ONEOK’s 1Q earnings could have been stronger


ONEOK, Inc.’s first quarter earnings report came in weaker than anticipated but for the year, the company had strong earnings.

Net income was $639 million or $1.09 a share and the Tulsa-based firm saw increased natural gas volumes.

But here’s where things were not as strong as leaders would have liked.

Its adjusted EBITDA of $1.44 billion was down 16.85 year over year and operating income of $1.06 billion was down 28.9 percent from the prior-year quarter’s level of $1.5 billion. ONEOK’s also had interest expenses of $300 million, an increase of $80.7% from the $166 million reported a year ago.

For the quarter, net income increased $70 million to a midpoint of $2.88 billion and earnings per diluted share grew to a midpoint of $4.92. Adjusted EBITDA increased $75 million to a midpoint of $6.175 billion.

“ONEOK generated solid results during the first quarter, supported by higher year-over-year volumes in the Rocky Mountain region and contributions from the refined products and crude segment,” said Pierce H. Norton II, ONEOK president and chief executive officer.

The company saw a 12% increase in Rocky Mountain region NGL raw feed volumes, a 4% increase in processed natural gas volumes and a 9% increase in processed Rocky Mountain region natural gas volumes.

Results were driven primarily by 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, partially offset by higher operating costs primarily due to planned asset maintenance, higher property insurance premiums and the growth of ONEOK’s operations.

“The strength of our business, underscored by accelerating volumes and a positive synergy outlook, resulted in an increase to our 2024 financial guidance and provides significant momentum into 2025,” said Norton.

ONEOK increased 2024 net income guidance to a range of $2.73 billion to $3.03 billion, compared with the previously announced range of $2.61 billion to $3.01 billion. Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) guidance increased to a range of $6.025 billion to $6.325 billion, compared with ONEOK’s previously announced range of $5.9 billion to $6.3 billion.

Total 2024 capital expenditure guidance remains unchanged at $1.75 billion to $1.95 billion.

The decrease in first quarter 2024 adjusted EBITDA, compared with the first quarter 2023, primarily reflects:

  • A $748 million decrease related to the Medford incident, due to an insurance settlement gain of $779 million in the first quarter 2023, offset partially by $31 million of lower third-party fractionation costs in the first quarter 2024; and
  • A $27 million increase in operating costs due primarily to planned asset maintenance and higher property insurance premiums; offset by
  • A $75 million increase in exchange services due primarily to higher volumes in the Rocky Mountain region.