Summary
ONEOK Inc. reported solid financial results for the nine months ended September 30, 2017. Total revenues increased significantly by 34% to $8.38 billion compared to the same period in 2016, driven by substantial growth in commodity sales and services revenue. Net income, however, saw a slight decrease of 4% to $528.7 million, primarily due to higher operating costs and non-cash impairment charges. The company successfully completed the acquisition of the remaining outstanding common units of ONEOK Partners on June 30, 2017, which has been accounted for as an equity transaction and is expected to contribute to future earnings growth. Liquidity remains strong, supported by operating cash flows, a revolving credit facility, and an "at-the-market" equity program.
Financial Highlights
49 data pointsBeta
Financial Statements
Beta
| Revenue | $2.91B |
| Cost of Revenue | $2.23B |
| Gross Profit | $676.95M |
| Operating Income | $354.62M |
| Interest Expense | $126.53M |
| Net Income | $165.74M |
| EPS (Basic) | $0.43 |
| EPS (Diluted) | $0.43 |
| Shares Outstanding (Basic) | 380.91M |
| Shares Outstanding (Diluted) | 383.42M |
Key Highlights
- 1Total revenues increased by 34% to $8.38 billion for the nine months ended September 30, 2017, compared to $6.27 billion in the prior year period.
- 2Net income attributable to ONEOK for the nine months ended September 30, 2017, was $324.8 million, compared to $261.5 million in the prior year period.
- 3The acquisition of the remaining ONEOK Partners common units was completed on June 30, 2017, integrating its operations fully into ONEOK.
- 4Adjusted EBITDA increased by 5% to $1.44 billion for the nine months ended September 30, 2017, compared to $1.38 billion in the prior year period, indicating operational strength.
- 5Capital expenditures decreased by 33% to $330.4 million for the nine months ended September 30, 2017, reflecting the completion of major growth projects in the prior year.
- 6The company declared a dividend of $0.745 per share for shareholders of record on November 6, 2017, an increase of 21% year-over-year, signaling confidence in future performance.
- 7The company ended the quarter with $11.7 million in cash and cash equivalents and maintained compliance with its credit agreement covenants.
Frequently Asked Questions
The primary driver for the significant increase in total revenues was higher commodity sales, largely due to volume growth in the Williston Basin and the STACK and SCOOP areas, combined with higher fees from contract restructuring efforts in the Natural Gas Gathering and Processing segment. Additionally, increased transportation services in the Natural Gas Pipelines segment and stronger optimization and marketing earnings in the Natural Gas Liquids segment contributed to the revenue growth.
The acquisition of the remaining outstanding common units of ONEOK Partners on June 30, 2017, was accounted for as an equity transaction, meaning no gain or loss was recognized on the Consolidated Statement of Income. This integration is expected to contribute to future earnings and cash flows. The company also recorded a significant deferred tax asset of approximately $2.1 billion as a result of the transaction.
ONEOK Inc. anticipates continued growth driven by producer activity in key basins like the STACK, SCOOP, Williston, Permian, and Powder River Basins. The company is investing in growth projects, including expansions of natural gas processing facilities and NGL gathering systems, with expected completion through 2018. Capital expenditures for the full year 2017 were projected between $450-$550 million for growth and $130-$150 million for maintenance. The company also continues to prioritize returning capital to shareholders through dividends, with a 21% year-over-year increase in the declared dividend.
While ONEOK's businesses are predominantly fee-based, there is still some exposure to commodity price fluctuations, particularly in the Natural Gas Gathering and Processing segment through 'POP with fee' contracts. The company actively manages this risk through contract restructuring to increase fees and reduce direct commodity price exposure. It also utilizes commodity derivative financial instruments and physical-forward contracts to hedge a significant portion of its commodity price risk for forecasted equity volumes, particularly in the Natural Gas Gathering and Processing segment.