TULSA, Okla., April 27, 2021 /PRNewswire/ -- ONEOK, Inc.
(NYSE: OKE) today announced higher first quarter 2021 results and
increased 2021 financial guidance.
Higher First Quarter 2021 Results, Compared With First
Quarter 2020:
- Net income of $386.2 million,
resulting in 86 cents per diluted
share.
- 24% increase in adjusted EBITDA to $866.4 million.
- 20% increase in Rocky Mountain region NGL raw feed throughput
volumes.
- 5% increase in Rocky Mountain region natural gas volumes
processed.
- $1.04 per MMBtu average fee rate
in the natural gas gathering and processing segment.
Increased 2021 Guidance:
- Net income midpoint increase to $1.35
billion.
- Diluted earnings per common share midpoint increase to
$3.02.
- Adjusted EBITDA midpoint increase to $3.2 billion.
FIRST QUARTER 2021 FINANCIAL HIGHLIGHTS
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2021
|
|
2020
|
|
|
(Millions of
dollars, except
per share amounts and
coverage ratios)
|
Net income (loss)
(a)
|
|
$
|
386.2
|
|
|
$
|
(141.9)
|
|
Diluted earnings
(loss) per common share (a)
|
|
$
|
0.86
|
|
|
$
|
(0.34)
|
|
Adjusted EBITDA (b)
(c)
|
|
$
|
866.4
|
|
|
$
|
700.8
|
|
DCF (b)
|
|
$
|
661.9
|
|
|
$
|
522.3
|
|
DCF in excess of
dividends paid (b)
|
|
$
|
245.6
|
|
|
$
|
135.7
|
|
Dividend coverage
ratio (b)
|
|
1.59
|
|
|
1.35
|
|
Operating income
(loss) (d)
|
|
$
|
664.7
|
|
|
$
|
(83.5)
|
|
Operating
costs
|
|
$
|
251.7
|
|
|
$
|
207.1
|
|
Depreciation and
amortization
|
|
$
|
157.1
|
|
|
$
|
132.4
|
|
Equity in net
earnings from investments
|
|
$
|
33.3
|
|
|
$
|
44.6
|
|
Capital
expenditures
|
|
$
|
176.7
|
|
|
$
|
949.7
|
|
|
(a) Amounts for the
three months ended March 31, 2020, include benefits of $18.8
million,
or 3 cents per diluted share after-tax, related to the
mark-to-market of ONEOK's share-based
compensation plan and $15.8 million, or 3 cents per diluted share
after-tax related to net gains
on open market repurchases of debt, and noncash charges of $641.8
million, or $1.17 per
diluted share after-tax, related primarily to impairments in the
natural gas gathering and
processing segment.
(b) Adjusted earnings
before interest, taxes, depreciation and amortization (adjusted
EBITDA),
distributable cash flow (DCF) and dividend coverage ratio are
non-GAAP measures.
Reconciliations to relevant GAAP measures are included in this news
release.
(c) Amount for the
three months ended March 31, 2020, includes a benefit of $15.8
million
related to gains on open market repurchases of debt.
(d) Amount for the
three months ended March 31, 2020, includes noncash impairment
charges
of $604.0 million.
|
"Despite the extraordinary winter weather conditions in the
first quarter, we continued to meet the needs of our customers,"
said Terry K. Spencer, ONEOK
president and chief executive officer. "Volumes on our system are
on an increasing trend, and our outlook for the year continues to
improve. Increasing producer activity, higher commodity prices and
strengthening energy markets contributed to the increase to our
2021 financial guidance.
"The hard work and preparation of our employees and the
capability of our integrated assets enabled us to perform well in
the first quarter," added Spencer. "ONEOK employees worked around
the clock to keep our assets operational in difficult conditions
while serving the critical needs of our customers."
FIRST QUARTER 2021 FINANCIAL PERFORMANCE
ONEOK's first quarter 2021 net income and adjusted earnings
before interest, taxes, depreciation and amortization (adjusted
EBITDA) increased, compared with the first quarter 2020. Higher
results benefited from increased natural gas sales in the natural
gas pipelines segment, increased natural gas liquids (NGL) volumes
in the Rocky Mountain region and lower realized commodity prices in
the first quarter 2020 in the natural gas gathering and processing
segment. Net income for the period also increased due to noncash
impairment charges in the natural gas gathering and processing
segment in the first quarter 2020.
Winter Storm Uri impacted all
three operating segments, resulting in a net positive impact to
financial results, as ONEOK's ability to meet increased demand for
natural gas and NGLs during the first quarter 2021 more than offset
unfavorable volume impacts. Results were impacted by decreased
volumes and increased electricity costs across ONEOK's operations
due to severe weather, and higher employee-related costs, property
taxes and supplies expenses. Net income also was impacted by higher
interest expense related to an increased debt balance and lower
capitalized interest, and higher depreciation expense due to
capital projects placed in service.
HIGHLIGHTS:
- First quarter 2021 adjusted EBITDA of $866.4 million, a 24% increase compared with
first quarter 2020.
- $104.9 million increase in
adjusted EBITDA from natural gas sales in the natural gas pipelines
segment.
- The 200 million cubic feet per day (MMcf/d) Bear Creek natural
gas processing plant expansion and related infrastructure in the
Williston Basin is expected to be completed in the fourth quarter
2021.
- A $773 million reduction in
capital expenditures, an 80% decrease, compared with the first
quarter 2020.
- In April 2021, declaring a
quarterly dividend of 93.5 cents per
share, or $3.74 per share on an
annualized basis.
- As of March 31, 2021:
-
- 3.98 times annualized run-rate net debt-to-EBITDA ratio.
- No borrowings outstanding under ONEOK's $2.5 billion credit agreement.
- $402.4 million of cash and cash
equivalents.
UPDATED 2021 GUIDANCE:
|
|
2021
Guidance
Range
|
|
|
(Millions of
dollars, except per
share amounts)
|
ONEOK,
Inc.
|
|
|
|
|
Net income
|
|
$
|
1,200
|
|
-
|
$
|
1,500
|
|
Diluted earnings per
common share
|
|
$
|
2.69
|
|
-
|
$
|
3.35
|
|
Adjusted EBITDA
(a)
|
|
$
|
3,050
|
|
-
|
$
|
3,350
|
|
Distributable cash
flow (a)
|
|
$
|
2,140
|
|
-
|
$
|
2,440
|
|
Growth capital
expenditures
|
|
$
|
335
|
|
-
|
$
|
465
|
|
Maintenance capital
expenditures
|
|
$
|
190
|
|
-
|
$
|
210
|
|
Segment Adjusted
EBITDA:
|
|
|
|
|
Natural Gas
Liquids
|
|
$
|
1,825
|
|
-
|
$
|
1,995
|
|
Natural Gas Gathering
and Processing
|
|
$
|
735
|
|
-
|
$
|
835
|
|
Natural Gas
Pipelines
|
|
$
|
495
|
|
-
|
$
|
515
|
|
Other
|
|
$
|
(5)
|
|
-
|
$
|
5
|
|
|
(a) Adjusted EBITDA
and distributable cash flow are non-GAAP measures.
Reconciliations to relevant GAAP measures are included in this news
release.
|
BUSINESS SEGMENT RESULTS:
Natural Gas Liquids Segment
The natural gas liquids segment's first quarter 2021 adjusted
EBITDA increased 6%, compared with the same period in 2020. Higher
volumes in the Rocky Mountain region and lower transportation costs
contributed to the increase.
|
|
Three Months
Ended
|
|
|
March
31,
|
Natural Gas
Liquids Segment
|
|
2021
|
|
2020
|
|
(Millions of
dollars)
|
Adjusted
EBITDA
|
|
$
|
435.6
|
|
|
$
|
410.9
|
|
Capital
expenditures
|
|
$
|
112.0
|
|
|
$
|
746.2
|
|
The increase in first quarter 2021 adjusted EBITDA, compared
with the first quarter 2020, primarily reflects:
- A $63.8 million increase in
exchange services (excluding the impact of Winter Storm Uri discussed below) due primarily
to:
-
- $51.8 million in higher volumes
in the Rocky Mountain region,
- $32.9 million in lower
transportation costs,
- $15.8 million related to wider
commodity price differentials, offset by
- $19.0 million in lower average
fee rates,
- $13.2 million in lower Permian
Basin volumes due to short-term contracts and increased ethane
rejection, and
- $9.5 million related to lower
unfractionated NGLs held in inventory; and
- A $38.8 million increase in
optimization and marketing due primarily to increased activities
during Winter Storm Uri and
unfavorable changes in the value of NGLs held in inventory in 2020;
offset by
- A $46.2 million decrease in
exchange services related to Winter Storm
Uri due primarily to decreased volumes across ONEOK's
operations and increased electricity costs;
- A $21.6 million increase in
operating costs due primarily to higher employee-related costs and
increased property taxes associated with ONEOK's completed
capital-growth projects; and
- An $11.7 million decrease in
equity in net earnings from investments due primarily to lower
volumes on the Overland Pass Pipeline.
Natural Gas Gathering and Processing Segment
The natural gas gathering and processing segment's first quarter
2021 adjusted EBITDA increased 28%, compared with the same period
in 2020.
|
Three Months
Ended
|
|
March
31,
|
Natural Gas
Gathering and Processing Segment
|
2021
|
|
2020
|
|
(Millions of
dollars)
|
Adjusted
EBITDA
|
$
|
204.7
|
|
|
$
|
159.6
|
|
Capital
expenditures
|
$
|
39.7
|
|
|
$
|
181.6
|
|
First quarter 2021 adjusted EBITDA increased, compared with the
first quarter 2020, which primarily reflects:
- A $45.6 million increase due
primarily to lower realized commodity prices in the prior year
impacting fee-based contracts with a percent of proceeds (POP)
component; and
- A $7.1 million decrease in
operating costs due primarily to lower materials, supplies and
outside services expenses; offset by
- A $9.0 million decrease due
primarily to lower volumes in the Mid-Continent region related to
Winter Storm Uri and natural
production declines, offset partially by higher volumes in the
Rocky Mountain region.
Natural Gas Pipelines Segment
The natural gas pipelines segment's well-positioned storage and
pipeline assets helped meet critical needs in the first quarter
2021. ONEOK's ability to continue providing reliable service
throughout the weather event helped meet increased natural gas
demand and contributed to higher adjusted EBITDA in the segment
compared with the same period in 2020.
|
Three Months
Ended
|
|
March
31,
|
Natural Gas
Pipelines Segment
|
2021
|
|
2020
|
|
(Millions of
dollars)
|
Adjusted
EBITDA
|
$
|
226.2
|
|
|
$
|
112.5
|
|
Capital
expenditures
|
$
|
21.2
|
|
|
$
|
16.6
|
|
First quarter 2021 adjusted EBITDA increased, compared with the
first quarter 2020, which primarily reflects:
- A $104.9 million increase due
primarily to higher average natural gas prices on 5.2 billion cubic
feet (Bcf) of natural gas sales in the first quarter 2021 of
volumes previously held in inventory, compared with 1.2 Bcf in the
first quarter 2020; and
- A $15.4 million increase in
transportation services due primarily to higher park-and-loan
activity, and higher interruptible transportation revenue;
offset by
- A $5.4 million increase in
operating costs due primarily to higher employee-related costs and
supplies expenses.
EARNINGS CONFERENCE CALL AND WEBCAST:
ONEOK executive management will conduct a conference call at
11 a.m. Eastern Daylight Time
(10 a.m. Central Daylight Time) on
April 28, 2021. The call also will be
carried live on ONEOK's website.
To participate in the telephone conference call, dial
800-367-2403, pass code 6389387, 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 ONEOK's website,
www.oneok.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 6389387.
LINK TO EARNINGS TABLES AND PRESENTATION:
https://ir.oneok.com/financial-information/financial-reports/2021
NON-GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) FINANCIAL
MEASURES:
ONEOK has disclosed in this news release adjusted earnings
before interest, taxes, depreciation and amortization (adjusted
EBITDA), distributable 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:
- Adjusted EBITDA is defined as net income adjusted for interest
expense, depreciation and amortization, noncash impairment charges,
income taxes, noncash compensation expense, allowance for equity
funds used during construction (equity AFUDC), and other noncash
items;
- Distributable cash flow is defined as adjusted EBITDA, computed
as described above, less interest expense, maintenance capital
expenditures and equity earnings from investments, excluding
noncash impairment charges, adjusted for cash distributions
received from unconsolidated affiliates and certain other items;
and
- Dividend coverage ratio is defined as ONEOK's distributable
cash flow to ONEOK shareholders divided by the dividends paid in
the period.
These non-GAAP financial measures described above are useful to
investors because they, and similar measures, are used by many
companies in the industry as a measure of financial performance and
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.
Adjusted EBITDA, ONEOK distributable 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. Reconciliations of net income (loss) to
adjusted EBITDA, distributable cash flow and coverage ratio are
included in the tables.
ONEOK, Inc. (pronounced ONE-OAK) (NYSE: OKE) is a leading
midstream service provider and owner of one of the nation's premier
natural gas liquids (NGL) systems, connecting NGL supply in the
Rocky Mountain, Mid-Continent and Permian regions with key market
centers and an extensive network of natural gas gathering,
processing, storage and transportation assets.
ONEOK is a FORTUNE 500 company and is included in S&P
500.
For information about ONEOK, visit the website:
www.oneok.com.
For the latest news about ONEOK, find us on LinkedIn, Instagram,
Facebook and Twitter.
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," "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 length, severity and reemergence of a pandemic or other
health crisis, such as the outbreak of COVID-19 and the measures
that international, federal, state and local governments, agencies,
law enforcement and/or health authorities implement to address it,
which may (as with COVID-19) precipitate or exacerbate one or more
of the factors herein, reduce the demand for natural gas, NGLs and
crude oil and significantly disrupt or prevent us and our customers
and counterparties from operating in the ordinary course for an
extended period and increase the cost of operating our
business;
- operational challenges relating to the COVID-19 pandemic and
efforts to mitigate the spread of the virus, including logistical
challenges, protecting the health and well-being of our employees,
remote work arrangements, performance of contracts and supply chain
disruption;
- 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 drill and obtain necessary
permits; regulatory compliance; reserve performance; and capacity
constraints and/or shutdowns on the pipelines that transport crude
oil, natural gas and NGLs from producing areas and our
facilities;
- risks associated with adequate supply to our gathering,
processing, fractionation and pipeline facilities, including
production declines that outpace new drilling, the shutting-in of
production by producers, actions taken by federal, state or local
governments to require producers to prorate or to cut their
production levels as a way to address any excess market supply
situations or extended periods of ethane rejection;
- demand for our services and products in the proximity of our
facilities;
- economic climate and growth in the geographic areas in which we
operate;
- the risk of a slowdown in growth or decline in the United States or international economies,
including liquidity risks in United
States or foreign credit markets;
- performance of contractual obligations by our customers,
service providers, contractors and shippers;
- 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, production limits and authorized rates of recovery of
natural gas and natural gas transportation costs;
- changes in demand for the use of natural gas, NGLs and crude
oil because of the development of new technologies or other market
conditions caused by concerns about climate change;
- the effects of weather and other natural phenomena, including
climate change, on our operations, demand for our services and
energy prices;
- acts of nature, sabotage, terrorism or other similar acts that
cause damage to our facilities or our suppliers', customers' or
shippers' facilities;
- 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 throughout the world;
- the risk of increased costs for insurance premiums, security or
other items as a consequence of terrorist attacks;
- the timing and extent of changes in energy commodity prices,
including changes due to production decisions by other countries,
such as the failure of countries to abide by agreements to reduce
production volumes;
- 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 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 United
States natural gas and crude oil; and
- availability of additional storage capacity;
- the efficiency of our plants in processing natural gas and
extracting and fractionating NGLs;
- the composition and quality of the natural gas and NGLs we
gather and process in our plants and transport on our
pipelines;
- risks of marketing, trading and hedging activities, including
the risks of changes in energy prices or the financial condition of
our counterparties;
- our ability to control operating costs and make cost-saving
changes;
- the risk inherent in the use of information systems in our
respective businesses and those of our counterparties and service
providers, including cyber-attacks, which, according to experts,
have increased in volume and sophistication since the beginning of
the COVID-19 pandemic; implementation of new software and hardware,
and the impact on the timeliness of information for financial
reporting;
- the timely receipt of approval by applicable governmental
entities for construction and operation of our pipeline and other
projects and required regulatory clearances;
- 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 Federal Energy Regulatory
Commission (FERC)-regulated rates;
- the results of administrative proceedings and litigation,
regulatory actions, executive orders, rule changes and receipt of
expected clearances involving any local, state or federal
regulatory body, including the FERC, the National Transportation
Safety Board, the Pipeline and Hazardous Materials Safety
Administration (PHMSA), the U.S. Environmental Protection Agency
(EPA) and the U.S. Commodity Futures Trading Commission
(CFTC);
- the mechanical integrity of facilities and pipelines
operated;
- the capital intensive nature of our businesses;
- the impact of unforeseen changes in interest rates, debt and
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 equity and bond market returns;
- actions by rating agencies concerning our credit;
- our indebtedness and guarantee obligations 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;
- our ability to access capital at competitive rates or on terms
acceptable to us;
- 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;
- our ability to control construction costs and completion
schedules of our pipelines and other projects;
- difficulties or delays experienced by trucks, railroads or
pipelines in delivering products to or from our terminals or
pipelines;
- the uncertainty of estimates, including accruals and costs of
environmental remediation;
- the impact of uncontracted capacity in our assets being greater
or less than expected;
- the impact of potential impairment charges;
- the profitability of assets or businesses acquired or
constructed by us;
- 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 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 impact of recently issued and future accounting updates and
other changes in accounting policies; and
- the risk factors listed in the reports ONEOK has filed and may
file with the Securities and Exchange Commission (the "SEC"), which
are incorporated by reference.
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.
ONEOK undertakes no obligation to publicly update any
forward-looking statement, whether as a result of new information,
future events or changes in circumstances, expectations or
otherwise.
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 ONEOK on file with
the SEC. ONEOK's SEC filings are available publicly on the SEC's
website at www.sec.gov.
Analyst
Contact:
|
Megan
Patterson
918-561-5325
|
Media
Contact:
|
Brad
Borror
918-588-7582
|
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SOURCE ONEOK, Inc.