01—Abstract
Summary
Summary of the 10-K filed February 27, 2024. Cited figures are marked; the original filing is the authoritative source.
ONEOK, Inc. reported a significant year in 2023, largely dominated by the successful completion of its acquisition of Magellan Midstream Partners, L.P. for $14.1 billiona.
This strategic move substantially diversifies ONEOK's asset base and is expected to yield significant synergies. Financially, the company benefited from a $779 millionb one-time settlement gain related to the Medford incident, bolstering its results. The business continues to demonstrate resilience with increased volumes across its system and a fee-based revenue model, with over 85% of consolidated earnings derived from fees in 2023, mitigating direct commodity price volatility.
Looking ahead, ONEOK is focused on maintaining financial strength and flexibility. The company's Board of Directors approved a $2.0 billionc share repurchase program and increased the quarterly dividend.
Capital expenditures are being strategically deployed into growth projects, including NGL fractionator and pipeline expansions, aimed at enhancing capacity and serving growing demand. Despite the integration of Magellan and ongoing capital investments, ONEOK maintains a strong liquidity position with no borrowings under its credit agreement at year-end 2023.
02—Key points
Key Highlights
- Completed the acquisition of Magellan Midstream Partners, L.P. for $14.1 billion, significantly diversifying the company's asset base and generating expected synergies.
- Recorded a one-time settlement gain of $779 million related to the Medford incident, positively impacting financial results.
- Over 85% of consolidated earnings were fee-based in 2023, highlighting a business model that reduces direct exposure to commodity price volatility.
- Announced a $2.0 billion share repurchase program and increased the quarterly dividend by 3.7%, signaling a commitment to returning capital to shareholders.
- Continued to advance key capital projects, including NGL fractionator and pipeline expansions, expected to enhance capacity and support future growth.
- Maintained a strong liquidity position, with $338 million in cash and cash equivalents and no outstanding borrowings under its $2.5 Billion Credit Agreement as of December 31, 2023.
- Achieved strong ESG ratings, including inclusion in the S&P Global Sustainability Yearbook and the Dow Jones Sustainability North American Index, underscoring a commitment to sustainability.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2023, ONEOK Inc kept $0.15.
- Revenue$17.68B100.0%
- Cost of revenue−$11.93B67.5%
- Gross profit$5.75B32.5%
- Operating costs−$1.68B9.5%
- Operating income$4.07B23.0%
- Interest, other & tax−$1.41B8.0%
- Net income$2.66B15.0%
Where FY2023 revenue went
$17.68B- Cost of revenue: $11.93B, 67% of revenue
- Net income: $2.66B, 15% of revenue
- Operating costs: $1.68B, 9.5% of revenue
- Interest, other & tax: $1.41B, 8.0% of revenue
Kept 15% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 27, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $17.68B$22.39B | −21.0% |
| Cost of Revenue | $11.93B$17.91B | −33.4% |
| Gross Profit | $5.75B$4.48B | +28.4% |
| Operating Income | $4.07B$2.81B | +45.1% |
| Interest Expense | $866.00M$676.00M | +28.1% |
| Net Income | $2.66B$1.72B | +54.4% |
| EPS (Basic) | $5.49$3.85 | +42.6% |
| EPS (Diluted) | $5.48$3.84 | +42.7% |
| Shares Outstanding (Basic) | 484.30M447.50M | +8.2% |
| Shares Outstanding (Diluted) | 485.40M448.40M | +8.3% |
05—Questions
Frequently Asked Questions
What was the financial impact of the Magellan Acquisition?
The Magellan Acquisition, completed on September 25, 2023, represented a total consideration of $14.1 billion, including $9.0 billion in stock and $5.25 billion in senior unsecured notes used to fund the cash portion. This acquisition significantly diversified ONEOK's asset base and is expected to drive substantial synergies. The acquired Magellan operations are now reported within ONEOK's new Refined Products and Crude segment.
How did the Medford incident affect ONEOK's financial performance?
In January 2023, ONEOK settled all claims related to the July 2022 Medford NGL fractionation facility incident for $930 million. This settlement resulted in a one-time gain of $779 million recognized in the first quarter of 2023, which positively impacted the company's financial results for the year.
What is ONEOK's strategy for capital allocation and shareholder returns?
ONEOK is focused on maintaining financial strength and flexibility. In January 2024, the company announced a $2.0 billion share repurchase program, targeting its utilization over the next four years. Additionally, the Board of Directors increased the quarterly dividend and announced a targeted annual dividend growth rate of 3-4%, demonstrating a commitment to returning capital to shareholders.
What are the key growth projects and capital expenditures for ONEOK?
ONEOK is investing in several key capital projects across its segments. In the Natural Gas Liquids segment, this includes the construction of the MB-6 NGL fractionator and expansions of the West Texas NGL and Elk Creek pipelines, expected in service in early 2025. In Natural Gas Pipelines, the company is expanding injection capabilities for its Oklahoma natural gas storage facilities. Total capital expenditures for 2023 were $1.6 billion, and the company expects expenditures of $1.75-$1.95 billion in 2024.
06—Continue