Summary
ONEOK, Inc.'s 2014 10-K report details a year of significant corporate restructuring and adaptation to a challenging commodity price environment. The company successfully separated its natural gas distribution business into a standalone entity, ONE Gas, and wound down its energy services business. These strategic moves allowed ONEOK to focus more intently on its core midstream operations through its significant investment in ONEOK Partners. The company's financial performance in 2014 was impacted by a sharp decline in crude oil and natural gas prices, particularly in the latter half of the year. Despite this, ONEOK Partners saw increased volumes across its systems due to producer activity in key basins like the Williston and Cana-Woodford. However, ethane rejection continued to negatively affect the Natural Gas Liquids segment's results. The company highlighted substantial growth projects completed and underway within ONEOK Partners, aimed at expanding its gathering, processing, fractionation, and transportation infrastructure.
Financial Highlights
54 data points| Revenue | $12.20B |
| Cost of Revenue | $10.09B |
| Gross Profit | $2.11B |
| Operating Expenses | $969.57M |
| Operating Income | $1.14B |
| Interest Expense | $356.16M |
| Net Income | $314.11M |
| EPS (Basic) | $1.50 |
| EPS (Diluted) | $1.49 |
| Shares Outstanding (Basic) | 209.39M |
| Shares Outstanding (Diluted) | 210.43M |
Key Highlights
- 1ONEOK completed the separation of its natural gas distribution business (ONE Gas) and winded down its energy services business in 2014, refocusing the company on its midstream operations via ONEOK Partners.
- 2The company experienced a significant decline in commodity prices (crude oil and natural gas) in late 2014, impacting segment margins and leading to a reassessment and suspension of certain growth projects.
- 3ONEOK Partners continued to invest heavily in growth projects, completing approximately $5.9 billion in projects and acquisitions from 2010-2014 across its natural gas gathering and processing, and natural gas liquids segments.
- 4Ethane rejection remained a challenge for the Natural Gas Liquids segment, impacting volumes gathered, fractionated, and transported, with expectations for this to persist until 2017.
- 5Despite lower commodity prices, ONEOK Partners saw increased volumes in its Natural Gas Gathering and Processing segment, driven by producer activity in key basins.
- 6ONEOK demonstrated a commitment to returning capital to shareholders, increasing its quarterly dividend per share by approximately 44% in 2014 and a further 51% on an annualized basis in early 2015.
- 7The company is facing ongoing litigation regarding Gas Index Pricing, with the Supreme Court having granted a writ of certiorari in July 2014, with a decision anticipated mid-2015.