Summary
ONEOK Inc. reported its financial results for the third quarter and nine months ended September 30, 2015. The company experienced a significant year-over-year decline in revenues, largely due to lower commodity prices for crude oil, natural gas, and NGLs, which were down considerably compared to the same periods in 2014. Despite the revenue drop, net income attributable to ONEOK saw an increase of 27% for the nine-month period, driven by factors including a substantial reduction in equity in net loss from investments and favorable contract adjustments. The company's operations, particularly through its majority-owned subsidiary ONEOK Partners, are heavily influenced by the volatile energy commodity price environment. Management highlighted ongoing efforts to increase the fee-based component of contracts within the Natural Gas Gathering and Processing segment and to mitigate the impact of lower commodity prices through hedging. Significant capital growth projects were completed in 2014 and early 2015, with more projects in progress, aimed at expanding infrastructure and capturing increasing volumes, particularly in key basins like the Williston and Permian. The company also provided an update on its financial outlook, anticipating continued lower commodity prices through the remainder of 2015 but a modest recovery in 2016.
Financial Highlights
50 data points| Revenue | $1.90B |
| Cost of Revenue | $1.36B |
| Gross Profit | $538.14M |
| Operating Expenses | $252.48M |
| Operating Income | $284.94M |
| Interest Expense | $106.92M |
| Net Income | $82.16M |
| EPS (Basic) | $0.39 |
| EPS (Diluted) | $0.39 |
| Shares Outstanding (Basic) | 210.30M |
| Shares Outstanding (Diluted) | 210.52M |
Key Highlights
- 1Total revenues decreased by 38% to $5.83 billion for the nine months ended September 30, 2015, compared to $9.35 billion in the prior year, primarily due to lower commodity sales.
- 2Net income attributable to ONEOK remained relatively flat at $219.5 million for the nine months ended September 30, 2015, compared to $219.6 million in the prior year, despite lower revenues.
- 3The company continues to invest in growth projects, with capital expenditures totaling $930.3 million for the nine months ended September 30, 2015, down from $1.2 billion in the prior year, reflecting project completions and timing.
- 4ONEOK Partners, the master limited partnership subsidiary, saw its credit rating outlook revised to negative by Moody's and S&P due to the depressed commodity price environment.
- 5The company is actively seeking to increase fee-based revenues and renegotiate contracts to mitigate the impact of commodity price volatility, with a focus on the Natural Gas Gathering and Processing segment.
- 6Despite lower commodity prices and reduced drilling activity, the company anticipates continued growth from its infrastructure projects and expects improved financial results in Q4 2015 and into 2016.