ONEOK INC NEW

Previous wording

Market Conditions and Business Update - We experienced stable volumes across our system in the first quarter of 2024, compared with the first quarter of 2023, despite the impact of winter weather in the first quarter of 2024. With the addition of our Refined Products and Crude segment due to the Magellan Acquisition, our extensive and integrated assets are located in, and connected with, some of the most productive shale basins, as well as refineries and demand centers, in the United States. Although the energy industry has experienced many commodity cycles, we have positioned ourselves to reduce exposure to direct commodity price volatility. Each of our four reportable segments are primarily fee-based, and we expect our consolidated earnings to be more than 85% fee-based in 2024.

Current wording

Market Conditions and Business Update - Earnings increased in the second quarter of 2024, compared with the second quarter of 2023, due primarily to higher NGL and natural gas processing volumes in the Rocky Mountain region, increased transportation services in the Natural Gas Pipelines segment and contributions from the Refined Products and Crude segment. With the addition of our Refined Products and Crude segment due to the Magellan Acquisition, our extensive and integrated assets are located in, and connected with, some of the most productive shale basins, as well as refineries and demand centers, in the United States. Although the energy industry has experienced many commodity cycles, we have positioned ourselves to reduce exposure to direct commodity price volatility. Each of our four reportable segments are primarily fee-based, and we expect our consolidated earnings to be more than 85% fee-based in 2024.

Previous wording

Ethane Economics - Price differentials between ethane and natural gas can cause natural gas processors to recover ethane or leave it in the natural gas stream, known as ethane rejection. As a result of these ethane economics, ethane volumes on our system can fluctuate. Ethane volumes under long-term contracts delivered to our NGL system decreased 15 MBbl/d to an average of 415 MBbl/d during the first quarter of 2024, compared with an average of 430 MBbl/d in the first quarter of 2023, due to changes in ethane extraction economics and the impact of weather. We estimate that there are approximately 250 MBbl/d of discretionary ethane, consisting of approximately 150 MBbl/d in the Rocky Mountain region and approximately 100 MBbl/d in the Mid-Continent region, that could be recovered and transported on our system.

Current wording

Ethane Economics - Price differentials between ethane and natural gas can cause natural gas processors to recover ethane or leave it in the natural gas stream, known as ethane rejection. As a result of these ethane economics, ethane volumes on our system can fluctuate. Ethane volumes under long-term contracts delivered to our NGL system during the second quarter of 2024 remained relatively unchanged compared with the second quarter of 2023. We estimate that there are approximately 250 MBbl/d of discretionary ethane, consisting of approximately 150 MBbl/d in the Rocky Mountain region and approximately 100 MBbl/d in the Mid-Continent region, which could be recovered and transported on our system.

Previous wording

At the end of the first quarter of 2024, we completed the expansion of our Refined Products pipeline to El Paso, Texas. This expansion connects more supply to growing markets in Texas, New Mexico, Arizona and Mexico, and the majority of the capital associated with this expansion is supported by volume commitments.

Current wording

At the end of the first quarter of 2024, we completed the expansion of our Refined Products pipeline to El Paso, Texas. This expansion connects more supply to growing markets in Texas, New Mexico, Arizona and Mexico.

Previous wording

Dividends - In February 2024, we paid a quarterly common stock dividend of 99 cents per share ($3.96 per share on an annualized basis), an increase of 3.7% compared with the same quarter in the prior year. Our dividend growth is due primarily to the increase in cash flows resulting from the growth of our operations. We declared a quarterly common stock dividend of 99 cents per share ($3.96 per share on an annualized basis) in April 2024. The quarterly common stock dividend will be paid May 15, 2024, to shareholders of record at the close of business on May 1, 2024.

Current wording

Dividends - In February and May 2024, we paid a quarterly common stock dividend of 99 cents per share ($3.96 per share on an annualized basis), an increase of 3.7% compared with the same quarters in the prior year. Our dividend growth is due primarily to the increase in cash flows resulting from the growth of our operations. We declared a quarterly common stock dividend of 99 cents per share in July 2024. The quarterly common stock dividend will be paid August 14, 2024, to shareholders of record at the close of business on August 1, 2024.

Previous wording

•Refined Products and Crude - contributed $262 million to operating income for the three months ended March 31, 2024, due to the impact of the Magellan Acquisition. We began allocating corporate costs to this segment in the first quarter of 2024, which reduced allocations to the other segments.

Current wording

•Refined Products and Crude - contributed $338 million to operating income for the three months ended June 30, 2024, due to the impact of the Magellan Acquisition. We began allocating certain corporate costs to this segment in the first quarter of 2024, which reduced allocations to the other segments.

Previous wording

•Natural Gas Gathering and Processing - an increase of $15 million due primarily to higher volumes in the Rocky Mountain region, offset partially by higher operating costs; offset by

Current wording

•Natural Gas Gathering and Processing - an increase of $66 million due primarily to higher volumes in the Rocky Mountain region and the sale of certain Kansas assets, offset partially by lower realized NGL and natural gas prices, net of hedging, and higher operating costs; offset by

Previous wording

•Natural Gas Liquids - a decrease of $710 million due primarily to an insurance settlement gain in 2023 related to the Medford incident and higher operating costs, offset partially by an increase in exchange services due primarily to higher volumes in the Rocky Mountain region; offset by

Current wording

•Natural Gas Liquids - a decrease of $622 million due primarily to an insurance settlement gain in 2023 related to the Medford incident and higher operating costs, offset partially by an increase in exchange services due primarily to higher volumes in the Rocky Mountain region; offset by

Previous wording

•Natural Gas Pipelines- an increase of $3 million due primarily to higher transportation services, offset partially by higher operating costs; and

Current wording

•Natural Gas Pipelines- an increase of $14 million due primarily to higher transportation services, offset partially by higher operating costs; and

Previous wording

Net income and diluted EPS decreased for the three months ended March 31, 2024, compared with the same period in 2023, due primarily to the items discussed above and higher interest expense from higher debt balances resulting from the Magellan Acquisition, offset partially by lower income taxes and higher equity in net earnings from investments.

Current wording

Net income and diluted EPS increased for the three months ended June 30, 2024, compared with the same period in 2023, due primarily to the items discussed above and higher equity in net earnings from investments, offset partially by higher interest expense from higher debt balances resulting from the Magellan Acquisition.

Previous wording

Capital expenditures increased for the three months ended March 31, 2024, compared with the same period in 2023, due primarily to our capital projects, including our MB-6 fractionator and NGL pipeline expansion projects.

Current wording

Capital expenditures increased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to our capital projects, including our MB-6 fractionator and NGL pipeline expansion projects.

Previous wording

•an increase of $26 million from higher volumes due primarily to increased production in the Rocky Mountain region; and

Current wording

•an increase of $64 million from higher volumes due primarily to increased production in the Rocky Mountain region; and

Previous wording

•an increase of $7 million due primarily to higher average fee rates and higher realized natural gas and condensate prices, net of hedging, offset partially by lower realized NGL prices, net of hedging; offset by

Current wording

•a decrease of $22 million due primarily to lower realized NGL and natural gas prices, net of hedging, offset partially by higher realized condensate prices, net of hedging, and higher average fee rates; and

Previous wording

•an increase of $12 million in operating costs due primarily to higher property insurance premiums, and higher employee-related costs, outside services and materials and supplies expense due primarily to the growth of our operations.

Current wording

•an increase of $15 million in operating costs due primarily to higher outside services and employee-related costs due primarily to the growth of our operations, and higher property insurance premiums.

Previous wording

Capital expenditures increased for the three months ended March 31, 2024, compared with the same period in 2023, due primarily to our routine capital projects.

Current wording

Capital expenditures increased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to our routine capital projects.

Previous wording

Our natural gas processed volumes increased for the three months ended March 31, 2024, compared with the same period in 2023, due primarily to increased production in the Rocky Mountain region, offset partially by the impact of winter weather in the Rocky Mountain and Mid-Continent regions in the first quarter of 2024.

Current wording

Our natural gas processed volumes increased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to increased production in the Rocky Mountain region.

Previous wording

Our average fee rate increased for the three months ended March 31, 2024, compared with the same period in 2023, due primarily to inflation-based escalators in our contracts.

Current wording

Our average fee rate increased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to inflation-based escalators in our contracts.

Previous wording

Commodity Price Risk- Our Natural Gas Gathering and Processing segment is exposed to commodity price risk as a result of retaining a portion of the commodity sales proceeds associated with our fee with POP contracts. We have hedged approximately 65% of our forecasted equity volumes for our Natural Gas Gathering and Processing segment in 2024.

Current wording

Commodity Price Risk- Our Natural Gas Gathering and Processing segment is exposed to commodity price risk as a result of retaining a portion of the commodity sales proceeds associated with our fee with POP contracts. We have hedged approximately 70% of our forecasted equity volumes for our Natural Gas Gathering and Processing segment in 2024.

Previous wording

•a decrease of $748 million related to the Medford incident, due primarily to an insurance settlement gain in 2023 of $779 million, offset partially by $31 million of lower third-party fractionation costs in the current year; and

Current wording

•a decrease of $734 million related to the Medford incident, due primarily to an insurance settlement gain in 2023 of $779 million, offset partially by $45 million of lower third-party fractionation costs in the current year; and

Previous wording

•an increase of $27 million in operating costs due primarily to planned asset maintenance and higher property insurance premiums; offset by

Current wording

•an increase of $47 million in operating costs due primarily to planned asset maintenance and higher property insurance premiums; offset by

Previous wording

Capital expenditures increased for the three months ended March 31, 2024, compared with the same period in 2023, due primarily to capital projects, which includes our MB-6 fractionator and pipeline expansion projects.

Current wording

Capital expenditures increased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to capital projects, which includes our MB-6 fractionator and pipeline expansion projects.

Previous wording

Volumes decreased for the three months ended March 31, 2024, compared with the same period in 2023, due primarily to lower ethane recovery and the impact of winter weather in the first quarter of 2024, offset partially by increased production in the Rocky Mountain region.

Current wording

While earnings increased, volumes decreased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to low-margin, short-term fractionation contracts in the prior year and a contract expiration, offset partially by increased production in the Rocky Mountain region at higher fee rates.

Previous wording

•an increase of $12 million in transportation services due primarily to higher firm and interruptible rates; offset by

Current wording

•an increase of $32 million in transportation services due primarily to higher firm and interruptible rates; offset by

Previous wording

•an increase of $8 million in operating costs due primarily to planned asset maintenance, higher property insurance premiums and employee-related costs.

Current wording

•an increase of $10 million in operating costs due primarily to planned asset maintenance and employee-related costs.

Previous wording

Capital expenditures increased for the three months ended March 31, 2024, compared with the same period in 2023, due primarily to our project to reactivate previously idled storage in Texas.

Current wording

Capital expenditures increased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to our project to reactivate previously idled storage in Texas.

Previous wording

Selected Financial Results and Operating Information - The following tables set forth certain selected financial results and operating information for our Refined Products and Crude segment for the period indicated:

Current wording

Selected Financial Results and Operating Information - The following tables set forth certain selected financial results and operating information for our Refined Products and Crude segment for the periods indicated:

Previous wording

(a) - The three months ended March 31, 2023, includes $733 million related to the Medford incident, including a settlement gain of $779 million, offset partially by $46 million of third-party fractionation costs.

Current wording

(a) - The six months ended June 30, 2023, includes $702 million related to the Medford incident, including a settlement gain of $779 million, offset partially by $77 million of third-party fractionation costs.

Previous wording

We expect our sources of cash inflows to provide sufficient resources to finance our operations, capital expenditures, quarterly cash dividends, maturities of long-term debt, share repurchases and contributions to unconsolidated affiliates. We believe we have sufficient liquidity due to our $2.5 Billion Credit Agreement, which expires in June 2027, and access to $1.0 billion available through our “at-the-market” equity program. As of the date of this report, no shares have been sold through our “at-the-market” equity program.

Current wording

We expect our sources of cash inflows to provide sufficient resources to finance our operations, acquisitions, capital expenditures, quarterly cash dividends, maturities of long-term debt, share repurchases and contributions to unconsolidated affiliates. We believe we have sufficient liquidity due to our $2.5 Billion Credit Agreement, which expires in June 2028, and access to $1.0 billion available through our “at-the-market” equity program. As of July 29, 2024, no shares have been issued through our “at-the-market” equity program.

Previous wording

Cash Management - At March 31, 2024, we had $65 million of cash and cash equivalents. We use a centralized cash management program that concentrates the cash assets of our nonguarantor operating subsidiaries in joint accounts for the purposes of providing financial flexibility and lowering the cost of borrowing, transaction costs and bank fees. Our centralized cash management program provides that funds in excess of the daily needs of our operating subsidiaries are concentrated, consolidated or otherwise made available for use by other entities within our consolidated group. Our operating subsidiaries participate in this program to the extent they are permitted pursuant to FERC regulations or their operating agreements. Under the cash management program, depending on whether a participating subsidiary has short-term cash surpluses or cash requirements, we provide cash to the subsidiary or the subsidiary provides cash to us.

Current wording

Cash Management - At June 30, 2024, we had $36 million of cash and cash equivalents. We use a centralized cash management program that concentrates the cash assets of our nonguarantor operating subsidiaries in joint accounts for the purposes of providing financial flexibility and lowering the cost of borrowing, transaction costs and bank fees. Our centralized cash management program provides that funds in excess of the daily needs of our operating subsidiaries are concentrated, consolidated or otherwise made available for use by other entities within our consolidated group. Our operating subsidiaries participate in this program to the extent they are permitted pursuant to FERC regulations or their operating agreements. Under the cash management program, depending on whether a participating subsidiary has short-term cash surpluses or cash requirements, we provide cash to the subsidiary or the subsidiary provides cash to us.

Previous wording

As of March 31, 2024, we had a working capital (defined as current assets less current liabilities) deficit of $1.2 billion, due primarily to current maturities of long-term debt and short-term borrowings. Generally, our working capital is influenced by several factors, including, among other things: (i) the timing of (a) debt and equity issuances, (b) the funding of capital expenditures, (c) scheduled debt payments, and (d) accounts receivable and payable; and (ii) the volume and cost of inventory and commodity imbalances. We may have working capital deficits in future periods as our long-term debt becomes current. We do not expect a working capital deficit of this nature to have a material adverse impact to our cash flows or operations.

Current wording

As of June 30, 2024, we had a working capital (defined as current assets less current liabilities) deficit of $1.5 billion, due primarily to current maturities of long-term debt and short-term borrowings. Generally, our working capital is influenced by several factors, including, among other things: (i) the timing of (a) debt and equity issuances, (b) the funding of capital expenditures, (c) scheduled debt payments, and (d) accounts receivable and payable; and (ii) the volume and cost of inventory and commodity imbalances. We may have working capital deficits in future periods as our long-term debt becomes current. We do not expect a working capital deficit of this nature to have a material adverse impact to our cash flows or operations.

Previous wording

Share Repurchase Program - In January 2024, our Board of Directors authorized a share repurchase program to buy up to $2.0 billion of our outstanding common stock and targets the program to be largely utilized over the next four years. We expect shares to be acquired from time to time in open-market transactions or through privately negotiated transactions at our discretion, subject to market conditions and other factors. We expect any purchases to be funded by cash on hand, cash flow from operations and short-term borrowings. The program will terminate upon completion of the repurchase of $2.0 billion of common stock or on January 1, 2029, whichever occurs first. As of April 22, 2024, no shares have been repurchased under the program.

Current wording

Share Repurchase Program - In January 2024, our Board of Directors authorized a share repurchase program to buy up to $2.0 billion of our outstanding common stock and targets the program to be largely utilized over the next four years. We expect shares to be acquired from time to time in open-market transactions or through privately negotiated transactions at our discretion, subject to market conditions and other factors. We expect any purchases to be funded by cash on hand, operating cash flows and short-term borrowings. The program will terminate upon completion of the repurchase of $2.0 billion of common stock or on January 1, 2029, whichever occurs first. As of July 29, 2024, no shares have been repurchased under the program.

Previous wording

Capital expenditures, excluding AFUDC, were $512 million and $289 million for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Capital expenditures, excluding AFUDC, were $991 million and $594 million for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

Dividends- Holders of our common stock share equally in any common stock dividends declared by our Board of Directors, subject to the rights of the holders of outstanding preferred stock. In February 2024, we paid a common stock dividend of 99 cents per share ($3.96 per share on an annualized basis), an increase of 3.7% compared with the same quarter in the prior year. A common stock dividend of 99 cents per share was declared in April 2024, for the shareholders of record at the close of business on May 1, 2024, payable May 15, 2024.

Current wording

Dividends- Holders of our common stock share equally in any common stock dividends declared by our Board of Directors, subject to the rights of the holders of outstanding preferred stock. In February and May 2024, we paid a common stock dividend of 99 cents per share ($3.96 per share on an annualized basis), an increase of 3.7% compared with the same quarter in the prior year. A common stock dividend of 99 cents per share was declared in July 2024, for the shareholders of record at the close of business on August 1, 2024, payable August 14, 2024.

Previous wording

Our Series E Preferred Stock pays quarterly dividends on each share of Series E Preferred Stock, when, as and if declared by our Board of Directors, at a rate of 5.5% per year. We paid dividends for the Series E Preferred Stock of $0.3 million in February 2024. Dividends totaling $0.3 million were declared in April 2024, for the Series E Preferred Stock and are payable May 15, 2024.

Current wording

Our Series E Preferred Stock pays quarterly dividends on each share of Series E Preferred Stock, when, as and if declared by our Board of Directors, at a rate of 5.5% per year. We paid dividends for the Series E Preferred Stock of $0.3 million in February and May 2024. Dividends totaling $0.3 million were declared in July 2024, for the Series E Preferred Stock and are payable August 14, 2024.

Previous wording

For the three months ended March 31, 2024, our cash flows from operations exceeded dividends paid by $18 million. We expect our cash flows from operations to continue to sufficiently fund our cash dividends. To the extent operating cash flows are not sufficient to fund our dividends, we may utilize cash on hand from other sources of short- and long-term liquidity to fund a portion of our dividends.

Current wording

For the six months ended June 30, 2024, our cash flows from operations exceeded dividends paid by $870 million. We expect our cash flows from operations to continue to sufficiently fund our cash dividends. To the extent operating cash flows are not sufficient to fund our dividends, we may utilize cash on hand from other sources of short- and long-term liquidity to fund a portion of our dividends.

Previous wording

Cash flows from operating activities, before changes in operating assets and liabilities for the three months ended March 31, 2024, decreased $142 million compared with the same period in 2023, due primarily to insurance proceeds received from the Medford settlement in 2023, offset partially by the impact of the Magellan Acquisition in our Refined Products and Crude segment, as discussed in “Financial Results and Operating Information.”

Current wording

Cash flows from operating activities, before changes in operating assets and liabilities for the six months ended June 30, 2024, increased $288 million compared with the same period in 2023, due primarily to the impact of the Magellan Acquisition in our Refined Products and Crude segment, as discussed in “Financial Results and Operating Information,” offset partially by insurance proceeds received from the Medford settlement in 2023.

Previous wording

The changes in operating assets and liabilities decreased operating cash flows $502 million for the three months ended March 31, 2024, compared with a decrease of $19 million for the same period in 2023. This change is due primarily to changes in accounts receivable resulting from the timing of receipt of cash from counterparties and from inventory, both of which vary from period to period, and with changes in commodity prices, and from changes in risk management assets and liabilities; offset partially by changes in accounts payable, which also vary from period to period with changes in commodity prices, and from the timing of payments to vendors, suppliers and other third parties.

Current wording

The changes in operating assets and liabilities decreased operating cash flows $299 million for the six months ended June 30, 2024, compared with a decrease of $44 million for the same period in 2023. This change is due primarily to changes in risk management assets and liabilities, changes in accounts receivable resulting from the timing of receipt of cash from counterparties and from inventory, both of which vary from period to period and with changes in commodity prices, and changes in our legal liability as discussed in Note J of the Notes to Consolidated Financial Statements in this Quarterly Report. These changes were offset partially by changes in accounts payable, which also vary from period to period with changes in commodity prices, and from the timing of payments to vendors, suppliers and other third parties.

Previous wording

Investing Cash Flows - Cash from investing activities for the three months ended March 31, 2024, decreased $625 million, compared with the same period in 2023, due primarily to insurance proceeds received from the Medford settlement in 2023, and an increase in capital expenditures in 2024 related to our capital projects.

Current wording

Investing Cash Flows - Cash used in investing activities for the six months ended June 30, 2024, increased $981 million, compared with the same period in 2023, due primarily to an increase in both capital expenditures related to our capital projects and acquisitions in 2024, and due to insurance proceeds received from the Medford settlement in 2023.

Previous wording

Financing Cash Flows - Cash used in financing activities for the three months ended March 31, 2024, decreased $517 million, compared with the same period in 2023, due primarily to the repayment of long-term debt in 2023 and short-term borrowings in 2024, offset partially by increased dividends paid in 2024.

Current wording

Financing Cash Flows - Cash used in financing activities for the six months ended June 30, 2024, decreased $760 million, compared with the same period in 2023, due primarily to the repayment of long-term debt in 2023 and short-term borrowings in 2024, offset partially by increased dividends paid in 2024.

Previous wording

•incurrence of significant costs to comply with the regulation of GHG emissions;

Current wording

•incurrence of significant costs to comply with the regulation of greenhouse gas emissions;

Previous wording

•the impact of the changing cost of providing pension and postretirement health care benefits to eligible employees and qualified retirees;

Current wording

•the impact of the changing cost of providing pension and health care benefits, including postretirement health care benefits, to eligible employees and qualified retirees;