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.