TULSA, Okla., Feb. 24, 2020 /PRNewswire/ -- ONEOK, Inc. (NYSE: OKE) today announced higher fourth quarter and full-year 2019 results, compared with the same periods in 2018, and announced 2020 financial guidance and a 2021 outlook.
Higher Full-year 2019 Results, Compared With The Full Year 2018:
Higher 2020 Earnings Guidance, Compared With Full-year 2019 Results:
FOURTH QUARTER AND FULL-YEAR 2019 FINANCIAL HIGHLIGHTS
Three Months Ended | Years Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(Millions of dollars, except per share and coverage ratio amounts) | |||||||||||||||
Net income | $ | 320.3 | $ | 292.9 | $ | 1,278.6 | $ | 1,155.0 | |||||||
Diluted earnings per common share | $ | 0.77 | $ | 0.70 | $ | 3.07 | $ | 2.78 | |||||||
Adjusted EBITDA (a) | $ | 660.5 | $ | 625.2 | $ | 2,580.2 | $ | 2,447.5 | |||||||
DCF (a) | $ | 487.9 | $ | 464.7 | $ | 2,016.1 | $ | 1,822.4 | |||||||
DCF in excess of dividends paid (a) | $ | 109.6 | $ | 112.7 | $ | 558.5 | $ | 487.3 | |||||||
Dividend coverage ratio (a) | 1.29 | 1.32 | 1.38 | 1.37 | |||||||||||
Operating income | $ | 487.3 | $ | 471.9 | $ | 1,914.4 | $ | 1,835.5 | |||||||
Operating costs | $ | 259.3 | $ | 236.3 | $ | 982.9 | $ | 907.0 | |||||||
Depreciation and amortization | $ | 126.0 | $ | 110.6 | $ | 476.5 | $ | 428.6 | |||||||
Equity in net earnings from investments | $ | 39.4 | $ | 42.3 | $ | 154.5 | $ | 158.4 | |||||||
Capital expenditures | $ | 1,109.0 | $ | 831.8 | $ | 3,848.3 | $ | 2,141.5 |
(a) Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), distributable cash flow (DCF) and dividend coverage ratio are non-GAAP measures. Reconciliations to relevant GAAP measures are included in this news release. |
"2019 was another successful year for ONEOK with volume growth driving strong results across our business segments," said Terry K. Spencer, ONEOK president and chief executive officer. "With the completions of the Elk Creek Pipeline and the Demicks Lake I and II plants, we continue to demonstrate our ongoing commitment to expanding our existing infrastructure to help our producer customers reduce natural gas flaring in the Williston Basin.
"As we look ahead, we expect these recently completed projects and our remaining announced projects to drive significant adjusted EBITDA growth of 25% in 2020, with an outlook of approximately 20% adjusted EBITDA growth in 2021. This growth program is providing needed pipeline, processing and fractionation services to our customers from the Williston and Permian basins and the Mid-Continent region to the Texas Gulf Coast, growing our fee-based earnings for years to come," added Spencer.
FOURTH QUARTER AND FULL-YEAR 2019 FINANCIAL PERFORMANCE
ONEOK's net income increased 9% in the fourth quarter 2019 and 11% for the full year 2019, compared with the same periods in 2018. Higher 2019 results were driven primarily by natural gas liquids (NGL) and natural gas volume growth, higher average fee rates in the natural gas liquids and natural gas gathering and processing segments and increased transportation services in the natural gas pipelines segment, compared with the full year 2018.
Results were offset partially by lower earnings from optimization and marketing due to wider location price differentials in 2018 in the natural gas liquids segment, higher employee-related costs associated with the growth of ONEOK's operations and higher third-party transportation and fractionation costs in the natural gas liquids segment. Higher depreciation expense due to completed growth projects, narrower product price differentials in the natural gas liquids segment and lower realized NGL and natural gas prices in the natural gas gathering and processing segment also impacted 2019 results.
HIGHLIGHTS:
2020 FINANCIAL GUIDANCE:
2020 Guidance Range | ||||||||
(Millions of dollars) | ||||||||
ONEOK, Inc. | ||||||||
Net income | $ | 1,355 | - | $ | 1,605 | |||
Diluted earnings per common share | $ | 3.25 | - | $ | 3.85 | |||
Adjusted EBITDA (a) | $ | 3,100 | - | $ | 3,350 | |||
Distributable cash flow (a) | $ | 2,245 | - | $ | 2,505 | |||
Capital-growth expenditures | $ | 2,250 | - | $ | 2,730 | |||
Maintenance capital expenditures | $ | 200 | - | $ | 220 | |||
Segment Adjusted EBITDA: | ||||||||
Natural Gas Liquids | $ | 1,945 | - | $ | 2,075 | |||
Natural Gas Gathering and Processing | $ | 790 | - | $ | 860 | |||
Natural Gas Pipelines | $ | 365 | - | $ | 405 | |||
Other | $ | — | - | $ | 10 |
(a) Adjusted EBITDA and distributable cash flow are non-GAAP measures. Reconciliations to relevant GAAP measures are included in this news release. |
2020 Guidance Range | ||||||
Summary of 2020 Volume Guidance | ||||||
Natural Gas Liquids Raw Feed Throughput (MBbl/d) (a) | 1,175 | - | 1,315 | |||
Natural Gas Gathered (MMcf/d) | 2,125 | - | 2,405 | |||
Natural Gas Processed (MMcf/d) | 2,010 | - | 2,270 |
(a) Represents physical raw feed volumes on which ONEOK charges a fee for transportation and/or fractionation services. |
2020 Performance Drivers:
Natural Gas Liquids
Natural Gas Gathering and Processing
Natural Gas Pipelines
Additional guidance information can be found in the tables and in supplemental materials found on ONEOK's website, www.oneok.com.
2021 OUTLOOK:
ONEOK expects an approximately 20% increase in adjusted EBITDA in 2021, compared with the 2020 guidance midpoint. The projects expected to be completed in 2020 and the first quarter 2021 provide a foundation for continued earnings growth in 2021.
Primary contributors to 2021 earnings growth are expected to include volume growth in the Williston and Powder River basins, additional contracted volumes on ONEOK's Elk Creek Pipeline, the completion of the Bakken NGL Pipeline extension in the fourth quarter 2020 and the Bear Creek natural gas processing plant expansion in Dunn County, North Dakota, in the first quarter 2021.
Additionally, increased volumes on the West Texas LPG pipeline system in the Permian Basin from completed expansion projects, the completion of the MB-5 NGL fractionator and the Arbuckle II Pipeline extension and expansions will provide further connectivity with Gulf Coast markets and are expected to contribute to 2021 earnings growth.
EXPANSION PROJECT ANNOUNCEMENTS:
NGL PROJECTS:
The Elk Creek Pipeline expansion to 400,000 bpd is expected to cost approximately $305 million, with incremental capacity becoming available in early 2021 ramping up to the full 400,000 bpd in the third quarter 2021. The expansion is supported by long-term dedicated NGL production from ONEOK and third-party natural gas processing plants in the Williston and Powder River basins.
The fully contracted 100,000 bpd West Texas LPG pipeline expansion is expected to cost approximately $310 million and be completed in the second quarter 2021. The expansion is supported by long-term dedicated NGL production from third-party natural gas processing plants in the Permian Basin.
Both NGL expansion projects are expected to generate an adjusted EBITDA multiple of less than four times.
DEMICKS LAKE EXPANSION PROJECT:
An additional 200 MMcf/d expansion of the Demicks Lake natural gas processing facility in McKenzie County, North Dakota, will increase total capacity of the existing site to 600 MMcf/d. The third Demicks Lake project, and related infrastructure, are expected to cost a total of approximately $305 million and be completed in the third quarter 2021. This expansion is supported by acreage dedications with primarily fee-based contracts and is expected to generate an adjusted EBITDA multiple of approximately four to five times.
2019 BUSINESS-SEGMENT RESULTS:
Key financial and operating statistics are listed in the tables.
Natural Gas Liquids Segment
The natural gas liquids segment's fourth quarter and full-year 2019 adjusted EBITDA increased 8% and 2%, respectively, compared with the same periods in 2018. Higher volumes in the Rocky Mountain region, Permian Basin and STACK and SCOOP areas of the Mid-Continent region, and higher average fee rates primarily in the Permian Basin contributed to the increases.
NGL raw feed throughput volumes increased 6% and 7%, respectively, during the fourth quarter and full year 2019, compared with 2018.
The segment connected ONEOK's Demicks Lake I natural gas processing plant to its system in the fourth quarter 2019, and one existing plant connection in the Williston Basin was expanded during the quarter.
Three Months Ended | Years Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
Natural Gas Liquids Segment | 2019 | 2018 | 2019 | 2018 | |||||||||||
(Millions of dollars) | |||||||||||||||
Adjusted EBITDA | $ | 373.9 | $ | 347.4 | $ | 1,465.8 | $ | 1,440.6 | |||||||
Capital expenditures | $ | 827.5 | $ | 519.7 | $ | 2,796.6 | $ | 1,306.3 |
The increase in fourth quarter 2019 adjusted EBITDA, compared with the fourth quarter 2018, primarily reflects:
The increase in adjusted EBITDA for the full year 2019, compared with 2018, primarily reflects:
Natural Gas Gathering and Processing Segment
The natural gas gathering and processing segment's fourth quarter and full-year 2019 adjusted EBITDA increased 8% and 11%, respectively, compared with the same periods in 2018.
Natural gas volumes processed increased 7% in both the fourth quarter and full year 2019, compared to the same periods in 2018, due primarily to volume growth in the Williston Basin. Volume growth in the STACK and SCOOP areas of the Mid-Continent region also contributed to the increase in volumes processed for the full year 2019.
The segment also continues to benefit from higher fee-based earnings, with an average fee rate of 92 cents per MMBtu for the full-year 2019, compared with 90 cents per MMBtu in 2018.
Three Months Ended | Years Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
Natural Gas Gathering and Processing Segment | 2019 | 2018 | 2019 | 2018 | |||||||||||
(Millions of dollars) | |||||||||||||||
Adjusted EBITDA | $ | 188.5 | $ | 174.6 | $ | 702.7 | $ | 631.6 | |||||||
Capital expenditures | $ | 252.4 | $ | 261.0 | $ | 926.5 | $ | 694.6 |
Fourth quarter 2019 adjusted EBITDA increased, compared with the fourth quarter 2018, which primarily reflects:
The increase in adjusted EBITDA for the full year 2019, compared with 2018, primarily reflects:
Natural Gas Pipelines Segment
The natural gas pipelines segment's full-year 2019 adjusted EBITDA increased 12%, compared with the full year 2018, due primarily to higher firm transportation capacity contracted due to completed expansion projects.
Three Months Ended | Years Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
Natural Gas Pipelines Segment | 2019 | 2018 | 2019 | 2018 | |||||||||||
(Millions of dollars) | |||||||||||||||
Adjusted EBITDA | $ | 97.8 | $ | 97.2 | $ | 408.8 | $ | 366.3 | |||||||
Capital expenditures | $ | 21.3 | $ | 47.3 | $ | 99.2 | $ | 119.2 |
Fourth quarter 2019 adjusted EBITDA was relatively unchanged, compared with the fourth quarter 2018, due to:
The increase in adjusted EBITDA for the full year 2019, compared with 2018, primarily reflects:
EARNINGS CONFERENCE CALL AND WEBCAST:
ONEOK executive management will conduct a conference call at 11 a.m. Eastern Standard Time (10 a.m. Central Standard Time) on Feb. 25, 2020. The call also will be carried live on ONEOK's website.
To participate in the telephone conference call, dial 800-367-2403, pass code 9753816, or log on to www.oneok.com.
If you are unable to participate in the conference call or the webcast, the replay will be available on ONEOK's website, www.oneok.com, for 30 days. A recording will be available by phone for seven days. The playback call may be accessed at 888-203-1112, pass code 9753816.
LINK TO EARNINGS TABLES AND PRESENTATION:
https://ir.oneok.com/financial-information/financial-reports/2020
NON-GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) FINANCIAL MEASURES:
ONEOK has disclosed in this news release adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), distributable cash flow and dividend coverage ratio, which are non-GAAP financial metrics, used to measure the company's financial performance and are defined as follows:
These non-GAAP financial measures described above are useful to investors because they, and similar measures, are used by many companies in the industry as a measure of financial performance and are commonly employed by financial analysts and others to evaluate our financial performance and to compare our financial performance with the performance of other companies within our industry. Adjusted EBITDA, ONEOK distributable cash flow and dividend coverage ratio should not be considered in isolation or as a substitute for net income or any other measure of financial performance presented in accordance with GAAP.
These non-GAAP financial measures exclude some, but not all, items that affect net income. Additionally, these calculations may not be comparable with similarly titled measures of other companies. Reconciliations of net income to adjusted EBITDA, distributable cash flow and coverage ratio are included in the tables.
ONEOK has also disclosed in this news release forward-looking estimates for a 2021 adjusted EBITDA outlook and projected adjusted EBITDA multiples expected to be generated by the announced capital-growth projects. Adjusted EBITDA multiples for the announced capital-growth projects reflect the expected adjusted EBITDA to be generated by the projects relative to the capital investment being made. A reconciliation of estimated adjusted EBITDA related to ONEOK's 2021 outlook and announced capital-growth projects to GAAP net income is not provided because the GAAP net income is not available without unreasonable efforts.
ONEOK, Inc. (pronounced ONE-OAK) (NYSE: OKE) is a leading midstream service provider and owner of one of the nation's premier natural gas liquids (NGL) systems, connecting NGL supply in the Rocky Mountain, Mid-Continent and Permian regions with key market centers and an extensive network of natural gas gathering, processing, storage and transportation assets.
ONEOK is a FORTUNE 500 company and is included in S&P 500.
For information about ONEOK, visit the website: www.oneok.com.
For the latest news about ONEOK, find us on LinkedIn, Instagram, Facebook and Twitter.
This news release contains certain "forward-looking statements" within the meaning of federal securities laws. Words such as "anticipates," "believes," "continues," "could," "estimates," "expects," "forecasts," "goal," "guidance," "intends," "may," "might," "outlook," "plans," "potential," "projects," "scheduled," "should," "will," 'would," and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect our current views about future events. Such forward-looking statements include, but are not limited to, statements about the benefits of the transaction involving us, including future financial and operating results, our plans, objectives, expectations and intentions, and other statements that are not historical facts, including future results of operations, projected cash flow and liquidity, business strategy, expected synergies or cost savings, and other plans and objectives for future operations. No assurances can be given that the forward-looking statements contained in this news release will occur as projected and actual results may differ materially from those projected.
Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties, many of which are beyond our control, and are not guarantees of future results. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. These risks and uncertainties include, without limitation, the following:
These reports are also available from the sources described below. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. ONEOK undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or changes in circumstances, expectations or otherwise.
The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the Risk Factors included in the most recent reports on Form 10-K and Form 10-Q and other documents of ONEOK on file with the SEC. ONEOK'sSEC filings are available publicly on the SEC's website at www.sec.gov.
Analyst Contact: | Andrew Ziola 918-588-7683 |
Media Contact: | Brad Borror 918-588-7582 |
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SOURCE ONEOK, Inc.