8-K: ONEOK Announces Higher Fourth Quarter and Full-Year 2024 Earnings Driven by Strategic Acquisitions and Volume Growth

ONEOK reports increased fourth quarter and full-year 2024 earnings, fueled by strategic acquisitions, volume growth, and fee-based earnings.

Summary

• ONEOK announced higher fourth quarter and full-year 2024 results compared to the previous year.
• Net income including noncontrolling interests for Q4 2024 was $1.0 billion, and for the full year, it was $3.1 billion.
• Adjusted EBITDA for Q4 2024 reached $2.17 billion, and for the full year, it was $6.78 billion.
• The company saw a 3% increase in Rocky Mountain region NGL raw feed throughput volumes and a 4% increase in crude oil volume shipped during the fourth quarter.
• Total wells connected increased by 11% in Q4 2024.
• For the full year, there was an 8% increase in Rocky Mountain region NGL raw feed throughput volumes and a 6% increase in Rocky Mountain region natural gas volumes processed.
• ONEOK completed several capital-growth projects, including the MB-6 NGL fractionator and the full looping of the West Texas NGL Pipeline system.
• The company also completed the acquisitions of Medallion Midstream and EnLink Midstream.
• ONEOK increased its quarterly dividend by 4% to $1.03 per share, or $4.12 per share annualized, in January 2025.
• As of Feb. 17, 2025, ONEOK repurchased 1.675 million shares of common stock for $171.7 million under its $2 billion share repurchase program.
• ONEOK amended and restated its credit agreement in February 2025, increasing the capacity to $3.5 billion and extending the expiration to February 2030.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, strategic acquisitions, and infrastructure developments. The company's focus on shareholder value and ESG initiatives further contributes to the positive sentiment.

Positives

• Increased net income and adjusted EBITDA for both Q4 and the full year 2024.
• Strategic acquisitions like EnLink and Medallion Midstream contributed to earnings.
• Volume growth in the Rocky Mountain region boosted results.
• Completed capital-growth projects expanded capacity and infrastructure.
• Increased quarterly dividend and share repurchase program returned value to shareholders.
• Strong ESG performance with AAA MSCI rating and top 20% Sustainalytics ranking.
• Significant progress towards emissions reduction targets.
• Increased credit agreement capacity to $3.5 billion and extended expiration to February 2030.

Negatives

• The decrease in adjusted EBITDA for the full year 2024 in the Natural Gas Liquids segment, compared with 2023, primarily reflects a $695 million decrease related to the Medford incident, due primarily to an insurance settlement gain in 2023 of $779 million, offset partially by $84 million of lower thirdparty fractionation costs.
• Increased operating costs due to higher employee-related costs and outside services from the growth of ONEOK's operations.

Risks

• Dependence on producers, gathering systems, refineries, and pipelines owned and operated by others.
• Impact of unfavorable economic and market conditions, including inflationary pressures and increased interest rates.
• Volatility of natural gas, NGL, refined products, and crude oil prices.
• Operational hazards and unforeseen interruptions at ONEOK's operations.
• Potential breaches of information security and cybersecurity attacks.
• Exposure to construction and supply risks.
• Impact of increased regulation of exploration and production activities.
• Credit risk of customers or counterparties.
• Shortage of skilled labor.
• Misconduct or other improper activities engaged in by ONEOK's employees.

Future Outlook

ONEOK's disciplined and intentional growth strategy continues with its current slate of projects, including the recently announced LPG export terminal joint venture, positioning the company for long-term growth and delivering value to shareholders.

Management Comments

• ONEOK's strong performance in 2024 was driven by contributions from multiple strategic acquisitions, volume growth and fee-based earnings, said Pierce H. Norton II, ONEOK president and chief executive officer.
• Over the past two years, strategic acquisitions and steady organic growth have transformed ONEOK into an even more geographically diversified and integrated midstream infrastructure company, added Norton.

Industry Context

ONEOK's focus on strategic acquisitions and infrastructure development aligns with the broader industry trend of consolidating midstream assets to enhance efficiency and expand market reach. The LPG export terminal joint venture reflects the growing demand for U.S. energy exports.

Comparison to Industry Standards

• ONEOK's adjusted EBITDA of $6.78 billion is comparable to other large midstream companies such as Enterprise Products Partners (EPD) and Kinder Morgan (KMI).
• The company's focus on NGL and natural gas infrastructure is consistent with industry trends, as these commodities are expected to see continued demand growth.
• ONEOK's ESG ratings are competitive with industry peers, reflecting a growing emphasis on sustainability in the energy sector.
• The completion of the West Texas NGL Pipeline expansion to 515,000 bpd, with plans to increase to 740,000 bpd, positions ONEOK favorably compared to competitors in terms of transportation capacity.

Stakeholder Impact

• Shareholders benefit from increased dividends and share repurchase program.
• Employees benefit from increased employee-related costs, indicating potential job growth and compensation improvements.
• Customers benefit from expanded infrastructure and increased capacity.
• Suppliers benefit from increased activity and capital expenditures.
• Creditors benefit from the company's strong financial performance and increased credit agreement capacity.

Next Steps

• Complete additional pump stations to increase West Texas NGL Pipeline system capacity to 740,000 bpd in mid-2025.
• Supply full power capability for the Elk Creek pipeline expansion in mid-2025.
• Continue with the LPG export terminal joint venture project.
• Participate in an earnings conference call on Feb. 25, 2025.

Key Dates

Keywords

ONEOK, earnings, EBITDA, acquisitions, midstream, NGL, natural gas, pipeline, volumes, dividend, ESG