with O&M growth expected to decline meaningfully in the second half of 2026 after higher growth in the first half
• The 2025-2030 five-year capital and growth plan originally released in December 2025 remains in place, with an update to 2027 and forward guidance expected later in 2026

OneGas is a 100% regulated natural gas utility operating three business units across Kansas, Oklahoma, and Texas, no separate segment financial performance is broken out in the call. For the consolidated firm: Q2 2026 adjusted net income was $52.1 million (82 cents diluted EPS), a 52% increase from $32.7 million (54 cents diluted EPS) in Q2 2025. GAAP EPS was 74 cents in Q2 2026, a nearly 40% increase from 53 cents in the prior year quarter. Year-to-date 2026 adjusted EPS has grown 16% over the first half of 2025. Q2 2026 O&M expenses increased 6.6% year-over-year, down from a larger increase in Q1 2026. Excluding KGSS1 related amounts, second quarter interest expense decreased $3.8 million year-over-year. Capital project completion was $188 million in the quarter, in line with Q2 2025.

• Elevated fuel costs for the company's fleet (driven by geopolitical unrest) have increased near-term O&M expenses, though these costs are factored into current full-year guidance
• Forward-looking statements are subject to material risks that could cause actual results to differ from projections, including regulatory outcomes, weather variability, customer investment decision timelines, and interest rate movements
• The large-load project development pipeline carries inherent uncertainty: projects do not get finalized until contracts are signed, and timelines can shift beyond current projections

Q: With improved regulatory constructs, will you shift/pull forward capital allocation, and can you comment on your 5-7 year plan? Does your 1-2% annual dividend growth policy still make sense with improving cash flow? / A: 60-70% of capital is allocated to system integrity regardless of regulation, while growth capital follows customer demand across all three states. Activity is particularly strong in Texas due to favorable legislation. The 5-7 year plan from December 2025 remains in place, with an update planned for late 2026. The 1-2% annual dividend growth policy is still in place through 2030, designed to support increased self-funding of capital to maximize EPS growth. The payout ratio has fallen to 57% GAAP, and a discussion about potential increases will happen during fall planning.

Q: Is the growth in large load customer interest a new trend or a continuation, and what should we expect for H2 2026 O&M growth? / A: Most large load projects are long-term developments that have been in the works for some time, though a smaller share have emerged more quickly, across all three states and all customer segments. O&M sequential growth will see a meaningful step down in H2 2026, after 8%+ growth in Q1 and ~6.6% in Q2. Elevated near-term costs come from high line locating activity tied to broader economic growth and higher fuel prices, but insourcing efficiencies will drive annual O&M growth back to the 3-4% long-term target in future periods.

Q: What is the Q2 2026 benefit from Texas HB 4384 and what is the cadence for the rest of the year? Have you decided to implement a SOFR collar for commercial paper to protect against rising rates? / A: The first half 2026 benefit from HB 4384 is ~28-29 cents per adjusted EPS, with full year guidance at 42 cents. No large Texas projects of the scale of last year's Austin reinforcement project are planned for H2 2026, so benefit accrual will be lower in the back half. After evaluation, OneGas has decided not to pursue a SOFR collar at this time. The cost and earnings volatility introduced by the hedge outweighed potential benefits, and FOMC projections indicate rates will decline over the medium term, so the hedge is not justified today.

Q: What factors drove the upgrade to full year guidance, and what is the timing for the remaining large load projects? / A: In addition to higher than expected benefits from HB 4384, the upgrade reflects stronger than expected progress on contracted projects, better cost discipline across the business, and higher than expected capacity release revenue from higher natural gas storage balances after the warm winter. One large late-stage project has already been contracted and will come online this quarter. The other five late-stage projects could be contracted by the end of 2026 or in early 2027, with early-stage 17 projects following later based on customer timelines.