8-KOther Events

ONEOK INC /NEW/ 8-K Report (Dec 21, 2001)

Filed December 21, 2001For Securities:OKE

Summary

ONEOK, Inc. (OKE) filed an 8-K on December 21, 2001, reporting revised earnings guidance for its fiscal year. The company now estimates net income, excluding an Oklahoma Corporation Commission (OCC) charge, to be between $1.20 and $1.20 per diluted share. Including the OCC charge, the estimated net income is in the range of $1.02 per diluted share. This downward revision is attributed to lower commodity prices and margins in the natural gas gathering and processing segment, as well as the impact of warmer weather on energy prices and the distribution business. Furthermore, ONEOK updated its exposure to Enron, a counterparty that has filed for bankruptcy. While previously stating exposure was less than $40 million, the company has not received payment for $14 million in commodity transactions that were due in late November and early December 2001. Enron's bankruptcy filing also poses a potential technical default risk on financing leases for ONEOK's Bushton gas processing plant, where Enron is one of three guarantors. ONEOK, as the primary guarantor, will continue lease payments and has informed the lessor and indenture trustee of the situation.

Key Highlights

  • 1ONEOK revised its full-year earnings guidance downwards.
  • 2Estimated net income, excluding OCC charge, is projected at $1.20 per diluted share.
  • 3Estimated net income, including OCC charge, is projected at $1.02 per diluted share.
  • 4Lower commodity prices/margins in natural gas gathering and processing impacted results.
  • 5Warmer-than-normal weather affected energy prices and the distribution segment.
  • 6ONEOK's exposure to Enron is updated, with $14 million in unreceived payments for commodity transactions.
  • 7Enron's bankruptcy filing creates a potential technical default risk on Bushton plant leases, where ONEOK is the primary guarantor.

Frequently Asked Questions

ONEOK revised its earnings guidance downwards primarily due to lower commodity prices and margins in its natural gas gathering and processing segment, as well as the impact of warmer-than-normal weather on energy prices and its distribution segment.

ONEOK has not received payment for $14 million of November and December 2001 commodity transactions that were due to settle in late November and early December 2001. This is an update to their previously disclosed exposure of less than $40 million.

Enron's bankruptcy filing may create a technical default on financing leases for the Bushton plant, as Enron is one of three guarantors. However, ONEOK is the primary guarantor and will continue to make all payments due under the leases. ONEOK has notified the relevant parties of the potential default.

ONEOK estimates net income, excluding the OCC charge, to be in the range of $1.20 per diluted share. Including the OCC charge, the estimated net income is in the range of $1.02 per diluted share.