ONEOK Announces Higher Fourth Quarter and Full-year 2023 Earnings
Record Rocky Mountain Region Volumes
Announces 2024 Financial Guidance
Higher Fourth-quarter 2023 Results, Compared with Fourth Quarter 2022:
- Net income of
$688 million , resulting in$1.18 per diluted share. - Adjusted EBITDA of more than
$1.5 billion . - 20% increase in
Rocky Mountain region NGL raw feed throughput volumes. - 17% increase in
Gulf Coast /Permian region NGL raw feed throughput volumes. - 17% increase in natural gas volumes processed.
- 15% increase in wells connected in the
Rocky Mountain region.
Higher Full-year 2023 Results, Compared with Full Year 2022:
- Net income of approximately
$2.7 billion , resulting in$5.48 per diluted share. - Adjusted EBITDA of more than
$5.2 billion . - 19% increase in
Gulf Coast /Permian region NGL raw feed throughput volumes. - 10% increase in
Rocky Mountain region NGL raw feed throughput volumes. - 54% increase in total wells connected.
- 14% increase in natural gas volumes processed.
2024 Earnings Guidance:
- Net income midpoint of
$2.8 billion . - Adjusted EBITDA midpoint of
$6.1 billion . - Approximately
$1.75 billion to$1.95 billion in total capital expenditures.
"Record volumes, strong financial performance and the closing of the Magellan acquisition solidified 2023 as a year of significant growth and transformation," said Pierce H. Norton II,
"Our confidence in
HIGHLIGHTS:
- In
January 2024 ,ONEOK increased its quarterly dividend 3.7% to99 cents per share, or$3.96 per share on an annualized basis. - In
January 2024 ,ONEOK authorized a$2 billion share repurchase program and targets it to be largely utilized over the next four years. - In 2023,
ONEOK extinguished$1.3 billion of long-term debt. - Capital-growth projects:
ONEOK approved the Elk Creek Pipeline expansion to 435,000 barrels per day (bpd), which will increase natural gas liquids (NGL) capacity out of theRocky Mountain region to 575,000 bpd. The expansion is expected to cost approximately$355 million and be completed in the first quarter 2025.- In February, the
Federal Energy Regulatory Commission (FERC) approved the Saguaro Connector Pipeline's Presidential Permit.ONEOK expects a final investment decision on the pipeline by mid-year 2024.
- 2023 Environmental, Social and Governance (ESG) highlights:
ONEOK received an MSCI ESG Rating ofAAA .ONEOK qualified for inclusion in the Dow Jones Sustainability North American Index, part of the Dow Jones Sustainability Indices (DJSI), which recognizes global sustainability leaders.ONEOK's ESG Risk Rating, as assessed by Morningstar Sustainalytics, was in the top 20% of the refiners and pipelines industry.
- As of
Dec. 31, 2023 :- 3.46 times fourth-quarter 2023 annualized run-rate net debt-to-EBITDA ratio (excluding transaction costs).
- No borrowings outstanding under ONEOK's
$2.5 billion credit agreement. $338 million of cash and cash equivalents.
FOURTH QUARTER AND FULL-YEAR 2023 FINANCIAL HIGHLIGHTS
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Three Months Ended |
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Years Ended |
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2023 |
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2022 |
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2023 |
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2022 |
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(Millions of dollars, except per share amounts) |
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Net income (a) (b) |
$ 688 |
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$ 485 |
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$ 2,659 |
|
$ 1,722 |
Diluted earnings per common share (a) (b) |
$ 1.18 |
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$ 1.08 |
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$ 5.48 |
|
$ 3.84 |
Adjusted EBITDA (c) (d) |
$ 1,514 |
|
$ 967 |
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$ 5,243 |
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$ 3,620 |
Operating income (c) |
$ 1,099 |
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$ 756 |
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$ 4,072 |
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$ 2,807 |
Operating costs |
$ 554 |
|
$ 322 |
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$ 1,535 |
|
$ 1,149 |
Depreciation and amortization |
$ 260 |
|
$ 157 |
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$ 769 |
|
$ 626 |
Equity in net earnings from investments |
$ 70 |
|
$ 37 |
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$ 202 |
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$ 148 |
Maintenance capital |
$ 139 |
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$ 69 |
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$ 277 |
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$ 228 |
Capital expenditures (includes maintenance) |
$ 603 |
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$ 316 |
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$ 1,595 |
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$ 1,202 |
(a) Amounts for the three months ended
(b) Amounts for the year ended
(c) Amounts for the three months and year ended
(d) Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) is a non-GAAP measure. |
FULL-YEAR 2023 FINANCIAL PERFORMANCE
Higher 2023 results were driven primarily by higher volumes across
Full-year 2023 results included
Additionally, 2023 results included
2024 GUIDANCE:
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2024 |
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(Millions of dollars, except |
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Net income |
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- |
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Diluted earnings per common share |
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- |
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Adjusted EBITDA (a) |
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- |
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Growth capital expenditures |
|
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- |
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Maintenance capital expenditures |
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- |
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Adjusted EBITDA: |
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Natural Gas Liquids |
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- |
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Refined Products and Crude |
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- |
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Natural Gas Gathering and Processing |
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- |
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Natural Gas Pipelines |
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- |
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Other |
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- |
|
(a) Adjusted EBITDA is a non-GAAP measure. A reconciliation to the relevant GAAP measure is included in this news release.
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2024 |
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Summary of 2024 Volume Guidance |
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Natural Gas Liquids Raw Feed Throughput (MBbl/d) |
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1,330 |
- |
1,430 |
Refined Products Volume Shipped (MBbl/d) |
|
1,500 |
- |
1,600 |
Crude Oil Volume Shipped (MBbl/d) |
|
700 |
- |
850 |
Natural Gas Processed (MMcf/d) |
|
2,240 |
- |
2,570 |
|
2024 Financial Guidance:
Building off of the opportunities captured in 2024,
Capital Expenditures:
Total capital expenditures are expected to range between
Capital expenditure guidance includes the MB-6 NGL fractionator, West Texas NGL pipeline expansion project and the expansion of the Elk Creek NGL pipeline, which will bring total capacity out of the
Expected 2024 Performance Drivers:
Natural Gas Liquids
- Higher exchange services margins from an expected increase in NGL raw feed throughput volumes in the
Rocky Mountain andGulf Coast /Permian regions from producer activity, plant connections and plant expansions completed in 2023 and 2024. - More than 90% fee-based earnings.
Refined Products and Crude
- Full-year effect of higher refined products tariff rates driven by a mid-year tariff increase of 11.5% in
July 2023 and a mid-single digit tariff increase expected in 2024. - Higher volumes and margins related to liquids blending, offset partially by lower contributions from joint ventures.
- More than 85% fee-based earnings.
Natural Gas Gathering and Processing
- Approximately 7% increase in natural gas volumes processed driven by increasing producer activity in the
Rocky Mountain region. - Approximately 530 to 600
Rocky Mountain region well connections in 2024. - Approximately 60 to 70 Mid-Continent region well connections in 2024.
- Approximately 85% fee-based earnings.
Natural Gas Pipelines
- More than 95% transportation capacity contracted.
- Increased demand for long-term pipeline and storage capacity.
- More than 95% fee-based earnings.
Returning Value to Investors
- Targeting an annual dividend growth rate ranging between 3% to 4%.
- Combination of common dividends and share repurchases is expected to trend towards a target of approximately 75% to 85% of forecasted cash flow from operations after capital expenditures over the next four years.
- Target debt-to-EBITDA ratio of approximately 3.5 times.
Additional guidance information: https://ir.oneok.com/financial-information/financial-reports.
2023 BUSINESS SEGMENT RESULTS:
Natural Gas Liquids Segment
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Three Months Ended |
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Years Ended |
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Natural Gas Liquids Segment |
2023 |
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2022 |
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2023 |
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2022 |
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(Millions of dollars) |
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Adjusted EBITDA |
$ 613 |
|
$ 565 |
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$ 3,045 |
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$ 2,095 |
Capital expenditures |
$ 323 |
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$ 136 |
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$ 818 |
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$ 581 |
The increase in fourth quarter 2023 adjusted EBITDA, compared with the fourth quarter 2022, primarily reflects:
- A
$135 million increase in exchange services due primarily to higher volumes acrossONEOK's system and lower volumes of unfractionated NGLs in inventory; - An
$11 million increase in earnings from unconsolidated affiliates due primarily to higher volumes delivered to theOverland Pass Pipeline and the change in calculation methodology in 2023; offset by - A
$47 million decrease in optimization and marketing due primarily to lower earnings on sales of purity NGLs previously held in inventory, lower optimization volumes and narrower location and commodity price differentials; - A
$34 million increase in third-party fractionation costs due to theMedford incident; and - A
$26 million increase in operating costs due primarily to higher employee costs and property insurance premiums.
The increase in adjusted EBITDA for the full year 2023, compared with 2022, primarily reflects:
- A
$663 million increase related to theMedford incident, due to the settlement gain of$779 million , offset partially by$146 million of third-party fractionation costs, compared with an approximately$30 million unfavorable impact of the 45-day waiting period in 2022; - A
$303 million increase in exchange services due primarily to higher volumes acrossONEOK's system, offset partially by narrower commodity price differentials; - A
$32 million increase in earnings from unconsolidated affiliates due primarily to higher volumes delivered to theOverland Pass Pipeline and the change in calculation methodology in 2023; - A
$20 million increase due primarily to higher volumes on theONEOK North System and higher storage revenue; and - A
$12 million increase in optimization and marketing due primarily to higher earnings on sales of purity NGLs previously held in inventory; offset by - An
$88 million increase in operating costs due primarily to higher employee-related costs and higher outside services due to the growth ofONEOK's operations, and higher property insurance premiums.
Natural Gas Gathering and Processing Segment
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Three Months Ended |
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Years Ended |
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Natural Gas Gathering and Processing Segment |
2023 |
|
2022 |
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2023 |
|
2022 |
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(Millions of dollars) |
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Adjusted EBITDA |
$ 323 |
|
$ 266 |
|
$ 1,244 |
|
$ 1,037 |
Capital expenditures |
$ 140 |
|
$ 124 |
|
$ 448 |
|
$ 445 |
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The increase in fourth quarter 2023 adjusted EBITDA, compared with the fourth quarter 2022, primarily reflects:
- A
$76 million increase from higher volumes due primarily to increased producer activity in theRocky Mountain and Mid-Continent regions and the impact of winter weather in theRocky Mountain region in the fourth quarter 2022; offset by - A
$15 million increase in operating costs due primarily to higher employee-related costs and higher property insurance premiums.
The increase in adjusted EBITDA for full year 2023, compared with 2022, primarily reflects:
- A
$227 million increase from higher volumes due primarily to increased producer activity in theRocky Mountain and Mid-Continent regions, and the impact of winter weather in theRocky Mountain region in the second and fourth quarters of 2022; and - A
$49 million increase due primarily to higher average fee rates and realized condensate prices, net of hedging, offset partially by lower realized NGL prices, net of hedging; offset by - A
$62 million increase in operating costs due primarily to higher employee-related costs, outside services and materials and supplies expense due primarily to the growth ofONEOK's operations, and higher property insurance premiums.
Natural Gas Pipelines Segment
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Three Months Ended |
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Years Ended |
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Natural Gas Pipelines Segment |
2023 |
|
2022 |
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2023 |
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2022 |
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(Millions of dollars) |
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Adjusted EBITDA |
$ 132 |
|
$ 131 |
|
$ 559 |
|
$ 488 |
Capital expenditures |
$ 73 |
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$ 41 |
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$ 228 |
|
$ 123 |
Fourth quarter 2023 adjusted EBITDA, compared with the fourth quarter 2022, primarily reflects:
- An
$11 million increase in earnings from unconsolidated affiliates due to the change in calculation methodology in 2023; offset by - A
$5 million decrease in storage services due primarily to lower short-term storage activity; and - A
$2 million increase in operating costs due primarily to employee-related costs.
The increase in adjusted EBITDA for the full year 2023, compared with 2022, primarily reflects:
- A
$43 million increase in transportation and storage services due primarily to higher storage rates on renegotiated contracts, higher storage volumes related to completed projects and higher firm and interruptible transportation volumes; and - A
$42 million increase in earnings from unconsolidated affiliates due to the change in calculation methodology in 2023; offset by - A
$20 million increase in operating costs due primarily to higher employee-related costs.
Refined Products and Crude Segment
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Three Months Ended |
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Years Ended |
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Refined Products and Crude Segment |
2023 |
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2022 |
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2023 |
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2022 |
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(Millions of dollars) |
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Adjusted EBITDA |
$ 424 |
|
- |
|
$ 465 |
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- |
Capital expenditures |
$ 51 |
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- |
|
$ 52 |
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- |
Adjusted EBITDA was
EARNINGS CONFERENCE CALL AND WEBCAST:
To participate in the telephone conference call, dial 877-883-0383, entry number 2949750, or log on to www.oneok.com.
If you are unable to participate in the conference call or the webcast, the replay will be available on
LINK TO EARNINGS TABLES AND PRESENTATION:
https://ir.oneok.com/financial-information/financial-reports
NON-GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) FINANCIAL MEASURES:
Adjusted EBITDA is useful to investors because it and similar measures are used by many companies in the industry as a measure of financial performance and is commonly employed by financial analysts and others to evaluate
This non-GAAP financial measure excludes some, but not all, items that affect net income. Additionally, this calculation may not be comparable with similarly titled measures of other companies. A reconciliation of net income to adjusted EBITDA is included in the tables.
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This news release contains certain "forward-looking statements" within the meaning of federal securities laws. Words such as "anticipates," "believes," "continues," "could," "estimates," "expects," "forecasts," "goal," "guidance," "intends," "may," "might," "outlook," "plans," "potential," "projects," "scheduled," "should," "target," "will," "would," and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect our current views about future events. Such forward-looking statements include, but are not limited to, statements about the benefits of the transaction involving us, including future financial and operating results, our plans, objectives, expectations and intentions, and other statements that are not historical facts, including future results of operations, projected cash flow and liquidity, business strategy, expected synergies or cost savings, and other plans and objectives for future operations. No assurances can be given that the forward-looking statements contained in this news release will occur as projected and actual results may differ materially from those projected.
Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties, many of which are beyond our control, and are not guarantees of future results. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. These risks and uncertainties include, without limitation, the following:
- the impact on drilling and production by factors beyond our control, including the demand for natural gas, NGLs, Refined Products and crude oil; producers' desire and ability to drill and obtain necessary permits; regulatory compliance; reserve performance; and capacity constraints and/or shut downs on the pipelines that transport crude oil, natural gas, NGLs, and Refined Products from producing areas and our facilities;
- the impact of unfavorable economic and market conditions, inflationary pressures, including increased interest rates, which may increase our capital expenditures and operating costs, raise the cost of capital or depress economic growth;
- the impact of the volatility of natural gas, NGL, Refined Products and crude oil prices on our earnings and cash flows, which is impacted by a variety of factors beyond our control, including international terrorism and conflicts and the geopolitical instability;
- the impact of reduced volatility in energy prices or new government regulations on our business;
- our dependence on producers, gathering systems, refineries and pipelines owned and operated by others and the impact of any closures, interruptions or reduced activity levels at these facilities;
- the impact of increased attention to ESG issues, including climate change, and risks associated with the physical impacts of climate change;
- risks associated with operational hazards and unforeseen interruptions at our operations;
- demand for our services and products in the proximity of our facilities;
- risks associated with our ability to hedge against commodity price risks or interest rate risks;
- a breach of information security, including a cybersecurity attack, or failure of one or more key information technology or operational systems;
- exposure to construction risk and supply risks if adequate natural gas, NGL, Refined Products and crude oil supply is unavailable upon completion of facilities;
- the accuracy of estimates of hydrocarbon reserves, which could result in lower than anticipated volumes;
- our lack of ownership over all of the land on which our property is located and certain of our facilities and equipment;
- the impact of changes in estimation, type of commodity and other factors on our measurement adjustments;
- excess capacity on our pipelines, processing, fractionation, terminal and storage assets;
- risks associated with the period of time our assets have been in service;
- our partial reliance on cash distributions from our consolidated affiliates on our operating cash flows;
- our ability to cause our joint ventures to take or not take certain actions unless some or all of our joint-venture participants agree;
- our reliance on others to operate joint-venture assets and to provide other services;
- increased regulation of exploration and production activities, including hydraulic fracturing, well setbacks and disposable of wastewater;
- impacts of regulatory oversight and potential penalties on our business;
- risks associated with the rate regulation, challenges or changes, which may reduce the amount of cash we generate;
- the impact of our gas liquids blending activities, which subject us to federal regulations that govern renewable fuel requirements in the
U.S. ; - incurrence of significant costs to comply with the regulation of GHG emissions;
- the impact of federal and state laws and regulations relating to the protection of the environment, public health and safety on our operations, as well as increased litigation and activism challenging oil and gas development as well as changes to and/or increased penalties from the enforcement of laws, regulations and policies;
- the impact of unforeseen changes in interest rates, debt and equity markets and other external factors over which we have no control;
- actions by rating agencies concerning our credit;
- our indebtedness and guarantee obligations could cause adverse consequences, including making us vulnerable to general adverse economic and industry conditions, limiting our ability to borrow additional funds and placing us at competitive disadvantages compared with our competitors that have less debt;
- an event of default may require us to offer to repurchase certain of our or
ONEOK Partners' senior notes or may impair our ability to access capital; - the right to receive payments on our outstanding debt securities and subsidiary guarantees is unsecured and effectively subordinated to any future secured indebtedness and any existing and future indebtedness of our subsidiaries that do not guarantee the senior notes;
- use by a court of fraudulent conveyance to avoid or subordinate the cross guarantees of our or
ONEOK Partners' indebtedness; - the 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;
- risks related to the Magellan Acquisition, including the risk that we may not realize the anticipated benefits of the Magellan Acquisition or successfully integrate the two companies;
- our ability to pay dividends;
- our exposure to the credit risk of our customers or counterparties;
- a shortage of skilled labor;
- misconduct or other improper activities engaged in by our employees;
- the impact of potential impairment charges;
- the impact of the changing cost of providing pension and postretirement health care benefits to eligible employees and qualified retirees;
- our ability to maintain an effective system of internal controls; and
- the risk factors listed in the reports we have filed and may file with the
SEC .
These reports are also available from the sources described below. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made.
The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the Risk Factors included in the most recent reports on Form 10-K and Form 10-Q and other documents of
Analyst Contact: |
918-561-5325 |
Media Contact: |
918-588-7582 |
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