Summary
ONEOK Inc. filed an 8-K on October 25, 2005, reporting two significant events. The company recognized a material impairment charge of $52.3 million related to its Spring Creek power plant, which it has agreed to sell for $53 million to Westar Energy, Inc. This sale is expected to close in 2006, pending regulatory approval, and the proceeds will be used to reduce short-term debt. Furthermore, ONEOK announced an upward revision to its third-quarter and full-year 2005 earnings guidance. This adjustment reflects improved operating performance, a gain from the sale of its production business, and the Spring Creek power plant impairment loss (which impacts discontinued operations). The company also provided preliminary earnings guidance for 2006, indicating expectations for a lower earnings per share range compared to the revised 2005 outlook.
Key Highlights
- 1ONEOK recognized a $52.3 million impairment charge for its Spring Creek power plant.
- 2The company has entered into an agreement to sell the Spring Creek power plant to Westar Energy, Inc. for $53 million.
- 3Proceeds from the power plant sale are earmarked for reducing short-term debt.
- 4Third-quarter 2005 earnings per share (EPS) guidance was significantly raised from 4 cents to a range of 47-51 cents (continuing operations) and $1.67-$1.71 (net earnings).
- 5Full-year 2005 EPS guidance was increased to a range of $4.92-$4.96 (net earnings) and $3.59-$3.63 (continuing operations).
- 6A $162 million after-tax gain from the sale of Texas gathering and processing assets is expected to be recognized in Q4 2005.
- 7Preliminary 2006 EPS guidance is projected to be between $1.97 and $2.03.