What were the key drivers of ONEOK's financial performance in 2004?

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.

How did the acquisitions affect ONEOK's business strategy and operations?

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.

What is ONEOK's approach to managing commodity price risk?

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.

OKE 10-K FY2004 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 8, 2005. Cited figures are marked; the original filing is the authoritative source.

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^a.

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.

02—Key points

Key Highlights

ONEOK Inc. reported a 13% increase in income from continuing operations to $242.2 million for the fiscal year 2004, indicating robust financial performance.
The Gathering and Processing segment saw a substantial 109% increase in operating income due to favorable commodity pricing for natural gas and NGL products.
Acquisition of Northern Plains Natural Gas Company in November 2004 expanded ONEOK's operations and asset base in the mid-continent region and Canada.
The company's strategy focused on integrating natural gas business operations and evaluating strategic acquisition opportunities to enhance shareholder value.
ONEOK 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.
The Distribution segment benefited from regulatory rate relief in Kansas and Oklahoma, contributing positively to the company's overall financial results.
A 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.

03—Questions

Frequently Asked Questions

What were the key drivers of ONEOK's financial performance in 2004?
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.
How did the acquisitions affect ONEOK's business strategy and operations?
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.
What is ONEOK's approach to managing commodity price risk?
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.

04—Continue

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