ONEOK(OKE) - 2025 Q1 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements (Unaudited) This section presents ONEOK's unaudited consolidated financial statements for the three-month periods ending March 31, 2025, and 2024, including income, comprehensive income, balance sheets, cash flows, and equity statements, along with detailed notes on accounting policies, acquisitions, fair value, debt, equity, and segments Consolidated Financial Statements For the first quarter of 2025, ONEOK reported total revenues of $8.04 billion, a significant increase from $4.78 billion in Q1 2024, with net income attributable to ONEOK at $636 million, slightly down from $639 million, resulting in a diluted EPS of $1.04 compared to $1.09, while total assets grew to $64.26 billion, cash from operations increased to $904 million, and cash used in investing and financing activities also rose, leading to a decrease in cash and cash equivalents to $141 million Consolidated Statements of Income Highlights (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $8,043 | $4,781 | +68.2% | | Operating Income | $1,220 | $1,064 | +14.7% | | Net Income Attributable to ONEOK | $636 | $639 | -0.5% | | Diluted EPS | $1.04 | $1.09 | -4.6% | Consolidated Balance Sheet Highlights (As of March 31, 2025) | Metric | March 31, 2025 (Millions) | December 31, 2024 (Millions) | | :--- | :--- | :--- | | Total Current Assets | $4,116 | $4,238 | | Total Assets | $64,263 | $64,069 | | Total Current Liabilities | $6,183 | $4,719 | | Total Liabilities | $42,143 | $42,636 | | Total ONEOK Shareholders' Equity | $21,364 | $17,036 | Consolidated Statements of Cash Flows Highlights (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | | :--- | :--- | :--- | | Cash provided by operating activities | $904 | $596 | | Cash used in investing activities | $(694) | $(578) | | Cash used in financing activities | $(802) | $(291) | | Cash and cash equivalents at end of period | $141 | $65 | Notes to Consolidated Financial Statements The notes detail key accounting events and policies, including the EnLink Acquisition completed on January 31, 2025, accounted for as an equity transaction, the company's debt including $2.06 billion in current maturities and an upsized $3.5 billion credit facility, and segment reporting showing significant revenue and EBITDA contributions from four main areas, with acquisitions being a key driver of growth - On January 31, 2025, ONEOK completed the acquisition of all publicly held common units of EnLink, issuing 41 million shares of common stock valued at $4.0 billion; as ONEOK already controlled EnLink, this was treated as an equity transaction, adjusting paid-in capital[24][25] - In February 2025, the company amended and upsized its revolving credit facility from $2.5 billion to $3.5 billion and extended the term to February 2030; as of March 31, 2025, there were no outstanding borrowings under this facility[41] - The company has four reportable segments: Natural Gas Gathering and Processing, Natural Gas Liquids, Natural Gas Pipelines, and Refined Products and Crude; corporate costs and eliminations are reported separately[67][69] Segment Adjusted EBITDA (Q1 2025 vs Q1 2024) | Segment | Q1 2025 (Millions) | Q1 2024 (Millions) | | :--- | :--- | :--- | | Natural Gas Gathering and Processing | $491 | $306 | | Natural Gas Liquids | $635 | $588 | | Natural Gas Pipelines | $212 | $165 | | Refined Products and Crude | $471 | $381 | | Total Segment Adjusted EBITDA | $1,809 | $1,440 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the Q1 2025 earnings increase primarily to the positive impact of the EnLink and Medallion acquisitions, with operations approximately 90% fee-based, reducing exposure to commodity price volatility, and key developments including the completion of the EnLink acquisition, formation of new joint ventures with MPLX, and progress on major capital projects, with total capital expenditures expected to be $2.8 - $3.2 billion in 2025, and strong liquidity maintained through a $3.5 billion credit facility and access to capital markets - Earnings increased in Q1 2025 compared to Q1 2024, primarily due to the positive impact of the EnLink and Medallion Acquisitions[79] - The company's consolidated earnings are expected to be approximately 90% fee-based in 2025, supported by long-term contracts, which reduces exposure to direct commodity price volatility[81] - Total capital expenditures for 2025 are projected to be between $2.8 billion and $3.2 billion[134] - On January 31, 2025, ONEOK completed the EnLink Acquisition, making EnLink a wholly owned subsidiary; 41 million shares of common stock were issued, valued at $4.0 billion[77] Recent Developments Key recent developments include the completion of the EnLink Acquisition, making EnLink a wholly owned subsidiary, the formation of two joint ventures with MPLX for a new LPG export terminal and a connecting pipeline with an expected investment of approximately $1.0 billion, and major capital projects underway, including the Elk Creek pipeline expansion, the Medford fractionator rebuild, and the Greater Denver pipeline expansion - Announced definitive agreements with MPLX to form joint ventures for a 400 MBbl/d LPG export terminal (Texas City Logistics) and a connecting pipeline (MBTC Pipeline), with ONEOK expecting to invest approximately $1.0 billion[78] Major Capital Projects Update | Project | Scope | Approx. Cost (Millions) | Expected Completion | | :--- | :--- | :--- | :--- | | Elk Creek pipeline expansion | Increase capacity to 435 MBbl/d | $355 | Completed (partially in service) | | Medford fractionator | Rebuild 210 MBbl/d facility | $385 | Phased, Q4 2026 - Q1 2027 | | Texas City Logistics export terminal | 400 MBbl/d LPG export terminal | $700 | Early 2028 | | MBTC Pipeline | 24-inch pipeline to terminal | $280 | Early 2028 | | Greater Denver pipeline expansion | Increase capacity by 35 MBbl/d | $480 | Mid-2026 | Financial Results and Operating Information Consolidated operating income for Q1 2025 increased by $156 million year-over-year to $1.22 billion, driven by contributions from the EnLink and Medallion acquisitions across all four segments, with Adjusted EBITDA rising to $1.775 billion from $1.441 billion, and the Natural Gas Gathering and Processing segment seeing the largest adjusted EBITDA increase of $185 million, primarily from EnLink's contribution, while the Refined Products and Crude segment's adjusted EBITDA grew by $90 million, also boosted by recent acquisitions Consolidated Financial Results (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (Millions) | Q1 2024 (Millions) | Change (Millions) | | :--- | :--- | :--- | :--- | | Operating Income | $1,220 | $1,064 | $156 | | Net Income | $691 | $639 | $52 | | Adjusted EBITDA | $1,775 | $1,441 | $334 | - The $156 million increase in operating income was primarily driven by contributions from recent acquisitions: $129M from Natural Gas Gathering and Processing (EnLink), $9M from Natural Gas Liquids (EnLink), $28M from Natural Gas Pipelines (EnLink), and $39M from Refined Products and Crude (Medallion and EnLink); this was partially offset by $39M in transaction costs[94] - Natural Gas Gathering and Processing adjusted EBITDA increased by $185 million, primarily due to a $213 million contribution from EnLink[99] - Refined Products and Crude adjusted EBITDA increased by $90 million, mainly due to a $92 million contribution from the Medallion and EnLink acquisitions[113][115] Liquidity and Capital Resources ONEOK maintains a strong liquidity position, with primary sources being operating cash flow, a commercial paper program, and a newly upsized $3.5 billion revolving credit facility expiring in 2030, which are believed sufficient to fund operations, capital expenditures ($2.8-$3.2B for 2025), dividends, and debt maturities, despite a working capital deficit of $2.1 billion as of March 31, 2025, mainly due to current debt maturities, which is not expected to adversely impact operations, and credit ratings remain investment grade - Primary liquidity sources include operating cash flows, a commercial paper program, and a $3.5 Billion Credit Agreement which was upsized from $2.5 billion and extended to February 2030[118][124] - The company maintains investment-grade credit ratings from Moody's (Baa2), S&P (BBB), and Fitch (BBB), all with a stable outlook[135] - In March 2025, the company repaid $250 million of 3.2% senior notes at maturity using cash on hand[129] - Cash flow from operations in Q1 2025 was $904 million, an increase of $308 million from Q1 2024, primarily due to the impact of the EnLink and Medallion acquisitions[141][142] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section addresses the company's market risk, focusing on counterparty credit risk, confirming no material changes in market risk exposure from the 2024 Annual Report, and noting that for the Refined Products and Crude segment, approximately 85% of revenues in Q1 2025 were from customers rated investment-grade or otherwise secured, mitigating credit risk - There have been no material changes in market risk exposures from those disclosed in the Annual Report[155] - In the Refined Products and Crude segment, approximately 85% of Q1 2025 revenues were from customers rated investment-grade or secured by letters of credit, liens, or other collateral[154] Item 4. Controls and Procedures The company's Principal Executive Officer and Principal Financial Officer concluded that disclosure controls and procedures were effective as of March 31, 2025, and no changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period (March 31, 2025)[157] - No material changes to the company's internal control over financial reporting were identified during the first quarter of 2025[158] Part II. Other Information Item 1. Legal Proceedings The company refers to Note J of the financial statements and its Annual Report for information on legal proceedings, having established a $1 million threshold for the disclosure of environmental proceedings - The company has elected to use a $1 million threshold for disclosing environmental proceedings[159] Item 1A. Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K - There have been no material changes to the risk factors set forth in the company's Annual Report[160] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's common stock repurchases during the first quarter of 2025, with a total of 315,000 shares purchased under the publicly announced program, and approximately $1.811 billion remaining available for repurchase under the current authorization as of March 2025 Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid Per Share | Remaining Authorization (Millions) | | :--- | :--- | :--- | :--- | | January 2025 | 125,000 | $100.46 | $1,828 | | February 2025 | 0 | $0.00 | $1,828 | | March 2025 | 190,000 | $91.79 | $1,811 | | Total | 315,000 | | | Item 5. Other Information The company reports two key items: first, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter, and second, on April 28, 2025, the company filed a certificate of retirement for all outstanding Series E Preferred Stock after repurchasing them, amending its certificate of incorporation to eliminate all references to this series of stock - On April 28, 2025, the company filed a certificate of retirement to cancel all outstanding shares of Series E Preferred Stock and amend its certificate of incorporation accordingly[166] - No director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025[165] Item 6. Exhibits This section lists all exhibits filed with the 10-Q report, including the Amended and Restated Certificate of Incorporation, various supplemental indentures related to debt, credit agreements, guaranty agreements, officer certifications required by the Sarbanes-Oxley Act, and Inline XBRL data files - A list of exhibits filed with the report is provided, including corporate governance documents, debt and credit agreements, and required officer certifications (302 and 906)[167][168][170]