01—Abstract
Summary
Summary of the 10-K filed February 27, 2008. Cited figures are marked; the original filing is the authoritative source.
ONEOK Inc.'s 2007 annual report highlights a year of strategic growth and operational expansion, particularly through its majority-owned subsidiary, ONEOK Partners, L.P.
(OKS). The company reported an increase in diluted earnings per share from continuing operations to $2.79a in 2007, up from $2.68 in 2006. This growth was driven by rate schedule implementations in the Distribution segment and improved natural gas liquids (NGL) operations within ONEOK Partners, benefiting from new supply connections and favorable product price spreads.
Significant capital projects were undertaken by ONEOK Partners, including the acquisition of a major NGL pipeline system from Kinder Morgan for approximately $300 millionb, and ongoing development of the Overland Pass Pipeline. These strategic moves underscore ONEOK's focus on expanding its midstream infrastructure and enhancing its NGL gathering, processing, and transportation capabilities. The company also demonstrated a commitment to shareholder returns, increasing its quarterly dividend by approximately 12% for 2008.
ONEOK Partners also increased its cash distribution to unitholders. While facing market risks common to the energy sector, including commodity price volatility and competition, ONEOK's diversified business segments and strategic investments position it for continued development and value creation.
02—Key points
Key Highlights
- ONEOK reported an increase in diluted EPS from continuing operations to $2.79 in 2007, compared to $2.68 in 2006.
- ONEOK Partners, L.P. (OKS) completed a significant acquisition of an NGL and refined products pipeline system from Kinder Morgan for approximately $300 million.
- ONEOK Partners announced and continued construction on major NGL pipeline projects, including the Overland Pass Pipeline and the Arbuckle Pipeline, enhancing its midstream infrastructure.
- The company increased its quarterly dividend by approximately 12% for 2008, signaling confidence in its financial performance and commitment to shareholder returns.
- The Distribution segment saw improved results due to new rate schedules implemented in Kansas and Texas, alongside a return to normal weather patterns.
- ONEOK's Energy Services segment experienced lower transportation margins, partially offsetting the overall growth in other segments.
- The company maintained strong credit ratings and liquidity, with ONEOK Partners accessing significant debt financing to support its capital expansion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2007, ONEOK Inc kept $0.02.
- Revenue$13.48B100.0%
- Cost of revenue−$11.67B86.6%
- Gross profit$1.81B13.4%
- Operating costs−$987.6M7.3%
- Operating income$822.5M6.1%
- Interest, other & tax−$517.6M3.8%
- Net income$304.9M2.3%
Where FY2007 revenue went
$13.48B- Cost of revenue: $11.67B, 87% of revenue
- Net income: $304.9M, 2.3% of revenue
- Operating costs: $987.6M, 7.3% of revenue
- Interest, other & tax: $517.6M, 3.8% of revenue
Kept 2.3% as net incomeNet income $304.9M · 2.3%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2007filed February 27, 2008Financial Statements
| Revenue | $13.48B |
| Cost of Revenue | $11.67B |
| Gross Profit | $1.81B |
| Operating Expenses | $989.47M |
| Operating Income | $822.54M |
| Interest Expense | $256.32M |
| Net Income | $304.92M |
| EPS (Basic) | $1.42 |
| EPS (Diluted) | $1.40 |
| Shares Outstanding (Basic) | 214.69M |
| Shares Outstanding (Diluted) | 218.60M |
05—Questions
Frequently Asked Questions
What were the key drivers of ONEOK's financial performance in 2007?
ONEOK's financial performance in 2007 was primarily driven by an increase in diluted earnings per share, supported by rate schedule implementations in its regulated Distribution segment and growth in its ONEOK Partners segment. ONEOK Partners benefited from expanded NGL operations, new supply connections, favorable NGL price spreads, and the acquisition of the Kinder Morgan NGL pipeline system.
What significant strategic investments did ONEOK make in 2007?
ONEOK, primarily through its ONEOK Partners subsidiary, made significant strategic investments in 2007. Key investments included the approximately $300 million acquisition of an NGL and refined products pipeline system from Kinder Morgan, and continued progress on major NGL pipeline projects like the Overland Pass Pipeline. These investments reflect a strategy to enhance and expand the company's midstream infrastructure, particularly in the NGL sector.
How did ONEOK's dividend policy evolve in 2007?
ONEOK demonstrated a shareholder-friendly approach by increasing its quarterly dividend by approximately 12% in January 2008, payable in the first quarter. This increase reflects management's confidence in the company's financial stability and future earnings potential, following a year of strategic growth and operational improvements.
06—Continue