ONEOK(US:OKE)2024-02-27 19:56Financial Data and Key Metrics Changes - ONEOK reported a net income midpoint of more than $2.8 billion for 2024, with an EPS midpoint of $4.88 per diluted share and an adjusted EBITDA midpoint of $6.1 billion [44] - The company extinguished $1.3 billion of long-term debt in 2023, achieving a net debt-to-EBITDA ratio of approximately 3.5x [23] - The quarterly dividend was increased by 3.7% to $0.99 per share, targeting an annual growth rate of 3% to 4% [23] Business Line Data and Key Metrics Changes - The Natural Gas Pipeline segment exceeded its 2023 financial guidance due to higher earnings from long-term storage services and increased rates from negotiated fee-based contracts [46] - The Refined Products and Crude segment achieved adjusted EBITDA of over $420 million in its first full quarter post-acquisition of Magellan, driven by tariff increases and steady transportation volumes [46] - Natural gas processing volumes increased by 14% and NGL volumes by 10% year-over-year, with significant growth in the Rocky Mountain region [26] Market Data and Key Metrics Changes - The Mid-Continent processing volume increased by 15% year-over-year, while Permian Basin NGL volumes rose by 19% [18] - The company expects stable producer activity and production efficiency improvements to drive strong natural gas and NGL volumes across its systems in 2024 [27] - The company anticipates healthy demand for ethane from the petrochemical industry, contributing to a positive outlook for NGL markets in 2024 [28] Company Strategy and Development Direction - ONEOK aims to maintain financial flexibility and capitalize on attractive growth opportunities, focusing on capital allocation strategies that enhance return on invested capital [7] - The company plans to execute a $2 billion share repurchase program over the next four years, complementing its dividend growth strategy [16] - The integration of the Magellan acquisition is a priority, with a focus on realizing synergies and enhancing competitive positioning [57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit adjusted EBITDA growth in 2024, supported by solid business fundamentals and demand for products [21] - The company highlighted the importance of safety and sustainability, consistently ranking high among industry peers [22] - Management noted that the operational platform has increased scale and diversification, positioning ONEOK for significant growth opportunities in 2024 [33] Other Important Information - The company expects to realize $175 million in total annual cost and initial commercial synergies in 2024, with an additional $125 million in 2025 [24] - Capital expenditures are projected at $1.85 billion, reflecting investments necessary to support producer activity and growth projects [17] - The company is working on expanding natural gas storage capabilities and has received regulatory approval for the Saguaro Connector Pipeline [30] Q&A Session All Questions and Answers Question: Can you provide concrete commercial examples driving the upward revision of synergies? - Management indicated that synergies are expected to reach approximately $400 million, driven by the integration of refined products and crude oil systems [35] Question: What are the assumptions for third-party frac costs in 2024? - The company expects third-party frac costs to be about $30 million per quarter in 2024, with significant impacts from the MB-6 project coming online in early 2025 [37] Question: How do you see dynamics playing out for Northern Border? - Management noted that volumes from long-term producers will continue to flow down Northern Border, with no expected restrictions in the near future [64] Question: What is the expected return multiple on the three major projects coming online in 2025? - Management indicated that MB-6 is expected to have a high operating rate and a favorable return multiple, while the Elk Creek expansion may have a lower return initially [66] Question: How does the company view potential LPG export opportunities? - The company is exploring LPG export options but does not see it as a necessity, given current market capabilities [124]