ONEOK 10-Q 2024-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended Sept. 30, 2024.

OR

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________.

Commission file number 001-13643

ONEOK, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (918) 588-7000

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On Oct. 21, 2024, the Company had 584,184,191 shares of common stock outstanding.

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ONEOK, Inc.

TABLE OF CONTENTS

As used in this Quarterly Report, references to “we,” “our” or “us” refer to ONEOK, Inc., an Oklahoma corporation, and its predecessors and subsidiaries, unless the context indicates otherwise.

The statements in this Quarterly Report that are not historical information, including statements concerning plans and objectives of management for future operations, economic performance or related assumptions, are forward-looking statements. Forward-looking statements may include words such as “anticipates,” “believes,” “continues,” “could,” “estimates,” “expect,” “forecasts,” “goal,” “guidance,” “intends,” “may,” “might,” “outlook,” “plans,” “potential,” “projects,” “scheduled,” “should,” “target,” “will,” “would” and other words and terms of similar meaning. Although we believe that our expectations regarding future events are based on reasonable assumptions, we can give no assurance that such expectations or assumptions will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements are described under Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations “Forward-Looking Statements,” and Part II, Item 1A, “Risk Factors,” in this Quarterly Report and under Part I, Item 1A, “Risk Factors,” in our Annual Report.

INFORMATION AVAILABLE ON OUR WEBSITE

We make available, free of charge, on our website (www.oneok.com) copies of our Annual Reports, Quarterly Reports, Current Reports on Form 8-K, amendments to those reports filed or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act and reports of holdings of our securities filed by our officers and directors under Section 16 of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC. Copies of our Code of Business Conduct and Ethics, Corporate Governance Guidelines, Director Independence Guidelines, Corporate Sustainability Report and the written charters of our Board Committees also are available on our website, and we will provide copies of these documents upon request.

In addition to our filings with the SEC and materials posted on our website, we also use social media platforms as additional channels of distribution to reach public investors. Information contained on our website or posted on our social media accounts, including any corresponding applications, are not incorporated by reference into this report.

GLOSSARY

The abbreviations, acronyms and industry terminology used in this Quarterly Report are defined as follows:

PART I - FINANCIAL INFORMATION

See accompanying Notes to Consolidated Financial Statements.

See accompanying Notes to Consolidated Financial Statements.

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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.

EnLink Controlling Interest Acquisition - On Aug. 28, 2024, we entered into the EnLink Purchase Agreement with GIP to acquire GIP’s interest in EnLink consisting of 43% of the outstanding EnLink Units for $14.90 in cash per unit and 100% of the outstanding limited liability company interests in the managing member of EnLink for $300 million, for total cash consideration of approximately $3.3 billion. On Oct. 15, 2024, we completed the EnLink Controlling Interest Acquisition. We funded this acquisition with an underwritten public offering of senior notes. For additional information on our long-term debt, see Note F of the Notes to Consolidated Financial Statements in this Quarterly Report.

This acquisition meaningfully increases our scale and integrated value chain within the growing Permian Basin while expanding and extending our asset bases in the Mid-Continent, North Texas and Louisiana regions. We expect to achieve significant synergies by combining our complementary asset positions.

We intend to pursue the acquisition of the publicly held EnLink Units in a tax-free transaction. For additional information on our acquisitions, 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 EnLink Controlling Interest Acquisition and the Potential EnLink Transaction.

Medallion Acquisition - On Aug. 28, 2024, we also entered into the Medallion Purchase and Sale Agreement with GIP to acquire all of the equity interests in Medallion for a purchase price of $2.6 billion, subject to upward and downward adjustments specified in the Medallion Purchase and Sale Agreement, and inclusive of the purchase of additional interests in a Medallion joint venture owned by a separate third party. Medallion operations are principally composed of providing midstream services for crude oil and condensate in West Texas, specifically the Midland Basin.

The closing of this transaction is expected to occur during the fourth quarter of 2024, subject to the satisfaction of customary closing conditions, including the expiration or termination of all applicable waiting periods imposed by the Hart-Scott-Rodino

Antitrust Improvements Act of 1976, as amended. We intend to fund this acquisition with a portion of the proceeds from the September 2024 underwritten public offering of senior notes. For additional information on our long-term debt, see Note F 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 Medallion Acquisition.

Gulf Coast NGL Pipelines Acquisition - In June 2024, we completed the acquisition of a system of NGL pipelines from Easton Energy, a Houston-based midstream company, for approximately $280 million. This acquisition in our Natural Gas Liquids segment includes approximately 450 miles of liquids products pipelines located in the strategic Gulf Coast market centers for NGLs, Refined Products and crude oil. A portion of the Easton assets are already connected to our Mont Belvieu assets. We expect to add connections to our Houston-based assets beginning in mid-2025 through the end of 2025.

Market Conditions and Business Update - Earnings increased in the third quarter of 2024, compared with the third quarter of 2023, due primarily to contributions from the Refined Products and Crude segment, higher NGL and natural gas processing volumes in the Rocky Mountain region, and increased transportation services in the Natural Gas Pipelines segment. Our extensive and integrated assets 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 2024.

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

(a) - Excludes capitalized interest/AFUDC.

(b) - This project originally had an estimated completion of first quarter 2025.

(c) - This project is expected to be completed in two phases, with the first phase expected to be completed in the fourth quarter of 2026, and the second phase completed in the first quarter of 2027.

(d) - This table excludes EnLink’s capital projects.

In August 2024, we announced plans to rebuild our 210 MBbl/d NGL fractionator in Medford, Oklahoma. Rebuilding at Medford provides strategic benefits that include expansion options that will allow our integrated system to accommodate volume growth from the Permian Basin and the Rocky Mountain and Mid-Continent regions. The Medford fractionator will also produce butane and natural gasoline for incremental Refined Products and diluent blending opportunities in the Mid-Continent region.

In July 2024, we announced plans to expand our Refined Products pipeline capacity, connecting Mid-Continent and Gulf Coast supply with the greater Denver area, to meet growing demand and increase connectivity with the Denver International Airport (DIA). The project includes construction of a new 230-mile, 16-inch diameter pipeline from Scott City, Kansas, to DIA and the addition or upgrading of certain pump stations along the existing Refined Products pipeline system. Total system capacity will increase by 35 MBbl/d and will have additional expansion capabilities. This project is fully subscribed under long-term contracts.

At the end of the first quarter of 2024, we completed the expansion of our Refined Products pipeline to El Paso, Texas. This expansion connects more supply to growing markets in Texas, New Mexico, Arizona and Mexico.

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

Debt Issuances - In September 2024, we completed an underwritten public offering of $7.0 billion senior unsecured notes consisting of $1.25 billion, 4.25% senior notes due 2027; $600 million, 4.4% senior notes due 2029; $1.25 billion, 4.75% senior notes due 2031; $1.6 billion, 5.05% senior notes due 2034; $1.5 billion, 5.7% senior notes due 2054; and $80

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There have been no material changes in market risk exposures that would affect the quantitative and qualitative disclosures presented as of Dec. 31, 2023, in Part II, Item 7A in our Annual Report.

See Note E of the Notes to Consolidated Financial Statements in this Quarterly Report for more information on our hedging activities.

Quarterly Evaluation of Disclosure Controls and Procedures - Our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) were effective as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting - There have been no changes in our internal control over financial reporting during the quarter ended Sept. 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

**ITEM 1.**LEGAL PROCEEDINGS

We have elected to use a $1 million threshold for disclosing environmental proceedings.

Information about our legal proceedings is included in Note J of the Notes to Consolidated Financial Statements in this Quarterly Report and under Note O of the Notes to Consolidated Financial Statements in our Annual Report.

Our investors should consider the risk factors set forth in Part I, Item 1A, Risk Factors, of our Annual Report that could affect us and our business. Except as set forth below, those risk factors have not materially changed.

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

We may be unable to integrate the businesses of EnLink and Medallion successfully or realize the anticipated benefits of the EnLink Controlling Interest Acquisition and the Medallion Acquisition (collectively, the “Transactions”).

The success of the Transactions will depend, in part, on our ability to realize the anticipated benefits from combining the businesses of ONEOK, EnLink and Medallion. If the businesses are not successfully combined, the anticipated benefits of the Transactions may not be realized fully or at all or may take longer to realize than expected. In addition, the integration may

result in additional and unforeseen expenses and potential unknown liabilities, which could reduce the anticipated benefits of the Transactions. It is possible that the integration process could result in the loss of key employees, as well as the disruption of our ongoing businesses or inconsistencies in our standards, controls, procedures and policies. Any or all of those occurrences could affect adversely the combined company’s ability to maintain relationships with customers and employees after the Transactions or to achieve the anticipated benefits of the Transactions. Integration efforts between the three companies will also divert management attention and resources. These integration matters could have an adverse effect on us.

We may not be able to reach an agreement for the Potential EnLink Transaction or successfully consummate such transaction if an agreement is reached, and we are likely to incur significant transaction costs pursuing the Potential EnLink Transaction. Should we consummate the Potential EnLink Transaction, execution of the integration strategy will involve considerable risks and may not be successful.

In connection with the announcement of the EnLink Controlling Interest Acquisition, we announced our intention, subsequent to the EnLink Controlling Interest Acquisition, to pursue the acquisition of the publicly held EnLink Units in a tax-free transaction. However, there can be no assurances that we will be able to reach an agreement for the Potential EnLink Transaction on terms that are acceptable to us or that we will be able to successfully consummate the transaction should we enter into a definitive agreement related to the transaction. If we are unable to reach an agreement for the acquisition of the publicly held EnLink Units, EnLink will continue to operate as a separate company, which could have a material adverse effect on our ability to implement our growth strategy and, ultimately, our business, financial condition and results of operations. Pursuing the Potential EnLink Transaction is likely to require the incurrence of a number of significant, non-recurring costs, including diversion of management resources, associated with negotiating and completing such transaction, combining the operations of the companies and achieving desired synergies. Such costs and diversions of resources, many of which will be borne by us whether or not the Potential EnLink Transaction is completed, could have an adverse effect on our financial condition and operating results.

Following the EnLink Controlling Interest Acquisition, certain aspects of EnLink’s business and operations will be integrated with ours, but EnLink will continue to operate as a separate public company. If completed, following the Potential EnLink Transaction, it is anticipated that EnLink will cease to operate as a separate public company, at which point we can begin full integration with our business. This integration process is expected to be subject to some or all of the challenges discussed under the risk factor captioned “We may be unable to integrate the businesses of EnLink and Medallion successfully or realize the anticipated benefits of the Transactions,” many of which may be more complex as a result of having to fully integrate the EnLink business. Further, this integration process may pose additional difficulties inherent with fully integrating the EnLink business and the discontinuation of its operation as a separate public company. If we are unable to successfully execute our integration strategy, we may be unable to realize some or all of the anticipated benefits of the Potential EnLink Transaction which could materially and adversely affect our business, operating results and financial condition.

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

ISSUER PURCHASES OF EQUITY SECURITIES

(a) - In January 2024, our Board of Directors authorized a share repurchase program to buy up to $2.0 billion of our outstanding common stock. The program will terminate upon completion of the repurchases, or on Jan. 1, 2029, whichever occurs first.

**ITEM 3.**DEFAULTS UPON SENIOR SECURITIES

Not applicable.

**ITEM 4.**MINE SAFETY DISCLOSURES

Not applicable.

Not applicable.

Readers of this report should not rely on or assume the accuracy of any representation or warranty or the validity of any opinion contained in any agreement filed as an exhibit to this Quarterly Report, because such representation, warranty or opinion may be subject to exceptions and qualifications contained in separate disclosure schedules, may represent an allocation of risk between parties in the particular transaction, may be qualified by materiality standards that differ from what may be viewed as material for securities law purposes, or may no longer continue to be true as of any given date. All exhibits attached to this Quarterly Report are included for the purpose of complying with requirements of the SEC. Other than the certifications made by our officers pursuant to the Sarbanes-Oxley Act of 2002 included as exhibits to this Quarterly Report, all exhibits are included only to provide information to investors regarding their respective terms and should not be relied upon as constituting or providing any factual disclosures about us, any other persons, any state of affairs or other matters.

The following exhibits are filed as part of this Quarterly Report:

Attached as Exhibit 101 to this Quarterly Report are the following Inline XBRL-related documents: (i) Document and Entity Information; (ii) Consolidated Statements of Income for the three and nine months ended Sept. 30, 2024 and 2023; (iii) Consolidated Statements of Comprehensive Income for the three and nine months ended Sept. 30, 2024 and 2023; (iv) Consolidated Balance Sheets at Sept. 30, 2024, and Dec. 31, 2023; (v) Consolidated Statements of Cash Flows for the nine months ended Sept. 30, 2024 and 2023; (vi) Consolidated Statements of Changes in Equity for the three and nine months ended Sept. 30, 2024 and 2023; and (vii) Notes to Consolidated Financial Statements.

SIGNATURE

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.