10-QPeriod: Q2 FY2022

ONEOK INC /NEW/ Quarterly Report for Q2 Ended Jun 30, 2022

Filed August 9, 2022For Securities:OKE

Summary

ONEOK Inc. reported strong financial results for the second quarter and first half of 2022, demonstrating resilience and growth. Total revenues significantly increased year-over-year, driven by higher commodity prices and improved volumes across its segments, particularly in Natural Gas Liquids and Natural Gas Gathering and Processing. The company also benefited from higher fee rates and expanded services in its Natural Gas Pipelines segment. Despite facing challenges such as severe weather events and a fire at its Medford fractionation facility, ONEOK maintained a robust operational performance. The company expects the Medford facility incident to be mitigated by insurance coverage and does not anticipate a material impact on its financial condition. ONEOK continues to invest in growth projects and has a strong liquidity position, with a fully available $2.5 billion credit facility, positioning it well for future operations and dividend payments.

Financial Highlights

48 data points
Beta

Revenue

$6.00B

18.6% Gross Margin

Net Income

$414.00M

6.9% Net Margin

EPS (Diluted)

$0.92

Total Assets

$24.53B

Cash & Equivalents

$136.00M

Free Cash Flow

$485.00M

Financial Statements
Beta
Revenue$6.00B
Cost of Revenue$4.88B
Gross Profit$1.12B
Operating Income$689.00M
Interest Expense$171.00M
Net Income$414.00M
EPS (Basic)$0.93
EPS (Diluted)$0.92
Shares Outstanding (Basic)447.50M
Shares Outstanding (Diluted)448.20M

Key Highlights

  • 1Total revenues increased significantly, with commodity sales showing a substantial rise, reflecting higher market prices.
  • 2Operating income grew year-over-year for both the quarter and the year-to-date period, driven by contributions from all three operating segments.
  • 3Adjusted EBITDA also showed considerable growth, indicating strong operational profitability before non-cash charges and interest.
  • 4The Natural Gas Liquids segment demonstrated robust performance, with increased volumes and higher average fee rates contributing to higher revenues and segment Adjusted EBITDA.
  • 5Capital expenditures increased significantly, reflecting ongoing investments in growth projects like the Demicks Lake III natural gas processing plant and the MB-5 fractionator.
  • 6The company maintained its quarterly common stock dividend at $0.935 per share, demonstrating a commitment to returning capital to shareholders.
  • 7ONEOK has a strong liquidity position, with no outstanding borrowings under its $2.5 billion credit agreement as of June 30, 2022, and sufficient cash on hand.

Frequently Asked Questions

The primary driver of the substantial increase in total revenues was higher commodity sales, largely due to significantly higher commodity prices compared to the prior year. Additionally, improved volumes in the Natural Gas Liquids and Natural Gas Gathering and Processing segments, along with higher fee rates in the Natural Gas Pipelines segment, contributed to revenue growth.

A fire occurred at the Medford, Oklahoma, natural gas liquids fractionation facility on July 9, 2022. While the facility is currently out of service, ONEOK is utilizing its integrated NGL pipeline system and other assets to maintain services. The company has property damage and business interruption insurance coverage with a limit of $2 billion, and it expects this coverage to mitigate financial losses. ONEOK does not currently anticipate a material impact on its financial condition, results of operations, or cash flows from this incident, though the timing of insurance proceeds may affect quarterly results.

ONEOK has maintained its quarterly common stock dividend at $0.935 per share, and declared a similar dividend payable in August 2022. The company generated sufficient operating cash flows to cover dividend payments for the first six months of 2022 and expects this trend to continue, indicating a commitment to shareholder returns.

ONEOK has a strong liquidity position, with no outstanding borrowings under its $2.5 billion credit agreement as of June 30, 2022. The company amended and restated this credit agreement in June 2022, extending its maturity to June 2027. In July 2022, ONEOK redeemed $895.8 million of its senior notes due October 2022 using cash on hand and short-term borrowings. The company expects sufficient cash inflows from operations, insurance proceeds, and its credit facility to meet its financial obligations.