Item 1A. RISK FACTORS

The entry into the Merger Agreement, and the failure to successfully combine the businesses of ONEOK and Magellan, may adversely affect our future results.

Our entry into the Merger Agreement represents several risks. Among other obligations, the Merger Agreement subjects us to restrictions on our business activities prior to the closing of the Merger Transaction. These restrictions could prevent us from pursuing certain business opportunities that arise prior to the closing and are outside the ordinary course of business.

The Merger Transaction is subject to the satisfaction of a number of other conditions beyond the parties’ control that may prevent, delay or otherwise materially adversely affect the completion of the Merger Transaction. These conditions include, among other things, Magellan unitholder approval of the Merger Agreement and ONEOK shareholder approval of the issuance of ONEOK common stock in connection with the Merger Transaction. We cannot predict with certainty whether and when any of these conditions will be satisfied. Any delay in completing the Merger Transaction could cause the combined company not to realize, or delay the realization, of some or all of the benefits that we expect to achieve from the Merger Transaction. Additionally, if the Merger Transaction is not completed, our ongoing business may be adversely affected and, without realizing any of the benefits of having completed the Merger Transaction, we may experience certain negative effects, including that we may experience negative reaction from the financial markets and business partners and that we may still be required to pay significant costs relating to the Merger Transaction, such as accounting, legal and other advisory and printing costs.

The success of the Merger Transaction will depend, in part, on our ability to realize the anticipated benefits from combining the businesses of ONEOK and Magellan. To realize these anticipated benefits, ONEOK’s and Magellan’s businesses must be successfully combined. If the combined company is not able to achieve these objectives, the anticipated benefits of the Merger Transaction may not be realized fully or at all or may take longer to realize than expected. In addition, the actual integration may result in additional and unforeseen expenses, which could reduce the anticipated benefits of the Merger Transaction, and such integration may not be successful or may take longer than anticipated. ONEOK and Magellan, including their respective subsidiaries, have operated and, until the completion of the Merger Transaction, will continue to operate independently. It is possible that the integration process could result in the loss of key employees, as well as the disruption of our ongoing businesses or inconsistencies in our standards, controls, procedures and policies. Any or all of those occurrences could affect adversely the combined company’s ability to maintain relationships with customers and employees after the Merger Transaction or to achieve the anticipated benefits of the Merger Transaction. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on us.

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, merger or other business combination agreements. Even if such a lawsuit is without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, which could have a negative impact on our liquidity and financial condition. Lawsuits that may be brought against us or our directors could also seek, among other things, injunctive relief or other equitable relief, including a request to rescind parts of the Merger Agreement already implemented and to otherwise enjoin the parties from consummating the Merger Transaction. Additionally, the defense or settlement of any lawsuits or claim against us or Magellan that remains unresolved at the time the Merger Transaction is completed may be assumed by us and could affect adversely the combined company’s business, results of operations, financial condition or cash flows.

Upon termination of the Merger Agreement under certain circumstances, we may be required to reimburse Magellan’s expenses up to $75 million or pay Magellan a termination fee equal to $450 million, less any expenses previously paid.

Our investors should consider the risks set forth in Part I, Item 1A, Risk Factors, of our Annual Report that could affect us and our business. Although we have tried to discuss key factors, our investors need to be aware that other risks may prove to be important in the future. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our financial performance. Investors should consider carefully the discussion of risks and the other information included or incorporated by reference in this Quarterly Report, including “Forward-Looking Statements,” which are included in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

**ITEM 2.**UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

**ITEM 3.**DEFAULTS UPON SENIOR SECURITIES

Not applicable.

**ITEM 4.**MINE SAFETY DISCLOSURES

Not applicable.