(Date of report) | February 24, 2014 |
(Date of earliest event reported) | February 24, 2014 |
Oklahoma | 001-13643 | 73-1520922 | ||
(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | Identification No.) |
Item 2.02 | Results of Operations and Financial Condition | |
On February 24, 2014, we announced our results of operations for the year ended December 31, 2013. The news release is furnished as Exhibit 99.1 and incorporated by reference herein. | ||
Item 7.01 | Regulation FD Disclosure | |
On February 24, 2014, we affirmed our 2014 financial guidance. The news release is furnished as Exhibit 99.1 and incorporated by reference herein. | ||
Item 9.01 | Financial Statements and Exhibits | |
(d) | Exhibits | |
Exhibit Number | Description | |
99.1 | News release issued by ONEOK, Inc. dated February 24, 2014. |
ONEOK, Inc. | |||
Date: | February 24, 2014 | By: | /s/ Derek S. Reiners |
Derek S. Reiners Senior Vice President, Chief Financial Officer and Treasurer |
Exhibit Number | Description | |
99.1 | (d) | News release issued by ONEOK, Inc. dated February 24, 2014. |
February 24, 2014 | Analyst Contact: | T.D. Eureste 918-588-7167 | |
Media Contact: | Brad Borror 918-588-7582 |
• | 2013 operating income of $926.7 million, compared with $1.1 billion in 2012; |
• | ONEOK Partners segment operating income of $900.7 million, compared with $962.9 million in 2012; |
• | Natural gas distribution segment operating income of $223.4 million, compared with $215.7 million in 2012; |
• | Energy services segment operating loss of $186.4 million, compared with an operating loss of $77.9 million in 2012; |
• | Distributions declared on the company's general partner interest in ONEOK Partners of $278.1 million; distributions declared on the company's limited partner interest in ONEOK Partners of $268.2 million in 2013; |
• | ONEOK Partners increasing its investments in its 2010 to 2016 capital-growth program by approximately $1.2 billion to a range of $6.0 billion to $6.4 billion, which includes: |
– | Announcing an investment of approximately $550 million to $680 million in November 2013 to construct the Lonesome Creek plant, a 200-million cubic feet per day (MMcf/d) natural gas processing facility in the Williston Basin in North Dakota, which is expected to be completed in the fourth quarter 2015; and expansions and upgrades to the existing gathering and compression infrastructure; |
– | Announcing an investment of approximately $100 million in November 2013 for a second expansion of the Bakken NGL Pipeline, which will increase the pipeline’s capacity to 160,000 barrels per day (bpd) from 135,000 and is expected to be completed during the second quarter 2016; and |
– | Announcing an investment of $305 million in September 2013 to acquire the Sage Creek plant, a 50 MMcf/d natural gas processing facility, and related natural gas gathering and natural gas liquids infrastructure in the Niobrara Shale, an NGL-rich area in the Powder River Basin in Wyoming; |
• | ONEOK, on a stand-alone basis, ending the fourth quarter 2013 with $564.5 million of commercial paper outstanding, $2.2 million in letters of credit, $14.8 million of cash and cash equivalents, and $633.3 million available under its $1.2 billion credit facility; |
• | ONEOK stand-alone cash flow from continuing operations, before changes in working capital, of $771.1 million in 2013, which exceeded capital expenditures and dividends of $622.0 million by $149.1 million; |
• | ONEOK in January 2014 increasing its dividend by 5 percent from the previous quarter to 40 cents per share, payable on Feb. 18, 2014, to shareholders of record at the close of business Feb. 10, 2014; |
• | The Kansas Corporation Commission approving a settlement agreement in December 2013 that allowed ONEOK to separate its natural gas distribution business; |
• | ONEOK completing on Jan. 31, 2014, the separation of its natural gas distribution business into ONE Gas, Inc., with ONEOK now consisting of its general partner and limited partner interests in ONEOK Partners; and |
• | ONEOK reducing the size of its credit facility to $300 million from $1.2 billion, effective upon completion of the separation of the natural gas distribution business. |
• | A $41.9 million increase in the natural gas liquids business in exchange-services margins from higher NGL volumes gathered, higher fees from contract renegotiations for its NGL exchange-services activities and higher revenues from customers with minimum volume obligations; |
• | A $34.1 million increase in the natural gas gathering and processing business due primarily to volume growth in the Williston Basin from the Stateline I and Stateline II natural gas processing plants and increased well connections, which resulted in higher natural gas volumes gathered, compressed, processed, transported and sold, higher NGL volumes sold and higher fees; |
• | An $11.1 million increase in the natural gas liquids business in optimization and marketing margins, primarily as a result of a $19.3 million increase from more favorable NGL product price differentials and a $6.4 million increase in marketing margins, offset partially by a $14.6 million decrease due primarily to narrower NGL location price differentials; |
• | A $4.8 million increase in the natural gas liquids business in storage margins due primarily to contract renegotiations; |
• | A $16.8 million decrease in the natural gas liquids business from the impact of ethane rejection, which resulted in lower NGL volumes; |
• | A $15.9 million decrease in the natural gas gathering and processing business due primarily to lower realized NGL product prices; |
• | A $6.7 million decrease in the natural gas liquids business from lower isomerization volumes, resulting from narrower price differentials between normal butane and iso-butane; |
• | A $5.1 million decrease in the natural gas gathering and processing business due primarily to changes in contract mix and terms associated with volume growth; and |
• | A $24.4 million increase in operating costs and depreciation and amortization expense due to completed capital-growth projects. |
• | An $8.7 million increase due to higher labor and employee benefit costs associated primarily with the growth of ONEOK Partners' operations and completed capital-growth projects in its natural gas gathering and processing, and natural gas liquids businesses, offset partially by other lower employee-related expenses; |
• | A $7.5 million increase due to higher materials, supplies and outside services expenses associated primarily with growth in ONEOK Partners' operations related to the completed capital-growth projects primarily in its natural gas gathering and processing, and natural gas liquids businesses; and |
• | A $1.8 million increase due to higher property taxes associated primarily with the growth of ONEOK Partners' operations and completed capital-growth projects in its natural gas liquids business. |
• | A $166.5 million increase in the natural gas liquids business in exchange-services margins from higher NGL volumes gathered, higher fees from contract renegotiations for its NGL exchange-services activities and higher revenues from customers with minimum volume obligations; |
• | A $100.1 million increase in the natural gas gathering and processing business due primarily to volume growth in the Williston Basin from the Stateline I and Stateline II natural gas processing plants and increased well connections, which resulted in higher natural gas volumes gathered, compressed, processed, transported and sold, higher NGL volumes sold and higher fees; |
• | A $19.5 million increase in the natural gas liquids business from the impact of operational measurement gains of approximately $9.7 million in 2013, compared with losses of approximately $9.8 million in 2012; |
• | A $10.5 million increase in the natural gas liquids business in storage margins due primarily to contract renegotiations; |
• | A $9.6 million increase in the natural gas pipelines business due primarily to higher rates on Guardian Pipeline and higher contracted capacity with natural gas producers on ONEOK Partners’ intrastate pipelines; |
• | A $6.4 million increase in the natural gas gathering and processing business due to a contract settlement in 2013; |
• | A $162.7 million decrease in the natural gas liquids business in optimization and marketing margins, primarily as a result of a $202.5 million decrease due to significantly narrower NGL location price differentials, offset partially by a $35.7 million increase due primarily to more favorable NGL product price differentials; |
• | A $48.8 million decrease in the natural gas liquids business from the impact of ethane rejection, which resulted in lower NGL volumes; |
• | A $41.7 million decrease in the natural gas gathering and processing business due primarily to lower realized NGL product prices; |
• | A $22.4 million decrease in the natural gas liquids business from lower isomerization volumes, resulting from the narrower price differential between normal butane and iso-butane; |
• | A $13.4 million decrease in the natural gas gathering and processing business due primarily to changes in contract mix and terms associated with volume growth; |
• | A $3.9 million decrease in the natural gas pipelines business from lower net retained fuel; |
• | A $3.5 million decrease in the natural gas gathering and processing business from lower dry natural gas volumes gathered in the Powder River Basin as a result of continued production declines; and |
• | A $72.7 million increase in operating costs and depreciation and amortization expense. |
• | A $17.7 million increase due to higher labor and employee benefit costs associated primarily with the growth of ONEOK Partners' operations and completed capital-growth projects in its natural gas gathering and processing, and natural gas liquids businesses, offset partially by other lower employee-related expenses; |
• | An $18.0 million increase due to higher materials, supplies and outside services expenses associated primarily with growth in ONEOK Partners' operations related to the completed capital-growth projects primarily in its natural gas gathering and processing, and natural gas liquids businesses; and |
• | A $6.9 million increase due to higher property taxes associated primarily with the growth of ONEOK Partners' operations and completed capital-growth projects in its natural gas gathering and processing business, and natural gas liquids businesses. |
• | Natural gas gathered was 1,454 billion British thermal units per day (BBtu/d) in the fourth quarter 2013, up 21 percent compared with the same period in 2012 due to increased well connections in the Williston Basin, offset partially by continued dry natural gas production declines in the Powder River Basin in Wyoming and production declines in Kansas; and up 5 percent compared with the third quarter 2013; |
• | Natural gas processed was 1,193 BBtu/d in the fourth quarter 2013, up 24 percent compared with the same period in 2012 due to increased well connections in the Williston Basin; and up 5 percent compared with the third quarter 2013; |
• | NGL sales in the natural gas gathering and processing business were 88,000 barrels per day (bpd) in the fourth quarter 2013, up 26 percent compared with the same period in 2012 due to increased well connections in the Williston Basin; and up 6 percent compared with the third quarter 2013; |
• | The realized composite NGL net sales price was 87 cents per gallon in the fourth quarter 2013, down 17 percent compared with the same period in 2012; and down 3 percent compared with the third quarter 2013; |
• | The realized condensate net sales price was $82.31 per barrel in the fourth quarter 2013, down 9 percent compared with the same period in 2012; and down 9 percent compared with the third quarter 2013; |
• | The realized residue natural gas net sales price was $3.64 per million British thermal units (MMBtu) in the fourth quarter 2013, down 15 percent compared with the same period in 2012; and up 8 percent compared with the third quarter 2013; |
• | NGLs transported on gathering lines were 563,000 bpd in the fourth quarter 2013, up 6 percent compared with the same period in 2012, due primarily to increased volumes from the Williston Basin made available by the completed Bakken NGL Pipeline; and NGLs gathered as a result of the capacity increase in the Mid-Continent and Texas made available through the partnership’s Cana-Woodford Shale and Granite Wash projects; offset partially by decreases in NGL volumes gathered as a result of ethane rejection; and down 2 percent compared with the third quarter 2013; |
• | NGLs fractionated were 537,000 bpd in the fourth quarter 2013, down 11 percent compared with the same period in 2012, due to lower volumes from ethane rejection, offset partially by higher volumes from the Williston Basin made available by the segment’s completed Bakken NGL Pipeline; and down 4 percent compared with the third quarter 2013; |
• | NGLs transported on distribution lines were 459,000 bpd in the fourth quarter 2013, down 9 percent compared with the same period in 2012, due primarily to ethane rejection; and up 1 percent compared with the third quarter 2013; |
• | The average Conway-to-Mont Belvieu price differential of ethane in ethane/propane mix, based on Oil Price Information Service (OPIS) pricing, was 5 cents per gallon in the fourth quarter 2013, compared with 7 cents per gallon in the same period in 2012; and 4 cents per gallon in the third quarter 2013; |
• | Natural gas transportation capacity contracted was 5,632 thousand dekatherms per day in the fourth quarter 2013, up 4 percent compared with the same period in 2012; and up 4 percent compared with the third quarter 2013; |
• | Natural gas transportation capacity subscribed was 92 percent in the fourth quarter 2013, up 2 percent compared with the same period in 2012; and up 3 percent compared with the third quarter 2013; and |
• | The average natural gas price in the Mid-Continent region was $3.75 per MMBtu in the fourth quarter 2013, up 14 percent compared with the same period in 2012; and up 10 percent compared with the third quarter 2013. |
Year Ending December 31, 2014 | ||||||||||
Volumes Hedged | Average Price | Percentage Hedged | ||||||||
NGLs (Bbl/d) | 9,351 | $ | 1.19 | / gallon | 71% | |||||
Condensate (Bbl/d) | 2,545 | $ | 2.25 | / gallon | 75% | |||||
Total (Bbl/d) | 11,896 | $ | 1.42 | / gallon | 72% | |||||
Natural gas (MMBtu/d) | 82,808 | $ | 4.06 | / MMBtu | 75% | |||||
Year Ending December 31, 2015 | ||||||||||
Volumes Hedged | Average Price | Percentage Hedged | ||||||||
Natural gas (MMBtu/d) | 48,877 | $ | 4.19 | / MMBtu | 41% |
• | A 10-cent-per-MMBtu change in the price of natural gas would change annual net margin by approximately $4.0 million; |
• | A 1-cent-per-gallon change in the composite price of NGLs would change annual net margin by approximately $2.0 million; and |
• | A $1.00-per-barrel change in the price of crude oil would change annual net margin by approximately $1.3 million. |
• | A $7.1 million increase from new rates in Kansas and Texas; |
• | A $4.5 million increase from higher sales volumes, due primarily to colder than normal weather in Oklahoma, Kansas and Texas in 2013, compared with warmer than normal weather in 2012; |
• | A $2.3 million increase from higher transportation volumes due primarily to higher demand from weather-sensitive customers in Kansas; |
• | A $16.0 million increase in operating costs; and |
• | An $11.9 million increase in depreciation and amortization expense due to a $10.2 million charge related to the Kansas Corporation Commission approving the settlement agreement that permitted ONEOK to separate the Kansas Gas Service natural gas distribution assets as part of the ONE Gas separation. |
• | A $10.1 million increase in share-based compensation costs; |
• | A $1.8 million increase in employee-related expenses; and |
• | A $1.6 million increase from higher property taxes, primarily as a result of an increase in the level of property tax expense recovered in base rates, which is offset in net margin. |
• | A $36.8 million increase from new rates in Oklahoma, Kansas and Texas; |
• | A $12.5 million increase from higher sales volumes, due primarily to colder than normal weather in Oklahoma, Kansas and Texas in 2013, compared with warmer than normal weather in 2012; |
• | A $5.9 million increase from higher transportation volumes due primarily to higher demand from weather-sensitive customers in Kansas; |
• | A $34.3 million increase in operating costs; and |
• | A $14.6 million increase in depreciation and amortization expense due to a $10.2 million charge in the fourth-quarter 2013 related to the Kansas Corporation Commission |
• | A $14.3 million increase in employee-related expenses; |
• | A $10.1 million increase in share-based compensation costs; |
• | A $7.0 million increase from higher property taxes, primarily as a result of an increase in the level of property tax expense recovered in base rates, which is offset in net margin; and |
• | A $2.9 million increase in bad debt expense. |
• | Residential natural gas sales volumes were 43.7 billion cubic feet (Bcf) in the fourth quarter 2013, up 16 percent compared with the same period in 2012; |
• | Total natural gas sales volumes were 57.2 Bcf in the fourth quarter 2013, up 17 percent compared with the same period in 2012; |
• | Natural gas transportation volumes were 54.3 Bcf in the fourth quarter 2013, up 8 percent compared with the same period in 2012; and |
• | Natural gas volumes delivered were 111.5 Bcf in the fourth quarter 2013, up 13 percent compared with the same period in 2012. |
• | A $24.3 million increase in storage and marketing margins, net of hedging activities, due primarily to a charge in the first quarter 2012 related to the reclassification of deferred losses into earnings from accumulated other comprehensive income (loss) on certain financial contracts that were used to hedge forecasted purchases on natural gas in 2012; and reduced storage capacity resulting in lower demand charges in the current year; offset partially by decreases due to lower realized seasonal storage differentials and marketing margins, net of hedging activities; |
• | A $17.1 million increase in transportation margins, due primarily to reduced contracted transportation capacity, resulting in lower demand charges in the current year; |
• | A $19.8 million decrease in premium-services margins, associated primarily with lower demand fees; and |
• | A $5.6 million decrease in financial trading margins. |
• | Natural gas in storage at Dec. 31, 2013, was 17.5 Bcf, compared with 55.5 Bcf in the same period in 2012. During the fourth quarter 2013, natural gas storage capacity decreased to 23.5 Bcf at Dec. 31, 2013, from 24 Bcf at Sept. 30, 2013, due to 0.5 Bcf of storage assigned to a third party; and |
• | Natural gas transportation capacity at Dec. 31, 2013, was 70 MMcf/d, compared with 1.0 Bcf/d of total capacity and 1.0 Bcf/d of long-term capacity in the same period in 2012. During the fourth quarter 2013, approximately 30 MMcf/d of transportation capacity was released to a third party. |
• | the effects of weather and other natural phenomena, including climate change, on our operations, including energy sales and demand for our services and energy prices; |
• | competition from other United States and foreign energy suppliers and transporters, as well as alternative forms of energy, including, but not limited to, solar power, wind power, geothermal energy and biofuels such as ethanol and biodiesel; |
• | the capital intensive nature of our businesses; |
• | the profitability of assets or businesses acquired or constructed by us; |
• | our ability to make cost-saving changes in operations; |
• | risks of marketing, trading and hedging activities, including the risks of changes in energy prices or the financial condition of our counterparties; |
• | the uncertainty of estimates, including accruals and costs of environmental remediation; |
• | the timing and extent of changes in energy commodity prices; |
• | the effects of changes in governmental policies and regulatory actions, including changes with respect to income and other taxes, pipeline safety, environmental compliance, climate change initiatives and authorized rates of recovery of natural gas and natural gas transportation costs; |
• | the impact on drilling and production by factors beyond our control, including the demand for natural gas and crude oil; producers’ desire and ability to obtain necessary permits; reserve performance; and capacity constraints on the pipelines that transport crude oil, natural gas and NGLs from producing areas and our facilities; |
• | changes in demand for the use of natural gas and crude oil because of market conditions caused by concerns about global warming; |
• | the impact of unforeseen changes in interest rates, equity markets, inflation rates, economic recession and other external factors over which we have no control, including the effect on pension and postretirement expense and funding resulting from changes in stock and bond market returns; |
• | our indebtedness could make us vulnerable to general adverse economic and industry conditions, limit our ability to borrow additional funds and/or place us at competitive disadvantages compared with our competitors that have less debt, or have other adverse consequences; |
• | actions by rating agencies concerning the credit ratings of ONEOK and ONEOK Partners; |
• | the results of administrative proceedings and litigation, regulatory actions, rule changes and receipt of expected clearances involving the Oklahoma Corporation Commission (OCC), Kansas Corporation Commission (KCC), Texas regulatory authorities or any other local, state or federal regulatory body, including the Federal Energy Regulatory Commission (FERC), the National Transportation Safety Board (NTSB), the Pipeline and Hazardous Materials Safety Administration (PHMSA), the Environmental Protection Agency (EPA) and the Commodity Futures Trading Commission (CFTC); |
• | our ability to access capital at competitive rates or on terms acceptable to us; |
• | risks associated with adequate supply to our gathering, processing, fractionation and pipeline facilities, including production declines that outpace new drilling or extended periods of ethane rejection; |
• | the risk that material weaknesses or significant deficiencies in our internal controls over financial reporting could emerge or that minor problems could become significant; |
• | the impact and outcome of pending and future litigation; |
• | the ability to market pipeline capacity on favorable terms, including the effects of: |
• | performance of contractual obligations by our customers, service providers, contractors and shippers; |
• | the timely receipt of approval by applicable governmental entities for construction and operation of our pipeline and other projects and required regulatory clearances; |
• | our ability to acquire all necessary permits, consents or other approvals in a timely manner, to promptly obtain all necessary materials and supplies required for construction, and to construct gathering, processing, storage, fractionation and transportation facilities without labor or contractor problems; |
• | the mechanical integrity of facilities operated; |
• | demand for our services in the proximity of our facilities; |
• | our ability to control operating costs; |
• | adverse labor relations; |
• | acts of nature, sabotage, terrorism or other similar acts that cause damage to our facilities or our suppliers’ or shippers’ facilities; |
• | economic climate and growth in the geographic areas in which we do business; |
• | the risk of a prolonged slowdown in growth or decline in the United States or international economies, including liquidity risks in United States or foreign credit markets; |
• | the impact of recently issued and future accounting updates and other changes in accounting policies; |
• | the possibility of future terrorist attacks or the possibility or occurrence of an outbreak of, or changes in, hostilities or changes in the political conditions in the Middle East and elsewhere; |
• | the risk of increased costs for insurance premiums, security or other items as a consequence of terrorist attacks; |
• | risks associated with pending or possible acquisitions and dispositions, including our ability to finance or integrate any such acquisitions and any regulatory delay or conditions imposed by regulatory bodies in connection with any such acquisitions and dispositions; |
• | the impact of uncontracted capacity in our assets being greater or less than expected; |
• | the ability to recover operating costs and amounts equivalent to income taxes, costs of property, plant and equipment and regulatory assets in our state and FERC-regulated rates; |
• | the composition and quality of the natural gas and NGLs we gather and process in our plants and transport on our pipelines; |
• | the efficiency of our plants in processing natural gas and extracting and fractionating NGLs; |
• | the impact of potential impairment charges; |
• | the risk inherent in the use of information systems in our respective businesses, implementation of new software and hardware, and the impact on the timeliness of information for financial reporting; |
• | our ability to control construction costs and completion schedules of our pipelines and other projects; and |
• | the risk factors listed in the reports we have filed and may file with the Securities and Exchange Commission (SEC), which are incorporated by reference. |
ONEOK, Inc. and Subsidiaries | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
Three Months Ended | Years Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
(Unaudited) | 2013 | 2012 | 2013 | 2012 | |||||||||||
(Thousands of dollars, except per share amounts) | |||||||||||||||
Revenues | $ | 4,140,111 | $ | 3,659,924 | $ | 14,602,717 | $ | 12,632,559 | |||||||
Cost of sales and fuel | 3,488,457 | 3,055,604 | 12,313,034 | 10,281,718 | |||||||||||
Net margin | 651,654 | 604,320 | 2,289,683 | 2,350,841 | |||||||||||
Operating expenses | |||||||||||||||
Operations and maintenance | 236,210 | 203,032 | 872,125 | 806,087 | |||||||||||
Depreciation and amortization | 108,034 | 86,415 | 384,377 | 335,844 | |||||||||||
Goodwill impairment | — | — | — | 10,255 | |||||||||||
General taxes | 24,328 | 21,420 | 118,328 | 102,891 | |||||||||||
Total operating expenses | 368,572 | 310,867 | 1,374,830 | 1,255,077 | |||||||||||
Gain on sale of assets | 11,539 | 6,133 | 11,881 | 6,736 | |||||||||||
Operating income | 294,621 | 299,586 | 926,734 | 1,102,500 | |||||||||||
Equity earnings from investments | 30,773 | 30,644 | 110,517 | 123,024 | |||||||||||
Allowance for equity funds used during construction | 9,350 | 7,522 | 30,522 | 13,648 | |||||||||||
Other income | 7,831 | 1,009 | 24,483 | 12,504 | |||||||||||
Other expense | (13,228 | ) | (935 | ) | (17,707 | ) | (4,925 | ) | |||||||
Interest expense (net of capitalized interest of $18,572, $11,255, $57,775 and $41,776, respectively) | (90,130 | ) | (83,591 | ) | (334,206 | ) | (302,305 | ) | |||||||
Income before income taxes | 239,217 | 254,235 | 740,343 | 944,446 | |||||||||||
Income taxes | (55,154 | ) | (58,360 | ) | (163,382 | ) | (215,195 | ) | |||||||
Income from continuing operations | 184,063 | 195,875 | 576,961 | 729,251 | |||||||||||
Income from discontinued operations, net of tax | — | — | — | 762 | |||||||||||
Gain on sale of discontinued operations, net of tax | — | — | — | 13,517 | |||||||||||
Net income | 184,063 | 195,875 | 576,961 | 743,530 | |||||||||||
Less: Net income attributable to noncontrolling interests | 93,326 | 84,333 | 310,428 | 382,911 | |||||||||||
Net income attributable to ONEOK | $ | 90,737 | $ | 111,542 | $ | 266,533 | $ | 360,619 | |||||||
Amounts attributable to ONEOK: | |||||||||||||||
Income from continuing operations | $ | 90,737 | $ | 111,542 | $ | 266,533 | $ | 346,340 | |||||||
Income from discontinued operations | — | — | — | 14,279 | |||||||||||
Net income | $ | 90,737 | $ | 111,542 | $ | 266,533 | $ | 360,619 | |||||||
Basic earnings per share: | |||||||||||||||
Income from continuing operations | $ | 0.44 | $ | 0.55 | $ | 1.29 | $ | 1.68 | |||||||
Income from discontinued operations | — | — | — | 0.07 | |||||||||||
Net income | $ | 0.44 | $ | 0.55 | $ | 1.29 | $ | 1.75 | |||||||
Diluted earnings per share: | |||||||||||||||
Income from continuing operations | $ | 0.43 | $ | 0.53 | $ | 1.27 | $ | 1.64 | |||||||
Income from discontinued operations | — | — | — | 0.07 | |||||||||||
Net income | $ | 0.43 | $ | 0.53 | $ | 1.27 | $ | 1.71 | |||||||
Average shares (thousands) | |||||||||||||||
Basic | 206,319 | 204,648 | 206,044 | 206,140 | |||||||||||
Diluted | 210,552 | 209,243 | 209,695 | 210,710 | |||||||||||
Dividends declared per share of common stock | $ | 0.38 | $ | 0.33 | $ | 1.48 | $ | 1.27 |
ONEOK, Inc. and Subsidiaries | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
December 31, | December 31, | |||||||
(Unaudited) | 2013 | 2012 | ||||||
Assets | (Thousands of dollars) | |||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 149,313 | $ | 583,618 | ||||
Accounts receivable, net | 1,549,563 | 1,349,371 | ||||||
Gas and natural gas liquids in storage | 417,077 | 517,014 | ||||||
Commodity imbalances | 82,144 | 90,211 | ||||||
Energy marketing and risk-management assets | 1,687 | 48,577 | ||||||
Other current assets | 171,018 | 175,869 | ||||||
Total current assets | 2,370,802 | 2,764,660 | ||||||
Property, plant and equipment | ||||||||
Property, plant and equipment | 15,536,156 | 13,088,991 | ||||||
Accumulated depreciation and amortization | 3,238,652 | 2,974,651 | ||||||
Net property, plant and equipment | 12,297,504 | 10,114,340 | ||||||
Investments and other assets | ||||||||
Investments in unconsolidated affiliates | 1,229,838 | 1,221,405 | ||||||
Goodwill and intangible assets | 1,182,515 | 996,206 | ||||||
Other assets | 626,899 | 758,664 | ||||||
Total investments and other assets | 3,039,252 | 2,976,275 | ||||||
Total assets | $ | 17,707,558 | $ | 15,855,275 |
ONEOK, Inc. and Subsidiaries | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(Continued) | ||||||||
December 31, | December 31, | |||||||
(Unaudited) | 2013 | 2012 | ||||||
Liabilities and equity | (Thousands of dollars) | |||||||
Current liabilities | ||||||||
Current maturities of long-term debt | $ | 10,656 | $ | 10,855 | ||||
Notes payable | 564,462 | 817,170 | ||||||
Accounts payable | 1,503,699 | 1,333,489 | ||||||
Commodity imbalances | 212,136 | 272,436 | ||||||
Energy marketing and risk-management liabilities | 4,032 | 9,990 | ||||||
Other current liabilities | 401,422 | 369,054 | ||||||
Total current liabilities | 2,696,407 | 2,812,994 | ||||||
Long-term debt, excluding current maturities | 7,754,975 | 6,515,372 | ||||||
Deferred credits and other liabilities | ||||||||
Deferred income taxes | 1,938,262 | 1,592,802 | ||||||
Other deferred credits | 472,734 | 701,657 | ||||||
Total deferred credits and other liabilities | 2,410,996 | 2,294,459 | ||||||
Commitments and contingencies | ||||||||
Equity | ||||||||
ONEOK shareholders’ equity: | ||||||||
Common stock, $0.01 par value: authorized 600,000,000 shares; issued 245,811,180 shares and outstanding 206,618,877 shares at December 31, 2013; issued 245,811,180 shares and outstanding 204,935,043 shares at December 31, 2012 | 2,458 | 2,458 | ||||||
Paid-in capital | 1,433,600 | 1,324,698 | ||||||
Accumulated other comprehensive loss | (121,987 | ) | (216,798 | ) | ||||
Retained earnings | 2,020,815 | 2,059,024 | ||||||
Treasury stock, at cost: 39,192,303 shares at December 31, 2013, and 40,876,137 shares at December 31, 2012 | (997,035 | ) | (1,039,773 | ) | ||||
Total ONEOK shareholders’ equity | 2,337,851 | 2,129,609 | ||||||
Noncontrolling interests in consolidated subsidiaries | 2,507,329 | 2,102,841 | ||||||
Total equity | 4,845,180 | 4,232,450 | ||||||
Total liabilities and equity | $ | 17,707,558 | $ | 15,855,275 |
ONEOK, Inc. and Subsidiaries | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Years Ended | ||||||||
December 31, | ||||||||
(Unaudited) | 2013 | 2012 | ||||||
(Thousands of dollars) | ||||||||
Operating activities | ||||||||
Net income | $ | 576,961 | $ | 743,530 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 384,377 | 335,852 | ||||||
Charges attributable to exit activities, net of settlements | 121,971 | — | ||||||
Impairment of goodwill | — | 10,255 | ||||||
Gain on sale of discontinued operations | — | (13,517 | ) | |||||
Equity earnings from investments | (110,517 | ) | (123,024 | ) | ||||
Distributions received from unconsolidated affiliates | 106,364 | 120,442 | ||||||
Deferred income taxes | 151,515 | 229,398 | ||||||
Share-based compensation expense | 46,194 | 36,692 | ||||||
Pension and postretirement benefit expense, net of contributions | 56,600 | (57,073 | ) | |||||
Allowance for equity funds used during construction | (30,522 | ) | (13,648 | ) | ||||
Gain on sale of assets | (11,881 | ) | (6,736 | ) | ||||
Other | (5,656 | ) | 27,982 | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | (189,809 | ) | (14,774 | ) | ||||
Gas and natural gas liquids in storage | 99,937 | 33,343 | ||||||
Accounts payable | 165,076 | (30,981 | ) | |||||
Commodity imbalances, net | (52,233 | ) | 43,471 | |||||
Energy marketing and risk-management assets and liabilities | 25,072 | (174,953 | ) | |||||
Other assets and liabilities | (38,682 | ) | (162,264 | ) | ||||
Cash provided by operating activities | 1,294,767 | 983,995 | ||||||
Investing activities | ||||||||
Capital expenditures (less allowance for equity funds used during construction) | (2,256,585 | ) | (1,866,153 | ) | ||||
Acquisition | (394,889 | ) | — | |||||
Proceeds from sale of discontinued operations, net of cash sold | — | 32,946 | ||||||
Contributions to unconsolidated affiliates | (35,308 | ) | (30,768 | ) | ||||
Distributions received from unconsolidated affiliates | 31,134 | 35,299 | ||||||
Proceeds from sale of assets | 13,617 | 12,240 | ||||||
Other | — | 2,237 | ||||||
Cash used in investing activities | (2,642,031 | ) | (1,814,199 | ) | ||||
Financing activities | ||||||||
Repayment of notes payable, net | (252,708 | ) | (24,812 | ) | ||||
Issuance of debt, net of discounts | 1,247,822 | 1,994,693 | ||||||
Long-term debt financing costs | (10,246 | ) | (15,036 | ) | ||||
Repayment of debt | (7,868 | ) | (361,464 | ) | ||||
Repurchase of common stock | — | (150,000 | ) | |||||
Issuance of common stock | 20,602 | 15,969 | ||||||
Issuance of common units, net of issuance costs | 583,929 | 459,587 | ||||||
Dividends paid | (304,742 | ) | (261,969 | ) | ||||
Distributions to noncontrolling interests | (374,142 | ) | (324,906 | ) | ||||
Excess tax benefit from share-based awards | 10,312 | 6,948 | ||||||
Cash provided by financing activities | 912,959 | 1,339,010 | ||||||
Change in cash and cash equivalents | (434,305 | ) | 508,806 | |||||
Change in cash and cash equivalents included in discontinued operations | — | 8,859 | ||||||
Change in cash and cash equivalents from continuing operations | (434,305 | ) | 517,665 | |||||
Cash and cash equivalents at beginning of period | 583,618 | 65,953 | ||||||
Cash and cash equivalents at end of period | $ | 149,313 | $ | 583,618 | ||||
Supplemental cash flow information: | ||||||||
Cash paid for interest, net of amounts capitalized | $ | 294,240 | $ | 439,398 | ||||
Cash paid (refunds received) for income taxes | $ | (16,640 | ) | $ | 872 |
ONEOK, Inc. and Subsidiaries | |||||||||||||||
INFORMATION AT A GLANCE | |||||||||||||||
Three Months Ended | Years Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
(Unaudited) | 2013 | 2012 | 2013 | 2012 | |||||||||||
(Millions of dollars, except as noted) | |||||||||||||||
ONEOK Partners | |||||||||||||||
Net margin | $ | 440.9 | $ | 399.5 | $ | 1,647.1 | $ | 1,641.8 | |||||||
Operating costs | $ | 136.9 | $ | 122.1 | $ | 521.5 | $ | 482.5 | |||||||
Depreciation and amortization | $ | 62.7 | $ | 53.1 | $ | 236.7 | $ | 203.1 | |||||||
Operating income | $ | 252.9 | $ | 230.5 | $ | 900.7 | $ | 962.9 | |||||||
Capital expenditures | $ | 565.4 | $ | 549.0 | $ | 1,939.3 | $ | 1,560.5 | |||||||
Natural gas gathering and processing business (a) | |||||||||||||||
Natural gas gathered (BBtu/d) | 1,454 | 1,201 | 1,347 | 1,119 | |||||||||||
Natural gas processed (BBtu/d) (b) | 1,193 | 964 | 1,094 | 866 | |||||||||||
NGL sales (MBbl/d) | 88 | 70 | 79 | 61 | |||||||||||
Residue gas sales (BBtu/d) | 562 | 430 | 497 | 397 | |||||||||||
Realized composite NGL net sales price ($/gallon) (c) | $ | 0.87 | $ | 1.05 | $ | 0.87 | $ | 1.06 | |||||||
Realized condensate net sales price ($/Bbl) (c) | $ | 82.31 | $ | 90.21 | $ | 86.00 | $ | 88.22 | |||||||
Realized residue gas net sales price ($/MMBtu) (c) | $ | 3.64 | $ | 4.27 | $ | 3.53 | $ | 3.87 | |||||||
Natural gas liquids business | |||||||||||||||
NGL sales (MBbl/d) | 688 | 654 | 657 | 572 | |||||||||||
NGLs fractionated (MBbl/d) (d) | 537 | 600 | 535 | 574 | |||||||||||
NGLs transported-gathering lines (MBbl/d) (a) | 563 | 531 | 547 | 520 | |||||||||||
NGLs transported-distribution lines (MBbl/d) (a) | 459 | 507 | 435 | 491 | |||||||||||
Average Conway-to-Mont Belvieu OPIS price differential - ethane in ethane/propane mix ($/gallon) | $ | 0.05 | $ | 0.07 | $ | 0.04 | $ | 0.17 | |||||||
Natural gas pipelines business (a) | |||||||||||||||
Natural gas transportation capacity contracted (MDth/d) | 5,632 | 5,429 | 5,524 | 5,366 | |||||||||||
Transportation capacity subscribed | 92 | % | 90 | % | 90 | % | 89 | % | |||||||
Average natural gas price | |||||||||||||||
Mid-Continent region ($/MMBtu) | $ | 3.75 | $ | 3.29 | $ | 3.61 | $ | 2.64 | |||||||
(a) - Includes volumes for consolidated entities only. | |||||||||||||||
(b) - Includes volumes at company-owned and third-party facilities. | |||||||||||||||
(c) - Presented net of the impact of hedging activities on our equity volumes. | |||||||||||||||
(d) - Includes volumes fractionated from company-owned and third-party facilities. | |||||||||||||||
Natural Gas Distribution | |||||||||||||||
Net margin | $ | 223.6 | $ | 210.6 | $ | 813.0 | $ | 756.4 | |||||||
Operating costs | $ | 114.4 | $ | 98.4 | $ | 444.9 | $ | 410.6 | |||||||
Depreciation and amortization | $ | 44.6 | $ | 32.7 | $ | 144.7 | $ | 130.1 | |||||||
Operating income | $ | 64.6 | $ | 79.5 | $ | 223.4 | $ | 215.7 | |||||||
Capital expenditures | $ | 85.7 | $ | 74.6 | $ | 292.1 | $ | 280.3 | |||||||
Natural gas volumes (Bcf) | |||||||||||||||
Natural gas sales | 57.2 | 48.8 | 164.2 | 141.4 | |||||||||||
Transportation | 54.3 | 50.2 | 205.9 | 199.4 | |||||||||||
Natural gas margins | |||||||||||||||
Net margin on natural gas sales | $ | 188.3 | $ | 176.8 | $ | 681.6 | $ | 631.8 | |||||||
Transportation margin | $ | 26.9 | $ | 23.6 | $ | 98.7 | $ | 88.8 | |||||||
Energy Services | |||||||||||||||
Net margin | $ | (13.6 | ) | $ | (6.2 | ) | $ | (173.0 | ) | $ | (49.3 | ) | |||
Operating costs | $ | 2.2 | $ | 4.1 | $ | 13.1 | $ | 18.0 | |||||||
Depreciation and amortization | $ | 0.1 | $ | 0.1 | $ | 0.3 | $ | 0.4 | |||||||
Goodwill impairment | $ | — | — | $ | — | $ | 10.3 | ||||||||
Operating loss | $ | (15.9 | ) | $ | (10.3 | ) | $ | (186.4 | ) | $ | (77.9 | ) |
ONEOK, Inc. and Subsidiaries | |||||||||||||||||
CONSOLIDATING INCOME STATEMENT | |||||||||||||||||
Three Months Ended December 31, 2013 | |||||||||||||||||
ONEOK | Consolidating | ||||||||||||||||
(Unaudited) | ONEOK | Partners | Entries | Consolidated | |||||||||||||
(Millions of dollars) | |||||||||||||||||
Operating income | |||||||||||||||||
ONEOK Partners | $ | — | $ | 253 | $ | — | $ | 253 | |||||||||
Natural Gas Distribution | 64 | — | — | 64 | |||||||||||||
Energy Services | (15 | ) | — | — | (15 | ) | |||||||||||
Other | (7 | ) | — | — | (7 | ) | |||||||||||
Operating income | 42 | 253 | — | 295 | |||||||||||||
Equity in earnings of ONEOK Partners | 136 | — | (136 | ) | — | ||||||||||||
Other income (expense) | (11 | ) | 45 | — | 34 | ||||||||||||
Interest expense | (24 | ) | (66 | ) | — | (90 | ) | ||||||||||
Income taxes | (52 | ) | (3 | ) | — | (55 | ) | ||||||||||
Income from continuing operations | 91 | 229 | (136 | ) | 184 | ||||||||||||
Net income | 91 | 229 | (136 | ) | 184 | ||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 93 | 93 | |||||||||||||
Net income attributable to ONEOK | $ | 91 | $ | 229 | $ | (229 | ) | $ | 91 | ||||||||
ONEOK, Inc. and Subsidiaries | |||||||||||||||||
CONSOLIDATING INCOME STATEMENT | |||||||||||||||||
Year Ended December 31, 2013 | |||||||||||||||||
ONEOK | Consolidating | ||||||||||||||||
(Unaudited) | ONEOK | Partners | Entries | Consolidated | |||||||||||||
(Millions of dollars) | |||||||||||||||||
Operating income | |||||||||||||||||
ONEOK Partners | $ | — | $ | 901 | $ | — | $ | 901 | |||||||||
Natural Gas Distribution | 223 | — | — | 223 | |||||||||||||
Energy Services | (186 | ) | — | — | (186 | ) | |||||||||||
Other | (11 | ) | — | — | (11 | ) | |||||||||||
Operating income | 26 | 901 | — | 927 | |||||||||||||
Equity in earnings of ONEOK Partners | 494 | — | (494 | ) | — | ||||||||||||
Other income (expense) | (4 | ) | 151 | — | 147 | ||||||||||||
Interest expense | (97 | ) | (237 | ) | — | (334 | ) | ||||||||||
Income taxes | (152 | ) | (11 | ) | — | (163 | ) | ||||||||||
Income from continuing operations | 267 | 804 | (494 | ) | 577 | ||||||||||||
Net income | 267 | 804 | (494 | ) | 577 | ||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 310 | 310 | |||||||||||||
Net income attributable to ONEOK | $ | 267 | $ | 804 | $ | (804 | ) | $ | 267 |
ONEOK, Inc. and Subsidiaries | |||||||||||||||||
CONSOLIDATING INCOME STATEMENT | |||||||||||||||||
Three Months Ended December 31, 2012 | |||||||||||||||||
ONEOK | Consolidating | ||||||||||||||||
(Unaudited) | ONEOK | Partners | Entries | Consolidated | |||||||||||||
(Millions of dollars) | |||||||||||||||||
Operating income | |||||||||||||||||
ONEOK Partners | $ | — | $ | 231 | $ | — | $ | 231 | |||||||||
Natural Gas Distribution | 80 | — | — | 80 | |||||||||||||
Energy Services | (10 | ) | — | — | (10 | ) | |||||||||||
Other | (1 | ) | — | — | (1 | ) | |||||||||||
Operating income | 69 | 231 | — | 300 | |||||||||||||
Equity in earnings of ONEOK Partners | 126 | — | (126 | ) | — | ||||||||||||
Other income (expense) | (1 | ) | 39 | — | 38 | ||||||||||||
Interest expense | (25 | ) | (58 | ) | — | (83 | ) | ||||||||||
Income taxes | (57 | ) | (1 | ) | — | (58 | ) | ||||||||||
Income from continuing operations | 112 | 211 | (126 | ) | 197 | ||||||||||||
Net income | 112 | 211 | (126 | ) | 197 | ||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 85 | 85 | |||||||||||||
Net income attributable to ONEOK | $ | 112 | $ | 211 | $ | (211 | ) | $ | 112 | ||||||||
Year Ended December 31, 2012 | |||||||||||||||||
ONEOK | Consolidating | ||||||||||||||||
(Unaudited) | ONEOK | Partners | Entries | Consolidated | |||||||||||||
(Millions of dollars) | |||||||||||||||||
Operating income | |||||||||||||||||
ONEOK Partners | $ | — | $ | 963 | $ | — | $ | 963 | |||||||||
Natural Gas Distribution | 216 | — | — | 216 | |||||||||||||
Energy Services | (78 | ) | — | — | (78 | ) | |||||||||||
Other | 2 | — | — | 2 | |||||||||||||
Operating income | 140 | 963 | — | 1,103 | |||||||||||||
Equity in earnings of ONEOK Partners | 506 | — | (506 | ) | — | ||||||||||||
Other income (expense) | 2 | 142 | — | 144 | |||||||||||||
Interest expense | (96 | ) | (206 | ) | — | (302 | ) | ||||||||||
Income taxes | (205 | ) | (10 | ) | — | (215 | ) | ||||||||||
Income from continuing operations | 347 | 889 | (506 | ) | 730 | ||||||||||||
Income from discontinued operations, net of tax | 14 | — | — | 14 | |||||||||||||
Net income | 361 | 889 | (506 | ) | 744 | ||||||||||||
Less: Net income attributable to noncontrolling interests | — | — | 383 | 383 | |||||||||||||
Net income attributable to ONEOK | $ | 361 | $ | 889 | $ | (889 | ) | $ | 361 |
ONEOK, Inc. and Subsidiaries | |||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE | |||
ONEOK, Inc. Stand-Alone Cash Flow, Before Changes in Working Capital | |||
Year Ended | |||
(Unaudited) | December 31, 2013 | ||
(Millions of dollars) | |||
Net income | $ | 577.0 | |
Charges attributable to exit activities | 122.0 | ||
Net income attributable to noncontrolling interests | (310.4 | ) | |
Equity in earnings of ONEOK Partners | (493.6 | ) | |
Distributions received from ONEOK Partners | 536.2 | ||
Depreciation and amortization | 147.6 | ||
Deferred income taxes | 146.1 | ||
Other | 46.2 | ||
Cash flow, before changes in working capital | $ | 771.1 | |
Note: ONEOK stand-alone cash flow, before changes in working capital, is a non-GAAP financial measure used by management, industry analysts, investors, lenders and rating agencies to assess the financial performance and the operating results of our fundamental business activities. ONEOK stand-alone cash flow, before changes in working capital, should not be considered in isolation or as a substitute for net income, income from operations or other measures of results of operations. |
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