One Gas Inc.

Company Overview

Business Model: ONE Gas, Inc. is a 100-percent regulated natural gas distribution utility, headquartered in Tulsa, Oklahoma. The Company provides natural gas distribution services to approximately 2.3 million customers, primarily serving residential, commercial, and transportation sectors. Revenue generation is derived from rates and charges established by state and local regulatory authorities, which are designed to allow for the recovery of costs and provide an opportunity to earn a fair and reasonable return on investments. The Company does not earn a profit on the natural gas commodity itself, as these costs are passed through to customers.

Market Position: ONE Gas, Inc. is one of the largest publicly traded natural gas utilities in the United States. It holds the position of the largest natural gas distributor in Oklahoma and Kansas and the third largest in Texas, based on customer count. Key distribution markets include Oklahoma City and Tulsa, Oklahoma; Kansas City, Wichita, and Topeka, Kansas; and Austin and El Paso, Texas. Its divisions, Oklahoma Natural Gas, Kansas Gas Service, and Texas Gas Service, serve approximately 89 percent, 72 percent, and 13 percent of the natural gas distribution customers in Oklahoma, Kansas, and Texas, respectively.

Recent Strategic Developments:

• Infrastructure Initiative: On December 18, 2025, ONE Gas, Inc. announced a $120 million infrastructure initiative in southeast Oklahoma. This project, to be installed and operated by Oklahoma Natural Gas, includes a 43-mile natural gas pipeline connecting to the Bennington Natural Gas Hub, expected to be completed by the third quarter of 2028. It aims to deliver over 100 Bcf of natural gas annually, supporting economic growth and enhancing energy reliability, including servicing Western Farmers Electric Cooperative’s natural gas-fueled generation.
• Credit Facility Expansion: In October 2025, the ONE Gas Credit Agreement was amended and restated, increasing the aggregate committed capacity to $1.5 billion from $1.35 billion and extending the maturity date to October 30, 2030. The agreement includes an expansion option for an additional $750 million.
• Commercial Paper Capacity Increase: In December 2025, the Company increased the capacity of its commercial paper program to $1.5 billion from $1.35 billion.
• Equity Issuances: On December 29, 2025, ONE Gas, Inc. settled forward sale agreements for 2,633,700 shares of its common stock, generating net proceeds of $205.0 million. In May 2025, a new forward sale agreement for 2,500,000 shares of common stock was entered into, with settlement scheduled no later than December 31, 2026. As of December 31, 2025, $225.5 million of equity remained available for issuance under an at-the-market equity distribution agreement established in February 2023.
• Texas House Bill 4384: Signed into law in June 2025, this legislation allows gas utilities in Texas to defer and subsequently recover specific costs related to property, plant, and equipment placed in service but not yet incorporated into base rates. Texas Gas Service began applying these provisions in the third quarter of 2025.
• Unsecured Term Loan: In August 2025, the Company entered into a 13-month unsecured term loan agreement for $250 million, bearing a variable interest rate based on Term SOFR plus a 90 bps spread.

Geographic Footprint: ONE Gas, Inc. operates exclusively within the United States, providing natural gas distribution services across Oklahoma, Kansas, and Texas. Its primary operational regions and key markets are concentrated in these three states, including major metropolitan areas such as Oklahoma City, Tulsa, Kansas City, Wichita, Topeka, Austin, and El Paso.

Financial Performance

Revenue Analysis

Profitability Metrics (2025):

• Gross Margin: 58.8%
• Operating Margin: 18.8%
• Net Margin: 10.9%

Investment in Growth:

• Capital Expenditures: $707.2 million (2025)
• Strategic Investments:
  • Infrastructure Initiative in southeast Oklahoma: $120 million (expected completion Q3 2028).
  • Total capital expenditures and asset removal costs were $759.5 million in 2025, with an expected $800 million for 2026. These investments are primarily directed towards pipeline integrity, system expansion to new areas, reinforcing system capabilities, pipeline replacements, automated meter reading, government-mandated pipeline relocations, fleet, facilities, IT assets, and cybersecurity.

Business Segment Analysis

ONE Gas, Inc. operates as a single reportable business segment: regulated public utilities that deliver natural gas to residential, commercial, and transportation customers. The Company's management structure is functionally aligned and centralized, with performance evaluated based on the results of the entire distribution business. Capital allocation decisions are driven by asset integrity management, operating efficiency, growth opportunities, and government-requested pipeline relocations, rather than by specific geographic location or regulatory jurisdiction.

Oklahoma Natural Gas

Financial Performance:

• Revenue: Approximately 91% of revenues from sales customers (excluding the cost of natural gas) were recovered from fixed charges in 2025.
• Operating Margin: Not segment-specific.
• Key Growth Drivers:
  • New rates, effective June 27, 2025, resulted from a Performance-Based Rate Change (PBRC) application, contributing a $41.1 million base rate revenue increase and a $2.4 million energy efficiency incentive.
  • The division operates with an authorized Return on Equity (ROE) of 9.4 percent, within a 100 basis point dead-band of 8.9 to 9.9 percent.
  • Rate Base: $2,453 million (as of June 2025).
  • Residential sales increased due to net customer growth.

Product Portfolio: Distribution of natural gas services to residential, commercial, and transportation customers.

Market Dynamics:

• Serves approximately 89 percent of natural gas distribution customers in Oklahoma.
• Subject to regulation by the Oklahoma Corporation Commission (OCC), utilizing a PBRC mechanism for annual rate adjustments.
• Employs weather normalization adjustment (WNA) mechanisms from November through April.
• Benefits from Purchased Gas Adjustment and Bad Debt Recovery mechanisms.

Kansas Gas Service

Financial Performance:

• Revenue: Approximately 52% of revenues from sales customers (excluding the cost of natural gas) were recovered from fixed charges in 2025.
• Operating Margin: Not segment-specific.
• Key Growth Drivers:
  • A $7.2 million rate increase related to its Gas System Reliability Surcharge (GSRS) was approved by the Kansas Corporation Commission (KCC) in July 2025, effective August 2025.
  • The division has an authorized ROE of 9.60 percent (as of August 2025).
  • Rate Base: $1,468 million (as of August 2025).
  • Residential sales increased due to net customer growth.
  • Securitization customer charges contributed $47.4 million in 2025, related to the recovery of extraordinary costs from Winter Storm Uri.

Product Portfolio: Distribution of natural gas services to residential, commercial, and transportation customers.

Market Dynamics:

• Serves approximately 72 percent of natural gas distribution customers in Kansas.
• Regulated by the KCC, with rate adjustments through the GSRS statute for qualifying infrastructure investments.
• Utilizes WNA mechanisms year-round (January through December).
• Benefits from Purchased Gas Adjustment, Bad Debt Recovery, and Expense Trackers.

Texas Gas Service

Financial Performance:

• Revenue: Approximately 66% of revenues from sales customers (excluding the cost of natural gas) were recovered from fixed charges in 2025.
• Operating Margin: Not segment-specific.
• Key Growth Drivers:
  • A rate case filed in June 2025 for all customers requested a $41.1 million revenue increase. A non-unanimous partial settlement agreement for a $15.0 million increase was filed in December 2025, based on a 9.8 percent ROE and 59.9 percent common equity ratio. The Railroad Commission of Texas (RRC) approved a $14.5 million revenue increase and consolidation of all service areas into a single statewide division, effective January 27, 2026.
  • Annual filings under the Gas Reliability Infrastructure Program (GRIP) statute in 2025 led to increases: $8.2 million for the West-North service area (effective June 2025), $15.4 million for the Central-Gulf service area (effective June 2025), and $2.9 million for the Rio Grande Valley service area (effective September 2025).
  • The division has an authorized ROE of 9.80 percent (as of January 2026).
  • Rate Base: $1,887 million (as of January 2026).
  • Residential sales increased due to net customer growth.

Product Portfolio: Distribution of natural gas services to residential, commercial, and transportation customers.

Market Dynamics:

• Serves approximately 13 percent of natural gas distribution customers in Texas.
• Regulated by the RRC and various municipalities, with rate adjustments through annual GRIP filings.
• Utilizes WNA mechanisms from September through May.
• Benefits from Purchased Gas Adjustment, Bad Debt Recovery, and Expense Trackers.
• Faces competition from other local distribution companies and pipelines for large industrial and commercial customers.

Capital Allocation Strategy

Shareholder Returns:

• Dividend Payments: $160.7 million was paid in dividends for the year ended December 31, 2025. In January 2026, a dividend of $0.68 per share ($2.72 per share on an annualized basis) was declared.
• Future Capital Return Commitments: The Company aims to maintain a dividend that is competitive with its peer group.

Balance Sheet Position (as of December 31, 2025):

• Cash and Equivalents: $10.6 million
• Total Debt: $3,373.7 million (comprising $2,150.0 million in Senior Notes, $250.0 million in Unsecured Term Loan, $257.9 million in KGSS-I Securitized Utility Tariff Bonds, and $737.4 million in Commercial Paper).
• Net Cash Position: -$3,363.1 million (Net Debt)
• Credit Rating:
  • Moody’s: A3 (Stable Outlook)
  • S&P: A- (Stable Outlook)
• Debt Maturity Profile:
  • Unsecured Term Loan: Matures in September 2026 ($250 million).
  • KGSS-I Securitized Utility Tariff Bonds: $30.6 million due within the next year, with a scheduled final payment date of August 1, 2032.
  • Senior Notes: Maturities include April 2029 ($300 million), May 2030 ($300 million), September 2032 ($600 million), February 2044 ($400 million), and November 2048 ($400 million).
  • Commercial Paper: Maturities vary but do not exceed 270 days from the issue date.

Cash Flow Generation (2025):

• Operating Cash Flow: $578.8 million
• Free Cash Flow: Not explicitly disclosed.

Operational Excellence

Production & Service Model: ONE Gas, Inc. operates as a natural gas distribution utility, committed to delivering natural gas safely, reliably, and affordably. The Company's operational philosophy prioritizes a zero-incident and 100-percent compliance safety culture. This is achieved through the deployment of various operational and damage prevention procedures and technologies for monitoring, protecting, and maintaining its natural gas distribution system. Capital investments are strategically made to meet growing customer demand, support economic development, and manage technology needs responsibly and sustainably.

Supply Chain Architecture: Key Suppliers & Partners:

• Natural Gas Suppliers: The Company procures natural gas from a diverse group of natural gas processors, marketers, and producers through competitive-bidding processes.
• Storage Capacity Providers: Third parties provide 60.8 Bcf of natural gas storage capacity under contracts ranging from one to ten years, with a maximum allowable daily withdrawal capacity of approximately 1.8 Bcf.
• Transportation Providers: Third parties are utilized for pipeline transportation capacity.
• Technology Vendors: Certain Information Technology (IT) systems and infrastructure are provided or maintained by third-party vendors.
• Cybersecurity Partners: Strategic external partnerships are leveraged for vulnerability testing, incident response, and various third-party assessments.

Facility Network (as of December 31, 2025):

• Distribution Mains: 43,200 miles (Oklahoma: 19,900 miles; Texas: 11,900 miles; Kansas: 11,400 miles).
• Transmission Pipelines: 2,200 miles (Oklahoma: 500 miles; Texas: 1,500 miles; Kansas: 200 miles).
• Office Space: Approximately 363,000 square feet of leased office space and other facilities.
• Natural Gas Storage: 60.8 Bcf of natural gas storage capacity under contract.

Operational Metrics (Year Ended December 31, 2025):

• Total Recordable Incident Rate (TRIR): 1.27
• Days Away, Restricted or Transferred Incident Rate (DART): 0.18
• Preventable Vehicle Incident Rate (PVIR): 1.60
• Emergency Response Time (ERT): 66.3% (time from initial notification to arrival on site for emergency calls).

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: The Company directly serves residential, commercial, and transportation customers through its extensive regulated natural gas distribution network across Oklahoma, Kansas, and Texas.
• Digital Platforms: While not explicitly detailed as a direct sales channel, ONE Gas, Inc. leverages technology solutions to enhance operational efficiency and customer service.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Large industrial and commercial customers have the option to purchase their natural gas supply from alternative providers and contract with ONE Gas, Inc. solely for transportation services. Reduced-rate transportation service may be negotiated in competitive situations.
• Customer Concentration: With approximately 2.3 million customers across three states, the Company is not materially exposed to a concentration of credit risk from any single customer or small group of customers.

Geographic Revenue Distribution:

• Oklahoma Natural Gas: Serves approximately 89% of the natural gas distribution customers in Oklahoma.
• Kansas Gas Service: Serves approximately 72% of the natural gas distribution customers in Kansas.
• Texas Gas Service: Serves approximately 13% of the natural gas distribution customers in Texas.
• Growth Markets: The Company consistently adds new customers, with approximately 23,000 new customer connections in both 2025 and 2024, indicating ongoing growth in its service areas.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The natural gas distribution industry is characterized by extensive state and local regulation governing rates and services. Demand for natural gas is seasonal, with a significant portion driven by heating requirements during colder months. The industry faces competition from alternative energy sources, primarily electricity, for applications such as space and water heating, cooking, and clothes drying. Decisions made by customers and builders regarding energy equipment at the initial installation typically lock in the chosen energy source for the equipment's lifespan.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Electricity Providers: Significant competition exists between natural gas and electricity, particularly in the residential and small commercial markets for heating and other energy uses.
• Other Local Distribution Companies: In Texas, ONE Gas, Inc. faces competition from other local distribution companies.
• Other Pipelines: For large industrial and commercial customers, other pipelines compete to provide natural gas transportation services, which can lead to negotiated rates below maximum approved tariffs.

Emerging Competitive Threats:

• Alternative Energy Sources: Competition from solar power, wind power, geothermal energy, and biofuels.
• Energy Efficiency: Increased adoption of energy-efficient construction methods, home improvements (e.g., insulated doors and windows, energy-efficient insulation), and more efficient appliances can lead to a decline in natural gas consumption.
• Technological Advances: Disruptive technologies that enhance electricity's competitive position relative to natural gas pose a threat.

Competitive Response Strategy:

• ONE Gas, Inc.'s strategy focuses on delivering natural gas as a foundational energy source, highlighting its crucial role in meeting growing energy needs and complementing renewable energy sources.
• The Company makes strategic capital investments to enhance the safety, integrity, and reliability of its natural gas distribution system, aiming to meet customers' evolving energy needs responsibly and sustainably.
• Technology solutions are leveraged to improve operational efficiency.
• Price volatility for customers is partially mitigated through the use of natural gas in storage, fixed-price natural gas contracts, and financial derivatives.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Economic Conditions: Weakening economic activity, driven by factors such as inflation, tariffs, high interest rates, and supply chain disruptions, could lead to a loss of existing customers, a decline in energy consumption, fewer new customer connections, and increased difficulties for customers to pay bills, potentially raising bad debt expense.
• Technology Disruption: Increased reliance on technology means that failures, lack of alternative technologies, or inability to support/update systems could hinder operations. Advances in technology could also enhance the competitive position of alternative energy sources like electricity.
• Customer Concentration: The Company is not materially exposed to a concentration of credit risk due to its large and diverse customer base across three states.
• Natural Gas Supply & Price Volatility: Dependence on third parties for natural gas supply, pipeline transportation, and storage capacity. Disruptions or significant price increases could impair the ability to meet customer demand and increase short-term or long-term debt. Price volatility is partially mitigated through hedging programs and storage.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Reliance on third-party suppliers for natural gas, transportation, and storage capacity. Disruptions due to operational failures, regulatory actions, or catastrophic events could adversely affect operations.
• Geographic Concentration: Business activities are concentrated in Oklahoma, Kansas, and Texas, making the Company susceptible to adverse changes in populations, regional economies, politics, regulations, regulatory decisions, and weather patterns within these states.
• Operational Hazards: The business is subject to inherent risks such as leaks, accidents, pipeline ruptures, equipment failures, adverse weather conditions, third-party damage, and catastrophic events (e.g., severe weather, terrorism, pandemics). These could result in legal liability, significant repair and remediation costs, increased operating costs, regulatory fines, and diminished customer confidence.
• Workforce Disruptions: Inability to attract and retain skilled management, professional, and technical employees, or workforce disruptions due to strikes or work stoppages by unionized employees (approximately 18% of the workforce), could adversely impact operations, earnings, and cash flows.

Financial & Regulatory Risks

Market & Financial Risks:

• Demand Volatility: Natural gas sales are seasonal, with higher demand during colder months. While weather normalization mechanisms partially offset weather-related fluctuations, they do not mitigate all impacts.
• Credit & Liquidity: The ability to obtain adequate and cost-effective financing is dependent on financial market liquidity and the Company's financial condition and credit ratings. A downgrade in credit ratings could limit access to capital markets and increase borrowing costs.
• Financing Arrangements Restrictions: Covenants in debt agreements, such as the total debt-to-capital ratio, could limit operating flexibility and the pursuit of growth strategies. Breaches of these covenants could trigger events of default.

Regulatory & Compliance Risks:

• Industry Regulation: Subject to extensive regulatory oversight from federal (PHMSA, DOT, OSHA, EPA, FERC, CFTC), state (OCC, KCC, RRC), and local authorities. Regulatory actions concerning allowed rates of return, rate design, and cost recovery could adversely impact financial results.
• Regulatory Lag: An inherent lag exists between making capital investments or incurring additional costs and the implementation of new rates to recover these expenditures, potentially affecting the Company's ability to earn its authorized rate of return.
• Environmental Regulations: Subject to laws and regulations governing air emissions, water discharges, waste management, and contaminated sites. Compliance costs could increase, and non-compliance could lead to civil or criminal liability and fines. Legislation addressing climate change could impose additional costs or operational restrictions.
• Pipeline Safety Regulations: Compliance with federal (PHMSA) and state pipeline safety statutes, including requirements for design, construction, operation, and maintenance. New or more stringent regulations, such as those from the PIPES Act or proposed rulemakings on leak detection, could necessitate significant expenditures or result in substantial fines for non-compliance.
• Cybersecurity Regulations: Increasing focus from federal and state regulatory agencies (e.g., DHS, TSA) on physical and cybersecurity risks, leading to more stringent security regulations for critical infrastructure sectors. Non-compliance could have a material adverse effect on operations and financial condition.

Geopolitical & External Risks

Geopolitical Exposure:

• Geographic Dependencies: The concentration of business activities in Oklahoma, Kansas, and Texas exposes the Company to specific regional political and economic risks.
• Climate Change: May increase the frequency and severity of extreme weather events in the service territory, potentially affecting customer energy use, population shifts, and increasing operating costs for system resiliency.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Operational Technology: The Company deploys a variety of operational and damage prevention procedures and technologies to monitor, protect, and maintain its natural gas distribution system, emphasizing safety, integrity, and reliability.
• Information Technology: Significant resources are committed to protecting and improving the security of computer systems, software, networks, and other information technology assets, including an enterprise resource planning system.
• Cybersecurity: A comprehensive cybersecurity program is in place, with robust technical defenses and implemented policies, procedures, and controls aimed at protecting IT, operational technology, and data systems from cyber intrusions and attacks.

Intellectual Property Portfolio: The filing does not provide specific details regarding the Company's intellectual property portfolio, such as patent strategy or licensing programs.

Technology Partnerships:

• Strategic Alliances: The Company leverages strategic external partnerships for specialized cybersecurity services, including vulnerability testing, incident response, and third-party assessments.
• Third-Party IT Vendors: Certain portions of the Company's IT systems and infrastructure are provided or maintained by third-party vendors.

Leadership & Governance

Executive Leadership Team (as of January 1, 2026)

Leadership Continuity: The executive leadership team demonstrates a mix of long-standing experience and recent appointments, contributing to leadership continuity. The Board of Directors maintains oversight of cybersecurity and data privacy matters, routinely evaluating the Company's cybersecurity strategy.

Board Composition: The Board of Directors considers cybersecurity risk a significant business risk. A governance committee, chaired by the Senior Vice President and Chief Information Officer, provides oversight for physical security and IT, with cross-functional executive membership.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 4,000 people as of February 1, 2026.
• Geographic Distribution: Employees are located across the Company's service territories in Oklahoma, Kansas, and Texas.
• Skill Mix: The workforce includes a skilled, agile, diverse, and engaged mix of managers, professional, and technical employees. Approximately 18 percent of employees (700 individuals at Kansas Gas Service) are represented by collective bargaining units.

Talent Management: Acquisition & Retention:

• Hiring Strategy: The Company focuses on recruiting and employing a qualified workforce to implement its business strategy, satisfy regulatory requirements, and serve customers.
• Retention Metrics: An annual survey is conducted to monitor and assess employee engagement.
• Employee Value Proposition: The Company is committed to fostering a supportive culture of physical, financial, emotional, and social wellness, offering health and wellness programs to employees.

Diversity & Development:

• Diversity Metrics: Inclusion and diversity are core values, with a commitment to creating equal opportunities and recognizing the value of every employee.
• Development Programs: An Inclusion and Diversity Council, chaired by the Chief Executive Officer, provides governance and guidance for an inclusive and diverse workforce. Employee-led resource groups are available. Regular cybersecurity awareness training, including during employee onboarding, is provided.
• Culture & Engagement: Safety is the Company's number one core value, with a commitment to a zero-incident safety culture, supported by training, performance management, and shared responsibility.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: Not explicitly disclosed in the filing.
• Carbon Neutrality: Not explicitly disclosed in the filing.
• Renewable Energy: Natural gas is positioned as a foundational energy source that plays a crucial role in meeting growing energy needs and complementing renewables and other energy sources.

Supply Chain Sustainability:

• Supplier Engagement: Not explicitly detailed in the filing.
• Responsible Sourcing: Not explicitly detailed in the filing.

Social Impact Initiatives:

• Community Investment: Not explicitly detailed in the filing.
• Product Impact: The Company emphasizes the essential role of natural gas as a foundational energy source for its customers and the integrated energy system.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Natural gas sales to residential and commercial customers are seasonal, with a substantial portion of demand driven by heating requirements. Consequently, sales volumes are typically higher during the months of November through March.
• Economic Sensitivity: Customer usage can fluctuate in response to various factors, including general economic conditions, significant disruptions in natural gas supplies, or changes in natural gas prices.
• Industry Cycles: Not explicitly detailed beyond seasonal and economic sensitivity.

Planning & Forecasting:

• Demand Forecasting: The Company's demand forecasting considers the impact of weather and economic conditions on customer usage.
• Inventory Management: Natural gas is injected into storage during warmer, off-peak months, when prices are typically lower, and withdrawn for use during the colder winter periods. This strategy supports the reliability of gas deliveries during peak demands, with approximately 35 percent of winter natural gas supply needs for sales customers expected to be met from storage.
• Capacity Planning: Capital investments are made to meet growing customer demand and reinforce and increase system capabilities.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• State and Local Regulation: ONE Gas, Inc. is subject to comprehensive regulation by the Oklahoma Corporation Commission (OCC), Kansas Corporation Commission (KCC), Railroad Commission of Texas (RRC), and various municipalities in Texas. These authorities establish rates and charges for natural gas distribution services, ensuring safe and reliable service at a reasonable cost while providing an opportunity for a fair return on investment.
• Federal Regulation: The Company is also subject to regulation by federal agencies, including the United States Department of Transportation Pipeline and Hazardous Materials Safety Administration (PHMSA) for pipeline safety, the United States Department of Transportation (DOT) and Occupational Safety and Health Administration (OSHA) for worker safety, and the United States Environmental Protection Agency (EPA) for environmental matters.
• Compliance Requirements: Regulations cover the design, construction, operation, and maintenance of pipelines, integrity management programs, operator qualification, public awareness, control room management, and environmental protection (e.g., air emissions, wastewater discharges, hazardous waste management, contaminated sites).

Trade & Export Controls: Not explicitly detailed in the filing.

Legal Proceedings: ONE Gas, Inc. is a party to various litigation matters and claims arising in the normal course of its operations. While the results of litigation cannot be predicted with certainty, the Company believes that reasonably possible losses from such matters, individually and in the aggregate, are not material. The probable outcome of these matters is not expected to have a material adverse effect on the Company's financial position, results of operations, or cash flows.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: The effective tax rate for the year ended December 31, 2025, was 17.8%.
• Geographic Tax Planning: Oklahoma accounts for more than 50 percent of the Company's state income taxes, net of federal tax benefits.
• Tax Reform Impact: The One Big Beautiful Bill Act, signed on July 4, 2025, is not expected to have a material impact on the Company's income taxes.
• Net Operating Loss Carryforwards: As of December 31, 2025, the Company had $338.4 million (tax effected) in federal net operating loss carryforwards and $24.1 million (tax effected) in state net operating loss carryforwards available to offset future taxable income.
• Tax Refunds: The Company filed an amended 2022 federal tax return requesting a refund of $55.6 million, which is pending approval. An amended Oklahoma corporate income tax return filed in the first quarter of 2025 resulted in a $1.5 million refund received in October 2025.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: ONE Gas, Inc. maintains general liability, cyber, and property insurance policies to address various hazards and risks inherent in its business. These policies are subject to specific limits, deductibles, and policy exclusions. The Company's cybersecurity insurance coverage is considered appropriate for the size and complexity of its operations.
• Risk Transfer Mechanisms: The Company utilizes purchased-gas cost adjustment mechanisms, which pass through natural gas costs to customers without profit, thereby transferring commodity price risk. Additionally, authorized natural gas financial hedging programs are employed to partially mitigate price volatility for customers.