Annual Report 2022

Delivering

Reliable & Affordable Energy

New revenues from system integrity investments and expansions to serve new customers contributed to our earnings growth. In 2022, despite significant macroeconomic headwinds, net income increased to $222 million compared with $206 million in 2021. Diluted earnings per share increased approximately 6% to $4.08, compared with $3.85 per diluted share last year. Dividends rose 7% in 2022 versus the prior year.

In 2022, we continued to address the impact of 2021’s Winter Storm Uri successfully. Securitized bonds were issued in Kansas and Oklahoma, and are expected to be issued soon in Texas. Securitization proved to be the most effective tool in helping limit the monthly economic impact on customers from this devastating natural disaster.

Resolution of the financial impact of Winter Storm Uri had positive implications for our credit ratings. S&P upgraded our credit rating one notch to A-, and both S&P and Moody’s returned our outlook to Stable.

In November 2022, we detailed our 2023 and five-year financial outlook, candidly discussing how altered macroeconomic conditions impacted our business and our company’s actions in response. We will be thoughtful about the sequence and timing of our regulatory activities to address the impacts of elevated inflation and interest rates as we continue to provide affordable service for customers.

Safety is at the foundation of everything we do. Our co-workers drive our safety culture and are committed to a goal of zero harm. Our commitment to safety carries over into all areas of our work, resulting in pipeline safety improvements, reliable service to our customers and an improved emissions profile of our system.

Safe driving, personal injury prevention and public safety are essential aspects of our daily work. Our training, processes and procedures are designed to prevent incidents and harm to our co-workers, customers and communities.

We leverage data in all areas of our pipeline safety program to guide decision-making and improve our processes. Vintage distribution main and service pipeline replacement projects are optimized for risk mitigation by our asset integrity management technology and contribute to emissions reductions.

We also use data from impactful weather events for system reliability planning and to further reinforce our operations.After Winter Storm Uri in 2021, we applied the lessons learned and made additional investments in our system, which included adding additional leased natural gas storage capacity and further diversifying our gas supply portfolio, which have enhanced reliability and resiliency. The benefits of this approach were clear during Winter Storm Elliott in December 2022, which brought extreme cold, snow and ice to our service territories. Our systems, processes and co-workers performed well with no significant service disruptions.

Our safety focus also extends to physical security, information technology and operational technology to keep our customers, co-workers and systems safe and secure. The ONE Gas Cybersecurity and Physical Security teams operate 24/7, continuously analyzing our company’s cybersecurity and physical security risks. We understand threats are ever-present and strive to remain vigilant in conducting drills and providing employee training.

We continue to enhance the reliability and resiliency of our distribution network and meet growing customer demand through ongoing capital investments in system integrity and service extensions.

Over the next several years, a portion of our growth capital will focus on expanding our system into growing population areas along the Interstate 35 corridor from Kansas City to Austin. This vibrant region is recognized as one of the country’s fastest-growing population and job creation areas. It also aligns with five of our seven major metro service areas: Kansas City and Wichita, Kansas; Tulsa and Oklahoma City, Oklahoma; and Austin, Texas. We added over 27,000 new customer connections in 2022, up nearly 9% compared with customer growth in 2021 and marking a new record for annual meter sets at ONE GAS.

In 2022, we invested over $650 million in capital projects, a 20% increase over 2021. Total capital spending for the next five years is anticipated to be $3.6 billion, including growth capital of approximately $1.1 billion. The capital forecast results in an estimated average rate base growth of 7% to 9% annually through 2027. A portfolio of regulatory mechanisms supports continuous improvements to our systems and recovery of those investments, with 90% of our capital investments included in annual regulatory filings.

A key component of our business strategy is reducing emissions. We believe our co-workers and assets will play an essential role in a cleaner energy future. We are actively evaluating opportunities for additional emissions reduction, including improving operational practices and expanding energy efficiency and education programs.

Energy choice is essential to a clean energy future, and a growing number of customers are looking for ways to reduce their carbon footprint. We continue to prepare for opportunities and technologies, such as supplementing the traditional natural gas in our system with renewable natural gas (RNG) and the utilization of low-carbon hydrogen. As of Dec. 31, 2022, we had more than 20 RNG projects in various stages of negotiation and development.

In 2022, ONE Gas filed an application with our Oklahoma regulators to approve a voluntary RNG tariff. This tariff is a proposed three-year pilot that would allow Oklahoma Natural Gas customers the opportunity to offset their natural gas carbon footprint for an additional charge. Additionally, we are authorized to spend up to $5 million annually to purchase RNG as part of our natural gas supply portfolio and recover the cost through our purchased gas-cost mechanism. This tariff will go into effect in 2023 if approved by the Oklahoma Corporation Commission.

We invite you to learn more about our environmental milestones at esg.onegas.com.

Natural gas maintains a competitive price advantage of an average of 2.5-to-1 compared with electricity in our service areas. Cost savings are a crucial differentiator for our customers facing rising costs in all areas of their lives. The American Gas Association estimates households that use natural gas for heating, cooking and clothes drying save an average of $1,068 per year compared with homes using electricity for those activities.

Part of serving our customers well is looking for innovative ways to keep their energy costs low, like expanding our energy efficiency programs, which help our customers use less energy, save money and reduce their environmental impact. We also continue to expand our low-income programs and assist customers with financial hardships.

In 2022, we filed a rate case requesting the consolidation of three service areas (West Texas, North Texas and Borger/Skellytown) into one West-North service area and a new rate design. Our regulators approved the requests, and residential customers in the new West-North service area may now choose a rateplan that aligns with their usage patterns and needs.

A high-performing workforce is the foundation of our strategic plan. We believe that every one of our co- workers makes a difference and contributes to our success. We create a safe, ethical and inclusive work culture welcoming all viewpoints. Our programs and policies help attract and develop diverse talent and support our co-workers’ physical, social, emotional and financial well-being. The result is an engaged workforce and an environment where top talent wants to work.

Inclusion & Diversity is a Core Value for ONE Gas and a critical element of a high-performing workforce. 2022 saw an increase in the number of our co-workers participating in employee-led programs designed to strengthen our “speak-up” culture, an essential element of both engagement and our focus on safety.

Our safety metrics and annual employee engagement survey also provide insight into our company’s culture and the effectiveness of our programs. Research shows engaged employees have fewer safety incidents, reduced turnover and increased productivity. In 2022, our engagement scores were in the top quartile of Gallup’s Overall Company Database.

While external circumstances may change, our commitment to safely delivering reliable and affordable natural gas and creating value for our stakeholders will not waver.

We remain confident in our long-term strategy, bolstered by a desirable geographic footprint with proven growth potential, constructive regulatory frameworks and a long runway of capital investment opportunities.

Through ongoing investments in system integrity and extension to serve new customers, we continue to enhance the resiliency of our distribution network and fulfill our mission of delivering natural gas for a better tomorrow.

Thank you for your support and interest in ONE Gas.