Item 1. FINANCIAL STATEMENTS

ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
									Three Months Ended
									March 31,
(Unaudited)															2023						2022
												(Millions of dollars, except per share amounts)
Revenues
Commodity sales															$	4,156					$	5,105
Services															365						340
Total revenues (Note K)															4,521						5,445
Cost of sales and fuel (exclusive of items shown separately below)															3,347						4,366
Operations and maintenance															239						214
Depreciation and amortization															162						154
General taxes															57						50
Other operating (income) expense, net (Note B)															(781)						(1)
Operating income															1,497						662
Equity in net earnings from investments (Note I)															40						36
Other income (expense), net															8						(13)
Interest expense (net of capitalized interest of $18 and $12, respectively)															(166)						(172)
Income before income taxes															1,379						513
Income taxes															(330)						(122)
Net income															1,049						391
Less: Preferred stock dividends															—						—
Net income available to common shareholders															$	1,049					$	391
Basic EPS (Note H)															$	2.34					$	0.87
Diluted EPS (Note H)															$	2.34					$	0.87
Average shares (millions)
Basic															448						447
Diluted															449						448

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
																		Three Months Ended
																		March 31,
(Unaudited)																								2023									2022
																								(Millions of dollars)
Net income																								$	1,049								$	391
Other comprehensive income (loss), net of tax
Change in fair value of derivatives, net of tax of $(7) and $21, respectively																								23									(72)
Derivative amounts reclassified to net income, net of tax of $3 and $(20), respectively																								(12)									66
Change in retirement and other postretirement benefit plan obligations, net of tax of $— and $(1), respectively																								—									3
Other comprehensive income (loss) of unconsolidated affiliates, net of tax of $1 and $(2), respectively																								(2)									7
Total other comprehensive income, net of tax																								9									4
Comprehensive income																								$	1,058								$	395

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
						March 31,						December 31,
(Unaudited)						2023						2022
Assets			(Millions of dollars)
Current assets
Cash and cash equivalents						$	680					$	220
Accounts receivable, net						1,153						1,532
Materials and supplies						157						149
NGLs and natural gas in storage						399						432
Commodity imbalances						22						43
Other current assets						158						172
Total current assets						2,569						2,548
Property, plant and equipment
Property, plant and equipment						25,252						25,015
Accumulated depreciation and amortization						5,212						5,063
Net property, plant and equipment						20,040						19,952
Investments and other assets
Investments in unconsolidated affiliates						789						802
Goodwill and net intangible assets						750						753
Other assets						316						324
Total investments and other assets						1,855						1,879
Total assets						$	24,464					$	24,379

Table of Contents

ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Continued)
						March 31,						December 31,
(Unaudited)						2023						2022
Liabilities and equity			(Millions of dollars)
Current liabilities
Current maturities of long-term debt (Note E)						$	500					$	925
Accounts payable						1,074						1,359
Commodity imbalances						220						254
Accrued taxes						150						136
Accrued interest						137						233
Operating lease liability						12						12
Other current liabilities						89						132
Total current liabilities						2,182						3,051
Long-term debt, excluding current maturities (Note E)						12,728						12,696
Deferred credits and other liabilities
Deferred income taxes						2,027						1,739
Operating lease liability						66						68
Other deferred credits						329						331
Total deferred credits and other liabilities						2,422						2,138
Commitments and contingencies (Note J)
Equity (Note F)
ONEOK shareholders’ equity:
Preferred stock, $0.01 par value: authorized and issued 20,000 shares at March 31, 2023, and December 31, 2022						—						—
Common stock, $0.01 par value: authorized 1,200,000,000 shares; issued 474,916,234 shares and outstanding 447,441,008 shares at March 31, 2023; issued 474,916,234 shares and outstanding 447,157,771 shares at December 31, 2022						5						5
Paid-in capital						7,253						7,253
Accumulated other comprehensive loss (Note G)						(99)						(108)
Retained earnings						672						50
Treasury stock, at cost: 27,475,226 shares at March 31, 2023, and 27,758,463 shares at December 31, 2022						(699)						(706)
Total equity						7,132						6,494
Total liabilities and equity						$	24,464					$	24,379

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

This page intentionally left blank.

Table of Contents

ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
						Three Months Ended
						March 31,
(Unaudited)						2023						2022
						(Millions of dollars)
Operating activities
Net income						$	1,049					$	391
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization						162						154
Equity in net earnings from investments						(40)						(36)
Distributions received from unconsolidated affiliates						43						36
Deferred income taxes						285						111
Medford settlement gain						(779)						—
Medford settlement proceeds						502						—
Other, net						18						25
Changes in assets and liabilities:
Accounts receivable						329						(244)
NGLs and natural gas in storage, net of commodity imbalances						20						(47)
Accounts payable						(237)						385
Accrued interest						(96)						(99)
Risk-management assets and liabilities						26						(119)
Other assets and liabilities, net						(61)						(94)
Cash provided by operating activities						1,221						463
Investing activities
Capital expenditures (less allowance for equity funds used during construction)						(289)						(257)
Distributions received from unconsolidated affiliates in excess of cumulative earnings						8						10
Medford settlement proceeds						328						—
Other, net						—						3
Cash provided by (used in) investing activities						47						(244)
Financing activities
Dividends paid						(427)						(417)
Short-term borrowings, net						—						78
Issuance of long-term debt, net of discounts						50						—
Repayment of long-term debt						(425)						—
Other, net						(6)						(11)
Cash used in financing activities						(808)						(350)
Change in cash and cash equivalents						460						(131)
Cash and cash equivalents at beginning of period						220						146
Cash and cash equivalents at end of period						$	680					$	15

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)						Preferred Stock Issued						Common Stock Issued						Preferred Stock						Common Stock						Paid-in Capital
						(Shares)												(Millions of dollars)
January 1, 2023						20,000						474,916,234						$	—					$	5					$	7,253
Net income						—						—						—						—						—
Other comprehensive income (Note G)						—						—						—						—						—
Preferred stock dividends - $13.75 per share (Note F)						—						—						—						—						—
Common stock issued						—						—						—						—						(3)
Common stock dividends - $0.955 per share (Note F)						—						—						—						—						—
Other, net						—						—						—						—						3
March 31, 2023						20,000						474,916,234						$	—					$	5					$	7,253

(Unaudited)						Preferred Stock Issued						Common Stock Issued						Preferred Stock						Common Stock						Paid-in Capital
						(Shares)												(Millions of dollars)
January 1, 2022						20,000						474,916,234						$	—					$	5					$	7,214
Net income						—						—						—						—						—
Other comprehensive income						—						—						—						—						—
Preferred stock dividends - $13.75 per share						—						—						—						—						—
Common stock issued						—						—						—						—						(6)
Common stock dividends - $0.935 per share						—						—						—						—						(26)
Other, net						—						—						—						—						(5)
March 31, 2022						20,000						474,916,234						$	—					$	5					$	7,177

Table of Contents

ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Continued)
(Unaudited)						Accumulated Other Comprehensive Loss						Retained Earnings						Treasury Stock						Total Equity
						(Millions of dollars)
January 1, 2023						$	(108)					$	50					$	(706)					$	6,494
Net income						—						1,049						—						1,049
Other comprehensive income (Note G)						9						—						—						9
Preferred stock dividends - $13.75 per share (Note F)						—						—						—						—
Common stock issued						—						—						7						4
Common stock dividends - $0.955 per share (Note F)						—						(427)						—						(427)
Other, net						—						—						—						3
March 31, 2023						$	(99)					$	672					$	(699)					$	7,132

(Unaudited)						Accumulated Other Comprehensive Loss						Retained Earnings						Treasury Stock						Total Equity
						(Millions of dollars)
January 1, 2022						$	(472)					$	—					$	(732)					$	6,015
Net income						—						391						—						391
Other comprehensive income						4						—						—						4
Preferred stock dividends - $13.75 per share						—						—						—						—
Common stock issued												—						12						6
Common stock dividends - $0.935 per share						—						(391)						—						(417)
Other, net												—						—						(5)
March 31, 2022						$	(468)					$	—					$	(720)					$	5,994

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

ONEOK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our accompanying unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC. These statements have been prepared in accordance with GAAP and reflect all adjustments that, in our opinion, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The 2022 year-end Consolidated Balance Sheet data was derived from our audited Consolidated Financial Statements but does not include all disclosures required by GAAP. These unaudited Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements in our Annual Report.

Recently Issued Accounting Standards Update - Changes to GAAP are established by the Financial Accounting Standards Board (FASB) in the form of ASUs to the FASB Accounting Standards Codification. We consider the applicability and impact of all ASUs. ASUs not discussed herein or in our Annual Report were assessed and determined to be either not applicable or clarifications of ASUs previously issued. There have been no new accounting pronouncements that have become effective or have been issued that are of significance or potential significance to us.

B. MEDFORD INCIDENT

On July 9, 2022, a fire occurred at our 210 MBbl/d Medford, Oklahoma, natural gas liquids fractionation facility. Beginning in August 2022, we developed claims related to the Medford incident and recorded accruals for the expected insurance recoveries. We assessed incurred costs and lost earnings related to business interruption and property damage to our facility, as well as timing of recognition under applicable insurance recovery guidance, and recorded accruals of $151 million in 2022 for insurance recoveries that offset our incurred costs and losses.

On January 9, 2023, we reached an agreement with our insurers to settle all claims for physical damage and business interruption related to the Medford incident. Under the terms of the settlement agreement, we agreed to resolve the claims for total insurance payments of $930 million, $100 million of which was received in 2022. The remaining $830 million was received in the first quarter 2023. The proceeds serve as settlement for property damage, business interruption claims to the date of the settlement and as payment in lieu of future business interruption insurance claims.

In the first quarter 2023, we applied the $830 million received to our outstanding insurance receivable at December 31, 2022, of $51 million, and recorded an operational gain for the remaining $779 million. We classified proceeds received within the Consolidated Statement of Cash Flows based on our assessment of the nature of the loss (property and business interruption) included in the settlement.

C. FAIR VALUE MEASUREMENTS

Determining Fair Value - For our fair value measurements, we utilize market prices, third-party pricing services, present value methods and standard option valuation models to determine the price we would receive from the sale of an asset or the transfer of a liability in an orderly transaction at the measurement date. We measure the fair value of a group of financial assets and liabilities consistent with how a market participant would price the net risk exposure at the measurement date. Determining the appropriate classification of our fair value measurements within the fair value hierarchy requires management’s judgment regarding the degree to which market data is observable or corroborated by observable market data. We categorize derivatives based on the lowest level input that is significant to the fair value measurement in its entirety. Our valuation techniques and inputs are consistent with those discussed in Note A of the Notes to Consolidated Financial Statements in our Annual Report.

Table of Contents

Recurring Fair Value Measurements - The following tables set forth our recurring fair value measurements as of the dates indicated:

			March 31, 2023
			Level 1						Level 2						Level 3						Total - Gross						Netting (a)						Total - Net
			(Millions of dollars)
Derivative assets
Commodity contracts			$	46					$	105					$	—					$	151					$	(106)					$	45
Interest-rate contracts			—						1						—						1						—						1
Total derivative assets			$	46					$	106					$	—					$	152					$	(106)					$	46
Derivative liabilities
Commodity contracts			$	(23)					$	(66)					$	—					$	(89)					$	89					$	—
Total derivative liabilities			$	(23)					$	(66)					$	—					$	(89)					$	89					$	—

(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheet on a net basis. We net derivative assets and liabilities when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us. At March 31, 2023, we posted no cash and held cash of $17 million from various counterparties, which offsets our derivative net asset position under master netting arrangements as shown in the table above.

			December 31, 2022
			Level 1						Level 2						Level 3						Total - Gross						Netting (a)						Total - Net
			(Millions of dollars)
Derivative assets
Commodity contracts			$	15					$	152					$	—					$	167					$	(125)					$	42
Interest-rate contracts			—						11						—						11						—						11
Total derivative assets			$	15					$	163					$	—					$	178					$	(125)					$	53
Derivative liabilities
Commodity contracts			$	(38)					$	(87)					$	—					$	(125)					$	125					$	—
Total derivative liabilities			$	(38)					$	(87)					$	—					$	(125)					$	125					$	—

(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheet on a net basis. We net derivative assets and liabilities when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us. At December 31, 2022, we held no cash and posted $9 million of cash with various counterparties, which is included in other current assets in our Consolidated Balance Sheet.

The following table sets forth a reconciliation of our Level 3 fair value measurements for the periods indicated:

									Three Months Ended
									March 31,
Derivative Assets (Liabilities)															2023						2022
															(Millions of dollars)
Net liabilities at beginning of period															$	—					$	(114)
Total changes in fair value:
Settlements included in net income (a)															—						38
New Level 3 derivatives included in other comprehensive income (b)															—						(1)
Unrealized change included in other comprehensive income (b)															—						(113)
Net liabilities at end of period															$	—					$	(190)

(a) - Included in commodity sales revenues/cost of sales and fuel in our Consolidated Statements of Income.

(b) - Included in change in fair value of derivatives in our Consolidated Statements of Comprehensive Income.

During the year ended December 31, 2022, we transferred out of Level 3 commodity derivatives associated with certain locations for both NGL and natural gas basis swaps, principally due to improved transparency of market prices as a result of the volume and frequency of transactions in these markets. We consider the valuation of these commodity derivatives, which are transacted through a clearing broker and valued with an unadjusted published price from an exchange, as a Level 2 valuation.

Other Financial Instruments - The approximate fair value of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings is equal to book value due to the short-term nature of these items. Our cash and cash equivalents are

Table of Contents

composed of bank and money market accounts and are classified as Level 1. Our short-term borrowings are classified as Level 2 since the estimated fair value of the short-term borrowings can be determined using information available in the commercial paper market. We have investments associated with our supplemental executive retirement plan and nonqualified deferred compensation plan that are carried at fair value and primarily are composed of exchange-traded mutual funds classified as Level 1.

The estimated fair value of our consolidated long-term debt, including current maturities, was $12.6 billion and $12.7 billion at March 31, 2023, and December 31, 2022, respectively. The book value of our consolidated long-term debt, including current maturities, was $13.2 billion and $13.6 billion at March 31, 2023, and December 31, 2022, respectively. The estimated fair value of the aggregate senior notes outstanding was determined using quoted market prices for similar issues with similar terms and maturities. The estimated fair value of our consolidated long-term debt is classified as Level 2.

D. RISK-MANAGEMENT AND HEDGING ACTIVITIES USING DERIVATIVES

Risk-management Activities - We are sensitive to changes in natural gas, crude oil and NGL prices, principally as a result of contractual terms under which these commodities are processed, purchased and sold. We are also subject to the risk of interest-rate fluctuation in the normal course of business. We use physical-forward purchases and sales and financial derivatives to secure a certain price for a portion of our natural gas, condensate and purity NGLs; to reduce our exposure to commodity price and interest-rate fluctuations; and to achieve more predictable cash flows. We follow established policies and procedures to assess risk and approve, monitor and report our risk-management activities. We have not used these instruments for trading purposes.

Commodity price risk - Commodity price risk refers to the risk of loss in cash flows and future earnings arising from adverse changes in the price of natural gas, NGLs and condensate. We may use commodity derivative instruments to reduce the near-term commodity price risk associated with a portion of our forecasted purchases and sales of commodities. Our exposure to commodity price risk is consistent with that discussed in our Annual Report.

Interest-rate risk - We may manage interest-rate risk through the use of fixed-rate debt, floating-rate debt and interest-rate swaps. Interest-rate swaps are agreements to exchange interest payments at some future point based on specified notional amounts. At March 31, 2023, and December 31, 2022, we had forward-starting interest-rate swaps with notional amounts totaling $375 million to hedge the variability of interest payments on a portion of our forecasted debt issuances. All of our interest-rate swaps are designated as cash flow hedges.

Fair Values of Derivative Instruments - The following table sets forth the fair values of our derivative instruments presented on a gross basis as of the dates indicated:

									March 31, 2023												December 31, 2022
			Location in our Consolidated Balance Sheets						Assets						(Liabilities)						Assets						(Liabilities)
Derivatives designated as hedging instruments									(Millions of dollars)
Commodity contracts (a)			Other current assets						$	151					$	(89)					$	160					$	(123)
			Other assets						—						—						6						(1)
Interest-rate contracts			Other current assets						1						—						11						—
Total derivatives designated as hedging instruments									$	152					$	(89)					$	177					$	(124)
Derivatives not designated as hedging instruments
Commodity contracts (a)			Other current assets						—						—						1						(1)
Total derivatives not designated as hedging instruments									—						—						1						(1)
Total derivatives									$	152					$	(89)					$	178					$	(125)

(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheets on a net basis when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us.

Table of Contents

Notional Quantities for Derivative Instruments - The following table sets forth the notional quantities for derivative instruments held as of the dates indicated:

						March 31, 2023						December 31 2022
			Contract Type			Net Purchased/Payor (Sold/Receiver)
Derivatives designated as hedging instruments:
Cash flow hedges
Fixed price
- Natural gas (Bcf)			Futures			(20.5)						(39.3)
- Crude oil and NGLs (MMBbl)			Futures			(13.0)						(8.4)
Basis
- Natural gas (Bcf)			Futures			(23.2)						(39.3)
Interest-rate contracts (Billions of dollars)			Swaps			$	0.4					$	0.4
Derivatives not designated as hedging instruments:
Fixed price
- Natural gas (Bcf)			Futures			—						(0.1)
- Crude oil and NGLs (MMBbl)			Futures			—						0.1
Basis
- Natural gas (Bcf)			Futures			—						(0.1)

Cash Flow Hedges - The following table sets forth the unrealized change in fair value of cash flow hedges in other comprehensive income (loss) for the periods indicated:

									Three Months Ended
									March 31,
												2023						2022
															(Millions of dollars)
Commodity contracts															$	40					$	(174)
Interest-rate contracts															(10)						81
Total unrealized change in fair value of cash flow hedges in other comprehensive income (loss)															$	30					$	(93)

The following table sets forth the effect of cash flow hedges on net income for the periods indicated:

Derivatives in Cash Flow Hedging Relationships			Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Net Income									Three Months Ended
						March 31,
												2023						2022
																		(Millions of dollars)
Commodity contracts			Commodity sales revenues															$	23					$	(211)
			Cost of sales and fuel															(3)						134
Interest-rate contracts			Interest expense															(5)						(9)
Total change in fair value of cash flow hedges reclassified from accumulated other comprehensive loss into net income on derivatives																		$	15					$	(86)

Credit Risk - We monitor the creditworthiness of our counterparties and compliance with policies and limits established by our Risk Oversight and Strategy Committee. We maintain credit policies with regard to our counterparties that we believe minimize credit risk. Our policies and related credit risk are consistent with those discussed in our Annual Report.

Table of Contents

E. DEBT

The following table sets forth our consolidated debt as of the dates indicated:

						March 31, 2023						December 31, 2022
						(Millions of dollars)
Commercial paper outstanding (a)						$	—					$	—
Senior unsecured obligations:
$425 at 5.0% due September 2023						—						425
$500 at 7.5% due September 2023						500						500
$500 at 2.75% due September 2024						500						500
$500 at 4.9% due March 2025						500						500
$400 at 2.2% due September 2025						387						387
$600 at 5.85% due January 2026						600						600
$500 at 4.0% due July 2027						500						500
$800 at 4.55% due July 2028						800						800
$100 at 6.875% due September 2028						100						100
$700 at 4.35% due March 2029						700						700
$750 at 3.4% due September 2029						714						714
$850 at 3.1% due March 2030						780						780
$600 at 6.35% due January 2031						600						600
$750 at 6.1% due November 2032						750						750
$400 at 6.00% due June 2035						400						400
$600 at 6.65% due October 2036						600						600
$600 at 6.85% due October 2037						600						600
$650 at 6.125% due February 2041						650						650
$400 at 6.2% due September 2043						400						400
$700 at 4.95% due July 2047						689						689
$1,000 at 5.2% due July 2048						1,000						1,000
$750 at 4.45% due September 2049						653						673
$500 at 4.5% due March 2050						443						443
$300 at 7.15% due January 2051						300						300
Guardian
$120 term loan, rate of 6.03% as of March 31, 2023, due June 2025						120						120
Viking
$60 term loan, rate of 6.16% as of March 31, 2023, due March 2026						50						—
Total debt						13,336						13,731
Unamortized portion of terminated swaps						9						10
Unamortized debt issuance costs and discounts						(117)						(120)
Current maturities of long-term debt						(500)						(925)
Long-term debt						$	12,728					$	12,696

(a) - Individual issuances of commercial paper under our commercial paper program generally mature in 90 days or less.

$2.5 Billion Credit Agreement - Our $2.5 Billion Credit Agreement is a revolving credit facility and contains certain customary conditions for borrowing, as well as customary financial, affirmative and negative covenants. Among other things, these covenants include maintaining a ratio of consolidated net indebtedness to adjusted EBITDA (EBITDA, as defined in our $2.5 Billion Credit Agreement, adjusted for all noncash charges and increased for projected EBITDA from certain lender-approved capital expansion projects) of no more than 5.0 to 1. At March 31, 2023, we had no outstanding borrowings, our ratio of indebtedness to adjusted EBITDA was 2.8 to 1, and we were in compliance with all covenants under our $2.5 Billion Credit Agreement.

Viking Term Loan Agreement - In March 2023, Viking entered into a $60 million senior unsecured Term Loan Agreement. The Viking Term Loan Agreement matures in March 2026 and bears interest at Term SOFR plus an applicable margin based on Viking’s credit rating at the time of determination plus an adjustment of 10 basis points. Under Viking’s current credit ratings, the applicable margin is 125 basis points. The Viking Term Loan Agreement allows prepayment of all or any portion

Table of Contents

outstanding without penalty or premium. During the first quarter 2023, Viking drew $50 million available under the agreement and the proceeds were used primarily to repay intercompany debt with ONEOK. The remainder was used for general corporate purposes. The remaining $10 million is available to be drawn until June 30, 2023. As of March 31, 2023, Viking is in compliance with all covenants under the Viking Term Loan Agreement.

Debt Repayments - In February 2023, we redeemed our $425 million, 5.0% senior notes due September 2023 at 100% of the principal amount, plus accrued and unpaid interest, with cash on hand.

Subsequent event - In April, we elected to redeem our $500 million, 7.5% senior notes due September 2023, with an effective redemption date in June 2023. The redemption price will be 100% of the principal amount of the notes, plus accrued and unpaid interest, which we expect to pay with cash on hand.

Debt Guarantees - ONEOK, ONEOK Partners and the Intermediate Partnership have cross guarantees in place for ONEOK’s and ONEOK Partners’ indebtedness. The Guardian Term Loan Agreement and Viking Term Loan Agreement are not guaranteed by ONEOK, ONEOK Partners or the Intermediate Partnership.

F. EQUITY

Dividends - Holders of our common stock share equally in any dividend declared by our Board of Directors, subject to the rights of the holders of outstanding Series E Preferred Stock. Dividends paid on our common stock in February 2023 were $0.955 per share. A common stock dividend of $0.955 per share was declared for shareholders of record at the close of business on May 1, 2023, payable May 15, 2023.

Our Series E Preferred Stock pays quarterly dividends on each share of Series E Preferred Stock, when, as and if declared by our Board of Directors, at a rate of 5.5% per year. We paid dividends for the Series E Preferred Stock of $0.3 million in February 2023. Dividends totaling $0.3 million were declared for the Series E Preferred Stock and are payable May 15, 2023.

G. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table sets forth the balance in accumulated other comprehensive loss for the period indicated, net of tax:

						Risk- Management Assets/Liabilities						Retirement and Other Postretirement Benefit Plan Obligations (a)						Risk- Management Assets/Liabilities of Unconsolidated Affiliates						Accumulated Other Comprehensive Loss
						(Millions of dollars)
January 1, 2023						$	(58)					$	(55)					$	5					$	(108)
Other comprehensive income (loss) before reclassifications						23						—						(2)						21
Amounts reclassified to net income (b)						(12)						—						—						(12)
Other comprehensive income (loss)						11						—						(2)						9
March 31, 2023						$	(47)					$	(55)					$	3					$	(99)

(a) - Includes amounts related to supplemental executive retirement plan.

(b) - See Note D for details of amounts reclassified to net income for risk-management assets/liabilities.

Table of Contents

The following table sets forth information about the balance of accumulated other comprehensive loss at March 31, 2023, representing unrealized gains (losses) related to risk-management assets and liabilities, net of tax:

						Risk- Management Assets/Liabilities
						(Millions of dollars)
Commodity derivative instruments expected to be realized within the next 21 months (a)						$	48
Settled interest-rate swaps to be recognized over the life of the long-term, fixed-rate debt (b)						(95)
Interest-rate swaps with future settlement dates expected to be amortized over the life of long-term debt						—
Accumulated other comprehensive loss at March 31, 2023						$	(47)

(a) - Based on commodity prices on March 31, 2023, we expect net gains of $48 million, net of tax, will be reclassified into earnings during the next 12 months. The remaining forecasted gains and losses have offsetting positions and are immaterial.

(b) - We expect net losses of $18 million, net of tax, will be reclassified into earnings during the next 12 months.

The remaining amounts in accumulated other comprehensive loss relate primarily to our retirement and other postretirement benefit plan obligations, which are expected to be amortized over the average remaining service period of employees participating in these plans.

H. EARNINGS PER SHARE

The following tables set forth the computation of basic and diluted EPS for the periods indicated:

			Three Months Ended March 31, 2023
			Income						Shares						Per Share Amount
			(Millions, except per share amounts)
Basic EPS
Net income available for common stock			$	1,049					448						$	2.34
Diluted EPS
Effect of dilutive securities			—						1
Net income available for common stock and common stock equivalents			$	1,049					449						$	2.34

			Three Months Ended March 31, 2022
			Income						Shares						Per Share Amount
			(Millions, except per share amounts)
Basic EPS
Net income available for common stock			$	391					447						$	0.87
Diluted EPS
Effect of dilutive securities			—						1
Net income available for common stock and common stock equivalents			$	391					448						$	0.87

Table of Contents

I. UNCONSOLIDATED AFFILIATES

Equity in Net Earnings from Investments - The following table sets forth our equity in net earnings from investments for the periods indicated:

									Three Months Ended
									March 31,
															2023						2022
															(Millions of dollars)
Northern Border															$	24					$	20
Overland Pass															9						5
Roadrunner															7						9
Other															—						2
Equity in net earnings from investments															$	40					$	36

We incurred expenses in transactions with unconsolidated affiliates of $28 million and $15 million for the three months ended March 31, 2023 and 2022, respectively, related primarily to Overland Pass and Northern Border. Revenue earned and accounts receivable from, and accounts payable to, our equity-method investees were not material.

We have an operating agreement with Roadrunner that provides for reimbursement or payment to us for management services and certain operating costs. Reimbursements and payments from Roadrunner included in operating income in our Consolidated Statements of Income for all periods presented were not material.

J. COMMITMENTS AND CONTINGENCIES

Environmental Matters and Pipeline Safety - The operation of pipelines, plants and other facilities for the gathering, processing, fractionation, transportation and storage of natural gas, NGLs, condensate and other products is subject to numerous and complex laws and regulations pertaining to health, safety and the environment. As an owner and/or operator of these facilities, we must comply with laws and regulations that relate to air and water quality, hazardous and solid waste management and disposal, cultural resource protection and other environmental and safety matters. The cost of planning, designing, constructing and operating pipelines, plants and other facilities must incorporate compliance with these laws, regulations and safety standards. Failure to comply with these laws and regulations may trigger a variety of administrative, civil and potentially criminal enforcement measures, including citizen suits, which can include the assessment of monetary penalties, the imposition of remedial requirements and the issuance of injunctions or restrictions on operation or construction. Management does not believe that, based on currently known information, a material risk of noncompliance with these laws and regulations exists that will affect adversely our consolidated results of operations, financial condition or cash flows.

Legal Proceedings - We are a party to various legal proceedings that have arisen in the normal course of our operations. While the results of these proceedings cannot be predicted with certainty, we believe the reasonably possible losses from such proceedings, individually and in the aggregate, are not material. Additionally, we believe the probable final outcome of such proceedings will not have a material adverse effect on our consolidated results of operations, financial position or cash flows.

K. REVENUES

Contract Assets and Contract Liabilities - Our contract asset balances at the beginning and end of the period primarily relate to our firm service transportation contracts with tiered rates, which are not material. Our contract liabilities at the beginning and end of the period primarily represent deferred revenue on storage contracts and deferred revenue on contributions in aid of construction received from customers, which are not material.

Receivables from Customers and Revenue Disaggregation - Substantially all of the balances in accounts receivable on our Consolidated Balance Sheets at March 31, 2023, and December 31, 2022, relate to customer receivables. Revenue sources are disaggregated in Note L.

Transaction Price Allocated to Unsatisfied Performance Obligations - We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) variable consideration on contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Table of Contents

The following table presents aggregate value allocated to unsatisfied performance obligations as of March 31, 2023, and the amounts we expect to recognize in revenue in future periods, related primarily to firm transportation and storage contracts with remaining contract terms ranging from one month to 22 years:

Expected Period of Recognition in Revenue						(Millions of dollars)
Remainder of 2023						$	328
2024						376
2025						284
2026						271
2027 and beyond						874
Total estimated transaction price allocated to unsatisfied performance obligations						$	2,133

The table above excludes variable consideration allocated entirely to wholly unsatisfied performance obligations, wholly unsatisfied promises to transfer distinct goods or services that are part of a single performance obligation and consideration we determine to be fully constrained. The amounts we determined to be fully constrained relate to future sales obligations under long-term sales contracts where the transaction price is not known and minimum volume agreements, which we consider to be fully constrained until invoiced.

L. SEGMENTS

Segment Descriptions - Our operations are divided into three reportable business segments as follows:

• our Natural Gas Gathering and Processing segment gathers, treats and processes natural gas;

• our Natural Gas Liquids segment gathers, treats, fractionates and transports NGLs and stores, markets and distributes purity NGLs; and

• our Natural Gas Pipelines segment transports and stores natural gas.

Other and eliminations consist of corporate costs, the operating and leasing activities of our headquarters building and related parking facility, the activity of our wholly owned captive insurance company and eliminations necessary to reconcile our reportable segments to our Consolidated Financial Statements.

Table of Contents

Operating Segment Information - The following tables set forth certain selected financial information for our operating segments for the periods indicated:

Three Months Ended March 31, 2023			Natural Gas Gathering and Processing						Natural Gas Liquids (a)						Natural Gas Pipelines (b)						Total Segments
			(Millions of dollars)
NGL and condensate sales			$	644					$	3,551					$	—					$	4,195
Residue natural gas sales			568						—						25						593
Gathering, processing and exchange services revenue			38						131						—						169
Transportation and storage revenue			—						50						145						195
Other			8						3						1						12
Total revenues (c)			1,258						3,735						171						5,164
Cost of sales and fuel (exclusive of depreciation and operating costs)			(875)						(3,095)						(14)						(3,984)
Operating costs			(105)						(152)						(45)						(302)
Equity in net earnings from investments			—						9						31						40
Noncash compensation expense			4						6						2						12
Other			1						778						—						779
Segment adjusted EBITDA			$	283					$	1,281					$	145					$	1,709
Depreciation and amortization			$	(67)					$	(78)					$	(17)					$	(162)
Investments in unconsolidated affiliates			$	26					$	413					$	349					$	788
Total assets			$	6,899					$	14,437					$	2,239					$	23,575
Capital expenditures			$	98					$	137					$	46					$	281

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $638 million, of which $577 million related to revenues within the segment, cost of sales and fuel of $184 million and operating costs of $87 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $116 million, cost of sales and fuel of $15 million and operating costs of $38 million.

(c) - Intersegment revenues are primarily commodity sales, which are based on the contracted selling price that is generally index-based and settled monthly, and for our Natural Gas Gathering and Processing segment totaled $631 million. Intersegment revenues for our Natural Gas Liquids and Natural Gas Pipelines segments were not material.

Three Months Ended March 31, 2023						Total Segments						Other and Eliminations						Total
						(Millions of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales						$	4,195					$	(634)					$	3,561
Residue natural gas sales						593						—						593
Gathering, processing and exchange services revenue						169						—						169
Transportation and storage revenue						195						(2)						193
Other						12						(7)						5
Total revenues (a)						$	5,164					$	(643)					$	4,521
Cost of sales and fuel (exclusive of depreciation and operating costs)						$	(3,984)					$	637					$	(3,347)
Operating costs						$	(302)					$	6					$	(296)
Depreciation and amortization						$	(162)					$	—					$	(162)
Equity in net earnings from investments						$	40					$	—					$	40
Investments in unconsolidated affiliates						$	788					$	1					$	789
Total assets						$	23,575					$	889					$	24,464
Capital expenditures						$	281					$	8					$	289

(a) - Noncustomer revenue for the three months ended March 31, 2023, totaled $40 million related primarily to gains from derivatives on commodity contracts.

Table of Contents

Three Months Ended March 31, 2022			Natural Gas Gathering and Processing						Natural Gas Liquids (a)						Natural Gas Pipelines (b)						Total Segments
			(Millions of dollars)
NGL and condensate sales			$	1,004					$	4,549					$	—					$	5,553
Residue natural gas sales			551						—						26						577
Gathering, processing and exchange services revenue			31						136						—						167
Transportation and storage revenue			—						47						123						170
Other			6						2						—						8
Total revenues (c)			1,592						4,734						149						6,475
Cost of sales and fuel (exclusive of depreciation and operating costs)			(1,289)						(4,089)						(17)						(5,395)
Operating costs			(94)						(129)						(41)						(264)
Equity in net earnings from investments			2						5						29						36
Noncash compensation expense and other			4						7						4						15
Segment adjusted EBITDA			$	215					$	528					$	124					$	867
Depreciation and amortization			$	(63)					$	(75)					$	(15)					$	(153)
Investments in unconsolidated affiliates			$	27					$	415					$	355					$	797
Total assets			$	6,914					$	15,102					$	2,154					$	24,170
Capital expenditures			$	93					$	126					$	23					$	242

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $604 million, of which $547 million related to revenues within the segment, cost of sales and fuel of $146 million and operating costs of $75 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $126 million, cost of sales and fuel of $21 million and operating costs of $35 million.

(c) - Intersegment revenues are primarily commodity sales, which are based on the contracted selling price that is generally index-based and settled monthly, and for our Natural Gas Gathering and Processing segment totaled $1.0 billion. Intersegment revenues for our Natural Gas Liquids and Natural Gas Pipelines segments were not material.

Three Months Ended March 31, 2022						Total Segments						Other and Eliminations						Total
						(Millions of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales						$	5,553					$	(1,028)					$	4,525
Residue natural gas sales						577						—						577
Gathering, processing and exchange services revenue						167						—						167
Transportation and storage revenue						170						(2)						168
Other						8						—						8
Total revenues (a)						$	6,475					$	(1,030)					$	5,445
Cost of sales and fuel (exclusive of depreciation and operating costs)						$	(5,395)					$	1,029					$	(4,366)
Operating costs						$	(264)					$	—					$	(264)
Depreciation and amortization						$	(153)					$	(1)					$	(154)
Equity in net earnings from investments						$	36					$	—					$	36
Investments in unconsolidated affiliates						$	797					$	—					$	797
Total assets						$	24,170					$	(177)					$	23,993
Capital expenditures						$	242					$	15					$	257

(a) - Noncustomer revenue for the three months ended March 31, 2022, totaled $(175) million related primarily to losses from derivatives on commodity contracts.

Table of Contents

									Three Months Ended
									March 31,
															2023						2022
															(Millions of dollars)
Reconciliation of net income to total segment adjusted EBITDA
Net income															$	1,049					$	391
Add:
Interest expense, net of capitalized interest															166						172
Depreciation and amortization															162						154
Income taxes															330						122
Noncash compensation expense and other															10						25
Other corporate costs															(8)						3
Total segment adjusted EBITDA (a)															$	1,709					$	867

(a) - The three months ended March, 31 2023 includes $733 million related to the Medford incident, including a settlement gain of $779 million, offset partially by $46 million of third-party fractionation costs.