An increase in rates helped ONE Gas, Inc. to reach an increased operating income of $65.4 million in the third quarter, according to the Tulsa firm’s announced third quarter earnings report.
The company, parent to Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service, reported operating income of $65.4 million during the quarter, up from the $59.4 million in the same quarter of 2024. It also said the increased earnings reflected an increase of $1.4 million in residential sales because of net customer growth in Oklahoma and Texas.
Operating income for the nine months ended September 30, 2025, was $317.7 million, compared with $274.6 million in 2024, which primarily reflects:
- an increase of $92.2 million from new rates; and
- an increase of $5.3 million in residential sales due primarily to net customer growth in Oklahoma and Texas.
“Our third-quarter performance reflects disciplined execution of our strategy and continued operational efficiency,” said Robert S. McAnnally, president and chief executive officer. “The narrowed financial outlook aligns with year-to-date results and reinforces our confidence in delivering full-year guidance. As we approach year-end, we remain focused on sustainable growth, prudent capital deployment and delivering long-term value for our shareholders.”
THIRD QUARTER 2025 FINANCIAL RESULTS & HIGHLIGHTS
- Third quarter 2025 net income was $26.5 million, or $0.44 per diluted share, compared with $19.3 million, or $0.34 per diluted share, in the third quarter 2024;
- Year-to-date 2025 net income was $177.9 million, or $2.94 per diluted share, compared with $145.8 million, or $2.56 per diluted share, in the same period last year;
- The Company narrowed its 2025 diluted earnings per share guidance to a range of $4.34 to $4.40, from a previous range of $4.32 to $4.42; and
- The board of directors declared a quarterly dividend of $0.67 per share ($2.68 annualized), payable on December 1, 2025, to shareholders of record at the close of business on November 14, 2025.
THIRD QUARTER 2025 FINANCIAL PERFORMANCE
ONE Gas reported operating income of $65.4 million in the third quarter, compared with $59.5 million in the third quarter 2024, which primarily reflects:
- an increase of $19.2 million from new rates; and
- an increase of $1.4 million in residential sales due primarily to net customer growth in Oklahoma and Texas.
The increases were partially offset by:
- an increase of $4.8 million in depreciation and amortization expense primarily from additional capital investment;
- an increase of $4.1 million due to ad valorem taxes;
- an increase of $3.8 million in employee-related costs; and
- an increase of $1.0 million due to outside services.
Excluding interest related to KGSS-I securitized bonds, interest expense, net decreased $3.4 million for the three months ended September 30, 2025, compared to the same period last year, primarily due to lower rates on commercial paper borrowings.
Income tax expense reflects credits for amortization of the regulatory liability associated with excess deferred income taxes (EDIT) of $1.7 million and $1.5 million for the three months ended September 30, 2025 and 2024, respectively.
Capital expenditures and asset removal costs were $207.6 million for the third quarter 2025 compared with $197.7 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 nine months ended September 30, 2025, was $317.7 million, compared with $274.6 million in 2024, which primarily reflects:
- an increase of $92.2 million from new rates; and
- an increase of $5.3 million in residential sales due primarily to net customer growth in Oklahoma and Texas.
These increases were partially offset by:
- an increase of $16.8 million in depreciation and amortization expense primarily from additional capital investment;
- an increase of $13.8 million due to ad valorem taxes;
- an increase of $12.8 million in employee-related costs;
- an increase of $2.5 million in insurance expense;
- an increase of $2.1 million in bad debt expense;
- an increase of $1.3 million in information technology expense; and
- a carrying charge of $2.9 million refunded to Oklahoma customers from the settlement of a disputed gas purchase invoice.
Excluding interest related to KGSS-I securitized bonds, interest expense, net for the nine months ended September 30, 2025 was in line with the same period last year.
Income tax expense includes a credit for amortization of the regulatory liability associated with EDIT of $11.9 million and $13.4 million for the nine months ended September 30, 2025 and 2024, respectively.
Capital expenditures and asset removal costs were $575.4 million for the nine-month 2025 period compared with $571.7 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 a Gas Reliability Infrastructure Program filing for all customers in the Rio Grande Valley service area, requesting a $3.2 million increase to be effective in September 2025. In August 2025, the RRC approved an increase of $2.9 million, and new rates became 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.
2025 FINANCIAL GUIDANCE NARROWED
The Company narrowed its 2025 financial guidance, with net income expected to be in the range of $262 million to $266 million, compared with its previously announced range of $261 million to $267 million. Earnings per diluted share are expected to be approximately $4.34 to $4.40, compared with the previously announced range of $4.32 to $4.42. There was no change to the respective midpoints of the 2025 net income and earnings per share guidance, both of which remain 2.5% above the original guidance forecasts for the year.
Capital expenditures, including asset removal costs, are still expected to be approximately $750 million in 2025.