10-QPeriod: Q1 FY2022

ONEOK INC /NEW/ Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 4, 2022For Securities:OKE

Summary

ONEOK Inc. reported a slight increase in net income for the first quarter of 2022 compared to the same period in 2021, with diluted earnings per share remaining stable. Total revenues saw a significant jump, driven by higher commodity sales, though service revenues experienced a slight decrease. The company's diversified operations across Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines segments contributed to this performance. Despite facing market volatility due to geopolitical events, ONEOK's primarily fee-based business model provided a degree of insulation, with approximately 90% of earnings expected to be fee-based in 2022. Capital expenditures increased significantly in the quarter, largely due to investments in growth projects like the Demicks Lake III natural gas processing plant and the MB-5 fractionator. The company maintained its quarterly common stock dividend, reflecting its confidence in operational performance and cash flow generation. Management anticipates continued demand for its midstream services, positioning ONEOK to benefit from increased domestic and international energy needs.

Financial Highlights

48 data points
Beta

Revenue

$5.45B

19.8% Gross Margin

Net Income

$391.00M

7.2% Net Margin

EPS (Diluted)

$0.87

Total Assets

$23.99B

Cash & Equivalents

$15.00M

Free Cash Flow

$206.00M

Financial Statements
Beta
Revenue$5.45B
Cost of Revenue$4.37B
Gross Profit$1.08B
Operating Income$662.00M
Interest Expense$172.00M
Net Income$391.00M
EPS (Basic)$0.87
EPS (Diluted)$0.87
Shares Outstanding (Basic)447.00M
Shares Outstanding (Diluted)448.00M

Key Highlights

  • 1Total revenues surged by $2.25 billion to $5.44 billion in Q1 2022 compared to Q1 2021, primarily driven by a substantial increase in commodity sales.
  • 2Net income available to common shareholders saw a modest increase of $4.99 million to $390.9 million, while diluted EPS remained steady at $0.87.
  • 3The Natural Gas Liquids segment was the primary driver of Adjusted EBITDA growth, increasing by $92.0 million, supported by higher fee rates and volumes, as well as wider commodity price differentials.
  • 4Capital expenditures increased by $80.3 million to $257.0 million, reflecting significant investments in growth projects, including the Demicks Lake III natural gas processing plant and the MB-5 fractionator.
  • 5The company maintained its quarterly common stock dividend at $0.935 per share, signaling confidence in its financial stability and operational outlook.
  • 6Despite revenue growth, operating income remained relatively flat, impacted by a decrease in the Natural Gas Pipelines segment, partly due to the lingering effects of Winter Storm Uri in the prior year's comparative period.
  • 7ONEOK reported strong liquidity with no borrowings under its $2.5 Billion Credit Agreement as of March 31, 2022.

Frequently Asked Questions

The primary driver for the substantial increase in total revenues was a significant rise in commodity sales, which more than offset a slight decrease in services revenue. This was influenced by market conditions and increased producer activity.

All three segments contributed to the company's performance, with the Natural Gas Liquids segment showing the strongest growth in Adjusted EBITDA. The Natural Gas Gathering and Processing segment also saw an increase, while the Natural Gas Pipelines segment experienced a decrease, partly due to comparisons with the prior year's period which was impacted by Winter Storm Uri.

ONEOK significantly increased its capital expenditures in Q1 2022, primarily for growth projects like new processing plants and fractionators. The company maintained its quarterly common stock dividend, indicating a positive outlook and commitment to returning value to shareholders.

ONEOK's business model is largely fee-based, which helps to insulate it from direct commodity price volatility. The company also utilizes hedging strategies through commodity derivative financial instruments and physical-forward contracts to mitigate price risks, particularly in its Natural Gas Gathering and Processing segment.