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What changed in Oneok's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Oneok's 2022 and 2023 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 2023 report.

+501 added−431 removedSource: 10-K (2024-02-27) vs 10-K (2023-02-28)

Top changes in Oneok's 2023 10-K

501 paragraphs added · 431 removed · 310 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

125 edited+83 added−48 removed60 unchanged
Biggest changeHogan 58 2022 to present Senior Vice President, Chief Human Resources Officer, ONEOK Senior Vice President, Chief Human Resources Officer 2017 to 2022 Senior Vice President, Human Resources, Hormel Foods 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. 21 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, 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.
Biggest changeINFORMATION 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.
Firm storage contracts typically have terms longer than one year. • Park-and-loan service - An interruptible storage service offered to customers providing the ability to park (inject) or loan (withdraw) natural gas into or out of our storage, typically for monthly or seasonal terms.
Our firm storage contracts typically have terms longer than one year. • Park-and-loan service - An interruptible storage service offered to customers providing the ability to park (inject) or loan (withdraw) natural gas into or out of our storage, typically for monthly or seasonal terms.
Demand for NGLs and the ability of natural gas processors to successfully and economically sustain their operations affect the volume of unfractionated NGLs produced by natural gas processing plants, thereby affecting the demand for NGL gathering, transportation and fractionation services.
Demand for NGLs and the ability of natural gas processors to sustain their operations successfully and economically affect the volume of unfractionated NGLs produced by natural gas processing plants, thereby affecting the demand for NGL gathering, transportation and fractionation services.
Unconsolidated Affiliates - Our Natural Gas Pipelines segment includes the following unconsolidated affiliates: • 50% ownership interest in Northern Border, which owns a FERC-regulated interstate pipeline that transports natural gas from the Montana-Saskatchewan border near Port of Morgan, Montana, and the Williston Basin in North Dakota to a terminus near North Hayden, Indiana. • 50% ownership interest in Roadrunner, a bidirectional pipeline, which has the capacity to transport 570 MMcf/d of natural gas from the Permian Basin in West Texas to the Mexican border near El Paso, Texas, and has capacity to transport approximately 1.0 Bcf/d of natural gas from the Delaware Basin to the Waha area.
Unconsolidated Affiliates - Our Natural Gas Pipelines segment includes the following unconsolidated affiliates: • 50% ownership interest in Northern Border, which owns a FERC-regulated interstate pipeline that transports natural gas from the Montana-Saskatchewan border near Port of Morgan, Montana, and the Williston Basin in North Dakota to a terminus near North Hayden, Indiana. • 50% ownership interest in Roadrunner, a bidirectional pipeline, which has the capacity to transport 570 MMcf/d of natural gas from the Permian Basin in West Texas to the Mexican border near El Paso, Texas, and has capacity to transport approximately 1.0 Bcf/d of natural gas from the Delaware Basin to the Waha Hub area.
In early 2023, we introduced a Racial Inclusion Collective Resource Group that combines our legacy race- and ethnicity-focused BRGs, along with new resources and support for our Asian-American and Pacific Islander employees and allies, into a single organization to facilitate collaboration on topics relevant to all groups while reserving opportunities for more identity-focused programming where appropriate.
In early 2023, we introduced a Racial Inclusion Collective Resource Group that combines our legacy race- and ethnicity-focused business resource groups (BRGs), along with new resources and support for our Asian-American and Pacific Islander employees and allies, into a single organization to facilitate collaboration on topics relevant to all groups while reserving opportunities for more identity-focused programming where appropriate.
In September 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. 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.
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. 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.
Our intrastate pipeline and storage companies include : • ONEOK Gas Transportation, which transports natural gas throughout the state of Oklahoma and has access to the major natural gas production areas in the Mid-Continent region, which include the SCOOP and STACK areas and the Cana-Woodford Shale, Woodford Shale, Springer Shale, Meramec, Granite Wash and Mississippian Lime formations.
Our intrastate pipeline and storage companies primarily include : • ONEOK Gas Transportation, which transports natural gas throughout the state of Oklahoma and has access to the major natural gas production areas in the Mid-Continent region, which include the SCOOP and STACK areas and the Cana-Woodford Shale, Woodford Shale, Springer Shale, Meramec, Granite Wash and Mississippian Lime formations.
Demand for butanes and natural gasoline, which are primarily used by the refining industry as blending stocks for motor fuel, denaturant for ethanol and diluents for crude oil, are also subject to some variability during seasonal periods when certain government restrictions on motor fuel blending products change.
Demand for butanes and natural gasoline, which are used by the refining industry as blending stocks for motor fuel, denaturant for ethanol and diluents for crude oil, are also subject to some variability during seasonal periods when certain government restrictions on motor fuel blending products change.
Progress to date on our goal has been accomplished through routine capital-growth projects and asset optimizations that were primarily performed for operational improvements that inherently improved our emissions profile. We continue to anticipate several potential pathways toward achieving our emissions reduction target.
Progress to date on our goal has been accomplished through routine capital projects and asset optimizations that were primarily performed for operational improvements that inherently improved our emissions profile. We continue to anticipate several potential pathways toward achieving our emissions reduction target.
In Oklahoma, natural gas storage operations are not subject to rate regulation by the state, and we have market-based rate authority from the FERC for certain types of services. See further discussion in the “Regulatory, Environmental and Safety Matters” section.
In Oklahoma, natural gas storage operations are not subject to rate regulation by the state, and we have market-based rate authority from the FERC for certain types of intrastate services. See further discussion in the “Regulatory, Environmental and Safety Matters” section.
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 refined petroleum 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 FERC-regulated tariffs.
Our and our competitors’ infrastructure projects may affect commodity prices and could displace supply volumes from the Mid-Continent and Rocky Mountain regions and the Permian Basin where our assets are located. We believe our assets are located strategically, connecting diverse supply areas to market centers.
Our and our competitors’ infrastructure projects may affect commodity prices and could displace supply volumes from the Mid-Continent and Rocky Mountain regions and the Permian Basin where our assets are located. We believe our assets are located strategically, connecting diverse supply areas to market and demand centers.
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.
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.
While compliance with the security directives is utilizing significant internal and external resources, we do not expect it to have a material impact on our results of operations, financial position or cash flows. HUMAN CAPITAL The long-term sustainability of our business is dependent on our continued ability to maintain a highly engaged workforce.
While compliance with the security directives requires significant internal and external resources, we do not expect it to have a material impact on our results of operations, financial position or cash flows. HUMAN CAPITAL The long-term sustainability of our business is dependent on our continued ability to maintain a highly engaged workforce.
For natural gas and natural gas gathering pipelines, the new proposed regulations became known as “the Mega Rule.” Due to the large number of rules being considered, PHMSA partitioned the new rule-making into three sections. The first section of rules was finalized and published in 2019 in the Federal Register and became effective in July 2020.
For natural gas and natural gas gathering pipelines, the new proposed regulations became known as “the Mega Rule.” Due to the large number of rules being considered, PHMSA partitioned the new rulemaking into three sections. The first section of rules was finalized and published in 2019 in the Federal Register and became effective in July 2020.
Each BRG’s purpose is to promote the attraction, development, motivation and retention of members of traditionally underrepresented groups in our industry and workplace in an effort to drive positive business outcomes. A key factor in the success of our BRGs is the active participation by officer-level executive sponsors and allies from outside the BRG’s underrepresented populations.
The purpose of these groups is to promote the attraction, development, motivation and retention of members of traditionally underrepresented groups in our industry and workplace in an effort to drive positive business outcomes. A key factor in the success of our BRGs is the active participation by officer-level executive sponsors and allies from outside the BRG’s underrepresented populations.
Additional benefits provided for the welfare of our employees include, among others, life insurance and long-term disability plans, health and dependent care flexible spending accounts, fertility benefits, disease prevention and management programs and full pay while on bereavement, military or personal and family care leave.
Additional benefits available for the welfare of our employees include, among others, life insurance and long-term disability plans, health and dependent care flexible spending accounts, fertility benefits, disease prevention and management programs and full pay while on bereavement, military or personal and family care leave.
It has access to major natural gas producing formations in the Texas Panhandle, including the Granite Wash formation and Delaware and Midland Basins in the Permian Basin. ONEOK WesTex Transmission is connected to our ONEOK Texas Gas Storage storage fields, which provide 5 Bcf of working gas storage capacity.
It has access to major natural gas producing formations in the Texas Panhandle, including the Granite Wash formation and Delaware and Midland Basins in the Permian Basin. ONEOK WesTex Transmission is connected to our ONEOK Texas Gas Storage facilities, which provide 5 Bcf of working gas storage capacity.
Regulated activities include, but are not limited to, those involving air emissions, storm water and wastewater discharges, handling and disposal of solid and hazardous wastes, 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 and pipeline and facility construction.
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.
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 Powder River Basin is primarily located in Wyoming, which includes the NGL-rich Niobrara Shale and Frontier and Turner formations where we provide gathering and processing services to customers in the eastern portion of the state.
The Powder River Basin is primarily located in Wyoming, which includes the NGL-rich Niobrara, Frontier, Turner and Mowry formations where we provide gathering and processing services to customers in the eastern portion of the state.
The thir d section of the Mega Rule established new regulations for certain gas gathering lines, which were formerly unregulated, and was published in November 2021 and became effective in May 2022.
The thir d section of the Mega Rule establishes new regulations for certain gas gathering lines, which were formerly unregulated, and was published in November 2021 and became effective in May 2022.
Hulse III 59 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 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.
This type of contract represented 73% of supply volumes in this segment for 2022 and 2021. • 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 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.
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 NGLs produced by us as if all of these products were combusted, even if they are used otherwise.
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.
Customers - Our Natural Gas Gathering and Processing and Natural Gas Liquids 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 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.
The factors that typically affect our ability to compete for natural gas and NGL supply are: • quality of services provided; • producer drilling activity; • proceeds remitted and/or fees charged under our contracts; • proximity of our assets to natural gas and NGL 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 and NGLs that exist in each pipeline system, plant, fractionator and storage location; • the petrochemical industry’s level of capacity utilization and feedstock requirements; • current and forward natural gas and NGL 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 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 second section of the PHMSA Gas Mega Rule, which was published in August 2022 and will be effective in May 2023, focuses on natural gas transmission pipelines and includes enhancements to management requirements for risk and integrity assessments, guidance for corrosion and mitigation timelines, pipeline inspections following extreme weather events and repair requirements for HCAs and non-HCAs.
The second section of the Mega Rule, which was published in August 2022 and became effective in May 2023, focuses on natural gas transmission pipelines and includes enhancements to management requirements for risk and integrity assessments, guidance for corrosion and mitigation timelines, pipeline inspections following extreme weather events and repair requirements for HCAs and non-HCAs.
Norton II 63 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 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.
Spears 43 2022 to present Senior Vice President and Chief Accounting Officer, Finance and Tax, ONEOK Senior Vice President and Chief Accounting Officer, Finance and Tax 2019 to 2021 Vice President and Chief Accounting Officer, ONEOK 2015 to 2019 Director, SEC Reporting, ONEOK Scott D.
Spears 44 2022 to present Senior Vice President and Chief Accounting Officer, Finance and Tax, ONEOK Senior Vice President and Chief Accounting Officer, Finance and Tax 2019 to 2021 Vice President and Chief Accounting Officer, ONEOK 2015 to 2019 Director, SEC Reporting, ONEOK Scott D.
GHG emission reductions as reported may be modified, updated, changed or supplemented based on available information. For the years ended December 31, 2022, 2021 and 2020, we did not have any 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. 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.
ONEOK Gas Transportation is connected to our ONEOK Gas Storage storage fields in Oklahoma, which provide 46 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 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; 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.
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.
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
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. 20 Table of Contents We value education and assist eligible employees with the expense of furthering their education in job-related fields, including up to $5,000 per year in qualifying tuition expenses.
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.
Low personal safety incident rates alone cannot prevent a large-scale incident, which is why we continue to focus on enhancing our Environmental, Safety and Health management systems and process safety programs, such as key risk/key control identification and knowledge sharing. We endeavor to operate our assets safely, reliably and in an environmentally responsible manner.
Low personal safety incident rates alone cannot prevent a large-scale incident, which is why we continue to focus on enhancing our Environmental, Safety and Health 23 T able of Contents management systems and process safety programs, such as key risk/key control identification and knowledge sharing. We endeavor to operate our assets safely, reliably and in an environmentally responsible manner.
The target represents a 30% 6 Table of Contents 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 December 31, 2019.
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 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.
In 2023, we anticipate reduction in our emissions to be primarily a result of improved methane management practices and system optimization that will not require material capital expenditures. We do not anticipate purchasing or selling carbon credits or offsets in 2023.
In 2024, we anticipate reduction in our emissions toward our target to be primarily a result of improved methane management practices and system optimization that will not require material capital expenditures. We do not anticipate purchasing or selling carbon credits or offsets in 2024.
Our interstate pipeline companies include: • Guardian, which interconnects with several pipelines at the Chicago Hub near Joliet, Illinois, and with local natural gas distribution and electric generation companies in Wisconsin; • Midwestern Gas Transmission, which is a bidirectional system that interconnects with Tennessee Gas Transmission Company’s pipeline near Portland, Tennessee, and with multiple interstate pipelines that have access to both the Utica Shale and the Marcellus Shale, and multiple interstate pipelines at the Chicago Hub near Joliet, Illinois; • Viking, which is a bidirectional system that interconnects with a TC Energy Corporation pipeline at the United States border near Emerson, Canada, and ANR Pipeline Company near Marshfield, Wisconsin; and • OkTex Pipeline, which has interconnections with several pipelines in Oklahoma, Texas and New Mexico. 13 Table of Contents Property - Our Natural Gas Pipelines segment includes the following assets: • 5,100 miles of state-regulated intrastate transmission pipelines with transportation capacity of 4.4 Bcf/d; • 1,500 miles of FERC-regulated interstate natural gas pipelines with 3.5 Bcf/d of transportation capacity; and • six underground natural gas storage facilities with 53.3 Bcf of total active working natural gas storage capacity.
Our interstate pipeline companies include: • Guardian, which interconnects with several pipelines at the Chicago Hub near Joliet, Illinois, and with local natural gas distribution and electric generation companies in Wisconsin; • Midwestern Gas Transmission, which is a bidirectional system that interconnects with Tennessee Gas Transmission Company’s pipeline near Portland, Tennessee, and with multiple interstate pipelines that have access to both the Utica Shale and the Marcellus Shale, and multiple interstate pipelines at the Chicago Hub near Joliet, Illinois; • Viking, which is a bidirectional system that interconnects with TC Energy Corporation’s Canadian Mainline System at the United States border near Emerson, Canada, and ANR Pipeline Company near Marshfield, Wisconsin; and • OkTex Pipeline, which has interconnections with several pipelines in Oklahoma, Texas and New Mexico. 13 T able of Contents Property - Our Natural Gas Pipelines segment includes the following wholly owned assets: • 5,100 miles of state-regulated intrastate transmission pipelines with transportation capacity of 4.5 Bcf/d; • 1,500 miles of FERC-regulated interstate natural gas pipelines with 3.7 Bcf/d of transportation capacity; and • six underground natural gas storage facilities with 57.4 Bcf of total active working natural gas storage capacity.
Under the firm service contract, the customer generally is guaranteed access to the capacity they reserve. • Interruptible service - Under interruptible service transportation agreements, the customer may utilize available capacity after firm service requests are satisfied. The customer is not guaranteed use of our pipelines unless excess capacity is available.
Under the firm service contract, the customer generally is guaranteed access to the capacity they reserve. 14 T able of Contents • Interruptible service - Under interruptible service transportation agreements, the customer may utilize available capacity after firm service requests are satisfied. The customer is not guaranteed use of our pipelines unless excess capacity is available.
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 so that we compete effectively.
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.
After performing these services, we sell the commodities and remit a portion of the commodity sales 9 Table of Contents 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 producer less our contractual fees.
In 2015, PHMSA issued notices of proposed rule-making for hazardous liquid pipeline safety regulations, natural gas transmission and gathering lines and underground natural gas storage facilities.
In 2015, PHMSA issued notices of proposed rulemaking for hazardous liquid pipeline safety regulations, natural gas transmission and gathering lines and underground natural gas storage facilities.
The potential capital and operating expenditures related to the new regulations are not fully known, but we do not anticipate a material impact to our planned capital or operations and maintenance costs resulting from compliance with the new regulations. 18 Table of Contents On July 9, 2022, a fire occurred at our 210 MBbl/d Medford, Oklahoma, natural gas liquids fractionation facility.
The potential capital and operating expenditures related to the new regulations are not fully known, but we do not anticipate a material impact to our planned capital or operations and maintenance costs resulting from compliance with the new regulations. In July 2022, a fire occurred at our 210 MBbl/d Medford, Oklahoma, natural gas liquids fractionation facility.
We have achieved reductions totaling approximately 0.5 million metric tons of the targeted 2.2 million metric tons of carbon dioxide equivalents, 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.
We have achieved reductions totaling approximatel y 1.1 million metric tons of the targeted 2.2 million metric tons of carbon dioxide equivalents, 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.
Natural Gas Pipelines Overview - In our Natural Gas Pipelines segment, our assets are connected to key supply areas and demand centers, including export markets in Mexico via Roadrunner and supply areas in Canada and the United States via our interstate and intrastate 12 Table of Contents natural gas pipelines and Northern Border, which enables us to provide essential natural gas transportation and storage services.
Our assets are connected to key supply areas and demand centers, including export markets in Mexico via Roadrunner and supply areas in Canada and the United States via our interstate and intrastate natural gas pipelines and Northern Border, which enables us to provide essential natural gas transportation and storage services.
Property - Our Natural Gas Gathering and Processing segment includes the following assets: • 17,200 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.
Property - 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.
The Inflation Reduction Act includes tax credits and other incentives intended to combat climate change by advancing decarbonization and promoting increased investment in renewable and low carbon intensity energy.
The IRA includes tax credits and other incentives intended to combat climate change by advancing decarbonization and promoting increased investment in renewable and low carbon intensity energy.
We embed D&I concepts into our core leadership development curriculum and sponsor a number of internal programs intended to promote D&I. In addition, we seek to give back to the communities where we operate by partnering on initiatives to support underrepresented community members and local charitable organizations.
All employees are invited to become a supporter of our BRGs. We embed D&I concepts into our core leadership development curriculum and sponsor a number of internal programs intended to promote D&I. In addition, we seek to give back to the communities where we operate by partnering on initiatives to support underrepresented community members and local charitable organizations.
In September 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.
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.
We are the operator of Roadrunner. See Note N of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of unconsolidated affiliates.
See Note N of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of unconsolidated affiliates.
Under the terms of the settlement agreement, we agreed to resolve the claims for total insurance payments of $930 million, $100 million of which was received in 2022. The remaining $830 million was received in the first quarter 2023.
Under the terms of the settlement agreement, we agreed to resolve the claims for total insurance payments of $930 million, $100 million of which was received in 2022. The remaining $830 million was received in the first quarter of 2023, resulting in a one-time settlement gain of $779 million.
This type of contract represented 20% of supply volumes in this segment for 2022 and 2021. • Fee-only - Under this type of contract, we charge a fee for the midstream services we provide, based on volumes gathered, processed, treated and/or compressed. Our fee-only contracts represented 7% of supply volumes in this segment for 2022 and 2021.
This type of contract represented 19% and 20% of supply volumes in this segment for 2023 and 2022, respectively. • Fee-only - Under this type of contract, we charge a fee for the midstream services we provide, based on volumes gathered, processed, treated and/or compressed.
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; natural gas, crude oil and NGL prices; the demand for each of these products from end users; the decline rate of existing production; producer access to capital and investment in the industry; or 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 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.
Continued demand from local distribution companies, electric-generation facilities and large industrial companies resulted in 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.
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.
Coupled together, these new sections of the Mega Rule provide incr eased requirements for operating and maintenance, integrity management, public awareness and civil/criminal penalties; however, we do not anticipate a material impact to our planned capital or operations and maintenance costs resulting from compliance with the newly published regulations. In 2020, legislation was passed to reauthorize PHMSA through 2024.
Coupled together, these new sections of the Mega Rule provide incr eased requirements for operating and maintenance, integrity management, public awareness and civil/criminal penalties; however, we do not anticipate a material im pact to our planned capital or operations and maintenance costs resulting from compliance with the newly published regulations.
Residue natural gas is transported to storage facilities and end users, such as large industrial customers, natural gas and electric utilities serving commercial and residential consumers, and can ultimately reach international markets through liquefied natural gas exports and cross-border pipelines.
Residue natural gas is transported or stored for end users, such as large industrial customers, natural gas and electric utilities serving commercial and residential consumers and can ultimately reach international markets through liquified natural gas exports and cross border pipelines.
Producing consistent and strong returns on invested capital will allow us to not only reward our shareholders but also provide the means and opportunity to serve our additional stakeholders, including employees, communities and the environment.
We expect consistent and strong returns on invested capital will allow us to reward our shareholders and provide the means and opportunity to serve our additional stakeholders, including employees, communities and the environment.
Our core values, listed below, guide the way in which our employees 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. 19 Table of Contents Diversity and Inclusion - Our diversity and inclusion (D&I) 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.
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.
We have achieved reductions totaling approximately 0.5 million metric tons of the targeted 2.2 million metric tons of carbon dioxide equivalents, 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 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.
Competition - We compete for natural gas and NGL supply with other midstream companies, major integrated oil companies and independent exploration and production companies that have gathering and processing assets, fractionators, intrastate and interstate pipelines and storage facilities.
Competition - We compete for natural gas, NGL, Refined Products and crude oil volumes with other midstream companies, major integrated oil companies and independent exploration and production companies that have gathering and processing assets, fractionators, pipelines, terminals and storage facilities.
Although the energy industry has experienced many commodity cycles, we have positioned ourselves to reduce exposure to direct commodity price volatility. Each of our three segments are primarily fee-based, and our consolidated earnings were approximately 90% fee-based in 2022.
Although the energy industry has experienced many commodity cycles, we have positioned ourselves to reduce exposure to direct commodity price volatility. Each of our four reportable segments are primarily fee-based, and our consolidated earnings were more than 85% fee-based in 2023.
The Pipeline Safety Improvement Act of 2002 requires pipeline companies operating high-pressure pipelines to perform integrity assessments on pipeline segments that pass through densely populated areas or near specifically designated high-consequence areas (HCAs).
Pipeline and Facility Safety - We are subject to PHMSA safety regulations, including pipeline asset integrity-management regulations. The Pipeline Safety Improvement Act of 2002 requires pipeline companies operating high-pressure pipelines to perform integrity assessments on pipeline segments that pass through densely populated areas or near specifically designated high-consequence areas (HCAs).
Mid-Continent region - The Mid-Continent region includes the oil-producing, NGL-rich SCOOP and STACK areas including the Cana-Woodford Shale, Woodford Shale, Springer Shale, Meramec, Granite Wash and Mississippian Lime formations of Oklahoma and the Hugoton Basin in Kansas.
Mid-Continent region - The Mid-Continent region includes the gas and oil-producing Anadarko Basin, which includes the NGL-rich SCOOP and STACK areas, including the Cana-Woodford Shale, Woodford Shale, Springer Shale, Meramec, Granite Wash and Mississippian Lime formations of Oklahoma and the Hugoton Basin in Kansas. We have more than 600,000 dedicated acres in the Anadarko Basin.
We have hedged approximately 70% of our forecasted equity volumes for 2023. Under certain fee with POP contracts, our contractual fees and POP percentage may increase or decrease if production volumes, delivery pressures or commodity prices change relative to specified thresholds.
Under certain fee with POP contracts, our contractual fees and POP percentage may increase or decrease if production volumes, delivery pressures or commodity prices change relative to specified thresholds.
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 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 business strategy is focused on: • Zero incidents - we commit to developing processes to drive a zero-incident culture for the well-being of our employees, contractors and communities.
Our vision is to create exceptional value for our stakeholders by providing solutions for a transforming energy future. Our business strategy is focused on: • Zero incidents - We commit to developing processes to drive a zero-incident culture for the well-being of our employees, contractors and communities.
Failure to comply with these laws, regulations, licenses and permits may expose us to fines, penalties, reputational harm and/or interruptions in our operations that could be material to our results of operations or financial 16 Table of Contents condition.
These laws and regulations require us to obtain and/or comply with a wide variety of environmental clearances, registrations, licenses, permits and other approvals. Failure to comply with these laws, regulations, licenses and permits may expose us to fines, penalties, reputational harm and/or interruptions in our operations that could be material to our results of operations or financial condition.
Our business activities are categorized as follows: • Exchange services - We utilize our assets to gather, transport, treat and fractionate unfractionated NGLs, thereby converting them into marketable purity NGLs delivered to a market center or customer-designated location.
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.
We are in the process of expanding the injection capabilities of our Oklahoma natural gas storage facilities which will allow us to utilize and subscribe an additional 4 Bcf of our existing storage capacity. We are also exploring reactivating previously idled storage facilities in Oklahoma and Texas, which are not included in the capacity above.
In 2023, we completed an expansion of our injection capabilities of our Oklahoma natural gas storage facilities which allowed us to utilize and subscribe an additional 4 Bcf of our existing storage capacity. We are reactivating previously idled storage facilities with 3 Bcf of working gas storage capacity in Texas, which is not included in the capacity above.
We continue to look for ways to reduce our GHG emissions and utilize more efficient technologies. We are evaluating the development of renewable energy and low-carbon projects, including opportunities that may complement our extensive midstream assets and expertise. For more information on our GHG emissions, see “GHG emissions” in the “Regulatory, Environmental and Safety Matters” section.
We continue to 6 T able of Contents look for ways to reduce our GHG emissions and utilize more efficient technologies. We are evaluating the development of renewable energy and low-carbon projects, including opportunities that may complement our extensive midstream assets and expertise.
Government Regulation - Interstate - Our interstate natural gas pipelines are regulated under the Natural Gas Act, which gives the FERC jurisdiction to regulate virtually all aspects of this business, such as transportation of natural gas, rates and charges for services, construction of new facilities, depreciation and amortization policies, acquisition and disposition of facilities and the initiation and discontinuation of services. 14 Table of Contents Intrastate - Our intrastate natural gas pipelines in Oklahoma, Kansas and Texas are regulated by the OCC, KCC and RRC, respectively, and by the FERC under the Natural Gas Policy Act for certain services where we deliver natural gas into FERC regulated natural gas pipelines.
Government Regulation - Interstate - Our interstate natural gas pipelines are regulated under the Natural Gas Act, which gives the FERC jurisdiction to regulate virtually all aspects of this business, such as transportation of natural gas, rates and charges for services, construction of new facilities, depreciation and amortization policies, acquisition and disposition of facilities and the initiation and discontinuation of services.
Sources of Earnings - Earnings for this segment are derived primarily from the following types of service contracts: • Fee with POP contracts with no producer take-in-kind rights - We purchase raw natural gas and charge contractual fees for providing midstream services, which include gathering, treating, compressing and processing the producer’s natural gas.
We calculate utilization rates using a weighted-average approach, adjusting for the dates that assets were placed in or removed from service. 9 T able of Contents Sources of Earnings - Earnings for this segment are derived primarily from the following types of service contracts: • Fee with POP contracts with no producer take-in-kind rights - We purchase raw natural gas and charge contractual fees for providing midstream services, which include gathering, treating, compressing and processing the producer’s natural gas.
For additional information about our retirement benefits, see Note L of the Notes to Consolidated Financial Statements in this Annual Report. INFORMATION ABOUT OUR EXECUTIVE OFFICERS All executive officers are elected annually by our Board of Directors. Our executive officers listed below include the officers who have been designated by our Board of Directors as our Section 16 executive officers.
For additional information about our retirement benefits, see Note L of the Notes to Consolidated Financial Statements in this Annual Report. 24 T able of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS All executive officers are elected annually by our Board of Directors.
We maintain mature and robust programs that guide trained staff in the completion of these activities, and we continue to enhance and improve these programs and our internal capabilities.
We maintain mature and robust programs that guide trained staff in the completion of these activities, and we continue to enhance and improve these programs and our internal capabilities. Health and Welfare - We provide a variety of benefits to help promote the health and welfare of our employees and their families.
NGLs extracted at natural gas processing plants, both third-party and our own, are then gathered by our NGL gathering pipelines. Gathered NGLs are directed to our downstream fractionators in the Mid-Continent region and Mont Belvieu, Texas, to be separated into purity products.
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.
In addition, we lease 10 MMBbl of annual pipeline capacity near our ONEOK North System and have access to 5 MMBbl of combined NGL storage capacity at facilities in Kansas and Texas and 60 MBbl/d of NGL fractionation capacity in the Gulf Coast through service agreements.
In addition, we have access to 5 MMBbl of combined NGL storage capacity at facilities in Kansas and Texas and 60 MBbl/d of NGL fractionation capacity in the Gulf Coast through service agreements. The operating capacity of our pipelines varies depending on pipeline diameter, product composition and segment of the system.
A portion of our ONEOK North System transports refined petroleum products, including unleaded gasoline and diesel, from Kansas to Iowa. 10 Table of Contents Property - Our Natural Gas Liquids segment includes the following assets: • 9,140 miles of gathering pipelines with operating capacity of 1,790 MBbl/d, including 6,350 miles of FERC-regulated pipelines with operating capacity of 1,490 MBbl/d; • 4,350 miles of distribution pipelines with operating capacity of 1,150 MBbl/d, including 4,180 miles of FERC-regulated pipelines with operating capacity of 1,080 MBbl/d; • seven NGL fractionators with combined operating capacity of 710 MBbl/d (includes interests in our proportional share of operating capacity), including 310 MBbl/d in the Mid-Continent region and 400 MBbl/d in the Gulf Coast region; • one isomerization unit with operating capacity of 10 MBbl/d; • one ethane/propane splitter with operating capacity of 40 MBbl/d; • six NGL storage facilities with operating storage capacity of 30 MMBbl; and • eight purity NGLs terminals.
A portion of our ONEOK North System transports Refined Products, including unleaded gasoline and diesel. 10 T able of Contents Property - Our Natural Gas Liquids segment includes the following assets, which are wholly owned, except where noted: • 9,160 miles of gathering pipelines; • 4,350 miles of distribution pipelines; • eight NGL fractionators with combined operating capacity of 835 MBbl/d (includes interests in our proportional share of operating capacity), including 310 MBbl/d in the Mid-Continent region and 525 MBbl/d in the Gulf Coast region, which are 98% utilized; • one isomerization unit with operating capacity of 10 MBbl/d; • one ethane/propane splitter with operating capacity of 40 MBbl/d; • six NGL storage facilities with operating storage capacity of 30 MMBbl; and • eight Purity NGLs terminals.
Recently, the EPA has updated the New Source Performance Standards Subpart OOOOb regulations to further reduce methane emissions, which includes increased monitoring frequency and more stringent repair requirements for new and modified oil and gas facilities. In addition, the EPA is proposing new nationwide emission guidelines for states to limit methane emissions from existing oil and gas facilities.
Recently, the EPA has released the pre-publication of the New Source Performance Standards Subpart OOOOb regulations to further reduce methane emissions, which includes increased monitoring frequency and more stringent repair requirements for new and modified oil and gas facilities.
NGLs - In our Natural Gas Liquids segment, we benefited from increased volumes and higher average fee rates in 2022, compared with 2021, from increased production in the Rocky Mountain region and the Permian Basin, offset partially by higher costs.
NGLs - In our Natural Gas Liquids segment, we benefited from increased volumes in 2023, compared with 2022, due primarily to increased production in the Permian Basin and Rocky Mountain region.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe degree to which the pandemic further impacts our business and results of operations will depend on future developments beyond our control, including the success of vaccination efforts and the effectiveness of such vaccines against future mutations of the COVID-19 virus, how quickly and to what extent economic and operating conditions resume to pre-COVID-19 levels, and the severity and duration of reduced global and regional economic activity resulting from the pandemic. 28 Table 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.
Biggest changeSuch 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 OUR BUSINESS AND INDUSTRY If the level of drilling in the regions in which we operate declines substantially near our assets, our volumes and revenues could decline. Our gathering and transportation pipeline systems are dependent upon production from natural gas and crude oil wells, which naturally declines over time.
RISK FACTORS RELATED TO OUR BUSINESS AND INDUSTRY If the level of drilling in the regions in which we operate declines substantially near our assets, our volumes and revenues could decline. Our gathering and transportation pipeline systems are dependent upon production from natural gas and crude oil wells, which naturally decline over time.
Severe weather impacts our operating territories primarily through hurricanes, thunderstorms, tornados, floods, freezing temperatures and snow or ice storms. To the extent the severity or frequency of extreme weather events increases, this could increase our cost of providing services, including the cost of insurance, and decrease the availability of certain insurance coverages.
Severe weather impacts our operating territories primarily through hurricanes, thunderstorms, tornados, floods, freezing temperatures and snow or ice storms. To the extent the severity or frequency of extreme weather events increases, this could increase our cost of providing services, including the cost of insurance, and the availability of certain insurance coverages could decrease.
Among other things, a legal challenge of the cross guarantees of our and ONEOK Partners’ indebtedness on fraudulent conveyance grounds may focus on the benefits, if any, realized by the guarantor as a result of our and ONEOK Partners’ issuance of such debt.
Among other things, a legal challenge of the cross guarantees of our and ONEOK Partners’ indebtedness on fraudulent conveyance grounds may focus on the benefits, if any, realized by the guarantor as a result of the issuance of such debt.
Efforts by us and our vendors to develop, implement and maintain security measures may not be successful in anticipating, detecting or preventing these events from occurring, due in part to attackers’ ever-changing methods and efforts to conceal their activities, and any network and information systems-related events could require us to expend significant resources to identify, assess and remedy such events.
Efforts by us and our vendors and counterparties to develop, implement and maintain security measures may not be successful in anticipating, detecting or preventing these events from occurring, due in part to attackers’ ever-changing methods and efforts to conceal their activities, and any network and information systems-related events could require us to expend significant resources to identify, assess and remedy such events.
Although ONEOK Partners and the Intermediate Partnership 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 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.
Other operational hazards and unforeseen interruptions include adverse weather conditions (including extreme cold weather), infectious disease including a pandemic, 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), 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.
A significant failure, compromise, breach or interruption in our systems, or those of our vendors, could result in a disruption of our operations, physical or environmental damages, customer dissatisfaction, damage to our reputation and a loss of customers or revenues.
A significant failure, compromise, breach or interruption in our systems, or those of our vendors or counterparties, could result in a disruption of our operations, physical or environmental damages, customer dissatisfaction, damage to our reputation and a loss of customers or revenues.
Any merger or acquisition involves potential risks that may include, among other things: • inaccurate assumptions about volumes, revenues and costs, including potential synergies; • an inability to integrate successfully the businesses we acquire; • decrease in our liquidity as a result of our using a significant portion of our available cash or borrowing capacity to finance the acquisition; 32 Table of Contents • a significant increase in our interest expense and/or financial leverage if we incur additional debt to finance the acquisition; • the assumption of unknown liabilities for which we are not indemnified, our indemnity is inadequate or our insurance policies may exclude from coverage; • an inability to hire, train or retain qualified personnel to manage and operate the acquired business and assets; • limitations on rights to indemnity from the seller; • inaccurate assumptions about the overall costs of equity or debt; • the diversion of management’s and employees’ attention from other business concerns; • unforeseen difficulties operating in new product areas or new geographic areas; • increased regulatory burdens; • customer or key employee losses at an acquired business; and • increased regulatory requirements.
Any merger or acquisition involves potential risks that may include, among other things: • inaccurate assumptions about volumes, revenues and costs, including potential synergies; • an inability to integrate successfully the businesses we acquire; • decrease in our liquidity as a result of our using a significant portion of our available cash or borrowing capacity to finance the acquisition; • a significant increase in our interest expense and/or financial leverage if we incur additional debt to finance the acquisition; • the assumption of unknown liabilities for which we are not indemnified, our indemnity is inadequate or our insurance policies may exclude from coverage; • an inability to hire, train or retain qualified personnel to manage and operate the acquired business and assets; • limitations on rights to indemnity from the seller; • inaccurate assumptions about the overall costs of equity or debt; • the diversion of management’s and employees’ attention from other business concerns; • unforeseen difficulties operating in new product areas or new geographic areas; • increased regulatory burdens; and • customer or key employee losses at an acquired business.
It is also possible that under certain circumstances, a court could avoid or subordinate the guarantor’s guarantee of our and ONEOK Partners’ indebtedness in favor of the guarantor’s other debts or liabilities to the extent that the court determined either of the following were true at the time the guarantor issued the guarantee: • the guarantor incurred the guarantee with the intent to hinder, delay or defraud any of its present or future creditors or the guarantor contemplated insolvency with a design to favor one or more creditors to the total or partial exclusion of others; or • the guarantor did not receive fair consideration or reasonable equivalent value for issuing the guarantee and, at the time it issued the guarantee, the guarantor: – was insolvent or rendered insolvent by reason of the issuance of the guarantee; – was engaged or about to engage in a business or transaction for which its remaining assets constituted unreasonably small capital; or – intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured.
It is also possible that under certain circumstances, a court could avoid or subordinate the guarantor’s guarantee of this indebtedness in favor of the guarantor’s other debts or liabilities to the extent that the court determined either of the following were true at the time the guarantor issued the guarantee: • the guarantor incurred the guarantee with the intent to hinder, delay or defraud any of its present or future creditors or the guarantor contemplated insolvency with a design to favor one or more creditors to the total or partial exclusion of others; or • the guarantor did not receive fair consideration or reasonable equivalent value for issuing the guarantee and, at the time it issued the guarantee, the guarantor: – was insolvent or rendered insolvent by reason of the issuance of the guarantee; – was engaged or about to engage in a business or transaction for which its remaining assets constituted unreasonably small capital; or – intended to incur, or believed that it would incur, debts beyond its ability to pay such debts as they matured.
Due to climate change concerns, some investors may choose to either not invest, or to reduce their investment, in companies that explore for, produce, process, transport or sell products derived from hydrocarbons. If this negative investor sentiment increases, we may see reduced demand for our securities, which could impact our liquidity or the value of our securities.
Due to climate change concerns, some investors may choose not to invest, or to reduce investment, in companies that explore for, produce, process, transport or sell products derived from hydrocarbons. If this negative investor sentiment increases, we may see reduced demand for our securities, which could impact our liquidity or the value of our securities.
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 system may be impacted materially by changes in estimation, type of commodity and other factors.
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.
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 us 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. Any such transaction could result in our being required to partner with different or additional parties who may have business interests different from ours.
For example, 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 $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.
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, including personnel, customer and vendor 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 and laws and regulations protecting personal data and privacy.
To manage the risk from market price fluctuations in natural gas, NGLs, crude oil and electricity prices, we may use derivative instruments such as swaps, futures, forwards and options. However, we do not hedge fully against commodity price changes, and we therefore retain some exposure to market risk.
To manage the risk from market price fluctuations in natural gas, NGLs, Refined Products and crude oil and electricity prices, we may use derivative instruments such as swaps, futures, forwards and options. However, we do not hedge fully against commodity price changes, and we therefore retain some exposure to market risk.
We may not have sufficient cash on hand to repurchase and repay any accelerated senior notes, which may cause us to borrow money under our credit facility or seek alternative financing sources to finance the repurchases and repayment.
We may not have sufficient cash on hand to repurchase and repay any accelerated senior notes, which may cause us to borrow funds under our credit facility or seek alternative financing sources to finance the repurchases and repayment.
Our operations are subject to all the risks and hazards typically associated with the operation of natural gas and NGL gathering, transportation and distribution pipelines, storage facilities and processing and fractionation facilities, which include, but are not limited to, leaks, pipeline ruptures, damage by third parties, the breakdown or failure of equipment or processes and the performance of facilities below expected levels of capacity and efficiency.
Our operations are subject to all the risks and hazards typically associated with the operation of gathering, transportation and distribution pipelines, storage facilities and processing and fractionation facilities, which include, but are not limited to, leaks, pipeline ruptures, damage by third parties, the breakdown or failure of equipment or processes and the performance of facilities below expected levels of capacity and efficiency.
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; 26 Table of Contents • we may be required to rely on third parties downstream of our facilities to have available capacity for our delivered natural gas or NGLs, 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 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 further discussion of impairments of goodwill, long-lived assets and equity-method investments, see Notes A, E, F, 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 N, respectively, of the Notes to Consolidated Financial Statements in this Annual Report.
The volatility of natural gas, crude oil and NGL prices could affect adversely our earnings and cash flows. Lower commodity prices could reduce crude oil, natural gas and NGL production, which could decrease the demand for our services.
The volatility of natural gas, NGL, Refined Products and crude oil prices could affect adversely our earnings and cash flows. Lower commodity prices could reduce crude oil, natural gas and NGL production, which could decrease the demand for our services.
The energy industry historically has been subject to heavy state and federal regulation that extends to many aspects of our businesses and operations, including: • change 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 the natural gas and energy businesses.
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.
However, we cannot predict precisely what form these future legislative and/or regulatory initiatives will take, the stringency of 29 Table of Contents such initiatives, when they will become effective or the impact on our capital expenditures, competitive position and results of operations.
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.
The amount of cash that our unconsolidated affiliates can distribute principally depends upon the amount of cash flows these affiliates generate from their respective operations, which may fluctuate from quarter to quarter. We may be unable to unilaterally determine the cash 27 Table of Contents distribution policies of our unconsolidated affiliates.
The amount of cash that our unconsolidated affiliates can distribute principally depends upon the amount of cash flows these affiliates generate from their respective operations, which may fluctuate from quarter to quarter. We may be unable to unilaterally determine the cash distribution policies of our unconsolidated affiliates.
Production areas outside of our operating regions may compete with natural gas and NGL supply originating in production areas connected to our systems, which may cause natural gas and NGLs 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 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.
For example, the SEC has announced its plans to propose new climate change disclosure requirements. While the 23 Table of Contents 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.
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.
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 or NGL supply be unavailable upon completion of the facilities.
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.
The crude oil and natural gas industry is relying increasingly on supplies from nonconventional sources, such as shale and tight sands. 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.
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.
If we are not able to obtain new supplies to replace the natural decline in volumes from existing production or reductions in volumes because of competition, including increased competition due to industry consolidation, throughput on our gathering and transportation pipeline systems and the utilization rates of our processing and fractionation facilities would decline, which could affect adversely our business, results of operations, financial position and cash flows.
If we are not able to obtain new supplies to replace the natural decline in volumes from existing production or reductions in volumes because of competition, throughput on our gathering and transportation pipeline systems and the utilization rates of our processing and fractionation facilities would decline, which could affect adversely our business, results of operations, financial position and cash flows.
A court may use fraudulent conveyance considerations to avoid or subordinate the cross guarantees of our and ONEOK Partners’ indebtedness. ONEOK, ONEOK Partners and the Intermediate Partnership 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 our and ONEOK Partners’ indebtedness.
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.
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.
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.
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.
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.
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.
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.
Volatility in commodity prices may have an impact on many 22 Table of Contents of our suppliers and customers, which, in turn, could have a negative impact on their ability to meet their obligations to us.
Volatility in commodity prices may have an impact on many of our suppliers and customers, which, in turn, could have a negative impact on their ability to meet their obligations to us.
As a result, new facilities may not be able to attract enough natural gas or NGLs to achieve our expected investment return, which could affect adversely our business, results of operations, financial position and cash flows. Estimates of hydrocarbon reserves may be inaccurate, which could result in lower than anticipated volumes.
As a result, new facilities may not be able to attract enough natural gas, NGLs, Refined Products and crude oil to achieve our expected investment return, which could affect adversely our business, results of operations, financial position and cash flows. Estimates of hydrocarbon reserves may be inaccurate, which could result in lower than anticipated volumes.
Under the Natural Gas Act, which is applicable to our interstate natural gas pipelines, and the Interstate Commerce Act, which is applicable to our interstate NGL pipelines, our interstate transportation rates are regulated by the FERC and many changes to our pipeline tariffs must be approved in a regulatory proceeding.
Under the Natural Gas Act, which is applicable to our interstate natural gas pipelines, and the Interstate Commerce Act, which is applicable to our interstate Refined Products, crude oil and NGL pipelines, our interstate transportation rates are regulated by the FERC and many changes to our pipeline tariffs must be approved in a regulatory proceeding.
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 (which may be even more difficult to obtain due to supply chain constraints) 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.
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.
Drilling and production are impacted by factors beyond our control, including: • demand and prices for natural gas, NGLs 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; and • capacity constraints and/or shut downs on the pipelines that transport crude oil, natural gas and NGLs 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; • 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.
Certain of our businesses are exposed to market risk and the impact of market fluctuations in natural gas, NGLs and crude oil prices. Market risk refers to the risk of loss of future cash flows and earnings arising from adverse changes in commodity prices.
Certain of our businesses are exposed to market risk and the impact of market fluctuations in natural gas, NGL, Refined Products and crude oil prices. Market risk refers to the risk of loss of future cash flows and earnings arising from adverse changes in commodity prices.
The quantification and resolution of measurement adjustments are complicated by several factors including: (i) the significant quantities ( i.e. , thousands) of measurement equipment that we use across our natural gas and NGL systems, primarily around our gathering and processing assets; (ii) varying qualities of natural gas in the streams gathered and processed through our systems and the mixed nature of NGLs gathered and fractionated; and (iii) variances in measurement that are inherent in metering technologies and standards.
The quantification and resolution of measurement adjustments are complicated by several factors including: (i) the significant quantities ( i.e. , thousands) of measurement equipment that we use across our systems, (ii) varying qualities of natural gas in the streams gathered and processed through our systems and the mixed nature of NGLs gathered and fractionated; and (iii) variances in measurement that are inherent in metering technologies and standards.
To the extent the guarantor’s guarantee of our and ONEOK Partners’ 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 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.
Current efforts by the federal government, such as the Improving Critical Infrastructure Cybersecurity executive order, and the TSA security directives issued in May and July 2021, and July 2022, have utilized significant internal and external resources, and any potential future statutes, regulations or orders could lead to further increased regulatory compliance costs, insurance coverage costs or capital expenditures.
Current efforts by the federal government, such as the Improving Critical Infrastructure Cybersecurity executive order, and the TSA security directives have utilized significant internal and external resources, and any potential future statutes, regulations or orders could lead to further increased regulatory compliance costs, insurance coverage costs or capital expenditures.
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 natural gas and NGL pipelines, processing, fractionation 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. In the competition for supply, we may have significant levels of excess capacity on our pipeline, processing, fractionation, terminal and storage assets.
We could also face 31 Table of Contents difficulties accessing capital or our borrowing costs could increase, impacting our ability to obtain financing for acquisitions or capital expenditures, to refinance indebtedness and to fulfill our debt obligations.
We could also face difficulties accessing capital or our borrowing costs could increase, impacting our ability to obtain financing for acquisitions or capital expenditures, to refinance indebtedness and to fulfill our debt obligations.
In addition to impacts from the COVID-19 pandemic, uncertainty or adverse changes in economic conditions worldwide, in the United States, or in the economic regions in which we operate, could negatively affect the crude oil and natural gas markets, resulting in reduced demand and increased price competition for our services and products, or otherwise affect adversely our business, results of operations, financial position and cash flows.
Uncertainty or adverse changes in economic conditions worldwide, in the United States, or in the economic regions in which we operate, could negatively affect the crude oil and natural gas markets, resulting in reduced demand and increased price competition for our services and products, or otherwise affect adversely our business, results of operations, financial position and cash flows.
Any failure to maintain effective internal 34 Table of Contents controls, or difficulties encountered in implementing or improving our internal controls, could harm our operating results or cause us to fail to meet our reporting obligations.
Any failure to maintain effective internal controls, or difficulties encountered in implementing or improving our internal controls, could harm our operating results or cause us to fail to meet our reporting obligations.
In addition, we may not be able to obtain the same level or kind of service or retain or receive the services in a timely manner, which may impact our ability to perform under our contracts and affect adversely our business and results of operations. The COVID-19 pandemic has affected adversely, and could further affect adversely, our results of operations.
In addition, we may not be able to obtain the same level or kind of service or retain or receive the services in a timely manner, which may impact our ability to perform under our contracts and affect adversely our business and results of 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; • the price differentials between the individual purity NGLs with respect to our NGL transportation and fractionation agreements; • the location price differentials in the price of natural gas and NGLs; • the seasonal price differentials in natural gas and NGLs related to our storage operations; • 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 • the fuel costs and the value of the retained fuel in-kind in our natural gas pipelines and storage operations.
The prices we receive for our commodities are subject to wide fluctuations in response to a variety of factors beyond our control, including, but not limited to, the following: • overall domestic and global economic conditions and uncertainty; • changes in the supply of, and demand for, domestic and foreign energy, even if relatively minor; • market uncertainty; • the occurrence of wars and other geopolitical conditions impacting supply and demand for natural gas, NGLs and crude oil; • production decisions by other countries, and the failure of countries to abide by recent agreements relating to production decisions; • the availability and cost of third-party transportation, natural gas processing and fractionation capacity; • the level of consumer product demand and storage inventory levels; • ethane rejection; • weather conditions; • domestic and foreign governmental regulations and taxes; • the price and availability of alternative fuels; • speculation in the commodity futures markets; • the effects of imports and exports on the price of natural gas, crude oil, NGL and liquefied natural gas; • the effect of worldwide energy-conservation measures; • the impact of new supplies, new pipelines, processing and fractionation facilities on location price differentials; and • technology and improved efficiency impacting supply and demand for natural gas, NGLs and crude oil.
The prices we receive for our commodities are subject to wide fluctuations in response to a variety of factors beyond our control, including, but not limited to, the following: • overall domestic and global economic conditions and uncertainty; • changes in the supply of, and demand for, domestic and foreign energy, even if relatively minor; • market uncertainty; • the occurrence of wars (such as the Russian invasion of Ukraine), the activities of the Organization of Petroleum Exporting Countries (OPEC) and other non-OPEC oil producing countries with large production capacity, or other geopolitical conditions (including instability in the Middle East) impacting supply and demand for natural gas, NGLs, Refined Products and crude oil; • production decisions by other countries, and the failure of countries to abide by recent agreements relating to production decisions; • the availability and cost of third-party transportation, natural gas processing and fractionation capacity; • the level of consumer product demand and storage inventory levels; • ethane rejection; • weather conditions; • public health crises, including pandemics (such as COVID-19); • domestic and foreign governmental regulations and taxes; • the price and availability of alternative fuels; • speculation in the commodity futures markets; • the effects of imports and exports on the price of natural gas, NGLs, Refined Products, crude oil and liquefied natural gas; • the effect of worldwide energy-conservation measures; • the impact of new supplies, new pipelines, processing and fractionation facilities on location price differentials; and • technology and improved efficiency impacting supply and demand for natural gas, NGLs, Refined Products and crude oil.
This shortage of trained workers is the result of experienced workers reaching retirement age and increased competition for workers in certain areas, combined with the challenges of attracting new, qualified workers to the midstream energy industry. This shortage of skilled labor could continue over an extended period.
This shortage of trained workers is the result of experienced workers reaching retirement age and increased competition for workers in certain areas, combined with the challenges of attracting new, qualified workers to the midstream energy industry.
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 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.
Any of these factors could reduce their production of unprocessed natural gas and, in turn, affect adversely our revenues and results of operations by decreasing the volumes of natural gas and NGLs gathered, treated, processed, fractionated and transported on our or our joint ventures’ assets. Our business is subject to regulatory oversight and potential penalties.
Any of these factors could reduce their production of crude oil and unprocessed natural gas and, in turn, affect adversely our revenues and results of operations by decreasing the volumes of crude oil, natural gas and NGLs gathered, treated, processed, fractionated, stored and transported on our or our joint ventures’ assets.
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 December 31, 2022, we had total indebtedness of $13.6 billion. Our indebtedness and guarantee obligations could have significant consequences.
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.
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.
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.
Examples of these laws include: • the Clean Air Act and analogous state laws that impose obligations related to air emissions; • the 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 waters; • the Comprehensive Environmental Response, Compensation and Liability Act (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; • the Endangered Species Act and analogous state laws that impose obligations related to protection of threatened and endangered species; and • the Resource Conservation and Recovery Act (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: • 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.
We may be subject to physical and financial risks associated with 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. For residential customers, heating and cooling represent their largest energy use.
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.
Natural gas and NGL measurement adjustments occur as part of the normal operating conditions associated with our assets.
Product measurement adjustments occur as part of the normal operating conditions associated with our assets.
We use software to help manage and operate our businesses, and this may subject us to increased risks. According to experts, there has been a rise in the number and sophistication of cyberattacks on companies’ network and information systems by both state-sponsored and criminal organizations and, as a result, the risks associated with such an event continue to increase.
According to experts, there has been a rise in the number and sophistication of cyberattacks on companies’ network and information systems by both state-sponsored and criminal organizations and, as a result, the risks associated with such an event continue to increase.
Our natural gas and NGL pipelines, processing, fractionation and storage assets compete with other pipelines, processing, fractionation and storage assets for natural gas and NGL supply delivered to the markets we serve.
Our pipeline, processing, fractionation, terminal and storage assets compete with other similar assets for natural gas, NGL, Refined Products and crude oil supply delivered to the markets we serve.
As with all companies, we are exposed to the risk of employee fraud or other misconduct. 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 officers, principal accounting officer, controllers and other persons performing similar functions) and all other employees.
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. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. ITEM 2. PROPERTIES A description of our properties is included in Item 1, Business.
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.
If the shortage of experienced labor continues or worsens, it could affect adversely our labor productivity and costs and our ability to expand operations in the event there is an increase in the demand for our services and products, which could affect adversely our business, results of operations, financial position and cash flows. 33 Table of Contents Our employees or directors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
If the shortage of experienced labor continues or worsens, it could affect adversely our labor productivity and costs and our ability to expand operations in the event there is an increase in the demand for our services and products, which could affect adversely our business, results of operations, financial position and cash flows.
In September 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 emissions by 2030. 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.
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 emissions by 2030 for our legacy ONEOK assets.
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.
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.
An act of terrorism could target our facilities, those of our suppliers or customers or those of other pipelines. A casualty occurrence may result in injury or loss of life, extensive property damage or environmental damage.
An act of terrorism could target our facilities, those of our suppliers or customers or those of other pipelines. A casualty occurrence may result in injury or loss of life, extensive property damage or environmental damage. The occurrence of operational hazards and unforeseen interruptions could affect adversely our business results of operations, financial position and cash flows.
The various uses of these information technology systems, networks and services include, but are not limited to: • controlling our plants and pipelines with industrial control systems including Supervisory Control and Data Acquisition; • collecting and storing customer, employee, investor and other stakeholder information and data; • processing transactions; • summarizing and reporting results of operations; • hosting, processing and sharing confidential and proprietary research, business plans and financial information; • complying with regulatory, legal, financial or tax requirements; • providing data security; and • other processes necessary to manage our business. 25 Table of Contents If any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them and may experience loss or corruption of critical data and interruptions or delays in our ability to perform critical functions, which could affect adversely our business and results of operations.
The various uses of these information technology systems, networks and services include, but are not limited to: • controlling our plants and pipelines with industrial control systems including Supervisory Control and Data Acquisition; • collecting and storing customer, employee, investor and other stakeholder information and data; • processing transactions; • summarizing and reporting results of operations; • hosting, processing and sharing confidential and proprietary research, business plans and financial information; • complying with regulatory, legal, financial or tax requirements; • providing data security; and • other processes necessary to manage our business.
The risk of incurring substantial environmental costs and liabilities is inherent in our business. Our operations are subject to extensive federal, state and local laws and regulations relating to the protection of the environment.
Our operations are subject to extensive federal, state and local laws and regulations relating to the protection of the environment.
We cannot provide assurance that any of our current ratings will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by these credit rating agencies.
Our commercial paper program has been assigned an investment-grade credit rating of Prime-2, A-2 and F2 by Moody’s, S&P and Fitch, respectively. We cannot provide assurance that any of our current ratings will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by these credit rating agencies.
Therefore, our counterparties may be similarly affected by changes in economic, regulatory or other factors that may affect our overall credit risk. A shortage of skilled labor may make it difficult for us to maintain labor productivity and competitive costs. Our operations require skilled and experienced workers with proficiency in multiple tasks.
A shortage of skilled labor may make it difficult for us to maintain labor productivity and competitive costs. Our operations require skilled and experienced workers with proficiency in multiple tasks.
We use both fixed and variable rate debt, and we are exposed to market risk due to the floating interest rates on our short-term borrowings.
We use both fixed and variable rate debt, and we are exposed to market risk due to the floating interest rates on our short-term borrowings. Our results of operations, financial position and cash flows could be affected adversely by significant fluctuations in interest rates.
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. 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.
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.
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, crude oil and NGLs differ from the stated price in the hedge instrument for these commodities.
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.
We have a defined benefit pension plan for certain employees and former employees, which closed to new participants in 2005, and postretirement welfare plans that provide postretirement medical and life insurance benefits to certain employees hired prior to 2017 who retire with at least five years of full-time service.
We have defined benefit pension plans for certain employees and former employees, which are closed to new participants, and postretirement welfare plans that provide postretirement medical and life insurance benefits to certain employees.
We are not prohibited under the indentures governing the senior notes from incurring additional indebtedness, but our debt agreements do subject us to certain operational limitations summarized in the next paragraph. If we incur significant additional indebtedness, it could worsen the negative consequences mentioned above and could affect adversely our ability to repay our other indebtedness.
We are not prohibited under the indentures governing the senior notes from incurring additional indebtedness, but our debt agreements do subject us to certain operational limitations that could restrict our ability to finance future operations or expand or pursue business activities, as summarized in the next paragraph.
Our operations are subject to federal and state laws and regulations relating to the protection of the environment, which may expose us to significant costs and liabilities. Increased litigation and activism challenging oil and gas development as well as changes to and/or increased penalties from the enforcement of laws, regulations and policies could impact adversely our business.
Increased litigation and activism challenging continued reliance upon oil and gas as well as changes to and/or increased penalties from the enforcement of laws, regulations and policies could impact adversely our business. The risk of incurring substantial environmental costs and liabilities is inherent in our business.
Additionally, a significant portion of our revenues are derived from the sale of commodities that are received in conjunction with natural gas gathering and processing services, the transportation and storage of natural gas, and from the purchase and sale of NGLs and purity NGLs.
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.
Consequently, we may not be able to renew existing insurance policies or purchase other desirable insurance on commercially reasonable terms, if at all. Insurance 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.
Insurance 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.
Our long-term debt has been assigned an investment-grade credit rating of “Baa3” by Moody’s and “BBB” by both S&P and Fitch. Our commercial paper program has been assigned an investment-grade credit rating of Prime-3, A-2 and F2 by Moody’s, S&P and Fitch, respectively.
Any reduction in our credit ratings could affect adversely our business, results of operations, financial position and cash flows. Our long-term debt has been assigned an investment-grade credit rating of “Baa2” by Moody’s and “BBB” by both S&P and Fitch.
As a result, the global supply of crude oil significantly exceeded demand and led to a collapse in crude oil prices. It is likely that commodity prices will continue to be volatile in the future.
Historically, commodity prices have been volatile and can change quickly. It is likely that commodity prices will continue to be volatile in the future.
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.
Our businesses are dependent upon our operational systems to process a large amount of data and complex transactions.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeCumulative Total Return Years Ended December 31, 2018 2019 2020 2021 2022 ONEOK, Inc. $ 106.28 $ 157.06 $ 88.96 $ 146.64 $ 174.36 S&P 500 Index $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 156.88 ONEOK Peer Group (a) $ 88.62 $ 104.19 $ 76.75 $ 102.24 $ 129.86 Alerian Midstream Energy Select Index (b) $ 82.33 $ 100.72 $ 77.13 $ 108.56 $ 129.35 (a) - The current ONEOK Peer Group is composed of the following companies: DCP Midstream, LP; Energy Transfer LP; EnLink Midstream, LLC; Enterprise Products Partners L.P.; Kinder Morgan, Inc.; Magellan Midstream Partners, L.P.; MPLX LP; NuStar Energy L.P.; Plains All American Pipeline, L.P.; Targa Resources Corp.; Western Midstream Partners, LP; and The Williams Companies, Inc.
Biggest change(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]
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 21, 2023, there were 13,064 holders of record of our 447,220,972 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 February 20, 2024, there were 13,034 holders of record of our 583,159,446 outstanding shares of common stock.
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. 35 Table of Contents PERFORMANCE GRAPH The following performance graph compares the performance of our common stock with the S&P 500 Index, the Alerian Midstream Energy Select Index and a ONEOK Peer Group during the period beginning on December 31, 2017, and ending on December 31, 2022.
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.
(b) - The Alerian Midstream Energy Select Index measures the composite performance of approximately 29 North American energy infrastructure companies who are engaged in midstream activities involving energy commodities. ITEM 6. [RESERVED] 36 Table of Contents
(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.
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Value of a $100 Investment, Assuming Reinvestment of Distributions/Dividends, at December 31, 2017, and at the End of Every Year Through December 31, 2022.
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PERFORMANCE 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.
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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.

Item 7. Management's Discussion & Analysis

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

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Biggest changeConsolidated Operations Selected Financial Results - The following table sets forth certain selected financial results for the periods indicated: Years Ended December 31, 2022 vs. 2021 2021 vs. 2020 Financial Results 2022 2021 2020 $ Increase (Decrease) ( Millions of dollars, except per share amounts ) Revenues Commodity sales $ 20,975.5 $ 15,180.3 $ 7,255.2 5,795.2 7,925.1 Services 1,411.4 1,360.0 1,287.0 51.4 73.0 Total revenues 22,386.9 16,540.3 8,542.2 5,846.6 7,998.1 Cost of sales and fuel (exclusive of items shown separately below) 17,909.9 12,256.7 5,110.1 5,653.2 7,146.6 Operating costs 1,149.7 1,067.0 886.1 82.7 180.9 Depreciation and amortization 626.1 621.7 578.7 4.4 43.0 Impairment charges — — 607.2 — (607.2) Other operating (income) expense, net (106.2) (1.4) (1.3) 104.8 0.1 Operating income $ 2,807.4 $ 2,596.3 $ 1,361.4 211.1 1,234.9 Equity in net earnings from investments $ 147.7 $ 122.5 $ 143.2 25.2 (20.7) Impairment of equity investments $ — $ — $ (37.7) — (37.7) Interest expense, net of capitalized interest $ (675.9) $ (732.9) $ (712.9) (57.0) 20.0 Net income $ 1,722.2 $ 1,499.7 $ 612.8 222.5 886.9 Diluted EPS $ 3.84 $ 3.35 $ 1.42 0.49 1.93 Adjusted EBITDA $ 3,619.7 $ 3,379.7 $ 2,723.7 240.0 656.0 Capital expenditures $ 1,202.1 $ 696.9 $ 2,195.4 505.2 (1,498.5) See reconciliation of net income to adjusted EBITDA in the “Non-GAAP Financial Measures” section.
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.
The following is a summary of our most critical accounting policies and estimates, which are defined as those estimates and policies most important to the portrayal of our financial condition and results of operations and requiring management’s most difficult, subjective or complex judgment, particularly because of the need to make estimates concerning the impact of inherently uncertain matters.
The following is a summary of our most critical accounting estimates, which are defined as those estimates most important to the portrayal of our financial condition and results of operations and requiring management’s most difficult, subjective or complex judgment, particularly because of the need to make estimates concerning the impact of inherently uncertain matters.
Selected Financial Results and Operating Information for the Year Ended December 31, 2021 vs. 2020 - The consolidated and segment financial results and operating information for the year ended December 31, 2021, compared with the year ended December 31, 2020, are included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2021 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 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.
The Intermediate Partnership holds all of ONEOK Partners’ interests and equity in its subsidiaries, which are nonguarantors, and substantially all the assets and operations reside with nonguarantor operating subsidiaries.
The Intermediate Partnership holds all of ONEOK Partners’ interests and equity in its subsidiaries, which are nonguarantors, and substantially all the assets and operations reside with nonguarantor operating subsidiaries. Magellan holds interests in its subsidiaries, which are nonguarantors, and substantially all the assets and operations reside with nonguarantor operating subsidiaries.
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 is 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 with goodwill was less than its carrying amount.
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 issuer and parent guarantor, excluding our ownership of all the interests in ONEOK Partners, reflect no material assets, liabilities or results of operations, apart from the guaranteed indebtedness.
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.
For more information on commodity price sensitivity and a discussion of the market risk of pricing changes, see Item 7A, Quantitative and Qualitative Disclosures about Market Risk. See Notes A, C and D of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of fair value measurements and derivatives and risk-management activities.
For more information on commodity price sensitivity and a discussion of the market risk of pricing changes, see Item 7A, Quantitative and Qualitative Disclosures about Market Risk. See Notes A, D and E of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of fair value measurements and derivatives and risk-management activities.
Material Commitments - We have material cash commitments related to our capital expenditures, senior notes and corresponding interest payments, which we expect to fund through our sources of cash inflows discussed above. Our senior notes and interest payments are discussed in Note G of the Notes to Consolidated Financial Statements in this Annual Report.
Material Commitments - We have material cash commitments related to our capital expenditures, senior notes and corresponding interest payments, which we expect to fund through our sources of cash inflows discussed above. Our senior notes and interest payments are discussed in Note H of the Notes to Consolidated Financial Statements in this Annual Report.
Our Series E Preferred Stock pays quarterly dividends on each share of Series E Preferred Stock, when, as and if declared by our Board of Directors, at a rate of 5.5% per year. In 2022, we paid dividends of $1.1 million for the Series E Preferred Stock.
Our Series E Preferred Stock pays quarterly dividends on each share of Series E Preferred Stock, when, as and if declared by our Board of Directors, at a rate of 5.5% per year. In 2023, we paid dividends for the Series E Preferred Stock of $1 million for the series E preferred stock.
Other Legal Proceedings - We are a party to various legal proceedings that have arisen in the normal course of our operations. While the results of these proceedings cannot be predicted with certainty, we believe the reasonably possible losses from such 44 Table of Contents proceedings, individually and in the aggregate, are not material.
Other Legal Proceedings - We are a party to various legal proceedings that have arisen in the normal course of our operations. While the results of these proceedings cannot be predicted with certainty, we believe the reasonably possible losses from such proceedings, individually and in the aggregate, are not material.
Impairment of Goodwill and Long-Lived Assets, Including Intangible Assets - We assess our goodwill for impairment at least annually as of July 1, unless events or changes in circumstances indicate an impairment may have occurred before that time.
Impairment of Goodwill, Long-Lived Assets, Including Intangible Assets and Equity Method Investments - We assess our goodwill for impairment at least annually as of July 1, unless events or changes in circumstances indicate an impairment may have occurred before that time.
We have discussed the development and selection of our estimates and critical accounting policies with the Audit Committee of our Board of Directors. See Note A of the Notes to Consolidated Financial Statements in this Annual Report for the description of our accounting policies and additional information about our critical accounting policies and estimates.
We have discussed the development and selection of our critical accounting estimates with the Audit Committee of our Board of Directors. See Note A of the Notes to Consolidated Financial Statements in this Annual Report for the description of our accounting policies.
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 and interest-rate swaps. For additional information on our interest-rate swaps, see Note D of the Notes to Consolidated Financial Statements in this Annual Report.
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.
Ethane Production - Price differentials between ethane and natural gas can cause natural gas processors to extract ethane or leave it in the natural gas stream, known as ethane rejection. As a result of these ethane economics, ethane volumes on our system can fluctuate.
Ethane Economics - Price differentials between ethane and natural gas can cause natural gas processors to recover ethane or leave it in the natural gas stream, known as ethane rejection. As a result of these ethane economics, ethane volumes on our system can fluctuate.
We expect our sources of cash inflows to provide sufficient resources to finance our operations, quarterly cash dividends, capital expenditures and maturities of long-term debt. 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 $2.5 Billion Credit Agreement, which expires in June 2027, and access to $1.0 billion available through our “at-the-market” equity program.
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. 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. 53 T able of Contents CASH FLOW ANALYSIS We use the indirect method to prepare our Consolidated Statements of Cash Flows.
Capital expenditur es increased in 2022 due primarily to capital-growth projects, including the Viking compression project. Years Ended December 31, Operating Information (a) 2022 2021 2020 Natural gas transportation capacity contracted ( MDth/d ) 7,428 7,395 7,461 Transportation capacity contracted 94 % 95 % 96 % (a) - Includes volumes for consolidated entities only.
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.
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.
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.
Cash Flow Analysis for the Year Ended December 31, 2021 vs. 2020 - The cash flow analysis for the year ended December 31, 2021, compared with the year ended December 31, 2020, is included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2021 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.
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.
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. See Note E 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 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.
Our dividend growth is primarily due to the increase in cash flows resulting from the growth of our operations. 38 Table 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 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.
See Notes A, E and F of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of goodwill, long-lived assets and investments in unconsolidated affiliates.
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.
(b) - Includes volumes we processed at company-owned and third-party facilities. 2022 vs. 2021 - Our natural gas gathered and natural gas processed volumes increased due primarily to increased producer activity in the Rocky Mountain and Mid-Continent regions, offset partially by the unfavorable 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. 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.
In April 2022, the FERC initiated a review of Guardian’s rates pursuant to Section 5 of the Natural Gas Act. In August 2022, Guardian reached a settlement in principle with the participants in the Section 5 rate case. The FERC approved the settlement in February 2023, which w ill result in a future reduction of rates.
In April 2022, the FERC initiated a review of Guardian’s rates pursuant to Section 5 of the Natural Gas Act. In August 2022, Guardian reached a settlement in principle with the participants in the Section 5 rate case. The FERC approved the settlement in February 2023, which resulted in a reduction of rates starting in April 2023 .
Credit Ratings - Our long-term debt credit ratings as of February 21, 2023, are shown in the table below: Rating Agency Long-Term Rating Short-Term Rating Outlook Moody’s Baa3 Prime-3 Positive 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 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.
As we place additional assets in service, our estimates related to depreciation expense have become more significant and changes in estimated useful lives of our assets could have a material effect on our results of operations.
As we place additional assets in service or acquire assets as a result of an acquisition or asset purchase, our estimates related to depreciation expense have become more significant and changes in estimated useful lives of our assets could have a material effect on our results of operations.
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.
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.
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.
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.
Adjusted EBITDA is defined as net income adjusted for interest expense, depreciation and amortization, noncash impairment charges, income taxes, allowance for equity funds used during construction, noncash compensation expense and certain other noncash items.
Adjusted EBITDA is defined as net income adjusted for interest expense, depreciation and amortization, noncash impairment charges, income taxes, noncash compensation expense and certain other noncash items.
We estimate that there are more than 225 MBbl/d of discretionary ethane, consisting of more than 125 MBbl/d in the Rocky Mountain region and approximately 100 MBbl/d in the Mid-Continent region, that can be recovered and transported on our system.
We estimate that there are approximately 250 MBbl/d of discretionary ethane, consisting of approximately 150 MBbl/d in the Rocky Mountain region and approximately 100 MBbl/d in the Mid-Continent region, that could be recovered and transported on our system.
In 2022, we paid common stock dividends of $3.74 per share, which is consistent with prior year. In February 2023, we paid a quarterly common stock dividend of $0.955 per share ($3.82 per share on an annualized basis), an increase of 2% compared with the same quarter in the prior year.
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.
We assess hedging relationships at the inception of the hedge and on an ongoing basis to determine whether the hedging relationship is, and is expected to remain, highly effective.
We assess hedging relationships at the inception of the hedge, and periodically thereafter, to determine whether the hedging relationship is, and is expected to remain, highly effective.
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 extract or reject ethane. 2022 vs. 2021 - Volumes increased due primarily to increased NGL production in the Rocky Mountain region and Permian Basin, and higher ethane volumes from incentivized ethane recovery in the Rocky Mountain region, offset partially by decreased ethane recovery in the Mid-Continent region due to ethane economics.
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.
Years Ended December 31, Operating Information (a) 2022 2021 2020 Natural gas gathered ( BBtu/d ) 2,852 2,736 2,553 Natural gas processed ( BBtu/d ) (b) 2,612 2,515 2,364 Average fee rate ( $/MMBtu ) $ 1.10 $ 1.04 $ 0.89 (a) - Includes volumes for consolidated entities only.
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.
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. 2022 vs. 2021 - Adjusted EBITD A increased $147.5 million, p rimarily as a result of the following: • an increase of $127.7 million due primarily to higher realized commodity prices, net of hedging, and average fee rates; and • an increase of $53.8 million from higher volumes due primarily to increased producer activity in the Rocky Mountain and Mid-Continent regions, offset partially by the impact of winter weather in the Rocky Mountain region in the second and fourth quarters of 2022; offset by • an increase of $35.2 million in operating costs due primarily to higher materials and supplies expense due primarily to the growth of our operations and higher outside services.
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.
In February 2023, we paid a quarterly common stock dividend of $0.955 per share ($3.82 per share on an annualized basis), an increase of 2% compared with the same quarter in the prior year.
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.
The remaining $830 million was received in the first quarter 2023. The proceeds serve as settlement for property damage, business interruption claims to the date of settlement and as payment in lieu of future business interruption insurance claims.
The proceeds serve as settlement for property damage, business interruption claims to the date of settlement and as payment in lieu of future business interruption insurance claims.
Although 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, our working capital deficits at December 31, 2022 and 2021, were driven primarily by current maturities of long-term debt.
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.
IMPACT OF NEW ACCOUNTING STANDARDS Information about the impact of new accounting standards is included in Note A of the Notes to Consolidated Financial Statements in this Annual Report. 48 Table of Contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of our Consolidated Financial Statements and related disclosures in accordance with GAAP requires us to make estimates and assumptions with respect to values or conditions that cannot be known with certainty that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements.
CRITICAL ACCOUNTING ESTIMATES The preparation of our Consolidated Financial Statements and related disclosures in accordance with GAAP requires us to make estimates and assumptions with respect to values or conditions that cannot be known with certainty that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements.
Our growth strategy is focused around connecting 41 Table of Contents diversified supply basins from the Rocky Mountain region through the Mid-Continent region and the Permian Basin with purity NGLs demand from the petrochemical and refining industries and NGL export demand in the Gulf Coast. See “Growth Projects” in the “Recent Developments” section for discussion of our capital-growth projects.
Our growth strategy is focused around 46 T able of Contents connecting diversified supply basins from the Rocky Mountain region through the Mid-Continent region and the Permian Basin with demand for Purity NGLs from the petrochemical and refining industries and NGL exports in the Gulf Coast.
Capital expenditures increased due primarily to our capital-growth projects, including the construction of our Demicks Lake III natural gas processing plant, our MB-5 fractionator and the Viking compression project. Additional information regarding our financial results and operating information is provided in the following discussion for each of our segments.
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.
In February 2023, we paid quarterly dividends totaling $0.3 million for the Series E Preferred Stock. For the year ended December 31, 2022, our cash flows from operations exceeded dividends paid by $1.2 billion. We expect our cash flows from operations to continue to sufficiently fund our cash dividends.
In February 2024, we paid quarterly dividends totaling $0.3 million for the Series E Preferred Stock. For the year ended December 31, 2023, our cash flows from operations exceeded dividends paid by $2.6 billion, due in part to the insurance proceeds received from the Medford settlement in 2023.
Years Ended December 31, Operating Information 2022 2021 2020 Raw feed throughput ( MBbl/d ) (a) 1,237 1,198 1,084 Average Conway-to-Mont Belvieu OPIS price differential - ethane in ethane/propane mix ( $/gallon ) $ 0.04 $ (0.01) $ 0.01 (a) - Represents physical raw feed volumes for which we provide transportation and/or fractionation services.
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.
We expect our cash from operations in the remainder of 2023 and in 2024 to be impacted by incurred costs and losses resulting from the Medford incident for which we will no longer receive business interruption proceeds.
The proceeds serve as settlement for property damage, business interruption claims to the date of settlement and as payment in lieu of future business interruption insurance claims. We expect our cash from operations in 2024 to be impacted by incurred costs resulting from the Medford incident for which we no longer receive business interruption proceeds.
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 $2.5 Billion Credit Agreement could increase and a potential loss of access to the commercial paper market could occur.
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.
Other options to obtain financing include, but are not limited to, issuing common stock, loans from financial institutions, issuance of convertible debt securities or preferred equity securities, asset securitization and the sale and lease-back of facilities. Debt Issuances - In November 2022, we completed an underwritten public offering of $750 million, 6.1% senior unsecured notes due 2032.
Other options to obtain financing include, but are not limited to, issuing common stock, loans from financial institutions, issuance of convertible debt securities or preferred equity securities, asset securitization and the sale and lease-back of facilities.
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. For a discussion of our capital expenditure financing, see “Capital Expenditures” in the “Liquidity and Capital Resources” section.
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. Capital Expenditures - We classify expenditures that are expected to generate additional revenue, return on investment or significant operating or environmental efficiencies as growth capital expenditures.
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.
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.
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.
Commodity Price Risk - See discussion regarding our commodity price risk under “Commodity Price Risk” in Item 7A, Quantitative and Qualitative Disclosures about Market Risk. Natural Gas Liquids Growth Projects - Our Natural Gas Liquids segment invests in projects to transport, fractionate, store and deliver to market centers 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.
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 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.
To estimate the fair value of 49 Table of Contents these assets, we use two generally accepted valuation approaches, an income approach and a market approach.
The evaluation is performed at the lowest level for which separately identifiable cash flows exist. To estimate the fair value of these assets, we use two generally accepted valuation approaches, an income approach and a market approach.
Our operating cash flows can also be impacted by changes in our NGLs and natural gas inventory balances, which are driven primarily by commodity prices, supply, demand and the operation of our assets. 2022 vs. 2021 - Cash flows from operating activities, before changes in operating assets and liabilities, increased $214.5 million due primarily to higher net income resulting from higher realized commodity prices, net of hedging, and higher average fee rates in our Natural Gas Gathering and Processing segment and higher exchange services in our Natural Gas Liquids segment.
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.
Subsequent event - We elected to redeem our $425 million, 5.0% senior notes due September 2023, with a redemption effective date in late February 2023. We expect the redemption price to equal 100% of the principal amount of the notes, plus accrued and unpaid interest, which we will pay with cash on hand.
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.
Additionally, the proposed border facilities would connect at the international boundary with a new pipeline under development in Mexico for delivery to a liquefied natural gas export facility on the west coast of Mexico. The final investment decision on the pipeline is expected by mid-2023. See “Growth Projects” in the “Recent Developments” section for discussion of our capital-growth projects.
The proposed border facilities would connect upstream with a potential intrastate pipeline, the Saguaro Connector pipeline. Additionally, the proposed border facilities would connect at the international boundary with a new pipeline under development in Mexico for delivery to a liquefied natural gas export facility on the west coast of Mexico.
The change is due primarily to changes in risk management assets and liabilities, which include the gains associated with the settlements of forward-starting interest rate swaps in 2022 and changes in the fair value of risk-management assets and liabilities; accounts receivable resulting from the timing of receipt of cash from customers and NGLs and natural gas in inventory, both of which vary from period to period and with changes in commodity prices; offset partially by changes in accounts payable, which also vary from period to period with changes in commodity prices, and from the timing of payments to vendors, suppliers and other third parties and changes in other assets and liabilities.
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.
For a discussion of our capital expenditure financing, see “Capital Expenditures” in the “Liquidity and Capital Resources” section. 40 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 December 31, 2022 vs. 2021 2021 vs. 2020 Financial Results 2022 2021 2020 $ Increase (Decrease) ( Millions of dollars ) NGL and condensate sales $ 3,690.2 $ 2,821.2 $ 889.4 869.0 1,931.8 Residue natural gas sales 2,674.4 1,483.9 771.5 1,190.5 712.4 Gathering, compression, dehydration and processing fees and other revenue 168.9 156.4 159.2 12.5 (2.8) Cost of sales and fuel (exclusive of depreciation and operating costs) (5,116.6) (3,226.1) (844.0) 1,890.5 2,382.1 Operating costs, excluding noncash compensation adjustments (386.6) (351.4) (320.0) 35.2 31.4 Equity in net earnings (loss) from investments 4.9 3.8 (1.1) 1.1 4.9 Other 1.4 1.3 (5.0) 0.1 6.3 Adjusted EBITDA $ 1,036.6 $ 889.1 $ 650.0 147.5 239.1 Impairment charges $ — $ — $ 566.1 — (566.1) Capital expenditures $ 444.9 $ 275.2 $ 446.1 169.7 (170.9) See reconciliation of net income to adjusted EBITDA in the “Non-GAAP Financial Measures” section.
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.
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.
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.
Debt Repayments - In July 2022, we redeemed the remaining $895.8 million of our 3.375% senior notes due October 2022 at 100% of the principal amount, plus accrued and unpaid interest, with cash on hand and short-term borrowings.
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.
Our primary capital-growth projects are outlined in the table below: Project Scope Approximate Costs (a) Completion Natural Gas Gathering and Processing ( In millions ) Demicks Lake III plant 200 MMcf/d processing plant in the core of the Williston Basin $188 Completed Supported by acreage dedications with primarily fee-based contracts Natural Gas Liquids MB-5 fractionator 125 MBbl/d NGL fractionator in Mont Belvieu, Texas $750 Second Quarter 2023 MB-6 fractionator 125 MBbl/d NGL fractionator in Mont Belvieu, Texas $550 First Quarter 2025 Natural Gas Pipelines Viking compressor stations Electrification and replacement of certain compressor assets $95 Third Quarter 2023 (a) - Excludes capitalized interest/AFUDC.
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.
When possible, we implement effective hedging strategies using derivative financial instruments that qualify as hedges for accounting purposes. We have not used derivative instruments for trading purposes.
The accounting for changes in the fair value of a derivative instrument depends on whether it qualifies and has been designated as part of a hedging relationship. When possible, we implement effective hedging strategies using derivative financial instruments that qualify as hedges for accounting purposes. We have not used derivative instruments for trading purposes.
On January 9, 2023, we reached an agreement with our insurers to settle all claims for physical damage and business interruption related to the Medford incident. Under the terms of the settlement agreement, we agreed to resolve the claims for total insurance payments of $930 million, $100 million of which was received in 2022.
Under the terms of the settlement agreement, we agreed to resolve the claims for total insurance payments of $930 million, $100 million of which was received in 2022. The remaining $830 million was received in the first quarter of 2023.
As utilization increases and demand for feedstock returns, we expect improvement in ethane economics; however, price fluctuations are expected to continue. Ethane volumes under long-term contracts delivered to our NGL system increased approximately 20 MBbl/d to an average of 450 MBbl/d in 2022, compared with 430 MBbl/d in 2021, due primarily to changes in ethane extraction economics.
Ethane volumes under long-term contracts delivered to our NGL system increased 25 MBbl/d to an average of 475 MBbl/d during 2023, compared with an average of 450 MBbl/d in 2022, due primarily to changes in ethane extraction economics.
To estimate undiscounted future cash flows of long-lived assets, we may apply a probability-weighted approach that incorporates different assumptions and potential outcomes related to the underlying long-lived assets. The evaluation is performed at the lowest level for which separately identifiable cash flows exist.
Our impairment tests require the use of assumptions and estimates, such as industry economic factors and the profitability of future business strategies. To estimate undiscounted future cash flows of long-lived assets we may apply a probability-weighted approach that incorporates different assumptions and potential outcomes related to the underlying long-lived assets.
In July 2022, we redeemed the remaining $895.8 million of our 3.375% senior notes due October 2022 at 100% of the principal amount, plus accrued and unpaid interest, with cash on hand and short-term borrowings. Subsequent event - We elected to redeem our $425 million, 5.0% senior notes due September 2023, with a redemption effective date in late February 2023.
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. Equity Issuances - On September 25, 2023, we completed the Magellan Acquisition.
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, 2022 vs. 2021 2021 vs. 2020 Financial Results 2022 2021 2020 $ Increase (Decrease) ( Millions of dollars ) NGL and condensate sales $ 18,329.3 $ 13,653.1 $ 6,409.3 4,676.2 7,243.8 Exchange service and other revenues 557.5 559.2 497.8 (1.7) 61.4 Transportation and storage revenues 180.0 179.6 182.9 0.4 (3.3) Cost of sales and fuel (exclusive of depreciation and operating costs) (16,546.1) (11,939.7) (5,108.6) 4,606.4 6,831.1 Operating costs, excluding noncash compensation adjustments (548.2) (499.4) (396.4) 48.8 103.0 Equity in net earnings from investments 34.6 21.0 39.9 13.6 (18.9) Other 88.1 (10.2) (7.7) 98.3 (2.5) Adjusted EBITDA $ 2,095.2 $ 1,963.6 $ 1,617.2 131.6 346.4 Impairment charges $ — $ — $ 78.8 — (78.8) Capital expenditures $ 580.8 $ 306.9 $ 1,655.8 273.9 (1,348.9) See reconciliation of net income to adjusted EBITDA in the “Non-GAAP Measures” section.
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.
Net income and diluted EPS increased due primarily to the items discussed above, lower interest expense related to increased capitalized interest and lower debt balances and higher equity in net earnings from investments. These increases were offset partially by higher income taxes and losses related to the mark-to-market of investments associated with certain benefit plan investments.
Net income and diluted EPS increased due primarily to the items discussed above, higher equity in net earnings from investments, higher interest income due to both higher cash balances and higher interest rates and net gains on extinguishment of debt related to open market repurchases.
These reconciling items can include depreciation and amortization, impairment charges, allowance for equity funds used during construction, gain or loss on sale of assets, deferred income taxes, 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. 47 Table of Contents The following table sets forth the changes in cash flows by operating, investing and financing activities for the periods indicated: Years Ended December 31, 2022 2021 2020 ( Millions of dollars ) Total cash provided by (used in): Operating activities $ 2,906.0 $ 2,546.3 $ 1,899.0 Investing activities (1,139.3) (665.3) (2,270.5) Financing activities (1,692.9) (2,259.1) 875.0 Change in cash and cash equivalents 73.8 (378.1) 503.5 Cash and cash equivalents at beginning of period 146.4 524.5 21.0 Cash and cash equivalents at end of period $ 220.2 $ 146.4 $ 524.5 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 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.
See discussion of our announced capital-growth projects in the “Recent Developments” section. 46 Table of Contents We expect total capital expenditures, excluding AFUDC and capitalized interest, of $1.3-$1.5 billion in 2023.
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.
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.
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.
Subsequent Event - On January 9, 2023, we reached an agreement with our insurers to settle all claims for physical damage and business interruption related to the Medford incident. Under the terms of the settlement agreement, we agreed to resolve the claims for total insurance payments of $930 million, $100 million of which was received in 2022.
Medford Incident - 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 that occurred at our 210 MMbl/d Medford, Oklahoma, NGL fractionation facility in July 2022.
For additional information on our and ONEOK Partners’ indebtedness, see Note G of the Notes to Consolidated Financial Statements in this Annual Report.
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.
These increases were offset partially by the impact of Winter Storm Uri in our Natural Gas Pipelines segment in the first quarter 2021, as discussed in “Financial Results and Operating Information.” The changes in operating assets and liabilities increased operating cash flows $3.4 million for the year ended December 31, 2022, compared with a decrease of $141.8 million for the same period in 2021.
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.
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. The accounting for changes in the fair value of a derivative instrument depends on whether it qualifies and has been designated as part of a hedging relationship.
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.
We had working capital (defined as current assets less current liabilities) deficits of $503.9 million and $810.2 million as of December 31, 2022, and December 31, 2021, respectively.
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.
Guarantees and Cash Management - We and ONEOK Partners are issuers of certain public debt securities. We guarantee certain indebtedness of ONEOK Partners, and ONEOK Partners and the Intermediate Partnership guarantee certain of our indebtedness.
As of December 31, 2023, Magellan no longer had debt obligations outstanding. We guarantee certain debt securities of ONEOK Partners, and ONEOK Partners, the Intermediate Partnership and Magellan guarantee certain of our debt securities.
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, 2022 vs. 2021 2021 vs. 2020 Financial Results 2022 2021 2020 $ Increase (Decrease) ( Millions of dollars ) Transportation revenues $ 408.8 $ 412.9 $ 401.7 (4.1) 11.2 Storage revenues 130.5 77.6 68.4 52.9 9.2 Residue natural gas sales and other revenues 39.2 116.4 9.9 (77.2) 106.5 Cost of sales and fuel (exclusive of depreciation and operating costs) (25.4) (11.2) (6.8) 14.2 4.4 Operating costs, excluding noncash compensation adjustments (174.1) (162.1) (137.2) 12.0 24.9 Equity in net earnings from investments 108.2 97.8 104.4 10.4 (6.6) Other 1.2 (3.6) (3.0) 4.8 (0.6) Adjusted EBITDA $ 488.4 $ 527.8 $ 437.4 (39.4) 90.4 Capital expenditures $ 123.4 $ 92.6 $ 71.9 30.8 20.7 See reconciliation of net income to adjusted EBITDA in the “Non-GAAP Measures” section. 2022 vs. 2021 - Adjusted EBITDA decreased $39.4 million primarily as a result of the following: • a decrease of $134.7 million due to the favorable impact of Winter Storm Uri in the first quarter 2021 on natural gas sales of volumes previously held in inventory, interruptible transportation revenue and park and loan revenue; and • an increase of $12.0 million in operating expenses due primarily to higher outside services, offset by • an increase of $51.5 million in storage services due primarily to higher storage rates on renegotiated contracts; 43 Table of Contents • an increase of $23.1 million in transportation services due primarily to higher interruptible revenue, excluding the impact of Winter Storm Uri in the first quarter 2021 noted above, and higher firm transportation revenue; • an increase of $17.5 million due primarily to higher average earnings on natural gas sales of volumes previously held in inventory, excluding the impact of Winter Storm Uri in the first quarter 2021 noted above, and higher pricing on compression services; and • an increase of $10.4 million from higher equity in net earnings from investments due primarily to increased volumes on Northern Border and higher firm transportation rates on Roadrunner.
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.
We may have working capital deficits in future periods as we continue to repay long-term debt.
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.
In December 2022, our Saguaro Connector Pipeline L.L.C. subsidiary filed a Presidential Permit application with the FERC to construct and operate new international border-crossing facilities at the U.S. and Mexico border. The proposed border facilities would connect upstream with a potential intrastate pipeline, the Saguaro Connector Pipeline, which would be owned and operated by ONEOK.
Natural Gas Pipelines Capital Projects - Our Natural Gas Pipelines segment invests in capital projects that provide transportation and storage services to end users. In February 2024, the FERC approved our Saguaro Connector Pipeline, L.L.C.’s Presidential Permit application to construct and operate new international border-crossing facilities at the U.S. and Mexico border.
Natural Gas Gathering and Processing Growth Projects - Our Natural Gas Gathering and Processing segment has invested in growth projects in NGL-rich areas in the Williston Basin. See “Growth Projects” in the “Recent Developments” section for discussion of our capital-growth projects.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+6 added−12 removed10 unchanged
Biggest changeIn addition, the majority of our Natural Gas Pipelines segment’s pipeline tariffs provide us the ability to require security from shippers. 55 Table of Contents
Biggest changeIn 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.
See Note A of the Notes to Consolidated Financial Statements in this Annual Report for discussion on our accounting policies for our derivative instruments and the impact on our Consolidated Financial Statements.
See Note A of the Notes to Consolidated Financial Statements in this Annual Report for a discussion on our accounting policies for our derivative instruments and the impact on our Consolidated Financial Statements.
In 2022 and 2021, approximately 95% 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 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.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our exposure to market risk discussed below includes forward-looking statements and represents an estimate of possible changes in future earnings that could occur assuming hypothetical future movements in interest rates or commodity prices.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our exposure to market risk discussed below includes forward-looking statements and represents an estimate of possible changes in future earnings that could occur assuming hypothetical future movements in interest rates or commodity prices within our derivative portfolio.
Our risk-management function follows policies and procedures established by our Risk Oversight and Strategy Committee to monitor our natural gas, condensate and NGL marketing activities and interest rates to ensure our hedging activities mitigate market risks and comply with approved thresholds or limits. We do not use financial instruments for trading purposes.
Our risk-management function follows policies and procedures established by our Risk Oversight and Strategy Committee to monitor our natural gas, NGL, Refined Products, condensate and crude oil marketing activities and interest rates to ensure our hedging activities mitigate market risks and comply with approved thresholds or limits. We do not use financial instruments for trading purposes.
We also earn sales revenue on the downstream sales of purity NGLs. In 2022 and 2021, approximately 85% and 70%, 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.
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.
COMMODITY PRICE RISK As part of our hedging strategy, we use commodity derivative financial instruments and physical-forward contracts described in Note D of the Notes to Consolidated Financial Statements in this Annual Report to reduce the impact of near-term price fluctuations of natural gas, NGLs and condensate.
COMMODITY PRICE RISK As part of our hedging strategy, we use commodity derivative financial instruments and physical-forward contracts described in Note E of the Notes to Consolidated Financial Statements in this Annual Report to reduce the impact of near-term price fluctuations of natural gas, NGLs, Refined Products, condensate and crude oil.
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, 2022 December 31, 2021 ( Millions of dollars ) Crude oil and NGLs $ 34.6 $ 40.6 Natural gas 18.0 11.5 Total change in estimated fair value of commodity contracts $ 52.6 $ 52.1 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 53 Table of Contents 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 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.
At December 31, 2022, and December 31, 2021, we had forward-starting interest-rate swaps with notional amounts totaling $0.4 billion and $1.1 billion, respectively, to hedge the variability of interest payments on a portion of our forecasted debt issuances. All of our interest-rate swaps are designated as cash flow hedges.
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.
In 2022 and 2021, approximately 90% and 85%, respectively, 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 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
COUNTERPARTY CREDIT RISK We assess the creditworthiness of our counterparties on an ongoing basis and require security, including prepayments and other forms of collateral, when appropriate. 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.
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.
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.
Future increases in commercial paper rates or bond rates could expose us to increased interest costs on future borrowings. We may manage interest-rate risk through the use of fixed-rate debt, floating-rate debt and interest-rate swaps. Interest-rate swaps are agreements to exchange interest payments at some future point based on specified notional amounts.
Future increases in commercial paper rates or bond rates could expose us to increased interest costs on future borrowings.
Removed
Although our businesses are primarily fee-based, in our Natural Gas Gathering and Processing segment, we are exposed to commodity price risk as a result of retaining a portion of the commodity sales proceeds associated with our fee with POP contracts.
Added
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.
Removed
Under certain fee with POP contracts, our contractual fees and POP percentage may increase or decrease if production volumes, delivery pressures or commodity prices change relative to specified thresholds. We are exposed to basis risk between the various production and market locations where we buy and sell commodities.
Added
In 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.
Removed
The following tables set forth hedging information for our Natural Gas Gathering and Processing segment’s forecasted equity volumes for the period indicated: Year Ending December 31, 2023 Volumes Hedged Average Price Percentage Hedged NGLs - excluding ethane ( MBbl/d ) - Conway/Mont Belvieu 10.7 $ 1.23 / gallon 67% Condensate ( MBbl/d ) - WTI-NYMEX 1.7 $ 85.48 / Bbl 67% Natural gas ( BBtu/d ) - NYMEX and basis 99.2 $ 3.50 / MMBtu 75% Year Ending December 31, 2024 Volumes Hedged Average Price Percentage Hedged Natural gas ( BBtu/d ) - NYMEX and basis 16.2 $ 7.18 / MMBtu 11% Our Natural Gas Gathering and Processing segment’s commodity price sensitivity is estimated as a hypothetical change in the price of NGLs, crude oil and natural gas at December 31, 2022.
Added
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.
Removed
Condensate sales are typically based on the price of crude oil.
Added
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.
Removed
Assuming normal operating conditions, we estimate the following for our forecasted equity volumes: • a $0.01 per gallon change in the composite price of NGLs, excluding ethane, would change adjusted EBITDA for the years ending December 31, 2023 and 2024, by $2.5 million and $2.6 million, respectively; • a $1.00 per barrel change in the price of crude oil would change adjusted EBITDA for the years ending December 31, 2023 and 2024, by $0.9 million and $1.0 million, respectively; and • a $0.10 per MMBtu change in the price of residue natural gas would change adjusted EBITDA for the years ending December 31, 2023 and 2024, by $4.8 million and $5.2 million, respectively.
Added
See Note E of the Notes to Consolidated Financial Statements in this Annual Report for more information on our hedging activities. COUNTERPARTY CREDIT RISK We assess the creditworthiness of our counterparties on an ongoing basis and require security, including prepayments, letters of credit, liens and other forms of collateral, when appropriate.
Removed
These estimates do not include any effects of hedging or effects on demand for our services or natural gas processing plant operations that might be caused by, or arise in conjunction with, commodity price fluctuations.
Added
Refined Products and Crude - Our Refined Products and Crude segment’s customers include refiners, wholesalers, retailers, traders, railroads, airlines and regional farm cooperatives.
Removed
For example, a change in the gross processing spread may cause a change in the amount of ethane extracted from the natural gas stream, impacting gathering and processing financial results for certain contracts. INTEREST-RATE RISK We are exposed to interest-rate risk through borrowings under our $2.5 Billion Credit Agreement, commercial paper program and long-term debt issuances.
Removed
In 2022, we settled $750 million of our forward-starting interest-rate swaps related to our underwritten public offering of $750 million senior unsecured notes, resulting in a gain of $28.1 million, which is included in accumulated other comprehensive loss and amortized into interest expense over the term of the related debt.
Removed
In December 2022, we terminated the remaining $375 million of our forward-starting interest swaps that had mandatory termination dates of December 31, 2022.
Removed
We simultaneously entered into forward-starting interest-rate swaps with the same notional amounts at current market rates to hedge the variability of interest payments on a portion of our forecasted debt issuances that may result from changes in the benchmark interest rate before the debt is issued.
Removed
At December 31, 2022 and 2021, we had derivative assets of $10.9 million and derivative liabilities of $145.5 million, respectively, related to these interest-rate swaps. 54 Table of Contents The following table presents the effect of a 10% hypothetical change in interest rates on the estimated fair value of our interest-rate derivative instruments as of the dates indicated: December 31, 2022 December 31, 2021 ( Millions of dollars ) Forward-starting interest-rate swaps $ 13.0 $ 19.6 Our sensitivity analysis represents an estimate of the reasonably possible gains and losses that would be recognized on our interest-rate derivative contracts assuming hypothetical movements in future interest rates and is not necessarily indicative of actual results that may occur.
Removed
Actual gains and losses may differ from estimates due to actual fluctuations in interest rates, as well as changes in our interest-rate derivative portfolio during the year. See Note D of the Notes to Consolidated Financial Statements in this Annual Report for more information on our hedging activities.

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