PR Newswire
TULSA, Okla., Feb. 25, 2019
TULSA, Okla., Feb. 25, 2019 /PRNewswire/ -- ONEOK, Inc. (NYSE: OKE) today announced higher fourth-quarter and full-year 2018 results, compared with the same periods in 2017, and announced 2019 financial guidance and a 2020 outlook.
Higher Full Year 2018 Results, Compared With The Full Year 2017:
Higher 2019 Financial Guidance, Compared With Full Year 2018 Results:
FOURTH-QUARTER AND FULL-YEAR 2018 FINANCIAL HIGHLIGHTS
Three Months Ended | Years Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(Millions of dollars, except per share and coverage ratio amounts) | |||||||||||||||
Net income attributable to ONEOK (a) | $ | 292.9 | $ | 63.0 | $ | 1,151.7 | $ | 387.8 | |||||||
Net income per diluted share (a) | $ | 0.70 | $ | 0.16 | $ | 2.78 | $ | 1.29 | |||||||
Adjusted EBITDA (b) | $ | 625.2 | $ | 547.7 | $ | 2,447.5 | $ | 1,986.9 | |||||||
DCF (b) | $ | 464.7 | $ | 366.0 | $ | 1,822.4 | $ | 1,384.7 | |||||||
Dividend coverage ratio (b) | 1.32 | 1.28 | 1.37 | 1.34 | |||||||||||
Operating income | $ | 471.9 | $ | 400.6 | $ | 1,835.5 | $ | 1,391.8 | |||||||
Operating costs | $ | 236.3 | $ | 214.1 | $ | 907.0 | $ | 822.7 | |||||||
Depreciation and amortization | $ | 110.6 | $ | 103.8 | $ | 428.6 | $ | 406.3 | |||||||
Equity in net earnings from investments | $ | 42.3 | $ | 40.3 | $ | 158.4 | $ | 159.3 | |||||||
Capital expenditures | $ | 831.8 | $ | 182.0 | $ | 2,141.5 | $ | 512.4 |
(a) Three-month and full-year periods ending Dec. 31, 2017, include one-time noncash charges of $141.3 million, or 36 cents per diluted share and 47 cents per diluted share, respectively, related to the enactment of the Tax Cuts and Jobs Act. The full-year ending Dec. 31, 2017, also includes noncash impairment charges of approximately $20.2 million, or 4 cents per diluted share, and approximately $50 million, or 10 cents per diluted share, in one-time and ONEOK and ONEOK Partners merger transaction-related costs. | |||||||||||||||
(b) Adjusted EBITDA; distributable cash flow (DCF); and dividend coverage ratio are non-GAAP measures. Full-year 2017 amounts include pretax cash costs associated with the ONEOK and ONEOK Partners merger transaction of approximately $30 million, or 0.04 times dividend coverage. Reconciliations to relevant GAAP measures are included in this news release. |
"2018 was an exceptional year for ONEOK, with continued volume growth across our operations and the announcement of more than $5.5 billion of capital-growth projects that will help meet customer needs and the increasing demand for natural gas and NGLs in the U.S. and abroad," said Terry K. Spencer, ONEOK president and chief executive officer. "We ended the year with a strong balance sheet and the financial capability to fund these projects with no expected equity needs in 2019.
"As we look ahead, 2019 will be a year of project execution, positioning ONEOK for strong earnings growth in 2020," added Spencer. "With continued production improvements and a large inventory of flared natural gas in the Williston Basin, we expect to immediately benefit from the completion of the Demicks Lake I natural gas processing plant, which we anticipate will start operations nearly full in the fourth quarter 2019. We expect volume to reach approximately 100,000 bpd on our Elk Creek Pipeline in the first quarter of 2020 from Demicks Lake I, third-party processing plants and NGLs currently being railed from the basin.
"The projects we're placing in service this year and in early 2020 will provide much needed natural gas processing and NGL takeaway capacity, and are expected to drive volume and earnings growth," said Spencer.
FOURTH-QUARTER AND FULL-YEAR 2018 FINANCIAL PERFORMANCE
ONEOK's operating income increased 18 percent in the fourth quarter 2018 and 32 percent for the full-year 2018, compared with the same periods in 2017. Higher 2018 results were driven primarily by natural gas and natural gas liquids volume growth across its operations, and higher optimization and marketing earnings in the natural gas liquids segment.
Results were offset partially by higher employee-related costs in all three segments, higher operating costs associated with the growth of ONEOK's operations in the natural gas gathering and processing segment and routine maintenance projects in the natural gas liquids and natural gas pipelines segments.
HIGHLIGHTS:
2019 FINANCIAL GUIDANCE:
2019 Guidance Range | ||||||||
(Millions of dollars) | ||||||||
ONEOK, Inc. | ||||||||
Net income | $ | 1,140 | - | $ | 1,400 | |||
Adjusted EBITDA (a) | $ | 2,500 | - | $ | 2,700 | |||
Distributable cash flow (a) | $ | 1,820 | - | $ | 2,060 | |||
Capital-growth expenditures | $ | 2,500 | - | $ | 3,700 | |||
Maintenance capital expenditures | $ | 160 | - | $ | 200 | |||
Segment Adjusted EBITDA: | ||||||||
Natural Gas Liquids | $ | 1,520 | - | $ | 1,620 | |||
Natural Gas Gathering and Processing | $ | 620 | - | $ | 680 | |||
Natural Gas Pipelines | $ | 360 | - | $ | 390 | |||
Other | $ | — | - | $ | 10 |
(a) Adjusted EBITDA and distributable cash flow are non-GAAP measures. Reconciliations to relevant GAAP measures are included in this news release. |
2019 Guidance Range | |||||||
Summary of 2019 Volume Guidance | |||||||
Natural Gas Liquids Raw Feed Throughput (MBbl/d) (a) | 1,080 | - | 1,165 | ||||
Natural Gas Gathered (MMcf/d) | 1,915 | - | 2,115 | ||||
Natural Gas Processed (MMcf/d) | 1,800 | - | 2,000 | ||||
Commodity Price Assumptions (average unhedged prices) (b): | |||||||
Natural Gas ($/MMBtu, NYMEX) | $ | 2.81 | |||||
Crude Oil ($/barrel, WTI-NYMEX) | $ | 54.55 | |||||
Average Conway-to-Mont Belvieu OPIS price differential - ethane in ethane/propane mix ($/gallon) | $ | 0.10 |
(a) Represents physical raw feed volumes on which ONEOK charges a fee for transportation and/or fractionation services. | |||||||
(b) Commodity price assumptions as of Feb. 7, 2019. |
2019 Performance Drivers:
Natural Gas Liquids
Natural Gas Gathering and Processing
Natural Gas Pipelines
Additional guidance information can be found in the tables and in supplemental materials found on ONEOK's website, www.oneok.com.
2020 OUTLOOK:
ONEOK expects a greater than 20 percent increase in adjusted EBITDA in 2020, compared with 2019. More than $4.4 billion of capital-growth projects expected to be completed in 2019 and in the first quarter 2020 will provide a foundation for significant earnings growth in 2020. ONEOK continues to contract additional volumes on these projects with construction underway, on time and on budget.
Primary contributors to 2020 earnings growth are expected to include a faster than anticipated volume ramp on ONEOK's Elk Creek Pipeline, its Demicks Lake I natural gas processing plant beginning operations nearly full in the fourth quarter 2019 and its MB-4 NGL fractionator exiting 2020 full. Elk Creek Pipeline is expected to reach its initial contracted capacity of 100,000 bpd in the first quarter of 2020, generating its targeted adjusted EBITDA multiple of four to six times within its first few months of operation. Elk Creek volumes are expected to continue to increase throughout 2020. Additionally, ONEOK expects to benefit from higher producer activity in the Powder River Basin, volume growth in the Permian Basin, increased rates on the West Texas LPG Pipeline system and the completion of the Arbuckle II NGL pipeline, which will provide additional connectivity with Gulf Coast markets.
2018 BUSINESS-SEGMENT RESULTS:
Key financial and operating statistics are listed in the tables.
Natural Gas Liquids Segment
The natural gas liquids segment's fourth-quarter and full-year 2018 adjusted EBITDA increased 12 and 25 percent, respectively, compared with the same periods in 2017. Higher volumes in the STACK and SCOOP areas, and the Williston and Permian basins, and higher earnings from optimization and marketing activities contributed to the increases.
NGL volumes gathered during the fourth quarter and full year 2018 increased 8 and 12 percent, respectively, compared with 2017. Fourth-quarter and full-year 2018 NGLs fractionated increased 9 and 15 percent respectively, compared with the same periods in 2017, due primarily to higher volumes gathered and an expansion of ONEOK's Mid-Continent fractionation capacity.
Ethane volumes across ONEOK's system increased approximately 65,000 bpd in 2018, compared with 2017, due to supply growth, increased NGL export demand and petrochemical facility expansion projects. ONEOK expects ethane production levels across its system to continue to fluctuate until the completion of its announced NGL pipeline and fractionation capital-growth projects, which are expected to help alleviate current system constraints.
Three Months Ended | Years Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
Natural Gas Liquids Segment | 2018 | 2017 | 2018 | 2017 | |||||||||||
(Millions of dollars) | |||||||||||||||
Adjusted EBITDA | $ | 347.4 | $ | 309.4 | $ | 1,440.6 | $ | 1,154.9 | |||||||
Capital expenditures | $ | 519.7 | $ | 54.5 | $ | 1,306.3 | $ | 114.3 |
The increase in fourth-quarter 2018 adjusted EBITDA, compared with the fourth quarter 2017, primarily reflects:
The increase in adjusted EBITDA for the full year 2018, compared with 2017, primarily reflects:
Natural Gas Gathering and Processing Segment
The natural gas gathering and processing segment's fourth-quarter and full-year 2018 adjusted EBITDA increased 21 and 22 percent, respectively, compared with the same periods in 2017, due to continued volume growth across ONEOK's operating basins.
Natural gas volumes processed increased 9 and 16 percent in the fourth quarter and full year 2018, respectively, compared with the same periods in 2017.
The segment also continues to benefit from higher fee-based earnings, with an average fee rate of 90 cents per MMBtu for the full-year 2018, compared with 86 cents per MMBtu in 2017.
Three Months Ended | Years Ended | ||||||||||||||
Natural Gas Gathering and Processing Segment | December 31, | December 31, | |||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(Millions of dollars) | |||||||||||||||
Adjusted EBITDA | $ | 174.6 | $ | 144.3 | $ | 631.6 | $ | 518.5 | |||||||
Capital expenditures | $ | 261.0 | $ | 98.5 | $ | 694.6 | $ | 284.2 |
Fourth-quarter 2018 adjusted EBITDA increased, compared with the fourth quarter 2017, which primarily reflects:
The increase in adjusted EBITDA for the full year 2018, compared with 2017, primarily reflects:
Natural Gas Pipelines Segment
The natural gas pipelines segment's fourth-quarter and full-year 2018 adjusted EBITDA increased 10 percent and 8 percent, respectively, compared with the same periods in 2017 due primarily to increased interruptible volumes and firm transportation capacity contracted.
Three Months Ended | Years Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
Natural Gas Pipelines Segment | 2018 | 2017 | 2018 | 2017 | |||||||||||
(Millions of dollars) | |||||||||||||||
Adjusted EBITDA | $ | 97.2 | $ | 88.7 | $ | 366.3 | $ | 339.8 | |||||||
Capital expenditures | $ | 47.3 | $ | 24.9 | $ | 119.2 | $ | 95.6 |
Fourth-quarter 2018 adjusted EBITDA increased, compared with the fourth quarter 2017, which primarily reflects:
The increase in adjusted EBITDA for the full year 2018, compared with 2017, primarily reflects:
EARNINGS CONFERENCE CALL AND WEBCAST:
ONEOK executive management will conduct a conference call at 11 a.m. Eastern Standard Time (10 a.m. Central Standard Time) on Feb. 26, 2019. The call also will be carried live on ONEOK's website.
To participate in the telephone conference call, dial 855-710-4182, pass code 9871790, or log on to www.oneok.com.
If you are unable to participate in the conference call or the webcast, the replay will be available on ONEOK's website, www.oneok.com, for 30 days. A recording will be available by phone for seven days. The playback call may be accessed at 888-203-1112, pass code 9871790.
LINKS TO EARNINGS TABLES AND PRESENTATION:
Presentation:
http://ir.oneok.com/~/media/Files/O/OneOK-IR/financial-reports/2019/q4-2018-earnings-results-presentation.pdf
NON-GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) FINANCIAL MEASURES:
ONEOK has disclosed in this news release adjusted EBITDA, distributable cash flow and dividend coverage ratio, which are non-GAAP financial metrics, used to measure the company's financial performance and are defined as follows:
These non-GAAP financial measures described above are useful to investors because they, and similar measures, are used by many companies in the industry as a measure of financial performance and are commonly employed by financial analysts and others to evaluate our financial performance and to compare our financial performance with the performance of other companies within our industry. Adjusted EBITDA, ONEOK distributable cash flow and dividend coverage ratio should not be considered in isolation or as a substitute for net income or any other measure of financial performance presented in accordance with GAAP.
These non-GAAP financial measures exclude some, but not all, items that affect net income. Additionally, these calculations may not be comparable with similarly titled measures of other companies. Reconciliations of net income to adjusted EBITDA, distributable cash flow and coverage ratio are included in the tables.
ONEOK, Inc. (pronounced ONE-OAK) (NYSE: OKE) is a leading midstream service provider and owner of one of the nation's premier natural gas liquids (NGL) systems, connecting NGL supply in the Mid-Continent, Permian and Rocky Mountain regions with key market centers and an extensive network of natural gas gathering, processing, storage and transportation assets.
ONEOK is a FORTUNE 500 company and is included in S&P 500.
For information about ONEOK, visit the website: www.oneok.com.
For the latest news about ONEOK, find us on LinkedIn, Instagram, Facebook and Twitter.
This news release contains certain "forward-looking statements" within the meaning of federal securities laws. Words such as "anticipates," "estimates," "believes," "expects," "intends," "plans," "projects," "will," "would," "should," "could," "may," "continues," "forecasts," "guidance," "goal," "might," "potential," "scheduled," and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect our current views about future events. Such forward-looking statements include, but are not limited to, statements about the benefits of the transaction involving us, including future financial and operating results, our plans, objectives, expectations and intentions, and other statements that are not historical facts, including future results of operations, projected cash flow and liquidity, business strategy, expected synergies or cost savings, and other plans and objectives for future operations. No assurances can be given that the forward-looking statements contained in this news release will occur as projected and actual results may differ materially from those projected.
Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties, many of which are beyond our control, and are not guarantees of future results. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. These risks and uncertainties include, without limitation, the following:
These reports are also available from the sources described below. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. ONEOK undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or changes in circumstances, expectations or otherwise.
The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the Risk Factors included in the most recent reports on Form 10-K and Form 10-Q and other documents of ONEOK on file with the SEC. ONEOK's SEC filings are available publicly on the SEC's website at www.sec.gov.
Analyst Contact: | Megan Patterson 918-561-5325 |
Media Contact: | Stephanie Higgins 918-591-5026 |
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SOURCE ONEOK, Inc.
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