Good day, and thank you for standing by. Welcome to the Q1 2022 OGE Energy Corp. Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to Jason Bailey, Director of Investor Relations. Please go ahead.

Thank you, Abigail, and good morning, everyone, and welcome to OGE Energy Corp.'s First Quarter 2022 Earnings Call. With me today, I have Sean Trauschke, our Chairman, President and CEO; and Bryan Buckler, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Bryan of financial results. And finally, as always, we will answer your questions. I'd like to remind you that this conference is being webcast and you may follow along at oge.com. In addition, the conference call and accompanying slides will be archived following the call on that same website. Before we begin the presentation, I'd like to direct your attention to the safe harbor statement regarding forward-looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward-looking financial results, but this is our best estimate to date. I'll now turn the call over to Sean for his opening remarks. Sean?

Thank you, Jason. Good morning, everyone, and thank you for joining us on the call today. Before we begin, last night, a number of our communities in our service territory were impacted by severe storms and multiple tornadoes. This was the second round of storms this week, and our thoughts and prayers are with the families and businesses impacted by these severe storms. Many of our OG&E family live in these very same communities. So we're working very safely to support our communities. So moving on to the quarter. Earlier this morning, we reported first quarter consolidated earnings of $1.39 per share, which includes utility earnings of $0.19 per share, earnings at the holding company of $0.05 per share and natural gas midstream operations of $1.15 per share. The first quarter was stable from a weather perspective and the team executed very well, setting our course for the year. Less than 10% of our annual income is derived from the first quarter, and we are confident in our guidance for this year. I'm proud of what we've accomplished for our investors, our customers and communities and I want you to know that we're not done. For 2022, critical operations, investments and our continued grid enhancement work will benefit 16% of our customer base through 27 new or upgraded substations and transmission lines. This quarter, we completed 40 distribution line circuit improvements, including automation and resiliency projects. We also improved 10 distribution substations and 5 communication technology projects. These projects will deliver improved reliability and resiliency for our growing customer base. Combined with last year's grid enhancements, now 36% of our customers will experience improvements from these investments to the grid. Turning to regulatory. Last week, we received responsive testimony in the Oklahoma rate review. As you know, this is 1…

Thank you, Sean. Thank you, Jason, and good morning, everyone. In February, we announced OG&E's 2022 earnings guidance midpoint at 6% above 2021, while at the same time, increasing the utility's long-term earnings per share growth rate to 5% to 7% through 2026. I'm happy to share with you that we're off to a great start on this 5-year plan, thanks to the outstanding efforts of our employees across the company, which is reflected in our first quarter results. On Slide 5, you can see that for the first quarter of 2022, we reported earnings of $1.39 per share as compared to $0.26 per share in the same period in 2021. The electric utility OG&E reported earnings of $0.19 per share in the first quarter compared to $0.06 per share in the same period in 2021. The increase was primarily due to higher sales volumes from solid load growth as well as increased recoveries of capital investments. As expected, these favorable revenue trends were partially offset by depreciation on a growing asset base and a planned increase in operation and maintenance expense. As a reminder, first quarter 2021 results were impacted by losses from the Guaranteed Flat Bill program during Winter Storm Uri. Our Natural Gas Midstream segment reported earnings per share of $1.15 in the first quarter compared to $0.19 per share in the same period in 2021. The increase was primarily due to a $282 million pretax unrealized mark-to-market gain on our investment in energy transfer, while 2021 reflected equity and earnings of Enable. Holdco and other operations reported earnings of $0.05 per share compared to $0.01 per share in the same period in 2021. The increase was primarily due to a consolidating tax adjustment of $12 million that will reverse over the course of the year. Turning…

[Operator Instructions]. And our first question comes from the line of Shahriar Pourreza with Guggenheim Partners.

It's Constantine here for Shahriar. Congrats on a great quarter.

Thank you, Constantine, and nice to hear from you.

Starting off with maybe a bit more of a broad question. In terms of capital allocation, you're starting to see some material proceeds from the ET shares. What sort of options are you looking at in terms of completing the sales towards the tail end of the year at ATM or any kind of forward sales? And is the primary allocation still kind of equitizing the regular spend just given the strong cash and balance sheet position, does that prompt some accelerated CapEx spending in the near term?

Yes. I'll take the first part of that, and then I'll let Bryan address the use of proceeds question. But Constantine we're -- we stand by our comments, we expect to -- the majority of our position to be exited by the end of the year. And we're going to update you on a quarterly basis. We're not going to get into how we're doing it and give daily updates only because it's our belief that some may look to trade around that information and ultimately put pressure on the ET units and we want to maximize the value for all of our shareholders.

Great. Yes. So thanks, Sean. And Constantine, we're really happy with the progress we've made to date on exiting the ET shares and as we've mentioned in the past, as we complete the exit of the midstream business, we're going to be able to reduce our holding company debt. We started the year with roughly $300 million to $400 million of Holdco short-term debt. So these proceeds will allow us to bring that down close to 0. And then you're looking at -- as we mentioned back in February, we're looking at an enhanced capital plan that's $950 million per year for 5 years and very customer focused, and we have a tremendous growth opportunity in the state of Oklahoma and Arkansas with those economies, and we're going to put that capital to use for our customers.

Excellent. I think that clears it up. And in terms of the regulatory constructs and the proceedings, the rate case, obviously, is still kind of early innings, but how are the conversations with stakeholders and regulators? And is there a traction on any of the new mechanisms that you envisioned? Just then maybe any comments on potential path to settle as you've done in the past. Is that still an option?

Yes. I think everything is still on the table. Nothing has been taken off the table. It's still very early in the process. As I mentioned, we'll file our rebuttal testimony towards the end of the month. And the testimony that we received to date is very consistent with what we received in the prior case. And so we'll work through this and again, it's just early. But I feel like we have a very strong case and a good opportunity here to have a constructive outcome.

Perfect. I think that sums it up pretty well.

All right. Have a great day.

Thank you, Constantine.

[Operator Instructions]. Our next question comes from Brandon Lee with Mizuho.

Just a quick question. You guys mentioned that you received pretax proceeds of $246 million. How much is that after tax?

So yes, Brandon, the $246 million, that's net of selling fees and commissions. So that's a net number from a proceeds perspective. And when you think about our investment in energy transfer, you kind of need to look at the entirety of that investment. If you do the math today, you're going to look at gross proceeds for our entire ownership interest and energy transfer based on today's unit price and what we've sold of somewhere in the $1.0 billion to $1.1 billion area. And of course, you would pay your normal tax rates on that federal and state taxes. As a reminder, we have a negative tax basis in energy transfer of an area of $800 million. So when the dust settles, you pay the normal taxes on your gross proceeds and then you pay taxes on that negative tax basis of $800 million, which you can do the math on that, but that's roughly a $200 million tax liability. So if you do all that math together, I think what you would see is $1.1 billion of gross proceeds, a tax bill in the $450 million type range. So net proceeds of over $600 million.

Great.

Absolutely. Have a good day, Brandon.

I am showing no further questions at this time. I would now like to turn the conference back to Sean.

Great. Thank you, Abigail. As we close out today's call, I would like to leave you with a few thoughts. Already this year, we benefited from continued and expected load and customer growth implemented key projects are in service and delivering reliable and resilient service for our customers, received our fourth formula rate filing in Arkansas, begun the rate review of process in Oklahoma, issued RFPs and to address future capacity needs, released our inaugural TCFD report and begun our energy transfer exit. Our accomplishments to date this year are many. And as I mentioned earlier, we're not done. And I'm so proud of every single person who works here at the company. They take our noble purpose to energize life to hard each day and every day, incredibly serving our customers, communities and investors at the same time each other. So thank you for your interest in OGE Energy Corp. and being on the call today. Have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.