ONEOK records 2Q earnings increase ahead of merger with Magellan Midstream



As ONEOK prepares for a merger with Magellan Midstream Partners, it reported its second quarter saw a 13% increase in net income as it reacherd $468 million or $1.04 per diluted share

Because of the increased income, the Tulsa-based company increased its full-year 2023 financial guidance. It also recorded a 10% increase in adjusted EBITDA to $971 million along with a 26% increase in its Gulf Coast/Permian region NGL raw feed.

ONEOK’s net income grew to a midpoint of $2.49 billion comopared with a previous midpoint of $2.41 billion. Earnings per diluted share grew to a midpoint of $5.54 compared with a previous midpoint of $5.36.

The firm’s adjusted EBITDA grew to a midpoint of $4.675 billion, better than the previous midpoint of $4.575 billion.

ONEOK’s leadership decided to increase the 2023 net income guidance to a range of $2.39 billion to $2.59 billion. The previously announced range was $2.26 billion to $2.56 billion.

Adjusted EBITDA guidance increased to a range of $4.575 billion to $4.775 billion, compared with ONEOK’s previously announced range of $4.425 billion to $4.725 billion.

These midpoints and ranges exclude the impact of the pending merger with Magellan Midstream Partners and future merger-related costs, to be comparable with the original guidance provided on Feb. 27, 2023.

The increase in financial guidance reflects continued volume strength across ONEOK’s operations, higher average fee rates in the natural gas liquids and natural gas gathering and processing segments, lower than expected third-party NGL fractionation costs and higher transportation and storage services in the natural gas pipelines segment.

ONEOK expects total capital expenditures, including growth and maintenance capital, of approximately $1.575 billion in 2023. The increase in expected capital expenditures in 2023 reflects the impact of strong producer activity and includes purchases of long-lead time components for capital-growth projects, initial activities for the expansion of Elk Creek Pipeline to 400,000 barrels per day (bpd) and activities to fully loop West Texas NGL Pipeline, which will more than double ONEOK’s NGL capacity out of the Permian Basin.

“Continued strength in volumes across our operations, particularly in the Rocky Mountain region and Permian Basin, resulted in higher second quarter results and positive momentum entering the second half of 2023,” said Pierce H. Norton II, ONEOK president and chief executive officer. “Operational outperformance through the first six months of 2023 enabled us to increase our financial guidance for the year.

“As we work toward the successful closing of our pending merger transaction with Magellan, we also remain focused on the fundamentals of ONEOK’s business that have gotten us where we are today,” added Norton. “We look forward to the strategic opportunities ahead of us through the combined companies, including opportunities to grow our existing legacy operations and further diversify our company through Magellan’s refined products and crude operations, providing compelling long-term value for our stakeholders.”