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| 8-K - OKE Q3 2015 EARNINGS RELEASE - ONEOK INC /NEW/ | okeq32015earningsrelease.htm |
Exhibit 99.1
November 3, 2015 | Analyst Contact: | T.D. Eureste 918-588-7167 | |
Media Contact: | Stephanie Higgins 918-591-5026 | ||
ONEOK Announces Third-quarter 2015 Results
• | ONEOK reaffirms 2015 financial guidance ranges; |
• | The natural gas gathering and processing segment’s fee-based margin is expected to increase to more than 70 percent in 2016 compared with 50 percent in 2015; |
• | Williston Basin natural gas gathered volumes reached more than 685 MMcf/d in September, up approximately 25 percent compared with September 2014; and |
• | The Bakken NGL Pipeline reached approximately 111,000 bpd in September, up approximately 106 percent compared with September 2014. |
TULSA, Okla. - Nov. 3, 2015 - ONEOK, Inc. (NYSE: OKE) today announced third-quarter 2015 financial results.
THIRD-QUARTER AND YEAR-TO-DATE 2015 FINANCIAL HIGHLIGHTS
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(Millions of dollars, except per share and coverage ratio amounts) | |||||||||||||||
Net income attributable to ONEOK (a) | $ | 82.2 | $ | 64.5 | $ | 219.5 | $ | 219.6 | |||||||
Net income per diluted share (a) | $ | 0.39 | $ | 0.31 | $ | 1.04 | $ | 1.04 | |||||||
Distributions declared from OKS | $ | 197.5 | $ | 162.0 | $ | 537.8 | $ | 464.5 | |||||||
Cash flow available for dividends (b) | $ | 173.0 | $ | 137.0 | $ | 474.7 | $ | 478.4 | |||||||
Dividend coverage ratio (b) | 1.34 | 1.12 | 1.24 | 1.33 | |||||||||||
(a) Amount includes a noncash impairment charge of $76.4 million, or 9 cents per diluted share, attributable to ONEOK, in ONEOK Partners' natural gas gathering and processing segment for the three and nine months ended Sept. 30, 2014. (b) Cash flow available for dividends and dividend coverage ratio are non-GAAP measures. Reconciliations to relevant GAAP measures are attached to this news release. | |||||||||||||||
“As the general partner of ONEOK Partners, ONEOK’s third-quarter results benefited from increased natural gas liquids (NGL) volumes and natural gas gathered volumes at the partnership,” said Terry K. Spencer, president and chief executive officer of ONEOK. “We expect NGL and natural gas volumes to continue to increase as a result of connecting seven third-party natural gas plants to our NGL system this year, reaching full capacity at our Williston Basin natural gas processing plants in September and the expected completion of our new 200
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ONEOK Announces Third-quarter 2015 Results
November 3, 2015
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million cubic feet per day (MMcf/d) Lonesome Creek natural gas processing plant in the Williston Basin by the end of this month.
“ONEOK Partners continues to focus on projects and initiatives to increase fee-based earnings and decrease commodity exposure in all three of its business segments,” said Spencer “In the natural gas gathering and processing segment, the partnership has successfully converted a portion of its percent-of-proceeds contracts to include a higher fee-based component. The segment will continue to actively pursue opportunities to convert additional agreements, and it anticipates being substantially complete with these efforts in the Williston Basin by the end of the year.
“In August, we purchased $650 million of newly issued units as part of a $750 million offering by ONEOK Partners to meet the partnership’s expected equity needs well into 2016,” added Spencer. “Our confidence in the partnership’s ability to continue growing its well-positioned and integrated asset footprint and the increased distributions we will receive from our new units drove our decision to make this additional investment, which we believe will deliver long-term value to our shareholders.”
THIRD-QUARTER AND YEAR-TO-DATE 2015 FINANCIAL PERFORMANCE
Third-quarter 2015 results were impacted positively by higher NGL volumes and natural gas gathered volumes at ONEOK Partners (NYSE:OKS), compared with the third quarter 2014, but were impacted negatively by low commodity prices and unplanned operational outages in the natural gas gathering and processing segment.
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(Millions of dollars) | |||||||||||||||
Operating income | $ | 284.9 | $ | 291.4 | $ | 754.1 | $ | 836.8 | |||||||
Operating costs | $ | 164.2 | $ | 172.4 | $ | 508.6 | $ | 493.6 | |||||||
Depreciation and amortization | $ | 88.3 | $ | 74.6 | $ | 261.2 | $ | 214.1 | |||||||
Equity in net earnings (loss) from investments | $ | 32.2 | $ | (52.3 | ) | $ | 93.2 | $ | 6.7 | ||||||
Capital expenditures | $ | 300.9 | $ | 382.2 | $ | 930.3 | $ | 1,204.4 | |||||||
Third-quarter 2015 operating income reflects:
• | Lower net realized NGL, natural gas and condensate prices; offset partially by |
• | Higher NGL exchange-services volumes from recently connected natural gas processing plants in the Williston Basin, Powder River Basin and Mid-Continent region; |
• | Higher margins due to changes in contract mix resulting from higher fees in the natural gas gathering and processing segment; and |
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ONEOK Announces Third-quarter 2015 Results
November 3, 2015
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• | Higher NGL transportation margins, primarily Permian Basin NGL volumes from the acquired West Texas LPG pipeline system. |
Operating costs decreased in the third quarter 2015, compared with the same period last year, due primarily to higher scheduled maintenance and chemicals costs in the prior year, offset partially by increased employee costs from the growth of ONEOK Partners’ operations related to its completed capital projects and acquisitions. Operating costs increased for the nine-month 2015 period, compared with the same period in 2014, due primarily to the growth of the partnership’s operations related to completed capital projects and acquisitions.
Depreciation and amortization increased for the three- and nine-month 2015 periods, compared with the same periods in 2014, due primarily to the growth of the partnership’s operations related to completed capital-growth projects and acquisitions.
Equity in net earnings from investments in the three- and nine-month 2015 periods increased, compared with the same periods in 2014, due primarily to a $76.4 million noncash impairment charge in the third quarter 2014, related to ONEOK Partners’ equity investment in Bighorn Gas Gathering, and higher volumes delivered to the Overland Pass Pipeline from the Bakken NGL Pipeline.
ONEOK’s future cash payments associated with the released natural gas transportation and storage capacity from the former energy services segment are expected to total approximately $26 million on an after-tax basis, which consists of approximately $4 million to be paid in the remainder of 2015; $11 million in 2016; $6 million in 2017; and $5 million over the period 2018 through 2023.
THIRD-QUARTER 2015 EARNINGS PRESENTATION AND KEY STATISTICS:
Additional financial and operating information that will be discussed on the third-quarter 2015 conference call is accessible on the ONEOK and ONEOK Partners websites, www.oneok.com and www.oneokpartners.com, or by selecting the links below.
> View earnings presentation
> View earnings tables
ONEOK AND ONEOK PARTNERS HIGHLIGHTS:
ONEOK:
• | Reaffirming its 2015 cash flow available for dividends guidance range of $570 million to $650 million and free cash flow guidance range of $90 million to $120 million provided on Feb. 23, 2015; |
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ONEOK Announces Third-quarter 2015 Results
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• | Completing a $500 million public offering of 7.5 percent senior notes due 2023. The net proceeds were approximately $487.1 million. ONEOK used the proceeds and cash on hand to purchase $650 million or approximately 21.5 million ONEOK Partners units. ONEOK’s aggregate ownership interest in ONEOK Partners increased to 41.2 percent, as of Sept. 30, 2015, from 36.8 percent at June 30, 2015; |
• | Receiving $97.9 million in distributions from the company's general partner interest and $73.3 million in distributions from the company's limited partner interest in ONEOK Partners in the third quarter 2015; and |
• | Increasing in October 2015 the quarterly dividend to 61.5 cents per share, or $2.46 per share on an annualized basis, a 4 percent increase compared with the third quarter 2014. |
ONEOK Partners:
• | Reaffirming its 2015 adjusted EBITDA guidance range of $1.51 billion to $1.73 billion; its DCF guidance range of $1.08 billion to $1.26 billion; and its net income guidance range of $845 million to $1.01 billion provided on Feb. 23, 2015; |
• | Reaffirming the expectation to exceed a 1.0 times distribution coverage in 2016; |
• | Receiving the Presidential Permit and authorization for the Roadrunner Gas Transmission pipeline project (Roadrunner), a 50-50 joint venture with a subsidiary of Fermaca Infrastructure B.V. The Presidential Permit and authorization allows for the construction and operation of border-crossing facilities for the export of natural gas between a point near San Elizario, Texas, and near San Isidro, Chihuahua, Mexico. The Roadrunner project was announced in April 2015 and includes approximately 200 miles of 30-inch diameter pipeline currently designed to transport up to 640 MMcf/d of natural gas, with up to 570 MMcf/d to be transported to Mexico. |
• | Connecting another third-party natural gas processing plant to the partnership’s NGL system located in the Mid-Continent region; |
• | Connecting to another compressor station with 15,000 horsepower in the Williston Basin located in southern Williams County, North Dakota; |
• | Raising net proceeds of approximately $749 million in August, through a private placement of 21.5 million common units to ONEOK and a registered direct offering of 3.3 million common units to funds managed by Kayne Anderson Capital Advisors, L.P. ONEOK also contributed approximately $15.3 million to maintain its 2 percent general partner interest. ONEOK’s aggregate ownership interest in ONEOK Partners increased to 41.2 percent, as of Sept. 30, 2015, from 36.8 percent at June 30, 2015; and |
• | Declaring in October 2015 a third-quarter 2015 distribution of 79 cents per unit, or $3.16 per unit on an annualized basis, a 2 percent increase compared with the third quarter 2014. |
BUSINESS-SEGMENT RESULTS:
Key financial and operating statistics are listed on page 21 in the tables.
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ONEOK Announces Third-quarter 2015 Results
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Natural Gas Liquids Segment
The natural gas liquids segment benefited from volume growth of NGLs gathered and fractionated during the third quarter 2015 and through the first nine months of the year. NGLs transported on gathering lines increased approximately 49 percent for each period compared with 2014, primarily due to Permian Basin volumes transported on the acquired West Texas LPG pipeline system. Recently connected natural gas processing plants across ONEOK Partners’ system, including one new third-party plant connected in the third quarter, and decreased ethane rejection in the Rocky Mountain region also contributed to volume growth. NGLs fractionated increased 7 and 5 percent in the three- and nine-month periods in 2015, respectively, compared with the same periods in 2014.
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(Millions of dollars) | |||||||||||||||
Operating income | $ | 207.5 | $ | 173.8 | $ | 549.6 | $ | 509.5 | |||||||
Operating costs | $ | 74.5 | $ | 77.0 | $ | 234.1 | $ | 218.2 | |||||||
Depreciation and amortization | $ | 39.3 | $ | 31.7 | $ | 118.1 | $ | 89.8 | |||||||
Equity in net earnings from investments | $ | 10.9 | $ | 4.4 | $ | 27.6 | $ | 13.6 | |||||||
The increase in third-quarter 2015 operating income, compared with the third quarter 2014, primarily reflects:
• | A $27.5 million increase in exchange-services margins, resulting primarily from increased volumes from recently connected natural gas processing plants in the Williston Basin, Powder River Basin and Mid-Continent region, offset partially by unplanned operational outages at the partnership’s natural gas processing plants in the Williston Basin; |
• | A $26.1 million increase in transportation margins, primarily from Permian Basin NGL volumes from the acquired West Texas LPG pipeline system; and |
• | A $12.5 million increase related to decreased ethane rejection in the Williston Basin, offset partially by higher ethane rejection in the Mid-Continent region; offset partially by |
• | A $17.2 million decrease in optimization and marketing margins; and |
• | A $6.2 million decrease related to lower isomerization volumes, resulting from the narrower NGL product price differentials between normal butane and iso-butane. |
The increase in operating income for the nine-month 2015 period, compared with the same period last year, primarily reflects:
• | A $149.7 million increase in exchange-services margins, resulting primarily from increased volumes from recently connected natural gas processing plants, higher fees for |
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ONEOK Announces Third-quarter 2015 Results
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exchange-services activities resulting from contract renegotiations, and higher revenues from minimum volume obligations, offset partially by unplanned operational outages at the partnership’s natural gas processing plants in the Williston Basin during the third quarter 2015; and
• | A $67.1 million increase in transportation margins, primarily from higher volumes on the acquired West Texas LPG pipeline system; offset partially by |
• | A $100.2 million decrease in optimization and marketing margins related primarily to the increased demand for propane experienced during the first quarter 2014; and |
• | A $26.6 million decrease related to lower isomerization volumes. |
Operating costs decreased for the third quarter 2015, compared with the same period in 2014, due primarily to decreased outside services expense and miscellaneous supplies and expenses due primarily to scheduled maintenance in the prior year.
Operating costs increased in the nine-month 2015 period, compared with the same period in 2014, due primarily to the completion of capital-growth projects and acquisitions.
Depreciation and amortization expense increased for the three- and nine-month periods, compared with the same periods in 2014, due to depreciation associated with completed capital-growth projects, including acquisitions.
Equity in net earnings from investments increased in the three- and nine-month 2015 periods, compared with the same periods in 2014, due primarily to higher volumes delivered to the Overland Pass Pipeline from the Bakken NGL Pipeline.
Natural Gas Pipelines Segment
The natural gas pipelines segment experienced fairly normal operating conditions during the third quarter 2015. Variances in financial performance between the nine-month 2015 period and the same period in 2014 were primarily a reflection of significantly higher weather-related seasonal demand resulting in higher natural gas prices during the first quarter 2014.
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(Millions of dollars) | |||||||||||||||
Operating income | $ | 37.7 | $ | 36.2 | $ | 106.9 | $ | 128.7 | |||||||
Operating costs | $ | 26.7 | $ | 28.0 | $ | 79.1 | $ | 82.8 | |||||||
Depreciation and amortization | $ | 10.9 | $ | 10.9 | $ | 32.5 | $ | 32.6 | |||||||
Equity in net earnings from investments | $ | 17.0 | $ | 14.4 | $ | 52.1 | $ | 53.7 | |||||||
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ONEOK Announces Third-quarter 2015 Results
November 3, 2015
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Operating income increased for the third quarter 2015, compared with the same period in 2014, which primarily reflects:
• | A $1.3 million increase due to higher storage revenues from increased rates; and |
• | A $1.2 million increase from higher transportation revenues, primarily from higher rates at Viking Gas Transmission Company. |
The decrease in operating income for the nine-month 2015 period, compared with the same period in 2014, primarily reflects:
• | A $12.6 million decrease from lower short-term natural gas storage services, due primarily to increased weather-related seasonal demand associated with severely cold weather in the first quarter 2014; and |
• | A $9.4 million decrease from lower net retained fuel due to lower natural gas prices and lower natural gas volumes retained; offset partially by |
• | A $5.8 million increase due to higher transportation revenues, primarily from increased rates on intrastate pipelines and higher rates at Viking Gas Transmission Company. |
Operating costs decreased for the three- and nine-month 2015 periods, compared with the same periods in 2014, primarily as a result of lower costs for materials and supplies.
Equity in net earnings from investments increased for the three-month 2015 period, compared with the same period in 2014, due primarily to an increase in firm transportation on Northern Border Pipeline.
Equity in net earnings from investments decreased for the nine-month 2015 period, compared with the same period in 2014, due primarily to decreased natural gas park-and-loan services on Northern Border Pipeline, resulting from increased weather-related seasonal demand due to severely cold weather in the first quarter 2014, offset partially by an increase in firm transportation.
Natural Gas Gathering and Processing Segment
The natural gas gathering and processing segment’s third-quarter and year-to-date 2015 results benefited from additional natural gas compression projects completed in 2015 and natural gas processing plants completed in 2014. For the nine-month 2015 period, natural gas gathered volumes increased approximately 13 percent and natural gas processed volumes increased approximately 12 percent, compared with the same period in 2014. Third-quarter natural gas volumes gathered increased slightly and natural gas volumes processed decreased slightly due to unplanned operational outages in the Williston Basin, which have been resolved, and minor timing delays in well completions in the Mid-Continent region.
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November 3, 2015
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Through the first nine months of 2015, the segment successfully restructured many of its percent-of-proceeds contracts to largely fee-based contracts and continues to actively work with its producer customers to similarly restructure additional contracts. Due to successful contract restructuring, the segment’s third-quarter 2015 average fee rate increased nearly 20 percent, compared with the same period in 2014. The partnership expects the contract restructuring efforts in the Williston Basin to be substantially complete by the end of 2015 and to receive the benefit from improved margins in 2016. As a result, the segment’s fee-based margin is expected to increase to more than 70 percent in 2016, compared with approximately 50 percent in 2015.
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
(Millions of dollars) | |||||||||||||||
Operating income | $ | 42.3 | $ | 82.9 | $ | 99.9 | $ | 208.9 | |||||||
Operating costs | $ | 61.2 | $ | 64.3 | $ | 193.9 | $ | 188.5 | |||||||
Depreciation and amortization | $ | 37.3 | $ | 31.3 | $ | 109.0 | $ | 89.6 | |||||||
Equity in net earnings (loss) from investments | $ | 4.4 | $ | (71.1 | ) | $ | 13.5 | $ | (60.5 | ) | |||||
Third-quarter 2015 operating income, compared with the third quarter 2014, primarily reflects:
• | A $53.9 million decrease due primarily to lower net realized NGL, natural gas and condensate prices; and |
• | A $7.0 million decrease due primarily to unplanned operational outages in the Williston Basin and decreased natural gas processed volumes in the Cana-Woodford Shale, offset partially by natural gas volume growth in the Williston Basin; offset partially by |
• | A $27.1 million increase due primarily to changes in contract mix resulting from higher fees. |
Operating income for the nine-month 2015 period decreased, compared with the same period last year, which primarily reflects:
• | A $153.3 million decrease due primarily to lower net realized NGL, natural gas and condensate prices; offset partially by |
• | A $47.9 million increase due primarily to changes in contract mix resulting from higher fees; and |
• | A $25.8 million increase due primarily to natural gas volume growth in the Williston Basin, offset partially by unplanned operational outages in the Williston Basin and decreased natural gas volumes in the Cana-Woodford Shale. |
Operating costs decreased in the third quarter 2015 but increased overall through the first nine months of 2015, compared with the same periods in 2014. The decrease in the third quarter
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2015 was due primarily to lower materials and supply costs due primarily to higher chemicals costs in the prior year. The increase in the nine-month 2015 period was due primarily to completed capital-growth projects.
Depreciation and amortization expense increased in the three- and nine-month 2015 periods, compared with the same periods in 2014, due primarily to completed capital-growth projects.
Equity in net earnings from investments increased for the three- and nine-month 2015 periods, compared with the same periods in 2014, due to a $76.4 million noncash impairment charge in the third quarter 2014 related to ONEOK Partners’ equity investment in the Bighorn Gas Gathering system in the Powder River Basin.
The following table contains equity-volume information for the periods indicated:
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
Equity-Volume Information (a) | 2015 | 2014 | 2015 | 2014 | |||||||
NGL sales (MBbl/d) | 24.9 | 16.0 | 21.0 | 16.6 | |||||||
Condensate sales (MBbl/d) | 2.7 | 2.6 | 3.0 | 3.1 | |||||||
Residue natural gas sales (BBtu/d) | 136.3 | 134.5 | 141.6 | 109.6 | |||||||
(a) - Includes volumes for consolidated entities only. | |||||||||||
The natural gas gathering and processing segment is exposed to commodity price risk as a result of percent-of-proceeds contracts, where the segment receives a percentage of volumes processed, or equity volumes, in exchange for services. ONEOK Partners expects NGLs, natural gas and crude oil commodity price sensitivity in the gathering and processing segment to decrease in 2016 as additional contracts are restructured to include higher fee-based components.
The partnership executes hedges to mitigate its commodity price risk. The tables below provide hedging information as of October 2015 for equity volumes in the natural gas gathering and processing segment in the periods indicated. NGLs hedged reflect propane, normal butane, iso-butane and natural gasoline only. The ethane component of the natural gas gathering and processing segment’s equity NGL volume is not expected to significantly impact the results of operations.
2016 natural gas equity volumes are expected to be lower due to restructuring a significant portion of the segments’ percent-of-proceed contracts. As a result, natural gas volumes hedged were realigned to reflect lower natural gas equity volumes expected in 2016.
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Three Months Ending December 31, 2015 | |||||||||
Volumes Hedged | Average Price | Percentage Hedged | |||||||
NGLs - excluding ethane (MBbl/d) - Conway/Mont Belvieu | 13.6 | $ | 0.64 | / gallon | 84% | ||||
Condensate (MBbl/d) - WTI-NYMEX | 2.6 | $ | 54.69 | / Bbl | 96% | ||||
Natural gas (BBtu/d) - NYMEX and basis | 122.8 | $ | 3.64 | / MMBtu | 97% | ||||
Year Ending December 31, 2016 | |||||||||
Volumes Hedged | Average Price | Percentage Hedged | |||||||
NGLs - excluding ethane (MBbl/d) - Conway/Mont Belvieu | 4.9 | $ | 0.54 | / gallon | 49% | ||||
Condensate (MBbl/d) - WTI-NYMEX | 1.5 | $ | 62.65 | / Bbl | 48% | ||||
Natural gas (BBtu/d) - NYMEX and basis | 74.1 | $ | 2.96 | / MMBtu | 83% | ||||
All of the natural gas gathering and processing segment’s commodity price sensitivities are estimated as a hypothetical change in the price of natural gas, NGLs and crude oil as of Sept. 30, 2015, excluding the effects of hedging and assuming normal operating conditions. Condensate sales are based on the price of crude oil.
The natural gas gathering and processing segment estimates the following sensitivities for the three months ending Dec. 31, 2015:
• | A 10-cent-per-MMBtu change in the price of residue natural gas would change three-month net margin by approximately $1.2 million; |
• | A 1-cent-per-gallon change in the composite price of NGLs would change three-month net margin by approximately $0.8 million; and |
• | A $1.00-per-barrel change in the price of crude oil would change three-month net margin by approximately $0.3 million. |
The natural gas gathering and processing segment estimates the following sensitivities for the year ending Dec. 31, 2016:
• | A 10-cent-per-MMBtu change in the price of residue natural gas would change 12-month net margin by approximately $3.3 million; |
• | A 1-cent-per-gallon change in the composite price of NGLs would change 12-month net margin by approximately $1.8 million; and |
• | A $1.00-per-barrel change in the price of crude oil would change 12-month net margin by approximately $1.3 million. |
These estimates do not include any effects on demand for ONEOK Partners’ services or natural gas processing plant operations that might be caused by, or arise in conjunction with, price changes. For example, a change in the gross processing spread may cause a change in the
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amount of ethane extracted from the natural gas stream affecting natural gas gathering and processing margins for certain contracts.
GROWTH ACTIVITIES:
The natural gas liquids segment completed the following projects in 2014 and 2015:
Completed Projects | Location | Capacity | Approximate Costs (a) | Completion Date |
(In millions) | ||||
Ethane/Propane Splitter | Texas Gulf Coast | 40 MBbl/d | $46 | March 2014 |
Sterling III Pipeline and reconfigure Sterling I and II | Mid-Continent Region | 193 MBbl/d | $808 | March 2014 |
Bakken NGL Pipeline expansion - Phase I | Rocky Mountain Region | 75 MBbl/d | $90 | September 2014 |
Niobrara NGL Lateral | Powder River Basin | 90 miles | $65 | September 2014 |
West Texas LPG pipeline system (b) | Permian Basin | 2,600 miles | $800 | November 2014 |
MB-3 Fractionator | Texas Gulf Coast | 75 MBbl/d | $520-$540 | December 2014 |
NGL Pipeline and Hutchinson Fractionator infrastructure | Mid-Continent Region | 95 miles | $115-$120 | April 2015 |
(a) Excludes AFUDC.
(b) Acquisition.
The partnership has announced approximately $190 million to $220 million of capital-growth projects in the natural gas liquids segment, which include the following:
Projects in Progress | Location | Capacity | Approximate Costs (a) | Expected Completion Date |
(In millions) | ||||
Bakken NGL Pipeline expansion - Phase II | Rocky Mountain Region | 25 MBbl/d | $100 | Third quarter 2016 |
Bear Creek NGL infrastructure | Williston Basin | 40 miles | $35-$45 | Third quarter 2016 |
Bronco NGL infrastructure | Powder River Basin | 65 miles | $45-$60 | Suspended |
Demicks Lake NGL infrastructure | Williston Basin | 12 miles | $10-$15 | Suspended |
(a) Excludes AFUDC.
The partnership has announced approximately $520 million to $600 million of projects in the natural gas pipelines segment, which include the Roadrunner Gas Transmission pipeline system, a 50 percent-owned joint venture equity method investment project and the WesTex Transmission Pipeline expansion, a wholly owned project.
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Projects in Progress | Location | Capacity | Approximate Costs (a) | Expected Completion Date |
(In millions) | ||||
WesTex Transmission Pipeline expansion | Permian Basin | 260 MMcf/d | $70-$100 | First quarter 2017 |
Roadrunner Gas Transmission Pipeline - Phases I, II, III (b) | Permian Basin | 640 MMcf/d | $450-$500 | Various |
-Phase I | Permian Basin | 170 MMcf/d | $200-$220 | First quarter 2016 |
-Phase II | Permian Basin | 400 MMcf/d | $220-$240 | First quarter 2017 |
-Phase III | Permian Basin | 70 MMcf/d | $30-$40 | 2019 |
(a) Excludes AFUDC.
(b) 50-50 joint venture. Approximate costs represent total project costs.
The natural gas gathering and processing segment completed the following projects in 2014:
Completed Projects | Location | Capacity | Approximate Costs (a) | Completion Date |
(In millions) | ||||
Rocky Mountain Region | ||||
Garden Creek II processing plant and infrastructure | Williston Basin | 100 MMcf/d | $310 | August 2014 |
Garden Creek III processing plant and infrastructure | Williston Basin | 100 MMcf/d | $310 | October 2014 |
Mid-Continent Region | ||||
Canadian Valley processing plant and infrastructure | Cana-Woodford Shale | 200 MMcf/d | $255 | March 2014 |
(a) Excludes AFUDC.
The partnership has announced approximately $1.8 billion to $2.6 billion of capital-growth projects in the natural gas gathering and processing segment, which include the following:
Projects in Progress | Location | Capacity | Approximate Costs (a) | Expected Completion Date |
(In millions) | ||||
Rocky Mountain Region | ||||
Lonesome Creek processing plant and infrastructure | Williston Basin | 200 MMcf/d | $550-$680 | November 2015 |
Sage Creek infrastructure | Powder River Basin | Various | $35 | Fourth quarter 2015 |
Natural gas compression | Williston Basin | 100 MMcf/d | $80-$90 | Fourth quarter 2015 |
Stateline de-ethanizers | Williston Basin | 26 MBbl/d | $60-$80 | Third quarter 2016 |
Bear Creek processing plant and infrastructure | Williston Basin | 80 MMcf/d | $230-$330 | Third quarter 2016 |
Bronco processing plant and infrastructure | Powder River Basin | 50 MMcf/d | $130-$200 | Suspended |
Demicks Lake processing plant and infrastructure | Williston Basin | 200 MMcf/d | $475-$670 | Suspended |
Mid-Continent Region | ||||
Knox processing plant and infrastructure | SCOOP | 200 MMcf/d | $240-$470 | Suspended |
(a) Excludes AFUDC.
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November 3, 2015
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EARNINGS CONFERENCE CALL AND WEBCAST:
ONEOK and ONEOK Partners executive management will conduct a joint conference call at 11 a.m. Eastern Standard Time (10 a.m. Central Standard Time) on Wednesday, Nov. 4, 2015. The call also will be carried live on ONEOK’s and ONEOK Partners’ websites.
To participate in the telephone conference call, dial 888-505-4368, pass-code 1733240, or log on to www.oneok.com or www.oneokpartners.com.
If you are unable to participate in the conference call or the webcast, the replay will be available on ONEOK’s website, www.oneok.com, and ONEOK Partners’ website, www.oneokpartners.com, for 30 days. A recording will be available by phone for seven days. The playback call may be accessed at 888-203-1112, pass-code 1733240.
LINKS TO EARNINGS TABLES AND PRESENTATION:
Tables:
http://www.oneok.com/~/media/ONEOK/EarningsTables/2015/OKE_Q3_2015_earnings8JkL9.ashx
Presentation:
http://www.oneok.com/~/media/ONEOK/EarningsTables/2015/OKE_OKS_Q3_2015_EarningsPresentationYnF05s4.ashx
NON-GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) FINANCIAL MEASURE:
ONEOK has disclosed in this news release cash flow available for dividends, free cash flow and dividend coverage ratio, which are non-GAAP financial metrics, used to measure the company’s financial performance and are defined as follows:
• | Cash flow available for dividends is defined as net income less the portion attributable to non-controlling interests, adjusted for equity in earnings and distributions declared from ONEOK Partners, and ONEOK’s stand-alone depreciation and amortization, deferred income taxes, stand-alone capital expenditures and certain other items; |
• | Free cash flow is defined as cash flow available for dividends, computed as described above, less ONEOK’s dividends declared; and |
• | Dividend coverage ratio is defined as cash flow available for dividends divided by the dividends declared for the period. |
These non-GAAP financial measures described above are useful to investors because they are used by many companies in the industry as a measurement of financial performance and
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November 3, 2015
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are commonly employed by financial analysts and others to evaluate our financial performance and to compare our financial performance with the performance of other companies within our industry. ONEOK cash flow available for dividends, free cash flow and dividend coverage ratio should not be considered in isolation or as a substitute for net income or any other measure of financial performance presented in accordance with GAAP.
These non-GAAP financial measures exclude some, but not all, items that affect net income. Additionally, these calculations may not be comparable with similarly titled measures of other companies. A reconciliation of cash flow available for dividends and free cash flow to net income is included in the tables.
ONEOK, Inc. (pronounced ONE-OAK) (NYSE: OKE) is the general partner and as of Sept. 30, 2015, owns 41.2 percent of ONEOK Partners, L.P. (NYSE: OKS), one of the largest publicly traded master limited partnerships, which owns one of the nation's premier natural gas liquids (NGL) systems, connecting NGL supply in the Mid-Continent, Permian and Rocky Mountain regions with key market centers and is a leader in the gathering, processing, storage and transportation of natural gas in the U.S. ONEOK is a FORTUNE 500 company and is included in Standard & Poor's (S&P) 500 Stock Index.
For information about ONEOK, Inc., visit the website: www.oneok.com.
For the latest news about ONEOK, follow us on Twitter @ONEOKNews.
Some of the statements contained and incorporated in this news release are forward-looking statements as defined under federal securities laws. The forward-looking statements relate to our anticipated financial performance (including projected operating income, net income, capital expenditures, cash flow and projected levels of dividends and distributions), liquidity, management’s plans and objectives for our future growth projects and other future operations (including plans to construct additional natural gas and natural gas liquids pipelines and processing facilities and related cost estimates), our business prospects, the outcome of regulatory and legal proceedings, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under federal securities legislation and other applicable laws. The following discussion is intended to identify important factors that could cause future outcomes to differ materially from those set forth in the forward-looking statements.
Forward-looking statements include the items identified in the preceding paragraph, the information concerning possible or assumed future results of our operations and other statements contained or incorporated in this Quarterly Report identified by words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “should,” “goal,” “forecast,” “guidance,” “could,” “may,” “continue,” “might,” “potential,” “scheduled” and other words and terms of similar meaning.
One should not place undue reliance on forward-looking statements. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Those factors may affect our operations, markets, products, services and prices. In addition to any assumptions and other factors referred to specifically in connection with the forward-looking statements, factors that could cause our actual results to differ materially from those contemplated in any forward-looking statement include, among others, the following:
• | the effects of weather and other natural phenomena, including climate change, on our operations, demand for our services and energy prices; |
• | competition from other United States and foreign energy suppliers and transporters, as well as alternative forms of energy, including, but not limited to, solar power, wind power, geothermal energy and biofuels such as ethanol and biodiesel; |
• | the capital intensive nature of our businesses; |
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• | the profitability of assets or businesses acquired or constructed by us; |
• | our ability to make cost-saving changes in operations; |
• | risks of marketing, trading and hedging activities, including the risks of changes in energy prices or the financial condition of our counterparties; |
• | the uncertainty of estimates, including accruals and costs of environmental remediation; |
• | the timing and extent of changes in energy commodity prices; |
• | the effects of changes in governmental policies and regulatory actions, including changes with respect to income and other taxes, pipeline safety, environmental compliance, climate change initiatives and authorized rates of recovery of natural gas and natural gas transportation costs; |
• | the impact on drilling and production by factors beyond our control, including the demand for natural gas and crude oil; producers’ desire and ability to obtain necessary permits; reserve performance; and capacity constraints on the pipelines that transport crude oil, natural gas and NGLs from producing areas and our facilities; |
• | difficulties or delays experienced by trucks, railroads or pipelines in delivering products to or from our terminals or pipelines; |
• | changes in demand for the use of natural gas, NGLs and crude oil because of market conditions caused by concerns about climate change; |
• | the impact of unforeseen changes in interest rates, equity markets, inflation rates, economic recession and other external factors over which we have no control, including the effect on pension and postretirement expense and funding resulting from changes in stock and bond market returns; |
• | our indebtedness could make us vulnerable to general adverse economic and industry conditions, limit our ability to borrow additional funds and/or place us at competitive disadvantages compared with our competitors that have less debt, or have other adverse consequences; |
• | actions by rating agencies concerning the credit ratings of ONEOK and ONEOK Partners; |
• | the results of administrative proceedings and litigation, regulatory actions, rule changes and receipt of expected clearances involving any local, state or federal regulatory body, including the FERC, the National Transportation Safety Board, the PHMSA, the EPA and CFTC; |
• | our ability to access capital at competitive rates or on terms acceptable to us; |
• | risks associated with adequate supply to our gathering, processing, fractionation and pipeline facilities, including production declines that outpace new drilling or extended periods of ethane rejection; |
• | the risk that material weaknesses or significant deficiencies in our internal controls over financial reporting could emerge or that minor problems could become significant; |
• | the impact and outcome of pending and future litigation; |
• | the ability to market pipeline capacity on favorable terms, including the effects of: |
– | future demand for and prices of natural gas, NGLs and crude oil; |
– | competitive conditions in the overall energy market; |
– | availability of supplies of Canadian and United States natural gas and crude oil; and |
– | availability of additional storage capacity; |
• | performance of contractual obligations by our customers, service providers, contractors and shippers; |
• | the timely receipt of approval by applicable governmental entities for construction and operation of our pipeline and other projects and required regulatory clearances; |
• | our ability to acquire all necessary permits, consents or other approvals in a timely manner, to promptly obtain all necessary materials and supplies required for construction, and to construct gathering, processing, storage, fractionation and transportation facilities without labor or contractor problems; |
• | the mechanical integrity of facilities operated; |
• | demand for our services in the proximity of our facilities; |
• | our ability to control operating costs; |
• | acts of nature, sabotage, terrorism or other similar acts that cause damage to our facilities or our suppliers’ or shippers’ facilities; |
• | economic climate and growth in the geographic areas in which we do business; |
• | the risk of a prolonged slowdown in growth or decline in the United States or international economies, including liquidity risks in United States or foreign credit markets; |
• | the impact of recently issued and future accounting updates and other changes in accounting policies; |
• | the possibility of future terrorist attacks or the possibility or occurrence of an outbreak of, or changes in, hostilities or changes in the political conditions in the Middle East and elsewhere; |
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• | the risk of increased costs for insurance premiums, security or other items as a consequence of terrorist attacks; |
• | risks associated with pending or possible acquisitions and dispositions, including our ability to finance or integrate any such acquisitions and any regulatory delay or conditions imposed by regulatory bodies in connection with any such acquisitions and dispositions; |
• | the impact of uncontracted capacity in our assets being greater or less than expected; |
• | the ability to recover operating costs and amounts equivalent to income taxes, costs of property, plant and equipment and regulatory assets in our state and FERC-regulated rates; |
• | the composition and quality of the natural gas and NGLs we gather and process in our plants and transport on our pipelines; |
• | the efficiency of our plants in processing natural gas and extracting and fractionating NGLs; |
• | the impact of potential impairment charges; |
• | the risk inherent in the use of information systems in our respective businesses, implementation of new software and hardware, and the impact on the timeliness of information for financial reporting; |
• | our ability to control construction costs and completion schedules of our pipelines and other projects; and |
• | the risk factors listed in the reports we have filed and may file with the SEC, which are incorporated by reference. |
These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other factors could also have material adverse effects on our future results. These and other risks are described in greater detail in Part 1, Item 1A, Risk Factors, in our most recent Annual Report on Form 10-K and in our other filings that we make with the Securities and Exchange Commission (SEC), which are available on the SEC’s website at www.sec.gov and our website at www.oneok.com. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Any such forward-looking statement speaks only as of the date on which such statement is made, and, other than as required under securities laws, we undertake no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.
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November 3, 2015
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ONEOK, Inc. and Subsidiaries | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
(Unaudited) | 2015 | 2014 | 2015 | 2014 | |||||||||||
(Thousands of dollars, except per share amounts) | |||||||||||||||
Revenues | |||||||||||||||
Commodity sales | $ | 1,484,350 | $ | 2,754,495 | $ | 4,642,320 | $ | 8,276,333 | |||||||
Services | 414,596 | 365,650 | 1,189,984 | 1,073,990 | |||||||||||
Total revenues | 1,898,946 | 3,120,145 | 5,832,304 | 9,350,323 | |||||||||||
Cost of sales and fuel | 1,360,809 | 2,583,204 | 4,307,766 | 7,807,275 | |||||||||||
Net margin | 538,137 | 536,941 | 1,524,538 | 1,543,048 | |||||||||||
Operating expenses | |||||||||||||||
Operations and maintenance | 146,979 | 153,408 | 442,179 | 433,457 | |||||||||||
Depreciation and amortization | 88,299 | 74,588 | 261,241 | 214,129 | |||||||||||
General taxes | 17,198 | 19,087 | 66,366 | 60,171 | |||||||||||
Total operating expenses | 252,476 | 247,083 | 769,786 | 707,757 | |||||||||||
Gain (loss) on sale of assets | (726 | ) | 1,534 | (610 | ) | 1,533 | |||||||||
Operating income | 284,935 | 291,392 | 754,142 | 836,824 | |||||||||||
Equity in net earnings (loss) from investments | 32,244 | (52,347 | ) | 93,205 | 6,747 | ||||||||||
Allowance for equity funds used during construction | 177 | 1,723 | 1,718 | 13,947 | |||||||||||
Other income | 71 | 100 | 249 | 3,117 | |||||||||||
Other expense | (7,508 | ) | (2,506 | ) | (7,754 | ) | (27,827 | ) | |||||||
Interest expense (net of capitalized interest of $8,851, $14,303, $26,008 and $41,446, respectively) | (106,923 | ) | (86,052 | ) | (306,057 | ) | (269,704 | ) | |||||||
Income before income taxes | 202,996 | 152,310 | 535,503 | 563,104 | |||||||||||
Income taxes | (38,298 | ) | (37,858 | ) | (123,948 | ) | (95,155 | ) | |||||||
Income from continuing operations | 164,698 | 114,452 | 411,555 | 467,949 | |||||||||||
Income (loss) from discontinued operations, net of tax | (3,860 | ) | (171 | ) | (4,144 | ) | (6,406 | ) | |||||||
Net income | 160,838 | 114,281 | 407,411 | 461,543 | |||||||||||
Less: Net income attributable to noncontrolling interests | 78,681 | 49,823 | 187,949 | 241,980 | |||||||||||
Net income attributable to ONEOK | $ | 82,157 | $ | 64,458 | $ | 219,462 | $ | 219,563 | |||||||
Amounts attributable to ONEOK: | |||||||||||||||
Income from continuing operations | $ | 86,017 | $ | 64,629 | $ | 223,606 | $ | 225,969 | |||||||
Income (loss) from discontinued operations | (3,860 | ) | (171 | ) | (4,144 | ) | (6,406 | ) | |||||||
Net income | $ | 82,157 | $ | 64,458 | $ | 219,462 | $ | 219,563 | |||||||
Basic earnings per share: | |||||||||||||||
Income from continuing operations | $ | 0.41 | $ | 0.31 | $ | 1.06 | $ | 1.08 | |||||||
Income (loss) from discontinued operations | (0.02 | ) | — | (0.02 | ) | (0.03 | ) | ||||||||
Net income | $ | 0.39 | $ | 0.31 | $ | 1.04 | $ | 1.05 | |||||||
Diluted earnings per share: | |||||||||||||||
Income from continuing operations | $ | 0.41 | $ | 0.31 | $ | 1.06 | $ | 1.07 | |||||||
Income (loss) from discontinued operations | (0.02 | ) | — | (0.02 | ) | (0.03 | ) | ||||||||
Net income | $ | 0.39 | $ | 0.31 | $ | 1.04 | $ | 1.04 | |||||||
Average shares (thousands) | |||||||||||||||
Basic | 210,296 | 209,489 | 210,138 | 209,341 | |||||||||||
Diluted | 210,524 | 210,759 | 210,509 | 210,482 | |||||||||||
Dividends declared per share of common stock | $ | 0.605 | $ | 0.575 | $ | 1.815 | $ | 1.535 | |||||||
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ONEOK, Inc. and Subsidiaries | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
September 30, | December 31, | ||||||
(Unaudited) | 2015 | 2014 | |||||
Assets | (Thousands of dollars) | ||||||
Current assets | |||||||
Cash and cash equivalents | $ | 38,371 | $ | 172,812 | |||
Accounts receivable, net | 586,157 | 745,494 | |||||
Materials and supplies | 62,604 | 55,833 | |||||
Natural gas and natural gas liquids in storage | 142,308 | 134,134 | |||||
Commodity imbalances | 30,602 | 64,788 | |||||
Other current assets | 76,129 | 117,466 | |||||
Assets of discontinued operations | 16,619 | 16,717 | |||||
Total current assets | 952,790 | 1,307,244 | |||||
Property, plant and equipment | |||||||
Property, plant and equipment | 14,457,280 | 13,602,647 | |||||
Accumulated depreciation and amortization | 2,178,687 | 1,940,210 | |||||
Net property, plant and equipment | 12,278,593 | 11,662,437 | |||||
Investments and other assets | |||||||
Investments in unconsolidated affiliates | 1,137,059 | 1,132,653 | |||||
Goodwill and intangible assets | 1,020,233 | 1,014,740 | |||||
Other assets | 115,716 | 124,679 | |||||
Assets of discontinued operations | 3,907 | 20,020 | |||||
Total investments and other assets | 2,276,915 | 2,292,092 | |||||
Total assets | $ | 15,508,298 | $ | 15,261,773 | |||
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ONEOK, Inc. and Subsidiaries | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(Continued) | |||||||
September 30, | December 31, | ||||||
(Unaudited) | 2015 | 2014 | |||||
Liabilities and equity | (Thousands of dollars) | ||||||
Current liabilities | |||||||
Current maturities of long-term debt | $ | 660,650 | $ | 10,650 | |||
Notes payable | 287,272 | 1,055,296 | |||||
Accounts payable | 620,568 | 891,413 | |||||
Commodity imbalances | 96,192 | 104,650 | |||||
Accrued interest | 108,454 | 104,877 | |||||
Other current liabilities | 157,705 | 180,558 | |||||
Liabilities of discontinued operations | 29,980 | 44,901 | |||||
Total current liabilities | 1,960,821 | 2,392,345 | |||||
Long-term debt, excluding current maturities | 7,773,756 | 7,150,142 | |||||
Deferred credits and other liabilities | |||||||
Deferred income taxes | 1,437,087 | 1,395,222 | |||||
Other deferred credits | 278,731 | 281,757 | |||||
Liabilities of discontinued operations | 20,598 | 36,424 | |||||
Total deferred credits and other liabilities | 1,736,416 | 1,713,403 | |||||
Commitments and contingencies | |||||||
Equity | |||||||
ONEOK shareholders’ equity: | |||||||
Common stock, $0.01 par value: authorized 600,000,000 shares; issued 245,811,180 shares and outstanding 209,273,336 shares at September 30, 2015; issued 245,811,180 shares and outstanding 208,322,247 shares at December 31, 2014 | 2,458 | 2,458 | |||||
Paid-in capital | 1,477,631 | 1,541,583 | |||||
Accumulated other comprehensive loss | (136,112 | ) | (136,353 | ) | |||
Retained earnings | — | 138,128 | |||||
Treasury stock, at cost: 36,537,844 shares at September 30, 2015, and 37,488,933 shares at December 31, 2014 | (929,505 | ) | (953,701 | ) | |||
Total ONEOK shareholders’ equity | 414,472 | 592,115 | |||||
Noncontrolling interests in consolidated subsidiaries | 3,622,833 | 3,413,768 | |||||
Total equity | 4,037,305 | 4,005,883 | |||||
Total liabilities and equity | $ | 15,508,298 | $ | 15,261,773 | |||
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November 3, 2015
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ONEOK, Inc. and Subsidiaries | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
(Unaudited) | 2015 | 2014 | ||||||
(Thousands of dollars) | ||||||||
Operating activities | ||||||||
Net income | $ | 407,411 | $ | 461,543 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 261,241 | 225,483 | ||||||
Charges attributable to exit activities | — | 1,739 | ||||||
Equity in net earnings from investments | (93,205 | ) | (6,747 | ) | ||||
Distributions received from unconsolidated affiliates | 92,042 | 84,298 | ||||||
Deferred income taxes | 124,615 | 96,044 | ||||||
Share-based compensation expense | 13,732 | 23,359 | ||||||
Pension and postretirement benefit expense, net of contributions | 10,145 | 14,282 | ||||||
Allowance for equity funds used during construction | (1,718 | ) | (13,947 | ) | ||||
Loss (gain) on sale of assets | 610 | (1,533 | ) | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 157,742 | 156,555 | ||||||
Natural gas and natural gas liquids in storage | (8,174 | ) | (43,351 | ) | ||||
Accounts payable | (191,542 | ) | (111,186 | ) | ||||
Commodity imbalances, net | 25,728 | (33,214 | ) | |||||
Settlement of exit activities liabilities | (31,207 | ) | (38,627 | ) | ||||
Energy marketing and risk management assets and liabilities | (45,240 | ) | 27,924 | |||||
Accrued interest | 3,577 | (6,390 | ) | |||||
Other assets and liabilities, net | (30,680 | ) | 34,307 | |||||
Cash provided by operating activities | 695,077 | 870,539 | ||||||
Investing activities | ||||||||
Capital expenditures (less allowance for equity funds used during construction) | (930,316 | ) | (1,204,386 | ) | ||||
Cash paid for acquisitions | — | (14,000 | ) | |||||
Contributions to unconsolidated affiliates | (27,540 | ) | (1,063 | ) | ||||
Distributions received from unconsolidated affiliates in excess of cumulative earnings | 25,111 | 24,925 | ||||||
Proceeds from sale of assets | 3,171 | 2,388 | ||||||
Other | (12,607 | ) | — | |||||
Cash used in investing activities | (942,181 | ) | (1,192,136 | ) | ||||
Financing activities | ||||||||
Borrowing (repayment) of notes payable, net | (768,024 | ) | (564,462 | ) | ||||
Issuance of ONE Gas, Inc. debt, net of discounts | — | 1,199,994 | ||||||
Issuance of long-term debt, net of discounts | 1,291,506 | — | ||||||
ONE Gas long-term debt financing costs | — | (9,663 | ) | |||||
Debt financing costs | (17,126 | ) | — | |||||
Repayment of long-term debt | (5,795 | ) | (555,768 | ) | ||||
Issuance of common stock | 13,839 | 12,908 | ||||||
Issuance of common units, net of issuance costs | 375,660 | 947,472 | ||||||
Dividends paid | (380,498 | ) | (321,051 | ) | ||||
Cash of ONE Gas at separation | — | (60,000 | ) | |||||
Distributions to noncontrolling interests | (396,847 | ) | (325,158 | ) | ||||
Cash provided by financing activities | 112,715 | 324,272 | ||||||
Change in cash and cash equivalents | (134,389 | ) | 2,675 | |||||
Change in cash and cash equivalents included in discontinued operations | (52 | ) | 3,163 | |||||
Change in cash and cash equivalents from continuing operations | (134,441 | ) | 5,838 | |||||
Cash and cash equivalents at beginning of period | 172,812 | 145,565 | ||||||
Cash and cash equivalents at end of period | $ | 38,371 | $ | 151,403 | ||||
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ONEOK, Inc. and Subsidiaries | |||||||||||||||
INFORMATION AT A GLANCE | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
(Unaudited) | 2015 | 2014 | 2015 | 2014 | |||||||||||
(Millions of dollars, except as noted) | |||||||||||||||
Natural Gas Liquids | |||||||||||||||
Net margin | $ | 321.8 | $ | 283.0 | $ | 902.4 | $ | 818.1 | |||||||
Operating costs | $ | 74.5 | $ | 77.0 | $ | 234.1 | $ | 218.2 | |||||||
Depreciation and amortization | $ | 39.3 | $ | 31.7 | $ | 118.0 | $ | 89.8 | |||||||
Operating income | $ | 207.5 | $ | 173.8 | $ | 549.6 | $ | 509.5 | |||||||
Equity in net earnings from investments | $ | 10.9 | $ | 4.4 | $ | 27.6 | $ | 13.6 | |||||||
NGL sales (MBbl/d) | 683 | 626 | 657 | 598 | |||||||||||
NGLs transported-gathering lines (MBbl/d) (a) | 786 | 529 | 759 | 508 | |||||||||||
NGLs fractionated (MBbl/d) (b) | 591 | 553 | 540 | 515 | |||||||||||
NGLs transported-distribution lines (MBbl/d) (a) | 456 | 377 | 422 | 412 | |||||||||||
Average Conway-to-Mont Belvieu OPIS price differential - ethane in ethane/propane mix ($/gallon) | $ | 0.02 | $ | 0.03 | $ | 0.02 | $ | 0.06 | |||||||
Capital expenditures - growth | $ | 45.1 | $ | 145.8 | $ | 159.8 | $ | 603.6 | |||||||
Capital expenditures - maintenance | $ | 7.7 | $ | 8.0 | $ | 25.6 | $ | 33.9 | |||||||
(a) - Includes volumes for consolidated entities only. | |||||||||||||||
(b) - Includes volumes at company-owned and third-party facilities. | |||||||||||||||
Natural Gas Pipelines | |||||||||||||||
Net margin | $ | 75.4 | $ | 73.4 | $ | 218.6 | $ | 242.4 | |||||||
Operating costs | $ | 26.7 | $ | 28.0 | $ | 79.2 | $ | 82.8 | |||||||
Depreciation and amortization | $ | 10.9 | $ | 10.9 | $ | 32.5 | $ | 32.6 | |||||||
Operating income | $ | 37.7 | $ | 36.2 | $ | 106.9 | $ | 128.7 | |||||||
Equity in net earnings from investments | $ | 17.0 | $ | 14.4 | $ | 52.1 | $ | 53.7 | |||||||
Natural gas transportation capacity contracted (MDth/d) (a) | 5,739 | 5,725 | 5,797 | 5,760 | |||||||||||
Transportation capacity contracted (a) | 90 | % | 90 | % | 91 | % | 91 | % | |||||||
Capital expenditures - growth | $ | 13.0 | $ | — | $ | 22.2 | $ | 3.6 | |||||||
Capital expenditures - maintenance | $ | 1.7 | $ | 10.7 | $ | 17.7 | $ | 22.4 | |||||||
(a) - Includes volumes for consolidated entities only. | |||||||||||||||
Natural Gas Gathering and Processing | |||||||||||||||
Net margin | $ | 140.7 | $ | 178.2 | $ | 402.5 | $ | 486.7 | |||||||
Operating costs | $ | 61.2 | $ | 64.3 | $ | 193.9 | $ | 188.5 | |||||||
Depreciation and amortization | $ | 37.3 | $ | 31.3 | $ | 109.0 | $ | 89.6 | |||||||
Operating income | $ | 42.3 | $ | 82.9 | $ | 99.9 | $ | 208.9 | |||||||
Equity in net earnings from investments | $ | 4.4 | $ | (71.1 | ) | $ | 13.5 | $ | (60.5 | ) | |||||
Natural gas gathered (BBtu/d) (a) | 1,897 | 1,847 | 1,877 | 1,665 | |||||||||||
Natural gas processed (BBtu/d) (a) (b) | 1,617 | 1,666 | 1,640 | 1,462 | |||||||||||
NGL sales (MBbl/d) (a) | 134 | 111 | 123 | 100 | |||||||||||
Residue natural gas sales (BBtu/d) (a) | 837 | 792 | 828 | 682 | |||||||||||
Realized composite NGL net sales price ($/gallon) (a) (c) (d) | $ | 0.31 | $ | 0.93 | $ | 0.35 | $ | 0.97 | |||||||
Realized condensate net sales price ($/Bbl) (a) (c) (e) | $ | 42.32 | $ | 81.02 | $ | 35.80 | $ | 78.00 | |||||||
Realized residue gas net sales price ($/MMBtu) (a) (c) | $ | 3.62 | $ | 3.92 | $ | 3.64 | $ | 3.91 | |||||||
Average fee rate ($/MMBtu) (a) | $ | 0.43 | $ | 0.36 | $ | 0.39 | $ | 0.36 | |||||||
Capital expenditures - growth | $ | 221.3 | $ | 206.1 | $ | 661.8 | $ | 478.8 | |||||||
Capital expenditures - maintenance | $ | 10.5 | $ | 8.8 | $ | 30.8 | $ | 27.2 | |||||||
(a) - Includes volumes for consolidated entities only. | |||||||||||||||
(b) - Includes volumes at company-owned and third-party facilities. | |||||||||||||||
(c) - Includes the impact of hedging activities on ONEOK Partners’ equity volumes. | |||||||||||||||
(d) - Net of transportation and fractionation costs. | |||||||||||||||
(e) - Net of transportation costs. | |||||||||||||||
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ONEOK Announces Third-quarter 2015 Results
November 3, 2015
Page 22
ONEOK, Inc. Stand-alone | ||||||||||||||||
CASH FLOW AVAILABLE FOR DIVIDENDS | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(Unaudited) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
(Millions of dollars) | ||||||||||||||||
Recurring cash flows: | ||||||||||||||||
Distributions from ONEOK Partners – declared | $ | 197.5 | $ | 162.0 | $ | 537.8 | $ | 464.5 | ||||||||
Interest expense, excluding noncash items | (20.3 | ) | (16.0 | ) | (52.2 | ) | (52.7 | ) | ||||||||
Cash income taxes | — | — | — | — | ||||||||||||
Released contracts from the former energy services business | (6.0 | ) | (11.0 | ) | (26.9 | ) | 60.8 | |||||||||
Corporate expenses | (2.0 | ) | (2.2 | ) | (4.8 | ) | (6.6 | ) | ||||||||
Equity compensation reimbursed by ONEOK Partners | 5.1 | 5.8 | 22.2 | 25.6 | ||||||||||||
Cash flows from recurring activities | 174.3 | 138.6 | 476.1 | 491.6 | ||||||||||||
Cash flows from ONE Gas separation | — | — | — | (5.7 | ) | |||||||||||
Total cash flows | 174.3 | 138.6 | 476.1 | 485.9 | ||||||||||||
Capital expenditures | (1.3 | ) | (1.6 | ) | (1.4 | ) | (7.5 | ) | ||||||||
Cash flow available for dividends | 173.0 | 137.0 | 474.7 | 478.4 | ||||||||||||
Dividends declared | (128.7 | ) | (122.8 | ) | (381.5 | ) | (358.8 | ) | ||||||||
Free cash flow | $ | 44.3 | $ | 14.2 | $ | 93.2 | $ | 119.6 | ||||||||
Dividend coverage ratio | 1.34 | 1.12 | 1.24 | 1.33 | ||||||||||||
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ONEOK Announces Third-quarter 2015 Results
November 3, 2015
Page 23
ONEOK, Inc. Stand-alone | ||||||||||||||||
RECONCILIATION OF CASH FLOW AVAILABLE FOR DIVIDENDS | ||||||||||||||||
AND FREE CASH FLOW TO NET INCOME | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
(Unaudited) | 2015 | 2014 | 2015 | 2014 | ||||||||||||
(Millions of dollars) | ||||||||||||||||
Net income attributable to ONEOK | $ | 82.2 | $ | 64.5 | $ | 219.5 | $ | 219.6 | ||||||||
Depreciation and amortization | 0.8 | 0.9 | 1.7 | 13.4 | ||||||||||||
Deferred income taxes | 40.0 | 35.2 | 120.3 | 89.0 | ||||||||||||
Equity in earnings of ONEOK Partners | (151.0 | ) | (117.5 | ) | (400.4 | ) | (405.3 | ) | ||||||||
Distributions from ONEOK Partners - declared | 197.5 | 162.0 | 537.8 | 464.5 | ||||||||||||
Equity compensation reimbursed by ONEOK Partners | 5.1 | 5.8 | 22.2 | 25.6 | ||||||||||||
Energy services realized working capital | (9.8 | ) | (10.8 | ) | (31.0 | ) | 77.1 | |||||||||
Other | 9.5 | (1.5 | ) | 6.0 | 2.0 | |||||||||||
Total cash flows | 174.3 | 138.6 | 476.1 | 485.9 | ||||||||||||
Capital expenditures | (1.3 | ) | (1.6 | ) | (1.4 | ) | (7.5 | ) | ||||||||
Cash flow available for dividends | 173.0 | 137.0 | 474.7 | 478.4 | ||||||||||||
Dividends declared | (128.7 | ) | (122.8 | ) | (381.5 | ) | (358.8 | ) | ||||||||
Free cash flow | $ | 44.3 | $ | 14.2 | $ | 93.2 | $ | 119.6 | ||||||||