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What changed in Oneok's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Oneok's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+496 added−447 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-27)

Top changes in Oneok's 2024 10-K

496 paragraphs added · 447 removed · 343 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

154 edited+68 added−52 removed62 unchanged
Biggest changeProperty - Our Natural Gas Gathering and Processing segment includes the following assets, which are wholly owned, except where noted: • 17,400 miles of natural gas gathering pipelines; • 14 natural gas processing plants with 1.9 Bcf/d of processing capacity in the Rocky Mountain region, and nine natural gas processing plants with 0.9 Bcf/d of processing capacity in the Mid-Continent region, and up to 150 MMcf/d of processing capacity in the Mid-Continent region through a long-term processing services agreement with an unaffiliated third party; and • 14 MBbl/d of NGL fractionation capacity and 26 MBbl/d of de-ethanizer capacity at various natural gas processing plants.
Biggest changeAs a result of the EnLink Acquisitions, we now provide gathering and processing services in the Barnett Shale. 11 Table of Contents Property - Our Natural Gas Gathering and Processing segment includes the following assets, which are wholly owned, except where noted, and exclude EnLink, which is shown separately below: • 13,500 miles of natural gas gathering pipelines; and • Natural gas processing plants with 1.9 Bcf/d of processing capacity in the Rocky Mountain region and 1.0 Bcf/d in the Mid-Continent region, which were 84% and 77% utilized in 2024 and 2023, respectively.
ONEOK Gas Transportation is connected to our ONEOK Gas Storage facilities in Oklahoma, which provide 50 Bcf of working gas storage capacity; and • ONEOK WesTex Transmission, which transports natural gas throughout the western portion of the state of Texas, including the Waha Hub area where other pipelines may be accessed for transportation to western markets, exports to Mexico, several markets to the southeast along the Gulf Coast, including the Houston Ship Channel and the Mid-Continent market to the north.
ONEOK Gas Transportation is connected to our ONEOK Gas Storage facilities in Oklahoma, which provide 50 Bcf of working gas storage capacity; • ONEOK WesTex Transmission, which transports natural gas throughout the western portion of the state of Texas, including the Waha Hub area where other pipelines may be accessed for transportation to western markets, exports to Mexico, several markets to the southeast along the Gulf Coast, including the Houston Ship Channel and the Mid-Continent market to the north.
In our Natural Gas Pipelines segment, we are exposed to minimal commodity price risk associated with (i) changes in the price of natural gas, which impact our fuel costs and retained fuel in-kind received for our compression services; and (ii) the differential between forward pricing of natural gas physical contracts and the price of natural gas on the spot market, which may affect our customer demand for our natural gas storage services.
In our Natural Gas Pipelines segment, we are exposed to minimal commodity price risk associated with (i) changes in the price of natural gas, which impact our fuel costs and retained fuel in-kind received for our compression services; and (ii) the differential between forward pricing of natural gas physical contracts and the price of natural gas on the spot market, which may affect customer demand for our natural gas storage services.
REGULATORY, ENVIRONMENTAL AND SAFETY MATTERS We are subject to a variety of historical preservation and environmental laws and/or regulations that affect many aspects of our present and future operations.
REGULATORY, ENVIRONMENTAL AND SAFETY MATTERS We are subject to a variety of historical preservation and environmental and safety laws and/or regulations that affect many aspects of our present and future operations.
The strategy is guided by a D&I Council composed of a diverse group of employees who represent different demographics, work locations, points of view, roles and levels of seniority. We also have a team within our human resources department that is wholly dedicated to supporting our D&I efforts.
The strategy is guided by a council composed of a diverse group of employees who represent different demographics, work locations, points of view, roles and levels of seniority. We also have a team within our human resources department that is wholly dedicated to supporting our I&D efforts.
Our organizational development and D&I teams provide live in-person and virtual classroom training, computer-based self-study and one-on-one coaching that is available to all employees. We value education and assist eligible employees with the expense of furthering their education in job-related fields, including up to $5,250 per year in qualifying tuition expenses.
Our organizational development and I&D teams provide live in-person and virtual classroom training, computer-based self-study and one-on-one coaching that is available to all employees. We value education and assist eligible employees with the expense of furthering their education in job-related fields, including up to $5,250 per year in qualifying tuition expenses.
D&I continues to be a priority in recruiting, and we deploy sourcing strategies designed to access talent from groups that are historically underrepresented in our industry and workplace. Retirement - We maintain a 401(k) Plan for our employees and match 100% of employee contributions up to 6% of eligible compensation each payroll period, subject to applicable tax limits.
I&D continues to be a priority in recruiting, and we deploy sourcing strategies designed to access talent from groups that are historically underrepresented in our industry and workplace. Retirement - We maintain a 401(k) Plan for our employees and match 100% of employee contributions up to 6% of eligible compensation each payroll period, subject to applicable tax limits.
The factors that typically affect our ability to compete for natural gas, NGL, Refined Products and crude oil volumes are: • quality of services provided; • producer drilling activity; • proceeds remitted and/or fees charged under our contracts; • proximity of our assets to natural gas, NGL, Refined Products and crude oil supply areas and markets; • proximity of our assets to alternative energy production; • location of our assets relative to those of our competitors; • efficiency and reliability of our operations; • receipt and delivery capabilities for natural gas, NGLs, Refined Products and crude oil that exist in each pipeline system, plant, fractionator, terminal and storage location; • the petrochemical industry’s level of capacity utilization and feedstock requirements; • current and forward natural gas, NGLs, Refined Products and crude oil prices; and • cost of and access to capital.
The factors that typically affect our ability to compete for natural gas, NGL, Refined Products and crude oil volumes are: • quality and quantity of services provided; • producer drilling activity; • proceeds remitted and/or fees charged under our contracts; • proximity of our assets to natural gas, NGL, Refined Products and crude oil supply areas and markets; • proximity of our assets to alternative energy production; • location of our assets relative to those of our competitors; • efficiency and reliability of our operations; • receipt and delivery capabilities for natural gas, NGLs, Refined Products and crude oil that exist in each pipeline system, plant, fractionator, terminal and storage location; • the petrochemical industry’s level of capacity utilization and feedstock requirements; • current and forward natural gas, NGLs, Refined Products and crude oil prices; and • cost of and access to capital.
Our crude oil pipelines transport crude oil to refineries, export facilities and demand centers. Throughout our distribution system, terminals play a key role in facilitating product movements and marketing by providing storage, distribution, blending and other ancillary services. Products transported on our Refined Products pipeline system include gasoline, distillates, aviation fuel and certain NGLs.
Crude oil pipelines gather and transport crude oil to refineries, export facilities and demand centers. Throughout our distribution system, terminals play a key role in facilitating product movements and marketing by providing storage, distribution, blending and other ancillary services. Products transported on our Refined Products pipeline system include gasoline, distillates, aviation fuel and certain NGLs.
Our downstream commodity sales customers are primarily petrochemical, refining and marketing companies, utilities, large industrial companies, natural gasoline distributors, propane distributors and municipalities. Our Refined Products and Crude segment’s customers also include crude oil producers, refiners, wholesalers, retailers, traders, railroads, airlines and regional farm cooperatives.
Our downstream commodity sales customers are primarily petrochemical, refining and marketing companies, utilities, large industrial companies, natural gasoline distributors, propane distributors, exporters and municipalities. Our Refined Products and Crude segment’s customers also include crude oil producers, refiners, wholesalers, retailers, traders, railroads, airlines and regional farm cooperatives.
The PIPES Act directs pipeline operators to update their inspection and maintenance plans to address the elimination of hazardous leaks and to minimize natural gas releases from pipeline facilities. The updated plans must also address the replacement or remediation at facilities that historically have been known to experience leaks.
The PIPES Act directs pipeline operators to update their inspection and maintenance plans to address the elimination of hazardous leaks and to minimize natural gas releases from pipeline facilities. The updated plans must also address the replacement or remediation of pipeline facilities that historically have been known to experience leaks.
Our exchange services activities are primarily fee-based and include some rate-regulated tariffs; however, we also capture certain product price differentials through the fractionation process. • Transportation and storage services - We transport Purity NGLs and certain Refined Products, primarily under FERC-regulated tariffs.
Our exchange services activities are primarily fee-based and include some rate-regulated tariffs; however, we also capture certain product price differentials through the fractionation process. • Transportation and storage services - We transport Purity NGLs and certain Refined Products, primarily under regulated tariffs.
The cost of compliance did not have a material impact on our operations, financial position or cash flows. In 2021, the TSA began issuing pipeline security directives to owners and/or operators of critical pipeline systems or facilities.
The cost of compliance did not have a material impact on our operations, financial position or cash flows. In July 2021, the TSA began issuing pipeline security directives to owners and/or operators of critical pipeline systems or facilities.
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 provide copies of these documents upon request.
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.
For employees just entering the workforce who desire to advance their career and continue to learn or for the professional who is interested in developing their skills, we provide education and training in a variety of areas, including leadership, functional and industry-specific topics, professional development and skill-building opportunities.
For employees just entering the workforce who desire to advance their career and continue to learn or for the employees who are interested in developing their skills, we provide education and training in a variety of areas, including leadership, functional and industry-specific topics, professional development and skill-building opportunities.
Our other unconsolidated affiliates in this segment are not material. See Note N of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of unconsolidated affiliates. Government Regulation - The operations and revenues of our NGL pipelines are regulated by various state and federal government agencies.
Our other unconsolidated affiliates in this segment are not material. See Note O of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of unconsolidated affiliates. Government Regulation - The operations and revenues of our NGL pipelines are regulated by various state and federal government agencies.
End markets for Refined Products deliveries are primarily retail gasoline stations, truck stops, farm cooperatives, railroad fueling depots, military bases and commercial airports. Our Natural Gas Pipeline segment’s assets primarily serve LDCs, electric-generation facilities, large industrial companies, municipalities, producers, processors and marketing companies. Our utility customers generally require our services regardless of commodity prices.
End markets for Refined Products deliveries are primarily retail gasoline stations, truck stops, farm cooperatives, railroad fueling depots, military bases and commercial airports. Our Natural Gas Pipeline segment’s assets primarily serve local distribution companies, electric-generation facilities, large industrial companies, municipalities, producers, processors and marketing companies. Our utility customers generally require our services regardless of commodity prices.
In addition, the IRA directed the EPA to impose and collect “Waste Emissions Charges,” or “Methane Fees,” for specific facilities that report more than 25,000 metric tons of carbon dioxide equivalent of GHG emissions per year and have a methane emissions intensity in excess of the relevant statutory threshold.
In addition, the IRA directed the EPA to impose and collect “Waste Emissions Charges,” or “Methane Fees,” for specific facilities th at report more than 25,000 metric tons of carbon dioxide equivalent of GHG emissions per year and have a methane emissions intensity in excess of the relevant statutory threshold.
The Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011 (the 2011 Pipeline Safety Act) increased maximum penalties for violating federal pipeline safety regulations, directs the DOT and Secretary of Transportation to conduct further review or studies on issues that may or may not be material to us and may result in the imposition of more stringent regulations.
The Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011 (the 2011 Pipeline Safety Act) increased maximum penalties for violating federal pipeline safety regulations, directs the United States Department of Transportation (DOT) and Secretary of Transportation to conduct further review or studies on issues that may or may not be material to us and may result in the imposition of more stringent regulations.
Our storage includes two underground natural gas storage facilities in Oklahoma, two underground natural gas storage facilities in Kansas and two underground natural gas storage facilities in Texas.
Our storage includes two underground natural gas storage facilities in Oklahoma, two underground natural gas storage facilities in Kansas and three underground natural gas storage facilities in Texas.
In 2023, we became a participant in American Petroleum Institute’s The Environmental Partnership and enrolled in environmental performance programs that are designed to further reduce emissions using proven, cost-effective controls.
We are a participant in the American Petroleum Institute’s The Environmental Partnership and are enrolled in environmental performance programs that are designed to further reduce emissions using proven, cost-effective controls.
Power interruptions and inaccessible well sites as a result of severe storms or freeze-offs, a phenomenon where water vapor from the well bore freezes at the wellhead or within the natural gas gathering system, may cause a temporary interruption in the flow of natural gas, NGLs, Refined Products and crude oil. 18 T able of Contents In our Natural Gas Pipelines segment, natural gas storage is necessary to balance the relatively steady natural gas supply with the seasonal demand of our local natural gas distribution and electric-generation customers as a result of the demand from their residential and commercial customers.
Power interruptions and inaccessible well sites as a result of severe storms or freeze-offs, a phenomenon where water vapor from the well bore freezes at the wellhead or within the natural gas gathering system, may cause a temporary interruption in the flow of natural gas, NGLs, Refined Products and crude oil. 21 Table of Contents In our Natural Gas Pipelines segment, natural gas storage is necessary to balance the relatively steady natural gas supply with the seasonal demand of our local natural gas distribution and electric-generation customers as a result of the demand from their residential and commercial customers.
The target represents a 30% reduction in combined operational Scope 1 and location-based Scope 2 GHG emissions attributable to ONEOK assets as of December 31, 2019.
The target represents a 30% reduction in combined operational Scope 1 and location-based Scope 2 GHG emissions attributable to ONEOK assets as of Dec. 31, 2019.
Our other unconsolidated affiliates in this segment are not material. See Note N of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of unconsolidated affiliates.
Our other unconsolidated affiliates in this segment are not material. See Note O of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of unconsolidated affiliates.
Market Conditions and Seasonality Supply and Demand - Supply for each of our segments depends on crude oil and natural gas drilling and production activities, which are driven by the strength of the economy and impacts of geopolitical events; crude oil, natural gas, NGL and Refined Products prices; the demand for each of these products from end users; changes in gas-to-oil ratios and the decline rate of 17 T able of Contents existing production; refinery maintenance cycles; producer access to capital and investment in the industry; connections to pipelines and refineries; and producer firm commitments to transportation pipelines.
Market Conditions and Seasonality Supply and Demand - Supply for each of our segments depends on crude oil and natural gas drilling and production activities, which are driven by the strength of the economy and impacts of geopolitical events; crude oil, natural gas, NGL and Refined 20 Table of Contents Products prices; the demand for each of these products from end users; changes in gas-to-oil ratios and the decline rate of existing production; refinery maintenance cycles; producer access to capital and investment in the industry; connections to pipelines and refineries; and producer firm commitments to transportation pipelines.
We are not currently required to comply with a substantial portion of the RCRA requirements as our operations routinely generate only small quantities of hazardous waste, and we are not a hazardous waste treatment, storage or disposal facility operator that is required to obtain a RCRA permit.
We are not currently required to comply with a substantial portion of the RCRA requirements as our operations routinely generate only small quantities of hazardous waste, and we are not a hazardous waste treatment, storage or disposal facility operator that is required to obtain a RCRA 24 Table of Contents permit.
Unconsolidated Affiliates - Our unconsolidated affiliates in this segment are not material. See Note N of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of our unconsolidated affiliates.
Unconsolidated Affiliates - Our unconsolidated affiliates in this segment are not material. See Note O of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of our unconsolidated affiliates.
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.
Unconsolidated Affiliates - Our Refined Products and Crude segment includes 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 40% 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 Denver-Julesburg 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.
Norton II 64 2021 to present President and Chief Executive Officer, ONEOK President and Chief Executive Officer 2021 to present Member of the Board of Directors, ONEOK 2014 to 2021 President and Chief Executive Officer, ONE Gas, Inc. 2014 to 2021 Member of the Board of Directors, ONE Gas, Inc. Walter S.
Norton II 65 2021 to present President and Chief Executive Officer, ONEOK President and Chief Executive Officer 2021 to present Member of the Board of Directors, ONEOK 2014 to 2021 President and Chief Executive Officer, ONE Gas, Inc. 2014 to 2021 Member of the Board of Directors, ONE Gas, Inc. Walter S.
After performing these services, we sell the commodities and remit a portion of the commodity sales proceeds to the producer less our contractual fees.
After performing these services, we sell the commodities and remit a portion of the commodity sales proceeds to the producers less our contractual fees.
As the RFS program is currently structured, the RVO of all obligated parties may increase over time unless adjusted by the EPA. The ability to incorporate increasing volumes of renewable fuel components into fuel products and the availability of RINs may be limited, which could increase our costs to comply with the RFS standards or limit our ability to blend.
As the RFS program is currently structured, the RVO of all obligated parties may increase over time unless adjusted by the EPA. The ability to incorporate increasing volumes of renewable fuel components into fuel products and the availability of RINs may be limited, which could increase our RFS compliance costs or limit our ability to blend.
Under this type of contract, the customer pays a monthly fixed fee and incremental fees, known as commodity charges, which are based on the actual volumes of natural gas they transport or store.
Under this type of contract, the customer pays a monthly fixed fee and incremental fees, known as commodity charges, which are based on the actual volumes of 17 Table of Contents natural gas they transport or store.
We have remained competitive by making capital investments to access and connect new supplies with end-user demand; increasing gathering, processing, fractionation and pipeline capacity; increasing storage, withdrawal and injection capabilities; and improving operating efficiency.
We have remained competitive by executing strategic acquisitions; making capital investments to access and connect new supplies with end-user demand; increasing gathering, processing, fractionation and pipeline capacity; increasing storage, withdrawal and injection capabilities; and improving operating efficiency.
Demand for gathering and processing services is dependent on natural gas production by producers in the regions in which we operate.
Demand for gathering and processing services is dependent on natural gas and crude oil production by producers in the regions in which we operate.
Burdick 59 2023 to present Executive Vice President and Chief Enterprise Services Officer, ONEOK Executive Vice President and Chief Enterprise Services Officer 2022 to 2023 Executive Vice President and Chief Commercial Officer, ONEOK 2017 to 2022 Executive Vice President and Chief Operating Officer, ONEOK Sheridan C.
Burdick 60 2023 to present Executive Vice President and Chief Enterprise Services Officer, ONEOK Executive Vice President and Chief Enterprise Services Officer 2022 to 2023 Executive Vice President and Chief Commercial Officer, ONEOK 2017 to 2022 Executive Vice President and Chief Operating Officer, ONEOK Sheridan C.
GHG emission reductions as reported may be modified, updated, changed or supplemented based on available information. F or the years ended December 31, 2023, 2022 and 2021 , we did not have any material dedicated capital expenditures specifically for climate-related projects, nor did we purchase or sell carbon credits or offsets.
GHG emission reductions as reported may be modified, updated, changed or supplemented based on available information. For the years ended Dec. 31, 2024, 2023 and 2022, we did not have any material dedicated capital expenditures specifically for climate-related projects, nor did we purchase or sell carbon credits or offsets.
We also may reimburse employees for certain job-related professional certification examination fees. Recruiting - We make it a priority to attract, select, develop, motivate, challenge and retain the talent necessary to support our key business strategies.
We also may reimburse employees for certain job-related professional certification examination fees. 27 Table of Contents Recruiting - We make it a priority to attract, select, develop, motivate, challenge and retain the talent necessary to support our key business strategies.
Customers - Our Natural Gas Gathering and Processing, Natural Gas Liquids and Refined Products and Crude segments derive services revenue from major and independent crude oil and natural gas producers. Our Natural Gas Liquids segment’s customers also include other NGL and natural gas gathering and processing companies.
Customers - Our Natural Gas Gathering and Processing, Natural Gas Liquids and Refined Products and Crude segments derive fees for services from major and independent crude oil and natural gas producers. Our Natural Gas Liquids segment’s customers also include other NGL and natural gas gathering and processing companies.
We seek to maintain investment-grade credit ratings and a strong balance sheet. We expect our internally generated cash flows will allow us to fund high-return capital projects in our existing operating 7 T able of Contents regions, grow our dividend, reduce debt and fund our $2.0 billion share repurchase program.
We seek to maintain investment-grade credit ratings and a strong balance sheet. We expect our internally generated cash flows will allow us to fund high-return capital projects in our existing operating regions, grow our dividend, reduce debt and fund our $2.0 billion share repurchase program.
Sustainability and Social Responsibility - Through our participation in the 2023 S&P Global Corporate Sustainability Assessment, we qualified for inclusion in the S&P Global Sustainability Yearbook for the fourth consecutive year, scoring within the top 15% of the Oil and Gas Storage and Transportation industry.
Sustainability and Social Responsibility - Through our participation in the 2024 S&P Global Corporate Sustainability Assessment, we qualified for inclusion in the S&P Global Sustainability Yearbook for the fifth consecutive year, scoring within the top 15% of the Oil and Gas Storage and Transportation industry.
Through our more than 50,000-mile pipeline network, we transport the natural gas, NGLs, Refined Products and crude oil that help meet domestic and international energy demand, contribute to energy security and provide safe, reliable and responsible energy solutions needed today and into the future. Midstream Value Chain The midstream value chain is a vital part of the energy industry.
Through our now approximately 60,000-mile pipeline network, we transport the natural gas, NGLs, Refined Products and crude oil that help meet domestic and international energy demand, contribute to energy security and provide safe, reliable and responsible energy solutions needed today and into the future. Midstream Value Chain The midstream value chain is a vital part of the energy industry.
Our Natural Gas Gathering and Processing segment provides these midstream services to producers in North Dakota, Montana, Wyoming, Kansas and Oklahoma. Rocky Mountain region - The Williston Basin is located in portions of North Dakota and Montana and includes the oil-producing, NGL-rich Bakken Shale and Three Forks formations. We have more than 3 million dedicated acres in the Williston Basin.
Our Natural Gas Gathering and Processing segment provides these midstream services to producers in the regions listed below. Rocky Mountain region - The Williston Basin is located in portions of North Dakota and Montana and includes the oil-producing, NGL-rich Bakken Shale and Three Forks formations. We have more than 3 million dedicated acres in the Williston Basin.
Under these laws, we could be required to 21 T able of Contents remove or remediate previously disposed waste, including waste disposed of or released by prior owners or operators, to remediate contaminated property, including groundwater contaminated by prior owners or operators, or to make capital improvements to prevent future contamination.
Under these laws, we could be required to remove or remediate previously disposed waste, including waste disposed of or released by prior owners or operators, to remediate contaminated property, including groundwater contaminated by prior owners or operators, or to make capital improvements to prevent future contamination.
As of December, 31, 2023, we have achieved reductions totaling approximately 1.1 million met ric tons of the targeted 2.2 million metric tons of carbon dioxide equivale nts, primarily as a result of methane emissions mitigation, system optimizations, electrification of certain natural gas compression equipment and lower carbon-based electricity in states in which we operate.
As of Dec. 31, 2024, we have achieved reductions totaling approximately 1.7 million met ric tons of the targeted 2.2 million metric tons of carbon dioxide equivale nts, primarily as a result of methane emissions mitigation, system utilization and optimizations, electrification of certain natural gas compression equipment and lower carbon-based electricity in states in which we operate.
Regulated activities include, but are not limited to, those involving air emissions, storm water and wastewater discharges, handling and disposal of solid and hazardous waste, wetland and waterway preservation, wildlife conservation, cultural resource protection, hazardous materials transportation and pipeline and facility construction.
Regulated activities include, but are not limited to, those involving air emissions, storm water and wastewater discharges, handling and disposal of solid and hazardous waste, wetland and waterway preservation, wildlife conservation, cultural resource protection, hazardous materials transportation, cleanup of spills or releases of hazardous substances and pipeline and facility construction.
Our fee-only contracts represented 9% and 7% of supply volumes in this segment for 2023 and 2022, respectively. For commodity sales, we contract to deliver residue natural gas, condensate and/or unfractionated NGLs to downstream customers at a specified delivery point. Our sales of NGLs are primarily to our affiliate in the Natural Gas Liquids segment.
Our fee-only contracts represented 5% and 9% of supply volumes in this segment, excluding EnLink, for 2024 and 2023, respectively. For commodity sales, we contract to deliver residue natural gas, condensate and/or unfractionated NGLs to downstream customers at a specified delivery point. Our sales of NGLs are primarily to our affiliate in the Natural Gas Liquids segment.
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, posted on our social media accounts, and any corresponding applications, are not incorporated by reference into this report. 25 T able of Contents
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.
Sources of Earnings - Earnings in this segment are derived primarily from transportation, storage and terminal services and product sales: • Transportation services - We generate revenue from transportation tariffs on volumes shipped on our Refined Products and crude oil pipeline systems. These transportation tariffs vary depending upon where the product originates, where ultimate delivery occurs and any applicable discounts.
Sources of Earnings - Earnings in this segment are derived primarily from transportation, storage and terminal services and product sales: • Transportation services - We generate revenue from tariffs on volumes gathered and transported on our Refined Products and crude oil pipeline systems. These transportation tariffs vary depending upon where the product originates and where ultimate delivery occurs.
Demand for shipments on our crude oil pipelines is driven primarily by crude oil production in the regions in which we operate, as well as by takeaway demand in the Houston and Cushing areas. Demand for natural gas, NGLs, Refined Products and crude oil is also impacted by global macroeconomic factors.
Demand for shipments on our crude oil pipelines is driven primarily by crude oil production and takeaway demand in the regions in which we operate. Demand for natural gas, NGLs, Refined Products and crude oil is also impacted by global macroeconomic factors.
In 2021, we announced a companywide absolute GHG emissions reduction target of 2.2 million metric tons of carbon dioxide equivalents from our combined Scope 1 and Scope 2 GHG emissions by 2030 for our legacy ONEOK assets.
Scope 2 emissions are generated from purchased power sources. In 2021, we announced a companywide absolute GHG emissions reduction target of 2.2 million metric tons of carbon dioxide equivalents from our combined Scope 1 and Scope 2 GHG emissions by 2030 for our legacy ONEOK assets.
In our Refined Products and Crude segment, we are exposed to commodity price risk, including product price and location differentials from our liquids blending and marketing activities, as well as product retained during the operations of our pipelines and terminals.
In our Refined Products and Crude segment, we are exposed to some commodity price risk, including product price and location differentials primarily from our optimization and marketing activities, as well as product retained during the operations of our pipelines and terminals.
In addition to activities on the federal level, state and regional initiatives could also lead to the regulation of GHG emissions sooner than or independent of federal regulation. These regulations could be more stringent than any federal legislation that may be adopted.
In addition to activities on the federal level, state and regional initiatives could also lead to the regulation of GHG emissions sooner than or independent of federal regulation, these regulations could be more stringent than requirements in any future federal legislation and/or regulation.
These regulations include standards for fuel parameters and require rigorous product sampling and testing, recordkeeping and reporting. Our ongoing compliance with these regulations is not expected to have a material adverse effect on our business. Federal Regulation - In August 2022, the IRA was signed into law.
These regulations include standards for fuel parameters and require rigorous product sampling and testing, recordkeeping and reportin g. Our ongoing compliance with these regulations is not expected to have a material adverse effect on our business. Federal Regulation - In August 2022, the Inflation Reduction Act of 2022 (IRA) was signed into law.
This type of contract represented 72% and 73% of supply volumes in this segment for 2023 and 2022, respectively. • Fee with POP contracts with producer take-in-kind rights - We purchase a portion of the raw natural gas stream, charge fees for providing the midstream services listed above, return primarily the residue natural gas to the producer, sell the remaining commodities and remit a portion of the commodity sales proceeds to the producer less our contractual fees.
This type of contract represented 76% and 72% of supply volumes in this segment, excluding EnLink, for 2024 and 2023, respectively. • Fee with POP contracts with producer take-in-kind rights - We purchase a portion of the raw natural gas stream, charge fees for providing the midstream services listed above, return certain commodities to the producer, sell the remaining commodities and remit a portion of the commodity sales proceeds to the producer less our contractual fees.
For additional information regarding the potential impact of laws and regulations on our operations see Item 1A “Risk Factors.” Waste - Our operations generate waste, including hazardous waste, that is subject to the requirements of the RCRA and comparable state statutes.
For additional information regarding the potential impact of laws and regulations on our operations see Item 1A “Risk Factors.” Waste - Our operations generate waste, including hazardous waste, that is subject to the requirements of the Resource Conservation and Recovery Act, as amended (RCRA), and comparable state statutes.
EPA - The EPA’s Mandatory Greenhouse Gas Reporting Rule requires annual GHG emissions reporting from our affected facilities and the carbon dioxide emission equivalents for all hydrocarbon liquids produced by us as if all of these products were combusted, even if they are used otherwise.
United States Environmental Protection Agency (EPA) - The EPA’s Mandatory Greenhouse Gas Reporting Rule requires annual GHG emissions reporting from our affected facilities and the carbon dioxide emission equivalents for all hydrocarbon liquids produced by us as if all products were combusted, even if they are used otherwise.
Transportation fees and discounts are in published tariffs filed with the FERC or the appropriate state agency or established by negotiated rates. • Storage and terminal services - We generate additional revenue from providing pipeline capacity and tank storage services, as well as providing services such as terminalling, ethanol and biodiesel unloading and loading, and additive injection, which are performed under a mix of as needed, monthly and long-term agreements. • Optimization and marketing - At times, we obtain Refined Products and crude oil and utilize our assets, contract portfolio and market knowledge to capture location, product and seasonal price differentials through purchases and sales of product and liquids blending.
Transportation fees are in published tariffs filed with the FERC or the appropriate state agency or established by negotiated rates. • Storage and terminal services - We generate additional revenue from providing pipeline capacity and tank storage services, as well as providing services such as terminalling, ethanol and biodiesel unloading and loading, and additive injection, which are performed under short-term and long-term agreements. • Optimization and marketing - At times, we obtain Refined Products and crude oil and utilize our assets, contract portfolio and market knowledge to capture location, product and seasonal price differentials through liquids blending and purchases and sales of product, including transmix, which is a mixture that forms when different Refined Products are transported in pipelines.
Hulse III 60 2022 to present Chief Financial Officer, Treasurer and Executive Vice President, Investor Relations and Corporate Development, ONEOK Chief Financial Officer, Treasurer and Executive Vice President, Investor Relations and Corporate Development 2019 to 2021 Chief Financial Officer, Treasurer and Executive Vice President, Strategy and Corporate Affairs, ONEOK 2017 to 2019 Chief Financial Officer and Executive Vice President, Strategic Planning and Corporate Affairs, ONEOK Kevin L.
Hulse III 61 2022 to present Chief Financial Officer, Treasurer and Executive Vice President, Investor Relations and Corporate Development, ONEOK Chief Financial Officer, Treasurer and Executive Vice President, Investor Relations and Corporate Development 2019 to 2021 Chief Financial Officer, Treasurer and Executive Vice President, Strategy and Corporate Affairs, ONEOK Kevin L.
Kelley 65 2022 to present Senior Vice President, Natural Gas Pipelines, ONEOK Senior Vice President, Natural Gas Pipelines 2018 to 2022 Senior Vice President, Natural Gas, ONEOK Mary M.
Kelley (a) 66 2022 to present Senior Vice President, Natural Gas Pipelines, ONEOK Senior Vice President, Natural Gas Pipelines 2018 to 2022 Senior Vice President, Natural Gas, ONEOK Mary M.
Safety and environmental responsibility continue to be primary areas of focus for us, and our emphasis on safety has produced improving trends in the key indicators we track. • Highly engaged workforce - We strive to be an employer of choice and continue to focus on attracting, selecting and retaining talent, advancing an inclusive, diverse and engaged culture and developing individuals and leaders. • Sustainable business model - We aim to maintain prudent financial strength and flexibility while operating a safe, reliable and resilient asset base.
Safety and environmental responsibility continue to be primary areas of focus for us. • Highly engaged workforce - We strive to be an employer of choice and continue to focus on attracting, selecting and retaining talent, advancing an inclusive, diverse and engaged culture and developing individuals and leaders. • Sustainable business model - We aim to maintain prudent financial strength and flexibility while operating a safe, reliable and resilient asset base.
Based on text in the IRA and a related rule that the EPA proposed in January 2024 that will require payment of Methane Fees to the EPA beginning in 2025 (for 2024 reported emissions), we do not believe the Methane Fees will have a material impact on our results of operations, financial position or cash flows.
Based on text in the IRA and a related rule that the EPA finalized in November 2024 that will require payment of Methane Fees to the EPA beginning in 2025 (for 2024 reported emissions), the 2024 Methane Fees, if implemented, will not have a material impact on our results of operations, financial position or cash flows.
Natural Gas Liquids Overview of Operations - In our Natural Gas Liquids segment, NGLs that are extracted at natural gas processing plants, both third-party and our own, are gathered by our NGL gathering pipelines. Gathered NGLs are directed to our downstream fractionators in the Mid-Continent and Gulf Coast regions to be separated into Purity NGLs.
Natural Gas Liquids Overview of Operations - In our Natural Gas Liquids segment, NGLs extracted at our own and third-party natural gas processing plants are gathered by our NGL gathering pipelines. Gathered NGLs are directed to our downstream fractionators to be separated into Purity NGLs.
ONEOK Leasing Company, L.L.C. leases excess office space, if any, to others and operates our headquarters office building. ONEOK Parking Company, L.L.C. owns and operates a parking garage adjacent to our headquarters. We have a wholly owned captive insurance company, which was formed in 2022.
ONEOK Leasing Company, L.L.C. primarily operates our headquarters office building. ONEOK Parking Company, L.L.C. owns and operates a parking garage adjacent to our headquarters. We have a wholly owned captive insurance company, which was formed in 2022.
Swords 54 2023 to present Executive Vice President, Commercial Liquids and Gathering and Processing, ONEOK Executive Vice President, Commercial Liquids and Gathering and Processing 2022 to 2023 Senior Vice President, Natural Gas Liquids and Natural Gas Gathering and Processing, ONEOK 2017 to 2022 Senior Vice President, Natural Gas Liquids, ONEOK Lyndon C.
Swords 55 2025 to present Executive Vice President and Chief Commercial Officer, ONEOK Executive Vice President and Chief Commercial Officer 2023 to 2025 Executive Vice President, Commercial Liquids and Gathering and Processing, ONEOK 2022 to 2023 Senior Vice President, Natural Gas Liquids and Natural Gas Gathering and Processing, ONEOK 2017 to 2022 Senior Vice President, Natural Gas Liquids, ONEOK Lyndon C.
In addition, many of these properties were previously operated by third parties whose treatment and disposal or release of hydrocarbons or other waste was not under our control. These properties and waste disposal facilities may be subject to CERCLA, RCRA and analogous state laws.
In addition, many of these properties were previously operated by third parties whose treatment and disposal or release of hydrocarbons or other waste was not under our control. These properties and waste disposal facilities may be subject to Comprehensive Environmental Response Compensation and Liability Act, as amended, RCRA and analogous state laws.
In addition, emissions controls and/or other regulatory or permitting mandates under the Clean Air Act and other 19 T able of Contents similar federal and state laws could require unexpected capital expenditures at our facilities.
In addition, emissions controls and/or other regulatory or permitting mandates under the Federal Clean Air Act, as amended (Clean Air Act), and other similar federal and state laws could require unexpected capital expenditures at our facilities.
Our core values, listed below, guide our employee behaviors and the ways in which we conduct our business and operations. • Safety & Environmental: we commit to a zero-incident culture for the well-being of our employees, contractors and communities and to operate in an environmentally responsible manner. • Ethics: we act with honesty, integrity and adherence to the highest standards of personal and professional conduct. • Diversity & Inclusion: we respect the uniqueness and worth of each employee, and believe that a diverse, inclusive workforce is essential for a sense of belonging, engagement and performance. • Excellence: we hold ourselves and others accountable to a standard of excellence through continuous improvement and teamwork. • Service: we invest our time, effort and resources to serve each other, our customers and communities. • Innovation: we seek to develop creative solutions by leveraging collaboration through ingenuity and technology.
Our core values, listed below, guide our employee behaviors and the ways in which we conduct our business and operations. • Safety & Environmental: we commit to a zero-incident culture for the well-being of our employees, contractors and communities and to operate in an environmentally responsible manner. • Ethics: we act with honesty, integrity and adherence to the highest standards of personal and professional conduct. • Inclusion & Diversity: we respect the uniqueness and worth of each individual, and we believe that an inclusive culture and diverse workforce are essential for a sense of belonging, engagement and performance. • Excellence: we hold ourselves and others accountable to a standard of excellence through continuous improvement and teamwork. • Service: we invest our time, effort and resources to serve each other, our customers and communities. • Innovation: we seek to develop creative solutions by leveraging collaboration through ingenuity and technology. 26 Table of Contents Inclusion and Diversity - Our inclusion and diversity (I&D) strategy is a cross-functional effort that draws upon contributions from employees at all levels of the organization and is focused on enhancing the workplace to attract and retain talent.
Taylor 65 2023 to present Executive Vice President, Chief Legal Officer and Assistant Secretary, ONEOK Executive Vice President, Chief Legal Officer and Assistant Secretary 2005 to 2021 Executive Vice President and Chief Legal and Administrative Officer, Devon Energy Corporation Charles M.
Taylor 66 2023 to present Executive Vice President, Chief Legal Officer and Assistant Secretary, ONEOK Executive Vice President, Chief Legal Officer and Assistant Secretary 2005 to 2021 Executive Vice President and Chief Legal and Administrative Officer, Devon Energy Corporation Randy N.
Sources of Earnings - Earnings in this segment are derived primarily from transportation and storage services. Our transportation earnings are primarily fee-based from the following types of services: • Firm service - Customers reserve a fixed quantity of pipeline capacity for a specified period of time, which obligates the customer to pay regardless of usage.
Our transportation earnings are primarily fee-based and utilize the following types of contracts: ◦ Firm service - Customers reserve a fixed quantity of pipeline capacity for a specified period of time, which obligates the customer to pay regardless of usage.
Continued demand from LDCs, electric- 12 T able of Contents generation facilities and large industrial companies supported low-cost expansions that position us well to provide additional services to our customers when needed. Intrastate Pipelines and Storage - Our intrastate natural gas pipeline and storage assets are located in Oklahoma, Texas and Kansas.
Growing demand from data centers and continued demand from local distribution companies, electric-generation facilities and large industrial companies support low-cost expansions that position us well to provide additional services to our customers when needed. 15 Table of Contents Intrastate Pipelines and Storage - Our intrastate natural gas pipeline and storage assets are located in Oklahoma, Texas and Kansas.
Our storage earnings are primarily fee-based from the following types of services: • Firm service - Customers reserve a specific quantity of storage capacity, including injection and withdrawal rights, and generally pay fixed fees based on the quantity of capacity reserved plus an injection and withdrawal fee based on actual usage.
The customer is not guaranteed use of our pipelines unless excess capacity is available. • Storage services - Our storage earnings are primarily fee-based and utilize the following types of contracts: ◦ Firm service - Customers reserve a specific quantity of storage capacity, including injection and withdrawal rights, and generally pay fixed fees based on the quantity of capacity reserved plus an injection and withdrawal fee based on actual usage.
We purchase NGLs and condensate from third parties, as well as from our Natural Gas Gathering and Processing segment. Our business activities are categorized as follows: • Exchange services - We utilize our assets to gather, transport, treat and fractionate NGLs, thereby converting them into marketable Purity NGLs and deliver them to a market center or customer-designated location.
Our business activities are categorized as follows: • Exchange services - We utilize our assets to gather, transport, treat and fractionate NGLs, converting them into marketable Purity NGLs, and deliver them to a market center or customer-designated location.
These benefits include medical, dental and vision plans, virtual health visits and engagement of third-party service providers to offer company on-site and near-site clinics in several of our operating areas.
Health and Welfare - We provide a variety of benefits to help promote the health and welfare of our employees and their families. These benefits include medical, dental and vision plans, virtual health visits and engagement of third-party service providers to offer company on-site and near-site clinics in several of our operating areas.
For additional information on the Magellan Acquisition, see Part II, Item 8, Note B of the Notes to Consolidated Financial Statements in this Annual Report. See Part 1, Item 1A “Risk Factors” for further discussion of risks related to the Magellan Acquisition.
Medallion’s operations are reported in our Refined Products and Crude segment. For additional information on the Medallion Acquisition, see Part II, Item 8, Note B, of the Notes to Consolidated Financial Statements in this Annual Report. See Part 1, Item 1A “Risk Factors” for further discussion of risks related to the Medallion Acquisition.
We continue to actively research opportunities that will complement our extensive assets and expertise, strengthening the role we expect to play in the transformation to a lower-carbon economy. • Maximizing total shareholder return - We plan to grow earnings through high-return capital projects that will allow us to increase our dividend and repurchase shares under our $2.0 billion share repurchase program.
We continue to actively seek out opportunities that will complement our extensive assets and expertise. • Maximizing total shareholder return - We plan to grow earnings through high-return capital projects that will allow us to increase our dividend and repurchase shares under our $2.0 billion share repurchase program.
In addition, customers typically are assessed fees, such as a commodity charge, and we may retain a percentage of natural gas in-kind for our compression services.
The rates are filed with FERC or the appropriate state jurisdictional agencies. In addition, customers typically are assessed fees, such as a commodity charge, and we may retain a percentage of natural gas in-kind for our compression services.
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.
No family relationships exist between any of the executive officers, nor is there any arrangement or understanding between any executive officer and any other person pursuant to which the officer was selected. 28 Table of Contents 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, Proxy Statements, 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.
In our Natural Gas Liquids segment, we are exposed to commodity price risk associated with changes in the price of NGLs; the location differential between the Mid-Continent, Chicago, Illinois, and Gulf Coast regions; and the relative price differential between natural gas, NGLs and individual Purity NGLs, which affect our NGL purchases and sales, our exchange services, transportation and storage services, and optimization and marketing financial results.
In our Natural Gas Liquids segment, we are exposed to commodity price risk associated with changes in the price of NGLs; the location differential between the Conway, Kansas, upper Midwest region, Mont Belvieu, Texas, and Louisiana; and the relative price differential between natural gas, NGLs and individual Purity NGLs, which affect our NGL purchases and sales, our exchange services, transportation and storage services, and optimization and marketing financial results.
We transport residue natural gas from certain of our natural gas processing plants to interstate pipelines in accordance with Section 311(a) of the Natural Gas Policy Act. Oklahoma, Kansas, Wyoming, Montana and North Dakota also have statutes regulating, to varying degrees, the gathering of natural gas in those states.
We transport residue natural gas from certain of our natural gas processing plants to interstate pipelines in accordance with Section 311(a) of the Natural Gas Policy Act of 1978, as amended. The states where we operate have statutes regulating, to varying degrees, the gathering of natural gas in those states.
In addition to the amended HLPSA covered in Title 49 of the Code of Federal Regulations, subsequent statutes provide the framework for the pipeline hazardous liquid safety program and include provisions related to PHMSA’s authorities, administration and regulatory activities.
In addition to the amended HLPSA covered in Title 49 of the Code of Federal Regulations, subsequent statutes provide the framework for the pipeline hazardous liquid safety program and include provisions related to PHMSA’s authorities, administration and regulatory activities. In 2020, legislation was passed to reauthorize PHMSA through 2024. Legislation is currently pending to extend this authorization.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

81 edited+25 added−3 removed132 unchanged
Biggest changeInsurance proceeds may not be adequate to cover all liabilities or incurred costs and losses or lost earnings. Further, we are not fully insured against all risks inherent to our business. If we were to incur a significant liability for which we were not fully insured, it could affect adversely our business, results of operations, financial position and cash flows.
Biggest changeIf we were to incur a significant liability for which we were not fully insured, it could affect adversely our business, results of operations, financial position and cash flows. Further, the proceeds of any such insurance may not be paid in a timely manner or reach the level of coverage purchased.
The demand for the storage services has resulted in part from customers’ desire to have the ability to take advantage of profit opportunities created by the volatility in prices of Refined Products, crude oil and natural gas. Periods of prolonged stability or declines in these commodity prices could reduce demand for our storage services.
The demand for our storage services has resulted in part from customers’ desire to have the ability to take advantage of profit opportunities created by the volatility in prices of Refined Products, crude oil and natural gas. Periods of prolonged stability or declines in these commodity prices could reduce demand for our storage services.
If any such failure, interruption or similar event results in the improper disclosure of information maintained in our information systems and networks or those of our vendors and counterparties, including personnel, customer, vendor and counterparty information, we could also be subject to liability under relevant contractual obligations and laws and regulations protecting personal data and privacy.
If any such failure, interruption or similar event results in the improper disclosure of information maintained in our information systems and networks or those of our vendors and counterparties, including personnel, customer, vendor and counterparty information, we could also be subject to liability under relevant contractual obligations, laws and regulations protecting personal data and privacy.
Joint and several, strict liability may be incurred without regard to fault under the CERCLA, RCRA and analogous state laws for the remediation of contaminated areas.
Joint and several, strict liability may be incurred without regard to fault under CERCLA, RCRA and analogous state laws for the remediation of contaminated areas.
There are increasing expectations that companies across all industries address ESG issues, including climate change. Changes in regulatory policies, public sentiment or widespread adoption of technologies that aim to address climate change through reducing GHG emissions may result in a reduction in the demand for hydrocarbon products, restrictions on their use or increased use of alternative energy sources.
There are expectations that companies across all industries address ESG issues, including climate change. Changes in regulatory policies, public sentiment or widespread adoption of technologies that aim to address climate change through reducing GHG emissions may result in a reduction in the demand for hydrocarbon products, restrictions on their use or increased use of alternative energy sources.
Production areas outside of our operating regions may compete with natural gas, NGL and crude oil supply originating in production areas connected to our systems, which may cause products in supply areas connected to our systems to be diverted to markets other than our traditional market areas and may affect capacity utilization adversely on our pipeline systems and our ability to renew or replace existing contracts.
Production areas outside of our operating regions may compete with natural gas, NGL, Refined Products and crude oil supply originating in production areas connected to our systems, which may cause products in supply areas connected to our systems to be diverted to markets other than our traditional market areas and may affect capacity utilization adversely on our pipeline systems and our ability to renew or replace existing contracts.
Sustained levels of high inflation have caused the Federal Reserve System and other central banks to increase interest rates, which may cause the cost of capital to increase and depress economic growth, either of which, or the combination of both, could affect adversely our business, results of operations, financial position and cash flows.
Sustained levels of high inflation caused the Federal Reserve System and other central banks to increase interest rates, which may cause the cost of capital to increase and depress economic growth, either of which, or the combination of both, could affect adversely our business, results of operations, financial position and cash flows.
Our ability to maintain or expand our businesses depends largely on the level of drilling and production by third parties in the regions in which we operate. Our natural gas and NGL supply volumes may be impacted if producers curtail or redirect drilling and production activities.
Our ability to maintain or expand our businesses depends largely on the level of drilling and production by third parties in the regions in which we operate. Our natural gas, NGL and crude supply volumes may be impacted if producers curtail or redirect drilling and production activities.
In addition, our ability to use NOL carryforwards and other tax attributes may be subject to significant limitations under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) and corresponding provisions of state law.
In addition, our ability to use NOL carryforwards and other tax attributes may be subject to limitations under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) and corresponding provisions of state law.
Our operations are subject to federal and state laws and regulations relating to the protection of public health and the environment, which may expose us to significant costs and liabilities.
Our operations are subject to federal and state laws and regulations relating to the protection of public health and safety and the environment, which may expose us to significant costs and liabilities.
The construction and modification of these facilities may involve the following risks: • projects may require significant capital expenditures, which may exceed our estimates, and involve numerous regulatory, environmental, political, legal and weather-related uncertainties; • projects may increase demand for labor, materials and rights of way, which may, in turn, affect our costs and schedule; • we may be unable to obtain new rights of way or permits to connect our systems to supply or downstream markets; 30 T able of Contents • if we undertake these projects, we may not be able to complete them on schedule or at the budgeted cost; • our revenues may not increase immediately upon the expenditure of funds on a particular project.
The construction and modification of these facilities may involve the following risks: • projects may require significant capital expenditures, which may exceed our estimates, and involve numerous regulatory, environmental, political, legal and weather-related uncertainties; • projects may increase demand for labor, materials and rights of way, which may, in turn, affect our costs and schedule; • we may be unable to obtain new rights of way or permits to connect our systems to supply or downstream markets; • if we undertake these projects, we may not be able to complete them on schedule or at the budgeted cost; • our revenues may not increase immediately upon the expenditure of funds on a particular project.
Our $2.5 Billion Credit Agreement contains provisions that, among other things, limit our ability to make material changes to the nature of our business, merge, consolidate or dispose of all or substantially all of our assets, grant liens and security interests on our assets, engage in transactions with affiliates or make restricted payments, including dividends.
Our $3.5 Billion Credit Agreement contains provisions that, among other things, limit our ability to make material changes to the nature of our business, merge, consolidate or dispose of all or substantially all of our assets, grant liens and security interests on our assets, engage in transactions with affiliates or make restricted payments, including dividends.
Private parties, including the owners of properties through which our pipeline systems pass, may have the right to pursue legal actions to enforce compliance as well as to seek damages for noncompliance with environmental laws and regulations or for personal injury or property damage arising from our operations.
Private parties, including the owners of properties through which our pipeline systems pass, may have the right to pursue legal actions to enforce compliance as well as to seek damages for noncompliance with environmental laws and regulations or for personal injury or property damage arising from our current or historical operations.
Our insurance may not cover all of these environmental risks, and there are also limits on coverage. Additional information is included under Item 1, Business, under “Regulatory, Environmental and Safety Matters” and in Note O of the Notes to Consolidated Financial Statements in this Annual Report.
Our insurance may not cover all of these environmental risks, and there are also limits on coverage. Additional information is included under Item 1, Business, under “Regulatory, Environmental and Safety Matters” and in Note P of the Notes to Consolidated Financial Statements in this Annual Report.
For further discussion of our defined benefit pension plan and postretirement welfare plans, see Note L of the Notes to Consolidated Financial Statements in this Annual Report. Any sustained declines in equity markets and reductions in bond yields may affect adversely the value of our pension and postretirement benefit plan assets.
For further discussion of our defined benefit pension plan and postretirement welfare plans, see Note M of the Notes to Consolidated Financial Statements in this Annual Report. Any sustained declines in equity markets and reductions in bond yields may affect adversely the value of our pension and postretirement benefit plan assets.
Drilling and production are impacted by factors beyond our control, including: • demand and prices for natural gas, NGLs, Refined Products and crude oil; • producers’ access to capital; • producers’ finding and development costs of reserves; • producers’ ability to secure drilling and completion crews and equipment; • producers’ desire and ability to obtain necessary permits, drilling rights and surface access in a timely manner and on reasonable terms; • crude oil and associated natural gas field characteristics and production performance; • regulatory compliance; • reserve performance; and • capacity constraints and/or shutdowns on the pipelines that transport crude oil, natural gas, NGLs and Refined Products from producing areas and our facilities.
Drilling and production are impacted by factors beyond our control, including: • demand and prices for natural gas, NGLs, Refined Products and crude oil; • producers’ access to capital; • producers’ finding and development costs of reserves; • producers’ ability to secure drilling and completion crews and equipment; • producers’ desire and ability to obtain necessary permits, drilling rights and surface access in a timely manner and on reasonable terms; • crude oil and associated natural gas field characteristics and production performance; • regulatory compliance and environmental or other governmental regulations; • reserve performance; and • capacity constraints and/or shutdowns on the pipelines that transport crude oil, natural gas, NGLs and Refined Products from producing areas and our facilities.
Our loss of these rights, through our inability to renew right-of-way contracts on acceptable terms or increased costs to renew such rights, could affect adversely our business, results of operations, financial position and cash flows. Measurement adjustments on our pipeline systems may be impacted materially by changes in estimation, type of commodity and other factors.
Our loss of these 34 Table of Contents rights, through our inability to renew right-of-way contracts on acceptable terms or increased costs to renew such rights, could affect adversely our business, results of operations, financial position and cash flows. Measurement adjustments on our pipeline systems may be impacted materially by changes in estimation, type of commodity and other factors.
Our primary commodity price exposures arise from: • the value of the commodities sold under fee with POP contracts of which we retain a portion of the sales proceeds; • product price differentials; • location price differentials; • seasonal price differentials; • the price risk related to electric costs to operate our facilities; and • the fuel costs and the value of the retained fuel in-kind in our natural gas pipelines and storage operations.
Our primary commodity price exposures arise from: • the value of the commodities sold under fee with POP contracts of which we retain a portion of the sales proceeds; • product price differentials; • location price differentials; • seasonal price differentials; • the price risk related to electric costs to operate our facilities; and 32 Table of Contents • the fuel costs and the value of the retained fuel in-kind in our natural gas pipelines and storage operations.
In addition, increasingly strict laws, regulations and enforcement policies could increase significantly our compliance costs, penalties and other cost associated with any alleged noncompliance, and the cost of any remediation that may become necessary; some of these costs could be material and could adversely affect our business, results of operation, financial position and cash flows.
In addition, increasingly strict laws, regulations and enforcement policies could increase significantly our compliance costs, penalties and other cost associated with 38 Table of Contents any alleged noncompliance, and the cost of any remediation that may become necessary; some of these costs could be material and could adversely affect our business, results of operation, financial position and cash flows.
For further discussion of impairments of long-lived assets, goodwill and equity-method investments, see Notes A, F, G, and N, respectively, of the Notes to Consolidated Financial Statements in this Annual Report.
For further discussion of impairments of long-lived assets, goodwill and equity-method investments, see Notes A, F, G, and O, respectively, of the Notes to Consolidated Financial Statements in this Annual Report.
Our operating cash flows are derived partially from cash distributions we receive from our unconsolidated affiliates. Our operating cash flows are derived partially from cash distributions we receive from our unconsolidated affiliates, as discussed in Note N of the Notes to Consolidated Financial Statements in this Annual Report.
Our operating cash flows are derived partially from cash distributions we receive from our unconsolidated affiliates. Our operating cash flows are derived partially from cash distributions we receive from our unconsolidated affiliates, as discussed in Note O of the Notes to Consolidated Financial Statements in this Annual Report.
It also requires us to maintain certain financial ratios, which limit the amount of additional indebtedness we can incur, as described in the “Liquidity and Capital Resources” section of Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in this Annual Report.
It also requires us to maintain certain financial ratios, which limit the amount of additional indebtedness we can incur, as described in the “Liquidity and Capital Resources” section of Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of 39 Table of Contents Operations, in this Annual Report.
The target represents a 30% reduction in combined operational Scope 1 and location-based Scope 2 GHG emissions attributable to ONEOK assets as of December 31, 2019.
The target represents a 30% reduction in combined operational Scope 1 and location-based Scope 2 GHG emissions attributable to ONEOK assets as of Dec. 31, 2019.
Under Section 382 of the Code and corresponding provisions of state law, if a corporation undergoes an ownership change, which is generally defined as a greater than 50 percent change in its equity ownership over a three-year period, the company’s ability to utilize U.S. NOL carryforwards and other tax attributes may be limited.
Under Section 382 of the Code and corresponding provisions of state law, if a corporation undergoes an ownership change, which is generally defined as a greater than 50 percent change in its equity ownership over a three-year period, the company’s ability to utilize U.S. NOL carryforwards and other tax attributes may be limited. We believe our historical U.S.
In addition, the profitability of the refineries that supply our facilities is subject to regional and global supply and demand dynamics that are difficult to predict. 27 T able of Contents A period of sustained weak demand or increased costs could make refining uneconomic for some refineries, including those directly or indirectly connected to our Refined Products and crude oil pipelines.
In addition, the profitability of the refineries that supply our facilities is subject to regional and global supply and demand dynamics that are difficult to predict. A period of sustained weak demand or increased costs could make refining uneconomic for some refineries, including those directly or indirectly connected to our Refined Products and crude oil pipelines.
To the extent the guarantor’s guarantee of any such indebtedness is avoided as a result of fraudulent conveyance or held unenforceable for any other reason, the holders of such debt would cease to have any claim in respect of the guarantee.
To the 40 Table of Contents extent the guarantor’s guarantee of any such indebtedness is avoided as a result of fraudulent conveyance or held unenforceable for any other reason, the holders of such debt would cease to have any claim in respect of the guarantee.
Our Board of Directors has adopted a code of business conduct and ethics that applies to our directors, officers (including our principal executive and financial officers, principal accounting officer, controllers and other persons performing similar functions) and all other employees.
Our Board of Directors has adopted a code of business conduct and ethics that applies to our directors, officers (including our principal executive and financial 42 Table of Contents officers, principal accounting officer, controllers and other persons performing similar functions) and all other employees.
Other operational hazards and unforeseen interruptions include adverse weather conditions (including extreme cold weather), infectious disease including a pandemic (such as COVID-19), cybersecurity attacks, geopolitical reactions, accidents, explosions, fires, the collision of equipment with our pipeline facilities (for example, this may occur if a third party were to perform excavation or construction work near our facilities) and catastrophic events such as tornados, hurricanes, earthquakes, floods and other similar events beyond our control.
Other operational hazards and unforeseen interruptions include adverse weather conditions (including extreme cold weather), public health crises including a pandemic (such as COVID-19), cybersecurity attacks, geopolitical events, accidents, explosions, fires, the collision of equipment with our pipeline facilities (for example, this may occur if a third party were to perform excavation or construction work near our facilities) and catastrophic events such as tornados, hurricanes, earthquakes, floods and other similar events beyond our control.
We may not be able to pass on the higher costs to our customers or recover all costs related to mitigating these physical risks. 28 T able of Contents Our operations are subject to operational hazards and unforeseen interruptions, which could affect adversely our business and for which we may not be adequately insured.
We may not be able to pass on the higher costs to our customers or recover all costs related to mitigating these physical risks. Our operations are subject to operational hazards and unforeseen interruptions, which could affect adversely our business and for which we may not be adequately insured.
Over time the age of these assets could result in increased maintenance or remediation expenditures and an increased risk of product releases and associated costs and liabilities. Any significant increase 31 T able of Contents in these expenditures, costs or liabilities could affect adversely our business, results of operations, financial position and cash flows.
Over time the age of these assets could result in increased maintenance or remediation expenditures and an increased risk of product releases and associated costs and liabilities. Any significant increase in these expenditures, costs or liabilities could affect adversely our business, results of operations, financial position and cash flows.
Our code of business conduct and ethics requires, among 38 T able of Contents other things, that our directors, officers and employees avoid conflicts of interest, comply with all applicable laws and other legal requirements, conduct business in an honest and ethical manner and otherwise act with integrity and in our company’s best interest.
Our code of business conduct and ethics requires, among other things, that our directors, officers and employees avoid conflicts of interest, comply with all applicable laws and other legal requirements, conduct business in an honest and ethical manner and otherwise act with integrity and in our company’s best interest.
For instance, if we build a new pipeline, the construction will occur over an extended period of time, and we will not receive any material increases in revenues until after completion of the project; • we may construct facilities to capture anticipated future growth in production or downstream demand in which anticipated growth does not materialize; • opposition from environmental and social groups, landowners, tribal groups, local groups and other advocates could result in organized protests, attempts to block or sabotage our construction activities or operations, intervention in regulatory or administrative proceedings involving our assets, or lawsuits or other actions designed to prevent, disrupt or delay the construction or operation of our assets; • we may be required to rely on third parties downstream of our facilities to have available capacity for our delivered natural gas, NGLs, Refined Products and crude oil, which may not be operational; and • inflationary pressure could increase our costs for construction materials or labor.
For instance, if we build a new pipeline, the construction will occur over an extended period of time, and we will not receive any material increases in revenues until after completion of the project; • we may construct facilities to capture anticipated future growth in production or downstream demand in which anticipated growth does not materialize; • opposition from environmental and social groups, landowners, tribal groups, local groups and other advocates could result in organized protests, attempts to block or sabotage construction activities or operations, intervention in regulatory or administrative proceedings involving our assets, or lawsuits or other actions designed to prevent, disrupt or delay the construction or operation of our assets; • we may be required to rely on third parties downstream of our facilities to have available capacity for our delivered natural gas, NGLs, Refined Products and crude oil, which may not be operational; and • inflationary pressure, along with pressure that may arise from the imposition by the federal government of tariffs on non-U.S. produced construction materials, could increase our costs for construction materials or labor.
Changes in the quality or quantity of this crude oil production, outages at these refineries or reduced or interrupted throughput on gathering systems or pipelines due to weather-related or other natural causes, competitive forces, testing, line repair, damage, reduced operating pressures or other causes could reduce shipments on our pipelines or result in our being unable to receive products at or deliver products from our terminals, any of which could adversely affect our business.
Changes in the quality or quantity of this crude oil production, outages at these refineries or reduced or interrupted throughput on gathering systems or pipelines due to weather-related or other natural causes, competitive forces, testing, line repair, damage, reduced operating pressures or other causes could reduce shipments on our pipelines or result in our being unable to receive products at or deliver products from our terminals, any of which could adversely affect our business, results of operations, financial position and cash flows.
Our ability to use net operating losses and certain other tax attributes to offset future taxable income may be limited. We currently have substantial U.S. federal net operating loss (“NOL”) carry forwards and other state tax attributes.
Our ability to use net operating losses and certain other tax attributes to offset future taxable income may be limited. We currently have substantial U.S. federal net operating loss (NOL) carry forward and other state tax attributes.
Each of these factors may contribute to measurement adjustments that may occur on our systems, which could affect adversely our business, results of operations, financial position and cash flows. In the competition for supply, we may have significant levels of excess capacity on our pipeline, processing, fractionation, terminal and storage assets.
Each of these factors may contribute to measurement adjustments that may occur on our systems, which could affect adversely our business, results of operations, financial position and cash flows. We face competition for supply and, as a result, we may have significant levels of excess capacity on our pipeline, processing, fractionation, terminal and storage assets.
ONEOK, ONEOK Partners, the Intermediate Partnership and Magellan have cross guarantees in place for our and ONEOK Partners’ indebtedness. A court may use fraudulent conveyance laws to subordinate or avoid the cross guarantees of certain of this indebtedness.
A court may use fraudulent conveyance considerations to avoid or subordinate the cross guarantees of our and ONEOK Partners’ indebtedness. ONEOK, ONEOK Partners, the Intermediate Partnership, Magellan, EnLink and EnLink Partners have cross guarantees in place for our and ONEOK Partners’ indebtedness.
For example, the IRA directs the EPA to impose and collect payment of “Waste Emissions Charges”, or “Methane Fees”, for specific facilities that report more than 25,000 metric tons of carbon dioxide equivalent of GHG emissions per year and have methane emissions intensity in excess of the relevant statutory threshold.
For example, the Inflation Reduction Act of 2022 (IRA) directs the EPA to impose and collect payment of “Waste Emissions Charges,” or “Methane Fees,” for specific facilities that report more than 25,000 metric tons of carbon dioxide equivalent of GHG emissions per year and have methane emissions intensity in excess of the relevant statutory threshold.
We may face significant costs to comply with the regulation of GHG emissions. GHG emissions in the midstream industry originate primarily from combustion engine exhaust, heater exhaust and fugitive methane gas emissions. International, federal, regional and/or state legislative and/or regulatory initiatives may attempt to control or limit GHG emissions, including initiatives directed at issues associated with climate change.
GHG emissions in the midstream industry originate primarily from combustion engine exhaust, heater exhaust and fugitive methane gas emissions. International, federal, regional and/or state legislative and/or regulatory initiatives may attempt to 37 Table of Contents control or limit GHG emissions, including initiatives directed at issues associated with climate change.
The energy industry historically has been subject to heavy state and federal regulation that extends to many aspects of our businesses and operations, including: • changes to federal, state and local taxation; • regulatory approval and review of certain of our rates, operating terms and conditions of service; • the types of services we may offer our counterparties; • construction and operation of new facilities; • the integrity, safety and security of facilities and operations; • acquisition, extension or abandonment of services or facilities; • reporting and information posting requirements; • maintenance of accounts and records; and • relationships with affiliate companies involved in all aspects of our business.
The energy industry is subject to heavy state and federal regulation that extends to many aspects of our businesses and operations, including: • changes to federal, state and local taxation; • regulatory approval and review of certain of our rates, operating terms and conditions of service; • the types of services we may offer our counterparties; • construction and operation of new facilities, and modifications and operation of existing facilities; • the integrity, safety and security of facilities and operations; • acquisition, extension or abandonment of services or facilities; • reporting and information posting requirements; • maintenance of accounts and records; and • relationships with affiliate companies involved in all aspects of our business. 36 Table of Contents Compliance with these requirements can be costly and burdensome.
Examples of these laws include the: • Clean Air Act and analogous state laws that impose obligations related to air emissions; • Clean Water Act and analogous state laws that impose requirements related to activities in and around certain state and federal waters, including requirements related to discharge of wastewater from our facilities into state and federal 34 T able of Contents waters and discharge of dredge and fill materials, such as dirt and other earthy materials, into waters of the United States; • CERCLA and analogous state laws that regulate the cleanup of hazardous substances that may have been released at properties currently or previously owned or operated by us or locations to which we have sent waste for disposal; • Endangered Species Act and analogous state laws that impose obligations related to protection of threatened and endangered species; and • RCRA and analogous state laws that impose requirements for the handling and discharge of solid and hazardous waste from our facilities.
Examples of these laws include the: • Federal Clean Air Act, as amended, and analogous state laws that impose obligations related to air emissions; • Federal Water Pollution Control Act Amendments of 1972, as amended, and analogous state laws that impose requirements related to activities in and around certain state and federal waters, including requirements related to discharge of wastewater from our facilities into state and federal waters and discharge of dredge and fill materials, such as dirt and other earthy materials, into waters of the United States; • Comprehensive Environmental Response, Compensation and Liability Act, as amended (CERCLA), and analogous state laws that regulate the cleanup of hazardous substances that may have been released at properties currently or previously owned or operated by us or locations to which we have sent waste for disposal; • Endangered Species Act of 1973 and analogous state laws that impose obligations related to protection of threatened and endangered species; and • Resource Conservation and Recovery Act, as amended (RCRA), and analogous state laws that impose requirements for the handling and discharge of solid and hazardous waste from our facilities.
Periods of severe volatility in equity and credit markets may disrupt our access to such markets, make it difficult to obtain financing necessary to expand facilities or acquire assets, increase financing costs and result in the imposition of restrictive financial covenants. Also, economic conditions in the wake of the pandemic have included increasing inflation.
Periods of severe volatility in equity and credit 29 Table of Contents markets may disrupt our access to such markets, make it difficult to obtain financing necessary to expand facilities or acquire assets, increase financing costs and result in the imposition of restrictive financial covenants. Also, economic conditions following the COVID-19 pandemic included increased inflation.
The realization of any of these risks could adversely affect our business. We depend on producers, gathering systems, refineries and pipelines owned and operated by others to supply our assets, and any closures, interruptions or reduced activity levels at these facilities may adversely affect our business.
The realization of any of these risks could adversely affect our business. 30 Table of Contents We depend on producers, gathering systems, refineries and pipelines owned and operated by others to supply our assets, and any closures, interruptions or reduced activity levels at these facilities may adversely affect our business, results of operations, financial position and cash flows.
We cannot predict the potential impact to our business resulting from additional regulations. Growing our business by constructing new pipelines and facilities or making modifications to our existing facilities subjects us to construction risk and supply risks, should adequate natural gas, NGL, Refined Products and crude oil supply be unavailable upon completion of the facilities.
Growing our business by constructing new pipelines and facilities or making modifications to our existing facilities subjects us to construction risk and supply risks, should adequate natural gas, NGL, Refined Products and crude oil supply be unavailable upon completion of the facilities.
The FERC and most relevant state regulatory authorities allow us to establish rates based on conditions in competitive markets without regard to the FERC’s index level or our cost-of-service. We establish market-based rates in approximately 70% of the markets for our Refined Products pipelines.
The FERC and most relevant state regulatory authorities allow us to establish rates based on conditions in competitive markets without regard to the FERC’s index level or our cost-of-service.
To the extent that the potential pathways we have identified to achieve this emissions reduction target are not available to us, or to the extent we otherwise are unable to make progress toward other ESG-related targets we may establish, we may face additional costs to meet these targets, or we may fail to meet them, which could negatively impact our business and reputation.
To the extent that the potential pathways we have identified to achieve this emissions reduction target are not available to us, or to the extent we otherwise are unable to make progress toward other ESG-related targets we may establish, we may face additional costs to meet these targets, or we may fail to meet them, which could negatively impact our business and reputation. 31 Table of Contents We may be subject to risks associated with the physical impacts of climate change.
Additionally, a significant portion of our revenues are derived from the sale of commodities that are received or purchased in conjunction with our gathering, processing, fractionation, transportation and storage services. As commodity 26 T able of Contents prices decline, we could be paid less for our commodities thereby reducing our cash flows.
Additionally, a portion of our revenues are derived from the sale of commodities that are received or purchased in conjunction with our gathering, processing, fractionation, transportation and storage services. As commodity prices decline, we could be paid less for our commodities thereby reducing our cash flows. Historically, commodity prices have been volatile and can change quickly.
Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our equity, our access to capital markets and the cost of capital.
Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our equity, our access to capital markets and the cost of capital. 43 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable.
Inflationary pressures have resulted in, and may continue to result in, additional increases to the cost of our materials, services and personnel, which could increase our capital expenditures and operating costs.
While inflation has declined since the second half of 2022, inflationary pressures have resulted in, and may continue to result in, additional increases to the cost of our materials, services and personnel, which could increase our capital expenditures and operating costs.
We rely on others to provide administrative, operating and management services for certain of our joint-venture assets. We have a limited ability to control the operations and the associated costs of such operations.
This reliance on others to operate joint-venture assets and to provide other services could affect adversely our business and results of operations. We rely on others to provide administrative, operating and management services for certain of our joint-venture assets. We have a limited ability to control the operations and the associated costs of such operations.
If we consummate any future mergers or acquisitions, our capitalization and results of operations may change significantly, and investors will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of our resources to future acquisitions. 37 T able of Contents The failure to successfully combine the businesses of ONEOK and Magellan may adversely affect our future results.
If we consummate any future mergers or acquisitions, our capitalization and results of operations may change significantly, and investors will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of our resources to future acquisitions.
A decrease in energy use due to weather changes may affect our financial condition, through decreased revenues. Extreme weather conditions in general require more system backup, adding to costs, and can contribute to increased system stresses, including damage to our assets or service interruptions. Weather conditions outside of our operating territory could also have an impact on our revenues.
Extreme weather conditions in general require more system backup, adding to costs, and can contribute to increased system stresses, including damage to our assets or service interruptions. Weather conditions outside of our operating territory could also have an impact on our revenues.
Determining the limitation under Section 382 of the Code is highly complex. We believe our U.S. NOL carryforwards and other tax attributes are not currently subject to a limitation as a result of an ownership change. However, it is possible that an ownership change may occur in the future, which may materially impact our ability to use our U.S.
NOL carryforwards and other tax attributes are not currently subject to a limitation as a result of an ownership change. However, it is possible that an ownership change may occur in the future, which may materially impact our ability to use our U.S. NOL carryforwards and other tax attributes to reduce U.S. federal and state taxable income.
However, we cannot predict precisely what form these future legislative and/or regulatory initiatives will take, the stringency of such initiatives, when they will become effective or the impact on our capital expenditures, competitive position and results of operations.
Methane Fees, if implemented, and other legislative and/or regulatory initiatives could make some of our activities uneconomic to maintain or operate. However, we cannot predict precisely what form these future legislative and/or regulatory initiatives will take, the stringency of such initiatives, when they will become effective or the impact on our capital expenditures, competitive position and results of operations.
Each rating should be evaluated independently of any other rating. 35 T able of Contents Our indebtedness and guarantee obligations could impair our financial condition and our ability to fulfill our obligations. As of December 31, 2023, we had total indebtedness of $22.8 billion. Our indebtedness and guarantee obligations could have significant consequences.
Each rating should be evaluated independently of any other rating. Our indebtedness and guarantee obligations could impair our financial condition and our ability to fulfill our obligations. As of Dec. 31, 2024, we had total indebtedness of $33.2 billion. Our indebtedness and guarantee obligations could have significant consequences.
In addition, the integration may result in additional and unforeseen expenses, which could reduce the anticipated benefits of the Magellan Acquisition. 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.
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 Magellan Acquisition or to achieve the anticipated benefits of the Magellan Acquisition. Integration efforts between the two companies will also divert management attention and resources. These integration matters could have an adverse effect on us.
Any or all of those occurrences could affect adversely the combined company’s ability to maintain relationships with customers and employees after the Recent Acquisitions or to achieve the anticipated benefits of the Recent Acquisitions. Integration efforts between the three companies will also divert management attention and resources.
The crude oil and natural gas industries are relying increasingly on supplies from nonconventional sources, such as shale and tight sands. Crude oil and natural gas extracted from these sources frequently requires hydraulic fracturing, which involves the pressurized injection of water, sand and chemicals into a geologic formation to stimulate crude oil and natural gas production.
Crude oil and natural gas extracted from these sources frequently requires hydraulic fracturing, which involves the pressurized injection of water, sand and chemicals into a geologic formation to stimulate crude oil and natural gas production.
Historically, commodity prices have been volatile and can change quickly. It is likely that commodity prices will continue to be volatile in the future.
It is likely that commodity prices will continue to be volatile in the future.
In the event of the insolvency, bankruptcy, liquidation, reorganization, dissolution or winding up of the business of a subsidiary that is not a guarantor, creditors of that subsidiary would generally have the right to be paid in full before any distribution is made to us or the holders of the debt securities. 36 T able of Contents A court may use fraudulent conveyance considerations to avoid or subordinate the cross guarantees of our and ONEOK Partners’ indebtedness.
In the event of the insolvency, bankruptcy, liquidation, reorganization, dissolution or winding up of the business of a subsidiary that is not a guarantor, creditors of that subsidiary would generally have the right to be paid in full before any distribution is made to us or the holders of the debt securities.
Although ONEOK Partners, the Intermediate Partnership and Magellan have guaranteed our debt securities, the guarantees are subject to release under certain circumstances, and we have subsidiaries that are not guarantors. In those cases, the debt securities effectively are subordinated to the claims of all creditors, including trade creditors and tort claimants, of our subsidiaries that are not guarantors.
Although ONEOK Partners, the Intermediate Partnership, Magellan, EnLink and EnLink Partners have guaranteed our debt securities, the guarantees are subject to release under certain circumstances, and we have subsidiaries that are not guarantors.
Moreover, subject to contractual restrictions, any joint-venture owner generally may sell, transfer or otherwise modify its ownership interest in a joint venture, whether in a transaction involving third parties or the other joint-venture owners. Any such transaction could result in our being required to partner with different or additional parties who may have business interests different from ours.
Moreover, subject to contractual restrictions, any joint-venture owner generally may sell, transfer or otherwise modify its ownership interest in a joint venture, whether in a transaction involving third parties or the other joint-venture owners.
Our liquids blending activities subject us to federal regulations that govern renewable fuel requirements in the U.S. The Energy Independence and Security Act of 2007 expanded the required use of renewable fuels in the U.S. Each year, the EPA establishes a renewable volume obligation (RVO) requirement for refiners and fuel manufacturers based on overall quotas established by the federal government.
Our liquids blending activities subject us to federal regulations that govern renewable fuel requirements in the U.S. The Energy Independence and Security Act of 2007 expanded the required use of renewable fuels in the U.S.
Finally, hedging arrangements for forecasted sales and purchases are used to reduce our exposure to commodity price fluctuations and may limit the benefit we would otherwise receive if market prices for natural gas, NGLs, Refined Products and crude oil differ from the stated price in the hedge instrument for these commodities. 29 T able of Contents A breach of information security, including a cybersecurity attack, or failure of one or more key information technology or operational systems, or those of third parties, may affect adversely our operations, financial results or reputation.
Finally, hedging arrangements for forecasted sales and purchases are used to reduce our exposure to commodity price fluctuations and may limit the benefit we would otherwise receive if market prices for natural gas, NGLs, Refined Products and crude oil differ from the stated price in the hedge instrument for these commodities.
State regulatory authorities could take similar measures for intrastate tariffs. In addition, shippers may challenge by complaint the lawfulness of tariff rates that have become final and effective.
State regulatory authorities could take similar measures for intrastate tariffs. In addition, shippers may challenge by complaint the lawfulness of tariff rates that have become final and effective. If existing rates are determined to be in excess of a just and reasonable level, we could be required to pay refunds to shippers, reduce rates and make other concessions.
We may be subject to risks associated with the physical impacts of climate change. The threat of global climate change may create physical and financial risks to our business. Some of our customers’ energy needs vary with weather conditions, primarily temperature.
The threat of global climate change may create physical and financial risks to our business. Some of our customers’ energy needs vary with weather conditions, primarily temperature. To the extent weather conditions may be affected by climate change, customers’ energy use could increase or decrease depending on the duration and magnitude of any changes.
We cannot guarantee that state or federal regulators will not challenge our safety practices or will authorize any projects or acquisitions that we may propose in the future. Moreover, there can be no guarantee that, if granted, any such authorizations will be made in a timely manner or will be free from potentially burdensome conditions.
Moreover, there can be no guarantee that, if granted, any such authorizations will be made in a timely manner or will be free from potentially burdensome conditions.
Holders of our common stock may receive dividends that vary from anticipated amounts, or no dividends at all. We may not have sufficient cash each quarter to pay dividends or maintain current or expected levels of dividends.
We may not have sufficient cash each quarter to pay dividends or maintain current or expected levels of dividends.
Similar operational hazards and unforeseen interruptions may also impact our producers or suppliers; for example, extreme cold weather can result in supply reductions from producer wellhead freeze-offs, as well as power curtailments or outages. Further, the United States government warned that energy assets, specifically the nation’s pipeline infrastructure, may be targets of terrorist attacks.
Similar operational hazards and unforeseen interruptions may also impact our producers or suppliers; for example, extreme cold weather can result in supply reductions from producer wellhead freeze-offs, as well as power curtailments or outages. A casualty occurrence may result in injury or loss of life, extensive property damage or environmental damage.
Such a limitation could affect adversely our results of operations, financial position and cash flows. 32 T able of Contents RISK FACTORS RELATED TO REGULATION Increased regulation of exploration and production activities, including hydraulic fracturing, well setbacks and disposal of wastewater, could result in reductions or delays in drilling and completing new crude oil and natural gas wells.
RISK FACTORS RELATED TO REGULATION Increased regulation of exploration and production activities, including hydraulic fracturing, well setbacks and disposal of wastewater, could result in reductions or delays in drilling and completing new crude oil and natural gas wells. The crude oil and natural gas industries rely on supplies from nonconventional sources, such as shale and tight sands.
Based on text in the IRA and a related rule that the EPA proposed in January 2024 to implement the Methane Fee program, we expect to begin paying Methane Fees in 2025 (for 2024 reported emissions) for applicable facilities. Methane Fees and other legislative and/or regulatory initiatives could make some of our activities uneconomic to maintain or operate.
Based on text in the IRA and a related rule that the EPA finalized in November 2024 to implement the Methane Fee program, we expect to begin paying Methane Fees in 2025 (for 2024 reported emissions) for applicable facilities. In January 2025, industry associations and certain states challenged the Waste Emissions Charge rule in the D.C.
Compliance with these requirements can be costly and burdensome. Future changes to laws, regulations and policies in these areas may impair our ability to compete for business or to recover costs and may increase the cost and burden of our operations.
Future changes to laws, regulations and policies in these areas may impair our ability to compete for business or to recover costs and may increase the cost and burden of our operations. We cannot guarantee that state or federal regulators will not challenge our safety practices or will authorize any projects or acquisitions that we may propose in the future.
By virtue of our liquids blending activity and resulting gasoline production, we are an obligated party and receive an annual RVO from the EPA. We typically purchase renewable energy credits, called RINs, to meet this obligation. Increases in the cost or decreases in the availability of RINs could have an adverse impact on our business.
We typically purchase renewable energy credits, called RINs, to meet this obligation. Increases in the cost or decreases in the availability of RINs could have an adverse impact on our business. We may face significant costs to comply with the regulation of GHG emissions.
For example, the SEC has announced its plans to propose new climate change disclosure requirements. While the form those requirements may take are not final, we may face increased costs associated with complying with any new climate disclosure rules. Certain investors are increasingly focused on ESG issues, including climate change.
If these or any other climate disclosure requirements become effective, we may face increased costs associated with complying with such new climate disclosure rules. Certain investors are increasingly focused on ESG issues, including climate change.
The success of the Magellan Acquisition will depend, in part, on our ability to realize the anticipated benefits from combining the businesses of ONEOK and Magellan. If the businesses are not successfully combined, the anticipated benefits of the Magellan Acquisition may not be realized fully or at all or may take longer to realize than expected.
We may be unable to integrate the businesses of EnLink and Medallion successfully or realize the anticipated benefits of the EnLink Acquisitions and the Medallion Acquisition (collectively, the “Recent Acquisitions”). The success of the Recent Acquisitions will depend, in part, on our ability to realize the anticipated benefits from combining the businesses of ONEOK, EnLink and Medallion.
Further, the proceeds of any such insurance may not be paid in a timely manner. Continued development of supply sources outside of our operating regions could impact demand for our services.
Continued development of supply sources outside of our operating regions could impact demand for our services.
We use the FERC’s indexing methodology to establish our rates in approximately 30% of the markets serviced by our Refined Products pipelines. The FERC’s indexing methodology is based on changes in the producer price index for finished goods combined with an index adjustment.
The FERC’s ratemaking methodologies may limit our ability to increase rates by amounts sufficient to reflect our actual cost or may delay the use of rates that reflect increased costs. The FERC’s indexing methodology is based on changes in the producer price index for finished goods combined with an index adjustment.
We do not operate all of our joint-venture assets nor do we employ directly all of the persons responsible for providing administrative, operating and management services. This reliance on others to operate joint-venture assets and to provide other services could affect adversely our business and results of operations.
Any such transaction could result in our being required to partner with different or additional parties who may have business interests different from ours. 35 Table of Contents We do not operate all of our joint-venture assets nor do we employ directly all of the persons responsible for providing administrative, operating and management services.
Our businesses are dependent upon our operational systems to process a large amount of data and complex transactions.
A breach of information security, including a cybersecurity attack, or failure of one or more key information technology or operational systems, or those of third parties, may affect adversely our operations, financial results or reputation. Our businesses are dependent upon our operational systems to process a large amount of data and complex transactions.
To the extent weather conditions may be affected by climate change, customers’ energy use could increase or decrease depending on the duration and magnitude of any changes. Increased energy use due to weather changes may require us to invest in more pipelines and other infrastructure to serve increased demand.
Increased energy use due to weather changes may require us to invest in more pipelines and other infrastructure to serve increased demand. A decrease in energy use due to weather changes may affect our financial condition through decreased revenues.
Premiums and deductibles for certain insurance policies can increase substantially, and, in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage. Consequently, we may not be able to renew existing insurance policies or purchase other desirable insurance on commercially reasonable terms, if at all.
The occurrence of operational hazards and unforeseen interruptions could affect adversely our business, results of operations, financial position and cash flows. Premiums and deductibles for certain insurance policies can increase substantially, and, in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur ERM process encompasses the identification and assessment of a broad range of risks, including cybersecurity, and the development and testing of controls to mitigate these risks.
Biggest changeITEM 1C. CYBERSECURITY Risk Management and Strategy - We take a cross-disciplinary approach to cybersecurity and physical security. Our annual Enterprise Risk Management (ERM) process encompasses the identification and assessment of a broad range of risks, including cybersecurity, and the development and testing of controls to mitigate these risks.
Our program generally incorporates the guidelines of the widely utilized National Institute of Standards and Technology Cybersecurity Framework, though this does not imply we meet any particular technical standards, specifications or requirements. In addition, we conduct risk assessments of third-party software and cloud vendors by utilizing security questionnaires prior to procurement.
Our security program generally incorporates the guidelines of the widely utilized National Institute of Standards and Technology Cybersecurity Framework, though this does not imply we meet any particular technical standards, specifications or requirements. In addition, we conduct risk assessments of enterprise third-party software and cloud vendors by utilizing security questionnaires prior to procurement.
Our annual ERM assessment is designed to enable our Board of Directors to establish a mutual understanding with management of the effectiveness of our risk-management practices and capabilities, to review our risk exposures and to elevate certain key risks for discussion at the board level. Our ERM program is overseen by our chief financial officer.
Our ERM assessment is designed to enable our Board of Directors to establish a mutual understanding with management of the effectiveness of our risk-management practices and capabilities, to review our risk exposures and to elevate certain key risks for discussion at the board level. Our ERM program is overseen by our chief financial officer.
This advisory team is chaired by our vice president of cybersecurity and physical security, who has more than twenty years of relevant experience in the field of cyber and physical security.
The Security Advisory team is chaired by our vice president of cybersecurity and physical security who has more than twenty years of relevant experience in the field of cyber and physical security.
Governance - Security is governed by the Security Advisory team, an executive advisory committee composed of company officers, including our chief executive officer, our chief financial officer and our chief enterprise services officer, who meet regularly to evaluate ongoing security threats and incidents, to define policy and to prioritize initiatives.
Governance - Security is governed by the Security Advisory team, an executive advisory committee composed of company officers, including our chief executive officer, our chief financial officer and our chief enterprise services officer. The Security Advisory team meets regularly to evaluate ongoing security threats and incidents, to define policy and to prioritize initiatives.
On a regular basis, we engage consultants to conduct penetration tests and architecture design reviews.
On a regular basis, we engage consultants, including external counsel and cybersecurity firms, to conduct penetration tests and architecture design reviews.
As of the date of this report, we are not aware of any cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
As of the date of this report, though the Company and third parties have experienced certain non-material cybersecurity incidents, we are not aware of any cybersecurity threats, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Identified cybersecurity threats and incidents are monitored and assessed for materiality by this cross-functional Security Advisory team. This assessment includes whether our Board of Directors should be informed of a threat or incident. Cybersecurity risks are communicated and discussed with our Board of Directors at least annually in conjunction with our overall ERM program.
Identified cybersecurity threats and incidents are monitored and assessed for materiality by this cross-functional Security Advisory Team. This assessment includes whether our Board of Directors should be informed of a threat or incident.
Removed
ITEM 1C. CYBERSECURITY Risk Management and Strategy - We are an essential critical infrastructure business, and cybersecurity is a high priority for our leadership and Board of Directors. In 2021, the Transportation Security Administration (TSA) began releasing security directives establishing cybersecurity requirements for our industry.
Added
Our vice president of cybersecurity and physical security reports to our executive vice president and chief enterprise services officer, responsible for cybersecurity, information technology, enterprise optimization and innovation, among other responsibilities. Before joining ONEOK, our executive vice president and chief enterprise services officer held information technology positions of increasing responsibility.
Removed
We promptly responded to these directives when released and continue to work collaboratively with our government counterparts to improve security throughout our technology systems. We engage in an annual comprehensive Enterprise Risk Management (ERM) process designed to identify and manage risk.
Added
Cybersecurity risks are communicated and discussed with our Board of Directors at least annually in conjunction with our overall ERM program. Internal Audit provides periodic updates to the Audit Committee on testing completed to meet TSA requirements.
Removed
In order to manage these cybersecurity risks, including our use of third-party software and cloud vendors, we have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our critical systems and information. We take a cross-disciplinary approach to cybersecurity and physical security.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePERFORMANCE GRAPH The following performance graph compares the performance of our common stock with the S&P 500 Index, the Alerian Midstream Energy Select Index, the S&P 500 Energy Index and a ONEOK Peer Group during the period beginning on December 31, 2018, and ending on December 31, 2023.
Biggest change(b) - Excludes 125,000 shares that were repurchased in December 2024, and settled in January 2025. 45 Table of Contents PERFORMANCE GRAPH The following performance graph compares the performance of our common stock with the S&P 500 Index, the S&P 500 Energy Index and a ONEOK Peer Group during the period beginning on Dec. 31, 2019, and ending on Dec. 31, 2024.
For information regarding our Employee Stock Award Program and other equity compensation plans, see Note K of the Notes to Consolidated Financial Statements and “Equity Compensation Plan Information” included in Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, in this Annual Report.
For information regarding our Employee Stock Award Program and other equity compensation plans, see Note L of the Notes to Consolidated Financial Statements and “Equity Compensation Plan Information” included in Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, in this Annual Report.
(c) - The current ONEOK Peer Group is composed of the following companies: Energy Transfer LP; EnLink Midstream, LLC; Enterprise Products Partners L.P.; Kinder Morgan, Inc.; MPLX LP; NuStar Energy L.P.; Plains All American Pipeline, L.P.; Targa Resources Corp.; Western Midstream Partners, LP; and The Williams Companies, Inc. ITEM 6. [RESERVED]
(b) - The current ONEOK Peer Group is composed of the following companies: Antero Midstream Corp.; Energy Transfer LP; Enterprise Products Partners L.P.; Kinder Morgan, Inc.; Kinetik Holdings Inc.; MPLX LP; Plains All American Pipeline, L.P.; Targa Resources Corp.; Western Midstream Partners, LP; and The Williams Companies, Inc. ITEM 6. [RESERVED]
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the NYSE under the trading symbol “OKE.” The corporate name ONEOK is used in stock listings. At February 20, 2024, there were 13,034 holders of record of our 583,159,446 outstanding shares of common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the NYSE under the trading symbol “OKE.” The corporate name ONEOK is used in stock listings. At Feb. 17, 2025, there were 15,874 holders of record of our 624,339,588 outstanding shares of common stock.
Removed
Value of a $100 Investment, Assuming Reinvestment of Distributions/Dividends, at December 31, 2018, and at the End of Every Year Through December 31, 2023. 41 T able of Contents Cumulative Total Return Years Ended December 31, 2019 2020 2021 2022 2023 ONEOK, Inc. $ 147.77 $ 83.70 $ 137.97 $ 164.05 $ 185.63 S&P 500 Index $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 S&P 500 Energy Index (a) $ 111.81 $ 74.16 $ 114.49 $ 189.40 $ 186.71 Alerian Midstream Energy Select Index (b) $ 121.76 $ 92.76 $ 133.62 $ 158.45 $ 182.54 ONEOK Peer Group (c) $ 115.22 $ 84.74 $ 115.08 $ 148.51 $ 174.65 (a) - The S&P 500 Energy Index is a subindex of the S&P 500 that includes those companies classified as members of the energy sector.
Added
REPURCHASES OF COMMON STOCK ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of the Publicly Announced Program (a) Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program ( Millions of dollars ) October 2024 — $ — — $ 2,000 November 2024 60,000 $ 112.96 60,000 $ 1,993 December 2024 (b) 1,490,000 $ 102.27 1,490,000 $ 1,841 Total 1,550,000 1,550,000 (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.
Removed
(b) - The Alerian Midstream Energy Select Index measures the composite performance of approximately 25 North American energy infrastructure companies that are engaged in midstream activities involving energy commodities. Beginning in 2024, we will replace the Alerian Midstream Energy Select Index with the S&P 500 Energy Index as it is more relevant to our business subsequent to the Magellan Acquisition.
Added
The program will terminate upon completion of the repurchases, or on Jan. 1, 2029, whichever occurs first.
Added
Value of a $100 Investment, Assuming Reinvestment of Distributions/Dividends, at Dec. 31, 2019, and at the End of Every Year Through Dec. 31, 2024.
Added
Cumulative Total Return Years ended Dec. 31, 2020 2021 2022 2023 2024 ONEOK, Inc. $ 56.64 $ 93.37 $ 111.01 $ 125.62 $ 188.65 S&P 500 Index $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 S&P 500 Energy Index (a) $ 66.32 $ 102.56 $ 169.96 $ 167.71 $ 177.30 ONEOK Peer Group (b) $ 75.32 $ 103.20 $ 132.34 $ 156.15 $ 234.20 (a) - The S&P 500 Energy Index is a subindex of the S&P 500 that includes those companies classified as members of the energy sector.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

84 edited+52 added−42 removed48 unchanged
Biggest changeConsolidated Operations Selected Financial Results - The following table sets forth certain selected financial results for the periods indicated: Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 Financial Results 2023 2022 2021 $ Increase (Decrease) ( Millions of dollars, except per share amounts ) Revenues Commodity sales $ 15,614 $ 20,976 $ 15,180 (5,362) 5,796 Services 2,063 1,411 1,360 652 51 Total revenues 17,677 22,387 16,540 (4,710) 5,847 Cost of sales and fuel (exclusive of items shown separately below) 11,929 17,910 12,257 (5,981) 5,653 Operating costs 1,535 1,149 1,067 386 82 Depreciation and amortization 769 626 622 143 4 Transaction costs 158 — — 158 — Other operating income, net (786) (105) (2) 681 103 Operating income $ 4,072 $ 2,807 $ 2,596 1,265 211 Equity in net earnings from investments $ 202 $ 148 $ 122 54 26 Interest expense, net of capitalized interest $ (866) $ (676) $ (733) 190 (57) Net income $ 2,659 $ 1,722 $ 1,500 937 222 Diluted EPS $ 5.48 $ 3.84 $ 3.35 1.64 0.49 Adjusted EBITDA $ 5,243 $ 3,620 $ 3,380 1,623 240 Capital expenditures $ 1,595 $ 1,202 $ 697 393 505 See reconciliation of net income to adjusted EBITDA in the “Non-GAAP Financial Measures” section. 44 T able of Contents 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. 2023 vs. 2022 - Operating income increased $1.3 billion primarily as a result of the following: • Natural Gas Gathering and Processing - an increase of $227 million from higher volumes in the Rocky Mountain and Mid-Continent regions and an increase of $49 million due primarily to higher average fee rates; • Natural Gas Liquids - an increase of $663 million related to the Medford incident and an increase of $303 million in exchange services; • Natural Gas Pipelines - an increase of $43 million in transportation and storage services; and • Refined Products and Crude - transportation and storage revenues of $535 million for the period of September 25, 2023, through December 31, 2023 due to the impact of the Magellan Acquisition; offset by • Consolidated Operating, Depreciation and Transaction Costs - an increase of $290 million in operating costs and depreciation expense from our Refined Products and Crude segment, an increase of $158 million from transaction costs related to the Magellan Acquisition and an increase of $239 million due primarily to higher operating costs and depreciation expense in our Natural Gas Gathering and Processing, Natural Gas Liquids and Natural Gas Pipelines segments.
Biggest changeConsolidated Operations Selected Financial Results - The following table sets forth certain selected financial results for the periods indicated: Years Ended Dec. 31, 2024 vs. 2023 2023 vs. 2022 Financial Results 2024 2023 2022 $ Increase (Decrease) ( Millions of dollars, except per share amounts ) Revenues Commodity sales $ 17,780 $ 15,614 $ 20,976 2,166 (5,362) Services and other 3,918 2,063 1,411 1,855 652 Total revenues 21,698 17,677 22,387 4,021 (4,710) Cost of sales and fuel (exclusive of items shown separately below) 13,311 11,929 17,910 1,382 (5,981) Operating costs 2,496 1,535 1,149 961 386 Depreciation and amortization 1,134 769 626 365 143 Transaction costs 73 158 — (85) 158 Other operating income, net (305) (786) (105) (481) 681 Operating income $ 4,989 $ 4,072 $ 2,807 917 1,265 Equity in net earnings from investments $ 439 $ 202 $ 148 237 54 Interest expense, net of capitalized interest $ (1,371) $ (866) $ (676) 505 190 Net income $ 3,112 $ 2,659 $ 1,722 453 937 Net income attributable to ONEOK $ 3,035 $ 2,659 $ 1,722 376 937 Diluted EPS $ 5.17 $ 5.48 $ 3.84 (0.31) 1.64 Adjusted EBITDA $ 6,784 $ 5,243 $ 3,620 1,541 1,623 Capital expenditures $ 2,021 $ 1,595 $ 1,202 426 393 49 Table of Contents 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.
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.
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 business and 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.
As part of our goodwill impairment test, we may first assess qualitative factors (including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance) to determine whether it is more likely than not that the fair value of each of our reporting units with goodwill was less than its carrying amount.
As part of our goodwill impairment test, we may first assess qualitative factors (including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance) to determine whether it is more likely than not that the fair value of each of our reporting units was less than its carrying amount.
If an impairment is indicated, we record an impairment loss equal to the difference between the carrying value and the fair value of the long-lived asset. We evaluate equity method investments in unconsolidated affiliates for impairment whenever events or circumstances indicate that there is an other-than-temporary loss in value of the investment.
If an impairment is indicated, we record an impairment loss equal to the difference between the carrying value and the fair value of the long-lived asset group. We evaluate equity method investments in unconsolidated affiliates for impairment whenever events or circumstances indicate that there is an other-than-temporary loss in value of the investment.
The guarantees in place for our and ONEOK Partners’ 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.
These guarantees in place for our and ONEOK Partners’ 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.
See Note B of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of the business combination. Derivatives and Risk-Management Activities - We utilize derivatives to reduce our market-risk exposure to commodity price and interest-rate fluctuations and to achieve more predictable cash flows.
See Note B of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of business combinations. Derivatives and Risk-management Activities - We utilize derivatives to reduce our market-risk exposure to commodity price and interest-rate fluctuations and to achieve more predictable cash flows.
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 repayments, and (d) accounts receivable and payable; and (ii) the volume and cost of inventory and commodity imbalances.
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.
Cost methods estimate the fair value of assets based on the estimated construction cost of the assets, and requires the use of various inputs and assumptions. While we believe we have made reasonable assumptions to estimate the fair value, these assumptions are inherently uncertain.
Cost methods estimate the fair value of assets based on the estimated construction or replacement cost of the assets and requires the use of various inputs and assumptions. While we believe we have made reasonable assumptions to estimate the fair value, these assumptions are inherently uncertain.
See Notes A, F, G and N of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of goodwill and intangible assets, long-lived assets and investments in unconsolidated affiliates.
See Notes A, F, G and O of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of goodwill and intangible assets, long-lived assets and investments in unconsolidated affiliates.
Selected Financial Results and Operating Information for the Year Ended December 31, 2022 vs. 2021 - The consolidated and segment financial results and operating information for the year ended December 31, 2022, compared with the year ended December 31, 2021, are included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2022 Annual Report on Form 10-K, which is available via the SEC’s website at www.sec.gov and our website at www.oneok.com.
Selected Financial Results and Operating Information for the Year Ended Dec. 31, 2023 vs. 2022 - The consolidated and segment financial results and operating information for the year ended Dec. 31, 2023, compared with the year ended Dec. 31, 2022, are included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2023 Annual Report on Form 10-K, which is available via the SEC’s website at www.sec.gov and our website at www.oneok.com.
We do not believe that changes in our fair value estimates of our derivative instruments have a material impact on our results of operations, as the majority of our derivatives are accounted for as effective cash flow hedges.
We do not believe that changes in our fair value estimates of our derivative instruments have a material impact on our results of operations, as the majority of our derivatives are accounted for 60 Table of Contents as effective cash flow hedges.
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 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 $3.5 Billion Credit Agreement, which expires in 2030. An adverse credit rating change alone is not a default under our $3.5 Billion Credit Agreement.
For the fiscal years presented in this Form 10-K, no changes were made to the determinations of useful lives that would have a material effect on the timing of depreciation expense in future periods. 56 T able of Contents See Note F of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of property, plant and equipment.
For the fiscal years presented in this Form 10-K, no 61 Table of Contents changes were made to the determinations of useful lives that would have a material effect on the timing of depreciation expense in future periods. See Note F of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of property, plant and equipment.
The discounted cash flow method utilizes assumptions that include, but are not limited to, estimated future cash flows, discount rates applied to estimated future cash flows, estimated rates of return and estimated customer attrition rates.
The discounted cash flow method utilizes assumptions that include, but are not limited to, estimated future cash flows, commodity margin growth rates, discount rates applied to estimated future cash flows, estimated rates of return and estimated customer attrition rates.
We expect our sources of cash inflows to provide sufficient resources to finance our operations, capital expenditures, quarterly cash dividends, maturities of long-term debt, share repurchases 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.
We expect our sources of cash inflows to provide sufficient resources to finance our operations, capital expenditures, quarterly cash dividends, maturities of long-term debt, share repurchases and contributions to unconsolidated affiliates. We believe we have sufficient liquidity due to our $3.5 Billion Credit Agreement, which expires in February 2030, and access to $1.0 billion available through our “at-the-market” equity program.
(b) - The year ended December 31, 2023, primarily includes transaction costs related to the Magellan Acquisition of $158 million, offset partially by interest income of $49 million and net gains of $41 million on extinguishment of debt related to open market repurchases.
The year ended Dec. 31, 2023, includes transaction costs related to the Magellan Acquisition of $158 million, offset partially by interest income of $49 million and net gains of $41 million on extinguishment of debt related to open market repurchases.
However, if a derivative instrument is ineligible for cash flow hedge accounting or if we fail to appropriately designate it as a cash flow hedge, changes in fair value of the derivative instrument would be recorded currently 55 T able of Contents in earnings.
However, if a derivative instrument is ineligible for cash flow hedge accounting or if we fail to appropriately designate it as a cash flow hedge, changes in fair value of the derivative instrument would be recorded currently in earnings.
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. 53 T able of Contents CASH FLOW ANALYSIS We use the indirect method to prepare our Consolidated Statements of Cash Flows.
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. 58 Table of Contents CASH FLOW ANALYSIS We use the indirect method to prepare our Consolidated Statements of Cash Flows.
Credit Ratings - Our long-term debt credit ratings as of February 20, 2024, 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 BBB F2 Stable Our credit ratings, which are investment grade, may be affected by our leverage, liquidity, credit profile or potential transactions.
Credit Ratings - Our long-term debt credit ratings as of Feb. 17, 2025, 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 BBB F2 Stable Our credit ratings, which are investment grade, may be affected by our leverage, liquidity, credit profile or potential transactions.
As of the date of this report, no shares have been sold through our “at-the-market” equity program. We may manage interest-rate risk through the use of fixed-rate debt, floating-rate debt, Treasury locks and interest-rate swaps. For additional information on our interest-rate swaps, see Note E of the Notes to Consolidated Financial Statements in this Annual Report.
As of Feb. 17, 2025, no shares have been sold through our “at-the-market” equity program. 55 Table of Contents We may manage interest-rate risk through the use of fixed-rate debt, floating-rate debt, Treasury locks and interest-rate swaps. For additional information on our interest-rate swaps, see Note E of the Notes to Consolidated Financial Statements in this Annual Report.
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.
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. See reconciliation of net income to adjusted EBITDA in the “Non-GAAP Financial Measures” subsection.
Our growth strategy is focused on expanding our core business and marketing presence. For a discussion of our capital expenditure financing, see “Capital Expenditures” in the “Liquidity and Capital Resources” section.
Our growth strategy is focused on expanding our core business and marketing presence. 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.
The following table sets forth the changes in cash flows by operating, investing and financing activities for the periods indicated: Years Ended December 31, 2023 2022 2021 ( Millions of dollars ) Total cash provided by (used in): Operating activities $ 4,421 $ 2,906 $ 2,546 Investing activities (6,404) (1,139) (665) Financing activities 2,101 (1,693) (2,259) Change in cash and cash equivalents 118 74 (378) Cash and cash equivalents at beginning of period 220 146 524 Cash and cash equivalents at end of period $ 338 $ 220 $ 146 Operating Cash Flows - Operating cash flows are affected by earnings from our business activities and changes in our operating assets and liabilities.
The following table sets forth the changes in cash flows by operating, investing and financing activities for the periods indicated: Years Ended Dec. 31, 2024 2023 2022 ( Millions of dollars ) Total cash provided by (used in): Operating activities $ 4,888 $ 4,421 $ 2,906 Investing activities (6,612) (6,404) (1,139) Financing activities 2,119 2,101 (1,693) Change in cash and cash equivalents 395 118 74 Cash and cash equivalents at beginning of period 338 220 146 Cash and cash equivalents at end of period $ 733 $ 338 $ 220 Operating Cash Flows - Operating cash flows are affected by earnings from our business activities and changes in our operating assets and liabilities.
For additional information on our and ONEOK Partners’ indebtedness, please see Note H of the Notes to Consolidated Financial Statements in this Annual 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.
For additional information on our indebtedness, please see Note H of the Notes to Consolidated Financial Statements in this Annual Report. Short-term Liquidity - Our principal sources of short-term liquidity consist of cash generated from operating activities, distributions received from our unconsolidated affiliates, proceeds from our commercial paper program and our recently executed $3.5 Billion Credit Agreement.
Dividends - During 2023, we paid common stock dividends totaling $3.82 per share, an increase of 2% compared to the 2022 dividend of $3.74 per share. In February 2024, we paid a quarterly common stock dividend of $0.99 per share ($3.96 per share on an annualized basis), an increase of 3.7% compared with the same quarter in the prior year.
Dividends - During 2024, we paid common stock dividends totaling $3.96 per share, an increase of 3.7% compared to the 2023 dividend of $3.82 per share. In February 2025, we paid a quarterly common stock dividend of $1.03 per share ($4.12 per share on an annualized basis), an increase of 4% compared with the same quarter in the prior year.
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: Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 Financial Results 2023 2022 2021 $ Increase (Decrease) ( Millions of dollars ) NGL and condensate sales $ 13,666 $ 18,329 $ 13,653 (4,663) 4,676 Exchange service and other revenues 559 558 559 1 (1) Transportation and storage revenues 204 180 180 24 — Cost of sales and fuel (exclusive of depreciation and operating costs) (11,592) (16,546) (11,940) (4,954) 4,606 Operating costs, excluding noncash compensation adjustments (637) (549) (499) 88 50 Adjusted EBITDA from unconsolidated affiliates (a) 67 — — 67 — Equity in net earnings from investments (a) — 35 21 (35) 14 Other 778 88 (10) 690 98 Adjusted EBITDA $ 3,045 $ 2,095 $ 1,964 950 131 Capital expenditures $ 818 $ 581 $ 307 237 274 (a) - Beginning in 2023, we updated our calculation methodology of adjusted EBITDA to include adjusted EBITDA from our unconsolidated affiliates which resulted in an additional $9 million of adjusted EBITDA in 2023, and we have not restated prior periods.
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: Years Ended Dec. 31, 2024 vs. 2023 2023 vs. 2022 Financial Results 2024 2023 2022 $ Increase (Decrease) ( Millions of dollars ) NGL and condensate sales $ 14,446 $ 13,666 $ 18,329 780 (4,663) Exchange service and other revenues 514 559 558 (45) 1 Transportation and storage revenues 207 204 180 3 24 Cost of sales and fuel (exclusive of depreciation and operating costs) (11,994) (11,592) (16,546) 402 (4,954) Operating costs, excluding noncash compensation adjustments (728) (637) (549) 91 88 Adjusted EBITDA from unconsolidated affiliates (a) 95 67 — 28 67 Equity in net earnings from investments (a) — — 35 (35) Other 3 778 88 (775) 690 Adjusted EBITDA $ 2,543 $ 3,045 $ 2,095 (502) 950 Capital expenditures $ 987 $ 818 $ 581 169 237 (a) - Beginning in 2023, we updated our calculation methodology of adjusted EBITDA to include adjusted EBITDA from our unconsolidated affiliates, which resulted in an additional $9 million of adjusted EBITDA in 2023, and we have not restated prior periods.
In 2023, we paid common stock dividends totaling $3.82 per share, an increase of 2% compared to the 2022 dividend of $3.74 per share. In February 2024, we paid a quarterly common stock dividend of $0.99 per share ($3.96 per share on an annualized basis), an increase of 3.7% compared with the same quarter in the prior year.
In 2024, we paid common stock dividends totaling $3.96 per share, an increase of 3.7% compared to the 2023 dividend of $3.82 per share. In February 2025, we paid a quarterly common stock dividend of $1.03 per share ($4.12 per share on an annualized basis), an increase of 4% compared with the same quarter in the prior year.
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.
As of the date of this report, the combined financial information of subsidiary issuers and parent guarantors, excluding our ownership of all interest in ONEOK Partners, Magellan and EnLink, reflect no material assets or liabilities or results of operations, apart from guaranteed indebtedness and therefore, we have excluded the summarized financial information for each issuer and guarantor.
Cash Management - At December 31, 2023, we had $338 million of cash and cash equivalents. 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.
For our wholly owned subsidiaries, we use a centralized cash management program that concentrates the cash assets of our wholly owned nonguarantor operating subsidiaries in joint accounts for the purposes of providing financial flexibility and lowering the cost of borrowing, transaction costs and bank fees.
For a discussion of our capital expenditure financing, see “Capital Expenditures” in the “Liquidity and Capital Resources” section. 45 T able of Contents 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: Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 Financial Results 2023 2022 2021 $ Increase (Decrease) ( Millions of dollars ) NGL and condensate sales $ 2,479 $ 3,690 $ 2,821 (1,211) 869 Residue natural gas sales 1,398 2,674 1,484 (1,276) 1,190 Gathering, compression, dehydration and processing fees and other revenue 179 169 156 10 13 Cost of sales and fuel (exclusive of depreciation and operating costs) (2,364) (5,117) (3,226) (2,753) 1,891 Operating costs, excluding noncash compensation adjustments (448) (386) (351) 62 35 Adjusted EBITDA from unconsolidated affiliates (a) 1 — — 1 — Equity in net earnings from investments (a) — 5 4 (5) 1 Other (1) 2 1 (3) 1 Adjusted EBITDA $ 1,244 $ 1,037 $ 889 207 148 Capital expenditures $ 448 $ 445 $ 275 3 170 (a) - Beginning in 2023, we updated our calculation methodology of adjusted EBITDA to include adjusted EBITDA from our unconsolidated affiliates, which resulted in an additional $3 million of adjusted EBITDA in 2023, and we have not restated prior periods.
For a discussion of our capital expenditure financing, see “Capital Expenditures” in the “Liquidity and Capital Resources” section. 50 Table of Contents 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: Years Ended Dec. 31, 2024 vs. 2023 2023 vs. 2022 Financial Results 2024 2023 2022 $ Increase (Decrease) ( Millions of dollars ) NGL and condensate sales $ 3,033 $ 2,479 $ 3,690 554 (1,211) Residue natural gas sales 1,203 1,398 2,674 (195) (1,276) Gathering, compression, dehydration and processing fees and other revenue 353 179 169 174 10 Cost of sales and fuel (exclusive of depreciation and operating costs) (2,600) (2,364) (5,117) 236 (2,753) Operating costs, excluding noncash compensation adjustments (583) (448) (386) 135 62 Adjusted EBITDA from unconsolidated affiliates (a) 3 1 — 2 1 Equity in net earnings from investments (a) — — 5 — (5) Other 75 (1) 2 76 (3) Adjusted EBITDA $ 1,484 $ 1,244 $ 1,037 240 207 Capital expenditures $ 492 $ 448 $ 445 44 3 (a) - Beginning in 2023, we updated our calculation methodology of adjusted EBITDA to include adjusted EBITDA from our unconsolidated affiliates, which resulted in an additional $3 million of adjusted EBITDA in 2023, and we have not restated prior periods.
Changes in commodity prices and sales volumes affect both revenue and cost of sales and fuel, and, therefore, the impact is largely offset between these line items. 2023 vs. 2022 - Adjusted EBITDA increased $207 million, primarily as a result of the following: • an increase of $227 million from higher volumes due primarily to increased producer activity in the Rocky Mountain and Mid-Continent regions, and the impact of winter weather in the Rocky Mountain region in the second and fourth quarters of 2022; and • an increase of $49 million due primarily to higher average fee rates and realized condensate prices, net of hedging, offset partially by lower realized NGL prices, net of hedging; offset by • an increase of $62 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.
Changes in commodity prices and sales volumes affect both revenue and cost of sales and fuel, and, therefore, the impact is largely offset between these line items. 2024 vs. 2023 - Adjusted EBITDA increased $240 million, primarily as a result of the following: • an increase of $200 million due to adjusted EBITDA from EnLink; • an increase of $77 million from higher volumes due primarily to increased production in the Rocky Mountain region; and • an increase of $59 million from the sale of certain non-strategic assets in 2024, primarily in Kansas; offset by • a decrease of $54 million due primarily to lower realized NGL prices, net of hedging, offset partially by higher average fee rates and realized condensate and natural gas prices, net of hedging; and • an increase of $44 million in operating costs due primarily to higher outside services, employee-related costs and materials and supplies expense due primarily to the growth of our operations.
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: Years Ended December 31, 2023 vs. 2022 2022 vs. 2021 Financial Results 2023 2022 2021 $ Increase (Decrease) ( Millions of dollars ) Transportation revenues $ 423 $ 409 $ 413 14 (4) Storage revenues 159 130 78 29 52 Residue natural gas sales and other revenues 41 40 116 1 (76) Cost of sales and fuel (exclusive of depreciation and operating costs) (28) (25) (11) 3 14 Operating costs, excluding noncash compensation adjustments (194) (174) (162) 20 12 Adjusted EBITDA from unconsolidated affiliates (a) 160 — — 160 — Equity in net earnings from investments (a) — 108 97 (108) 11 Other (2) — (3) (2) 3 Adjusted EBITDA $ 559 $ 488 $ 528 71 (40) Capital expenditures $ 228 $ 123 $ 93 105 30 (a) - Beginning in 2023, we updated our calculation methodology of adjusted EBITDA to include adjusted EBITDA from our unconsolidated affiliates which resulted in an additional $42 million of adjusted EBITDA in 2023, and we have not restated prior periods.
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: Years Ended Dec. 31, 2024 vs. 2023 2023 vs. 2022 Financial Results 2024 2023 2022 $ Increase (Decrease) ( Millions of dollars ) Transportation revenues $ 523 $ 423 $ 409 100 14 Storage revenues 161 159 130 2 29 Residue natural gas sales and other revenues 138 41 40 97 1 Cost of sales and fuel (exclusive of depreciation and operating costs) (112) (28) (25) 84 3 Operating costs, excluding noncash compensation adjustments (225) (194) (174) 31 20 Adjusted EBITDA from unconsolidated affiliates (a) 187 160 — 27 160 Equity in net earnings from investments (a) — — 108 — (108) Other 228 (2) — 230 (2) Adjusted EBITDA $ 900 $ 559 $ 488 341 71 Capital expenditures $ 258 $ 228 $ 123 30 105 (a) - Beginning in 2023, we updated our calculation methodology of adjusted EBITDA to include adjusted EBITDA from our unconsolidated affiliates, which resulted in an additional $42 million of adjusted EBITDA in 2023, and we have not restated prior periods. 2024 vs. 2023 - Adjusted EBITDA increased $341 million primarily as a result of the following: • an increase of $227 million due to the interstate natural gas pipeline divestiture; • an increase of $75 million in transportation services due primarily to higher firm and interruptible rates; • an increase of $41 million due to adjusted EBITDA from EnLink; and • an increase of $16 million in adjusted EBITDA from unconsolidated affiliates due primarily to increased volumes on Northern Border; offset by • an increase of $19 million in operating costs due primarily to planned asset maintenance and employee-related costs.
Natural Gas Liquids Capital Projects - Our Natural Gas Liquids segment invests in capital projects to transport, fractionate, store, deliver to market centers and receive NGL supply from shale and other resource development areas.
Natural Gas Liquids Capital Projects - Our Natural Gas Liquids segment invests in capital projects to transport, fractionate, store, deliver to market centers and receive NGL supply from shale and other resource development areas. Our growth strategy is focused on connecting diversified raw feed supply basins to Purity NGL export, petrochemical and refining demand centers.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with Part I, Item 1, Business, our audited Consolidated Financial Statements and the Notes to Consolidated Financial Statements in this Annual Report.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis should be read in conjunction with Part I, Item 1, Business, our audited Consolidated Financial Statements and the Notes to Consolidated Financial Statements in this Annual Report. 46 Table of Contents 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 Annual Report for additional information.
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.
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.
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. 2023 vs. 2022 - Cash flows from operating activities, before changes in operating assets and liabilities increased $1.1 billion for the year ended December 31, 2023, compared with the same period in 2022, due primarily to higher operating income resulting from higher volumes from increased production and higher average fee rates in our Natural Gas Gathering and Processing segment, higher exchange services in our Natural Gas Liquids 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; and insurance proceeds received from the Medford settlement.
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. 2024 vs. 2023 - Cash flows from operating activities, before changes in operating assets and liabilities increased $868 million for the year ended Dec. 31, 2024, compared with the same period in 2023, due primarily to the impact of the Magellan Acquisition in our Refined Products and Crude segment, as discussed in “Financial Results and Operating Information” offset partially by insurance proceeds received from the Medford settlement in 2023.
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.
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 $3.5 Billion Credit Agreement would increase, and a potential loss of access to the commercial paper market could occur.
Years Ended December 31, Operating Information (a) 2023 2022 2021 Natural gas processed ( BBtu/d ) (b) 2,995 2,612 2,515 Average fee rate ( $/MMBtu ) $ 1.17 $ 1.10 $ 1.04 (a) - Includes volumes for consolidated entities only.
Years Ended Dec. 31, Operating Information (a) 2024 2023 2022 Natural gas processed ( BBtu/d ) (b) 3,088 2,995 2,612 Average fee rate ( $/MMBtu ) $ 1.20 $ 1.17 $ 1.10 (a) - Includes volumes for consolidated entities only, and excludes EnLink, as EnLink operating statistics are not meaningful to full-year 2024 operating results.
In prior periods, our calculation included equity in net earnings from investments. This change resulted in an additional $62 million of adjusted EBITDA in 2023, and we have not restated prior periods. Adjusted EBITDA from our unconsolidated affiliates is calculated consistently with the definition above and excludes items such as interest, depreciation, income taxes and other noncash items.
In prior periods, our calculation included equity in net earnings from investments. This change resulted in an additional $62 million of adjusted EBITDA in 2023, and we have not restated prior periods.
The program will terminate upon completion of the repurchase of $2.0 billion of common stock or on January 1, 2029, whichever occurs first. As of February 20, 2024, no shares have been repurchased under the program.
As of Feb. 17, 2025, we have repurchased 1.675 million shares for $172 million under the program with cash on hand. The program will terminate upon completion of the repurchase of $2.0 billion of common stock or on Jan. 1, 2029, whichever occurs first.
Three Months Ended December 31, Operating Information (a) 2023 Refined Products volume shipped ( MBbl/d ) 1,547 Crude oil volume shipped ( MBbl/d ) 808 (a) - Includes volumes for consolidated entities only.
Operating Information (a) Year Ended Dec. 31, 2024 Three Months Ended Dec. 31, 2023 Refined Products volume shipped ( MBbl/d ) 1,512 1,547 Crude oil volume shipped ( MBbl/d ) 783 808 (a) - Includes volumes for consolidated entities only and excludes Medallion and EnLink, as Medallion and EnLink operating statistics are not meaningful to full-year 2024 operating results.
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.
Debt Repayments - In December 2024, we redeemed our $500 million, 4.9% senior notes due March 2025 at 100% of the principal amount, plus accrued and unpaid interest, with cash on hand. In September 2024, we repaid the remaining $484 million of our $500 million, 2.75% senior notes at maturity with cash on hand.
Capital Projects - Our primary capital projects are outlined in the table below: Project Scope Approximate Costs (a) Completion Natural Gas Liquids (In millions) 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 Elk Creek pipeline expansion Increase capacity to 435 MBbl/d out of the Rocky Mountain region $355 First Quarter 2025 Natural Gas Pipelines Viking compressor stations Electrification and replacement of certain compressor assets $110 Completed (a) - Excludes capitalized interest/AFUDC.
Capital Projects - Our primary capital projects are outlined in the table below: Project Scope Approximate Costs (a) Expected Completion Natural Gas Liquids (In millions) MB-6 fractionator 125 MBbl/d NGL fractionator in Mont Belvieu, Texas $550 Completed West Texas NGL pipeline expansion Increase capacity via pipeline looping in the Permian Basin $520 Completed Elk Creek pipeline expansion Increase capacity to 435 MBbl/d out of the Rocky Mountain region $355 Completed (b) Medford fractionator Rebuild our 210 MBbl/d NGL fractionation facility in Medford, Oklahoma $385 (c) Refined Products and Crude Greater Denver pipeline expansion Increase total system capacity by 35 MBbl/d and additional expansion capabilities $480 Mid-2026 (a) - Excludes capitalized interest/AFUDC.
We assess our long-lived assets, including intangible assets, for impairment whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable. An impairment is indicated if the carrying amount of a long-lived asset exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset.
An impairment is indicated if the carrying amount of a long-lived asset group exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset group.
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 risk management assets and liabilities.
This change is due primarily to changes in our legal reserve liability as discussed in Note P of the Notes to Consolidated Financial Statements in this Annual Report, changes in risk management assets and liabilities and changes in accounts receivable resulting from the receipts of cash from counterparties and from inventory, both of which varies from period to period, and with changes in commodity prices.
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. 50 T able of Contents In January 2023, we reached an agreement with our insurers to settle all claims for physical damage and business interruption related to the Medford incident.
LIQUIDITY AND CAPITAL RESOURCES General - Our primary sources of cash inflows are operating cash flows, proceeds from our commercial paper program and our $3.5 Billion Credit Agreement, debt issuances and the issuance of common stock for our liquidity and capital resources requirements.
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. 2023 vs. 2022 - Volumes increased due primarily to increased production in the Permian Basin and Rocky Mountain region and increased ethane volumes in the Mid-Continent region.
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. 52 Table of Contents 2024 vs. 2023 - While exchange services earnings increased, volumes decreased in 2024 due primarily to the expiration of low-margin contracts in the prior year and lower volumes in the Permian Basin, offset partially by increased production in the Rocky Mountain region at higher fee rates.
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: Years Ended December 31, ( Unaudited ) 2023 2022 2021 Reconciliation of net income to adjusted EBITDA (Millions of dollars) Net income $ 2,659 $ 1,722 $ 1,500 Interest expense, net of capitalized interest 866 676 733 Depreciation and amortization 769 626 622 Income taxes 838 528 484 Adjusted EBITDA from unconsolidated affiliates (c) 264 — — Equity in net earnings from investments (c) (202) — — Noncash compensation expense and other 49 68 41 Adjusted EBITDA (a)(b)(c) $ 5,243 $ 3,620 $ 3,380 Reconciliation of segment adjusted EBITDA to adjusted EBITDA Segment adjusted EBITDA: Natural Gas Gathering and Processing $ 1,244 $ 1,037 $ 889 Natural Gas Liquids (a) 3,045 2,095 1,964 Natural Gas Pipelines 559 488 528 Refined Products and Crude (d) 465 — — Other (b) (70) — (1) Adjusted EBITDA (a)(b)(c) $ 5,243 $ 3,620 $ 3,380 (a) - The year ended December 31, 2023, includes $633 million related to the Medford incident, including a settlement gain of $779 million, offset partially by $146 million of third-party fractionation costs.
Market conditions and seasonality can cause volume fluctuations in a single quarter that are not representative of full-year results. 54 Table of Contents 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: Years Ended Dec. 31, ( Unaudited ) 2024 2023 2022 Reconciliation of net income to adjusted EBITDA (Millions of dollars) Net income $ 3,112 $ 2,659 $ 1,722 Interest expense, net of capitalized interest 1,371 866 676 Depreciation and amortization 1,134 769 626 Income taxes 998 838 528 Adjusted EBITDA from unconsolidated affiliates (a) 532 264 — Equity in net earnings from investments (a) (439) (202) — Noncash compensation expense and other 76 49 68 Adjusted EBITDA (a)(b)(c)(d) $ 6,784 $ 5,243 $ 3,620 Reconciliation of segment adjusted EBITDA to adjusted EBITDA Segment adjusted EBITDA: Natural Gas Gathering and Processing $ 1,484 $ 1,244 $ 1,037 Natural Gas Liquids (b) 2,543 3,045 2,095 Natural Gas Pipelines (d) 900 559 488 Refined Products and Crude (e) 1,892 465 — Other (c) (35) (70) — Adjusted EBITDA (a)(b)(c)(d) $ 6,784 $ 5,243 $ 3,620 (a) - 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.
Natural Gas Gathering and Processing Capital Projects - Our Natural Gas Gathering and Processing segment invests in capital projects in NGL-rich areas where we operate.
Natural Gas Gathering and Processing Capital Projects - Our Natural Gas Gathering and Processing segment invests in capital projects in natural gas and NGL-rich areas across key basins where we operate. See “Capital Projects” in the “Recent Developments” section for more information on our capital projects.
As of December 31, 2023, we had no borrowings under our $2.5 Billion Credit Agreement and we are in compliance with all covenants. We had working capital (defined as current assets less current liabilities) deficits of $344 million and $503 million as of December 31, 2023, and December 31, 2022, respectively due primarily to current maturities of long-term debt.
We had working capital (defined as current assets less current liabilities) deficits of $481 million and $344 million as of Dec. 31, 2024, and Dec. 31, 2023, respectively, due primarily to current maturities of long-term debt.
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. 2023 vs. 2022 - Adjusted EBITDA increased $950 million primarily as a result of the following: • an increase of $663 million related to the Medford incident, due to the settlement gain of $779 million, offset partially by $146 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 $303 million in exchange services due primarily to higher volumes across the system, offset partially by narrower commodity price differentials; • an increase of $32 million in earnings from unconsolidated affiliates due primarily to higher volumes delivered to the Overland Pass pipeline and the change in calculation methodology in 2023; • an increase of $20 million due primarily to higher volumes on the ONEOK North System and higher storage revenue; and • an increase of $12 million in optimization and marketing due primarily to higher earnings on sales of Purity NGLs held in inventory; offset by • an increase of $88 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.
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. 2024 vs. 2023 - Adjusted EBITDA decreased $502 million primarily as a result of the following: • a decrease of $695 million related to the Medford incident, due primarily to an insurance settlement gain in 2023 of $779 million, offset partially by $84 million of lower third-party fractionation costs in the current year; • an increase of $77 million in operating costs due primarily to planned asset maintenance, higher employee-related costs and property taxes from the growth of our operations; and • a decrease of $9 million in optimization and marketing due primarily to lower earnings on sales of Purity NGLs held in inventory; offset by • an increase of $184 million in exchange services due primarily to higher volumes in the Rocky Mountain region, higher average fee rates and wider commodity price differentials, offset partially by lower volumes in the Gulf Coast/Permian and Mid-Continent regions, and higher transportation costs; • an increase of $59 million due to adjusted EBITDA from EnLink; and • an increase of $31 million in adjusted EBITDA from unconsolidated affiliates due primarily to higher volumes delivered to the Overland Pass Pipeline.
(b) - Includes volumes we processed at company-owned and third-party facilities. 2023 vs. 2022 - Our natural gas processed volumes increased due primarily to increased producer activity in the Rocky Mountain and Mid-Continent regions and the impact of winter weather in the Rocky Mountain region in the second and fourth quarters of 2022.
(b) - Includes volumes we processed at company-owned and third-party facilities. 2024 vs. 2023 - Our natural gas processed volumes increased due primarily to increased production in the Rocky Mountain region. Our average fee rate increased due primarily to inflation-based escalators in our contracts.
Our capital expenditures are financed typically through operating cash flows and short- and long-term debt. 52 T able of Contents The following table sets forth our capital expenditures, excluding AFUDC, for the periods indicated: Capital Expenditures 2023 2022 2021 ( Millions of dollars ) Natural Gas Gathering and Processing $ 448 $ 445 $ 275 Natural Gas Liquids 818 581 307 Natural Gas Pipelines 228 123 93 Refined Products and Crude (a) 52 — — Other 49 53 22 Total capital expenditures $ 1,595 $ 1,202 $ 697 (a) - Includes capital expenditures for the period September 25, 2023, through December 31, 2023.
The following table sets forth our capital expenditures, excluding the equity portion of AFUDC, for the periods indicated: Capital Expenditures 2024 (a) 2023 2022 ( Millions of dollars ) Natural Gas Gathering and Processing $ 492 $ 448 $ 445 Natural Gas Liquids 987 818 581 Natural Gas Pipelines 258 228 123 Refined Products and Crude (b) 216 52 — Other 68 49 53 Total capital expenditures $ 2,021 $ 1,595 $ 1,202 (a) - Includes capital expenditures for EnLink and Medallion for the period Oct. 15, 2024, and Nov. 1, 2024, through Dec. 31, 2024, respectively.
Please see “Financial Results and Operating Information” for a discussion of operating results. The changes in operating assets and liabilities increased operating cash flows $358 million for the year ended December 31, 2023, compared with a decrease of $58 million for the same period in 2022.
The changes in operating assets and liabilities decreased operating cash flows $43 million for the year ended Dec. 31, 2024, compared with an increase of $358 million for the same period in 2023.
Capital expenditur es increased in 2023 due primarily to capital projects, which includes our MB-6 fractionator and pipeline expansion projects. 47 T able of Contents Years Ended December 31, Operating Information 2023 2022 2021 Raw feed throughput ( MBbl/d ) (a) 1,359 1,237 1,198 Average Conway-to-Mont Belvieu OPIS price differential - ethane in ethane/propane mix ( $/gallon ) $ 0.04 $ 0.04 $ (0.01) (a) - Represents physical raw feed volumes for which we provide transportation and/or fractionation services.
Years Ended Dec. 31, Operating Information 2024 2023 2022 Raw feed throughput ( MBbl/d ) (a) 1,309 1,359 1,237 Average Conway-to-Mont Belvieu Oil Price Information Service price differential - ethane in ethane/propane mix ( $/gallon ) $ 0.01 $ 0.04 $ 0.04 (a) - Represents physical raw feed volumes for which we provide transportation and/or fractionation services, and excludes EnLink, as EnLink operating statistics are not meaningful to full-year 2024 operating results.
Selected Financial Results and Operating Information - The following tables set forth certain selected financial results and operating information for our Refined Products and Crude segment for the period subsequent to the closing of the Magellan Acquisition: September 25 through December 31, 2023 Financial Results ( Millions of dollars ) Product sales $ 502 Transportation revenues 392 Storage, terminals and other revenues 177 Cost of sales and fuel (exclusive of depreciation and operating costs) (450) Operating costs, excluding noncash compensation adjustments (192) Adjusted EBITDA from unconsolidated affiliates 36 Adjusted EBITDA $ 465 Capital expenditures $ 52 See reconciliation of net income to adjusted EBITDA in the “Non-GAAP Financial Measures” section. 49 T able of Contents 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.
Selected Financial Results and Operating Information - The following tables set forth certain selected financial results and operating information for our Refined Products and Crude segment for the periods indicated: Financial Results Year Ended Dec. 31, 2024 Sept. 25 through Dec. 31, 2023 (a) ( Millions of dollars ) Product sales $ 2,258 $ 502 Transportation revenues 1,539 392 Storage, terminals and other revenues 663 177 Cost of sales and fuel (exclusive of depreciation and operating costs) (1,949) (450) Operating costs, excluding noncash compensation adjustments (857) (192) Adjusted EBITDA from unconsolidated affiliates 247 36 Other (9) — Adjusted EBITDA $ 1,892 $ 465 Capital expenditures $ 216 $ 52 (a) - T he year ended Dec. 31, 2023, includes results subsequent to the Magellan Acquisition.
For additional information on our $2.5 Billion Credit Agreement, see Note H of the Notes to Consolidated Financial Statements in this Annual Report. 51 T able of Contents 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.
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.
Capital expenditures increased due primarily to our capital projects, including our MB-6 fractionator, NGL pipeline expansion projects and the Viking compression project. Additional information regarding our financial results and operating information is provided in the following discussion for each of our four segments.
Additional information regarding our financial results and operating information is provided in the following discussion for each of our segments.
We may have working capital deficits in future periods as our long-term debt becomes current. We do not expect a working capital deficit of this nature to have a material adverse impact to our cash flows or operations.
We may have working capital deficits in future periods as our long-term debt becomes current.
Capital Expenditures - We proactively monitor lead times on materials and equipment used in constructing capital projects, and we enter into procurement agreements for long-lead items for potential projects to plan for future growth.
We also have cash commitments related to transportation, storage and other commercial contracts, as well as our financial and physical derivative obligations, which we expect to fund with cash from operations. 57 Table of Contents Capital Expenditures - We proactively monitor lead times on materials and equipment used in constructing capital projects, and we enter into procurement agreements for long-lead items for potential projects to plan for future growth.
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.
The net proceeds, after deducting underwriting discounts, commissions and offering expenses, were $6.9 billion.
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.
In December 2024, we redeemed our $500 million, 4.9% senior notes due March 2025 at 100% of the principal amount, plus accrued and unpaid interest, with cash on hand. Subsequent to the EnLink Controlling Interest Acquisition, we repaid $465 million of borrowings under the EnLink Revolving Credit Facility with cash on hand.
We expect our cash flows from operations to continue to sufficiently fund our cash dividends.
For the year ended Dec. 31, 2024, our cash flows from operations exceeded dividends paid by $2.6 billion. We expect our cash flows from operations to continue to sufficiently fund our cash dividends.
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.
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 $800 million, 5.85% senior notes due 2064.
Share Repurchase Program - In January 2024, our Board of Directors authorized a share repurchase program to buy up to $2.0 billion of our outstanding common stock and targets the program to be largely utilized over the next four years.
Share Repurchase Program - In January 2024, our Board of Directors authorized a share repurchase program to buy up to $2.0 billion of our outstanding common stock. We expect shares to be acquired from time to time in open-market transactions or through privately negotiated transactions at our discretion, subject to market conditions and other factors.
Share Repurchase Program - In January 2024, our Board of Directors authorized a share repurchase program to buy up to $2.0 billion of our outstanding common stock and targets the program to be largely utilized over the next four years.
Share Repurchase Program - In January 2024, our Board of Directors authorized a share repurchase program to buy up to $2.0 billion of our outstanding common stock. We expect shares to be acquired from time to time in open-market transactions or through privately negotiated transactions at our discretion, subject to market conditions and other factors.
Capital expenditures increased in 2023, compared with 2022, due primarily to our capital projects, including our MB-6 fractionator, NGL pipeline expansion projects and the Viking compression project. See discussion of our announced capital projects in the “Recent Developments” section. We expect total capital expenditures, excluding AFUDC and capitalized interest, of $1.75-$1.95 billion in 2024.
See discussion of our announced capital projects in the “Recent Developments” section. We expect total capital expenditures, excluding AFUDC and capitalized interest, of $2.8 - $3.2 billion in 2025.
Our dividend growth is primarily due to the increase in cash flows resulting from the growth of our operations. 43 T able of Contents FINANCIAL RESULTS AND OPERATING INFORMATION How We Evaluate Our Operations Management uses a variety of financial and operating metrics to analyze our performance.
Our dividend growth is due primarily to the increase in cash flows resulting from the growth of our operations.
In 2023, we connected two third-party natural gas processing plants 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.
See “Capital Projects” in the “Recent Developments” section for more information on our capital projects. 51 Table of Contents In 2024, we connected one third-party natural gas processing plant in the Permian Basin to our system, and two third-party natural gas processing plants previously connected to our system were expanded, one in the Permian Basin and one in the Mid-Continent region.
Cash Flow Analysis for the Year Ended December 31, 2022 vs. 2021 - The cash flow analysis for the year ended December 31, 2022, compared with the year ended December 31, 2021, is included in Part II, Item 7, Management’s 54 T able of Contents Discussion and Analysis of Financial Condition and Results of Operations of our 2022 Annual Report on Form 10-K, which is available via the SEC’s website at www.sec.gov and our website at www.oneok.com.
Financing Cash Flows 2024 vs. 2023 - Cash provided by financing activities for the year ended Dec. 31, 2024, increased $18 million compared with the same period in 2023, due primarily to the increase in issuance of senior unsecured notes associated with acquisitions, offset by increased repayments of long-term debt in 2024, including the repayment of the Viking and Guardian Term Loan Agreements and the outstanding borrowings on the EnLink Revolving Credit facility and the EnLink AR Facility, increased dividends paid in 2024 and the repurchase of EnLink’s Series C Preferred Units. 59 Table of Contents Cash Flow Analysis for the Year Ended Dec. 31, 2023 vs. 2022 - The cash flow analysis for the year ended Dec. 31, 2023, compared with the year ended Dec. 31, 2022, is included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2023 Annual Report on Form 10-K, which is available via the SEC’s website at www.sec.gov and our website at www.oneok.com.
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.
Debt Issuances - In September 2024, we completed an underwritten public offering of $7.0 billion senior unsecured notes consisting of senior notes of the following tenors: $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 $800 million, 5.85% senior notes due 2064.
For additional information on the Magellan Acquisition, see Part II, Item 8, Note B of the Notes to Consolidated Financial Statements in this Annual Report. See Part 1, Item 1A “Risk Factors” for further discussion of risks related to the Magellan Acquisition.
We expect to add connections to our Houston-based assets beginning in mid-2025 through the end of 2025. For additional information on our most recent acquisitions and divestiture, see Part II, Item 8, Note B of the Notes to Consolidated Financial Statements in this Annual Report.
The program will terminate upon completion of the repurchase of $2.0 billion of common stock or on January 1, 2029, whichever occurs first. As of February 20, 2024, no shares have been repurchased under the program.
We expect any purchases to be funded by cash on hand, cash flow from operations and short-term borrowings. The program will terminate upon completion of the repurchase of $2.0 billion of common stock or on Jan. 1, 2029, whichever occurs first. As of Feb. 17, 2025, we repurchased 1.675 million shares for $172 million under the program.
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 - In December 2023, ONEOK assumed the debt obligations of Magellan under its previous debt indentures and Magellan provided a guarantee of the outstanding notes.
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. In December 2024, we entered into an agreement to provide revolving unsecured loans to EnLink through a promissory note at an interest rate of 4.85% at Dec. 31, 2024.
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 Annual Report for additional information. Magellan Acquisition - On September 25, 2023, we completed the Magellan Acquisition.
Diluted EPS decreased due primarily to the impact of the insurance settlement gain in 2023 related to the Medford incident . Capital expenditures increased due primarily to our capital projects. Please refer to the “Recent Developments” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report for additional information on our capital projects.
These increases were offset partially by higher income taxes and higher interest expense due to interest costs resulting from the Magellan Acquisition, which include acquired debt balances, our August 2023 $5.25 billion notes offering and commitment fees associated with our undrawn and terminated 364-day bridge loan facility.
Net income increased due primarily to the items discussed above and higher equity in net earnings from investments, offset partially by higher interest expense due to higher debt balances resulting from the August 2023 $5.25 billion notes offering, the September 2024 $7.0 billion notes offering and the acquired debt balances from both the Magellan Acquisition in 2023 and the EnLink Controlling Interest Acquisition in 2024.
Capital expenditur es increased in 2023 due primarily to capital projects, including the Viking compression project. Years Ended December 31, Operating Information (a) 2023 2022 2021 Natural gas transportation capacity contracted ( MDth/d ) 7,743 7,428 7,395 Transportation capacity contracted 96 % 94 % 95 % (a) - Includes volumes for consolidated entities only.
Years Ended Dec. 31, Operating Information (a) 2024 2023 2022 Natural gas transportation capacity contracted ( MDth/d ) 8,176 7,743 7,428 Transportation capacity contracted 97 % 96 % 94 % (a) - Includes volumes for consolidated entities only and excludes EnLink, as EnLink operating statistics are not meaningful to full-year 2024 operating results. 2024 vs. 2023 - Natural gas transportation capacity contrac ted increased due primarily to the completion of expansion projects on our assets. 53 Table of Contents Refined Products and Crude Capital Projects - Our Refined Products and Crude segment invests in capital projects to transport, store and distribute Refined Products and crude oil primarily throughout the central United States.
In addition, we assumed Magellan's debt at the fair value of $4.0 billion. We issued approximately 135 million shares of common stock, 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.
We issued 41 million shares of common stock, with a fair value of $4.0 billion as of the closing date of the EnLink Acquisition. EnLink is now a wholly owned subsidiary.
(c) - 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. In prior periods, our calculation included equity in net earnings from investments.
In prior periods, our calculation included equity in net earnings from investments. This change resulted in an additional $62 million of adjusted EBITDA in 2023, and we have not restated prior periods.
Investing Cash Flows 2023 vs. 2022 - Cash used in investing activities for the year ended December 31, 2023, increased $5.3 billion, compared with the same period in 2022, due primarily to the $5.0 billion of cash paid for the Magellan Acquisition.
Investing Cash Flows 2024 vs. 2023 - Cash used in investing activities for the year ended Dec. 31, 2024, increased $208 million, compared with the same period in 2023, due primarily to cash paid to acquire EnLink and Medallion, capital expenditures related to our capital projects in 2024 and insurance proceeds received from the Medford settlement in 2023, offset partially by proceeds received from the interstate natural gas pipeline divestiture.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+2 added−2 removed15 unchanged
Biggest changeIn the second quarter of 2023, we entered into $1.1 billion of Treasury locks to hedge the variability of interest payments on a portion of our forecasted debt issuances. In the third quarter of 2023, we settled all of our Treasury locks related to our underwritten public offering of $5.25 billion senior unsecured notes associated with the Magellan Acquisition.
Biggest changeIn the same quarter, we settled all of our $1.5 billion Treasury locks related to our underwritten public offering of $7.0 billion senior unsecured notes associated with the EnLink Controlling Interest Acquisition and Medallion Acquisition. All of our Treasury locks were designated as cash flow hedges.
Natural Gas Gathering and Processing - Our Natural Gas Gathering and Processing segment derives services revenue primarily from major and independent crude oil and natural gas producers, which include both large integrated and independent exploration and production companies. In this segment, our downstream commodity sales customers are primarily utilities, large industrial companies, marketing companies and our NGL affiliate.
Natural Gas Gathering and Processing - Our Natural Gas Gathering and Processing segment derives fees for services primarily from major and independent crude oil and natural gas producers, which include both large integrated and independent exploration and production companies. In this segment, our downstream commodity sales customers are primarily utilities, large industrial companies, marketing companies and our NGL affiliate.
In 2023 and 2022, approximately 90% of our revenues in this segment were from customers rated investment-grade by S&P, approved through comparable internal counterparty analysis or were secured by letters of credit or other collateral. In addition, the majority of our Natural Gas Pipelines segment’s pipeline tariffs provide us the ability to require security from shippers.
In 2024, excluding EnLink, and 2023, approximately 90% of our revenues in this segment were from customers rated investment grade by S&P, approved through comparable internal counterparty analysis or were secured by letters of credit or other collateral. In addition, the majority of our Natural Gas Pipelines segment’s pipeline tariffs provide us the ability to require security from shippers.
Actual gains and losses may differ from estimates due to actual fluctuations in market prices, as well as changes in our commodity derivative portfolio during the year. INTEREST-RATE RISK We are exposed to interest-rate risk through borrowings under our $2.5 Billion Credit Agreement, commercial paper program, term loan agreements and long-term debt issuances.
Actual gains and losses may differ from estimates due to actual fluctuations in market prices, as well as changes in our commodity derivative portfolio during the year. INTEREST-RATE RISK We are exposed to interest-rate risk through borrowings under our $3.5 Billion Credit Agreement, commercial paper program and long-term debt issuances.
We also earn sales revenue on the downstream sales of Purity NGLs. In 2023 and 2022, approximately 85% of this segment’s commodity sales were made to customers rated investment-grade by S&P, approved through comparable internal counterparty analysis or were secured by letters of credit or other collateral.
We also earn sales revenue on the downstream sales of Purity NGLs. In 2024, excluding EnLink, and 2023, approximately 90% and 85%, respectively of this segment’s commodity sales were made to customers rated investment-grade by S&P, approved through comparable internal counterparty analysis or were secured by letters of credit or other collateral.
The following table presents the effect a hypothetical 10% change in the underlying commodity prices would have on the estimated fair value of our commodity derivative instruments as of the dates indicated: Commodity Contracts December 31, 2023 December 31, 2022 ( Millions of dollars ) Refined Products, crude oil and NGLs $ 67 $ 35 Natural gas 5 18 Total change in estimated fair value of commodity contracts $ 72 $ 53 Our sensitivity analysis represents an estimate of the reasonably possible gains and losses that would be recognized on our commodity derivative contracts assuming hypothetical movements in future market prices and is not necessarily indicative of actual results that may occur.
The following table presents the effect a hypothetical 10% change in the underlying commodity prices would have on the estimated fair value of our commodity derivative instruments as of the dates indicated: Commodity Contracts Dec. 31, 2024 Dec. 31, 2023 ( Millions of dollars ) Refined Products, crude oil and NGLs $ 61 $ 67 Natural gas 9 5 Total change in estimated fair value of commodity contracts $ 70 $ 72 Our sensitivity analysis represents an estimate of the reasonably possible gains and losses that would be recognized on our commodity derivative contracts assuming hypothetical movements in future market prices and is not necessarily indicative of actual results that may occur.
In 2023 and 2022, approximately 90% and 95%, respectively, of the downstream commodity sales in our Natural Gas Gathering and Processing segment were made to customers rated investment-grade by S&P, approved through comparable internal counterparty analysis or were secured by letters of credit or other collateral.
In 2024, excluding EnLink, and 2023, approximately 85% and 90%, respectively, of the downstream commodity sales in our Natural Gas Gathering and Processing segment were made to customers rated investment-grade by S&P, approved through comparable internal counterparty analysis or were secured by letters of credit or other collateral.
In the fourth quarter of 2023, approximately 70% of our revenues in this segment were from customers rated investment grade by S&P, approved through comparable internal counterparty analysis or were secured by letters of credit, liens, or other collateral. 58 T able of Contents
In 2024, excluding EnLink and Medallion, and the fourth quarter of 2023, approximately 70% of our revenues in this segment were from customers rated investment-grade by S&P, approved through comparable internal counterparty analysis or were secured by letters of credit, liens, or other collateral. 63 Table of Contents
Certain of our counterparties may be impacted by a relatively low commodity price environment and could experience financial problems, which could result in nonpayment and/or nonperformance, which could impact adversely our results of operations.
Certain of our counterparties may be impacted by a relatively low commodity price environment and could experience financial problems, which could result in nonpayment and/or nonperformance, which could impact adversely our results of operations. As a result of our recent acquisitions, we now transact with the counterparties of EnLink and Medallion.
At both December 31, 2023, and December 31, 2022, we had no outstanding Treasury lock agreements. Interest-rate swaps are agreements to exchange interest payments at some future point based on specified notional amounts.
At Dec. 31, 2024, and Dec. 31, 2023, we had no outstanding Treasury lock agreements. Interest-rate swaps are agreements to exchange interest payments at some future point based on specified notional amounts. EnLink previously entered into $400 million interest rate swaps associated with the EnLink Revolving Credit Facility and the EnLink AR Facility.
Future increases in commercial paper rates or bond rates could expose us to increased interest costs on future borrowings.
Future increases in commercial paper rates or bond rates could expose us to increased interest 62 Table of Contents costs on future borrowings. We may manage interest-rate risk through the use of fixed-rate debt, floating-rate debt, Treasury locks and interest-rate swaps.
We may manage interest-rate risk through the use of fixed-rate debt, floating-rate debt, Treasury locks and interest-rate swaps. 57 T able of Contents Treasury locks are agreements to pay the difference between the benchmark Treasury rate and the rate that is designated in the terms of the agreement.
Treasury locks are agreements to pay the difference between the benchmark Treasury rate and the rate that is designated in the terms of the agreement. In the third quarter of 2024, we entered into $1.5 billion of Treasury locks to hedge the variability of interest payments on a portion of our forecasted debt issuances.
Removed
At December 31, 2022, we had forward-starting interest-rate swaps with notional amounts totaling $0.4 billion to hedge the variability of interest payments on a portion of our forecasted debt issuances.
Added
In December 2024, EnLink terminated the $400 million interest rate swaps upon repayment of outstanding amounts under the EnLink Revolving Credit Facility and termination of the EnLink AR Facility. At Dec. 31, 2024, and Dec. 31, 2023, we had no outstanding interest-rate swap agreements.
Removed
In the third quarter of 2023, we settled all of our $0.4 billion forward-starting interest-rate swaps related to our underwritten public offerings of $5.25 billion senior unsecured notes associated with the Magellan Acquisition. At December 31, 2023, we had no outstanding forward-starting interest-rate swaps.
Added
A substantial portion of EnLink and Medallion counterparties are rated investment-grade by S&P or provide a letter of credit or other collateral.

Other OKE 10-K year-over-year comparisons