ONEOK(OKE) - 2024 Q3 - Quarterly Report

Financial Performance - Total revenues for Q3 2024 were $5,023 million, a 19.9$4,189 million in Q3 2023[9] - Net income for Q3 2024 was $693 million, a 52.6$454 million in Q3 2023[9] - Diluted EPS for Q3 2024 was $1.18, a 19.2$0.99 in Q3 2023[9] - Operating income for Q3 2024 was $1,128 million, a 52.6$739 million in Q3 2023[9] - Comprehensive income for Q3 2024 was $733 million, a 59.0$461 million in Q3 2023[10] - Net income for the period was $2,112 million, up from$1,971 million in the previous year[14] - Net income for Q1 2024 was $639 million, increasing to$780 million in Q2 2024, and $693 million in Q3 2024[21] - Basic EPS for the three months ended Sept. 30, 2024, was$1.18, compared to $0.99 for the same period in 2023[68] - Net income available for common stock for the nine months ended Sept. 30, 2024, was$2.111 billion, with basic EPS of $3.61[68] - Total revenues for the three months ended Sept. 30, 2024, were$5,718 million, with $905 million from Natural Gas Gathering and Processing,$3,679 million from Natural Gas Liquids, $171 million from Natural Gas Pipelines, and$963 million from Refined Products and Crude[84] - Total revenues for the three months ended Sept. 30, 2023, were $4,817 million, with$965 million from Natural Gas Gathering and Processing, $3,634 million from Natural Gas Liquids,$146 million from Natural Gas Pipelines, and $72 million from Refined Products and Crude[86] - Total revenues for the nine months ended Sept. 30, 2024, reached$16.746 billion, with liquids commodity sales contributing $13.266 billion[89] - Adjusted EBITDA for the nine months ended Sept. 30, 2024, was$4.614 billion, up from $3.821 billion in the same period in 2023[95] - Transportation and storage revenue for the nine months ended Sept. 30, 2024, was$2.122 billion, compared to $577 million in 2023[89][92] - Cost of sales and fuel for the nine months ended Sept. 30, 2024, was$10.866 billion, slightly higher than $10.423 billion in 2023[89][92] - Operating costs for the nine months ended Sept. 30, 2024, were$1.717 billion, up from $978 million in 2023[89][92] - Depreciation and amortization for the nine months ended Sept. 30, 2024, totaled$786 million, compared to $506 million in 2023[89][92] - Equity in net earnings from investments for the nine months ended Sept. 30, 2024, was$256 million, up from $132 million in 2023[89][92] Revenue and Sales Breakdown - Commodity sales for Q3 2024 were$4,083 million, an 8.6% increase compared to $3,760 million in Q3 2023[9] - Services revenue for Q3 2024 was$940 million, a 119.1% increase compared to $429 million in Q3 2023[9] - Segment adjusted EBITDA for the three months ended Sept. 30, 2024, was$1,549 million, with $318 million from Natural Gas Gathering and Processing,$624 million from Natural Gas Liquids, $166 million from Natural Gas Pipelines, and$441 million from Refined Products and Crude[84] - Segment adjusted EBITDA for the three months ended Sept. 30, 2023, was $1,116 million, with$323 million from Natural Gas Gathering and Processing, $616 million from Natural Gas Liquids,$136 million from Natural Gas Pipelines, and $41 million from Refined Products and Crude[86] Expenses and Costs - Interest expense for Q3 2024 was$325 million, a 51.2% increase compared to $215 million in Q3 2023[9] - Depreciation and amortization for Q3 2024 was$274 million, a 54.8% increase compared to $177 million in Q3 2023[9] - Capital expenditures amounted to$1,459 million, compared to $992 million in the prior year[15] - Cash used in investing activities was$1,832 million, a decrease from $5,759 million in the prior year[15] - Capital expenditures for the three months ended Sept. 30, 2024, were$450 million, with $102 million in Natural Gas Gathering and Processing,$247 million in Natural Gas Liquids, $56 million in Natural Gas Pipelines, and$45 million in Refined Products and Crude[84] - Capital expenditures for the three months ended Sept. 30, 2023, were $386 million, with$126 million in Natural Gas Gathering and Processing, $189 million in Natural Gas Liquids,$70 million in Natural Gas Pipelines, and $1 million in Refined Products and Crude[86] - Capital expenditures for the nine months ended Sept. 30, 2024, totaled$1.411 billion, compared to $959 million in the same period in 2023[89][92] Acquisitions and Investments - The company completed the EnLink Controlling Interest Acquisition on October 15, 2024, for a total cash consideration of approximately$3.3 billion[28][29] - EnLink's assets include 13,600 miles of pipeline, 25 natural gas processing plants with 5.9 Bcf/d capacity, and seven fractionators with 316 MBbl/d capacity[30] - The Medallion Acquisition, expected to close in Q4 2024, involves a purchase price of $2.6 billion for midstream services in West Texas[34][35] - The Gulf Coast NGL Pipelines Acquisition in June 2024 cost approximately$280 million, adding 450 miles of NGL pipelines[38] - The Magellan Acquisition, completed on September 25, 2023, had a total consideration of $14.1 billion, including$9.0 billion in common stock and $5.25 billion in senior unsecured notes[39] - Magellan Acquisition total consideration was$14.114 billion, including $5.052 billion in cash and$9.062 billion in equity[41] - Magellan Acquisition resulted in total assets acquired of $14.673 billion and liabilities assumed of$5.148 billion[41] - Goodwill increased by $165 million due to adjustments in the purchase price allocation, primarily from a$100 million decrease in property, plant and equipment[41] - Pro forma revenue for the nine months ended Sept. 30, 2023, was $14.764 billion, with net income of$2.364 billion[42] - Transaction costs for the nine months ended Sept. 30, 2023, related to the Magellan Acquisition were $154 million[44] - Investments in unconsolidated affiliates for the nine months ended Sept. 30, 2024, were$1.922 billion, up from $1.794 billion in 2023[89][92] Debt and Financing - Long-term debt, excluding current maturities, rose to$26,880 million from $21,183 million[12] - Cash provided by financing activities was$4,681 million, up from $2,910 million in the previous year[16] - The company completed a$7.0 billion senior unsecured notes offering in September 2024, with net proceeds of $6.9 billion intended for acquisitions and general corporate purposes[62] - Current maturities of long-term debt totaled$1.257 billion as of Sept. 30, 2024[62] - The company's ratio of consolidated indebtedness to adjusted EBITDA was 3.7 to 1 as of Sept. 30, 2024, with no outstanding borrowings under its $2.5 billion credit agreement[64] - Consolidated long-term debt fair value was$28.0 billion at Sept. 30, 2024, compared to a book value of $28.1 billion[53] - Treasury locks of$1.5 billion were settled in Q3 2024 to hedge interest-rate risk on forecasted debt issuances[56] Equity and Dividends - Total equity increased to $16,887 million from$16,484 million, driven by retained earnings and paid-in capital[12] - Total equity increased from $16,484 million at the start of 2024 to$16,887 million by September 30, 2024[21] - Dividends paid totaled $1,734 million, up from$1,283 million in the previous year[16] - Dividends paid on common stock in 2024 were $0.99 per share, with a total of$0.3 million paid for Series E Preferred Stock dividends in February, May, and August 2024[66][67] Assets and Liabilities - Total assets increased to $51,050 million from$44,266 million, reflecting growth in cash held for acquisitions and other assets[12] - Cash and cash equivalents at the end of the period stood at $6,464 million, a significant increase from$284 million[16] - Accounts receivable decreased to $1,252 million from$1,705 million, indicating improved collections[12] - Total assets as of Sept. 30, 2024, amounted to $44.549 billion, an increase from$43.582 billion in 2023[89][92] Derivatives and Hedging - Derivative assets as of Sept. 30, 2024, totaled $80 million gross, with a net position of$39 million after netting[49] - Total derivatives designated as hedging instruments decreased to $73 million in assets and$23 million in liabilities as of Sept. 30, 2024, compared to $163 million in assets and$78 million in liabilities as of Dec. 31, 2023[58] - Notional quantities for natural gas derivatives designated as hedging instruments decreased to 24.4 Bcf as of Sept. 30, 2024, from 16.0 Bcf as of Dec. 31, 2023[59] Insurance and Settlements - Insurance settlement for the Medford incident totaled $930 million, with$830 million received in Q1 2023 and recorded as an operational gain of $779 million[46] - The company reached settlements with all remaining claimants in the first quarter of 2024, and all settlement payments were made in the second quarter of 2024, fully offset by insurance proceeds[74] Contract Liabilities and Revenue Recognition - Contract liabilities at Dec. 31, 2023, were$150 million, with $104 million in other current liabilities and$46 million in other deferred credits[77] - Contract liabilities at Sept. 30, 2024, were $150 million, with$112 million in other current liabilities and $38 million in other deferred credits[77] - Expected revenue recognition for the remainder of 2024 is$335 million, with $1,174 million in 2025,$956 million in 2026, $839 million in 2027, and$2,512 million for 2028 and beyond[80] Goodwill and Impairment - Goodwill impairment review as of July 1, 2024, concluded no impairment for Natural Gas Pipelines, Natural Gas Liquids, and Refined Products and Crude reporting units[24] Accounting Standards - The company issued ASU 2023-07 and ASU 2023-09, effective for fiscal years beginning after December 15, 2024, with no material impact expected[26][27] Transactions with Affiliates - The company incurred $54 million in expenses related to transactions with unconsolidated affiliates for the three months ended Sept. 30, 2024, up from$33 million in the same period in 2023[71]