01—Abstract
Summary
Summary of the 10-K filed February 26, 2013. Cited figures are marked; the original filing is the authoritative source.
ONEOK Inc.'s 2013 10-K filing highlights a company actively expanding its midstream infrastructure to capitalize on the growing North American natural gas and NGL production, particularly from shale plays.
The company's strategy revolves around its majority-owned subsidiary, ONEOK Partners, L.P., which is undertaking significant capital projects totaling approximately $4.7 billion to $5.3 billiona. These investments are focused on enhancing gathering, processing, and NGL transportation and fractionation capacity across key regions like the Mid-Continent and Rocky Mountains. Despite lower commodity prices in 2012, ONEOK benefited from increased volumes and new rates in its Natural Gas Distribution segment.
However, the Energy Services segment experienced margin compression due to narrowed price differentials and lower volatility. The company demonstrated a commitment to shareholder returns by increasing dividends per share by 18%b in 2012 and is actively managing its balance sheet to maintain strong credit ratings.
02—Key points
Key Highlights
- ONEOK Partners is investing heavily ($4.7B - $5.3B) in new capital projects to expand NGL and natural gas midstream infrastructure, driven by increased production from shale plays.
- The company reported a 18% increase in dividends paid per share for 2012, indicating a focus on shareholder returns.
- Despite lower commodity prices in 2012, ONEOK Partners saw increased volumes from completed projects, boosting its gathering and processing and NGL businesses.
- The Natural Gas Distribution segment benefited from new rates across its service territories and improved operating efficiencies, leading to higher operating income.
- The Energy Services segment faced margin compression due to narrowed NGL price differentials and lower market volatility, impacting its financial performance.
- ONEOK successfully managed its liquidity through operating cash flow, commercial paper, and distributions from ONEOK Partners, with significant debt issuances to support growth projects.
- The company maintained investment-grade credit ratings, which are crucial for its access to capital markets and financial flexibility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, ONEOK Inc kept $0.04.
- Revenue$10.18B100.0%
- Cost of revenue−$8.54B83.9%
- Gross profit$1.64B16.1%
- Operating costs−$690.3M6.8%
- Operating income$953.5M9.4%
- Interest, other & tax−$592.9M5.8%
- Net income$360.6M3.5%
Where FY2012 revenue went
$10.18B- Cost of revenue: $8.54B, 84% of revenue
- Net income: $360.6M, 3.5% of revenue
- Operating costs: $690.3M, 6.8% of revenue
- Interest, other & tax: $592.9M, 5.8% of revenue
Kept 3.5% as net incomeNet income $360.6M · 3.5%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 26, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $10.18B$14.81B | −31.2% |
| Cost of Revenue | $8.54B$12.43B | −31.3% |
| Gross Profit | $1.64B$2.38B | −30.9% |
| Operating Expenses | $697.06M$1.22B | −42.9% |
| Operating Income | $953.48M$1.16B | −17.7% |
| Interest Expense | $237.64M$297.01M | −20.0% |
| Net Income | $360.62M$360.59M | 0.0% |
| EPS (Basic) | $1.75$1.72 | +1.7% |
| EPS (Diluted) | $1.71$1.68 | +1.8% |
| Shares Outstanding (Basic) | 206.14M209.34M | −1.5% |
| Shares Outstanding (Diluted) | 210.71M214.50M | −1.8% |
05—Questions
Frequently Asked Questions
What are ONEOK's primary growth drivers as outlined in this report?
ONEOK's primary growth drivers are the significant investments in midstream infrastructure by its subsidiary, ONEOK Partners. These investments are aimed at capturing increased natural gas and NGL production from shale formations, enhancing gathering, processing, and NGL transportation and fractionation capabilities across key regions.
How did the company's financial performance fare in 2012, considering commodity price trends?
In 2012, ONEOK experienced lower commodity prices, which impacted revenues. However, the company benefited from increased volumes due to completed capital projects within ONEOK Partners and new rates in its Natural Gas Distribution segment. The Energy Services segment saw reduced margins due to market conditions.
What is ONEOK's approach to capital allocation and shareholder returns?
ONEOK demonstrates a commitment to shareholder returns through increasing its dividends, as evidenced by an 18% increase in 2012. The company also repurchased shares and is managing its balance sheet, including significant debt issuances to fund growth projects, while aiming to maintain strong credit ratings.
What are the key risks the company identifies that could impact its future performance?
Key risks include market volatility affecting capital availability and commodity prices, dependence on ONEOK Partners' earnings and distributions, increased competition in the energy sector, regulatory changes, potential environmental liabilities, and the ability to secure and manage debt. The company also notes risks associated with ethane rejection impacting NGL volumes.
06—Continue