01—Abstract
Summary
Summary of the 10-K filed February 28, 2023. Cited figures are marked; the original filing is the authoritative source.
ONEOK Inc. reported robust earnings growth in 2022, driven by increased producer activity and higher commodity prices, with approximately 90%a of its earnings being fee-based, providing a degree of insulation from commodity price volatility.
The company successfully navigated operational challenges, including the Medford incident, by securing a significant insurance settlement of $930 millionb. Strategic capital investments in new processing and fractionation facilities are set to enhance future volumes and earnings. ONEOK is also proactively addressing ESG initiatives, setting emissions reduction targets and exploring low-carbon projects, positioning itself for a transforming energy future while maintaining a strong financial position and a commitment to shareholder returns through dividends.
02—Key points
Key Highlights
- ONEOK reported earnings growth in 2022 due to increased producer activity, higher commodity prices, and improved fee rates, with approximately 90% of earnings being fee-based.
- The company reached a $930 million insurance settlement for the July 2022 Medford fractionation facility incident, with $100 million received in 2022 and the remainder in Q1 2023.
- Key capital growth projects are progressing, including the Demicks Lake III natural gas processing plant (completed) and the MB-5 NGL fractionator (expected Q2 2023), with plans for an MB-6 fractionator.
- Natural Gas Gathering & Processing segment adjusted EBITDA increased by $147.5 million, driven by higher commodity prices, fee rates, and volumes.
- Natural Gas Liquids segment adjusted EBITDA grew by $131.6 million, benefiting from higher fee rates and volumes, offset by increased costs.
- Natural Gas Pipelines segment adjusted EBITDA saw a decrease of $39.4 million, primarily due to the favorable impact of Winter Storm Uri in the prior year.
- The company maintained its commitment to shareholders by paying dividends totaling $3.74 per share in 2022 and increasing its quarterly dividend by 2% in February 2023.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, ONEOK Inc kept $0.08.
- Revenue$22.39B100.0%
- Cost of revenue−$17.91B80.0%
- Gross profit$4.48B20.0%
- Operating costs−$1.67B7.5%
- Operating income$2.81B12.5%
- Interest, other & tax−$1.08B4.8%
- Net income$1.72B7.7%
Where FY2022 revenue went
$22.39B- Cost of revenue: $17.91B, 80% of revenue
- Net income: $1.72B, 7.7% of revenue
- Operating costs: $1.67B, 7.5% of revenue
- Interest, other & tax: $1.08B, 4.8% of revenue
Kept 7.7% as net incomeNet income $1.72B · 7.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 28, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $22.39B$16.54B | +35.3% |
| Cost of Revenue | $17.91B$12.26B | +46.1% |
| Gross Profit | $4.48B$4.28B | +4.5% |
| Operating Income | $2.81B$2.60B | +8.1% |
| Interest Expense | $676.00M$733.00M | −7.8% |
| Net Income | $1.72B$1.50B | +14.8% |
| EPS (Basic) | $3.85$3.36 | +14.6% |
| EPS (Diluted) | $3.84$3.35 | +14.6% |
| Shares Outstanding (Basic) | 447.50M446.40M | +0.2% |
| Shares Outstanding (Diluted) | 448.40M447.40M | +0.2% |
05—Questions
Frequently Asked Questions
What was the financial performance of ONEOK in 2022?
In 2022, ONEOK experienced earnings growth driven by increased producer activity, higher realized commodity prices (net of hedging), and higher average fee rates across its operations. Approximately 90% of its consolidated earnings were fee-based, providing stability against commodity price volatility. The company reported a net income of $1.72 billion and an Adjusted EBITDA of $3.62 billion.
How did the Medford incident impact ONEOK, and what is the status of the insurance claim?
A fire occurred at ONEOK's Medford, Oklahoma, NGL fractionation facility on July 9, 2022. The company recorded $150.7 million in insurance accruals in 2022 for property damage and business interruption. Crucially, on January 9, 2023, ONEOK settled all claims for $930 million, receiving $100 million in 2022 and the remaining $830 million in Q1 2023. This settlement covers physical damage, business interruption claims up to the settlement date, and future business interruption claims.
What are ONEOK's key growth projects and their expected impact?
ONEOK is focused on expanding its midstream infrastructure. Key growth projects include the completed Demicks Lake III natural gas processing plant in the Williston Basin, which enhances processing capacity. Additionally, the MB-5 NGL fractionator in Mont Belvieu, Texas, is expected to be completed in the second quarter of 2023, followed by plans for the MB-6 NGL fractionator. These projects are expected to drive higher volumes and contribute to earnings growth.
How is ONEOK addressing environmental, social, and governance (ESG) factors?
ONEOK is committed to ESG initiatives, evidenced by its inclusion in the S&P Global Sustainability Yearbook for the third consecutive year and receiving an MSCI ESG Rating of AAA. The company has set an absolute GHG emissions reduction target of 2.2 million metric tons by 2030 (a 30% reduction from 2019 levels) and has already achieved approximately 0.5 million metric tons of reduction through various initiatives like methane emissions mitigation and system optimizations. They are also exploring opportunities in renewable energy and low-carbon projects.
06—Continue