01—Abstract
Summary
Summary of the 10-K filed February 25, 2009. Cited figures are marked; the original filing is the authoritative source.
ONEOK Inc. (OKE) reported its 2008 fiscal year results, demonstrating growth in diluted earnings per share to $2.95a, a 6% increase from 2007.
This growth was primarily driven by strong performance in the ONEOK Partners segment, benefiting from wider NGL product price differentials, higher commodity prices, and increased NGL gathering and fractionation volumes, along with contributions from recently acquired assets. The company's strategy continues to focus on delivering consistent growth and sustainable earnings across its segments: ONEOK Partners, Distribution, and Energy Services. Despite anticipating a challenging economic environment for 2009 with downward pressure on commodity prices, ONEOK remains strategically positioned.
The company is undertaking significant capital projects within ONEOK Partners, aimed at expanding its gathering, processing, and NGL infrastructure, including the Overland Pass Pipeline and Guardian Pipeline extension, though capital expenditures in 2009 are projected to be lower than in 2008. ONEOK's financial health remains solid, supported by substantial operating cash flow and access to credit facilities. The company also managed its capital structure by repurchasing debt and continuing to pay and increase its dividends, reflecting confidence in its ongoing operational performance and future outlook amidst economic uncertainty.
02—Key points
Key Highlights
- Diluted EPS increased by 6% to $2.95 in 2008, driven by the ONEOK Partners segment's improved performance.
- ONEOK Partners completed several key capital projects in 2008, including pipeline extensions and fractionation expansions, supporting its growth strategy.
- The company anticipates lower capital expenditures in 2009 ($425 million for ONEOK Partners) compared to 2008 ($1.3 billion for ONEOK Partners), reflecting project completion and a cautious outlook.
- ONEOK Inc. increased its ownership in ONEOK Partners to 47.7% through strategic unit purchases and partner contributions.
- The company demonstrated a commitment to shareholders by increasing dividends per share by 11% in 2008 and ONEOK Partners increasing unit distributions by 6%.
- Despite anticipating a deteriorating economic climate in 2009, ONEOK believes its strong financial position and access to credit will allow it to maintain operations and planned activities.
- The company is subject to market and credit risks, particularly due to the volatility of commodity prices and disruptions in capital markets, as noted in its risk factors.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, ONEOK Inc kept $0.02.
- Revenue$16.16B100.0%
- Cost of revenue−$14.22B88.0%
- Gross profit$1.94B12.0%
- Operating costs−$1.02B6.3%
- Operating income$917.0M5.7%
- Interest, other & tax−$605.1M3.7%
- Net income$311.9M1.9%
Where FY2008 revenue went
$16.16B- Cost of revenue: $14.22B, 88% of revenue
- Net income: $311.9M, 1.9% of revenue
- Operating costs: $1.02B, 6.3% of revenue
- Interest, other & tax: $605.1M, 3.7% of revenue
Kept 1.9% as net incomeNet income $311.9M · 1.9%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed February 25, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $16.16B$13.48B | +19.9% |
| Cost of Revenue | $14.22B$11.67B | +21.9% |
| Gross Profit | $1.94B$1.81B | +6.9% |
| Operating Expenses | $1.02B$989.47M | +3.2% |
| Operating Income | $917.00M$822.54M | +11.5% |
| Interest Expense | $264.17M$256.32M | +3.1% |
| Net Income | $311.91M$304.92M | +2.3% |
| EPS (Basic) | $1.50$1.42 | +5.3% |
| EPS (Diluted) | $1.48$1.40 | +5.7% |
| Shares Outstanding (Basic) | 209K214.69M | −99.9% |
| Shares Outstanding (Diluted) | 212K218.60M | −99.9% |
05—Questions
Frequently Asked Questions
What were the main drivers of ONEOK's financial performance in 2008?
ONEOK's improved financial performance in 2008 was primarily driven by the ONEOK Partners segment, which benefited from wider NGL product price differentials, higher realized commodity prices, and increased NGL gathering and fractionation volumes. Additionally, the acquisition of assets from Kinder Morgan contributed to the segment's growth.
How is ONEOK positioned for 2009, given the anticipated economic downturn?
ONEOK anticipates a challenging economic environment in 2009 with downward pressure on commodity prices, leading to reduced drilling activity and petrochemical demand. However, the company plans to strategically pursue growth opportunities arising from industry consolidation and underperforming asset sales. It expects to manage its operations through operating cash flow, existing capital resources, and its ability to access financing, while also planning for significantly lower capital expenditures in 2009 compared to 2008.
What is the significance of ONEOK Partners to ONEOK Inc.'s financial results?
ONEOK Partners is a crucial component of ONEOK Inc.'s operations and financial results. ONEOK Inc. owns a 47.7% interest in ONEOK Partners, which is a major player in natural gas gathering, processing, storage, and transportation, as well as NGLs. The company's strategy explicitly focuses on developing growth projects within ONEOK Partners and relies on its distributions for a significant portion of its cash flow.
06—Continue