What is ONEOK's financial performance in Q1 2019 compared to Q1 2018?

In the first quarter of 2019, ONEOK Inc. reported a significant increase in net income available to common shareholders to $336.9 million ($0.81 per diluted share) from $264.2 million ($0.64 per diluted share) in the same period of 2018. Operating income also saw a healthy increase of 12% to $468.7 million. While total revenues decreased by 10% to $2.78 billion, largely due to lower commodity sales, this was countered by strong growth in services revenue and effective cost management, leading to improved profitability.

How is ONEOK funding its significant capital expenditures?

ONEOK's capital expenditures surged to $889.7 million in Q1 2019, up from $264.5 million in Q1 2018, primarily for growth projects in natural gas gathering and processing, and natural gas liquids infrastructure. The company expects to finance these expenditures through a combination of operating cash flows, short-term borrowings, long-term debt issuances, and potentially equity issuances. Its strong liquidity, including $2.5 billion in available credit, provides the necessary financial flexibility.

What are the key drivers behind ONEOK's revenue and earnings growth?

The primary drivers for ONEOK's revenue and earnings growth in Q1 2019 include increased volumes across its key operating regions (Williston, Permian, STACK/SCOOP), supported by producer activity and enhanced completion techniques. Growth in Natural Gas Liquids segment's optimization and marketing activities, driven by wider location price differentials and higher volumes, also contributed significantly. The company's focus on fee-based services, secured by long-term contracts, provides a stable revenue stream and underpins its strong operating income and Adjusted EBITDA growth.

How is ONEOK managing commodity price and interest rate risks?

ONEOK employs a multi-faceted approach to manage market risks. For commodity price risk, the company utilizes hedging strategies, including futures contracts, forward contracts, and swaps, particularly for its Natural Gas Gathering and Processing segment, to mitigate exposure to near-term price fluctuations. For interest rate risk, ONEOK uses a mix of fixed-rate and floating-rate debt, alongside interest-rate swaps, to hedge against variability in interest payments. The company's primarily fee-based business model also provides a natural hedge against extreme commodity price volatility.

OKE 10-Q Quarterly Report Q1 FY2019 — Revenue, Net Income, EPS

Summary

ONEOK Inc. (OKE) reported solid financial results for the first quarter of 2019, demonstrating resilience and strategic execution in a dynamic energy market. The company saw a significant increase in net income and operating income compared to the prior year, driven by volume growth across its key business segments, particularly in the Permian, Williston, and STACK/SCOOP areas. This growth was supported by substantial investments in capital projects, primarily focused on expanding natural gas gathering and processing and natural gas liquids infrastructure, which are largely secured by long-term, fee-based contracts. ONEOK's commitment to returning capital to shareholders is evident through its increased dividend payout, reflecting confidence in its ongoing performance and growth trajectory. The company's diversified operations across natural gas gathering and processing, natural gas liquids, and natural gas pipelines continue to provide stable cash flows, with a significant portion of its earnings being fee-based. While commodity price fluctuations pose a market risk, ONEOK's hedging strategies and the primarily fee-based nature of its contracts mitigate some of this exposure. The company's strong liquidity position and access to credit facilities provide the financial flexibility needed to fund its ambitious growth projects and meet its financial obligations, positioning it well for continued operational success and value creation for its shareholders.

Financial Highlights

49 data points

Beta

Revenue

$2.78B

0.3% Gross Margin

Net Income

$336.93M

0.1% Net Margin

EPS (Diluted)

$0.81

Total Assets

$18.93B

Cash & Equivalents

$27.81M

Free Cash Flow

-$536.10M

Financial Statements

Beta

Revenue	$2.78B
Cost of Revenue	$1.96B
Gross Profit	$823.58M
Operating Income	$468.74M
Interest Expense	$115.42M
Net Income	$336.93M
EPS (Basic)	$0.82
EPS (Diluted)	$0.81
Shares Outstanding (Basic)	412.91M
Shares Outstanding (Diluted)	415.23M

Key Highlights

1Net income available to common shareholders increased by 27% to $336.9 million, or $0.81 per diluted share, compared to $264.2 million, or $0.64 per diluted share, in the first quarter of 2018.
2Total revenues decreased by 10% to $2.78 billion, primarily due to lower commodity sales, though this was partially offset by a 9% increase in services revenue.
3Operating income grew by 12% to $468.7 million, reflecting strong performance across business segments, particularly driven by volume growth and higher optimization/marketing earnings in the Natural Gas Liquids segment.
4Capital expenditures significantly increased to $889.7 million from $264.5 million in the prior year, driven by investments in major growth projects across its segments, notably the Elk Creek and Arbuckle II pipelines.
5The company announced a dividend increase of 12% to $0.86 per share for the first quarter of 2019, signaling confidence in its financial health and future prospects.
6Adjusted EBITDA rose by 12% to $637.5 million, highlighting the company's operational efficiency and the growing contribution of its fee-based services.
7ONEOK maintains a strong liquidity position with $27.8 million in cash and cash equivalents and $2.5 billion in borrowing capacity under its credit agreement, supporting its extensive capital investment plans.

ONEOK INC /NEW/ Quarterly Report for Q1 Ended Mar 31, 2019

Summary

Financial Highlights

Key Highlights

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