Investment in Unconsolidated Affiliate and Related Party Transactions

On March 14, 2013, OGE Energy entered into a Master Formation Agreement with the ArcLight group and CenterPoint Energy, Inc., pursuant to which OGE Energy, the ArcLight Group and CenterPoint Energy, Inc., agreed to form Enable to own and operate the midstream businesses of OGE Energy and CenterPoint that was initially structured as a private limited partnership. This transaction closed on May 1, 2013.

Pursuant to the Master Formation Agreement, OGE Energy and the ArcLight group indirectly contributed 100 percent of the equity interests in Enogex LLC to Enable. The Company determined that its contribution of Enogex LLC to Enable met the requirements of being in substance real estate and was recorded at historical cost. Immediately prior to closing, on May 1, 2013, the ArcLight group contributed $107.0 million and OGE Energy contributed $9.1 million to Enogex LLC in order to pay down short-term debt. At March 31, 2014, OGE Energy, through its wholly owned subsidiary OGE Holdings, held 28.5 percent of the limited partner interests in Enable.

The general partner of Enable is equally controlled by CenterPoint and OGE Energy, who each have 50 percent of the management rights. CenterPoint and OGE Energy also own a 40 percent and 60 percent interest, respectively, in any incentive distribution rights to be held by the general partner of Enable following the initial public offering of Enable on April 16, 2014 as described below. Based on the 50/50 management ownership, with neither company having control, effective May 1, 2013, OGE Energy deconsolidated its interest in Enogex Holdings LLC and began accounting for its interest in Enable using the equity method of accounting.

Pursuant to a Registration Rights Agreement dated as of May 1, 2013, OGE Energy and CenterPoint Energy, Inc. agreed to initiate the process for the sale of an equity interest in Enable in an initial public offering. On April 16, 2014, Enable completed an initial public offering of 28,750,000 common units resulting in Enable becoming a publicly traded Master Limited Partnership. The offering represented approximately 6.9 percent of the limited partner interests and raised approximately $466 million in net proceeds for Enable. As a result of the offering, OGE Holding's ownership was reduced from 28.5 percent to 26.7 percent.

On May 1, 2013, OGE Energy, OGE Holdings and Enable entered into a Seconding Agreement. During the term of the Seconding Agreement, OGE Holdings' employees will continue to perform services for Enable and its subsidiaries.

Distributions received from Enable were $32.5 million during the three months ended March 31, 2014.

Related Party Transactions

OGE Energy charged operating costs to Enable of $6.0 million during the three months ended March 31, 2014. OGE Energy charges operating costs to OG&E and Enable based on several factors. Operating costs directly related to OG&E and or Enable are assigned as such. Operating costs incurred for the benefit of OG&E and Enable are allocated either as overhead based primarily on labor costs or using the "Distrigas" method. The Distrigas method is a three-factor formula that uses an equal weighting of payroll, net operating revenues and gross property, plant and equipment. OGE Energy adopted the Distrigas method in January 1996 as a result of a recommendation by the OCC Staff. OGE Energy believes this method provides a reasonable basis for allocating common expenses.

Related Party Transactions with Enable



	Three Months Ended
	March 31,
(In millions)	2014
Operating Revenues:
Electricity to power electric compression assets	$	2.9
Cost of Sales:
Natural gas transportation services	$	8.7
Natural gas storage services	3.3
Natural gas purchases	5.0

Summarized Financial Information of Enable

Summarized unaudited financial information for 100 percent of Enable is presented below at March 31, 2014 and for the three months ended March 31, 2014.



Balance Sheet	March 31, 2014
	(In millions)
Current assets	$	500.6
Non-current assets	10,757.6
Current liabilities	1,038.9
Non-current liabilities	2,002.0



	Three Months Ended
Income Statement	March 31, 2014
	(In millions)
Operating revenues	$	1,001.6
Cost of sales	632.6
Operating income	161.9
Net income attributable to Enable	149.2

Enable concluded that the formation of Enable was considered a business combination, and CenterPoint Midstream was the acquirer of Enogex Holdings for accounting purposes. Under this method, the fair value of the consideration paid by CenterPoint Midstream for Enogex Holdings is allocated to the assets acquired and liabilities assumed on May 1, 2013 based on their fair value. Enogex Holdings' assets, liabilities and equity were accordingly adjusted to estimated fair value, resulting in an increase to equity of $2.2 billion. Due to the Company's determination that its contribution of Enogex LLC to Enable met the requirements of being in substance real estate and thus recording the initial investment at historical cost, the effects of the amortization and depreciation expense associated with the fair value adjustments on Enable's results of operations have been eliminated in the Company's recording of its equity in earnings of Enable.

OGE Energy recorded equity in earnings of unconsolidated affiliates of $47.9 million for the three months ended March 31, 2014. Equity in earnings of unconsolidated affiliates includes OGE Energy's 28.5 percent share of Enable earnings adjusted for the amortization of the basis difference of OGE Energy's original investment in Enogex and its underlying equity in net assets of Enable, based on historical cost as of May 1, 2013. The basis difference is being amortized over approximately 30 years, the average life of the assets to which the basis difference is attributed. Equity in earnings of unconsolidated affiliates is also adjusted for the elimination of the Enogex Holdings fair value adjustments as described above.



	Three Months Ended
Reconciliation of Equity in Earnings of Unconsolidated Affiliates	March 31, 2014
	(In millions)
OGE's 28.5% share of Enable Net Income	$	42.5
Amortization of basis difference	3.6
Elimination of Enogex Holdings fair value and other adjustments	1.8
OGE's Equity in earnings of unconsolidated affiliates	$	47.9