10-KPeriod: FY2004

ONEOK INC /NEW/ Annual Report, Year Ended Dec 31, 2004

Filed March 8, 2005For Securities:OKE

Summary

ONEOK Inc. (OKE) reported strong performance for the fiscal year ended December 31, 2004, with income from continuing operations increasing by 13% to $242.2 million and operating income rising to $490.0 million. The company highlighted significant improvements in its Gathering and Processing segment, driven by favorable commodity pricing for natural gas and NGL products. Strategic acquisitions, including Northern Plains Natural Gas Company, bolstered the company's asset base and expanded its operational reach across the mid-continent region and into Canada. ONEOK also continued its commitment to shareholder value through increased dividends and a new stock buyback program, reflecting confidence in its financial position and future outlook.

Key Highlights

  • 1ONEOK Inc. reported a 13% increase in income from continuing operations to $242.2 million for the fiscal year 2004, indicating robust financial performance.
  • 2The Gathering and Processing segment saw a substantial 109% increase in operating income due to favorable commodity pricing for natural gas and NGL products.
  • 3Acquisition of Northern Plains Natural Gas Company in November 2004 expanded ONEOK's operations and asset base in the mid-continent region and Canada.
  • 4The company's strategy focused on integrating natural gas business operations and evaluating strategic acquisition opportunities to enhance shareholder value.
  • 5ONEOK increased its quarterly dividend throughout 2004, culminating in an annualized dividend of $1.00 per share, signaling financial strength and commitment to returning value to shareholders.
  • 6The Distribution segment benefited from regulatory rate relief in Kansas and Oklahoma, contributing positively to the company's overall financial results.
  • 7A new $1.0 billion, five-year credit agreement was secured in September 2004, providing financial flexibility and support for the company's operations and growth strategies.

Frequently Asked Questions

ONEOK's financial performance in 2004 was driven by a combination of factors including a favorable pricing environment for natural gas and NGL products, particularly benefiting the Gathering and Processing segment, and the successful acquisition of Texas gas and oil properties in late 2003 that contributed to increased production. Additionally, regulatory rate relief in the Distribution segment and strategic acquisitions like Northern Plains Natural Gas Company played significant roles in the company's overall growth and profitability.

The acquisition of Northern Plains Natural Gas Company in November 2004 was a key strategic move that expanded ONEOK's footprint into the mid-continent region and Canada, positioning the company to manage over $2.5 billion in assets, primarily natural gas infrastructure. This aligns with the company's strategy of integrating its natural gas operations and evaluating further acquisition opportunities to complement its existing asset base. The acquisition of Texas gas and oil properties in December 2003 also contributed to the growth of the Production segment.

ONEOK actively manages commodity price risk, particularly in its non-regulated businesses like Energy Services and Gathering & Processing. The company utilizes derivative financial instruments such as futures contracts, swaps, and options to hedge anticipated sales and purchases of natural gas, NGLs, and crude oil, as well as to manage basis risk and NGL price volatility. These risk management activities are overseen by senior management and the audit committee, with Value-at-Risk (VAR) methodology used to estimate potential losses.