ONE Gas, the Tulsa-based company with 2.3 million customers in Oklahoma, Kansas and Texas, came out with its 2024 fiancial guidance this week, expecting 2024 net income to be $214 million to $231 million….lower than the 2023 financial guidance.
The company said earnings per diluted share are anticipated to be in the range of $3.70 to $4.00. By the middle of 2024, ONE Gas net income could total $223 million and earnings per share at $3.85. Its divisions include Kansas Gas Service, the largest natural gas distributor in Kansas; Oklahoma Natural Gas, the largest in Oklahoma; and Texas Gas Service, the third largest in Texas, in terms of customers.
In 2022, ONE Gas had a financial guidance of earnings totaling $4.06 to $4.10 peer share and up to $223 million in net income.
The company’s 2023 guidance included an anticipated net income of up to $238 million and earnings per share at about $4.26.
“As we look to 2024, we remain focused on executing our business strategy, anchored by system reinforcements and a continued expansion of core capabilities to meet growing customer demand,” said Robert S. McAnnally, president and chief executive officer.
“While rapidly altered macroeconomic conditions momentarily accentuate the lag inherent in our 100% regulated model, our focus remains on long-term value creation as we provide service to a region that is growing and values the integral role natural gas will play well into the future.”
2024 FINANCIAL GUIDANCE
The company’s 2024 earnings guidance includes the benefit of new rates and customer growth, offset by higher operating expenses, including employee-related and contractor costs, depreciation expense from capital investments, and interest expense due to higher interest rates. It also assumes normal weather.
Capital investments, including asset removal costs, are expected to be approximately $750 million in 2024, primarily targeted for system integrity and replacement projects. Capital investments for extensions to new customers are expected to be approximately $170 million, primarily as a result of continued growth opportunities in Texas and Oklahoma. The anticipated average rate base for 2024 is $5.55 billion, calculated consistent with utility ratemaking in each jurisdiction.
FIVE-YEAR FINANCIAL GROWTH RATES
For the five years ending 2028, capital investments, including asset removal costs, are expected to be in the range of $750 million to $950 million per year, or approximately $4.25 billion for the five-year period, including growth capital of approximately $1.10 billion. The increase in capital supports estimated average rate base growth of 7% to 9% per year through 2028.
Net income is expected to increase by an average of 7% to 9% annually through 2028, with diluted earnings per share of 4% to 6%.
Operating costs over the five years are expected to increase on average approximately 5% per year.
ONE Gas estimates total net long-term financing needs for the period 2024 through 2028 of approximately $2.3 billion, of which approximately 45% to 50% is expected to be equity. The Company expects to settle approximately 1.69 million shares and 2.9 million shares of forward equity sales by year-end 2023 and 2024, respectively, with anticipated net proceeds of approximately $130 million and $220 million. The forward equity sales already secured for 2024 settlement are in support of the company’s articulated five-year equity financing needs.
The company also expects to achieve an average annual dividend growth rate of 1% to 2% through 2028, subject to board of directors’ approval, with a target dividend payout ratio of 55% to 65% of net income.
Source: press release
