Higher Year-Over-Year Rocky Mountain Region
Volumes
Volume Momentum Contributes to Higher 2024
Financial Expectations
TULSA,
Okla., April 30, 2024 /PRNewswire/ -- ONEOK, Inc.
(NYSE: OKE) today announced first quarter 2024 results and
increased full-year 2024 financial guidance.
First Quarter 2024 Results, Compared With First Quarter
2023:
- Net income of $639 million,
resulting in $1.09 per diluted
share.
- Adjusted EBITDA of $1.44
billion.
- 12% increase in Rocky Mountain region NGL raw feed throughput
volumes.
- 4% increase in natural gas volumes processed.
- 9% increase in Rocky Mountain region natural gas volumes
processed.
- 7% increase in natural gas gathering and processing segment
adjusted EBITDA.
- 4% increase in natural gas pipelines segment adjusted
EBITDA.
2024 Guidance Increase:
- Net income increased $70 million
to a midpoint of $2.88 billion.
- Earnings per diluted share increased to a midpoint of
$4.92.
- Adjusted EBITDA increased $75
million to a midpoint of $6.175
billion.
The increase in financial guidance reflects favorable industry
fundamentals across ONEOK's system and continued confidence in
synergy expectations.
ONEOK increased 2024 net income guidance to a range of
$2.73 billion to $3.03 billion, compared with the previously
announced range of $2.61 billion to
$3.01 billion. Adjusted earnings
before interest, taxes, depreciation and amortization (adjusted
EBITDA) guidance increased to a range of $6.025 billion to $6.325
billion, compared with ONEOK's previously announced range of
$5.9 billion to $6.3 billion.
Total 2024 capital expenditure guidance remains unchanged at
$1.75 billion to $1.95 billion.
"ONEOK generated solid results during the first quarter,
supported by higher year-over-year volumes in the Rocky Mountain
region and contributions from the refined products and crude
segment," said Pierce H. Norton II,
ONEOK president and chief executive officer. "The strength of our
business, underscored by accelerating volumes and a positive
synergy outlook, resulted in an increase to our 2024 financial
guidance and provides significant momentum into 2025.
"The resiliency of our assets and employees was highlighted once
again as we were able to quickly respond to winter weather during
the first quarter," continued Norton. "We remain focused on
integrating the Magellan assets and maximizing value for our
stakeholders."
FIRST QUARTER 2024 FINANCIAL HIGHLIGHTS
|
Three Months
Ended
|
|
March
31,
|
|
2024
|
|
2023
|
|
(Millions of
dollars, except per share amounts)
|
Net income
(a)
|
$
639
|
|
$
1,049
|
Diluted earnings per
common share (a)
|
$
1.09
|
|
$
2.34
|
Adjusted EBITDA (a)
(b)
|
$
1,441
|
|
$
1,733
|
Operating income
(a)
|
$
1,064
|
|
$
1,497
|
Operating
costs
|
$
572
|
|
$
296
|
Depreciation and
amortization
|
$
254
|
|
$
162
|
Equity in net earnings
from investments
|
$
76
|
|
$
40
|
Maintenance
capital
|
$
74
|
|
$
22
|
Capital expenditures
(includes maintenance)
|
$
512
|
|
$
289
|
(a) Amounts for the
three months ended March 31, 2023, include a pre-tax benefit of
$733 million related to the Medford
incident, including a one-time insurance settlement gain of $779
million, offset partially by $46 million of third-party
fractionation costs incurred during the first quarter 2023,
resulting in a net EPS benefit of $1.26 per diluted share after
tax.
(b) Adjusted earnings
before interest, taxes, depreciation and amortization (adjusted
EBITDA) is a non-GAAP measure.
Beginning in 2023, ONEOK updated its calculation methodology of
adjusted EBITDA to include adjusted EBITDA from
unconsolidated affiliates. This change resulted in an additional
$16 million of adjusted EBITDA in the first quarter of
2023.
|
HIGHLIGHTS:
- In January 2024, ONEOK authorized
a $2 billion share repurchase program
and targets it to be largely utilized over the next four
years.
- In March 2024, ONEOK purchased an
additional 10% interest in the Saddlehorn Pipeline Company,
resulting in a 40% ownership interest at March 31, 2024.
- At the end of the first quarter of 2024, ONEOK completed the
expansion of its refined products pipeline to El Paso, Texas.
- In April 2024, ONEOK declared a
quarterly dividend of 99 cents per
share, or $3.96 per share on an
annualized basis.
- As of March 31, 2024:
- 3.8 times first-quarter 2024 annualized run-rate net
debt-to-EBITDA ratio.
- No borrowings outstanding under ONEOK's $2.5 billion credit agreement.
FIRST QUARTER 2024 FINANCIAL PERFORMANCE
ONEOK reported first quarter 2024 net income and adjusted EBITDA
of $639 million and $1.44 billion, respectively.
Results were driven primarily by higher NGL and natural gas
processing volumes in the Rocky Mountain region, increased
transportation services in the natural gas pipelines segment and
contributions from the refined products and crude segment,
partially offset by higher operating costs primarily due to planned
asset maintenance, higher property insurance premiums and the
growth of ONEOK's operations.
ONEOK's first quarter 2023 net income and adjusted EBITDA
included $733 million related to the
Medford incident.
BUSINESS SEGMENT RESULTS:
Natural Gas Liquids Segment
|
Three Months
Ended
|
|
March
31,
|
Natural Gas Liquids
Segment
|
2024
|
|
2023
|
|
(Millions of
dollars)
|
Adjusted
EBITDA
|
$
588
|
|
$
1,283
|
Capital
expenditures
|
$
253
|
|
$
137
|
The decrease in first quarter 2024 adjusted EBITDA, compared
with the first quarter 2023, primarily reflects:
- A $748 million decrease related
to the Medford incident, due to an
insurance settlement gain of $779
million in the first quarter 2023, offset partially by
$31 million of lower third-party
fractionation costs in the first quarter 2024; and
- A $27 million increase in
operating costs due primarily to planned asset maintenance and
higher property insurance premiums; offset by
- A $75 million increase in
exchange services due primarily to higher volumes in the Rocky
Mountain region.
Refined Products and Crude Segment
|
Three Months
Ended
|
|
March
31,
|
Refined Products and
Crude Segment
|
2024
|
|
(Millions of
dollars)
|
Adjusted
EBITDA
|
$
381
|
Capital
expenditures
|
$
42
|
Natural Gas Gathering and Processing Segment
|
Three Months
Ended
|
|
March
31,
|
Natural Gas
Gathering and Processing Segment
|
2024
|
|
2023
|
|
(Millions of
dollars)
|
Adjusted
EBITDA
|
$
306
|
|
$
285
|
Capital
expenditures
|
$
116
|
|
$
98
|
The increase in first quarter 2024 adjusted EBITDA, compared
with the first quarter 2023, primarily reflects:
- A $26 million increase from
higher volumes due primarily to increased production in the Rocky
Mountain region; and
- A $7 million increase due
primarily to higher average fee rates and higher realized natural
gas and condensate prices, net of hedging, offset partially by
lower realized NGL prices, net of hedging; offset
by
- A $12 million increase in
operating costs due primarily to higher property insurance premiums
and higher employee-related costs, outside services and materials
and supplies expense due primarily to the growth of ONEOK's
operations.
Natural Gas Pipelines Segment
|
Three Months
Ended
|
|
March
31,
|
Natural Gas
Pipelines Segment
|
2024
|
|
2023
|
|
(Millions of
dollars)
|
Adjusted
EBITDA
|
$
165
|
|
$
158
|
Capital
expenditures
|
$
79
|
|
$
46
|
The increase in first quarter 2024 adjusted EBITDA, compared
with the first quarter 2023, primarily reflects:
- A $12 million increase in
transportation services due primarily to higher firm and
interruptible rates; offset by
- An $8 million increase in
operating costs due primarily to planned asset maintenance, higher
property insurance premiums and employee-related costs.
EARNINGS CONFERENCE CALL AND WEBCAST:
ONEOK executive management will conduct a conference call at
11 a.m. Eastern (10 a.m. Central) on May 1,
2024. The call also will be carried live on ONEOK's
website.
To participate in the telephone conference call, dial
877-883-0383, entry number 9316232, or log on to www.oneok.com.
If you are unable to participate in the conference call or the
webcast, the replay will be available on ONEOK's website,
www.oneok.com, for one year. A recording will be available by phone
for seven days. The playback call may be accessed at 877-344-7529,
access code 6947284.
LINK TO EARNINGS TABLES AND PRESENTATION:
https://ir.oneok.com/financial-information/financial-reports
NON-GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) FINANCIAL
MEASURES:
ONEOK has disclosed in this news release adjusted earnings
before interest, taxes, depreciation and amortization (adjusted
EBITDA), which is a non-GAAP financial metric, used to measure the
company's financial performance. Adjusted EBITDA is defined as net
income adjusted for interest expense, depreciation and
amortization, noncash impairment charges, income taxes, noncash
compensation expense, and other noncash items; and includes
adjusted EBITDA from the company's unconsolidated affiliates using
the same recognition and measurement methods used to record equity
in net earnings of unconsolidated affiliates. Adjusted EBITDA from
unconsolidated affiliates is calculated consistently with the
definition above and excludes items such as interest, taxes,
depreciation and other noncash items.
Adjusted EBITDA is useful to investors because it and similar
measures are used by many companies in the industry as a measure of
financial performance and is commonly employed by financial
analysts and others to evaluate ONEOK's financial performance and
to compare the company's financial performance with the performance
of other companies within the industry. Adjusted EBITDA should not
be considered in isolation or as a substitute for net income or any
other measure of financial performance presented in accordance with
GAAP.
This non-GAAP financial measure excludes some, but not all,
items that affect net income. Additionally, this calculation may
not be comparable with similarly titled measures of other
companies. A reconciliation of net income to adjusted EBITDA is
included in the tables.
At ONEOK (NYSE: OKE), we deliver energy products and services
vital to an advancing world. We are a leading midstream operator
that provides gathering, processing, fractionation, transportation
and storage services. Through our more than 50,000-mile pipeline
network, we transport the natural gas, natural gas liquids (NGLs),
refined products and crude that help meet domestic and
international energy demand, contribute to energy security and
provide safe, reliable and responsible energy solutions needed
today and into the future. As one of the largest diversified energy
infrastructure companies in North
America, ONEOK is delivering energy that makes a difference
in the lives of people in the U.S. and around the world.
ONEOK is an S&P 500 company headquartered in Tulsa, Oklahoma.
For information about ONEOK, visit the website:
www.oneok.com.
For the latest news about ONEOK, find us on LinkedIn, Facebook,
X and Instagram.
This news release contains certain "forward-looking statements"
within the meaning of federal securities laws. Words such as
"anticipates," "believes," "continues," "could," "estimates,"
"expects," "forecasts," "goal," "guidance," "intends," "may,"
"might," "outlook," "plans," "potential," "projects," "scheduled,"
"should," "target," "will," "would," and similar expressions may be
used to identify forward-looking statements. Forward-looking
statements are not statements of historical fact and reflect our
current views about future events. Such forward-looking statements
include, but are not limited to, statements about the benefits of
the transaction involving us, including future financial and
operating results, our plans, objectives, expectations and
intentions, and other statements that are not historical facts,
including future results of operations, projected cash flow and
liquidity, business strategy, expected synergies or cost savings,
and other plans and objectives for future operations. No assurances
can be given that the forward-looking statements contained in this
news release will occur as projected and actual results may differ
materially from those projected.
Forward-looking statements are based on current expectations,
estimates and assumptions that involve a number of risks and
uncertainties, many of which are beyond our control, and are not
guarantees of future results. Accordingly, there are or will be
important factors that could cause actual results to differ
materially from those indicated in such statements and, therefore,
you should not place undue reliance on any such statements and
caution must be exercised in relying on forward-looking statements.
These risks and uncertainties include, without limitation, the
following:
- the impact on drilling and production by factors beyond our
control, including the demand for natural gas, NGLs, Refined
Products and crude oil; producers' desire and ability to drill and
obtain necessary permits; regulatory compliance; reserve
performance; and capacity constraints and/or shut downs on the
pipelines that transport crude oil, natural gas, NGLs, and Refined
Products from producing areas and our facilities;
- the impact of unfavorable economic and market conditions,
inflationary pressures, including increased interest rates, which
may increase our capital expenditures and operating costs, raise
the cost of capital or depress economic growth;
- the impact of the volatility of natural gas, NGL, Refined
Products and crude oil prices on our earnings and cash flows, which
is impacted by a variety of factors beyond our control, including
international terrorism and conflicts and the geopolitical
instability;
- the impact of reduced volatility in energy prices or new
government regulations on our business;
- our dependence on producers, gathering systems, refineries and
pipelines owned and operated by others and the impact of any
closures, interruptions or reduced activity levels at these
facilities;
- the impact of increased attention to ESG issues, including
climate change, and risks associated with the physical impacts of
climate change;
- risks associated with operational hazards and unforeseen
interruptions at our operations;
- the inability of insurance proceeds to cover all liabilities or
incurred costs and losses, or lost earnings, resulting from a
loss;
- the risk of increased costs for insurance premiums or less
favorable coverage;
- demand for our services and products in the proximity of our
facilities;
- risks associated with our ability to hedge against commodity
price risks or interest rate risks;
- a breach of information security, including a cybersecurity
attack, or failure of one or more key information technology or
operational systems;
- exposure to construction risk and supply risks if adequate
natural gas, NGL, Refined Products and crude oil supply is
unavailable upon completion of facilities;
- the accuracy of estimates of hydrocarbon reserves, which could
result in lower than anticipated volumes;
- our lack of ownership over all of the land on which our
property is located and certain of our facilities and
equipment;
- the impact of changes in estimation, type of commodity and
other factors on our measurement adjustments;
- excess capacity on our pipelines, processing, fractionation,
terminal and storage assets;
- risks associated with the period of time our assets have been
in service;
- our partial reliance on cash distributions from our
consolidated affiliates on our operating cash flows;
- our ability to cause our joint ventures to take or not take
certain actions unless some or all of our joint-venture
participants agree;
- our reliance on others to operate joint-venture assets and to
provide other services;
- increased regulation of exploration and production activities,
including hydraulic fracturing, well setbacks and disposable of
wastewater;
- impacts of regulatory oversight and potential penalties on our
business;
- risks associated with the rate regulation, challenges or
changes, which may reduce the amount of cash we generate;
- the impact of our gas liquids blending activities, which
subject us to federal regulations that govern renewable fuel
requirements in the U.S.;
- incurrence of significant costs to comply with the regulation
of GHG emissions;
- the impact of federal and state laws and regulations relating
to the protection of the environment, public health and safety on
our operations, as well as increased litigation and activism
challenging oil and gas development as well as changes to and/or
increased penalties from the enforcement of laws, regulations and
policies;
- the impact of unforeseen changes in interest rates, debt and
equity markets and other external factors over which we have no
control;
- actions by rating agencies concerning our credit;
- our indebtedness and guarantee obligations could cause adverse
consequences, including making us vulnerable to general adverse
economic and industry conditions, limiting our ability to borrow
additional funds and placing us at competitive disadvantages
compared with our competitors that have less debt;
- an event of default may require us to offer to repurchase
certain of our or ONEOK Partners' senior notes or may impair our
ability to access capital;
- the right to receive payments on our outstanding debt
securities and subsidiary guarantees is unsecured and effectively
subordinated to any future secured indebtedness and any existing
and future indebtedness of our subsidiaries that do not guarantee
the senior notes;
- use by a court of fraudulent conveyance to avoid or subordinate
the cross guarantees of our or ONEOK Partners' indebtedness;
- the risks associated with pending or possible acquisitions and
dispositions, including our ability to finance or integrate any
such acquisitions and any regulatory delay or conditions imposed by
regulatory bodies in connection with any such acquisitions and
dispositions;
- risks related to the Magellan Acquisition, including the risk
that we may not realize the anticipated benefits of the Magellan
Acquisition or successfully integrate the two companies;
- our ability to pay dividends;
- our exposure to the credit risk of our customers or
counterparties;
- a shortage of skilled labor;
- misconduct or other improper activities engaged in by our
employees;
- the impact of potential impairment charges;
- the impact of the changing cost of providing pension and
postretirement health care benefits to eligible employees and
qualified retirees;
- our ability to maintain an effective system of internal
controls; and
- the risk factors listed in the reports we have filed and may
file with the SEC.
These reports are also available from the sources described
below. Forward-looking statements are based on the estimates and
opinions of management at the time the statements are made. ONEOK
undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
changes in circumstances, expectations or otherwise.
The foregoing review of important factors should not be
construed as exhaustive and should be read in conjunction with the
other cautionary statements that are included herein and elsewhere,
including the Risk Factors included in the most recent reports on
Form 10-K and other documents of ONEOK on file with the SEC.
ONEOK's SEC filings are available publicly on the SEC's website at
www.sec.gov.
Analyst
Contact:
|
Megan
Patterson
|
|
918-561-5325
|
Media
Contact:
|
Brad
Borror
|
|
918-588-7582
|
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SOURCE ONEOK, Inc.