Item 1. FINANCIAL STATEMENTS

ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
			Three Months Ended												Nine Months Ended
			September 30,												September 30,
(Unaudited)			2023						2022						2023						2022
			(Millions of dollars, except per share amounts)
Revenues
Commodity sales			$	3,760					$	5,564					$	11,287					$	16,320
Services			429						350						1,155						1,035
Total revenues (Note L)			4,189						5,914						12,442						17,355
Cost of sales and fuel (exclusive of items shown separately below)			2,799						4,773						8,628						14,017
Operations and maintenance			308						238						833						683
Depreciation and amortization			177						157						509						469
General taxes			44						48						148						144
Transaction costs (Note B)			123						—						133						—
Other operating (income) expense, net (Note C)			(1)						(2)						(782)						(9)
Operating income			739						700						2,973						2,051
Equity in net earnings from investments (Note J)			49						39						132						111
Other income (expense), net			22						(8)						43						(30)
Interest expense (net of capitalized interest of $8, $17, $32, and $42, respectively)			(215)						(167)						(561)						(510)
Income before income taxes			595						564						2,587						1,622
Income taxes			(141)						(132)						(616)						(385)
Net income			454						432						1,971						1,237
Less: Preferred stock dividends			1						1						1						1
Net income available to common shareholders			$	453					$	431					$	1,970					$	1,236
Basic EPS (Note I)			$	0.99					$	0.96					$	4.37					$	2.76
Diluted EPS (Note I)			$	0.99					$	0.96					$	4.36					$	2.76
Average shares (millions)
Basic			457.3						447.7						451.2						447.4
Diluted			458.2						448.2						452.1						448.3

See accompanying Notes to Consolidated Financial Statements.

ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
			Three Months Ended												Nine Months Ended
			September 30,												September 30,
(Unaudited)			2023						2022						2023									2022
			(Millions of dollars)
Net income			$	454					$	432					$	1,971								$	1,237
Other comprehensive income (loss), net of tax
Change in fair value of derivatives, net of tax of $(3), $(31), $(25) and $(17), respectively			12						107						86									57
Derivative amounts reclassified to net income, net of tax of $4, $(16), $14 and $(57), respectively			(7)						54						(44)									190
Change in retirement and other postretirement benefit plan obligations, net of tax of $(1), $(1), $(1) and $(3), respectively			2						3						3									9
Other comprehensive income (loss) of unconsolidated affiliates, net of tax of $—, $(1), $1 and $(5), respectively			—						3						(5)									16
Total other comprehensive income, net of tax			7						167						40									272
Comprehensive income			$	461					$	599					$	2,011								$	1,509

See accompanying Notes to Consolidated Financial Statements.

ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
						September 30,						December 31,
(Unaudited)						2023						2022
Assets			(Millions of dollars)
Current assets
Cash and cash equivalents						$	284					$	220
Accounts receivable, net						1,571						1,532
Materials and supplies						142						149
Inventories						869						432
Commodity imbalances						22						43
Other current assets						300						172
Total current assets						3,188						2,548
Property, plant and equipment
Property, plant and equipment						37,626						25,015
Accumulated depreciation and amortization						5,537						5,063
Net property, plant and equipment						32,089						19,952
Other assets
Investments in unconsolidated affiliates						1,795						802
Goodwill						5,682						528
Intangible assets, net						861						225
Other assets						324						324
Total other assets						8,662						1,879
Total assets						$	43,939					$	24,379
Liabilities and equity
Current liabilities
Current maturities of long-term debt (Note F)						$	500					$	925
Accounts payable						1,619						1,359
Commodity imbalances						248						254
Accrued taxes						220						136
Accrued interest						218						233
Operating lease liability						32						12
Other current liabilities						461						132
Total current liabilities						3,298						3,051
Long-term debt, excluding current maturities (Note F)						21,450						12,696
Deferred credits and other liabilities
Deferred income taxes						2,349						1,739
Operating lease liability						77						68
Other deferred credits						466						331
Total deferred credits and other liabilities						2,892						2,138
Commitments and contingencies (Note K)
Equity (Note G)
Preferred stock, $0.01 par value: authorized and issued 20,000 shares at September 30, 2023, and December 31, 2022						—						—
Common stock, $0.01 par value: authorized 1,200,000,000 shares; issued 609,713,834 shares and outstanding 582,536,892 shares at September 30, 2023; issued 474,916,234 shares and outstanding 447,157,771 shares at December 31, 2022						6						5
Paid-in capital						16,315						7,253
Accumulated other comprehensive loss (Note H)						(68)						(108)
Retained earnings						737						50
Treasury stock, at cost: 27,176,942 shares at September 30, 2023, and 27,758,463 shares at December 31, 2022						(691)						(706)
Total equity						16,299						6,494
Total liabilities and equity						$	43,939					$	24,379

See accompanying Notes to Consolidated Financial Statements.

ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
						Nine Months Ended
						September 30,
(Unaudited)						2023						2022
						(Millions of dollars)
Operating activities
Net income						$	1,971					$	1,237
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization						509						469
Equity in net earnings from investments						(132)						(111)
Distributions received from unconsolidated affiliates						134						110
Deferred income taxes						599						345
Medford settlement gain						(779)						—
Medford settlement proceeds						502						—
Other, net						79						46
Changes in assets and liabilities:
Accounts receivable						153						(260)
Inventories, net of commodity imbalances						(104)						(165)
Accounts payable						38						296
Other assets and liabilities, net						(57)						(101)
Cash provided by operating activities						2,913						1,866
Investing activities
Capital expenditures (less allowance for equity funds used during construction)						(992)						(886)
Cash paid for Magellan Acquisition, net of cash acquired						(5,008)						—
Contributions to unconsolidated affiliates						(111)						(2)
Distributions received from unconsolidated affiliates in excess of cumulative earnings						18						18
Medford settlement proceeds						328						—
Other, net						6						6
Cash used in investing activities						(5,759)						(864)
Financing activities
Dividends paid						(1,283)						(1,253)
Short-term borrowings, net						—						901
Issuance of long-term debt, net of discounts						5,298						120
Debt financing costs						(71)						(1)
Repayment of long-term debt						(1,040)						(896)
Other, net						6						3
Cash provided by (used in) financing activities						2,910						(1,126)
Change in cash and cash equivalents						64						(124)
Cash and cash equivalents at beginning of period						220						146
Cash and cash equivalents at end of period						$	284					$	22

See accompanying Notes to Consolidated Financial Statements.

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 H)						—						—						—						—						—
Preferred stock dividends - $13.75 per share (Note G)						—						—						—						—						—
Common stock issued						—						—						—						—						(3)
Common stock dividends - $0.955 per share (Note G)						—						—						—						—						—
Other, net						—						—						—						—						3
March 31, 2023						20,000						474,916,234						—						5						7,253
Net income						—						—						—						—						—
Other comprehensive income (Note H)						—						—						—						—						—
Preferred stock dividends - $13.75 per share (Note G)						—						—						—						—						—
Common stock issued						—						—						—						—						7
Common stock dividends - $0.955 per share (Note G)						—						—						—						—						—
Other, net						—						—						—						—						10
June 30, 2023						20,000						474,916,234						—						5						7,270
Net income						—						—						—						—						—
Other comprehensive income (Note H)						—						—						—						—						—
Preferred stock dividends - $13.75 per share (Note G)						—						—						—						—						—
Magellan Acquisition consideration						—						134,797,600						—						1						9,061
Common stock issued						—						—						—						—						3
Common stock dividends - $0.955 per share (Note G)						—						—						—						—						—
Other, net						—						—						—						—						(19)
September 30, 2023						20,000						609,713,834						$	—					$	6					$	16,315

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
Net income						—						—						—						—						—
Other comprehensive income						—						—						—						—						—
Preferred stock dividends - $13.75 per share						—						—						—						—						—
Common stock issued						—						—						—						—						7
Common stock dividends - $0.935 per share						—						—						—						—						(4)
Other, net						—						—						—						—						10
June 30, 2022						20,000						474,916,234						—						5						7,190
Net income						—						—						—						—						—
Other comprehensive income						—						—						—						—						—
Preferred stock dividends - $13.75 per share						—						—						—						—						—
Common stock issued						—						—						—						—						4
Common stock dividends - $0.935 per share						—						—						—						—						13
Other, net						—						—						—						—						11
September 30, 2022						20,000						474,916,234						$	—					$	5					$	7,218

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 H)						9						—						—						9
Preferred stock dividends - $13.75 per share (Note G)						—						—						—						—
Common stock issued						—						—						7						4
Common stock dividends - $0.955 per share (Note G)						—						(427)						—						(427)
Other, net						—						—						—						3
March 31, 2023						(99)						672						(699)						7,132
Net income						—						468						—						468
Other comprehensive income (Note H)						24						—						—						24
Preferred stock dividends - $13.75 per share (Note G)						—						—						—						—
Common stock issued						—						—						6						13
Common stock dividends - $0.955 per share (Note G)						—						(429)						—						(429)
Other, net						—						—						—						10
June 30, 2023						(75)						711						(693)						7,218
Net income						—						454						—						454
Other comprehensive income (Note H)						7						—						—						7
Preferred stock dividends - $13.75 per share (Note G)						—						(1)						—						(1)
Magellan Acquisition consideration						—						—						—						9,062
Common stock issued						—						—						2						5
Common stock dividends - $0.955 per share (Note G)						—						(427)						—						(427)
Other, net						—						—						—						(19)
September 30, 2023						$	(68)					$	737					$	(691)					$	16,299

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
Net income						—						414						—						414
Other comprehensive income						101						—						—						101
Preferred stock dividends - $13.75 per share						—						—						—						—
Common stock issued						—						—						7						14
Common stock dividends - $0.935 per share						—						(414)						—						(418)
Other, net						—						—						—						10
June 30, 2022						(367)						—						(713)						6,115
Net income						—						432						—						432
Other comprehensive income						167						—						—						167
Preferred stock dividends - $13.75 per share						—						(1)						—						(1)
Common stock issued						—						—						2						6
Common stock dividends - $0.935 per share						—						(431)						—						(418)
Other, net						—						—						—						11
September 30, 2022						$	(200)					$	—					$	(711)					$	6,312

See accompanying Notes to Consolidated Financial Statements.

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. Certain reclassifications have been made in the prior year Consolidated Financial Statements to conform to the current year presentation. These unaudited Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements in our Annual Report.

Goodwill Impairment Review - We assess our goodwill for impairment at least annually as of July 1, unless events or changes in circumstances indicate an impairment may have occurred before that time. At July 1, 2023, we assessed qualitative factors to determine whether it was more likely than not that the fair value of each of our reporting units with goodwill was less than its carrying amount. After assessing qualitative factors (including macroeconomic conditions, industry and market considerations, costs and overall financial performance), we determined that it was more likely than not that the fair value of the Natural Gas Pipelines and Natural Gas Liquids reporting units were not less than their respective carrying value, that no further testing was necessary and that goodwill was not considered impaired.

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. MAGELLAN ACQUISITION

On September 25, 2023, we completed the previously announced agreement to acquire all the outstanding common units of Magellan in a cash-and-stock transaction. The acquisition strategically diversifies our complementary asset base and allows for significant expected synergies as a combined entity. Pursuant to the Merger Agreement, each common unit of Magellan was exchanged for a fixed ratio of 0.667 shares of ONEOK common stock and $25.00 of cash, for a total consideration of $14.1 billion. A total of approximately 135 million shares of common stock were issued, with a fair value of approximately $9.0 billion as of the closing date of the Magellan Acquisition. We funded the cash portion of the acquisition with an underwritten public offering of $5.25 billion senior unsecured notes. In connection with the underwritten public offering, we terminated the undrawn commitment letter for the $5.25 billion unsecured 364-day bridge loan facility. For additional information on our long-term debt, see Note F.

Magellan’s operations are principally composed of transportation, storage and distribution of Refined Products, certain NGLs and crude oil. The assets acquired consist of an approximately 9,800-mile Refined Products pipeline system with 54 terminals, including one marine storage terminal, and crude oil infrastructure with approximately 1,000 miles of pipelines, one condensate splitter and three storage terminals. We also acquired ownership interests in Magellan’s eight unconsolidated affiliates. In conjunction with the Magellan Acquisition, Magellan’s results of operations will be reported within our new Refined Products and Crude segment, consistent with how information is presented to our chief operating decision maker.

The Magellan Acquisition was accounted for using the acquisition method of accounting for business combinations pursuant to Accounting Standards Codification 805, “Business Combinations,” which requires, among other things, assets acquired and liabilities assumed to be recorded at their fair values on the acquisition date. Determining the fair value of acquired assets and liabilities assumed requires management’s judgment and the use of independent valuation specialists. The purchase price allocation presented below is preliminary, as certain data necessary to complete the purchase price allocation is not yet available, including, but not limited to, the final valuation of assets acquired and liabilities assumed. Management is also evaluating certain assumptions of assets acquired and liabilities assumed and may adjust the allocation in subsequent periods. The final valuation will be completed no later than one year from the acquisition date.

The following tables set forth the acquisition consideration and preliminary purchase price allocation of assets acquired and liabilities assumed:

			At September 25, 2023
			(Millions of dollars and shares/units, except per share/unit data)
Magellan public common units outstanding			202.1
Cash consideration per Magellan unit			$25.00
Cash consideration			$	5,052
Magellan public common units outstanding			202.1
ONEOK exchange ratio per Magellan unit			0.667
Shares of ONEOK common stock issued			134.8
ONEOK common stock closing price on September 25, 2023			$66.54
Fair value of common stock issued			$	8,969
Fair value of Magellan replacement equity awards			93
Equity consideration			$	9,062
Total consideration			$	14,114

			At September 25, 2023
Assets acquired:			(Millions of dollars)
Cash and cash equivalents			$	44
Accounts receivables, net			245
Inventories			348
Other current assets			65
Property, plant and equipment			11,562
Investments in unconsolidated affiliates			909
Intangible assets			645
Other assets			112
Total assets acquired			13,930
Liabilities assumed:
Accounts payable			221
Other current liabilities			533
Long-term debt, excluding current maturities			4,013
Other deferred credits and liabilities			203
Total liabilities assumed			4,970
Total identifiable net assets			8,960
Goodwill			5,154
Total purchase price			$	14,114

Property, plant and equipment:

Property, plant and equipment consists primarily of pipeline, pipeline-related equipment, storage tanks and processing equipment and will be depreciated on a straight-line basis over the estimated useful lives of the assets.

Intangible assets:

The preliminary value of net identifiable intangible assets relates to contract-based customer relationships that will be amortized over the period of expected benefit.

Long-term debt, excluding current maturities:

We assumed the outstanding debt of Magellan and utilized publicly traded prices to estimate the fair value. The debt comprises senior unsecured obligations with varying maturities and interest rates as outlined in Note F. Recognizing the debt at its acquisition date fair value resulted in a discount from the notional value. The discount will be amortized into interest expense over the remaining life of the debt.

Other deferred credits and liabilities:

Magellan’s pension and postretirement benefit net liabilities of $71 million were assumed in conjunction with the Magellan Acquisition. These defined benefit plans are composed of two pension plans, including one for non-union employees and one for union employees, as well as a postretirement welfare benefit plan for certain employees.

Goodwill:

The following table sets forth the amounts of goodwill by segment for the periods indicated:

			Natural Gas Gathering and Processing						Natural Gas Liquids						Natural Gas Pipelines						Refined Products and Crude						Total
			(Millions of dollars)
Gross goodwill			$	153					$	371					$	157					$	—					$	681
Accumulated impairment losses			(153)						—						—						—						(153)
December 31, 2022			—						371						157						—						528
Acquisitions (a)			—						—						—						5,154						5,154
September 30, 2023			$	—					$	371					$	157					$	5,154					$	5,682

(a) - Goodwill from the Magellan Acquisition primarily represents expected commercial and cost synergies and is expected to be fully deductible for tax purposes. Allocation is preliminary and may be updated as we continue to evaluate the benefits of expected commercial and cost synergies to reporting units.

Results of Operations

The results of operations attributable to the Magellan Acquisition have been included in our Consolidated Financial Statements since the date of the acquisition through September 30, 2023. Revenue and net income attributable to the assets acquired for the period September 25, 2023, through September 30, 2023, were $72 million and $29 million, respectively.

For the nine months ended September 30, 2023, we recognized approximately $154 million of transaction costs associated with the Magellan Acquisition, as outlined in the table below. These non-recurring costs are primarily related to advisory fees, severance and settlement of share-based awards for certain Magellan employees, as well as bridge facility commitment fees. The following table sets forth the impact of acquisition related transaction costs in our Consolidated Statements of Income as of the periods indicated:

						Three Months Ended						Nine Months Ended
						September 30,						September 30,
						2023						2023
						(Millions of dollars)
Transaction costs						$	123					$	133
Interest expense						13						21
Total						$	136					$	154

Pro Forma Financial Information

The following table sets forth the unaudited supplemental pro forma financial information for the three and nine months ended September 30, 2023 and 2022, as if we had completed the Magellan Acquisition on January 1, 2022:

						Three Months Ended												Nine Months Ended
						September 30,												September 30,
						2023						2022						2023						2022
						(Millions of dollars)
Revenue						$	4,850					$	6,723					$	14,764					$	19,548
Net income						$	572					$	596					$	2,364					$	1,336

The summarized unaudited pro forma information reflects the following adjustments:

• Reflects depreciation and amortization based on the preliminary fair values of property, plant and equipment, and intangible assets;

• Reflects $136 million and $154 million of non-recurring transaction costs incurred for the three and nine months ended September 30, 2023, respectively, that were reclassified and included in pro forma net income for the nine months ended September 30, 2022, as if they had been incurred on January 1, 2022;

• Reflects interest expense related to the underwritten public offering of $5.25 billion senior unsecured notes used to fund the cash consideration and other costs related to the Magellan Acquisition;

• Reflects the amortization of the debt discount to fair value of the Magellan long-term debt assumed;

• Reflects the amortization of excess fair value of the replacement share-based awards;

• Reflects the income tax effect of the pro forma adjustments; and

• Excludes the impact of historical activity between ONEOK and Magellan.

The unaudited pro forma financial information for the nine months ended September 30, 2023, includes a one-time operational gain of $779 million related to insurance proceeds on the Medford incident. The unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of our operating results that would have occurred had the transaction been completed at the beginning of the period presented, nor is it necessarily indicative of future results.

C. 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 in other operating (income) expense, net, within the Consolidated Statement of Income. 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.

D. 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.

Magellan Acquisition - Included in our commodity derivative contracts are exchange-traded, exchange cleared and over-the-counter derivative contracts related to Refined Products, certain NGLs and crude oil. The exchange-traded contracts are valued based on quoted prices in active markets and are classified within Level 1 of our fair value hierarchy. The exchange cleared and over-the-counter derivatives are valued based on significant observable pricing inputs including quoted prices for similar assets and liabilities in active markets and inputs from third-party pricing services supported with corroborative evidence and are classified within Level 2 of our fair value hierarchy.

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

			September 30, 2023
			Level 1						Level 2						Level 3						Total - Gross						Netting (a)						Total - Net
			(Millions of dollars)
Derivative assets
Commodity contracts			$	49					$	67					$	—					$	116					$	(81)					$	35
Total derivative assets			$	49					$	67					$	—					$	116					$	(81)					$	35
Derivative liabilities
Commodity contracts			$	(16)					$	(68)					$	—					$	(84)					$	81					$	(3)
Total derivative liabilities			$	(16)					$	(68)					$	—					$	(84)					$	81					$	(3)

(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 September 30, 2023, we held no cash and posted cash of $43 million with various counterparties, which is included in other current assets in our Consolidated Balance Sheet.

			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												Nine Months Ended
			September 30,												September 30,
Derivative Assets (Liabilities)			2023						2022						2023						2022
			(Millions of dollars)
Net liabilities at beginning of period			$	—					$	(110)					$	—					$	(114)
Total changes in fair value:
Settlements included in net income (a)			—						39						—						79
New Level 3 derivatives included in other comprehensive income (b)			—						—						—						73
Unrealized change included in other comprehensive income (b)			—						122						—						13
Net assets at end of period			$	—					$	51					$	—					$	51

(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 NGL 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 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 mutual funds, municipal bonds and other fixed income securities classified as Level 1 and Level 2.

The estimated fair value of our consolidated long-term debt, including current maturities, was $19.8 billion and $12.7 billion at September 30, 2023, and December 31, 2022, respectively. The book value of our consolidated long-term debt, including current maturities, was $22.0 billion and $13.6 billion at September 30, 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.

E. RISK-MANAGEMENT AND HEDGING ACTIVITIES USING DERIVATIVES

Risk-management Activities - We are sensitive to changes in natural gas, NGLs and crude oil prices, principally as a result of contractual terms under which these commodities are processed, purchased and sold. As a result of the Magellan Acquisition, we are also sensitive to changes in Refined Product prices. 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, NGLs, Refined Products, condensate and crude oil purchases and sales; 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, Refined Products, condensate and crude oil. 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.

In our Refined Products and Crude segment, we implemented effective hedging strategies for a substantial portion of the segment’s commodity derivative financial instruments that qualify as cash flow hedges for accounting purposes. Changes in the fair value of commodity derivative instruments not designated as a hedge were immaterial for the period September 25, 2023, through September 30, 2023, and are recorded currently in earnings.

Interest-rate risk - We may manage interest-rate risk through the use of fixed-rate debt, floating-rate debt, Treasury locks and interest-rate swaps. Treasury locks are agreements to pay the difference between the benchmark Treasury rate and the rate that is designated in the terms of the agreement. In the second quarter 2023, we entered into $1.1 billion of Treasury locks to hedge the variability of interest payments on a portion of our forecasted debt issuances. In the third quarter 2023, we settled all of our $1.1 billion Treasury locks related to our underwritten public offering of $5.25 billion senior unsecured notes associated with the Magellan Acquisition resulting in a gain of $43 million, which is included in accumulated other comprehensive loss and amortized into interest expense over the term of the related debt. All of our Treasury locks were designated as cash flow hedges.

Interest-rate swaps are agreements to exchange interest payments at some future point based on specified notional amounts. In the third quarter 2023, we settled all of our $0.4 billion forward-starting interest-rate swaps related to our underwritten public offerings of $5.25 billion senior unsecured notes associated with the Magellan Acquisition resulting in a gain of $44 million, which is included in accumulated other comprehensive loss and amortized into interest expense over the term of the related debt. All of our interest-rate swaps were 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:

									September 30, 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						$	104					$	(79)					$	160					$	(123)
			Other assets						—						—						6						(1)
Interest-rate contracts			Other current assets						—						—						11						—
Total derivatives designated as hedging instruments									104						(79)						177						(124)
Derivatives not designated as hedging instruments
Commodity contracts (a)			Other current assets/liabilities						12						(5)						1						(1)
Total derivatives not designated as hedging instruments									12						(5)						1						(1)
Total derivatives									$	116					$	(84)					$	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.

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

						September 30, 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			(18.8)						(39.3)
- Refined Products, crude oil and NGLs (MMBbl)			Futures			(13.8)						(8.4)
Basis
- Natural gas (Bcf)			Futures			(19.4)						(39.3)
Interest-rate contracts (Billions of dollars)			Swaps			$	—					$	0.4
Derivatives not designated as hedging instruments:
Fixed price
- Natural gas (Bcf)			Futures			—						(0.1)
- Refined Products, crude oil and NGLs (MMBbl)			Futures and swaps			(1.9)						0.1
Basis
- Natural gas (Bcf)			Futures			—						(0.1)
- Refined Products, crude oil and NGLs (MMBbl)			Futures and swaps			(0.1)						—

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

			Three Months Ended												Nine Months Ended
			September 30,												September 30,
2023						2022						2023						2022
			(Millions of dollars)
Commodity contracts			$	(37)					$	69					$	57					$	(139)
Interest-rate contracts			52						69						54						213
Total unrealized change in fair value of cash flow hedges in other comprehensive income			$	15					$	138					$	111					$	74

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												Nine Months Ended
September 30,												September 30,
2023						2022						2023						2022
						(Millions of dollars)
Commodity contracts			Commodity sales revenues			$	31					$	(78)					$	149					$	(546)
			Cost of sales and fuel			(15)						18						(75)						328
Interest-rate contracts			Interest expense			(5)						(10)						(16)						(29)
Total change in fair value of cash flow hedges reclassified from accumulated other comprehensive loss into net income on derivatives						$	11					$	(70)					$	58					$	(247)

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.

F. DEBT

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

						September 30, 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 at 2.75% due September 2024						500						500
$250 at 3.2% due March 2025 (b)						250						—
$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
$650 at 5.0% due March 2026 (b)						650						—
$750 at 5.55% due November 2026						750						—
$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
$750 at 5.65% due November 2028						750						—
$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
$500 at 3.25% due June 2030 (b)						500						—
$500 at 5.8% due November 2030						500						—
$600 at 6.35% due January 2031						600						600
$750 at 6.1% due November 2032						750						750
$1,500 at 6.05% due September 2033						1,500						—
$400 at 6.0% due June 2035						400						400
$600 at 6.65% due October 2036						600						600
$250 at 6.4% due May 2037 (b)						250						—
$600 at 6.85% due October 2037						600						600
$650 at 6.125% due February 2041						650						650
$250 at 4.2% due December 2042 (b)						250						—
$400 at 6.2% due September 2043						400						400
$550 at 5.15% due October 2043 (b)						550						—
$250 at 4.2% due March 2045 (b)						250						—
$500 at 4.25% due September 2046 (b)						500						—
$700 at 4.95% due July 2047						689						689
$500 at 4.2% due October 2047 (b)						500						—
$1,000 at 5.2% due July 2048						1,000						1,000
$500 at 4.85% due February 2049 (b)						500						—
$750 at 4.45% due September 2049						653						673
$500 at 4.5% due March 2050						443						443
$800 at 3.95% due March 2050 (b)						800						—
$300 at 7.15% due January 2051						300						300
$1,750 at 6.625% due September 2053						1,750						—
Guardian $120 term loan, rate of 6.54% as of September 30, 2023, due June 2025						120						120
Viking $60 term loan, rate of 6.67% as of September 30, 2023, due March 2026						60						—
Total debt						23,096						13,731
Unamortized debt discounts						(1,029)						(35)
Unamortized debt issuance costs and terminated swaps						(117)						(75)
Current maturities of long-term debt						(500)						(925)
Long-term debt						$	21,450					$	12,696

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

(b) - Debt assumed in the Magellan Acquisition. Amounts are presented at face value with discount to fair value included in unamortized debt discounts.

$2.5 Billion Credit Agreement - Our $2.5 Billion Credit Agreement, which expires in 2027, 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). In addition, adjusted EBITDA as defined in our $2.5 Billion Credit Agreement allows inclusion of the trailing twelve months of consolidated adjusted EBITDA of the acquired business. In the third quarter 2023, we completed the Magellan Acquisition, which allowed us to elect an acquisition adjustment period under our $2.5 Billion Credit Agreement and, as a result, increased our leverage ratio covenant to 5.5 to 1 for the third quarter 2023 and the two following quarters. Thereafter, the covenant will decrease to 5.0 to 1. At September 30, 2023, we had no outstanding borrowings, our ratio of indebtedness to adjusted EBITDA was 3.7 to 1 and we were in compliance with all covenants under our $2.5 Billion Credit Agreement.

Debt Issuances - In August 2023, we completed an underwritten public offering of $5.25 billion senior unsecured notes consisting of $750 million, 5.55% senior notes due 2026; $750 million, 5.65% senior notes due 2028; $500 million, 5.80% senior notes due 2030; $1.5 billion, 6.05% senior notes due 2033; and $1.75 billion, 6.625% senior notes due 2053. The net proceeds, after deducting underwriting discounts, commissions and offering expenses, were $5.2 billion. The net proceeds were used to fund the cash consideration and other costs related to the Magellan Acquisition.

Debt Repayments - In June 2023, we redeemed our $500 million, 7.5% senior notes due September 2023 at 100% of the principal amount, plus accrued and unpaid interest, with cash on hand.

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.

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

Viking Term Loan Agreement - In March 2023, Viking entered into a $60 million senior unsecured Term Loan Agreement, which is fully drawn. The proceeds were used to repay intercompany debt with ONEOK and for general corporate purposes. The Viking Term Loan Agreement matures in March 2026 and bears interest at Term SOFR plus an applicable margin. As of September 30, 2023, Viking was in compliance with all covenants under the Viking Term Loan Agreement.

G. EQUITY

Equity Issuances - On September 25, 2023, we completed the previously announced agreement to acquire all the outstanding common units of Magellan in a cash-and-stock transaction. Pursuant to the Merger Agreement, each common unit of Magellan was exchanged for a fixed ratio of 0.667 shares of ONEOK common stock and $25.00 of cash. A total of approximately 135 million shares of common stock were issued, with a fair value of approximately $9.0 billion as of the closing date of the Magellan Acquisition.

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, May 2023 and August 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 November 1, 2023, payable November 14, 2023.

Our Series E Preferred Stock pays quarterly dividends on each share of Series E Preferred Stock, when 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, May 2023 and August 2023. Dividends totaling $0.3 million were declared for the Series E Preferred Stock and are payable November 14, 2023.

H. 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 before reclassifications						86						—						—						86
Amounts reclassified to net income (b)						(44)						3						(5)						(46)
Other comprehensive income (loss)						42						3						(5)						40
September 30, 2023						$	(16)					$	(52)					$	—					$	(68)

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

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

The following table sets forth information about the balance of accumulated other comprehensive loss at September 30, 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 27 months (a)						$	19
Settled interest-rate swaps and Treasury locks to be recognized over the life of the long-term, fixed-rate debt (b)						(35)
Accumulated other comprehensive loss at September 30, 2023						$	(16)

(a) - Based on commodity prices on September 30, 2023, we expect net gains of $19 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 $15 million, net of tax, will be reclassified into earnings during the next 12 months.

The remaining balance in accumulated other comprehensive loss relates 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.

I. EARNINGS PER SHARE

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

			Three Months Ended September 30, 2023
			Income						Shares						Per Share Amount
			(Millions, except per share amounts)
Basic EPS
Net income available for common stock			$	453					457.3						$	0.99
Diluted EPS
Effect of dilutive securities			—						0.9
Net income available for common stock and common stock equivalents			$	453					458.2						$	0.99

			Three Months Ended September 30, 2022
			Income						Shares						Per Share Amount
			(Millions, except per share amounts)
Basic EPS
Net income available for common stock			$	431					447.7						$	0.96
Diluted EPS
Effect of dilutive securities			—						0.5
Net income available for common stock and common stock equivalents			$	431					448.2						$	0.96

			Nine Months Ended September 30, 2023
			Income						Shares						Per Share Amount
			(Millions, except per share amounts)
Basic EPS
Net income available for common stock			$	1,970					451.2						$	4.37
Diluted EPS
Effect of dilutive securities			—						0.9
Net income available for common stock and common stock equivalents			$	1,970					452.1						$	4.36

			Nine Months Ended September 30, 2022
			Income						Shares						Per Share Amount
			(Millions, except per share amounts)
Basic EPS
Net income available for common stock			$	1,236					447.4						$	2.76
Diluted EPS
Effect of dilutive securities			—						0.9
Net income available for common stock and common stock equivalents			$	1,236					448.3						$	2.76

J. 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												Nine Months Ended
			September 30,												September 30,
			2023						2022						2023						2022
			(Millions of dollars)
Northern Border			$	20					$	17					$	58					$	53
Overland Pass			17						10						39						23
Roadrunner			10						10						32						28
Other (a)			2						2						3						7
Equity in net earnings from investments			$	49					$	39					$	132					$	111

(a) - Includes equity in net earnings for the acquired investments from the Magellan Acquisition from the period September 25, 2023 through September 30, 2023.

We incurred expenses in transactions with unconsolidated affiliates of $33 million and $26 million for the three months ended September 30, 2023 and 2022, respectively, and $88 million and $56 million for the nine months ended September 30, 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 are the operator of Roadrunner, and as a result of the Magellan Acquisition, we are also the operator of BridgeTex, HoustonLink, MVP, Powder Springs, Saddlehorn, Texas Frontera and the pipeline activities of Seabrook. In each case, we have operating agreements that provide for reimbursement or payment to us for management services and certain operating costs. Reimbursements and payments included in operating income in our Consolidated Statements of Income for all periods presented were not material. In the second quarter 2023, we made an equity contribution of $105 million to Roadrunner, which in combination with an equal contribution from our joint venture partner, was used to repay Roadrunner’s outstanding debt.

K. 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, Refined Products, crude oil 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.

L. 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. The following table sets forth the balances in contract liabilities for the periods indicated:

Contract Liabilities						(Millions of dollars)
Balance at December 31, 2022 (a)						$	52
Revenue recognized included in beginning balance						(22)
Net additions (b)						141
Balance at September 30, 2023 (c)						$	171

(a) - Contract liabilities of $23 million and $29 million are included in other current liabilities and other deferred credits, respectively, in our Consolidated Balance Sheet.

(b) - Net additions include increases due to the Magellan Acquisition, which are primarily related to customer prepayments for services.

(c) - Contract liabilities of $128 million and $43 million are included in the other current liabilities and other deferred credits, respectively in our Consolidated Balance Sheet.

Receivables from Customers and Revenue Disaggregation - Substantially all of the balances in accounts receivable on our Consolidated Balance Sheets at September 30, 2023, and December 31, 2022, relate to customer receivables. Revenue sources are disaggregated in Note M.

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.

The following table presents aggregate value allocated to unsatisfied performance obligations as of September 30, 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 21 years:

Expected Period of Recognition in Revenue						(Millions of dollars)
Remainder of 2023						$	291
2024						1,125
2025						873
2026						708
2027 and beyond						2,281
Total						$	5,278

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 value is not known and minimum volume agreements, which we consider to be fully constrained until invoiced.

M. SEGMENTS

Segment Descriptions - Our operations are divided into four 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;

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

• our Refined Products and Crude segment transports, stores and distributes Refined Products, certain NGLs and crude oil, as well as conducts certain commodity-related activities including liquids blending, fractionation and marketing activities. This new reportable business segment was added in conjunction with the Magellan Acquisition that closed on September 25, 2023. Results of operations for this business segment are included below for the period September 25, 2023, through September 30, 2023.

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.

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

Three Months Ended September 30, 2023			Natural Gas Gathering and Processing						Natural Gas Liquids (a)						Natural Gas Pipelines (b)						Refined Products and Crude (d)						Total Segments
			(Millions of dollars)
NGL and condensate sales			$	641					$	3,432					$	—					$	—					$	4,073
Residue natural gas sales			279						—						3						—						282
Gathering, processing and exchange service revenue			36						150						—						—						186
Transportation and storage revenue			—						48						143						—						191
Other			9						4						—						72						85
Total revenues (c)			965						3,634						146						72						4,817
Cost of sales and fuel (exclusive of depreciation and operating costs)			(527)						(2,875)						(2)						(22)						(3,426)
Operating costs			(119)						(168)						(51)						(13)						(351)
Equity in net earnings from investments			—						17						29						3						49
Noncash compensation expense and other			3						6						3						—						12
Segment adjusted EBITDA			$	322					$	614					$	125					$	40					$	1,101
Depreciation and amortization			$	(68)					$	(85)					$	(17)					$	(6)					$	(176)
Capital expenditures			$	126					$	189					$	70					$	1					$	386

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $756 million, of which $696 million related to revenues within the segment, cost of sales and fuel of $240 million and operating costs of $93 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $107 million, cost of sales and fuel of $8 million and operating costs of $42 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 $620 million. Intersegment revenues for our Natural Gas Liquids and Natural Gas Pipelines segments were not material.

(d) - Disaggregation of revenue for our Refined Products and Crude segment is preliminary and will be updated as we continue to evaluate these contracts.

Three Months Ended September 30, 2023						Total Segments						Other and Eliminations						Total
						(Millions of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales						$	4,073					$	(624)					$	3,449
Residue natural gas sales						282						—						282
Gathering, processing and exchange services revenue						186						—						186
Transportation and storage revenue						191						(3)						188
Other						85						(1)						84
Total revenues (a)						$	4,817					$	(628)					$	4,189
Cost of sales and fuel (exclusive of depreciation and operating costs)						$	(3,426)					$	627					$	(2,799)
Operating costs						$	(351)					$	(1)					$	(352)
Depreciation and amortization						$	(176)					$	(1)					$	(177)
Equity in net earnings from investments						$	49					$	—					$	49
Capital expenditures						$	386					$	12					$	398

(a) - Noncustomer revenue for the three months ended September 30, 2023, totaled $18 million related primarily to gains from derivatives on commodity sales contracts.

Three Months Ended September 30, 2022			Natural Gas Gathering and Processing						Natural Gas Liquids (a)						Natural Gas Pipelines (b)						Total Segments
			(Millions of dollars)
NGL and condensate sales			$	991					$	4,749					$	—					$	5,740
Residue natural gas sales			824						—						3						827
Gathering, processing and exchange services revenue			36						139						—						175
Transportation and storage revenue			—						40						134						174
Other			8						3						—						11
Total revenues (c)			1,859						4,931						137						6,927
Cost of sales and fuel (exclusive of depreciation and operating costs)			(1,461)						(4,317)						(4)						(5,782)
Operating costs			(98)						(144)						(44)						(286)
Equity in net earnings from investments			2						11						26						39
Noncash compensation expense and other			2						4						2						8
Segment adjusted EBITDA			$	304					$	485					$	117					$	906
Depreciation and amortization			$	(65)					$	(76)					$	(16)					$	(157)
Capital expenditures			$	104					$	169					$	40					$	313

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $672 million, of which $621 million related to revenues within the segment, cost of sales and fuel of $205 million and operating costs of $84 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $102 million, cost of sales and fuel of $12 million and operating costs of $37 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 September 30, 2022						Total Segments						Other and Eliminations						Total
						(Millions of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales						$	5,740					$	(1,006)					$	4,734
Residue natural gas sales						827						—						827
Gathering, processing and exchange services revenue						175						—						175
Transportation and storage revenue						174						(2)						172
Other						11						(5)						6
Total revenues (a)						$	6,927					$	(1,013)					$	5,914
Cost of sales and fuel (exclusive of depreciation and operating costs)						$	(5,782)					$	1,009					$	(4,773)
Operating costs						$	(286)					$	—					$	(286)
Depreciation and amortization						$	(157)					$	—					$	(157)
Equity in net earnings from investments						$	39					$	—					$	39
Capital expenditures						$	313					$	14					$	327

(a) - Noncustomer revenue for the three months ended September 30, 2022, totaled $(57) million related primarily to losses from derivatives on commodity sales contracts.

Nine Months Ended September 30, 2023			Natural Gas Gathering and Processing						Natural Gas Liquids (a)						Natural Gas Pipelines (b)						Refined Products and Crude (d)						Total Segments
			(Millions of dollars)
NGL and condensate sales			$	1,835					$	10,103					$	—					$	—					$	11,938
Residue natural gas sales			1,066						—						28						—						1,094
Gathering, processing and exchange services revenue			109						414						—						—						523
Transportation and storage revenue			—						143						434						—						577
Other			22						9						1						72						104
Total revenues (c)			3,032						10,669						463						72						14,236
Cost of sales and fuel (exclusive of depreciation and operating costs)			(1,787)						(8,597)						(17)						(22)						(10,423)
Operating costs			(339)						(481)						(145)						(13)						(978)
Equity in net earnings from investments			1						39						89						3						132
Noncash compensation expense			13						20						5						—						38
Other			(1)						775						1						—						775
Segment adjusted EBITDA			$	919					$	2,425					$	396					$	40					$	3,780
Depreciation and amortization			$	(202)					$	(248)					$	(50)					$	(6)					$	(506)
Investments in unconsolidated affiliates			$	26					$	417					$	440					$	911					$	1,794
Total assets			$	6,976					$	14,988					$	2,433					$	19,185					$	43,582
Capital expenditures			$	308					$	495					$	155					$	1					$	959

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $2.1 billion, of which $1.9 billion related to revenues within the segment, cost of sales and fuel of $627 million and operating costs of $273 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $326 million, cost of sales and fuel of $31 million and operating costs of $121 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 $1.8 billion. Intersegment revenues for our Natural Gas Liquids and Natural Gas Pipelines segments were not material.

(d) - Disaggregation of revenue for our Refined Products and Crude segment is preliminary and will be updated as we continue to evaluate these contracts.

Nine Months Ended September 30, 2023						Total Segments						Other and Eliminations						Total
						(Millions of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales						$	11,938					$	(1,779)					$	10,159
Residue natural gas sales						1,094						—						1,094
Gathering, processing and exchange services revenue						523						—						523
Transportation and storage revenue						577						(7)						570
Other						104						(8)						96
Total revenues (a)						$	14,236					$	(1,794)					$	12,442
Cost of sales and fuel (exclusive of depreciation and operating costs)						$	(10,423)					$	1,795					$	(8,628)
Operating costs						$	(978)					$	(3)					$	(981)
Depreciation and amortization						$	(506)					$	(3)					$	(509)
Equity in net earnings from investments						$	132					$	—					$	132
Investments in unconsolidated affiliates						$	1,794					$	1					$	1,795
Total assets						$	43,582					$	357					$	43,939
Capital expenditures						$	959					$	33					$	992

(a) - Noncustomer revenue for the nine months ended September 30, 2023, totaled $160 million related primarily to gains from derivatives on commodity sales contracts.

Nine Months Ended September 30, 2022			Natural Gas Gathering and Processing						Natural Gas Liquids (a)						Natural Gas Pipelines (b)						Total Segments
			(Millions of dollars)
NGL and condensate sales			$	3,034					$	14,308					$	—					$	17,342
Residue natural gas sales			2,035						—						30						2,065
Gathering, processing and exchange services revenue			104						415						—						519
Transportation and storage revenue			—						127						387						514
Other			18						8						1						27
Total revenues (c)			5,191						14,858						418						20,467
Cost of sales and fuel (exclusive of depreciation and operating costs)			(4,148)						(12,949)						(22)						(17,119)
Operating costs			(289)						(416)						(126)						(831)
Equity in net earnings from investments			5						25						81						111
Noncash compensation expense and other			12						12						6						30
Segment adjusted EBITDA			$	771					$	1,530					$	357					$	2,658
Depreciation and amortization			$	(193)					$	(226)					$	(47)					$	(466)
Investments in unconsolidated affiliates			$	28					$	414					$	362					$	804
Total assets			$	7,079					$	14,987					$	2,205					$	24,271
Capital expenditures			$	321					$	445					$	82					$	848

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $1.9 billion, of which $1.7 billion related to revenues within the segment, cost of sales and fuel of $503 million and operating costs of $241 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $329 million, cost of sales and fuel of $40 million and operating costs of $108 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 $3.1 billion. Intersegment revenues for our Natural Gas Liquids and Natural Gas Pipelines segments were not material.

Nine Months Ended September 30, 2022						Total Segments						Other and Eliminations						Total
						(Millions of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales						$	17,342					$	(3,096)					$	14,246
Residue natural gas sales						2,065						—						2,065
Gathering, processing and exchange services revenue						519						—						519
Transportation and storage revenue						514						(6)						508
Other						27						(10)						17
Total revenues (a)						$	20,467					$	(3,112)					$	17,355
Cost of sales and fuel (exclusive of depreciation and operating costs)						$	(17,119)					$	3,102					$	(14,017)
Operating costs						$	(831)					$	4					$	(827)
Depreciation and amortization						$	(466)					$	(3)					$	(469)
Equity in net earnings from investments						$	111					$	—					$	111
Investments in unconsolidated affiliates						$	804					$	—					$	804
Total assets						$	24,271					$	168					$	24,439
Capital expenditures						$	848					$	38					$	886

(a) - Noncustomer revenue for the nine months ended September 30, 2022, totaled $(364) million related primarily to losses from derivatives on commodity sales contracts.

			Three Months Ended												Nine Months Ended
			September 30,												September 30,
			2023						2022						2023						2022
			(Millions of dollars)
Reconciliation of net income to total segment adjusted EBITDA
Net income			$	454					$	432					$	1,971					$	1,237
Add:
Interest expense, net of capitalized interest			215						167						561						510
Depreciation and amortization			177						157						509						469
Income taxes			141						132						616						385
Noncash compensation expense and other			14						14						32						51
Other corporate costs (b)			100						4						91						6
Total segment adjusted EBITDA (a)			$	1,101					$	906					$	3,780					$	2,658

(a) - The nine months ended September 30, 2023 includes $667 million related to the Medford incident, including a settlement gain of $779 million, offset partially by $112 million of third-party fractionation costs.

(b) - Includes costs related to the Magellan Acquisition of $123 million, offset partially by interest income of $26 million for the three months ended September 30, 2023, and costs related to the Magellan Acquisition of $133 million, offset partially by interest income of $42 million for the nine months ended September 30, 2023.