10-KPeriod: FY2009

ONEOK INC /NEW/ Annual Report, Year Ended Dec 31, 2009

Filed February 23, 2010For Securities:OKE

Summary

ONEOK Inc.'s 2010 10-K filing outlines a diversified energy company with three main operating segments: ONEOK Partners, Distribution, and Energy Services. The company emphasizes a strategy focused on consistent growth and sustainable earnings through strategic acquisitions, organic growth projects within ONEOK Partners, operational efficiencies in Distribution, and market optimization in Energy Services. For the year ended December 31, 2009, ONEOK reported a decrease in diluted EPS from continuing operations to $2.87 from $2.95 in 2008, with operating income declining slightly due to lower commodity prices impacting ONEOK Partners, partially offset by improved performance in the Distribution and Energy Services segments. Despite a challenging economic environment, the company managed its balance sheet, with ONEOK Partners successfully issuing equity and debt, which helped in repaying borrowings. The company's outlook for 2010 anticipates a moderate economic recovery and an improving commodity price environment. Significant capital projects were completed in 2009 by ONEOK Partners, enhancing its natural gas liquids infrastructure. The company also highlighted its dividend payouts, which saw an increase for shareholders.

Financial Highlights

52 data points
Beta

Revenue

$10.81B

18.5% Gross Margin

Net Income

$305.45M

2.8% Net Margin

EPS (Diluted)

$1.44

Total Assets

$12.83B

Cash & Equivalents

$30.92M

Free Cash Flow

$661.45M

Financial Statements
Beta
Revenue$10.81B
Cost of Revenue$8.81B
Gross Profit$2.00B
Operating Expenses$1.12B
Operating Income$882.87M
Interest Expense$300.82M
Net Income$305.45M
EPS (Basic)$1.45
EPS (Diluted)$1.44
Shares Outstanding (Basic)211K
Shares Outstanding (Diluted)213K

Key Highlights

  • 1Diversified business model across ONEOK Partners (gathering, processing, NGLs, pipelines), Distribution (natural gas utility services), and Energy Services (marketing, storage, risk management).
  • 2ONEOK Partners completed several key capital projects in 2009, including pipeline expansions and processing plant upgrades, enhancing its NGL infrastructure.
  • 3Despite a challenging economic climate in 2009, ONEOK demonstrated resilience, with its Distribution segment benefiting from capital-recovery mechanisms and its Energy Services segment showing improved margins.
  • 4The company maintained its dividend payments to shareholders and increased its quarterly dividend in early 2010, signaling confidence in its financial stability.
  • 5ONEOK Partners successfully accessed capital markets through equity and debt offerings in 2009 and early 2010, strengthening its financial position and allowing for debt reduction.
  • 6The company's outlook for 2010 is cautiously optimistic, anticipating a moderate economic recovery and an improving commodity price environment.
  • 7Risk factors highlighted include market volatility, capital availability, commodity price fluctuations, and regulatory changes, common to the energy sector.

Frequently Asked Questions

In 2009, ONEOK's financial performance was influenced by lower realized commodity prices and narrower NGL product price differentials, primarily impacting the ONEOK Partners segment. However, this was partially offset by increased natural gas volumes processed and NGL volumes gathered, fractionated, and transported, as well as improved net margins in the Energy Services segment due to higher transportation and premium services margins, and in the Distribution segment due to capital-recovery mechanisms.

ONEOK Partners made significant progress on its capital projects in 2009, placing several key NGL pipeline projects, including the Arbuckle, D-J Basin lateral, and Piceance lateral pipelines, into service. Additionally, expansions for the Guardian Pipeline and the Williston Basin natural gas processing plant were completed, strengthening the company's midstream infrastructure.

ONEOK's primary business strategy is to deliver consistent growth and sustainable earnings. This is achieved by increasing distributable cash flow at ONEOK Partners through strategic acquisitions and growth projects, growing the rate base and operating efficiencies in the Distribution segment, focusing on key markets in Energy Services, executing strategic acquisitions, and managing its balance sheet to maintain strong investment-grade credit ratings.

ONEOK manages commodity price risk through a combination of derivative instruments, including futures, physical forward contracts, swaps, and options, primarily to hedge anticipated purchases and sales of natural gas, NGLs, and condensate. These strategies aim to minimize earnings volatility and protect against adverse price fluctuations.