10-QPeriod: Q1 FY2005

ONEOK INC /NEW/ Quarterly Report for Q1 Ended Mar 31, 2005

Filed May 5, 2005For Securities:OKE

Summary

ONEOK Inc. reported solid financial performance for the first quarter of 2005, with net income of $107.7 million, a slight increase from $105.2 million in the same period of 2004. This growth was primarily driven by favorable commodity prices, particularly benefiting the Gathering and Processing segment, and improved margins in the Production segment. Despite the increase in net income, diluted earnings per share decreased to $0.97 from $1.04 in the prior year, attributed to a higher number of outstanding shares and dilutive securities. The company also highlighted its strategic acquisition of Northern Plains Natural Gas Company, which is expected to serve as a new growth vehicle. In line with its commitment to shareholder returns, ONEOK's Board of Directors announced a 12% increase in the quarterly dividend to $0.28 per share. The company reiterated its full-year 2005 earnings guidance and is actively managing its operations and financial strategies to navigate market volatility and regulatory environments.

Key Highlights

  • 1Net income increased to $107.7 million in Q1 2005, up from $105.2 million in Q1 2004, driven by favorable commodity prices and segment performance.
  • 2Diluted EPS decreased to $0.97 from $1.04, primarily due to an increase in average shares outstanding and dilutive securities.
  • 3The company acquired Northern Plains Natural Gas Company, viewing it as a new growth vehicle.
  • 4ONEOK announced a 12% increase in its quarterly dividend to $0.28 per share, reflecting strong financial performance.
  • 5The company reaffirmed its full-year 2005 earnings guidance of $2.22 to $2.28 per share.
  • 6Total revenues significantly increased to $2.75 billion from $1.03 billion in the prior year, largely due to a substantial rise in operating revenues excluding energy trading revenues.
  • 7The company repurchased 2.1 million shares of common stock in Q1 2005 under a new share repurchase program.

Frequently Asked Questions

The increase in net income to $107.7 million was primarily driven by favorable commodity prices, which positively impacted the Gathering and Processing segment, and improved margins in the Production segment. Higher revenues, especially in operating revenues excluding energy trading, also contributed significantly.

Diluted earnings per share decreased from $1.04 in Q1 2004 to $0.97 in Q1 2005. This was due to an increase in the average number of outstanding shares and dilutive securities, including the impact of mandatory convertible equity units and shares repurchased under the new program.

The acquisition of Northern Plains Natural Gas Company, which owns a significant interest in Northern Border Partners, is expected to serve as a new growth vehicle for ONEOK. It contributed positively to income before taxes in the first quarter.

ONEOK is returning value to shareholders through increased dividends and share repurchases. The Board of Directors announced a 12% increase in the quarterly dividend to $0.28 per share and repurchased 2.1 million shares of common stock in Q1 2005 under a new authorized program.