Part I [Business](index=6&type=section&id=Item%201.%20Business) ONE Gas is a regulated natural gas utility serving 2.2 million customers in Oklahoma, Kansas, and Texas, focusing on safety, system investment, and sustainability - ONE Gas is a **100-percent regulated** natural gas distribution utility, serving approximately **2.2 million customers** across Oklahoma, Kansas, and Texas[15](index=15&type=chunk)[16](index=16&type=chunk) - The company's business strategy focuses on **five key areas**: Safety, Compliance and Reliability; Fostering a High-performing Workforce; Investing in Our System; Maintaining a Conservative Financial Profile; and Sustainability (ESG)[17](index=17&type=chunk) - Operations are regulated by the **Oklahoma Corporation Commission (OCC)**, **Kansas Corporation Commission (KCC)**, and the **Railroad Commission of Texas (RRC)** and various Texas municipalities, which establish rates and charges[17](index=17&type=chunk)[18](index=18&type=chunk) - The company is exploring new opportunities in **Renewable Natural Gas (RNG)** and **hydrogen** to secure new supply sources and reduce greenhouse gas emissions[48](index=48&type=chunk) [Regulatory Overview](index=6&type=section&id=Item%201.%20Business%23Regulatory%20Overview) The company's rates are set by state regulators, utilizing mechanisms like PBRC, GSRS, GRIP/COSA, and WNA to manage costs, investments, and revenue stability Regulatory Rate Structure Overview (as of Dec 2020) | Division | Jurisdiction | Rate Base (millions) | Authorized ROE | Equity Ratio | | :--- | :--- | :--- | :--- | :--- | | Oklahoma Natural Gas | OK | $1,616 | 9.50% | 56% | | Kansas Gas Service | KS | $1,133 | 9.30% | N/A | | Texas Gas Service | Central-Gulf | $458 | 9.50% | 59% | | Texas Gas Service | West Texas | $397 | 9.50% | 60% | - **Interim rate adjustment mechanisms** are in place across all jurisdictions (**PBRC, GSRS, GRIP/COSA**) to allow for recovery of capital investments between general rate cases[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - **Weather normalization adjustment (WNA)** mechanisms are utilized in all service areas to reduce the impact of weather variations on customer bills and company revenues[26](index=26&type=chunk) [Market Conditions and Seasonality](index=8&type=section&id=Item%201.%20Business%23Market%20Conditions%20and%20Seasonality) The company manages natural gas supply with 48.3 Bcf storage capacity, addressing seasonal demand and maintaining a significant cost advantage over electricity while supporting the CNG market - As of December 31, 2020, the company had **48.3 Bcf** of contracted natural gas storage capacity with a maximum daily withdrawal capacity of approximately **1.3 Bcf**[38](index=38&type=chunk) Natural Gas vs. Electricity Cost Advantage (2020) | State | ONE Gas Delivered Cost/kWh | Avg. Retail Electricity Price/kWh | Natural Gas Advantage Ratio | | :--- | :--- | :--- | :--- | | Oklahoma | 2.86¢ | 10.09¢ | 3.5x | | Kansas | 3.00¢ | 12.78¢ | 4.3x | | Texas | 3.42¢ | 11.95¢ | 3.5x | - The company supplied **151 CNG fueling stations** as of year-end 2020, transporting **2.6 million Dth** for this purpose, a **6% decrease** from 2019[47](index=47&type=chunk) [Employees](index=10&type=section&id=Item%201.%20Business%23Employees) As of February 2021, ONE Gas employed approximately 3,700 people, with 700 covered by collective bargaining agreements, emphasizing a culture of safety and inclusion - The company employed approximately **3,700 people** as of February 1, 2021[50](index=50&type=chunk) Collective Bargaining Agreements (as of Feb 1, 2021) | Union | Approximate Employees | Contract Expires | | :--- | :--- | :--- | | The United Steelworkers | 400 | May 31, 2022 | | International Brotherhood of Electrical Workers | 300 | June 30, 2021 | [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including operational hazards, regulatory challenges impacting cost recovery, financial volatility from economic conditions and gas prices, and risks related to common stock and general business changes - Operational risks include **pandemics** (e.g., COVID-19), **pipeline safety regulations**, **operational hazards** like leaks and explosions, reliance on technology and **cybersecurity threats**, and potential **labor shortages** or strikes[58](index=58&type=chunk)[63](index=63&type=chunk)[73](index=73&type=chunk) - Regulatory and legislative risks include the inability to earn a reasonable rate of return or fully recover costs due to **adverse regulatory actions**, changes in **environmental laws** concerning climate change, and potential **fines for noncompliance**[87](index=87&type=chunk)[97](index=97&type=chunk) - Financial, economic, and market risks encompass **unfavorable economic conditions** reducing demand, natural gas price volatility increasing working capital needs, **competition** from electricity and renewables, and potential **credit rating downgrades** increasing borrowing costs[101](index=101&type=chunk)[103](index=103&type=chunk)[110](index=110&type=chunk) - Risks related to common stock include **anti-takeover provisions** in the company's charter and bylaws, and the dependency of **dividend payments** on generating sufficient cash flows[132](index=132&type=chunk)[137](index=137&type=chunk) [Properties](index=28&type=section&id=Item%202.%20Properties) As of December 2020, ONE Gas owned approximately 43,700 miles of pipeline and held 48.3 Bcf of contracted natural gas storage capacity Pipeline Miles by State (as of Dec 31, 2020) | Properties (miles) | OK | KS | TX | Total | | :--- | :--- | :--- | :--- | :--- | | Distribution | 19,000 | 11,600 | 10,600 | 41,200 | | Transmission | 700 | 1,500 | 300 | 2,500 | | **Total properties** | **19,700** | **13,100** | **10,900** | **43,700** | - The company has **48.3 Bcf** of natural gas storage capacity under contract, with a maximum daily withdrawal capacity of approximately **1.3 Bcf**[142](index=142&type=chunk) [Legal Proceedings](index=28&type=section&id=Item%203.%20Legal%20Proceedings) Legal proceedings information is detailed in Note 17 of the financial statements, with the company not expecting material adverse effects from ongoing litigation - Reference to **Note 17** of the Notes to Consolidated Financial Statements for information regarding legal proceedings[143](index=143&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=29&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) ONE Gas common stock trades on the NYSE under 'OGS,' with 10,601 shareholders as of February 2021, and a quarterly dividend of $0.58 per share declared in January 2021 - Common stock is listed on the **NYSE** under the trading symbol "**OGS**"[147](index=147&type=chunk) - In January 2021, a dividend of **$0.58 per share** (**$2.32 annualized**) was declared[147](index=147&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) ONE Gas's financial performance, driven by its regulated model, was impacted by the February 2021 winter storm and COVID-19, leading to a $2.5 billion term loan and credit rating downgrades, despite net income growth [Recent Developments](index=30&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Recent%20Developments) Recent developments include the February 2021 winter storm, causing $2.2 billion in gas costs and a $2.5 billion term loan, and COVID-19 impacts, with both leading to deferred cost recovery efforts - The February 2021 winter weather event resulted in approximately **$2.2 billion** in aggregated natural gas purchases for that month[155](index=155&type=chunk) - On February 22, 2021, the company entered into a **$2.5 billion** two-year unsecured term loan facility to enhance liquidity for financing the extraordinary gas purchases[156](index=156&type=chunk) - In response to COVID-19, the company received **accounting orders** in each jurisdiction to **defer certain incremental costs** (like bad debt) and lost revenues for future recovery determination in rate cases[161](index=161&type=chunk) - In February 2020, an at-the-market equity program for up to **$250 million** was initiated[163](index=163&type=chunk) [Regulatory Activities](index=33&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Regulatory%20Activities) The company is actively seeking regulatory recovery for February 2021 winter storm costs and COVID-19 impacts, while continuing regular rate activities and adjusting for tax law changes like Kansas's state income tax exemption - Following the Feb 2021 winter storm, the company is seeking regulatory authority in all jurisdictions to record **regulatory assets** to account for extraordinary costs. **Kansas and Texas approved** this, while an administrative law judge in Oklahoma has recommended approval[167](index=167&type=chunk)[175](index=175&type=chunk)[187](index=187&type=chunk) - In May 2020, Kansas passed a law exempting KCC-regulated utilities from state income tax starting Jan 1, 2021. This resulted in an **$81.5 million EDIT regulatory liability** to be refunded to customers over time[177](index=177&type=chunk) - In August 2020, the RRC approved a **$10.3 million base rate increase** for the newly consolidated Central-Gulf service area in Texas[192](index=192&type=chunk) [Financial Results and Operating Information](index=38&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Financial%20Results%20and%20Operating%20Information) In 2020, net income increased to $196.4 million, driven by a $28.1 million rise in net margin from new rates and customer growth, despite higher operating costs, with capital expenditures reaching $512.2 million Selected Financial Results (in millions) | Financial Results | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Total revenues | $1,530.3 | $1,652.7 | $1,633.7 | | Net margin (Non-GAAP) | $992.9 | $964.8 | $919.1 | | Operating income | $303.5 | $295.3 | $288.4 | | Net income | $196.4 | $186.7 | $172.2 | | Capital expenditures | $512.2 | $465.1 | $447.4 | - Net income increased by **$9.7 million (5%)** in 2020 compared to 2019[199](index=199&type=chunk)[200](index=200&type=chunk) - Net margin increased **$28.1 million (3%)** in 2020 vs. 2019, driven by **$23.1 million** from new rates and **$10.1 million** from residential customer growth[204](index=204&type=chunk)[205](index=205&type=chunk) - The average number of total customers increased by **26,000**, from 2.194 million in 2019 to **2.220 million** in 2020[212](index=212&type=chunk) [Liquidity and Capital Resources](index=43&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Liquidity%20and%20Capital%20Resources) The company funds operations via cash flow and commercial paper, securing a $2.5 billion term loan for winter storm costs, while facing credit rating downgrades, and saw operating cash flow increase to $364.5 million in 2020 - On Feb 22, 2021, the company entered into a **$2.5 billion** term loan facility to manage liquidity needs arising from the 2021 winter storm[227](index=227&type=chunk)[228](index=228&type=chunk) Credit Rating Downgrades (February 23, 2021) | Rating Agency | New Rating | Outlook | | :--- | :--- | :--- | | Moody's | A3 | Negative | | S&P | BBB+ | Negative | - The company has a **$700 million** commercial paper program, with **$418.2 million** outstanding at year-end 2020[226](index=226&type=chunk) - Cash provided by operating activities increased by **$54.1 million** to **$364.5 million** in 2020, primarily due to working capital changes[246](index=246&type=chunk)[247](index=247&type=chunk) [Environmental, Safety and Regulatory Matters](index=46&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Environmental%2C%20Safety%20and%20Regulatory%20Matters) The company manages environmental and safety regulations, including MGP site remediation costs of $9.1 million to $23.3 million, new PHMSA pipeline safety rules, and participates in voluntary methane reduction programs - The company has an estimated potential cost of **$9.1 million to $23.3 million** for additional investigation and remediation at its former MGP sites. The reserve for these sites was increased to **$14.5 million** in 2020[254](index=254&type=chunk)[507](index=507&type=chunk) - A new **PHMSA pipeline safety rule** became effective July 1, 2020, with **non-material compliance costs**. A second, potentially significant, rule is still pending[260](index=260&type=chunk)[261](index=261&type=chunk) - The company participates in **voluntary methane reduction initiatives**, including the EPA's Natural Gas STAR Methane Challenge and the ONE Future coalition, which aims to reduce methane emissions to **1% or less by 2025**[268](index=268&type=chunk)[269](index=269&type=chunk) [Estimates and Critical Accounting Policies](index=50&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Estimates%20and%20Critical%20Accounting%20Policies) Critical accounting policies involve significant judgment, including Regulation accounting (ASC 980) for deferring costs, revenue recognition, pension calculations, annual goodwill impairment testing, and accruals for contingencies like MGP site remediation - **Regulation (ASC 980)** is a critical policy, allowing the company to record **regulatory assets** for costs probable of future recovery through rates, and **regulatory liabilities** for amounts to be returned to customers[276](index=276&type=chunk) - Accrued unbilled revenue, an estimate of gas delivered but not yet billed, was **$144.9 million** at Dec 31, 2020, compared to **$109.7 million** at year-end 2019[278](index=278&type=chunk) - **Goodwill impairment testing** is performed annually; the 2020 qualitative assessment did not indicate any impairment[287](index=287&type=chunk) - In 2020, the reserve for MGP site remediation was increased by **$9.1 million** to a total of **$14.5 million**, based on updated cost estimates[292](index=292&type=chunk) [Financial Statements and Supplementary Data](index=57&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2020, including the independent auditor's report, detailing financial position, operations, and cash flows in accordance with GAAP [Report of Independent Registered Public Accounting Firm](index=57&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) PricewaterhouseCoopers LLP issued an unqualified opinion on ONE Gas's 2020 financial statements and internal controls, highlighting rate regulation accounting as a critical audit matter due to significant judgment - The auditor, PricewaterhouseCoopers LLP, issued an **unqualified (clean) opinion** on the financial statements and internal controls[317](index=317&type=chunk) - A **Critical Audit Matter** was identified related to the accounting for the effects of **rate regulation**, due to the significant judgment required by management in assessing regulatory impacts on assets and liabilities[325](index=325&type=chunk)[326](index=326&type=chunk) [Consolidated Financial Statements](index=59&type=section&id=Consolidated%20Financial%20Statements) The 2020 consolidated financial statements show total revenues of $1.53 billion, net income of $196.4 million, total assets of $6.03 billion, and cash from operations of $364.5 million Consolidated Statement of Income Highlights (Year Ended Dec 31, 2020, in thousands) | Metric | Amount | | :--- | :--- | | Total revenues | $1,530,268 | | Operating income | $303,516 | | Net income | $196,412 | | Diluted EPS | $3.68 | Consolidated Balance Sheet Highlights (As of Dec 31, 2020, in thousands) | Metric | Amount | | :--- | :--- | | Total Assets | $6,028,712 | | Net Property, Plant and Equipment | $4,867,057 | | Total Liabilities | $3,795,401 | | Total Equity | $2,233,311 | [Notes to Consolidated Financial Statements](index=68&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial figures, including subsequent events like the February 2021 winter storm's $2.2 billion gas costs and $2.5 billion term loan, long-term debt, regulatory assets/liabilities, and environmental remediation - Note 2 (Subsequent Events) discloses that the February 2021 winter storm resulted in approximately **$2.2 billion** in natural gas purchases and the company entered into a **$2.5 billion** term loan facility for liquidity[402](index=402&type=chunk)[403](index=403&type=chunk) - Note 5 (Long-Term Debt) details the company's **$1.6 billion** in senior notes outstanding, with maturities ranging from 2024 to 2048[414](index=414&type=chunk) - Note 11 (Regulatory Assets and Liabilities) shows total regulatory assets of **$423.7 million** and total regulatory liabilities of **$563.3 million** as of Dec 31, 2020, with the largest liability being **$547.6 million** related to income tax rate changes[437](index=437&type=chunk) - Note 17 (Commitments and Contingencies) details the environmental remediation liability for **12 former MGP sites** in Kansas, with a reserve of **$14.5 million** and deferred costs of **$18.8 million** for regulatory recovery[504](index=504&type=chunk)[505](index=505&type=chunk)[507](index=507&type=chunk) [Controls and Procedures](index=102&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2020, an assessment concurred by PricewaterhouseCoopers LLP - Management concluded that disclosure controls and procedures were **effective** as of December 31, 2020[518](index=518&type=chunk) - Management concluded that internal control over financial reporting was **effective** as of December 31, 2020, an assessment **audited and confirmed** by PricewaterhouseCoopers LLP[519](index=519&type=chunk)[520](index=520&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=102&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance practices is incorporated by reference from the company's 2021 definitive Proxy Statement - Information concerning directors, corporate governance, the audit committee, and code of ethics is **incorporated by reference** from the **2021 definitive Proxy Statement**[524](index=524&type=chunk)[527](index=527&type=chunk)[529](index=529&type=chunk) [Executive Compensation](index=104&type=section&id=Item%2011.%20Executive%20Compensation) All information regarding executive compensation is incorporated by reference from the company's 2021 definitive Proxy Statement - All information on executive compensation is **incorporated by reference** from the **2021 definitive Proxy Statement**[535](index=535&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=104&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details stock ownership by major shareholders and management, and equity compensation plans, with most information incorporated by reference from the 2021 definitive Proxy Statement Equity Compensation Plan Information (as of Dec 31, 2020) | Plan Category | Number of Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Number of Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | :--- | | Approved by security holders | — | — | 2,942,946 | | Not approved by security holders | — | — | 1,812 | | **Total** | **—** | **—** | **2,944,758** | - Information on security ownership of certain beneficial owners and management is **incorporated by reference** from the **2021 definitive Proxy Statement**[536](index=536&type=chunk)[537](index=537&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=106&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2021 definitive Proxy Statement - All information on certain relationships, related transactions, and director independence is **incorporated by reference** from the **2021 definitive Proxy Statement**[542](index=542&type=chunk) [Principal Accounting Fees and Services](index=106&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services provided by PricewaterhouseCoopers LLP is incorporated by reference from the 2021 definitive Proxy Statement - All information on principal accountant fees and services is **incorporated by reference** from the **2021 definitive Proxy Statement**[543](index=543&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=107&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed with the Form 10-K report, including corporate documents, debt agreements, compensation plans, and certifications - Lists **all financial statements and exhibits** filed with the report[546](index=546&type=chunk) - Exhibits include **key corporate documents**, **debt agreements**, **compensation plans**, and **required certifications**[547](index=547&type=chunk)[548](index=548&type=chunk)[549](index=549&type=chunk)

Financial Data and Key Metrics Changes - The company updated its 2020 financial guidance, expecting net income to be between $186 million and $198 million, and earnings per diluted share to be between $3.44 and $3.68 [7] - Net income for Q3 2020 was $21.1 million or $0.39 per diluted share, compared to $17.5 million or $0.33 per diluted share in Q3 2019, reflecting a net margin increase of $5.2 million [8] - Operating costs increased by $0.8 million compared to the same period last year, primarily due to COVID-19 related expenses and employee costs [9] Business Line Data and Key Metrics Changes - The increase in net margin was primarily due to $3.7 million from new rates and $2.7 million from residential sales driven by customer growth [8] - Transport revenues and volumes for Q3 2020 were above the same period in 2019, with year-to-date transport revenues flat year-over-year [20] Market Data and Key Metrics Changes - The company reported an average of approximately 24,000 more sales customers year-to-date compared to the same period last year, with a 27% increase in new customer connections [22] - Economic activity is showing positive signs, particularly in Texas and Oklahoma, with over 100 new business relocations or expansions announced in the Austin area, expected to create over 14,000 new jobs [21] Company Strategy and Development Direction - The company is consolidating jurisdictions to improve efficiency, reducing the number of jurisdictions in Texas from 10 to 5 since the spin-off in 2014 [18] - The company is exploring renewable natural gas (RNG) projects and hydrogen production, indicating a commitment to decarbonization and innovation in energy solutions [48][50] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in being well-prepared for the winter heating season despite the ongoing pandemic, highlighting proactive measures taken for employee safety [38] - The company is monitoring bad debt expenses, which have increased to $8.8 million year-to-date compared to $4.6 million last year, indicating ongoing challenges related to COVID-19 [57] Other Important Information - The board declared a dividend of $0.54 per share, and the authorized rate base was approximately $3.71 billion as of September 30, 2020 [12] - The company has adequate liquidity, with approximately $391 million in its commercial paper program and no plans to issue equity for the remainder of 2020 [14] Q&A Session Summary Question: How is the company preparing for COVID-19 during the winter heating season? - Management has been preparing since March, implementing medical protocols to ensure employee and customer safety, and feels well-prepared for the upcoming challenges [38][39] Question: What is the trend in bad debt as the company heads into winter? - Bad debt expense is currently $8.8 million year-to-date, up from $4.6 million last year, with ongoing monitoring of the situation [57] Question: Is there a regulatory framework for investing in RNG across jurisdictions? - RNG is recoverable in Texas, and there are efforts in Oklahoma to study and potentially integrate RNG into the gas supply [60]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2020. OR ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________. Commission file number 001-36108 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 15 Ea ...

ONE Gas, Inc. (NYSE:OGS) Q2 2020 Earnings Conference Call July 28, 2020 11:00 AM ET Company Participants Brandon Lohse - IR Pierce Norton - President and CEO Caron Lawhorn - SVP and CFO Curtis Dinan - SVP and Chief Commercial Officer Sid McAnnally - SVP and Chief Operating Officer Conference Call Participants Shar Pourreza - Guggenheim Partners Chris Sighinolfi - Jefferies Gabriel Moreen - Mizuho Harry Pollans - Bank of America Aga Zmigrodzka - UBS Brian Russo - Sidoti Operator Good day, and welcome to the ...

[Report Overview](index=1&type=section&id=Report%20Overview) [Filing Information](index=1&type=section&id=Filing%20Information) This report is ONE Gas, Inc.'s quarterly report (Form 10-Q) for the period ended June 30, 2020, with the company registered in Oklahoma, stock ticker OGS listed on the NYSE, classified as a large accelerated filer, and having filed all required reports | Metric | Details | | :--- | :--- | | **Report Type** | Quarterly Report (Form 10-Q) | | **Reporting Period** | As of June 30, 2020 | | **Company Name** | ONE Gas, Inc. | | **Jurisdiction of Incorporation** | Oklahoma | | **Stock Ticker** | OGS | | **Listing Exchange** | New York Stock Exchange | | **Filer Category** | Large Accelerated Filer | | **Common Stock Outstanding** | 52,920,531 shares (as of July 20, 2020) | [Forward-Looking Statements Disclaimer](index=3&type=section&id=Forward-Looking%20Statements%20Disclaimer) This report contains forward-looking statements regarding management's expectations for future operations, financial performance, and market conditions, cautioning investors that actual results may differ significantly due to various factors - Forward-looking statements cover future operating plans, economic performance, and related assumptions, using words like "anticipate," "estimate," and "expect"[9](index=9&type=chunk) - The company cannot guarantee that forward-looking expectations or assumptions will be realized, and actual results may differ materially due to various significant factors[9](index=9&type=chunk) - Important influencing factors are detailed in the "Forward-Looking Statements" within "Management's Discussion and Analysis" and "Risk Factors" sections[9](index=9&type=chunk) [Available Information](index=4&type=section&id=Available%20Information) The company provides free access to SEC filings, governance documents, and uses social media for information dissemination, with website and social media content not incorporated by reference into this report - The company's website (www.onegas.com) provides free access to SEC filings (10-K, 10-Q, 8-K) and their amendments[10](index=10&type=chunk) - The company's website also offers corporate governance documents, such as the Code of Business Conduct, Corporate Governance Guidelines, and Bylaws[10](index=10&type=chunk) - The company uses social media platforms to disseminate information, but website and social media content are not incorporated by reference into this report[11](index=11&type=chunk) [Glossary](index=5&type=section&id=Glossary) This report includes a glossary defining abbreviations, acronyms, and industry terms to aid reader comprehension of specialized content - The glossary defines abbreviations, acronyms, and industry terms used in this quarterly report, such as AAO (Accounting Authority Order), ADIT (Accumulated Deferred Income Taxes), and COVID-19 (Coronavirus Disease 2019)[13](index=13&type=chunk) [Part I. Financial Information](index=6&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents ONE Gas, Inc.'s unaudited consolidated financial statements, including statements of income, comprehensive income, balance sheets, cash flows, and equity, along with notes, for the quarter and six months ended June 30, 2020 [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) Consolidated Statements of Income Key Data (Unaudited) | Metric (Thousands of Dollars) | June 30, 2020 (3 Months) | June 30, 2019 (3 Months) | June 30, 2020 (6 Months) | June 30, 2019 (6 Months) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | 273,287 | 290,560 | 801,455 | 951,560 | | **Cost of Natural Gas** | 62,510 | 82,588 | 288,649 | 447,664 | | **Operating Income** | 44,608 | 46,891 | 177,812 | 174,510 | | **Net Income** | 25,325 | 24,470 | 117,002 | 118,130 | | **Diluted Earnings Per Share** | 0.48 | 0.46 | 2.20 | 2.22 | | **Dividends Per Share** | 0.54 | 0.50 | 1.08 | 1.00 | - For the three months ended June 30, 2020, net income increased by **3.5%** year-over-year, and diluted earnings per share grew by **4.3%**[14](index=14&type=chunk) - For the six months ended June 30, 2020, net income decreased by **0.9%** year-over-year, and diluted earnings per share decreased by **0.9%**[14](index=14&type=chunk) [Consolidated Statements of Comprehensive Income](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Consolidated Statements of Comprehensive Income Key Data (Unaudited) | Metric (Thousands of Dollars) | June 30, 2020 (3 Months) | June 30, 2019 (3 Months) | June 30, 2020 (6 Months) | June 30, 2019 (6 Months) | | :--- | :--- | :--- | :--- | :--- | | **Net Income** | 25,325 | 24,470 | 117,002 | 118,130 | | **Other Comprehensive Income (Net of Tax)** | 223 | 160 | 447 | 320 | | **Comprehensive Income** | 25,548 | 24,630 | 117,449 | 118,450 | - For the three months ended June 30, 2020, comprehensive income increased by **3.7%** year-over-year[16](index=16&type=chunk) - For the six months ended June 30, 2020, comprehensive income decreased by **0.8%** year-over-year[16](index=16&type=chunk) [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheets Key Data (Unaudited) | Metric (Thousands of Dollars) | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Assets** | 5,681,612 | 5,708,300 | | **Net Property, Plant and Equipment** | 4,707,725 | 4,565,226 | | **Total Equity** | 2,191,987 | 2,129,390 | | **Long-Term Debt (Less Current Maturities)** | 1,581,931 | 1,286,064 | | **Total Liabilities and Equity** | 5,681,612 | 5,708,300 | - As of June 30, 2020, total assets slightly decreased by **0.47%** compared to December 31, 2019[18](index=18&type=chunk) - Long-term debt (less current maturities) significantly increased by **23.0%**, reflecting the company's issuance of **$300 million** of 2.00% Senior Notes in April 2020[20](index=20&type=chunk)[59](index=59&type=chunk) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Consolidated Statements of Cash Flows Key Data (Unaudited) | Metric (Thousands of Dollars) | June 30, 2020 (6 Months) | June 30, 2019 (6 Months) | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | 278,685 | 241,171 | | **Net Cash Used in Investing Activities** | (235,018) | (187,334) | | **Net Cash Used in Financing Activities** | (51,066) | (64,046) | | **Net Change in Cash and Cash Equivalents** | (7,399) | (10,209) | | **Cash and Cash Equivalents at End of Period** | 10,454 | 11,114 | - Net cash from operating activities increased by **15.5%** year-over-year, primarily due to changes in working capital from the timing of natural gas purchases[24](index=24&type=chunk)[161](index=161&type=chunk) - Net cash used in investing activities increased by **25.5%**, mainly due to higher capital expenditures for system integrity activities and new area service extensions[24](index=24&type=chunk)[162](index=162&type=chunk) - Net cash used in financing activities decreased by **20.3%**, primarily as proceeds from long-term debt issuance offset increased note repayments[24](index=24&type=chunk)[163](index=163&type=chunk) [Consolidated Statements of Equity](index=13&type=section&id=Consolidated%20Statements%20of%20Equity) Consolidated Statements of Equity Key Data (Unaudited) | Metric (Thousands of Dollars) | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Equity** | 2,191,987 | 2,129,390 | | **Retained Earnings** | 461,962 | 402,509 | | **Accumulated Other Comprehensive Loss** | (6,292) | (6,739) | | **Common Stock Issued (Shares)** | 52,920,530 | 52,771,749 | - As of June 30, 2020, total equity increased by **2.9%** compared to December 31, 2019, primarily driven by an increase in retained earnings[28](index=28&type=chunk) - Retained earnings increased by **14.8%**, reflecting the accumulation of net income and dividend payments[28](index=28&type=chunk) [Notes to Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) [1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=15&type=section&id=1.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The company primarily provides natural gas distribution services to approximately **2.2 million** customers across Oklahoma, Kansas, and Texas, serving residential, commercial, and transportation sectors[32](index=32&type=chunk) - The company adopted ASU 2020-04 (Reference Rate Reform) and ASU 2016-13 (Financial Instruments – Credit Losses) in the first quarter of 2020, with no material impact on the consolidated financial statements[38](index=38&type=chunk)[43](index=43&type=chunk) - The company adopted ASU 2018-15 (Implementation Costs in Cloud Service Contracts) on January 1, 2020, with no material impact on the consolidated financial statements[41](index=41&type=chunk) [2. REVENUE](index=17&type=section&id=2.%20REVENUE) Revenue by Source (Unaudited) | Revenue Source (Thousands of Dollars) | June 30, 2020 (3 Months) | June 30, 2019 (3 Months) | June 30, 2020 (6 Months) | June 30, 2019 (6 Months) | | :--- | :--- | :--- | :--- | :--- | | **Natural Gas Sales to Customers** | 243,308 | 258,560 | 724,026 | 880,052 | | **Transportation Revenue** | 24,481 | 23,991 | 58,238 | 59,019 | | **Miscellaneous Revenue** | 3,120 | 5,428 | 7,590 | 10,856 | | **Total Revenue from Customer Contracts** | 270,909 | 287,979 | 789,854 | 949,927 | | **Other Revenue** | 2,378 | 2,581 | 11,601 | 1,633 | | **Total Revenues** | 273,287 | 290,560 | 801,455 | 951,560 | - For the three months ended June 30, 2020, natural gas sales revenue decreased by **5.9%** year-over-year, and total revenues decreased by **5.9%**[46](index=46&type=chunk) - For the six months ended June 30, 2020, natural gas sales revenue decreased by **17.7%** year-over-year, and total revenues decreased by **15.8%**[46](index=46&type=chunk) [3. REGULATORY ASSETS AND LIABILITIES](index=17&type=section&id=3.%20REGULATORY%20ASSETS%20AND%20LIABILITIES) Summary of Regulatory Assets and Liabilities (Unaudited) | Metric (Thousands of Dollars) | June 30, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total Regulatory Assets, Net** | 421,202 | 438,476 | | **Total Regulatory Liabilities, Net** | (584,278) | (548,719) | | **Net Regulatory Assets and Liabilities** | (163,076) | (110,243) | - Kansas legislation exempting utilities from state income tax led to the company remeasuring ADIT, resulting in an **$81.5 million** EDIT regulatory liability to be refunded to customers[50](index=50&type=chunk) - The company has received regulatory accounting orders authorizing deferral of certain incremental costs and lost revenues related to COVID-19, but these have not been recorded as regulatory assets as of June 30, 2020, pending future recoverability determination[53](index=53&type=chunk) [4. CREDIT FACILITY AND SHORT-TERM NOTES PAYABLE](index=19&type=section&id=4.%20CREDIT%20FACILITY%20AND%20SHORT-TERM%20NOTES%20PAYABLE) - The company has a **$700 million** commercial paper program, with **$230.5 million** of commercial paper outstanding as of June 30, 2020[54](index=54&type=chunk) - The ONE Gas Credit Agreement is a **$700 million** revolving unsecured credit facility maturing in October 2024, with **$698.8 million** of remaining credit available as of June 30, 2020[55](index=55&type=chunk)[57](index=57&type=chunk) - In April 2020, the company entered into a **$250 million** ONE Gas 364-Day Credit Agreement as an additional liquidity source, with no borrowings outstanding as of June 30, 2020[58](index=58&type=chunk) [5. LONG-TERM DEBT](index=19&type=section&id=5.%20LONG-TERM%20DEBT) - In April 2020, ONE Gas issued **$300 million** of 2.00% Senior Notes due 2030, with proceeds used to reduce outstanding commercial paper and for general corporate purposes[59](index=59&type=chunk) - The company's long-term debt includes multiple series of senior notes totaling **$1.6 billion**, with maturities ranging from 2024 to 2048[60](index=60&type=chunk) [6. LEASES](index=19&type=section&id=6.%20LEASES) - In March 2020, the company reassessed and modified certain operating leases for office facilities, resulting in a **$9 million** increase in right-of-use assets and a **$9.4 million** increase in operating lease liabilities[61](index=61&type=chunk) [7. EQUITY](index=19&type=section&id=7.%20EQUITY) - In February 2020, the company initiated an "at-the-market" equity program for up to **$250 million**, having issued and sold **4,783** shares of common stock for net proceeds of **$394 thousand** as of June 30, 2020[62](index=62&type=chunk)[63](index=63&type=chunk) - In July 2020, the company declared a dividend of **$0.54** per share, which annualizes to **$2.16** per share[63](index=63&type=chunk) [8. ACCUMULATED OTHER COMPREHENSIVE LOSS](index=20&type=section&id=8.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20LOSS) Reclassification Impact of Accumulated Other Comprehensive Loss Components (Unaudited) | Metric (Thousands of Dollars) | June 30, 2020 (3 Months) | June 30, 2019 (3 Months) | June 30, 2020 (6 Months) | June 30, 2019 (6 Months) | | :--- | :--- | :--- | :--- | :--- | | **Pension and Other Postretirement Benefit Plan Liabilities** | 10,594 | 8,653 | 21,188 | 17,306 | | **Regulatory Adjustments** | (10,296) | (8,440) | (20,592) | (15,662) | | **Total Reclassifications for the Period** | 223 | 160 | 447 | 320 | - The net loss amortization for pension and other postretirement benefit plan liabilities is part of net periodic benefit cost[64](index=64&type=chunk)[65](index=65&type=chunk) - Regulatory adjustments represent pension and other postretirement benefit costs expected to be recovered through rates and deferred as regulatory assets[65](index=65&type=chunk) [9. EARNINGS PER SHARE](index=21&type=section&id=9.%20EARNINGS%20PER%20SHARE) Basic and Diluted Earnings Per Share Calculation (Unaudited) | Metric | June 30, 2020 (3 Months) | June 30, 2019 (3 Months) | June 30, 2020 (6 Months) | June 30, 2019 (6 Months) | | :--- | :--- | :--- | :--- | :--- | | **Basic Earnings Per Share** | 0.48 | 0.46 | 2.21 | 2.23 | | **Diluted Earnings Per Share** | 0.48 | 0.46 | 2.20 | 2.22 | | **Basic Average Shares (Thousands)** | 53,053 | 52,890 | 53,030 | 52,858 | | **Diluted Average Shares (Thousands)** | 53,264 | 53,215 | 53,266 | 53,210 | - Basic earnings per share are calculated based on net income and the daily weighted-average number of common shares outstanding, including fully vested but unissued shares[66](index=66&type=chunk) - Diluted earnings per share include basic earnings per share, plus unvested share awards under compensation plans, but only to the extent these instruments dilute earnings per share[66](index=66&type=chunk) [10. EMPLOYEE BENEFIT PLANS](index=21&type=section&id=10.%20EMPLOYEE%20BENEFIT%20PLANS) Components of Net Periodic Benefit Cost for Pension Benefits (Unaudited) | Metric (Thousands of Dollars) | June 30, 2020 (3 Months) | June 30, 2019 (3 Months) | June 30, 2020 (6 Months) | June 30, 2019 (6 Months) | | :--- | :--- | :--- | :--- | :--- | | **Service Cost** | 3,217 | 3,008 | 6,434 | 6,016 | | **Interest Cost** | 8,545 | 10,168 | 17,090 | 20,336 | | **Expected Return on Assets** | (15,280) | (15,485) | (30,560) | (30,970) | | **Net Loss Amortization** | 10,580 | 8,260 | 21,160 | 16,520 | | **Net Periodic Benefit Cost** | 7,062 | 5,951 | 14,124 | 11,902 | - The company recovers qualified pension benefit plan and other postretirement benefit plan costs through rates charged to customers[70](index=70&type=chunk) - As of June 30, 2020, the company recognized **$5.9 million** in regulatory assets, reflecting capitalized non-service cost components[71](index=71&type=chunk) [11. INCOME TAXES](index=22&type=section&id=11.%20INCOME%20TAXES) - The company uses an estimated annual effective tax rate to determine income tax provisions for interim reporting periods[72](index=72&type=chunk) - New Kansas law exempting utilities from state income tax led to the company remeasuring ADIT, resulting in an **$81.5 million** EDIT regulatory liability to be refunded to customers[74](index=74&type=chunk) - As of June 30, 2020, the company had no uncertain tax positions and is no longer subject to income tax examinations for years prior to 2017[73](index=73&type=chunk) [12. OTHER INCOME AND OTHER EXPENSE](index=22&type=section&id=12.%20OTHER%20INCOME%20AND%20OTHER%20EXPENSE) Components of Other Income and Other Expense (Unaudited) | Metric (Thousands of Dollars) | June 30, 2020 (3 Months) | June 30, 2019 (3 Months) | June 30, 2020 (6 Months) | June 30, 2019 (6 Months) | | :--- | :--- | :--- | :--- | :--- | | **Net Periodic Benefit Cost (Non-Service Cost)** | (1,253) | (1,469) | (2,376) | (3,068) | | **Investment Income (Loss) Related to Non-Qualified Employee Benefit Plans** | 3,947 | 1,050 | (312) | 3,491 | | **Other, Net** | (300) | (446) | (706) | (859) | | **Other Income (Expense), Net** | 2,394 | (865) | (3,394) | (436) | - For the three months ended June 30, 2020, other income (expense), net, shifted from an **$865 thousand** expense in 2019 to **$2.394 million** in income, primarily due to a significant increase in investment income related to non-qualified employee benefit plans[76](index=76&type=chunk) - For the six months ended June 30, 2020, other income (expense), net, changed from a **$436 thousand** expense in 2019 to a **$3.394 million** expense, mainly due to losses on investments related to non-qualified employee benefit plans[76](index=76&type=chunk) [13. COMMITMENTS AND CONTINGENCIES](index=23&type=section&id=13.%20COMMITMENTS%20AND%20CONTINGENCIES) - The COVID-19 pandemic impacted company operations, including reduced late payment fees, reconnection fees, and collection expenses, increased bad debt expense, and incremental costs for personal protective equipment[77](index=77&type=chunk) - The company has **12** former manufactured gas plant (MGP) sites in Kansas and bears environmental liabilities, with **3** sites having received regulatory closure, though future costs may still arise[79](index=79&type=chunk) - PHMSA (Pipeline and Hazardous Materials Safety Administration) issued new pipeline safety regulations, with the first final rule effective July 1, 2020, and compliance costs are not expected to materially impact the company[87](index=87&type=chunk)[89](index=89&type=chunk) [14. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS](index=24&type=section&id=14.%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS%20AND%20FAIR%20VALUE%20MEASUREMENTS) - The company records all derivative instruments at fair value, except for normal purchases and sales expected to result in physical delivery, and has not designated any derivative instruments as hedging instruments[92](index=92&type=chunk)[93](index=93&type=chunk) - As of June 30, 2020, the company held **1.47 billion cubic feet** of purchased natural gas call options, for which it paid **$5.8 million** in premiums, with a fair value of **$4.9 million**, classified as Level 1 fair value measurements[96](index=96&type=chunk) - The carrying value of the company's long-term debt (including current maturities) was **$1.6 billion** as of June 30, 2020, with an estimated fair value of **$1.9 billion**, classified as Level 2 fair value measurements[98](index=98&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses ONE Gas, Inc.'s financial condition and operating results for the three and six months ended June 30, 2020, focusing on recent developments, regulatory activities, financial performance, liquidity, capital resources, and environmental, safety, and regulatory matters [RECENT DEVELOPMENTS](index=27&type=section&id=RECENT%20DEVELOPMENTS) - The COVID-19 pandemic has impacted company operations in several ways, including a moratorium on customer disconnections, increased bad debt expense, reduced travel expenses, and incremental costs for personal protective equipment[102](index=102&type=chunk) - The company has received regulatory authorization to defer incremental costs and lost revenues related to COVID-19, but these have not been recorded as regulatory assets as of June 30, 2020[102](index=102&type=chunk) - In July 2020, the company declared a dividend of **$0.54** per share, and in February 2020, it initiated a **$250 million** "at-the-market" equity program to support company operations and capital expenditures[103](index=103&type=chunk)[104](index=104&type=chunk) [REGULATORY ACTIVITIES](index=29&type=section&id=REGULATORY%20ACTIVITIES) - Oklahoma regulators approved COVID-19 related regulatory assets and deferrals, along with a **$9.7 million** base rate increase and **$2.2 million** in energy efficiency incentives[105](index=105&type=chunk)[106](index=106&type=chunk) - Kansas legislation exempting utilities from state income tax resulted in an **$81.5 million** EDIT regulatory liability to be refunded to customers, and approved a **$4.2 million** GSRS increase[112](index=112&type=chunk)[113](index=113&type=chunk) - Texas regulators authorized the use of regulatory accounting mechanisms to seek future recovery of incremental costs incurred due to the COVID-19 pandemic and approved a **$4.7 million** GRIP increase for the West Texas service area[117](index=117&type=chunk)[118](index=118&type=chunk) [FINANCIAL RESULTS AND OPERATING INFORMATION](index=32&type=section&id=FINANCIAL%20RESULTS%20AND%20OPERATING%20INFORMATION) Selected Financial Results (Unaudited) | Metric (Millions of Dollars) | June 30, 2020 (3 Months) | June 30, 2019 (3 Months) | June 30, 2020 (6 Months) | June 30, 2019 (6 Months) | | :--- | :--- | :--- | :--- | :--- | | **Net Income** | 25.3 | 24.5 | 117.0 | 118.1 | | **Total Revenues** | 273.3 | 290.6 | 801.5 | 951.6 | | **Cost of Natural Gas** | 62.5 | 82.6 | 288.6 | 447.7 | | **Gross Profit** | 210.8 | 208.0 | 512.9 | 503.9 | | **Operating Income** | 44.6 | 46.9 | 177.8 | 174.5 | | **Capital Expenditures and Cost of Asset Disposals** | 130.6 | 114.2 | 254.0 | 208.6 | - For the three months ended June 30, 2020, gross profit (non-GAAP) increased by **$2.8 million** (**1%**), primarily due to new rates and customer growth, offset by reduced COVID-19 related late payment and collection fees[130](index=130&type=chunk) - For the six months ended June 30, 2020, capital expenditures and cost of asset disposals increased by **$16.4 million** and **$45.4 million**, respectively, mainly due to system integrity activities and new area service extensions[136](index=136&type=chunk) Average Customer Count (Unaudited) | Customer Type | June 30, 2020 (3 Months) | June 30, 2019 (3 Months) | June 30, 2020 (6 Months) | June 30, 2019 (6 Months) | | :--- | :--- | :--- | :--- | :--- | | **Residential** | 2,045 | 2,022 | 2,044 | 2,024 | | **Commercial and Industrial** | 161 | 160 | 162 | 161 | | **Total Customers (Thousands)** | 2,221 | 2,197 | 2,221 | 2,200 | [CONTINGENCIES](index=36&type=section&id=CONTINGENCIES) - The company is a party to various lawsuits and claims but believes that reasonably possible losses from these matters will not materially adversely affect operating results, financial condition, or cash flows[142](index=142&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=37&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - The company primarily relies on cash flow from operations and commercial paper to meet liquidity and capital needs, expecting to maintain operating levels through stable cash flow and financing arrangements[143](index=143&type=chunk)[144](index=144&type=chunk) - As of June 30, 2020, the company had a **$700 million** commercial paper program, a **$700 million** revolving credit facility, and a **$250 million** 364-day credit agreement, totaling **$728.8 million** in short-term liquidity[146](index=146&type=chunk)[147](index=147&type=chunk)[151](index=151&type=chunk) - In April 2020, the company issued **$300 million** of 2.00% Senior Notes to reduce outstanding commercial paper and for general corporate purposes, with a long-term debt to capitalization ratio of **42%** as of June 30, 2020[152](index=152&type=chunk)[154](index=154&type=chunk) Credit Ratings (as of June 30, 2020) | Rating Agency | Rating | Outlook | | :--- | :--- | :--- | | **Moody's** | A2 | Stable | | **S&P** | A | Stable | [CASH FLOW ANALYSIS](index=38&type=section&id=CASH%20FLOW%20ANALYSIS) Cash Flow Changes (Unaudited) | Activity Type (Millions of Dollars) | June 30, 2020 (6 Months) | June 30, 2019 (6 Months) | 2020 vs. 2019 Change | | :--- | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | 278.7 | 241.2 | 37.5 | | **Net Cash Used in Investing Activities** | (235.0) | (187.3) | (47.7) | | **Net Cash Used in Financing Activities** | (51.1) | (64.1) | 13.0 | | **Net Change in Cash and Cash Equivalents** | (7.4) | (10.2) | 2.8 | - Operating cash flow increased, primarily due to changes in working capital from the timing of natural gas purchases[161](index=161&type=chunk) - Cash outflow from investing activities increased, mainly due to higher capital expenditures for system integrity activities and new area service extensions[162](index=162&type=chunk) - Cash outflow from financing activities decreased, primarily as proceeds from long-term debt issuance offset increased note repayments[163](index=163&type=chunk) [ENVIRONMENTAL, SAFETY AND REGULATORY MATTERS](index=39&type=section&id=ENVIRONMENTAL%2C%20SAFETY%20AND%20REGULATORY%20MATTERS) - The company continued to provide essential services during the COVID-19 pandemic, implementing policies and procedures to protect employee and customer safety, while obtaining regulatory authorization to defer related incremental costs and lost revenues[164](index=164&type=chunk) - The company is subject to various environmental laws and regulations, including investigation and remediation responsibilities for former MGP sites, though related expenditures have not materially impacted financial condition to date[165](index=165&type=chunk)[167](index=167&type=chunk)[172](index=172&type=chunk) - The company is subject to PHMSA pipeline safety regulations, with the first final rule effective July 1, 2020, and compliance costs are not expected to materially impact the company; a second final rule is anticipated in 2020, potentially incurring significant capital and operating expenditures[174](index=174&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk) [IMPACT OF NEW ACCOUNTING STANDARDS](index=42&type=section&id=IMPACT%20OF%20NEW%20ACCOUNTING%20STANDARDS) - Information regarding the impact of new accounting standards is included in Note 1 to the consolidated financial statements in this quarterly report[187](index=187&type=chunk) [ESTIMATES AND CRITICAL ACCOUNTING POLICIES](index=42&type=section&id=ESTIMATES%20AND%20CRITICAL%20ACCOUNTING%20POLICIES) - The company makes estimates and assumptions when preparing consolidated financial statements, which may affect reported amounts of assets, liabilities, revenues, and expenses, and actual results may differ from these estimates[188](index=188&type=chunk) - Detailed information on estimates and critical accounting policies is included in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of the company's annual report[189](index=189&type=chunk) [FORWARD-LOOKING STATEMENTS](index=43&type=section&id=FORWARD-LOOKING%20STATEMENTS) - Forward-looking statements in this report pertain to the company's expected financial performance, liquidity, future operating plans, business prospects, regulatory and legal proceedings outcomes, and market conditions[190](index=190&type=chunk) - The company cautions investors that actual results may differ materially from forward-looking statements due to various known and unknown risks, uncertainties, and other factors[192](index=192&type=chunk) - Factors that could cause actual results to differ include, but are not limited to: ability to recover operating costs, regulatory changes, economic climate, COVID-19 pandemic impacts, competition, weather variations, debt levels, natural gas supply, mechanical integrity, labor relations, capital market accessibility, credit ratings, inflation and interest rate changes, environmental and safety laws, litigation, and regulatory investigations[193](index=193&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discloses the company's market risks, primarily commodity price, interest rate, and counterparty credit risks, and outlines strategies for managing these exposures [Commodity Price Risk](index=44&type=section&id=Commodity%20Price%20Risk) - The company mitigates commodity price risk, primarily driven by natural gas price fluctuations, through purchased gas cost adjustment mechanisms[196](index=196&type=chunk) - The company may use derivative instruments to economically hedge anticipated natural gas purchase costs during winter heating seasons to reduce the impact of natural gas market price volatility on customers[196](index=196&type=chunk) - Gains or losses associated with these derivative instruments and storage activities are included in the purchased gas cost adjustment mechanism and are recoverable[197](index=197&type=chunk) [Interest-Rate Risk](index=45&type=section&id=Interest-Rate%20Risk) - The company primarily faces interest rate risk related to commercial paper borrowings and new debt financings used to meet capital requirements[198](index=198&type=chunk) - The company plans to manage future borrowing interest rate risk through the use of fixed-rate debt, variable-rate debt, and interest rate swaps[198](index=198&type=chunk) [Counterparty Credit Risk](index=45&type=section&id=Counterparty%20Credit%20Risk) - The company assesses customer creditworthiness and requires guarantees from customers not meeting minimum standards, but does not face significant concentrations of credit risk due to a large customer base[199](index=199&type=chunk) - The COVID-19 pandemic led to a moratorium on customer disconnections, increasing bad debt expense, but the company has received regulatory authorization to defer related incremental costs and lost revenues[199](index=199&type=chunk) - The company maintains an allowance for doubtful accounts based on customer credit risk, historical trends, and current conditions, and recovers the fuel-related portion of bad debt through the purchased gas cost adjustment mechanism[199](index=199&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports the quarterly evaluation results of the company's disclosure controls and procedures and changes in internal control over financial reporting [Quarterly Evaluation of Disclosure Controls and Procedures](index=45&type=section&id=Quarterly%20Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The company's Chief Executive Officer and Chief Financial Officer have concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[200](index=200&type=chunk) [Changes in Internal Control Over Financial Reporting](index=45&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) - Despite employees working remotely due to the COVID-19 pandemic, there were no changes in internal control over financial reporting during the second quarter ended June 30, 2020, that materially affected or are reasonably likely to materially affect internal control over financial reporting[201](index=201&type=chunk) [Part II. Other Information](index=45&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is a party to various legal proceedings and claims arising in the normal course of operations, believing that reasonably possible losses will not materially adversely affect operating results, financial condition, or cash flows - The company is a party to various legal proceedings and claims, but believes that reasonably possible losses from these matters will not materially adversely affect operating results, financial condition, or cash flows[203](index=203&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) This section supplements the risk factors listed in the company's annual report, specifically highlighting the potentially significant adverse impacts of pandemics or other health crises on the business [Pandemics or other health crises could have an adverse effect on our business.](index=46&type=section&id=Pandemics%20or%20other%20health%20crises%20could%20have%20an%20adverse%20effect%20on%20our%20business.) - The COVID-19 pandemic has had an unprecedented impact on the U.S. economy and caused significant volatility in financial markets, potentially adversely affecting the company's customers, employees, and supply chain partners[205](index=205&type=chunk) - The pandemic may lead to customer payment defaults, business disruptions, and could force the company to suspend or limit certain business operations, with regulators requiring continued service to defaulting customers during the pandemic, potentially adversely affecting profitability, liquidity, and cash flows[206](index=206&type=chunk) - Increased remote work arrangements may elevate the risk of cyberattacks, and technical system failures could limit normal operations or amplify the impact of cyberattacks[207](index=207&type=chunk)[208](index=208&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section is not applicable as the company did not report unregistered equity securities sales and use of proceeds - This section is not applicable[211](index=211&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section is not applicable as the company did not report defaults upon senior securities - This section is not applicable[212](index=212&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable as the company did not make mine safety disclosures - This section is not applicable[213](index=213&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) This section is not applicable as the company did not report other information - This section is not applicable[214](index=214&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with this quarterly report, including underwriting agreements, articles of incorporation, credit agreements, and XBRL files, emphasizing that exhibits are provided for SEC compliance and not as the sole basis for factual disclosure - Exhibits include underwriting agreements, articles of incorporation, credit agreements, and XBRL files, intended to comply with SEC requirements[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) - Statements, warranties, or opinions in the exhibits may be subject to exceptions and qualifications in disclosure schedules or represent an allocation of risks between transaction parties[215](index=215&type=chunk) - Interactive data files (XBRL files) are also available on the company's website[218](index=218&type=chunk)

Financial Data and Key Metrics Changes - Net income for Q1 2020 was $91.7 million or $1.72 per diluted share, compared to $93.7 million or $1.76 per diluted share in Q1 2019, reflecting a slight decrease [12] - Net margin increased by $6.2 million year-over-year, driven by new rates in Kansas and Texas and residential customer growth, although warmer weather contributed to a $5 million decrease in net margin from lower volumes [12] - Operating costs decreased by $3.1 million compared to the same period last year, including a $4.3 million reduction in expenses related to non-qualified employee benefit plans [12] Business Line Data and Key Metrics Changes - The company experienced no material financial impact from the COVID-19 pandemic in Q1 2020, maintaining strong performance across its business lines [11] - Capital expenditures and asset removal costs increased by $29 million compared to Q1 2019, with expectations of approximately $475 million in capital spending for the full year [13][14] Market Data and Key Metrics Changes - Approximately 12,000 transport customers represented $114 million or 12% of net margin in 2019, with two major customers temporarily suspending operations due to COVID-19, leading to an anticipated revenue impact of about $100,000 per month [28][29] - The moratorium on disconnects had a slight impact on first-quarter totals, but customer growth rates remained strong [27] Company Strategy and Development Direction - The company is focused on maintaining its capital spending and operational integrity despite the challenges posed by COVID-19, with a strong emphasis on safety and employee health [16][34] - Regulatory activities include filings for rate increases in Oklahoma and Texas, aimed at improving recovery of capital expenditures and addressing the regulatory asset establishment for COVID-19 related expenses [31][32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant impact of COVID-19 on the economy and emphasized the importance of their business continuity plan, which is based on anticipation, awareness, and agility [8][9] - The company expects a reduction in revenues from customers affected by the pandemic, higher bad debts due to disconnect moratoriums, and incremental expenses related to COVID-19, but also anticipates reductions in some areas such as travel expenses [35][36] Other Important Information - The Board of Directors declared a dividend of $0.54 per share, unchanged from the previous quarter, consistent with the company's guidance for 2020 [14] - As of March 31, 2020, the company had $235.2 million in short-term liquidity available, supported by a $700 million credit facility [38] Q&A Session Summary Question: Impact of weather on sales forecast and growth numbers - Management noted that the disconnect moratoriums would delay the ramp-up to normal operations, and they always assume normal weather in their guidance [45][49] Question: Long-term view on regulatory outcomes and ROEs - Management indicated that recent filings are intended to close the ROE gap and improve timely recovery of capital expenditures [50][51] Question: Fixed charges and their fluctuation throughout the year - Management explained that fixed charges typically increase as volumetric charges decrease in lower demand months, but they do not provide specific quarterly guidance [54] Question: Impact of social distancing on pending rate cases - Management confirmed a slight impact on the timeline of one rate case due to remote working conditions but did not foresee significant delays [55] Question: Equity issuance under the ATM program - Management stated that they plan to issue equity this year but have not specified the amount or timing, allowing for opportunistic market access [56] Question: Non-employee contract labor and operational changes - Management confirmed that they coordinated closely with contractors to ensure safety and continued operations without anticipated constraints [60][61] Question: Bad debt expense and its management - Management discussed the increase in bad debt expense and the need to work with regulators to determine the appropriate amounts to defer [84][86]

[Part I. Financial Information](index=6&type=section&id=Part%20I%2E%20Financial%20Information) This part presents the unaudited consolidated financial statements, management's discussion and analysis, and disclosures on market risk and internal controls [Item 1. Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Item%201%2E%20Consolidated%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited consolidated financial statements for ONE Gas, Inc. for Q1 2020 and 2019, including income, balance sheets, cash flows, and equity statements [Consolidated Statements of Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income) For Q1 2020, ONE Gas reported total revenues of $528.2 million and a net income of $91.7 million, a slight decrease from Q1 2019 Consolidated Statements of Income Highlights (Q1 2020 vs Q1 2019) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | **Total revenues** | $528.2 million | $661.0 million | | **Operating income** | $133.2 million | $127.6 million | | **Net income** | $91.7 million | $93.7 million | | **Diluted EPS** | $1.72 | $1.76 | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2020, total assets were $5.67 billion, a slight decrease from year-end 2019, while total equity increased to $2.19 billion Balance Sheet Summary (As of March 31, 2020) | Account | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Total assets** | $5.67 billion | $5.71 billion | | Net property, plant and equipment | $4.63 billion | $4.57 billion | | **Total liabilities** | $3.49 billion | $3.58 billion | | Long-term debt | $1.29 billion | $1.29 billion | | **Total equity** | $2.19 billion | $2.13 billion | [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For Q1 2020, cash provided by operating activities significantly increased to $182.7 million, while investing and financing outflows also rose Cash Flow Summary (Q1 2020 vs Q1 2019) | Activity | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :--- | :--- | :--- | | **Cash provided by operating activities** | $182.7 million | $122.3 million | | **Cash used in investing activities** | ($113.2) million | ($86.3) million | | **Cash used in financing activities** | ($76.3) million | ($37.6) million | | **Change in cash and cash equivalents** | ($6.8) million | ($1.7) million | [Notes to Consolidated Financial Statements](index=15&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial items, focusing on COVID-19 impacts, environmental remediation, and pipeline safety regulations - The company operates as a regulated public utility delivering natural gas to approximately **2.2 million customers** in Oklahoma, Kansas, and Texas[31](index=31&type=chunk) - Received or expects accounting orders to defer incremental COVID-19 costs, including bad debt and lost revenues, for future recovery[50](index=50&type=chunk)[69](index=69&type=chunk) - Initiated a **$250 million** at-the-market equity program in February 2020, with no shares issued as of March 31, 2020[58](index=58&type=chunk) - Responsible for environmental conditions at **12 former Manufactured Gas Plant (MGP) sites** in Kansas and one in Texas, with ongoing remediation[71](index=71&type=chunk)[74](index=74&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202%2E%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, highlighting a 2% net margin increase, COVID-19 response, regulatory activities, and strong liquidity [Recent Developments](index=27&type=section&id=Recent%20Developments) The company provides essential services during COVID-19, implementing safety protocols, and expects future financial impacts, while securing deferral orders and new credit facilities - Implemented comprehensive policies to protect employees and customers during COVID-19, enabling remote work for **49% of employees** and providing PPE for field staff[92](index=92&type=chunk) - Suspended disconnects for nonpayment through May 15, 2020, anticipating future revenue reductions and increased bad debt expenses due to the pandemic[92](index=92&type=chunk)[93](index=93&type=chunk) - Entered into a new **$250 million** 364-day credit agreement in April 2020 to provide additional liquidity[93](index=93&type=chunk) [Regulatory Activities](index=29&type=section&id=Regulatory%20Activities) The company is actively engaged in regulatory proceedings across its jurisdictions, seeking rate increases and deferrals for COVID-19 related costs - **Oklahoma:** Filed its fourth annual Performance-Based Rate Change (PBRC) application requesting an **$11.8 million** base rate increase[97](index=97&type=chunk) - **Kansas:** Filed for an Accounting Authority Order (AAO) to defer incremental costs and lost revenues related to COVID-19 for recovery in a future rate case[101](index=101&type=chunk) - **Texas:** The RRC issued an order authorizing a mechanism for future recovery of incremental expenses from COVID-19; GRIP filings were made in West Texas for a **$4.7 million** increase[106](index=106&type=chunk)[107](index=107&type=chunk) [Financial Results and Operating Information](index=31&type=section&id=Financial%20Results%20and%20Operating%20Information) Net income for Q1 2020 was $91.7 million, down from $93.7 million in Q1 2019, with net margin increasing by 2% due to new rates Financial Results Summary (Q1 2020 vs Q1 2019) | Metric | Q1 2020 | Q1 2019 | Change | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $528.2M | $661.0M | ($132.8M) | (20)% | | Cost of natural gas | $226.1M | $365.1M | ($139.0M) | (38)% | | **Net margin (Non-GAAP)** | **$302.1M** | **$295.9M** | **$6.2M** | **2%** | | Operating income | $133.2M | $127.6M | $5.6M | 4% | - The increase in net margin was primarily driven by **$7.9 million** from new rates and **$2.5 million** from residential customer growth, offset by a **$3.9 million** decrease due to warmer weather[119](index=119&type=chunk) - Heating Degree Days (HDDs) were significantly lower than Q1 2019: **21% lower in Oklahoma**, **19% lower in Kansas**, and **15% lower in Texas**[119](index=119&type=chunk)[127](index=127&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity through operating cash flow, a $700 million commercial paper program, and a new $250 million credit facility - Primary liquidity sources are operating cash flow and a **$700 million** commercial paper program, supported by a **$700 million** revolving credit agreement[129](index=129&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - In April 2020, the company entered into an additional **$250 million** 364-day credit agreement to enhance liquidity[138](index=138&type=chunk) Credit Ratings (as of March 31, 2020) | Rating Agency | Rating | Outlook | | :--- | :--- | :--- | | Moody's | A2 | Stable | | S&P | A | Stable | [Cash Flow Analysis](index=36&type=section&id=Cash%20Flow%20Analysis) Operating cash flow increased by $60.4 million to $182.7 million, while investing and financing outflows also increased due to capital expenditures and debt repayments Cash Flow Changes (Q1 2020 vs Q1 2019) | Activity | Q1 2020 | Q1 2019 | Variance | | :--- | :--- | :--- | :--- | | Operating activities | $182.7M | $122.3M | $60.4M | | Investing activities | ($113.2M) | ($86.3M) | ($26.9M) | | Financing activities | ($76.3M) | ($37.7M) | ($38.6M) | [Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages commodity price, interest-rate, and counterparty credit risks, largely mitigating them through regulatory mechanisms and diversification - **Commodity Price Risk:** Mitigated by purchased-gas cost adjustment mechanisms that allow recovery of natural gas costs from customers[177](index=177&type=chunk) - **Interest-Rate Risk:** Exposure exists from commercial paper borrowings and future debt financing, managed with a mix of fixed and floating-rate debt[178](index=178&type=chunk) - **Counterparty Credit Risk:** Diversified across **2.2 million customers**; the company has suspended disconnects due to COVID-19 and is seeking regulatory deferral of associated bad debt expenses[179](index=179&type=chunk) [Controls and Procedures](index=40&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of March 31, 2020, with no material impact from the shift to remote work due to COVID-19 - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the reporting period[180](index=180&type=chunk)[181](index=181&type=chunk) - No material changes in internal control over financial reporting during the quarter, despite the shift to remote work due to COVID-19[182](index=182&type=chunk) [Part II. Other Information](index=42&type=section&id=Part%20II%2E%20Other%20Information) [Legal Proceedings](index=42&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is involved in various litigation matters, but management believes reasonably possible losses are not material to financial results - The company states that it is not involved in any legal proceedings expected to have a material adverse effect on its financial condition or results of operations[183](index=183&type=chunk) [Risk Factors](index=42&type=section&id=Item%201A%2E%20Risk%20Factors) A new risk factor highlights the unprecedented impact of pandemics like COVID-19 on the economy, customers, and company operations - A new risk factor has been identified concerning the adverse effects of pandemics or other health crises, such as COVID-19[184](index=184&type=chunk)[185](index=185&type=chunk) - The COVID-19 pandemic creates significant uncertainties regarding its potential adverse effects on the economy, customers, employees, and supply chain partners, leading to financial market volatility[185](index=185&type=chunk) - Governmental actions like 'stay-at-home' orders may cause financial hardship for customers, increasing payment delinquencies, and could force the company to curtail or suspend certain business operations[186](index=186&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable for the reporting period - Not applicable[189](index=189&type=chunk) [Exhibits](index=43&type=section&id=Item%206%2E%20Exhibits) This section lists exhibits filed with the Quarterly Report, including corporate governance documents and credit agreements - Lists exhibits filed with the report, including the Equity Distribution Agreement for the at-the-market program and the new Credit Agreement dated April 7, 2020[195](index=195&type=chunk)

INVESTOR UPDATE I April 27, 2020 Forward-Looking Statements l Statements contained in this presentation that include company expectations or predictions should be considered forward-looking statements that are covered by the safe harbor provisions of the Securities Act of 1933 and the Securities and Exchange Act of 1934. It is important to note that the actual results could differ materially from those projected in such forward-looking statements. For additional information that could cause actual results t ...

INVESTOR UPDATE NYC & Boston | March 2020 Forward-Looking Statements Statements contained in this presentation that include company expectations or predictions should be considered forward-looking statements that are covered by the safe harbor provisions of the Securities Act of 1933 and the Securities and Exchange Act of 1934. It is important to note that the actual results could differ materially from those projected in such forward-looking statements. For additional information that could cause actual re ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019. OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________. Commission file number 001-36108 ONE Gas, Inc. (Exact name of registrant as specified in its charter) Oklahoma 46-3561936 (Address of principal exe ...