Key Highlights

  • Consensus EPS of 1.51 compares with diluted EPS of 1.53 for the second quarter, against 1.34 last year.
  • Management raised full-year net income guidance to a midpoint of USD 3.6 billion, up USD 150 million from February.
  • Full-year adjusted EBITDA guidance moved to a midpoint of USD 8.35 billion, up USD 250 million from initial expectations.
  • Capital expenditures guidance of USD 2.7 billion to USD 3.2 billion was maintained, with second-half spending at the upper end.

ONEOK (NYSE:OKE) reports third-quarter results on Tuesday, Oct. 27, after the market closes. Consensus stands at EPS of 1.51 on revenue of USD 10.54 billion, and the company has a market capitalization of USD 60.75 billion.

ONEOK is a midstream company with NGL, refined products and natural gas operations. In the second quarter, it reported revenues of USD 12,049 million against USD 7,887 million and net income attributable to ONEOK of USD 966 million against USD 841 million.

Estimates Against Company Guidance

The revenue estimate of USD 10.54 billion is below the USD 12,049 million reported for the second quarter. The EPS estimate of 1.51 is below the diluted EPS of 1.53 reported, which compared with 1.34 a year earlier.

Management raised full-year net income guidance to a midpoint of USD 3.6 billion and adjusted EBITDA guidance to a midpoint of USD 8.35 billion. It maintained capital expenditures guidance at USD 2.7 billion to USD 3.2 billion.

What Management Guided and What It Left Open

Management said cumulative cash tax benefits rose to USD 2.6 billion from a prior estimate of USD 1.5 billion, with cash tax payments deferred until 2031. It said capital spending reaches the upper end of its range in the second half, without giving a quarterly split.

Management put numbers on projects. Permian processing capacity reaches nearly 2.4 billion cubic feet per day on completion of current expansions, the Bighorn plant was upsized to 400 million cubic feet per day from 300 million, and the LPG export facility of 200,000 barrels per day has reached an 80% contracting threshold.

The Medford fractionation project Phase 1 is slated for completion in the fourth quarter, adding 100,000 barrels per day, and the Denver refined products expansion added 35,000 barrels per day on Aug. 1.

Changes in the Latest Results

Net income was USD 967 million, up 13%, and adjusted EBITDA was USD 2.12 billion, up 7%. The filing ties higher earnings to NGL, refined products and natural gas volumes and higher optimization and marketing activity.

NGL raw feed throughput rose 7%, refined products volumes rose 8%, and Seabrook crude export throughput rose approximately 20% from the first quarter. Midland crude gathering volumes rose 10% from the first quarter.

Operating income was USD 1,593 million against USD 1,431 million, and cost of revenue was USD 9,242 million against USD 5,360 million. Rocky Mountain drilling reached 13 rigs, up two from the prior quarter, while Mid-Continent drilling held at 11 rigs. Management also cited a supply agreement for 1 gigawatt of power plant demand, and the estimates table lists a market capitalization of USD 60.75 billion.

Figures to Follow in the Release

Diluted EPS against 1.51 and revenue against USD 10.54 billion are the first comparisons. Other markers are the USD 3.6 billion net income midpoint, adjusted EBITDA against USD 8.35 billion, NGL volumes and capital expenditures.