01—Abstract
Summary
Summary of the 10-K filed February 25, 2020. Cited figures are marked; the original filing is the authoritative source.
ONEOK Inc.'s 2019 10-K filing reveals a year of significant growth, driven by the completion of major capital projects and increased volumes across its Natural Gas Gathering and Processing, and Natural Gas Liquids segments.
The company's strategy continues to focus on expanding its fee-based earnings, with approximately 90%a of consolidated earnings being fee-based in 2019. Significant investments in infrastructure, including NGL pipelines and processing plants, are positioned to capitalize on increasing natural gas and NGL production, particularly in the Rocky Mountain and Permian regions. Financially, ONEOK demonstrated resilience with increased net income and robust operating cash flows.
The company managed its debt effectively, undertaking public offerings of senior unsecured notes to fund growth projects and refinance existing debt. While facing some NGL location price differentials impacting optimization activities, ONEOK anticipates narrower differentials in 2020. The company also highlighted its commitment to shareholder returns through a 9%b increase in dividends declared per share, underscoring its focus on sustainable earnings growth and shareholder value.
02—Key points
Key Highlights
- ONEOK generated approximately 90% of its consolidated earnings from fee-based businesses in 2019, indicating a stable and predictable revenue stream.
- The company completed several key capital-growth projects in 2019, including NGL pipelines and natural gas processing plants, which are expected to drive future volume growth and earnings.
- Volumes increased across the Natural Gas Gathering and Processing and Natural Gas Liquids segments compared to 2018, supported by new infrastructure and improved producer productivity.
- Net income increased by approximately 10% to $1.28 billion in 2019 from $1.15 billion in 2018, demonstrating strong operational performance.
- ONEOK returned capital to shareholders through a 9% increase in dividends per share, reflecting confidence in future earnings growth.
- The company maintained a strong liquidity position, with no outstanding borrowings under its $2.5 Billion Credit Agreement at year-end 2019 and a healthy cash balance.
- Strategic investments in the Rocky Mountain, Permian, and Mid-Continent regions position ONEOK to benefit from continued production growth in these key energy basins.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, ONEOK Inc kept $0.13.
- Revenue$10.16B100.0%
- Cost of revenue−$6.79B66.8%
- Gross profit$3.38B33.2%
- Operating costs−$1.46B14.4%
- Operating income$1.91B18.8%
- Interest, other & tax−$635.8M6.3%
- Net income$1.28B12.6%
Where FY2019 revenue went
$10.16B- Cost of revenue: $6.79B, 67% of revenue
- Operating costs: $1.46B, 14% of revenue
- Net income: $1.28B, 13% of revenue
- Interest, other & tax: $635.8M, 6.3% of revenue
Kept 13% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 25, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $10.16B$12.59B | −19.3% |
| Cost of Revenue | $6.79B$9.42B | −28.0% |
| Gross Profit | $3.38B$3.17B | +6.5% |
| Operating Income | $1.91B$1.84B | +4.3% |
| Interest Expense | $491.77M$469.62M | +4.7% |
| Net Income | $1.28B$1.16B | +10.7% |
| EPS (Basic) | $3.09$2.80 | +10.4% |
| EPS (Diluted) | $3.07$2.78 | +10.4% |
| Shares Outstanding (Basic) | 413.56M411.49M | +0.5% |
| Shares Outstanding (Diluted) | 415.44M414.19M | +0.3% |
05—Questions
Frequently Asked Questions
What were the key drivers of ONEOK's financial performance in 2019?
ONEOK's financial performance in 2019 was primarily driven by increased volumes across its Natural Gas Gathering and Processing and Natural Gas Liquids segments. This growth was a result of completed capital-growth projects, continued drilling activity, and improved producer productivity, which collectively boosted fee-based earnings.
How is ONEOK managing its debt and capital structure?
ONEOK actively manages its debt by undertaking public offerings of senior unsecured notes to fund capital expenditures and refinance existing debt. The company maintained a strong liquidity position, with no borrowings outstanding under its $2.5 Billion Credit Agreement at the end of 2019, and has a commitment to maintaining investment-grade credit ratings. The company expects capital expenditures to decrease in 2020 and 2021 compared to 2019.
What is ONEOK's strategy for future growth?
ONEOK's strategy centers on organic investments to support earnings growth, focusing on expanding its fee-based operations. Key growth initiatives include continued investment in NGL pipelines, processing plants, and related infrastructure, particularly in the Rocky Mountain, Permian, and Mid-Continent regions, to connect increasing supply with market demand.
Did ONEOK experience any significant market challenges in 2019?
The company noted fluctuating NGL location price differentials in 2019, primarily due to increased supply, infrastructure constraints, and slower demand growth in the Gulf Coast. These factors impacted earnings from optimization and marketing activities in the Natural Gas Liquids segment. However, ONEOK anticipates narrower price differentials in 2020.
06—Continue