01—Abstract
Summary
Summary of the 10-K/A filed October 12, 2010. Cited figures are marked; the original filing is the authoritative source.
ONEOK Inc. (OKE) filed an amendment to its 2009 10-K report, detailing its diversified energy operations.
The company operates through three primary segments: ONEOK Partners, Distribution, and Energy Services. ONEOK Partners is a significant master limited partnership focused on natural gas and natural gas liquids (NGL) gathering, processing, storage, and transportation. The Distribution segment serves as a regulated public utility, distributing natural gas to over two million customers across Oklahoma, Kansas, and Texas.
The Energy Services segment provides premium natural gas marketing and risk management services. The company's strategy emphasizes consistent growth and sustainable earnings through strategic acquisitions, growth projects within ONEOK Partners, and operational efficiencies in its Distribution segment. In 2009, ONEOK Partners completed several capital projects, including pipeline expansions and plant expansions, funded partly by public offerings of common units.
The company managed its balance sheet to maintain strong credit ratings, aiming for investment-grade levels. Key financial highlights indicate a decrease in diluted earnings per share from continuing operations in 2009 compared to 2008, primarily due to lower commodity prices and increased operating expenses in the ONEOK Partners segment, partially offset by improved margins in the Energy Services and Distribution segments.
02—Key points
Key Highlights
- ONEOK operates through three main segments: ONEOK Partners (midstream natural gas and NGLs), Distribution (regulated natural gas utility), and Energy Services (natural gas marketing and risk management).
- ONEOK Partners made significant capital investments in 2009, completing several pipeline and processing plant expansions, including the Guardian Pipeline expansion and the Arbuckle Natural Gas Liquids Pipeline.
- The company's strategy aims for consistent growth and sustainable earnings, focusing on increasing distributable cash flow at ONEOK Partners and growing the rate base in its Distribution segment.
- ONEOK Partners successfully accessed capital markets with public offerings of common units in July 2009 and February 2010, raising significant proceeds to repay debt and fund operations.
- Despite lower commodity prices impacting ONEOK Partners' margins in 2009, the company saw improved net margins in its Energy Services and Distribution segments due to various factors like increased transportation margins and capital-recovery mechanisms.
- ONEOK managed its capital structure with a focus on maintaining investment-grade credit ratings, with ONEOK Partners also maintaining similar ratings.
- The company's financial performance in 2009 showed a decrease in diluted earnings per share from continuing operations compared to 2008, primarily due to lower commodity prices and increased operating costs in ONEOK Partners.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, ONEOK Inc kept $0.03.
- Revenue$10.81B100.0%
- Cost of revenue−$8.81B81.5%
- Gross profit$2.00B18.5%
- Operating costs−$1.12B10.3%
- Operating income$882.9M8.2%
- Interest, other & tax−$577.4M5.3%
- Net income$305.5M2.8%
Where FY2009 revenue went
$10.81B- Cost of revenue: $8.81B, 82% of revenue
- Net income: $305.5M, 2.8% of revenue
- Operating costs: $1.12B, 10% of revenue
- Interest, other & tax: $577.4M, 5.3% of revenue
Kept 2.8% as net incomeNet income $305.5M · 2.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-K/AFY2009filed October 12, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $10.81B$16.16B | −33.1% |
| Cost of Revenue | $8.81B$14.22B | −38.1% |
| Gross Profit | $2.00B$1.94B | +3.2% |
| Operating Expenses | $1.12B$1.02B | +9.7% |
| Operating Income | $882.87M$917.00M | −3.7% |
| Interest Expense | $300.82M$264.17M | +13.9% |
| Net Income | $305.45M$311.91M | −2.1% |
| EPS (Basic) | $1.45$1.50 | −3.0% |
| EPS (Diluted) | $1.44$1.48 | −2.7% |
| Shares Outstanding (Basic) | 211K209K | +1.0% |
| Shares Outstanding (Diluted) | 213K212K | +0.5% |
05—Questions
Frequently Asked Questions
What are ONEOK's primary business segments and their roles?
ONEOK operates through three main segments: ONEOK Partners, which focuses on gathering, processing, storing, and transporting natural gas and NGLs; Distribution, which acts as a regulated public utility distributing natural gas to millions of customers in Oklahoma, Kansas, and Texas; and Energy Services, which provides natural gas marketing and risk management services.
How did ONEOK Partners perform in 2009, and what were its key activities?
In 2009, ONEOK Partners experienced lower realized commodity prices and narrower NGL product price differentials, leading to a decrease in net margin. However, this was partially offset by increased NGL volumes gathered, fractionated, and transported due to completed capital projects like the Overland Pass Pipeline and Arbuckle Pipeline. The segment also saw increased natural gas transportation margins and volumes processed. ONEOK Partners also successfully completed public offerings of its common units in July 2009 and February 2010, raising capital to repay debt.
What is ONEOK's overall financial performance and outlook as of this filing?
For the year ended December 31, 2009, ONEOK reported a decrease in diluted earnings per share from continuing operations to $2.87 from $2.95 in 2008. The company expects a moderate economic recovery in 2010 with potential inflationary pressures in 2011, anticipating improved credit markets. The company's strategy remains focused on growth and maintaining strong credit ratings.
What are the significant risks faced by ONEOK?
ONEOK faces several risks, including market volatility and capital availability, unfavorable economic and market conditions impacting demand and pricing, uncertainty in capital markets increasing the cost of capital, and heavy dependence on earnings and distributions from ONEOK Partners. Non-regulated businesses carry a higher risk profile, and the company is also subject to commodity price volatility, interest rate fluctuations, and stringent environmental and governmental regulations.
06—Continue