10-QPeriod: Q3 FY2007

ONEOK INC /NEW/ Quarterly Report for Q3 Ended Sep 30, 2007

Filed November 2, 2007For Securities:OKE

Summary

ONEOK Inc.'s third quarter 2007 report (filed November 2, 2007) for the period ending September 30, 2007, indicates a decrease in diluted earnings per share from continuing operations to $0.13 compared to $0.21 in the prior year. This was primarily driven by lower operating income, particularly within the Energy Services segment due to reduced transportation and storage margins, despite some offset from financial trading gains. The Distribution segment saw improved performance due to new rate schedules. The company highlighted significant strategic activities, including ONEOK Partners' acquisition of a natural gas liquids pipeline system for approximately $300 million, financed by a $600 million debt issuance. This acquisition, along with ongoing capital projects within ONEOK Partners, contributed to a substantial increase in capital expenditures. Dividends per share saw an increase, signaling confidence in future performance.

Key Highlights

  • 1Diluted EPS from continuing operations decreased to $0.13 from $0.21 year-over-year for the third quarter.
  • 2Total revenues for the quarter were $2,809,997,000, a slight increase from $2,644,835,000 in Q3 2006.
  • 3Operating income declined to $102.8 million from $119.6 million due to lower margins in the Energy Services segment.
  • 4ONEOK Partners acquired a natural gas liquids pipeline system for $300 million, financed by a $600 million debt issuance.
  • 5Capital expenditures increased significantly, driven by ONEOK Partners' growth projects.
  • 6The company declared a quarterly dividend of $0.36 per share, an increase of approximately 13% year-over-year.
  • 7Total assets grew to $10.92 billion as of September 30, 2007, up from $10.39 billion at December 31, 2006.

Frequently Asked Questions

The primary driver for the decrease in diluted EPS from continuing operations to $0.13 in Q3 2007 from $0.21 in Q3 2006 was lower operating income. This was mainly due to decreased transportation and storage margins in the Energy Services segment, partially offset by gains in financial trading and improved performance in the Distribution segment from new rate schedules.

The most significant strategic move was ONEOK Partners' acquisition of an interstate natural gas liquids and refined petroleum products pipeline system for approximately $300 million. This acquisition was financed through a $600 million issuance of Senior Notes due 2037. The company also highlighted ongoing capital projects within ONEOK Partners, contributing to increased capital expenditures.

Total assets increased from $10.39 billion at December 31, 2006, to $10.92 billion at September 30, 2007. Long-term debt also increased as a percentage of the capital structure, from 65% to 71%, while equity decreased from 35% to 29%.

The company declared a quarterly dividend of $0.36 per share, representing an approximate 13% increase compared to the same period in the previous year. ONEOK Partners also increased its cash distribution to $1.01 per unit, up approximately 4% year-over-year.