Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited Consolidated Financial Statements and the Notes to Consolidated Financial Statements in this Quarterly Report, as well as our Annual Report.

RECENT DEVELOPMENTS

Please refer to the “Financial Results and Operating Information” and “Liquidity and Capital Resources” sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report for additional information.

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.

For additional information on the Magellan Acquisition, see Note B of the Notes to Consolidated Financial Statements in this Quarterly Report. See Part 2, Item 1A “Risk Factors” for further discussion of risks related to the Magellan Acquisition. Additional information regarding the financial results and operating information of our Refined Products and Crude segment subsequent to the closing of the Magellan Acquisition is provided in “Financial Results and Operating Information”.

Market Conditions and Business Update - We experienced increased volumes across our system in the third quarter 2023, compared with the third quarter 2022, highlighting our extensive and integrated assets that are located in, and connected with, some of the most productive shale basins, as well as refineries and demand centers, in the United States. Although the energy industry has experienced many commodity cycles, we have positioned ourselves to reduce exposure to direct commodity price volatility. Each of our four reportable segments are primarily fee-based, and we expect our consolidated earnings to be more than 85% fee-based in 2023. While our Natural Gas Gathering and Processing segment’s earnings are primarily fee-based, we have direct commodity price exposure related primarily to fee with POP contracts, and we have hedged approximately 70% of our forecasted equity volumes for the remainder of 2023. In addition, our Natural Gas Gathering and Processing and Natural Gas Liquids segments are exposed to volumetric risk as a result of drilling and completion activity, severe weather disruptions, operational outages, global crude oil, NGL and natural gas demand, changes in gas-to-oil ratios and normal volumetric well declines. Our Refined Products and Crude segment is exposed to volumetric risk due to demand for Refined Products and crude oil in the markets we serve. Our Natural Gas Pipelines segment is not exposed to significant volumetric risk due to nearly all of our capacity being subscribed under long-term, firm fee-based contracts.

Medford Incident - On July 9, 2022, a fire occurred at our 210 MBbl/d Medford, Oklahoma, natural gas liquids fractionation facility. 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, resulting in a one-time settlement gain of $779 million. The proceeds serve as settlement for property damage, business interruption claims to the date of settlement and as payment in lieu of future business interruption insurance claims.

The Medford incident resulted in an increase in operating income and adjusted EBITDA of $697 million due to a favorable impact of $667 million in the nine months ended September 30, 2023, from the settlement gain of $779 million, offset partially by $112 million of third-party fractionation costs compared with an approximately $30 million unfavorable impact of the 45-day waiting period in the nine months ended September 30, 2022. We expect our cash from operations in the remainder of 2023 and in 2024 to be impacted by incurred costs resulting from the Medford incident for which we no longer receive business interruption proceeds.

Due to market demand and a more favorable completion schedule, we announced plans to construct a new 125 MBbl/d MB-6 NGL fractionator in Mont Belvieu, Texas, instead of rebuilding our Medford NGL fractionator at this time. The MB-6 fractionator will produce purity ethane instead of the ethane/propane mix previously produced at the Medford facility. The 125 MBbl/d capacity of the MB-6 fractionator is expected to be economically comparable to the capacity lost at Medford. In addition, our 125 MBbl/d MB-5 NGL fractionator was completed in April 2023, which has reduced the need for third-party fractionation while the new MB-6 fractionator is being constructed.

Sustainability and Social Responsibility - Through our participation in the 2022 S&P Global Corporate Sustainability Assessment, we qualified for inclusion in the S&P Global Sustainability Yearbook for the third consecutive year, ranking in the top 10% of the Oil and Gas Storage and Transportation industry and being recognized as an Industry Mover. We continue to look for ways to reduce our GHG emissions and utilize more efficient technologies. We are evaluating the development of renewable energy and low-carbon projects, including opportunities that may complement our midstream assets and expertise.

Natural Gas - In our Natural Gas Gathering and Processing segment, processed volumes increased in the third quarter 2023, compared with the third quarter 2022, due primarily to increased producer activity in the Rocky Mountain and Mid-Continent regions.

In our Natural Gas Pipelines segment, as a result of recently completed expansion projects, we fully subscribed an additional 4 Bcf of our existing storage capacity in Oklahoma through 2027, with 90% subscribed through 2029. In addition, we are nearing the completion of the electrification of certain compression assets on Viking to improve the reliability of our operations while lowering our Scope 1 emissions from this equipment. Viking is seeking to recover its investment in the project through a proposed increase in rates filed in July 2023.

NGLs - In our Natural Gas Liquids segment, we benefited from increased volumes in the third quarter 2023, compared with the third quarter 2022, due primarily to increased production across our integrated system.

We have begun initial work, primarily on long lead time components, for two NGL pipeline expansion projects. Activities are underway to complete the looping of the West Texas NGL pipeline, which will more than double our NGL capacity out of the Permian Basin. The full loop is expected to be in service in the first quarter of 2025. We also are taking steps towards expanding the Elk Creek pipeline to 400 MBbl/d to provide capacity for growing volumes in the Rocky Mountain region.

Ethane Economics - Price differentials between ethane and natural gas can cause natural gas processors to recover ethane or leave it in the natural gas stream, known as ethane rejection. As a result of these ethane economics, ethane volumes on our system can fluctuate. Ethane volumes under long-term contracts delivered to our NGL system increased 35 MBbl/d to an average of 490 MBbl/d in the third quarter 2023, compared with an average of 455 MBbl/d in the third quarter 2022, due primarily to changes in ethane extraction economics. We estimate that there are approximately 250 MBbl/d of discretionary ethane, consisting of approximately 150 MBbl/d in the Rocky Mountain region and approximately 100 MBbl/d in the Mid-Continent region, that could be recovered and transported on our system.

Capital Projects - Our primary capital projects are outlined in the table below:

Project			Scope			Approximate Cost (a)			Completion
Natural Gas Gathering and Processing						(In millions)
Demicks Lake III plant			200 MMcf/d processing plant in the core of the Williston Basin			$188			Completed
Natural Gas Liquids
MB-5 fractionator			125 MBbl/d NGL fractionator in Mont Belvieu, Texas			$750			Completed
MB-6 fractionator			125 MBbl/d NGL fractionator in Mont Belvieu, Texas			$550			First Quarter 2025
West Texas NGL pipeline expansion			Increase capacity to 740 MBbl/d in the Permian Basin			$520			First Quarter 2025
Natural Gas Pipelines
Viking compression			Upgrade reliability of certain compressor assets			$95			Fourth Quarter 2023

(a) - Excludes capitalized interest/AFUDC.

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.

Dividends - In February, May and August 2023, we paid a quarterly common stock dividend of $0.955 per share ($3.82 per share on an annualized basis), an increase of 2% compared with the same quarters in the prior year. Our dividend growth is due primarily to the increase in cash flows resulting from the growth of our operations. We declared a quarterly common stock dividend of $0.955 per share ($3.82 per share on an annualized basis) in October 2023. The quarterly common stock dividend will be paid November 14, 2023, to shareholders of record at the close of business on November 1, 2023.

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 was not less than their respective carrying value, that no further testing was necessary, and that goodwill was not considered impaired.

FINANCIAL RESULTS AND OPERATING INFORMATION

How We Evaluate Our Operations

Management uses a variety of financial and operating metrics to analyze our performance. Our consolidated financial metrics include: (1) operating income; (2) net income; (3) diluted EPS; and (4) adjusted EBITDA. We evaluate segment operating results using adjusted EBITDA and our operating metrics, which include various volume and rate statistics that are relevant for the respective segment. These operating metrics allow investors to analyze the various components of segment financial results in terms of volumes and rate/price. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results. For additional information on our operating metrics, see the respective segment subsections of this “Financial Results and Operating Information” section.

Non-GAAP Financial Measures - Adjusted EBITDA is a non-GAAP measure of our financial performance. Adjusted EBITDA is defined as net income adjusted for interest expense, depreciation and amortization, noncash impairment charges, income taxes, allowance for equity funds used during construction, noncash compensation expense and certain other noncash items. We believe this non-GAAP financial measure is useful to investors because it and similar measures are used by many

companies in our industry as a measurement of financial performance and is commonly employed by financial analysts and others to evaluate our financial performance and to compare financial performance among companies in our industry. Adjusted EBITDA should not be considered an alternative to net income, EPS or any other measure of financial performance presented in accordance with GAAP. Additionally, this calculation may not be comparable with similarly titled measures of other companies.

Consolidated Operations

Selected Financial Results - The following table sets forth certain selected financial results for the periods indicated:

			Three Months Ended												Nine Months Ended												Three Months						Nine Months
			September 30,												September 30,												2023 vs. 2022						2023 vs. 2022
Financial Results			2023						2022						2023						2022						$ Increase (Decrease)						$ Increase (Decrease)
			(Millions of dollars, except per share amounts)
Revenues
Commodity sales			$	3,760					$	5,564					$	11,287					$	16,320					(1,804)						(5,033)
Services			429						350						1,155						1,035						79						120
Total revenues			4,189						5,914						12,442						17,355						(1,725)						(4,913)
Cost of sales and fuel (exclusive of items shown separately below)			2,799						4,773						8,628						14,017						(1,974)						(5,389)
Operating costs			352						286						981						827						66						154
Depreciation and amortization			177						157						509						469						20						40
Transaction costs			123						—						133						—						123						133
Other operating (income) expense, net			(1)						(2)						(782)						(9)						(1)						773
Operating income			$	739					$	700					$	2,973					$	2,051					39						922
Equity in net earnings from investments			$	49					$	39					$	132					$	111					10						21
Interest expense, net of capitalized interest			$	(215)					$	(167)					$	(561)					$	(510)					48						51
Net income			$	454					$	432					$	1,971					$	1,237					22						734
Diluted EPS			$	0.99					$	0.96					$	4.36					$	2.76					0.03						1.60
Adjusted EBITDA			$	1,001					$	902					$	3,689					$	2,652					99						1,037
Capital expenditures			$	398					$	327					$	992					$	886					71						106

See reconciliation of net income to adjusted EBITDA in the “Non-GAAP Financial Measures” section.

Changes in commodity prices and sales volumes affect both revenues and cost of sales and fuel in our Consolidated Statements of Income and, therefore, the impact is largely offset between these line items.

Operating income increased $39 million for the three months ended September 30, 2023, compared with the same period in 2022, primarily as a result of the following:

*•*Natural Gas Liquids - an increase of $76 million in exchange services due primarily to higher volumes across our system, and an increase of $67 million in optimization and marketing due primarily to higher earnings on sales of Purity NGLs held in inventory;

*•*Natural Gas Gathering and Processing - an increase of $54 million from higher volumes in the Rocky Mountain and Mid-Continent regions, offset partially by $14 million due primarily to lower realized NGL prices, net of hedging;

• Refined Products and Crude - an increase due to the impact of the Magellan Acquisition for the period of September 25, 2023, through September 30, 2023; and

*•*Natural Gas Pipelines - an increase of $9 million in transportation and storage services due primarily to higher firm and interruptible transportation volumes and higher firm storage volumes; offset by

*•*Consolidated Operating and Transaction Costs - an increase of $189 million due primarily to transaction costs related to the Magellan Acquisition, higher employee-related costs and outside services due to the growth of our operations and higher property insurance premiums.

Operating income increased $922 million for the nine months ended September 30, 2023, compared with the same period in 2022, primarily as a result of the following:

*•*Natural Gas Liquids - an increase of $697 million related to the Medford incident and an increase of $168 million in exchange services;

*•*Natural Gas Gathering and Processing - an increase of $151 million from higher volumes in the Rocky Mountain and Mid-Continent regions and an increase of $51 million due primarily to higher average fee rates;

• Refined Products and Crude - an increase due to the impact of the Magellan Acquisition for the period of September 25, 2023, through September 30, 2023; and

*•*Natural Gas Pipelines - an increase of $47 million in transportation and storage services due primarily to higher storage rates, higher firm and interruptible transportation volumes and higher short-term storage activity; offset by

*•*Consolidated Operating, Depreciation and Transaction Costs - an increase of $327 million due primarily to transaction costs related to the Magellan Acquisition, higher employee-related costs, outside services and depreciation expense due primarily to the growth of our operations, and higher property insurance premiums.

Net income and diluted EPS increased for the three and nine months ended September 30, 2023, compared with the same periods in 2022, due primarily to the items discussed above, higher interest income due to both higher cash balances and higher interest rates, and higher equity in net earnings from investments, with the nine months ended September 30, 2023 favorably impacted by the mark-to-market of investments associated with certain benefit plan investments. These increases were offset partially by higher income taxes and higher interest expense due to both higher debt balances and by transaction costs included in interest expense related to bridge facility commitment fees.

Capital expenditures increased for the three and nine months ended September 30, 2023, compared with the same periods in 2022, due primarily to our growth projects.

Additional information regarding our financial results and operating information is provided in the following discussion for each of our segments.

Natural Gas Gathering and Processing

Overview - Our Natural Gas Gathering and Processing segment provides midstream services to producers in North Dakota, Montana, Wyoming, Kansas and Oklahoma. Raw natural gas is typically gathered at the wellhead, compressed and transported through pipelines to our processing facilities. Most raw natural gas produced at the wellhead also contains a mixture of condensate and NGL components, including ethane, propane, iso-butane, normal butane and natural gasoline. Processed natural gas, usually referred to as residue natural gas, is then recompressed and delivered to natural gas pipelines, storage facilities and end users. The NGLs separated from the raw natural gas are sold and delivered through NGL pipelines to fractionation facilities for further processing.

Our Natural Gas Gathering and Processing segment’s earnings are primarily fee-based, but we have some direct commodity price exposure related primarily to fee with POP contracts. Under certain fee with POP contracts, our contractual fees and POP percentage may increase or decrease if production volumes, delivery pressures or commodity prices change relative to specified thresholds. To mitigate the impact of this commodity price exposure, we have hedged a significant portion of our Natural Gas Gathering and Processing segment’s commodity price risk for the remainder of 2023 and into 2024. This segment has substantial long-term acreage dedications in some of the most productive areas of the Williston Basin and Mid-Continent region, which helps to mitigate long-term volumetric risk.

Capital Projects - Our Natural Gas Gathering and Processing segment has invested in growth projects in NGL-rich areas in the Williston Basin. See “Capital Projects” in the “Recent Developments” section for more information on our capital projects.

For a discussion of our capital expenditure financing, see “Capital Expenditures” in the “Liquidity and Capital Resources” section.

Selected Financial Results and Operating Information - The following tables set forth certain selected financial results and operating information for our Natural Gas Gathering and Processing segment for the periods indicated:

			Three Months Ended												Nine Months Ended												Three Months						Nine Months
			September 30,												September 30,												2023 vs. 2022						2023 vs. 2022
Financial Results			2023						2022						2023						2022						$ Increase (Decrease)						$ Increase (Decrease)
			(Millions of dollars)
NGL and condensate sales			$	641					$	991					$	1,835					$	3,034					(350)						(1,199)
Residue natural gas sales			279						824						1,066						2,035						(545)						(969)
Gathering, compression, dehydration and processing fees and other revenue			45						44						131						122						1						9
Cost of sales and fuel (exclusive of depreciation and operating costs)			(527)						(1,461)						(1,787)						(4,148)						(934)						(2,361)
Operating costs, excluding noncash compensation adjustments			(114)						(95)						(326)						(279)						19						47
Equity in net earnings from investments			—						2						1						5						(2)						(4)
Other			(2)						(1)						(1)						2						(1)						(3)
Adjusted EBITDA			$	322					$	304					$	919					$	771					18						148
Capital expenditures			$	126					$	104					$	308					$	321					22						(13)

See reconciliation of net income to adjusted EBITDA in the “Non-GAAP Financial Measures” section.

Changes in commodity prices and sales volumes affect both revenues and cost of sales and fuel and, therefore, the impact is largely offset between these line items.

Adjusted EBITDA increased $18 million for the three months ended September 30, 2023, compared with the same period in 2022, primarily as a result of the following:

• an increase of $54 million from higher volumes due primarily to increased producer activity in the Rocky Mountain and Mid-Continent regions; offset by

• an increase of $19 million in operating costs due primarily to higher employee-related costs, outside services and materials and supplies expense due primarily to the growth of our operations and higher property insurance premiums; and

• a decrease of $14 million due primarily to lower realized NGL prices, net of hedging.

Adjusted EBITDA increased $148 million for the nine months ended September 30, 2023, compared with the same period in 2022, primarily as a result of the following:

• an increase of $151 million from higher volumes due primarily to increased producer activity in the Rocky Mountain and Mid-Continent regions, and the impact of severe weather in the Rocky Mountain region in the second quarter 2022; and

• an increase of $51 million due primarily to higher average fee rates, offset partially by lower realized NGL prices, net of hedging; offset by

• an increase of $47 million in operating costs due primarily to higher employee-related costs, outside services and materials and supplies expense due primarily to the growth of our operations and higher property insurance premiums.

Capital expenditures increased for the three months ended September 30, 2023, compared with the same period in 2022, due primarily to our routine growth projects. Capital expenditures decreased for the nine months ended September 30, 2023, compared with the same period in 2022, due primarily to our Demicks Lake III project completed in the first quarter 2023.

			Three Months Ended												Nine Months Ended
			September 30,												September 30,
Operating Information (a)			2023						2022						2023						2022
Natural gas processed (BBtu/d) (b)			3,085						2,743						2,935						2,590
Average fee rate ($/MMBtu)			$	1.17					$	1.16					$	1.17					$	1.09

(a) - Includes volumes for consolidated entities only.

(b) - Includes volumes we processed at company-owned and third-party facilities.

Our natural gas processed volumes increased for the three and nine months ended September 30, 2023, compared with the same periods in 2022, due primarily to increased producer activity in the Rocky Mountain and Mid-Continent regions, and the impact of severe weather in the Rocky Mountain region in the second quarter 2022.

Our average fee rate increased for the nine months ended September 30, 2023, compared with the same period in 2022, due primarily to inflation-based escalators in our contracts, and for certain fee with POP contracts, our contractual fees increased due to production volumes, delivery pressures or commodity prices relative to specified contractual thresholds.

Natural Gas Liquids

Overview - Our Natural Gas Liquids segment owns and operates facilities that gather, fractionate, treat and distribute NGLs and store Purity NGLs, primarily in Oklahoma, Kansas, Texas, New Mexico and the Rocky Mountain region, which includes the Williston, Powder River and DJ Basins. We provide midstream services to producers of NGLs and deliver those products to the two primary market centers: one in the Mid-Continent in Conway, Kansas, and the other in the Gulf Coast in Mont Belvieu, Texas. We own or have an ownership interest in FERC-regulated NGL gathering and distribution pipelines in Oklahoma, Kansas, Texas, New Mexico, Montana, North Dakota, Wyoming and Colorado, and terminal and storage facilities in Kansas, Nebraska, Iowa and Illinois. We have a 50% ownership interest in Overland Pass, which operates an interstate NGL pipeline originating in Wyoming and Colorado and terminating in Kansas. The majority of the pipeline-connected natural gas processing plants in the Williston Basin, Oklahoma, Kansas and the Texas Panhandle are connected to our NGL gathering systems. We lease rail cars and own and operate truck- and rail-loading and -unloading facilities connected to our NGL fractionation, storage and pipeline assets. We also own FERC-regulated NGL distribution pipelines in Kansas, Nebraska, Iowa, Illinois and Indiana that connect our Mid-Continent assets with Midwest markets, including Chicago, Illinois. A portion of our ONEOK North System transports Refined Products, including unleaded gasoline and diesel.

Capital Projects - Our Natural Gas Liquids segment invests in growth projects to transport, fractionate, store and deliver to market centers NGL supply from shale and other resource development areas. Our growth strategy is focused around connecting diversified supply basins from the Rocky Mountain region through the Mid-Continent region and the Permian Basin with demand for Purity NGLs from the petrochemical and refining industries and NGL exports in the Gulf Coast. We proactively monitor lead times on materials and equipment used in constructing capital projects, and we enter into supply agreements for long-lead items for potential projects to plan for future growth. See “Capital Projects” in the “Recent Developments” section for more information on our capital projects.

In the nine months ended September 30, 2023, we connected one third-party natural gas processing plant in the Permian Basin and one affiliate natural gas processing plant in the Rocky Mountain region.

For a discussion of our capital expenditure financing, see “Capital Expenditures” in the “Liquidity and Capital Resources” section.

Selected Financial Results and Operating Information - The following tables set forth certain selected financial results and operating information for our Natural Gas Liquids segment for the periods indicated:

			Three Months Ended												Nine Months Ended												Three Months						Nine Months
			September 30,												September 30,												2023 vs. 2022						2023 vs. 2022
Financial Results			2023						2022						2023						2022						$ Increase (Decrease)						$ Increase (Decrease)
			(Millions of dollars)
NGL and condensate sales			$	3,432					$	4,749					$	10,103					$	14,308					(1,317)						(4,205)
Exchange service and other revenues			154						142						423						423						12						—
Transportation and storage revenues			48						40						143						127						8						16
Cost of sales and fuel (exclusive of depreciation and operating costs)			(2,875)						(4,317)						(8,597)						(12,949)						(1,442)						(4,352)
Operating costs, excluding noncash compensation adjustments			(161)						(139)						(461)						(399)						22						62
Equity in net earnings from investments			17						11						39						25						6						14
Other			(1)						(1)						775						(5)						—						780
Adjusted EBITDA			$	614					$	485					$	2,425					$	1,530					129						895
Capital expenditures			$	189					$	169					$	495					$	445					20						50

See reconciliation of net income to adjusted EBITDA in the “Non-GAAP Financial Measures” section.

Changes in commodity prices and sales volumes affect both revenues and cost of sales and fuel and, therefore, the impact is largely offset between these line items.

Adjusted EBITDA increased $129 million for the three months ended September 30, 2023, compared with the same period in 2022, primarily as a result of the following:

• an increase of $76 million in exchange services due primarily to higher volumes across the system;

• an increase of $67 million in optimization and marketing due primarily to higher earnings on sales of Purity NGLs held in inventory; and

• an increase of $8 million due to higher transportation and storage revenue; offset by

• an increase of $22 million in operating costs due primarily to higher employee-related costs and higher outside services due to the growth of our operations, and higher property insurance premiums; and

• a decrease of $5 million related to the Medford incident, due to $35 million in third-party fractionation costs in 2023 compared with an approximately $30 million unfavorable impact of the 45-day waiting period in 2022.

Adjusted EBITDA increased $895 million for the nine months ended September 30, 2023, compared with the same period in 2022, primarily as a result of the following:

• an increase of $697 million related to the Medford incident, due to a favorable impact of $667 million in 2023 from the settlement gain of $779 million, offset partially by $112 million of third-party fractionation costs, compared with an approximately $30 million unfavorable impact of the 45-day waiting period in 2022;

• an increase of $168 million in exchange services due primarily to higher volumes in the Rocky Mountain region and Permian Basin, offset partially by narrower commodity price differentials and lower related volumes;

• an increase of $60 million in optimization and marketing due primarily to higher earnings on sales of Purity NGLs held in inventory;

• an increase of $16 million due to higher transportation and storage revenue; and

• an increase of $14 million in equity in net earnings from investments due primarily to higher volumes delivered to the Overland Pass pipeline; offset by

• an increase of $62 million in operating costs due primarily to higher employee-related costs and higher outside services due to the growth of our operations, and higher property insurance premiums.

Capital expenditures increased for the three and nine months ended September 30, 2023, compared with the same periods in 2022, due primarily to growth projects.

			Three Months Ended												Nine Months Ended
			September 30,												September 30,
Operating Information			2023						2022						2023						2022
Raw feed throughput (MBbl/d) (a)			1,413						1,278						1,357						1,252
Average Conway-to-Mont Belvieu OPIS price differential - ethane in ethane/propane mix ($/gallon)			$	0.08					$	0.03					$	0.04					$	0.04

(a) - Represents physical raw feed volumes for which we provide transportation and/or fractionation services.

We generally expect ethane volumes to increase or decrease with corresponding increases or decreases in overall NGL production. However, ethane volumes may experience growth or decline greater than corresponding growth or decline in overall NGL production due to ethane economics causing producers to recover or reject ethane.

Volumes increased for the three and nine months ended September 30, 2023, compared with the same periods in 2022, due primarily to increased production in the Permian Basin and Rocky Mountain region, offset partially by lower ethane volumes in the Rocky Mountain region. The three months ended September 30, 2023, also benefited from increased ethane volumes in the Mid-Continent region.

Natural Gas Pipelines

Overview - In our Natural Gas Pipelines segment, our assets are connected to key supply areas and demand centers, including export markets in Mexico via Roadrunner and supply areas in Canada and the United States via our interstate and intrastate natural gas pipelines and Northern Border, which enable us to provide essential natural gas transportation and storage services. Continued demand from local distribution companies, electric-generation facilities and large industrial companies supported low-cost expansions that position us well to provide additional services to our customers when needed.

Capital Projects - Our Natural Gas Pipelines segment invests in growth projects that provide transportation and storage services to end users. In December 2022, our Saguaro Connector Pipeline LLC subsidiary filed a Presidential Permit application with the FERC to construct and operate new international border-crossing facilities at the U.S. and Mexico border. The proposed border facilities would connect upstream with a potential intrastate pipeline, the Saguaro Connector Pipeline, which would be owned and operated by ONEOK. Additionally, the proposed border facilities would connect at the international boundary with a new pipeline under development in Mexico for delivery to a liquefied natural gas export facility on the west coast of Mexico. The final investment decision on the pipeline is expected by year-end 2023.

See “Capital Projects” in the “Recent Developments” section for more information on our capital projects.

For a discussion of our capital expenditure financing, see “Capital Expenditures” in the “Liquidity and Capital Resources” section.

Selected Financial Results and Operating Information - The following tables set forth certain selected financial results and operating information for our Natural Gas Pipelines segment for the periods indicated:

			Three Months Ended												Nine Months Ended												Three Months						Nine Months
			September 30,												September 30,												2023 vs. 2022						2023 vs. 2022
Financial Results			2023						2022						2023						2022						$ Increase (Decrease)						$ Increase (Decrease)
			(Millions of dollars)
Transportation revenues			$	106					$	101					$	315					$	301					5						14
Storage revenues			37						33						119						86						4						33
Residue natural gas sales and other revenues			3						3						29						31						—						(2)
Cost of sales and fuel (exclusive of depreciation and operating costs)			(2)						(4)						(17)						(22)						(2)						(5)
Operating costs, excluding noncash compensation adjustments			(49)						(43)						(140)						(122)						6						18
Equity in net earnings from investments			29						26						89						81						3						8
Other			1						1						1						2						—						(1)
Adjusted EBITDA			$	125					$	117					$	396					$	357					8						39
Capital expenditures			$	70					$	40					$	155					$	82					30						73

See reconciliation of net income to adjusted EBITDA in the “Non-GAAP Financial Measures” section.

Adjusted EBITDA increased $8 million for the three months ended September 30, 2023, compared with the same period in 2022, due primarily to an increase of $9 million in transportation and storage services due primarily to higher firm and interruptible transportation and higher firm storage volumes.

Adjusted EBITDA increased $39 million for the nine months ended September 30, 2023, compared with the same period in 2022, primarily as a result of the following:

• an increase of $47 million in transportation and storage services due primarily to higher storage rates on renegotiated contracts, higher firm and interruptible transportation volumes and higher short-term storage activity; offset by

• an increase of $18 million in operating costs due primarily to higher employee-related costs and outside services due to timing of maintenance activities and the growth of our operations.

Capital expenditures increased for the three and nine months ended September 30, 2023, compared with the same periods in 2022, due primarily to growth projects, including the Viking compression project.

			Three Months Ended												Nine Months Ended
			September 30,												September 30,
Operating Information (a)			2023						2022						2023						2022
Natural gas transportation capacity contracted (MDth/d)			7,704						7,318						7,684						7,367
Transportation capacity contracted			96		%				92		%				95		%				93		%

(a) - Includes volumes for consolidated entities only.

In April 2022, the FERC initiated a review of Guardian’s rates pursuant to Section 5 of the Natural Gas Act. In August 2022, Guardian reached a settlement in principle with the participants in the Section 5 rate case. The FERC approved the settlement

in February 2023, which resulted in a reduction of rates starting in April 2023. The reduced rates did not have a material impact on our results of operations.

In July 2023, Viking filed a proposed increase in rates pursuant to Section 4 of the Natural Gas Act with the FERC. The FERC is currently reviewing the filing. While the ultimate outcome of the filing cannot be predicted, we do not expect it to materially impact our results of operations.

Refined Products and Crude

Overview - Our Refined Products and Crude segment is principally engaged in the transportation, storage and distribution of Refined Products, NGLs and crude oil, primarily throughout the central United States. Products transported on our Refined Products pipeline system include gasoline, distillates, aviation fuel and certain NGLs. Shipments originate on our Refined Products pipeline system from direct connections to refineries or through interconnections with other pipelines or terminals for transportation and ultimate distribution to retail fueling stations, convenience stores, travel centers, railroads, airports and other end users. Our crude oil assets are strategically located to serve crude oil supply, trading and demand centers. Revenue is generated primarily through transportation tariffs on our pipelines, storage fees from our terminals, pipeline capacity fees and tolling fees from our condensate splitter. In addition, we earn revenue for terminalling and other services.

Property - Our Refined Products and Crude segment includes the following wholly owned assets:

• 9,800 miles of Refined Product pipeline system beginning in the Texas Gulf coast and covering a 15-state area across the central U.S;

• 54 Refined Product terminals with 47 MMBbl of storage capacity, including one marine storage terminal along the Houston Ship Channel;

• 1,000 miles of crude oil pipelines, including the 450-mile Longhorn pipeline, with operating capacity of

275 MBbl/d from the Permian Basin to Houston, Texas, approximately 400 miles of pipeline in Kansas and

Oklahoma and an additional 100 miles in Texas;

• crude oil storage, primarily located in East Houston, Cushing and Corpus Christi, with combined storage capacity of 31 MMBbl; and

• one condensate splitter in Corpus Christi with 50 MBbl/d of capacity.

Unconsolidated Affiliates - Our Refined Products and Crude segment has the following unconsolidated affiliates:

• a 30% ownership interest in BridgeTex, which owns an approximately 400-mile crude oil pipeline with transport capacity of up to 440 MBbl/d that connects Permian Basin crude oil to our East Houston terminal;

• a 30% ownership interest in Saddlehorn, which owns an undivided joint interest in an approximately 600-mile pipeline, with transport capacity of up to 290 MBbl/d of crude oil from the DJ Basin and Rocky Mountain region to storage facilities in Cushing, including our Cushing terminal; and

• a 25% ownership in MVP, which owns a Refined Products marine storage terminal along the Houston Ship Channel in Pasadena, Texas, including more than 5 MMBbl of storage, two ship docks and truck loading facilities.

Our other unconsolidated affiliates in this segment are not material.

Selected Financial Results and Operating Information - Financial results and operating information for our Refined Products and Crude segment for the period subsequent to the closing of the Magellan Acquisition were not material. Adjusted EBITDA was $40 million, which includes a $9 million mark-to-market gain on commodity derivative positions settling in the fourth quarter 2023.

Due to the Magellan Acquisition, commodity inventory balances within our Refined Products and Crude segment were recorded at market value, which was an approximate $50 million increase over the pre-acquisition value. We expect to realize the majority of the related unfavorable impact of this acquisition adjustment in the fourth quarter 2023, as the acquired inventory is sold.

Non-GAAP Financial Measures

The following table sets forth a reconciliation of net income, the nearest comparable GAAP financial performance measure, to adjusted EBITDA for the periods indicated:

						Three Months Ended												Nine Months Ended
						September 30,												September 30,
(Unaudited)						2023						2022						2023						2022
Reconciliation of net income to adjusted EBITDA						(Millions of dollars)
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
Adjusted EBITDA (a)(b)						$	1,001					$	902					$	3,689					$	2,652
Reconciliation of segment adjusted EBITDA to adjusted EBITDA
Segment adjusted EBITDA:
Natural Gas Gathering and Processing						$	322					$	304					$	919					$	771
Natural Gas Liquids (a)						614						485						2,425						1,530
Natural Gas Pipelines						125						117						396						357
Refined Products and Crude						40						—						40						—
Other (b)						(100)						(4)						(91)						(6)
Adjusted EBITDA (a)(b)						$	1,001					$	902					$	3,689					$	2,652

(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 transaction 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 transaction 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.

CONTINGENCIES

See Note K of the Notes to Consolidated Financial Statements in this Quarterly Report for discussion of regulatory and environmental matters.

LIQUIDITY AND CAPITAL RESOURCES

General - Our primary sources of cash inflows are operating cash flows, proceeds from our commercial paper program and our $2.5 Billion Credit Agreement, debt issuances and the issuance of common stock for our liquidity and capital resources requirements.

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 settlement and as payment in lieu of future business interruption insurance claims. We expect our cash from operations in the remainder of 2023 and in 2024 to be impacted by incurred costs resulting from the Medford incident for which we no longer receive business interruption proceeds.

We expect our sources of cash inflows to provide sufficient resources to finance our operations, quarterly cash dividends, capital expenditures, maturities of long-term debt and contributions to unconsolidated affiliates. We believe we have sufficient liquidity due to our $2.5 Billion Credit Agreement, which expires in June 2027, and access to $1.0 billion available through our “at-the-market” equity program. As of the date of this report, no shares have been sold through our “at-the-market” equity program.

Cash Management - At September 30, 2023, we had $284 million of cash and cash equivalents. Our cash balance is composed primarily of highly liquid government money market funds and deposits fully insured by the Federal Deposit Insurance Corporation.

We use a centralized cash management program that concentrates the cash assets of our nonguarantor operating subsidiaries in joint accounts for the purposes of providing financial flexibility and lowering the cost of borrowing, transaction costs and bank fees. Our centralized cash management program provides that funds in excess of the daily needs of our operating subsidiaries are concentrated, consolidated or otherwise made available for use by other entities within our consolidated group. Our operating subsidiaries participate in this program to the extent they are permitted pursuant to FERC regulations or their operating agreements. Under the cash management program, depending on whether a participating subsidiary has short-term cash surpluses or cash requirements, we provide cash to the subsidiary or the subsidiary provides cash to us.

Guarantees - We guarantee certain debt securities of ONEOK Partners and Magellan, and ONEOK Partners, Magellan and the Intermediate Partnership guarantee certain of our debt securities. The guarantees in place for our, ONEOK Partners’ and Magellan’s indebtedness are full, irrevocable, unconditional and absolute joint and several guarantees to the holders of each series of outstanding securities. Liabilities under the guarantees rank equally in right of payment with all existing and future senior unsecured indebtedness. The Intermediate Partnership holds all of ONEOK Partners’ interests and equity in its subsidiaries, which are nonguarantors, and substantially all the assets and operations reside with nonguarantor operating subsidiaries. Magellan holds interests in its subsidiaries, which are nonguarantors, and substantially all the assets and operations reside with nonguarantor operating subsidiaries. Therefore, as allowed under Rule 13-01, we have excluded the summarized financial information for each issuer and guarantor as the combined financial information of the subsidiary issuers and parent guarantor, excluding our ownership of all the interests in ONEOK Partners and Magellan, reflect no material assets, liabilities or results of operations, apart from the guaranteed indebtedness. For additional information on our, ONEOK Partners’ and Magellan’s indebtedness, please see Note F of the Notes to Consolidated Financial Statements in this Quarterly Report.

Short-term Liquidity - Our principal sources of short-term liquidity consist of cash generated from operating activities, distributions received from our equity-method investments, proceeds from our commercial paper program and our $2.5 Billion Credit Agreement. As of September 30, 2023, we had no borrowings under our $2.5 Billion Credit Agreement and we are in compliance with all covenants.

As of September 30, 2023, we had a working capital deficit of $110 million (defined as current assets less current liabilities). Generally, our working capital is influenced by several factors, including, among other things: (i) the timing of (a) debt and equity issuances, (b) the funding of capital expenditures, (c) scheduled debt payments, and (d) accounts receivable and payable; and (ii) the volume and cost of inventory and commodity imbalances. We may have working capital deficits in future periods as we continue to repay long-term debt. We do not expect a working capital deficit of this nature to have a material adverse impact to our cash flows or operations.

For additional information on our $2.5 Billion Credit Agreement, see Note F of the Notes to Consolidated Financial Statements in this Quarterly Report.

Long-term Financing - In addition to our principal sources of short-term liquidity discussed above, we expect to fund our longer-term financing requirements by issuing long-term notes, as needed. Other options to obtain financing include, but are not limited to, issuing common stock, loans from financial institutions, issuance of convertible debt securities or preferred equity securities, asset securitization and the sale and lease-back of facilities.

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. In connection with the underwritten public offering, we terminated the undrawn commitment letter for the $5.25 billion unsecured 364-day bridge loan facility.

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 June 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.

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.

For additional information on our long-term debt, see Note F of the Notes to Consolidated Financial Statements in this Quarterly Report.

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, 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.

Capital Expenditures - We classify expenditures that are expected to generate additional revenue, return on investment or significant operating or environmental efficiencies as growth capital expenditures. Maintenance capital expenditures are those capital expenditures required to maintain our existing assets and operations and do not generate additional revenues. Maintenance capital expenditures are made to replace partially or fully depreciated assets, to maintain the existing operating capacity of our assets and to extend their useful lives. We proactively monitor lead times on materials and equipment used in constructing capital projects, and we enter into supply agreements for long-lead items for potential projects to plan for future growth. Our capital expenditures are financed typically through operating cash flows and short- and long-term debt.

Capital expenditures, excluding AFUDC, were $992 million and $886 million for the nine months ended September 30, 2023 and 2022, respectively.

We expect total capital expenditures, excluding AFUDC and capitalized interest, of $1.475-$1.675 billion in 2023. This range excludes the impact of the Magellan Acquisition.

Credit Ratings - Our long-term debt credit ratings as of October 23, 2023, are shown in the table below:

Rating Agency			Long-Term Rating			Short-Term Rating			Outlook
Moody’s			Baa2			Prime-2			Stable
S&P			BBB			A-2			Stable
Fitch (a)			BBB			F2			Stable

(a) Rating does not apply to Magellan’s long-term debt as Fitch does not currently rate these notes.

Our credit ratings, which are investment grade, may be affected by our leverage, liquidity, credit profile or potential transactions. Subsequent to the Magellan Acquisition, Moody’s and S&P updated the rating on Magellan’s long-term debt to match the ratings on ONEOK’s long-term debt. In April 2023, Moody’s upgraded the rating on our long-term debt to Baa2 from Baa3, the rating on our short-term debt to Prime-2 from Prime-3 and changed the outlook to stable from positive. The most common criteria for assessment of our credit ratings are the debt-to-EBITDA ratio, interest coverage, business risk profile and liquidity. If our credit ratings were downgraded, our cost to borrow funds under our $2.5 Billion Credit Agreement could increase and a potential loss of access to the commercial paper market could occur. In the event that we are unable to borrow funds under our commercial paper program and there has not been a material adverse change in our business, we would continue to have access to our $2.5 Billion Credit Agreement, which expires in 2027. An adverse credit rating change alone is not a default under our $2.5 Billion Credit Agreement.

In the normal course of business, our counterparties provide us with secured and unsecured credit. In the event of a downgrade in our credit ratings or a significant change in our counterparties’ evaluation of our creditworthiness, we could be required to provide additional collateral in the form of cash, letters of credit or other negotiable instruments as a condition of continuing to conduct business with such counterparties. We may be required to fund margin requirements with our counterparties with cash, letters of credit or other negotiable instruments.

Dividends - Holders of our common stock share equally in any common stock dividends declared by our Board of Directors, subject to the rights of the holders of outstanding preferred stock. In February, May and August 2023, we paid a common stock dividend of $0.955 per share ($3.82 per share on an annualized basis), an increase of 2% compared with the same quarters in the prior year. A common stock dividend of $0.955 per share was declared in October 2023 for the 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, 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, May and August 2023. Dividends totaling $0.3 million were declared in October 2023 for the Series E Preferred Stock and are payable November 14, 2023.

For the nine months ended September 30, 2023, our cash flows from operations exceeded dividends paid by $1.6 billion, due in part to the insurance proceeds received from the Medford settlement in the first quarter. We expect our cash flows from operations to continue to sufficiently fund our cash dividends. To the extent operating cash flows are not sufficient to fund our dividends, we may utilize cash on hand from other sources of short- and long-term liquidity to fund a portion of our dividends.

CASH FLOW ANALYSIS

We use the indirect method to prepare our Consolidated Statements of Cash Flows. Under this method, we reconcile net income to cash flows provided by operating activities by adjusting net income for those items that affect net income but do not result in actual cash receipts or payments during the period and for operating cash items that do not impact net income. These reconciling items can include depreciation and amortization, deferred income taxes, impairment charges, allowance for equity funds used during construction, gain or loss on sale of assets, net undistributed earnings from equity-method investments, share-based compensation expense, other amounts and changes in our assets and liabilities not classified as investing or financing activities.

The following table sets forth the changes in cash flows by operating, investing and financing activities for the periods indicated:

															Variances
			Nine Months Ended												2023 vs. 2022
			September 30,												$ Increase (Decrease) in Cash
			2023						2022
			(Millions of dollars)
Total cash provided by (used in):
Operating activities			$	2,913					$	1,866					$	1,047
Investing activities			(5,759)						(864)						(4,895)
Financing activities			2,910						(1,126)						4,036
Change in cash and cash equivalents			64						(124)						188
Cash and cash equivalents at beginning of period			220						146						74
Cash and cash equivalents at end of period			$	284					$	22					$	262

Operating Cash Flows - Operating cash flows are affected by earnings from our business activities and changes in our operating assets and liabilities. Changes in commodity prices and demand for our services or products, whether because of general economic conditions, changes in supply, changes in demand for the end products that are made with our products or increased competition from other service providers, could affect our earnings and operating cash flows. Our operating cash flows can also be impacted by changes in our inventory balances, which are driven primarily by commodity prices, supply, demand and the operation of our assets.

Cash flows from operating activities, before changes in operating assets and liabilities for the nine months ended September 30, 2023, increased $787 million compared with the same period in 2022, due primarily to insurance proceeds received from the Medford settlement, and higher operating income resulting from higher exchange services in our Natural Gas Liquids segment, higher volumes from increased production and higher average fee rates in our Natural Gas Gathering and Processing segment, higher transportation and storage services in our Natural Gas Pipelines segment, and an increase due to the impact of the Magellan Acquisition in our Refined Products and Crude segment, as discussed in “Financial Results and Operating Information.”

The changes in operating assets and liabilities increased operating cash flows $30 million for the nine months ended September 30, 2023, compared with a decrease of $230 million for the same period in 2022. This change is due primarily to changes in accounts receivable resulting from the timing of receipt of cash from counterparties and from inventory, both of which vary from period to period, and with changes in commodity prices; offset partially by changes in accounts payable, which also vary from period to period with changes in commodity prices, and from the timing of payments to vendors, suppliers and other third parties.

Investing Cash Flows - Cash used in investing activities for the nine months ended September 30, 2023, increased $4.9 billion, compared with the same period in 2022, due primarily to the $5.0 billion of cash paid for the Magellan Acquisition, net of cash received, offset partially by insurance proceeds received from the Medford settlement.

Financing Cash Flows - Cash from financing activities for the nine months ended September 30, 2023, increased $4.0 billion, compared with the same period in 2022, due primarily to the issuance of $5.25 billion senior unsecured notes associated with the Magellan Acquisition, offset partially by short-term borrowings in 2022.

REGULATORY, ENVIRONMENTAL AND SAFETY MATTERS

Information about our regulatory, environmental and safety matters can be found in “Regulatory, Environmental and Safety Matters” under Part I, Item 1, Business, in our Annual Report.

IMPACT OF NEW ACCOUNTING STANDARDS

See Note A of the Notes to Consolidated Financial Statements in this Quarterly Report for discussion of new accounting standards.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our Consolidated Financial Statements and related disclosures in accordance with GAAP requires us to make estimates and assumptions with respect to values or conditions that cannot be known with certainty that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. These estimates and assumptions also affect the reported amounts of revenue and expenses during the reporting period. Although we believe these estimates and assumptions are reasonable, actual results could differ from our estimates.

Fair Value Estimates in Business Combination Accounting - Business combination accounting requires that assets and liabilities be recorded at their estimated fair value in connection with the initial recognition of the transaction. Estimating the fair value of assets and liabilities in connection with business combination accounting requires management to make estimates, assumptions and judgments, and in some cases management may also utilize third-party specialists to assist and advise on those estimates.

In order to estimate the fair value of acquired assets and assumed liabilities, we utilized widely accepted valuation techniques that included market and discounted cash flow approaches. These approaches utilize assumptions that include, but are not limited to, estimated future cash flows, discount rates applied to estimated future cash flows, and estimated asset replacement costs. While we believe we have made reasonable assumptions to estimate the fair value, these assumptions are inherently uncertain.

The purchase price allocation recorded in a business combination may change during the measurement period, which is a period not to exceed one year from the date of acquisition, as additional information about conditions existing at the acquisition date becomes available.

Additional information about our critical accounting estimates is included under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Critical Accounting Policies and Estimates,” in our Annual Report.

FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements in reliance on the safe harbor protections of the Securities Act of 1933, as amended, and the Exchange Act, which involve substantial risk and uncertainties. The forward-looking statements relate to our anticipated financial performance (including projected operating income, net income, capital expenditures, cash flows and projected levels of dividends), liquidity, management’s plans and objectives for our future capital projects and other future operations (including plans to construct additional natural gas and NGL pipelines, processing and fractionation facilities and related cost estimates), our business prospects, the outcome of regulatory and legal proceedings, market conditions and other matters. The following discussion is intended to identify important factors that could cause future outcomes to differ materially from those set forth in the forward-looking statements.

Forward-looking statements and other statements in this Quarterly Report regarding our environmental, social and other sustainability targets, plans and goals are not an indication that these statements are required to be disclosed in our filings with the SEC, or that we will continue to make similar statements in the same extent or manner in future filings. In addition, historical, current and forward-looking environmental, social and sustainability-related statements may be based on standards and processes for measuring progress that are still developing and that continue to evolve, and assumptions that are subject to change in the future.

Forward-looking statements include the items identified in the preceding paragraph, the information concerning possible or assumed future results of our operations and other statements contained in this Quarterly Report identified by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “might,” “outlook,” “plan,” “potential,” “project,” “scheduled,” “should,” “target,” “will,” “would,” and other words and terms of similar meaning.

One should not place undue reliance on forward-looking statements. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Those factors may affect our operations, markets, products, services and prices. In addition to any assumptions and other factors referred to specifically in connection with the forward-looking statements, factors that could cause our actual results to differ materially from those contemplated in any forward-looking statement include, among others, the following:

• the impact of inflationary pressures, including increased interest rates, which may increase our capital expenditures and operating costs, raise the cost of capital or depress economic growth;

• the impact on drilling and production by factors beyond our control, including the demand for natural gas, NGLs, Refined Products and crude oil; producers’ desire and ability to drill and obtain necessary permits; regulatory compliance; reserve performance; and capacity constraints and/or shut downs on the pipelines that transport crude oil, natural gas, Refined Products and NGLs from producing areas and our facilities;

• risks associated with adequate supply to our gathering, processing, fractionation, pipeline and terminal facilities, including production declines that outpace new drilling, the shutting-in of production by producers, actions taken by federal, state or local governments to require producers to prorate or to cut their production levels as a way to address any excess market supply situations or extended periods of ethane rejection;

• demand for our services and products in the proximity of our facilities;

• economic climate and growth in the geographic areas in which we operate;

• the risk of a slowdown in growth or decline in the United States or international economies, including liquidity risks in United States or foreign credit markets;

• risks related to the Magellan Acquisition, including litigation risk and the risk that we may not realize the anticipated benefits of the Magellan Acquisition or successfully integrate the two companies;

• international terrorism and conflicts and the possibility or occurrence of an outbreak of, or changes in, hostilities or changes in the political conditions and conflicts throughout the world;

• performance of contractual obligations by our customers, service providers, contractors and shippers;

• the effects of changes in governmental policies and regulatory actions, including changes with respect to income and other taxes, pipeline safety, environmental compliance, cybersecurity, climate change initiatives, emissions credits, carbon offsets, carbon pricing, production limits and authorized rates of recovery of natural gas and natural gas transportation costs;

• changes in demand for the use of natural gas, NGLs, Refined Products and crude oil because of the development of new technologies or other market conditions caused by concerns about climate change;

• the impact of the transformation to a lower-carbon economy, including the timing and extent of the transformation, as well as the expected role of different energy sources, including natural gas, NGLs, Refined Products and crude oil, in such a transformation;

• the pace of technological advancements and industry innovation, including those focused on reducing GHG emissions and advancing other climate-related initiatives, and our ability to take advantage of those innovations and developments;

• the effectiveness of our risk-management function, including mitigating cyber- and climate-related risks;

• our ability to identify and execute opportunities, and the economic viability of those opportunities, including those relating to renewable natural gas, carbon capture, use and storage, other renewable energy sources such as solar and wind and alternative low carbon fuel sources such as hydrogen;

• the ability of our existing assets and our ability to apply and continue to develop our expertise to support the growth of, and transformation to, various renewable and alternative energy opportunities, including through the positioning and optimization of our assets;

• our ability to efficiently reduce our GHG emissions (both Scope 1 and 2 emissions), including through the use of lower carbon power alternatives, management practices and system optimizations;

• the necessity to focus on maintaining and enhancing our existing assets while reducing our Scope 1 and 2 GHG emissions;

• the effects of weather and other natural phenomena and the effects of climate change (including physical and transformation-related effects) on our operations, demand for our services and commodity prices;

• acts of nature, sabotage, terrorism or other similar acts that cause damage to our facilities or our suppliers’, customers’ or shippers’ facilities;

• the inability of insurance proceeds to cover all liabilities or incurred costs and losses, or lost earnings, resulting from a loss;

• delays in receiving insurance proceeds from covered losses;

• the risk of increased costs for insurance premiums, or less favorable coverage;

• increased costs as a consequence of terrorist attacks, including security related measures;

• the timing and extent of changes in energy commodity prices, including changes due to production decisions by other countries, such as the failure of countries to abide by agreements to reduce production volumes;

• competition from other United States and foreign energy suppliers and transporters, as well as alternative forms of energy, including, but not limited to, solar power, wind power, geothermal energy and biofuels such as ethanol and biodiesel;

• the ability to market pipeline capacity on favorable terms, including the effects of:

– future demand for and prices of natural gas, NGLs and Refined Products and crude oil;

– competitive conditions in the overall energy market;

– availability of supplies of United States natural gas and crude oil; and

– availability of additional storage capacity;

• the efficiency of our plants in processing natural gas and extracting and fractionating NGLs;

• the composition and quality of the natural gas, NGLs and condensate we gather and process in our plants and transport on our pipelines;

• risks of marketing, trading and hedging activities, including the risks of changes in commodity prices or the financial condition of our counterparties;

• our ability to control operating costs and make cost-saving changes;

• the risks inherent in the use of information systems in our respective businesses and those of our counterparties and service providers, including cyber-attacks, which, according to experts, have increased in volume and sophistication since the beginning of the COVID-19 (Coronavirus disease 2019, including variants thereof) pandemic; implementation of new software and hardware; and the impact on the timeliness of information for financial reporting;

• the timely receipt of approval by applicable governmental entities for construction and operation of our pipeline and other projects and required regulatory clearances;

• the ability to recover operating costs and amounts equivalent to income taxes, costs of property, plant and equipment and regulatory assets in our state and FERC-regulated rates;

• the results of governmental actions, administrative proceedings and litigation, regulatory actions, executive orders, rule changes and receipt of expected clearances involving any local, state or federal regulatory body, including the FERC, the National Transportation Safety Board, Homeland Security, the PHMSA, the EPA, the SEC, Homeland Security’s Transportation Security Administration, and the CFTC;

• the mechanical integrity of facilities and pipelines operated;

• the capital-intensive nature of our businesses;

• the impact of unforeseen changes in interest rates, debt and equity markets, inflation rates, economic recession and other external factors over which we have no control, including the effect on pension and postretirement expense and funding resulting from changes in equity and bond market returns;

• actions by rating agencies concerning our credit;

• our indebtedness and guarantee obligations could cause adverse consequences, including making us vulnerable to general adverse economic and industry conditions, limiting our ability to borrow additional funds and placing us at competitive disadvantages compared with our competitors that have less debt;

• our ability to access capital at competitive rates or on terms acceptable to us;

• our ability to acquire all necessary permits, consents or other approvals in a timely manner, to promptly obtain all necessary materials and supplies required for construction, and to construct gathering, processing, fractionation, transportation and storage facilities without labor or contractor problems;

• our ability to control construction costs and completion schedules of our pipelines and other projects;

• difficulties or delays experienced by trucks, railroads or pipelines in delivering products to or from our terminals or pipelines;

• the uncertainty of estimates, including accruals and costs of environmental remediation;

• the impact of uncontracted capacity in our assets being greater or less than expected;

• the impact of potential impairment charges;

• the profitability of assets or businesses acquired or constructed by us;

• the risks associated with pending or possible acquisitions and dispositions, including our ability to finance or integrate any such acquisitions and any regulatory delay or conditions imposed by regulatory bodies in connection with any such acquisitions and dispositions;

• the risk that material weaknesses or significant deficiencies in our internal controls over financial reporting could emerge or that minor problems could become significant;

• the impact and outcome of pending and future litigation;

• the impact of recently issued and future accounting updates and other changes in accounting policies; and

• the risk factors listed in the reports we have filed, which are incorporated by reference, and may file with the SEC.

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other factors could also affect adversely our future results. These and other risks are described in greater detail in Part I, Item 1A, Risk Factors, in our Annual Report and in our other filings that we make with the SEC, which are available via the SEC’s website at www.sec.gov and our website at www.oneok.com. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Any such forward-looking statement speaks only as of the date on which such statement is made, and other than as required under securities laws, we undertake no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.