ONE Gas experienced a drop of millions in its second quarter net income, according to the Tulsa-based company’s second quarter financial results released this week.
Second quarter 2025 net income for the firm that owns Oklahoma Natural Gas Company, Kansas Gas Service and Texas Gas Service, totaled $32 million or $0.53 per diluted share, compared to the $119.4 million or $1.98 per share reported in the first quarter. The $32 million was still improved from the $27.2 million and $0.48 per share for the second quarter of last year.
In announcing the second quarter results, ONE Gas president and CEO Robert S. McAnnally said the results and “increased guidance reflect strong operational performance, effective cost management and continued progress” on the firm’s regulatory efforts.
SECOND QUARTER 2025 FINANCIAL RESULTS & HIGHLIGHTS
- Second quarter 2025 net income was $32.0 million, or $0.53 per diluted share, compared with $27.2 million, or $0.48 per diluted share, in the second quarter 2024;
- Year-to-date 2025 net income was $151.5 million, or $2.51 per diluted share, compared with $126.6 million, or $2.23 per diluted share, in the same period last year;
- The Company raised its 2025 diluted earnings per share guidance to a range of $4.32 to $4.42, from a previous range of $4.20 to $4.32;
- In May 2025, the Company executed a forward sale agreement for 2.5 million shares of common stock, at a net price of $78.47 per share, with settlement by Dec. 31, 2026; and
- The board of directors declared a quarterly dividend of $0.67 per share ($2.68 annualized), payable on September 3, 2025, to shareholders of record at the close of business on August 18, 2025.
SECOND QUARTER 2025 FINANCIAL PERFORMANCE
ONE Gas reported operating income of $71.9 million in the second quarter, compared with $69.3 million in the second quarter 2024, which primarily reflects:
- an increase of $21.1 million from new rates;
- an increase of $2.1 million due to higher sales volumes, net of the impact of weather normalization mechanisms; and
- an increase of $1.5 million in residential sales due primarily to net customer growth in Oklahoma and Texas.
The increases were partially offset by:
- an increase of $6.8 million in depreciation and amortization expense from additional capital investment;
- an increase of $5.7 million in employee-related costs;
- an increase of $5.0 million due to ad valorem taxes;
- an increase of $1.6 million in bad debt expense; and
- a carrying charge of $2.9 million refunded to Oklahoma customers from the settlement of a disputed gas purchase invoice.
Weather across the Company’s service areas was 19 percent warmer than normal but 45 percent colder than the second quarter of 2024, with the impact on operating income largely mitigated by regulatory weather normalization mechanisms.
Excluding interest related to KGSS-I securitized bonds, interest expense, net decreased $1.3 million for the three months ended June 30, 2025, primarily due to a lower weighted-average interest rate on outstanding commercial paper compared to the prior-year period.
Income tax expense reflects credits for amortization of the regulatory liability associated with excess deferred income taxes (EDIT) of $2.1 million and $1.8 million for the three months ended June 30, 2025 and 2024, respectively.
Capital expenditures and asset removal costs were $190.1 million for the second quarter 2025 compared with $194.6 million in the same period last year, primarily representing expenditures for system integrity and extension of service to new areas.
YEAR-TO-DATE 2025 FINANCIAL PERFORMANCE
Operating income for the six months ended June 30, 2025, was $252.4 million, compared with $215.1 million in 2024, which primarily reflects:
- an increase of $73.0 million from new rates; and
- an increase of $3.9 million in residential sales due primarily to net customer growth in Oklahoma and Texas.
These increases were partially offset by:
- an increase of $11.9 million in depreciation and amortization expense from additional capital investment;
- an increase of $9.7 million due to ad valorem taxes;
- an increase of $9.0 million in employee-related costs;
- an increase of $2.3 million in bad debt expense;
- an increase of $1.7 million due to insurance expense; and
- a carrying charge of $2.9 million refunded to Oklahoma customers from the settlement of a disputed gas purchase invoice.
Weather across the service territories for the six-month 2025 period was 3 percent colder than normal and 18 percent colder than the same period last year. The impact on operating income was largely tempered by regulatory weather normalization mechanisms.
Excluding interest related to KGSS-I securitized bonds, interest expense, net increased $3.3 million for the six months ended June 30, 2025, primarily due to the August 2024 reopening of the 5.10 percent senior notes to issue an additional $250 million.
Income tax expense includes a credit for amortization of the regulatory liability associated with EDIT of $10.2 million and $11.9 million for the six months ended June 30, 2025 and 2024, respectively.
Capital expenditures and asset removal costs were $367.8 million for the six-month 2025 period compared with $374.0 million in the same period last year, primarily representing expenditures for system integrity and extension of service to new areas.
REGULATORY ACTIVITIES UPDATE
In June 2025, Texas Gas Service filed a rate case for all customers in the Central-Gulf, West-North and Rio Grande Valley service areas, requesting a $41.1 million revenue increase and proposing to consolidate all service areas into a single division. Texas Gas Service filed this rate case directly with the cities in each service area, which includes the cities of Austin and El Paso, and the Railroad Commission of Texas (RRC) for the unincorporated areas. This filing is based on a 10.4 percent return on equity and a 59.9 percent common equity ratio. New rates are expected to take effect in the first quarter of 2026.
In April 2025, Texas Gas Service made Gas Reliability Infrastructure Program filings for all customers in the Rio Grande Valley service area, requesting a $3.2 million increase to be effective in September 2025.
In April 2025, Kansas Gas Service submitted an application to the Kansas Corporation Commission (KCC) requesting an increase of approximately $7.2 million related to its Gas System Reliability Surcharge. In July 2025, the KCC approved a $7.2 million increase effective August 2025.
In February 2025, Oklahoma Natural Gas filed its annual Performance-Based Rate Change application for the test year ended December 2024. The filing included a requested $41.5 million base rate revenue increase, a $2.4 million energy efficiency incentive, and $13.2 million of estimated EDIT to be credited to customers in 2026. A settlement agreement was reached among the parties, which included a $41.1 million base rate revenue increase, a $2.4 million energy efficiency incentive, and $17.9 million of estimated EDIT to be credited to customers beginning in February 2026. Interim rates, subject to refund, were implemented in June 2025. The Oklahoma Corporation Commission issued a final order approving the settlement in July 2025.
In February 2025, Texas Gas Service made Gas Reliability Infrastructure Program filings for customers in each of the Central-Gulf and West-North service areas, requesting increases of $15.4 million and $8.2 million, respectively. In May 2025, the RRC approved the increases, and new rates became effective in June 2025.
2025 FINANCIAL GUIDANCE INCREASED
Based on strong operational performance and the expected impact of Texas House Bill 4384, the Company raised its 2025 financial guidance, with net income expected to be in the range of $261 million to $267 million, compared with its previously announced range of $254 million to $261 million. Earnings per diluted share are expected to be approximately $4.32 to $4.42, compared with the previously announced range of $4.20 to $4.32. The midpoint of 2025 earnings per diluted share guidance increased to $4.37, up from the previous guidance midpoint of $4.26.
Capital expenditures, including asset removal costs, are still expected to be approximately $750 million in 2025.