Improved quarterly and year-end revenues for ONE Gas,Inc. resulted in larger per share earnings for investors, thanks in part, to higher prices paid by ratepayers.
The Tulsa-based company, the parent of subsidiaries Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service, reported this week it had $77 million in fourth quarter 2024 net income or $1.34 a share, up from the $70.7 million and $1.27 reported in the fourth quarter of 2023. New rates approved by Oklahoma regulators also led to some of the increased net income.
For all of 2024, the ONE Gas net income was $222.9 million or $3.91 a share compared to $231.2 million and $4.14 a share at the end of 2023.
“Our strong financial performance is a testament to our prudent fiscal planning, execution of our regulatory strategy and disciplined management of operations and maintenance expenses,” said Robert S. McAnnally, president and chief executive officer.
“As we embark on a new year, we are prepared to serve a growing customer base while continuing to enhance the safety and reliability of our system.”
ONE Gas settled 3,160,465 million shares of common stock for net proceeds of $245.7 million. It also reported ful-year 2024 capital expenditures and asset removal costs came to $762.1 million compared to $728.7 million in 2023.
Earnings also led to a January increase of the dividend for the first quarter 2025 by 1 cent to $0.67 a share or $2.68 annualized payable March 7 to shareholders of record at the close of business Feb. 21, 2025.
ONE Gas reported operating income of $124.3 million in the fourth quarter, compared with $107.1 million in the fourth quarter 2023, which primarily reflects:
- an increase of $24.6 million from new rates;
- an increase of $1.2 million in residential sales due primarily to net customer growth in Oklahoma and Texas; and
- an increase of $7.9 million in gas sales-related revenues.
The increase was partially offset by:
- an increase of $2.9 million in depreciation and amortization expense from additional capital investment;
- an increase of $6.5 million in employee-related costs, due primarily to planned investments in the Company’s workforce and ongoing in-sourcing efforts, which have enhanced management of operations and maintenance expense; and
- an increase of $4.8 million in ad-valorem taxes, primarily due to regulatory outcomes which took effect during the quarter.
Weather was 24.3 percent warmer than normal for the three months ended Dec. 31, 2024. The impact on operating income was mitigated by weather normalization mechanisms.
Excluding interest related to KGSS-I securitized bonds, net interest expense increased $10.4 million for the three months ending Dec. 31, 2024. Interest expense was primarily impacted by the conversion of the two debt maturities in the first quarter 2024 to commercial paper with a higher weighted average interest rate, the issuance of $300 million of 5.10 percent senior notes in December 2023 and the reopening of the 5.10 percent senior notes in August 2024 to issue an additional $250 million, all of which are supportive of our capital plan.
Income tax expense includes a credit for amortization of the regulatory liability associated with excess deferred income taxes (EDIT) of $12.3 million and $6.9 million for the three months ended Dec. 31, 2024, and 2023, respectively.
Capital expenditures and asset removal costs were $190.4 million for the fourth quarter 2024 compared with $189.6 million in the same period last year, primarily representing expenditures for system integrity and extension of service to new areas.
FULL YEAR 2024 FINANCIAL PERFORMANCE
Operating income for the twelve-month 2024 period was $399.0 million, compared with $377.6 million in 2023, which primarily reflects:
- an increase of $67.9 million from new rates; and
- an increase of $6.3 million in residential sales due primarily to net customer growth in Oklahoma and Texas.
These increases were offset partially by:
- an increase of $22.9 million of employee-related costs due primarily to planned investments in the Company’s workforce and ongoing in-sourcing efforts;
- an increase of $16.9 million in depreciation and amortization expense from additional capital investment; and
- an increase of $6.9 million due to ad-valorem taxes.
Excluding interest related to KGSS-I securitized bonds, net interest expense increased $33.6 million for the twelve months ended Dec. 31, 2024. Interest expense was primarily impacted by the conversion of the two debt maturities in the first quarter 2024 to commercial paper with a higher weighted average interest rate, the issuance of $300 million of 5.10 percent senior notes in December 2023 and the reopening of the 5.10 percent senior notes in August 2024 to issue an additional $250 million.
Income tax expense includes a credit for amortization of the regulatory liability associated with EDIT of $25.7 million and $22.4 million for the twelve months ended Dec. 31, 2024, and 2023, respectively.
Capital expenditures and asset removal costs were $762.1 million for the twelve-month 2024 period compared with $728.7 million in the same period last year. The increase was due primarily to expenditures for system integrity and extension of service to new areas.
In December, the Company settled 3,160,465 million shares of our common stock under our at-the-market equity program and forward contracts for net proceeds of $245.7 million. In December, we also amended the two forward sale agreements we entered into in September 2023 to extend the maturity date of 223,000 and 180,000 shares of our common stock to December 31, 2025 from December 31, 2024.
REGULATORY ACTIVITIES UPDATE
In February 2025, Texas Gas Service made Gas Reliability Infrastructure Program filings for all customers in the Central-Gulf service area, requesting a $15.4 million increase to be effective in June 2025.
In February 2025, Texas Gas Service made Gas Reliability Infrastructure Program filings for all customers in the West-North service area, requesting a $8.2 million increase to be effective in June 2025.
2025 FINANCIAL GUIDANCE
On Dec. 4, 2024, ONE Gas announced that its 2025 net income is expected to be in the range of $254 million to $261 million, with earnings per diluted share of $4.20 to $4.32.
Capital investments, including asset removal costs, are expected to be approximately $750 million in 2025, primarily targeted for system integrity and replacement projects. Capital investments for extensions to new customers are expected to be approximately $180 million.
