What was the primary driver for the significant increase in operating income?

The significant increase in operating income was primarily driven by the consolidation of ONEOK Partners' operations (effective January 1, 2006) and a gain on the sale of assets, specifically the sale of a 20% partnership interest in Northern Border Pipeline by ONEOK Partners, which contributed approximately $113.9 million.

Why did diluted earnings per share from continuing operations decrease in the third quarter of 2006?

Diluted earnings per share (EPS) from continuing operations decreased to $0.21 in Q3 2006 from $0.41 in Q3 2005. This decrease, despite higher operating income, suggests that while overall profitability improved, the net income available for common shareholders on a per-share basis was lower, potentially due to factors like increased interest expenses, minority interests, or a higher number of outstanding shares due to conversions or issuances.

What are the major recent acquisitions and divestitures?

Key transactions include the sale of certain gathering, processing, NGL, and pipeline assets to ONEOK Partners for $3 billion in April 2006, and ONEOK Partners' sale of a 20% interest in Northern Border Pipeline for $297 million. The acquisition of Koch Industries' NGL businesses in July 2005 for $1.33 billion also continues to impact results. Additionally, ONEOK Partners acquired full ownership of Guardian Pipeline.

How is the company managing its debt and liquidity?

The company has access to credit facilities, including a $1.2 billion five-year credit agreement for ONEOK and a $750 million revolving credit agreement for ONEOK Partners. In September 2006, ONEOK Partners issued $1.39 billion in senior notes to repay debt and finance operations. The company also had $88.4 million in letters of credit outstanding and no commercial paper outstanding at the end of Q3 2006, indicating a strong liquidity position.

OKE 10-Q Quarterly Report Q3 FY2006 — Revenue, Net Income, EPS

Summary

ONEOK, Inc.'s Q3 2006 report shows a significant increase in operating income, driven by the consolidation of ONEOK Partners and asset sales, particularly the gain from the Northern Border Pipeline interest sale. However, diluted earnings per share from continuing operations saw a decrease compared to the prior year's quarter, indicating potential margin pressures or increased operational costs impacting profitability on a per-share basis. The company has been actively engaged in strategic acquisitions and divestitures, notably the significant transaction involving its former Gathering and Processing, Natural Gas Liquids, and Pipelines and Storage segments with ONEOK Partners. This restructuring aims to streamline operations and potentially unlock value. ONEOK Partners also issued substantial senior notes to finance operations and repay debt. Investors should monitor the integration progress of these newly combined entities and the impact of ongoing regulatory changes affecting the Distribution segment.

Key Highlights

1Operating income increased significantly by 9% ($9.5 million) for Q3 2006 and by 89% ($310.4 million) for the nine months ended September 30, 2006, compared to the prior year periods.
2Diluted earnings per share (EPS) from continuing operations decreased to $0.21 in Q3 2006 from $0.41 in Q3 2005.
3The company completed the sale of certain assets comprising its former Gathering and Processing, Natural Gas Liquids, and Pipelines and Storage segments to ONEOK Partners for approximately $3 billion in April 2006.
4ONEOK Partners issued $1.39 billion in senior notes in September 2006 to repay outstanding debt.
5The company recognized a gain of approximately $113.9 million in Q2 2006 from the sale of a 20% interest in Northern Border Pipeline.
6Capital expenditures for the first nine months of 2006 were $244 million, an increase from $190 million in the same period of 2005, excluding acquisitions.
7The Distribution segment experienced a net margin increase due to new rate schedules in Oklahoma, partially offset by expiring riders and lower volumetric rider collections.

ONEOK INC /NEW/ Quarterly Report for Q3 Ended Sep 30, 2006

Summary

Key Highlights

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