TULSA, Okla., Feb. 5 /PRNewswire-FirstCall/ -- ONEOK, Inc. (NYSE: OKE) and
ONEOK Partners, L.P. (NYSE: OKS) today affirmed that their 2008 results are
expected to be within the earnings guidance ranges provided on Nov. 5, 2008,
even though they experienced changing market conditions during the fourth
quarter - lower commodity prices, narrower natural gas liquids (NGL) product
price and natural gas storage differentials, instances of ethane rejection and
weather-related operational outages.
ONEOK expects its 2008 results will be near the low end of the 2008 net
income range of $2.95 to $3.05 per diluted share, as previously issued.
ONEOK Partners expects its 2008 results will be within the lower half of
the net income guidance range of $5.95 to $6.15 per unit, with distributable
cash flow (DCF) projected to be in the range of $625 million to $655 million,
as previously issued.
"Strong performances by our distribution and ONEOK Partners segments
contributed to ONEOK's expected 2008 results," said John W. Gibson, chief
executive officer of ONEOK, and chairman and chief executive officer of ONEOK
Partners.
"The partnership is expected to have a record year in 2008, driven
primarily by higher commodity prices and wider NGL product price differentials
that allowed us to capture additional margins, as well as by higher volumes in
our natural gas and natural gas liquids businesses. However, significantly
lower commodity prices and a difficult business environment will make 2009 a
challenging year for ONEOK and ONEOK Partners," Gibson added.
ONEOK's 2009 net income is expected to be in the range of $2.25 to $2.75
per diluted share, reflecting lower anticipated earnings in the ONEOK Partners
segment, partially offset by higher expected earnings in the distribution and
energy services segments.
ONEOK Partners' 2009 net income is expected to be in the range of $3.15 to
$3.75 per unit. Preliminary estimates for the partnership's 2009 DCF are
expected to be in the range of $490 million to $550 million.
"Our 2009 earnings expectations reflect a significantly lower commodity
price environment, compared with 2008 realized prices," Gibson stated.
"Earnings from the partnership's recently completed internal growth projects -
which are primarily fee based - will partially offset the effects of lower
commodity prices and narrower NGL product price differentials. In our
distribution segment, we expect improved performance from the implementation
of rate mechanisms and operating efficiencies, and our energy services segment
will benefit from higher expected transportation margins in 2009.
"Given the uncertain capital markets and lower commodity price
environment, we remain focused on preserving our liquidity and maintaining the
partnership's distribution and ONEOK's dividend," Gibson stated. "We believe
there will be consolidation within our industry. With a strong balance sheet
and adequate liquidity, we'll be able to participate in those consolidation
opportunities and continue to increase distributions and dividends, as
conditions warrant."
2009 GUIDANCE FOR ONEOK
ONEOK's 2009 operating income from its ONEOK Partners segment is
forecasted to be approximately $521 million. Lower anticipated commodity
prices in the partnership's natural gas gathering and processing business, and
reduced NGL product price differentials in its natural gas liquids gathering
and fractionation business are expected to lower 2009 earnings, compared with
2008. The impact of the lower commodity prices is expected to be partially
offset by higher fee-based revenues in the partnership's natural gas and
natural gas liquids pipeline businesses, as a result of completing several
large internal growth projects in 2008.
The distribution segment is projecting 2009 operating income of
approximately $200 million. This is an increase from 2008 projected earnings,
due to continued implementation of rate strategies, including capital and
bad-debt recovery mechanisms, and improved operating efficiencies.
In the energy services segment, 2009 operating income is projected to be
approximately $115 million. This is an increase from 2008 projected earnings,
primarily due to expected improved transportation margins as a result of
higher anticipated natural gas basis differentials. For 2009, approximately
67 percent of energy services' transportation position is hedged. The 2009
earnings guidance reflects lower storage margins than occurred in 2008 and
planned changes in the segment's operations, which will reduce storage
capacity utilization.
On a stand-alone basis, ONEOK expects its 2009 free cash flow from
continuing operations before changes in working capital to exceed capital
expenditures and dividends by $185 million to $235 million.
At Dec. 31, 2008, ONEOK had $1.4 billion outstanding and $135.4 million
available under its revolving credit facilities and approximately $332.4
million in available cash and cash equivalents.
2009 GUIDANCE FOR ONEOK PARTNERS
The average unhedged prices used in 2009 guidance are $50 per barrel for
New York Mercantile Exchange (NYMEX) crude oil, $5 per MMBtu for NYMEX natural
gas and 56 cents per gallon for composite natural gas liquids.
The natural gas gathering and processing segment's 2009 operating income
is forecasted to be approximately $164 million, which is less than 2008
guidance due to lower anticipated natural gas liquids, crude oil and natural
gas prices. Natural gas volumes gathered and processed are expected to be
down approximately 2 percent from 2008 levels.
For 2009, the partnership estimates that in its natural gas gathering and
processing segment a 1 cent per gallon increase in the composite price of
natural gas liquids would increase annual net margin by approximately $1.2
million. A $1.00 per barrel increase in the price of crude oil would increase
annual net margin by approximately $1.0 million. Also, a 10 cent per MMBtu
increase in the price of natural gas would increase annual net margin by
approximately $0.6 million. All of these sensitivities exclude the effects of
hedging and assume normal operating conditions.
For 2009, financial hedges are in place on 25 percent of the natural gas
gathering and processing segment's expected natural gas liquids production at
an average price of $2.08 per gallon and on 32 percent of its expected
condensate production at an average price of $3.23 per gallon.
The natural gas pipelines segment's 2009 operating income is projected to
be approximately $141 million. The Guardian Pipeline expansion and extension
is expected to bring additional earnings to the segment in 2009. This
increase is partially offset by lower anticipated natural gas prices that
affect the segment's retained fuel position.
The natural gas liquids gathering and fractionation segment's 2009
operating income is forecasted to be approximately $102 million.
Approximately $93 million of the lower 2009 earnings projection is related to
an anticipated return to more normal NGL product price differentials than was
experienced in 2008. The segment also benefited from $13.3 million in
operational measurement gains, primarily at NGL storage caverns, in the third
quarter 2008. As a result of the completion of Overland Pass Pipeline and
related projects, volumes are expected to increase despite some anticipated
ethane rejection.
The natural gas liquids pipelines segment's 2009 operating income is
projected to be approximately $113 million. The segment's expected increase,
compared with 2008 projected earnings, is the result of anticipated volume
increases as a result of full-year operation of the Overland Pass Pipeline and
partial-year operations of the D-J and Piceance Lateral Pipelines and the
Arbuckle Pipeline, despite some anticipated ethane rejection.
2009 equity earnings from investments are estimated to be approximately
$91 million. 2008 equity earnings from investments included an $8.3 million,
third-quarter 2008 gain on the sale of Bison Pipeline LLC by Northern Border
Pipeline.
2009 capital expenditures are expected to be approximately $425 million,
comprised of $355 million in growth capital and $70 million in maintenance
capital. 2009 growth capital is significantly lower than the 2008 estimate of
$1.2 billion, as the partnership completes its $2 billion of growth projects.
At Dec. 31, 2008, ONEOK Partners had $870.0 million outstanding and $130.0
million available under its revolving credit facility and approximately $177.6
million in available cash and cash equivalents. These additional funds and
remaining borrowing capacity, as well as operating cash flow, would be
sufficient to fund the partnership's capital requirements well into 2009.
2008 RESULTS
ONEOK's and ONEOK Partners' 2008 financial results will be released on
Feb. 23, 2009, following the close of market. The management of ONEOK
Partners and ONEOK will conduct a joint conference call on Tuesday, Feb. 24,
2009, at 11 a.m. Eastern Standard Time (10 a.m. Central Standard Time). The
call will also be carried live on ONEOK's and ONEOK Partners' Web sites.
To participate in the telephone conference call, dial 866-256-9295, pass
code 1327308, or log on to the webcast at www.oneokpartners.com or
www.oneok.com.
For those unable to participate in the conference call or the webcast, the
replay will be available on ONEOK Partners' Web site, www.oneokpartners.com,
or ONEOK's Web site, www.oneok.com, for 30 days. A recording will be
available by phone for seven days. The playback call may be accessed at
866-837-8032, pass code 1327308.
NON-GAAP FINANCIAL MEASURES
ONEOK Partners has disclosed in this news release forecasted EBITDA and
DCF amounts that are non-GAAP financial measures. Management believes EBITDA
and DCF provide useful information to investors as a measure of comparison
with peer companies. However, these calculations may vary from company to
company, so the partnership's computations may not be comparable with those of
other companies. DCF is not necessarily the same as available cash as defined
in the Partnership Agreement. Management further uses EBITDA to compare the
financial performance of its segments and to internally manage those business
segments. Reconciliations of forecasted EBITDA to forecasted net income, and
forecasted computations of DCF are included in the financial tables attached
to this release.
ONEOK, Inc. (NYSE: OKE) is a diversified energy company. We are the
general partner and own 47.7 percent of ONEOK Partners, L.P. (NYSE: OKS), one
of the largest publicly traded limited partnerships, which is a leader in the
gathering, processing, storage and transportation of natural gas in the U.S.
and owns one of the nation's premier natural gas liquids (NGL) systems,
connecting natural gas and NGL supply in the Mid-Continent and Rocky Mountain
regions with key market centers. ONEOK is among the largest natural gas
distributors in the United States, serving more than 2 million customers in
Oklahoma, Kansas and Texas. Our energy services operation focuses primarily
on marketing natural gas and related services throughout the U.S. ONEOK is a
Fortune 500 company.
ONEOK Partners, L.P. (NYSE: OKS) is one of the largest publicly traded
limited partnerships, and is a leader in the gathering, processing, storage
and transportation of natural gas in the U.S. and owns one of the nation's
premier natural gas liquids (NGL) systems, connecting natural gas and NGL
supply in the Mid-Continent and Rocky Mountain regions with key market
centers. Our general partner is a wholly owned subsidiary of ONEOK, Inc.
(NYSE: OKE), a diversified energy company, which owns 47.7 percent of the
overall partnership interest. ONEOK is one of the largest natural gas
distributors in the United States, and its energy services operation focuses
primarily on marketing natural gas and related services throughout the U.S.
For more information, visit the Web sites at www.oneokpartners.com or
www.oneok.com.
Some of the statements contained and incorporated in this news release are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. The forward-looking statements relate to:
anticipated financial performance; management's plans and objectives for
future operations; business prospects; outcome of regulatory and legal
proceedings; market conditions and other matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements in certain circumstances. The following discussion is intended to
identify important factors that could cause future outcomes to differ
materially from those set forth in the forward-looking statements.
Forward-looking statements include the items identified in the preceding
paragraph, the information concerning possible or assumed future results of
our operations and other statements contained or incorporated in this news
release identified by words such as "anticipate," "plan," "estimate,"
"expect," "forecast," "intend," "believe," "projection," "goal" or similar
phrases.
You should not place undue reliance on forward-looking statements. Known
and unknown risks, uncertainties and other factors may cause our actual
results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by
forward-looking statements. Those factors may affect our operations, markets,
products, services and prices. In addition to any assumptions and other
factors referred to specifically in connection with the forward-looking
statements, factors that could cause our actual results to differ materially
from those contemplated in any forward-looking statement include, among
others, the following:
-- actions by rating agencies concerning the credit ratings of ONEOK and
ONEOK Partners;
-- the effects of weather and other natural phenomena on our operations,
including energy sales and prices and demand for pipeline capacity;
-- competition from other U.S. and Canadian energy suppliers and
transporters as well as alternative forms of energy;
-- the capital intensive nature of our businesses;
-- the profitability of assets or businesses acquired by us;
-- risks of marketing, trading and hedging activities, including the
risks of changes in energy prices or the financial condition of our
counterparties;
-- economic climate and growth in the geographic areas in which we do
business;
-- the risk of a significant slowdown in growth or decline in the U.S.
economy or the risk of delay in growth recovery in the U.S. economy;
-- the uncertainty of estimates, including accruals and costs of
environmental remediation;
-- the timing and extent of changes in commodity prices for natural gas,
NGLs, electricity and crude oil;
-- the effects of changes in governmental policies and regulatory
actions, including changes with respect to income and other taxes,
environmental compliance, and authorized rates or recovery of gas and
gas transportation costs;
-- changes in demand for the use of natural gas because of market
conditions caused by concerns about global warming or changes in
governmental policies and regulations due to climate change
initiatives;
-- the impact of recently issued and future accounting pronouncements and
other changes in accounting policies;
-- the possibility of future terrorist attacks or the possibility or
occurrence of an outbreak of, or changes in, hostilities or changes in
the political conditions in the Middle East and elsewhere;
-- the risk of increased costs for insurance premiums, security or other
items as a consequence of terrorist attacks;
-- the impact of unforeseen changes in interest rates, equity markets,
inflation rates, economic recession and other external factors over
which we have no control, including the effect on pension expense and
funding resulting from changes in stock and bond market returns;
-- risks associated with pending or possible acquisitions and
dispositions, including our ability to finance or integrate any such
acquisitions and any regulatory delay or conditions imposed by
regulatory bodies in connection with any such acquisitions and
dispositions;
-- the results of administrative proceedings and litigation, regulatory
actions and receipt of expected regulatory clearances involving the
OCC, KCC, Texas regulatory authorities or any other local, state or
federal regulatory body, including the FERC;
-- our ability to access capital at competitive rates or on terms
acceptable to us;
-- risks associated with adequate supply to our gas gathering and
processing, fractionation and pipeline facilities, including
production declines which outpace new drilling;
-- the risk that material weaknesses or significant deficiencies in our
internal controls over financial reporting could emerge or that minor
problems could become significant;
-- the impact of the outcome of pending and future litigation;
-- the possible loss of gas distribution franchises or other adverse
effects caused by the actions of municipalities;
-- the impact of unsold pipeline capacity being greater or less than
expected;
-- the ability to market pipeline capacity on favorable terms, including
the effects of:
-- future demand for and prices of natural gas;
-- competitive conditions in the overall natural gas and electricity
markets;
-- availability of supplies of Canadian and U.S. natural gas;
-- availability of additional storage capacity;
-- weather conditions; and
-- competitive developments by Canadian and U.S. natural gas
transmission peers;
-- performance of contractual obligations by our customers and shippers;
-- the ability to recover operating costs and amounts equivalent to
income taxes, costs of property, plant and equipment and regulatory
assets in our state and FERC-regulated rates;
-- timely receipt of approval by applicable governmental entities for
construction and operation of our pipeline projects and required
regulatory clearances;
-- our ability to acquire all necessary rights-of-way permits and
consents in a timely manner, our ability to promptly obtain all
necessary materials and supplies required for construction and our
ability to construct pipelines without labor or contractor problems;
-- our ability to promptly obtain all necessary materials and supplies
required for construction of gathering, processing and transportation
facilities;
-- our ability to control construction costs and completion schedules of
our pipeline projects and other projects;
-- the composition and quality of the natural gas we gather and process
in our plants and transport on our pipelines;
-- the efficiency of our plants in processing natural gas and extracting
NGLs;
-- the mechanical integrity of facilities operated;
-- demand for our services in the proximity of our facilities;
-- the impact of potential impairment charges;
-- our ability to control operating costs;
-- the risk inherent in the use of information systems in our respective
businesses, implementation of new software and hardware, and the
impact on the timeliness of information for financial reporting;
-- acts of nature, sabotage, terrorism or other similar acts causing
damage to our facilities or our suppliers' or shippers' facilities;
and
-- the risk factors listed in the reports we have filed and may file with
the SEC, which are incorporated by reference.
These factors are not necessarily all of the important factors that could
cause actual results to differ materially from those expressed in any of our
forward-looking statements. Other factors could also have material adverse
effects on our future results. All forward-looking statements attributable to
us or persons acting on our behalf are expressly qualified in their entirety
by these factors. Other than as required under securities laws, we undertake
no obligation to update publicly any forward-looking statement whether as a
result of new information, subsequent events or change in circumstances,
expectations or otherwise.
ONEOK, Inc. and Subsidiaries Exhibit A
EARNINGS GUIDANCE*
2009
(Millions, except per unit amounts) Guidance
Operating income
---------------- ----
ONEOK Partners $521
Distribution 200
Energy Services 115
Other 1
----- ---
Operating income 837
Equity earnings from investments 91
Other income (expense) 7
Interest expense (313)
Minority interest (167)
Income taxes (186)
------------ ----
Net income $269
========== ====
------------------------------- -----
Net earnings per share, diluted $2.50
=============================== =====
Average shares of common stock,
diluted 107.4
Capital Expenditures
-------------------- ----
ONEOK Partners $425
Distribution 137
Other 19
----- ----
Total Capital Expenditures $581
========================== ====
*Amounts shown are midpoints of ranges provided.
ONEOK Partners, L.P. and Subsidiaries Exhibit B
EARNINGS GUIDANCE*
2009
(Millions, except per unit amounts) Guidance
Operating income
---------------- ----
Natural Gas Gathering and Processing $164
Natural Gas Pipelines 141
Natural Gas Liquids Gathering and
Fractionation 102
Natural Gas Liquids Pipelines 113
Other 1
------- ---
Operating income 521
Equity earnings from investments 91
Other income (expense) 10
Interest expense (203)
Income taxes and other (16)
---------------------- ----
Net income $403
========== ====
------------------- -----
Net income per unit $3.45
=================== =====
Number of units used in computation 90.9
Capital Expenditures
Natural Gas Gathering and Processing $119
Natural Gas Pipelines 62
Natural Gas Liquids Gathering and
Fractionation 71
Natural Gas Liquids Pipelines 173
----------------------------- ----
Total Capital Expenditures $425
========================== ====
Growth $355
Maintenance 70
----------- ----
Total Capital Expenditures $425
========================== ====
*Amounts shown are midpoints of ranges provided.
ONEOK Partners, L.P. and Subsidiaries Exhibit C
EARNINGS GUIDANCE*
2009
(Millions of dollars) Guidance
Reconciliation of Net Income to EBITDA
-------------------------------------- ----
Net income $403
Interest expense 203
Depreciation and amortization 165
Income taxes and other 16
Equity AFUDC (6)
------------ ----
EBITDA $781
====== ====
Reconciliation of EBITDA to Distributable Cash Flow
---------------------------------------------------
EBITDA $781
Interest expense (203)
Maintenance capital (70)
Equity earnings from investments (91)
Distributions received from investments 114
Current income tax expense & other (11)
---------------------------------- ----
Distributable Cash Flow $520
======================= ====
*Amounts shown are midpoints of ranges provided.
Analyst Contact: Dan Harrison Analyst Contact: Christy Williamson
918-588-7950 918-588-7163
Media Contact: Megan Washbourne
918-588-7572
OKE-FG OKS-FG
SOURCE ONEOK, Inc.; ONEOK Partners, L.P.
-0- 02/05/2009
/CONTACT: Analysts, Dan Harrison, +1-918-588-7950, or Christy Williamson,
+1-918-588-7163, or media, Megan Washbourne, +1-918-588-7572, all of ONEOK,
Inc.; ONEOK Partners, L.P./
/Web Site: http://www.oneok.com /
(OKE OKS)
CO: ONEOK, Inc.; ONEOK Partners, L.P.
ST: Oklahoma, Kansas, Texas
IN: OIL GAS
SU: ERN CCA
PR
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3946 02/05/2009 16:05 EST http://www.prnewswire.com