Tulsa-based ONEOK, Inc. announced its third quarter 2020 financial results showing an increase of 14 percent in operating income. This amount represents a whopping 55% increase in operating income compared with 2Q 2020 results, according to a company press release.
The company said its net income for the quarter was $312.3 million or 70 cents a share while adjusted EBITDA was $747.0 million, up 15 percent.
Results were driven primarily by higher natural gas liquids (NGL) volumes. The company reported a 16% decrease in operating costs. ONEOK also updated its 2020 outlook.
“Third quarter results were driven by curtailed volume returning to our system resulting in improved earnings,” said Terry K. Spencer, ONEOK president and chief executive officer. “NGL volumes across all of our operating areas have exceeded pre-pandemic levels, and natural gas volumes processed in the Rocky Mountain region have exceeded 1.2 billion cubic feet per day. Volumes achieved in September were more in-line with our original pre-pandemic 2020 expectations.”
Given the recovery of curtailed volumes in the regions where ONEOK operates, 2020 net income and adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) are now expected to approach the midpoint of the ranges provided on April 28, 2020, of $500 million to $900 million, and $2,600 million to $3,000 million, respectively.
ONEOK’s operating income and adjusted EBITDA increased 14% and 15%, respectively, compared with the third quarter 2019. Higher results were driven primarily by increased NGL volumes across ONEOK’s operations, lower operating costs in all three of ONEOK’s business segments, and lower rail transportation and pipeline costs in the natural gas liquids segment due to the completion of ONEOK’s Elk Creek Pipeline, compared with the third quarter 2019.
Results were partially offset by higher depreciation expense due to capital-growth projects placed in service, lower earnings from optimization and marketing in the natural gas liquids segment, lower natural gas volumes in the natural gas gathering and processing segment due to natural production declines in the Mid-Continent region and production curtailments in the Williston Basin, and lower interruptible transportation services in the natural gas pipelines segment, compared with the third quarter 2019.
NGL projects completed in August 2020 include:
- the 75-mile Bakken NGL pipeline lateral connecting to a third-party natural gas processing plant in Williams County, North Dakota; and
- the Arbuckle II pipeline extension which increases connectivity from the Elk Creek Pipeline to the Arbuckle II Pipeline and additional Mid-Continent NGL gathering infrastructure.
The company reported substantial completion of all active announced capital-growth projects and maintaining an annual run rate of $300 million to $400 million of total capital expenditures until producer activity levels warrant additional infrastructure.
Click here for the full press release.