Item 1. FINANCIAL STATEMENTS

ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
			Three Months Ended
			March 31,
(Unaudited)			2024						2023
			(Millions of dollars, except per share amounts)
Revenues
Commodity sales			$	3,928					$	4,156
Services			853						365
Total revenues (Note K)			4,781						4,521
Cost of sales and fuel (exclusive of items shown separately below)			2,897						3,347
Operations and maintenance			486						239
Depreciation and amortization			254						162
General taxes			86						57
Other operating income, net (Note C)			(6)						(781)
Operating income			1,064						1,497
Equity in net earnings from investments (Note I)			76						40
Other income, net			7						8
Interest expense (net of capitalized interest of $12 and $18, respectively)			(300)						(166)
Income before income taxes			847						1,379
Income taxes			(208)						(330)
Net income			639						1,049
Less: Preferred stock dividends			—						—
Net income available to common shareholders			$	639					$	1,049
Basic EPS (Note H)			$	1.09					$	2.34
Diluted EPS (Note H)			$	1.09					$	2.34
Average shares (millions)
Basic			584.2						448.1
Diluted			585.7						449.0

See accompanying Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
						Three Months Ended
						March 31,
(Unaudited)						2024						2023
Net income						$	639					$	1,049
Other comprehensive income (loss), net of tax
Change in fair value of derivatives, net of tax of $22 and $(7), respectively						(75)						23
Derivative amounts reclassified to net income, net of tax of $6 and $3, respectively						(21)						(12)
Changes in benefit plan obligations and other, net of tax of $— and $1, respectively						1						(2)
Total other comprehensive income (loss), net of tax						(95)						9
Comprehensive income						$	544					$	1,058

See accompanying Notes to Consolidated Financial Statements.

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ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
						March 31,						December 31,
(Unaudited)						2024						2023
Assets			(Millions of dollars)
Current assets
Cash and cash equivalents						$	65					$	338
Accounts receivable, net						1,699						1,705
Materials and supplies						153						148
Inventories						798						639
Commodity imbalances						23						26
Other current assets						212						252
Total current assets						2,950						3,108
Property, plant and equipment
Property, plant and equipment						38,796						38,454
Accumulated depreciation and amortization						5,989						5,757
Net property, plant and equipment						32,807						32,697
Other assets
Investments in unconsolidated affiliates						1,939						1,874
Goodwill						5,056						4,952
Intangible assets, net						1,311						1,316
Other assets						327						319
Total other assets						8,633						8,461
Total assets						$	44,390					$	44,266
Liabilities and equity
Current liabilities
Current maturities of long-term debt (Note F)						$	1,234					$	484
Short-term borrowings (Note F)						320						—
Accounts payable						1,480						1,564
Commodity imbalances						221						244
Accrued taxes						169						215
Accrued interest						268						381
Other current liabilities						502						564
Total current liabilities						4,194						3,452
Long-term debt, excluding current maturities						20,447						21,183
Deferred credits and other liabilities
Deferred income taxes						2,745						2,594
Other deferred credits						559						553
Total deferred credits and other liabilities						3,304						3,147
Commitments and contingencies (Note J)
Equity (Note G)
Preferred stock, $0.01 par value: authorized and issued 20,000 shares at March 31, 2024, and December 31, 2023						—						—
Common stock, $0.01 par value: authorized 1,200,000,000 shares; issued 609,713,834 shares and outstanding 583,644,277 shares at March 31, 2024; issued 609,713,834 shares and outstanding 583,093,100 shares at December 31, 2023						6						6
Paid-in capital						16,303						16,320
Accumulated other comprehensive loss						(128)						(33)
Retained earnings						927						868
Treasury stock, at cost: 26,069,557 shares at March 31, 2024, and 26,620,734 shares at December 31, 2023						(663)						(677)
Total equity						16,445						16,484
Total liabilities and equity						$	44,390					$	44,266

See accompanying Notes to Consolidated Financial Statements.

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ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
						Three Months Ended
						March 31,
(Unaudited)						2024						2023
						(Millions of dollars)
Operating activities
Net income						$	639					$	1,049
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization						254						162
Equity in net earnings from investments						(76)						(40)
Distributions received from unconsolidated affiliates						78						43
Deferred income taxes						180						285
Medford settlement gain						—						(779)
Medford settlement proceeds						—						502
Other, net						23						18
Changes in assets and liabilities:
Accounts receivable						6						329
Inventories, net of commodity imbalances						(179)						20
Accounts payable						(29)						(237)
Risk-management assets and liabilities						(144)						26
Other assets and liabilities, net						(156)						(157)
Cash provided by operating activities						596						1,221
Investing activities
Capital expenditures (less allowance for equity funds used during construction)						(512)						(289)
Purchases of and contributions to unconsolidated affiliates						(92)						(2)
Distributions received from unconsolidated affiliates in excess of cumulative earnings						25						8
Medford settlement proceeds						—						328
Other, net						1						2
Cash provided by (used in) investing activities						(578)						47
Financing activities
Dividends paid						(578)						(427)
Short-term borrowings, net						320						—
Issuance of long-term debt, net of discounts						—						50
Repayment of long-term debt						—						(425)
Other, net						(33)						(6)
Cash used in financing activities						(291)						(808)
Change in cash and cash equivalents						(273)						460
Cash and cash equivalents at beginning of period						338						220
Cash and cash equivalents at end of period						$	65					$	680

See accompanying Notes to Consolidated Financial Statements.

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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, 2024						20,000						609,713,834						$	—					$	6					$	16,320
Net income						—						—						—						—						—
Other comprehensive loss						—						—						—						—						—
Preferred stock dividends - $13.75 per share (Note G)						—						—						—						—						—
Common stock issued						—						—						—						—						(8)
Common stock dividends - $0.99 per share (Note G)						—						—						—						—						—
Other, net						—						—						—						—						(9)
March 31, 2024						20,000						609,713,834						$	—					$	6					$	16,303

(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						—						—						—						—						—
Preferred stock dividends - $13.75 per share						—						—						—						—						—
Common stock issued						—						—						—						—						(3)
Common stock dividends - $0.955 per share						—						—						—						—						—
Other, net						—						—						—						—						3
March 31, 2023						20,000						474,916,234						$	—					$	5					$	7,253

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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, 2024						$	(33)					$	868					$	(677)					$	16,484
Net income						—						639						—						639
Other comprehensive loss						(95)						—						—						(95)
Preferred stock dividends - $13.75 per share (Note G)						—						—						—						—
Common stock issued						—						—						14						6
Common stock dividends - $0.99 per share (Note G)						—						(579)						—						(579)
Other, net						—						(1)						—						(10)
March 31, 2024						$	(128)					$	927					$	(663)					$	16,445

(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						9						—						—						9
Preferred stock dividends - $13.75 per share						—						—						—						—
Common stock issued						—						—						7						4
Common stock dividends - $0.955 per share						—						(427)						—						(427)
Other, net						—						—						—						3
March 31, 2023						$	(99)					$	672					$	(699)					$	7,132

See accompanying Notes to Consolidated Financial Statements.

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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 2023 year-end Consolidated Balance Sheet data was derived from our audited Consolidated Financial Statements but does not include all disclosures required by GAAP. These unaudited Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements in our Annual Report.

Recently Issued Accounting Standards Update - Changes to GAAP are established by the FASB in the form of ASUs to the FASB Accounting Standards Codification. We consider the applicability and impact of all ASUs. There have been no new accounting pronouncements that have become effective or have been issued that are of significance or potential significance to us during the quarter, and no material updates to recently issued standards disclosed in our Annual Report.

B. MAGELLAN ACQUISITION

On September 25, 2023, we completed the Magellan Acquisition. The acquisition strategically diversifies our complementary asset base and allows for significant expected synergies as a combined entity. 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 our long-term debt, please see Note H in our Annual Report.

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. During the three months ended March 31, 2024, there have been no material changes to the preliminary purchase price allocation disclosed in our Annual Report.

C. MEDFORD INCIDENT

In 2022, a fire occurred at our 210 MBbl/d Medford, Oklahoma, natural gas liquids fractionation facility. In the first quarter of 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 of 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. 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, 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.

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

			March 31, 2024
			Level 1						Level 2						Level 3						Total - Gross						Netting (a)						Total - Net
			(Millions of dollars)
Derivative assets
Commodity contracts			$	58					$	57					$	—					$	115					$	(114)					$	1
Total derivative assets			$	58					$	57					$	—					$	115					$	(114)					$	1
Derivative liabilities
Commodity contracts			$	(94)					$	(83)					$	—					$	(177)					$	177					$	—
Total derivative liabilities			$	(94)					$	(83)					$	—					$	(177)					$	177					$	—

(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheet on a net basis. We net derivative assets and liabilities when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us. At March 31, 2024, we held no cash and posted cash of $129 million with various counterparties, including $63 million of cash collateral that is offsetting derivative net liability positions under master-netting arrangements in the table above. The remaining $66 million of cash collateral in excess of derivative net liability positions is included in other current assets in our Consolidated Balance Sheet.

			December 31, 2023
			Level 1						Level 2						Level 3						Total - Gross						Netting (a)						Total - Net
			(Millions of dollars)
Derivative assets
Commodity contracts			$	109					$	68					$	—					$	177					$	(125)					$	52
Total derivative assets			$	109					$	68					$	—					$	177					$	(125)					$	52
Derivative liabilities
Commodity contracts			$	(40)					$	(44)					$	—					$	(84)					$	84					$	—
Total derivative liabilities			$	(40)					$	(44)					$	—					$	(84)					$	84					$	—

(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, 2023, we posted no cash and held cash of $41 million with various counterparties, which offsets our derivative net asset position under master netting arrangements as shown in the table above.

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 $21.0 billion and $21.4 billion at March 31, 2024, and December 31, 2023, respectively. The book value of our consolidated long-term debt, including current maturities, was $21.7 billion at March 31, 2024, and December 31, 2023. 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, Refined Products and crude oil prices, principally as a result of contractual terms under which these commodities are processed, purchased and sold. We are also subject to the risk of interest-rate fluctuation in the normal course of business. We use physical-forward purchases and sales and financial derivatives to secure a certain price for a portion of our natural gas, 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. Additionally, we may use physical-forward purchases and financial derivatives to reduce commodity price risk associated with power and natural gas used to operate our facilities. 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.

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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 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. Our exposure to commodity price risk is consistent with that discussed in our Annual Report.

Interest-rate risk - We may manage interest-rate risk through the use of fixed-rate debt, floating-rate debt, Treasury locks and interest-rate swaps. At both March 31, 2024, and December 31, 2023, we had no outstanding Treasury lock agreements or interest rate swaps.

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

									March 31, 2024												December 31, 2023
			Location in our Consolidated Balance Sheets						Assets						(Liabilities)						Assets						(Liabilities)
Derivatives designated as hedging instruments									(Millions of dollars)
Commodity contracts (a)(b)			Other current assets						$	103					$	(164)					$	163					$	(78)
Total derivatives designated as hedging instruments									103						(164)						163						(78)
Derivatives not designated as hedging instruments
Commodity contracts (a)(b)			Other current assets						12						(13)						14						(6)
Total derivatives not designated as hedging instruments									12						(13)						14						(6)
Total derivatives									$	115					$	(177)					$	177					$	(84)

(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.

(b) - At March 31, 2024, our derivative net liability positions under master-netting arrangements for financial commodity contracts were offset by cash collateral of $63 million.

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

						March 31, 2024						December 31, 2023
			Contract Type			Net Purchased/Payor (Sold/Receiver)
Derivatives designated as hedging instruments:
Cash flow hedges
Fixed price
- Natural gas (Bcf)			Futures and swaps			(17.4)						(16.0)
- NGLs, Refined Products and crude oil (MMBbl)			Futures and swaps			(16.0)						(14.5)
- Power (GWh)			Futures and swaps			22.1						22.1
Basis
- Natural gas (Bcf)			Futures and swaps			(17.2)						(16.0)
Derivatives not designated as hedging instruments:
Fixed price
- Natural gas (Bcf)			Futures and swaps			—						(0.7)
- NGLs, Refined Products and crude oil (MMBbl)			Futures and swaps			(0.6)						0.1
Basis
- Natural gas (Bcf)			Futures and swaps			—						(0.7)
- NGLs, Refined Products, and crude oil (MMBbl)			Futures and swaps			(1.4)						(0.1)

Cash Flow Hedges - During the three months ended March 31, 2024, we have not had material cash flow hedge activity on our commodity derivative instruments.

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.

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F. DEBT

Current Maturities - At March 31, 2024, our current maturities of long-term debt of $1.2 billion consist of $484 million, 2.75% senior notes due September 2024; $250 million, 3.2% senior notes due March 2025; and $500 million, 4.9% senior notes due March 2025.

Commercial Paper Program - At March 31, 2024, we had $320 million of commercial paper outstanding, bearing a weighted-average interest rate of 5.50%. At December 31, 2023, we had no commercial paper outstanding.

$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 12 months of consolidated adjusted EBITDA of the acquired business. In March 2024, we acquired additional ownership interest in one of our unconsolidated affiliates, 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 until the quarter ended December 31, 2024, when it will decrease to 5.0 to 1. As of March 31, 2024, we had no outstanding borrowings, our ratio of consolidated indebtedness to adjusted EBITDA was 4.1 to 1, and we were in compliance with all covenants under our $2.5 Billion Credit Agreement.

Debt Guarantees - ONEOK, ONEOK Partners, the Intermediate Partnership and Magellan have cross guarantees in place for ONEOK’s and ONEOK Partners’ indebtedness. The Guardian Term Loan Agreement and Viking Term Loan Agreement are not guaranteed by ONEOK, ONEOK Partners, the Intermediate Partnership or Magellan. For further details on our indebtedness, see Note H of the Notes to Consolidated Financial Statements in our Annual Report.

G. EQUITY

Dividends - Holders of our common stock share equally in any dividend declared by our Board of Directors, subject to the rights of the holders of outstanding Series E Preferred Stock. Dividends paid on our common stock in February 2024 were 99 cents per share. A common stock dividend of 99 cents per share was declared for shareholders of record at the close of business on May 1, 2024, payable May 15, 2024.

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 2024. Dividends totaling $0.3 million were declared for the Series E Preferred Stock and are payable May 15, 2024.

H. EARNINGS PER SHARE

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

			Three Months Ended March 31, 2024
			Income						Shares						Per Share Amount
			(Millions, except per share amounts)
Basic EPS
Net income available for common stock			$	639					584.2						$	1.09
Diluted EPS
Effect of dilutive securities			—						1.5
Net income available for common stock and common stock equivalents			$	639					585.7						$	1.09

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			Three Months Ended March 31, 2023
			Income						Shares						Per Share Amount
			(Millions, except per share amounts)
Basic EPS
Net income available for common stock			$	1,049					448.1						$	2.34
Diluted EPS
Effect of dilutive securities			—						0.9
Net income available for common stock and common stock equivalents			$	1,049					449.0						$	2.34

I. UNCONSOLIDATED AFFILIATES

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

			Three Months Ended
			March 31,
			2024						2023
			(Millions of dollars)
Northern Border			$	25					$	24
Overland Pass			15						9
Roadrunner			11						7
Saddlehorn			10						—
BridgeTex			7						—
MVP			4						—
Other			4						—
Equity in net earnings from investments			$	76					$	40

In March 2024, we purchased an additional 10% interest in Saddlehorn, resulting in a 40% ownership interest at March 31, 2024.

We incurred expenses in transactions with unconsolidated affiliates of $39 million and $28 million for the three months ended March 31, 2024 and 2023, respectively, related primarily to Overland Pass and Northern Border. Revenue earned and accounts receivable from, and accounts payable to, our unconsolidated affiliates were not material.

We are the operator of Roadrunner, BridgeTex, MVP and Saddlehorn. 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.

J. COMMITMENTS AND CONTINGENCIES

Regulatory, Environmental and Safety Matters - The operation of pipelines, terminals, plants and other facilities for the gathering, processing, fractionation, transportation and storage of 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, terminals, 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 - Corpus Christi Terminal Personal Injury Proceeding - Ismael Garcia, Andrew Ramirez and Jesus Juarez Quintero, et al. brought personal injury cases against Magellan and co-defendants Triton Industrial Services, LLC, Tidal Tank, Inc. and Cleveland Integrity Services, Inc. in Nueces County Court in Texas. The claims were originally brought in three different actions but were consolidated into a single case on March 2, 2021. Claims were asserted by or on behalf of seven

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individuals, and certain beneficiaries, who were employed by a contractor and working at a Magellan facility. These individuals were injured, one fatally, as a result of a fire that occurred on December 5, 2020, while they were cleaning a tank at our Corpus Christi terminal. During the first quarter of 2024, we reached settlement with all remaining claimants. We recorded accruals that represent the settlement, as well as offsetting insurance receivables for the amounts accrued.

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

K. REVENUES

Contract Assets and Contract Liabilities - Our contract asset balances at the beginning and the 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, 2023 (a)						$	150
Revenue recognized included in beginning balance						(109)
Net additions						98
Balance at March 31, 2024 (b)						$	139

(a) - Contract liabilities of $104 million and $46 million are included in other current liabilities and other deferred credits, respectively, in our Consolidated Balance Sheet.

(b) - Contract liabilities of $99 million and $40 million are included in the other current liabilities and other deferred credits, respectively in our Consolidated Balance Sheet.

Receivables from Customers and Revenue Disaggregation - Excluding the insurance receivable related to the legal proceeding described in Note J, substantially all of the balances in accounts receivable on our Consolidated Balance Sheets at March 31, 2024, and December 31, 2023, relate to customer receivables. Revenue sources are disaggregated in Note L.

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 March 31, 2024, 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 20 years:

Expected Period of Recognition in Revenue						(Millions of dollars)
Remainder of 2024						$	924
2025						986
2026						832
2027						735
2028 and beyond						2,192
Total						$	5,669

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.

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L. SEGMENTS

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

• our Natural Gas Gathering and Processing segment gathers, treats, processes and markets 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, distributes, blends and markets Refined Products and crude oil.

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 March 31, 2024			Natural Gas Gathering and Processing						Natural Gas Liquids						Natural Gas Pipelines						Refined Products and Crude						Total Segments
			(Millions of dollars)
Liquids commodity sales			$	623					$	3,264					$	—					$	351					$	4,238
Residue natural gas sales			344						—						28						—						372
Gathering, processing and exchange services revenue			35						122						—						—						157
Transportation and storage revenue			—						48						157						466						671
Other			8						2						—						27						37
Total revenues (a)			1,010						3,436						185						844						5,475
Cost of sales and fuel (exclusive of depreciation and operating costs)			(594)						(2,698)						(15)						(285)						(3,592)
Operating costs			(117)						(181)						(53)						(217)						(568)
Adjusted EBITDA from unconsolidated affiliates			2						17						47						35						101
Noncash compensation expense and other			5						14						1						4						24
Segment adjusted EBITDA			$	306					$	588					$	165					$	381					$	1,440
Depreciation and amortization			$	(70)					$	(85)					$	(18)					$	(80)					$	(253)
Equity in net earnings from investments			$	2					$	15					$	36					$	23					$	76
Investments in unconsolidated affiliates			$	25					$	414					$	522					$	976					$	1,937
Total assets			$	7,021					$	15,279					$	2,635					$	19,401					$	44,336
Capital expenditures			$	116					$	253					$	79					$	42					$	490

(a) - Intersegment revenues are primarily from commodity sales, which are based on the contracted selling price that is generally index-based and settled monthly. Intersegment revenues for the Natural Gas Gathering and Processing segment totaled $620 million and were not material for the Natural Gas Liquids, Refined Products and Crude and Natural Gas Pipelines segments.

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Three Months Ended March 31, 2024						Total Segments						Other and Eliminations						Total
						(Millions of dollars)
Reconciliations of total segments to consolidated
Liquids commodity sales						$	4,238					$	(682)					$	3,556
Residue natural gas sales						372						—						372
Gathering, processing and exchange services revenue						157						—						157
Transportation and storage revenue						671						(7)						664
Other						37						(5)						32
Total revenues (a)						$	5,475					$	(694)					$	4,781
Cost of sales and fuel (exclusive of depreciation and operating costs)						$	(3,592)					$	695					$	(2,897)
Operating costs						$	(568)					$	(4)					$	(572)
Depreciation and amortization						$	(253)					$	(1)					$	(254)
Equity in net earnings from investments						$	76					$	—					$	76
Investments in unconsolidated affiliates						$	1,937					$	2					$	1,939
Total assets						$	44,336					$	54					$	44,390
Capital expenditures						$	490					$	22					$	512

(a) - Substantially all of our revenues relate to contracts with customers.

Three Months Ended March 31, 2023			Natural Gas Gathering and Processing						Natural Gas Liquids						Natural Gas Pipelines						Total Segments
			(Millions of dollars)
NGL and condensate sales			$	644					$	3,551					$	—					$	4,195
Residue natural gas sales			568						—						25						593
Gathering, processing and exchange services revenue			38						131						—						169
Transportation and storage revenue			—						50						145						195
Other			8						3						1						12
Total revenues (a)			1,258						3,735						171						5,164
Cost of sales and fuel (exclusive of depreciation and operating costs)			(875)						(3,095)						(14)						(3,984)
Operating costs			(105)						(152)						(45)						(302)
Adjusted EBITDA from unconsolidated affiliates (b)			1						11						44						56
Noncash compensation expense			4						6						2						12
Other			2						778						—						780
Segment adjusted EBITDA (b)			$	285					$	1,283					$	158					$	1,726
Depreciation and amortization			$	(67)					$	(78)					$	(17)					$	(162)
Equity in net earnings from investments			$	—					$	9					$	31					$	40
Investments in unconsolidated affiliates			$	26					$	413					$	349					$	788
Total assets			$	6,899					$	14,437					$	2,239					$	23,575
Capital expenditures			$	98					$	137					$	46					$	281

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

(b) - Beginning in 2023, we updated our calculation methodology of adjusted EBITDA to include adjusted EBITDA from our unconsolidated affiliates using the same recognition and measurement methods used to record equity in net earnings from investments. This change resulted in an additional $16 million of adjusted EBITDA in the first quarter of 2023.

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

(a) - Substantially all of our revenues relate to contracts with customers.

						Three Months Ended March 31,
						2024						2023
Reconciliation of net income to total segment adjusted EBITDA						(Millions of dollars)
Net income						$	639					$	1,049
Interest expense, net of capitalized interest						300						166
Depreciation and amortization						254						162
Income taxes						208						330
Adjusted EBITDA from unconsolidated affiliates (b)						101						56
Equity in net earnings from investments (b)						(76)						(40)
Noncash compensation expense and other						15						10
Other corporate costs						(1)						(7)
Total segment adjusted EBITDA (a)(b)						$	1,440					$	1,726

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

(b) - Beginning in 2023, we updated our calculation methodology of adjusted EBITDA to include adjusted EBITDA from our unconsolidated affiliates using the same recognition and measurement methods used to record equity in net earnings from investments. This change resulted in an additional $16 million of adjusted EBITDA in the first quarter of 2023.