What were the primary drivers behind the significant increase in operating income and EPS for the period?

The significant increase in operating income and EPS was primarily driven by the consolidation of ONEOK Partners, L.P. due to accounting standard changes (EITF 04-5), the acquisition of natural gas liquids assets from Koch Industries, higher commodity prices, wider gross processing spreads, and increased natural gas transportation revenues. Strategic divestitures, such as the sale of a stake in Northern Border Pipeline, also contributed a gain on sale.

How did the consolidation of ONEOK Partners, L.P. affect the financial statements?

The consolidation of ONEOK Partners, L.P. starting January 1, 2006, means that its revenues, costs, and expenses are now fully reflected in ONEOK's consolidated financial statements. While this adoption of EITF 04-5 did not impact net income, it significantly altered the reported top-line and operational figures for the periods presented. Prior periods were not restated, affecting comparability.

What were the major acquisitions and divestitures during the period, and what is their impact?

Key transactions included the sale of certain assets to ONEOK Partners for approximately $3 billion, the sale of a 20% interest in Northern Border Pipeline for approximately $297 million (resulting in a gain of $113.9 million), and the full acquisition of Guardian Pipeline. These moves are part of a strategy to refine the business portfolio and enhance the ONEOK Partners segment's scale and capabilities.

How is the company managing its debt and liquidity?

ONEOK and ONEOK Partners have access to significant credit facilities. In July 2006, ONEOK amended and restated its credit agreement, extending maturity and increasing borrowing capacity. ONEOK Partners also has revolving credit agreements in place. The company generated strong operating cash flows and continues to manage its debt levels, with capitalization remaining relatively stable in terms of debt-to-equity ratio for ONEOK on a consolidated basis.

OKE 10-Q Quarterly Report Q2 FY2006 — Revenue, Net Income, EPS

Summary

ONEOK, Inc. reported a significant increase in operating income for the three and six months ended June 30, 2006, driven by strategic acquisitions and divestitures. The company's financial performance was bolstered by the consolidation of ONEOK Partners, L.P. following accounting standard changes, and the acquisition of Koch Industries' natural gas liquids businesses. These factors, combined with favorable commodity prices and increased transportation revenues, led to a substantial rise in net margin and earnings per share. Key strategic moves included the sale of certain assets to ONEOK Partners and the divestiture of a partnership interest in Northern Border Pipeline, which contributed a gain on sale. The company also expanded its ownership in Guardian Pipeline to 100%. Dividends to shareholders and distributions to ONEOK Partners' unitholders were increased, reflecting improved financial results. Liquidity remains strong, supported by operating cash flows and access to credit facilities.

Key Highlights

1Operating income surged significantly year-over-year, reaching $269.4 million for Q2 2006 and $539.4 million for the first six months of 2006.
2Diluted EPS from continuing operations saw a substantial increase to $0.65 in Q2 2006 and $1.80 for the first six months, up from $0.16 and $1.08 respectively in the prior year.
3The consolidation of ONEOK Partners, L.P. starting January 1, 2006, significantly impacted reported revenues, costs, and expenses, reflecting the combined operational results.
4The company completed several strategic transactions, including the sale of assets to ONEOK Partners and the divestiture of a 20% interest in Northern Border Pipeline, generating a $113.9 million gain on sale.
5ONEOK Partners expanded its ownership to 100% in Guardian Pipeline L.L.C. and initiated the Overland Pass Pipeline Company joint venture.
6Both ONEOK and ONEOK Partners updated and extended their credit facilities to enhance financial flexibility.
7The company announced an increase in its quarterly dividend to $0.32 per share and ONEOK Partners increased its cash distribution to $0.95 per unit.

ONEOK INC /NEW/ Quarterly Report for Q2 Ended Jun 30, 2006

Summary

Key Highlights

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