TULSA, Okla., Feb. 23 /PRNewswire-FirstCall/ -- ONEOK, Inc. (NYSE: OKE)
today reported higher 2008 net income, which increased to $311.9 million, or
$2.95 per diluted share, from $304.9 million, or $2.79 per diluted share, a
year earlier.
Fourth-quarter 2008 net income was $68.2 million, or 65 cents per diluted
share, compared with net income of $102.9 million, or 98 cents per diluted
share, in the fourth quarter 2007.
"Our ONEOK Partners segment had a record year in 2008, driven by continued
volume growth, as well as high commodity prices and wider NGL product price
differentials," said John W. Gibson, ONEOK chief executive officer. "In the
first nine months of 2008, we saw unprecedented commodity price levels, which
began falling in the fourth quarter. The partnership benefited from these
higher prices, but we anticipate lower prices in 2009.
"Our distribution segment also had a record year as we continued to
implement rate strategies and focused on operating efficiencies to improve
financial performance. Our energy services segment had a challenging year in
2008, adversely affected by the commodity markets and weather," said Gibson.
"However, we are continuing with our efforts to improve this business -- to
have more predictable, less volatile earnings and lower working capital
requirements -- while continuing to serve our customers.
"Our ONEOK Partners segment turned in a solid fourth-quarter performance,
despite challenges in the energy and financial markets during the second half
of the year," Gibson added. "Our distribution segment's performance improved
as expected in the quarter, with results in our energy services segment
reflecting reduced storage and transportation margins."
ONEOK's fourth-quarter operating income was $218.7 million in 2008,
compared with $255.7 million in 2007, reflecting a decrease in storage,
marketing and transportation margins in the energy services segment.
ONEOK's 2008 operating income increased to $917.0 million from $822.5
million in 2007. The increase is primarily due to the record performance in
the ONEOK Partners segment, which benefited from significantly wider NGL
product price differentials, higher realized commodity prices, increased
volumes and incremental net margin associated with the North System, an
interstate natural gas liquids and refined petroleum products pipeline system
that was acquired in October 2007. In addition, the distribution segment
contributed higher earnings in 2008, due to the implementation of new rate
mechanisms and operating efficiencies. These increases were partially offset
by lower storage, marketing and transportation margins in the energy services
segment.
Operating costs for the year were $776.9 million, compared with $761.5
million in 2007. The increase is primarily due to incremental operating
expenses associated with the acquired North System and higher operating costs
at ONEOK Partners' fractionation facilities.
2008 SUMMARY INCLUDES:
* Operating income of $917.0 million, compared with $822.5 million in
2007;
* Increasing the company's dividend 11 percent during the year;
* Increasing the company's ownership in ONEOK Partners to 47.7 percent
by purchasing an additional 5.4 million common units in March 2008
for a total purchase price of approximately $303.2 million, and
contributing $9.4 million to maintain the 2 percent general partner
interest. ONEOK Partners also completed a public offering of 2.5
million common units at $58.10 per common unit;
* ONEOK Partners completing several large internal growth projects,
including the Overland Pass Pipeline, and continuing construction on
the balance of its $2 billion growth program;
* Receiving approval to recover the fuel-related portion of bad-debt
costs through the purchased gas adjustment mechanism in the
distribution segment's Oklahoma service territory;
* Receiving approval in the distribution segment to recover, and earn
a return on, $12.6 million in capital costs incurred to expand and
maintain the natural gas distribution system in Oklahoma; recovery
of, and a return on, $2.9 million in capital investment for safety-
related and public improvement infrastructure in Kansas; and $1.0
million in capital recovery in the El Paso, Texas, service area;
* Receiving approval of $4.7 million in new rates, annually, in
several of the distribution segment's Texas service areas;
* Receiving approval to recover, and earn a return on, expenses
associated with the Integrity Management Program in the distribution
segment's Oklahoma service territory;
* Filing for incentive-based rates in the distribution segment's
Oklahoma service territory;
* Distributions declared related to the company's general partner
interest in ONEOK Partners of $85.5 million for the year;
distributions declared from the company's limited partner interest
in ONEOK Partners of $180.6 million for 2008;
* ONEOK stand-alone, long-term debt of 44 percent of capitalization at
year-end 2008. In February 2009, ONEOK repaid $100 million of
maturing long-term debt;
* ONEOK, on a stand-alone basis, at Dec. 31, 2008, having $1.4 billion
in short-term debt, $332.4 million of cash and cash equivalents, and
$668.4 million of gas in storage;
* ONEOK stand-alone cash flow from continuing operations, before
changes in working capital, of $551.6 million, which exceeded stand-
alone capital expenditures and dividends of $382.1 million by $169.5
million;
* ONEOK's three distribution companies being named leading performers
in emergency response by the American Gas Association;
* ONEOK Partners being named the Natural Gas STAR Gathering and
Processing Partner of the Year by the U. S. Environmental Protection
Agency; and
* ONEOK Partners receiving an award from the Occupational Safety and
Health Administration (OSHA) for achieving three years of excellence
in employee health and safety at its Mont Belvieu fractionator, and
being recognized by OSHA as a STAR Status Site at its Maysville,
Okla., natural gas processing facility.
2008 BUSINESS UNIT RESULTS
ONEOK Partners
The ONEOK Partners segment posted fourth-quarter operating income of
$133.0 million, compared with $129.7 million in the same quarter 2007.
The increase in fourth-quarter earnings comes primarily from the natural
gas liquids pipelines business, which increased $12.1 million from higher
volumes, which included $10.3 million from increased volumes on the North
System. In addition, the Overland Pass Pipeline became fully operational
during the fourth quarter. ONEOK Partners' natural gas liquids gathering and
fractionation business benefited $11.4 million from wider NGL product price
differentials. These increases were partially offset by reduced earnings in
its natural gas gathering and processing business, as a result of $7.8 million
from lower commodity prices and $8.6 million from a one-time favorable
contract settlement in 2007. Depreciation expense increased $5.0 million in
2008, compared with the fourth quarter 2007, associated with the partnership's
completed capital projects.
For the year, operating income increased 44 percent to $644.8 million,
compared with $446.8 million in 2007.
Full-year 2008 results reflect a $70.8 million increase in ONEOK Partners'
natural gas liquids gathering and fractionation business, as a result of
significantly wider NGL product price differentials and a $32.1 million
increase from higher NGL gathering and fractionation volumes. The natural gas
gathering and processing business increased $58.4 million due to higher
realized commodity prices. The natural gas liquids pipelines business
benefited $44.3 million from the North System -- which included $10.3 million
from higher fourth-quarter volumes -- and $4.3 million from higher volumes on
other pipelines. The natural gas pipelines business benefited $11.7 million
from higher transportation and storage margins, primarily due to the impact of
natural gas prices on retained fuel, and new and renegotiated storage
contracts.
Operating costs for the ONEOK Partners' segment were $371.8 million for
the full year 2008, compared with $337.4 million in 2007, increasing primarily
as a result of incremental operating expenses associated with the North System
and higher operating costs at ONEOK Partners' fractionation facilities.
Depreciation and amortization expense increased by $11.1 million for 2008,
compared with 2007, primarily due to depreciation expense associated with
ONEOK Partners' completed capital projects and the acquired North System.
The ONEOK Partners segment's equity earnings from investments for the full
year 2008 were $101.4 million, compared with $89.9 million in the same period
last year. The increase is primarily due to higher gathering revenues in
ONEOK Partners' various investments, as well as an $8.3 million gain on the
sale of Bison Pipeline LLC by Northern Border Pipeline, partially offset by
reduced volumes on Northern Border Pipeline. ONEOK Partners owns a 50 percent
equity interest in Northern Border Pipeline.
The ONEOK Partners segment's capital expenditures for the year ending Dec.
31, 2008, increased to $1.3 billion, compared with $709.9 million in the same
period in 2007, as a result of the partnership's internal growth projects.
During 2008, ONEOK Partners completed a number of growth projects, including
the Overland Pass Pipeline, related NGL infrastructure upgrades, an NGL
pipeline extension into the Woodford Shale of Oklahoma, the Fort Union Gas
Gathering expansion and Midwestern Gas Transmission's eastern extension
pipeline. In addition, the partnership placed the Guardian Pipeline extension
and expansion in partial service in December 2008 and full service is expected
during the first quarter of 2009.
Distribution
The distribution segment reported fourth-quarter 2008 operating income of
$71.2 million versus $60.7 million in the same quarter 2007.
Fourth-quarter 2008 earnings benefited from new rate mechanisms, which
contributed $2.5 million in Oklahoma and $1.0 million in Texas. Operating
costs decreased to $89.7 million in the fourth quarter 2008 versus $98.8
million in the same period in 2007, primarily due to lower employee-related
costs.
The distribution segment reported record 2008 operating income of $188.8
million, compared with $174.1 million last year. The increase resulted
primarily from the implementation of new rate mechanisms, which included a
$12.4 million increase in Oklahoma from new capital and expense recovery
mechanisms, and a $3.3 million increase in Texas.
Operating costs for 2008 decreased to $375.3 million, compared with $377.8
million in 2007, primarily due to $4.3 million in lower employee-related costs
and $1.0 million in lower bad-debt expense, partially offset by an increase of
$2.4 million in fuel-related vehicle costs.
Residential and commercial volumes increased during 2008, compared with
2007, due to colder temperatures in the Oklahoma and Kansas service
territories; however, margins were moderated by weather normalization
mechanisms.
Energy Services
The energy services segment posted fourth-quarter operating income of $9.3
million versus $75.7 million in the same quarter 2007.
Fourth-quarter 2008 results, when compared with the same period in 2007,
reflect a decrease of $44.7 million in storage and marketing margins as a
result of less favorable pricing conditions in 2008, and a decrease of $28.7
million in transportation margins primarily due to narrower natural gas price
differentials between the Rocky Mountain and Mid-Continent regions.
Operating costs decreased $4.6 million for the quarter, compared with the
same period last year, primarily due to lower employee-related costs.
Energy services' full-year 2008 operating income was $75.7 million,
compared with $205.4 million in 2007. Compared with the same period a year
earlier, 2008 results were lower primarily due to a decrease of $83.3 million
in storage and marketing margins, which included hedging activities and a $9.7
million net loss to reflect inventory at the lower of cost or market in the
third quarter 2008. In addition, transportation margins decreased $40.3
million, and financial trading margins decreased $13.9 million from the same
period in 2007.
During 2008, commodity prices and weather provided a less favorable
operating environment, which lowered storage margins when compared with 2007.
The realized seasonal storage differential in 2008 was 96 cents per MMBtu,
compared with $1.94 per MMBtu realized in 2007. Reductions in the
transportation margins in 2008 were primarily due to narrower natural gas
price differentials between the Rocky Mountain and Mid-Continent regions.
Operating costs for the year decreased to $35.6 million, compared with
$39.9 million in 2007, due primarily to lower employee-related costs.
On Dec. 31, 2008, natural gas in storage was 81.9 Bcf, compared with 66.7
Bcf a year earlier. At Jan. 31, 2009, natural gas in storage was 62.6 Bcf.
Natural gas storage capacity under lease was 91 Bcf on Dec. 31, 2008, compared
with 96 Bcf in 2007.
The net margin for the energy services segment was derived from the
following sources:
Three Months Ended Years Ended
December 31, December 31,
2008 2007 2008 2007
(Millions of dollars)
Marketing, storage and
transportation, gross $67.3 $134.5 $313.4 $409.1
Less: Storage and
transportation costs (56.7) (50.5) (219.8) (191.9)
Marketing, storage and
transportation, net 10.6 84.0 93.6 217.2
Retail marketing 5.5 4.6 14.8 14.0
Financial trading 0.7 (0.1) 2.3 16.2
Net margin $16.8 $88.5 $110.7 $247.4
EARNINGS CONFERENCE CALL
The management of ONEOK and ONEOK Partners 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 http://www.oneok.com or
http://www.oneokpartners.com.
For those unable to participate in the conference call or the webcast, the
replay will be available on ONEOK's Web site, http://www.oneok.com, and ONEOK
Partners' Web site, http://www.oneokpartners.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.
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 master 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 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.
For information about ONEOK, Inc., visit the Web site:
http://www.oneok.com.
Some of the statements contained and incorporated in this news release are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of
1934, as amended. The forward-looking statements relate to our anticipated
financial performance, management's plans and objectives for our future
operations, our business prospects, the outcome of regulatory and legal
proceedings, market conditions and other matters. We make these forward-
looking statements in reliance on the safe harbor protections provided under
the Private Securities Litigation Reform Act of 1995. 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," "estimate," "expect,"
"project," "intend," "plan," "believe," "should," "goal," "forecast," "could,"
"may," "continue," "might," "potential," "scheduled," and other words and
terms of similar meaning.
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:
* the effects of weather and other natural phenomena on our
operations, including energy sales and demand for our services and
energy prices;
* competition from other United States and Canadian energy suppliers
and transporters as well as alternative forms of energy, including,
but not limited to, biofuels such as ethanol and biodiesel;
* the status of deregulation of retail natural gas distribution;
* the capital intensive nature of our businesses;
* the profitability of assets or businesses acquired or constructed by
us;
* our ability to make cost-saving changes in operations;
* risks of marketing, trading and hedging activities, including the
risks of changes in energy prices or the financial condition of our
counterparties;
* the uncertainty of estimates, including accruals and costs of
environmental remediation;
* the timing and extent of changes in energy commodity prices;
* the effects of changes in governmental policies and regulatory
actions, including changes with respect to income and other taxes,
environmental compliance, climate change initiatives, and authorized
rates or recovery of gas and gas transportation costs;
* the impact on drilling and production by factors beyond our control,
including the demand for natural gas and refinery-grade crude oil;
producers' desire and ability to obtain necessary permits; reserve
performance; and capacity constraints on the pipelines that
transport crude oil, natural gas and NGLs from producing areas and
our facilities;
* changes in demand for the use of natural gas because of market
conditions caused by concerns about global warming;
* 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;
* our indebtedness could make us vulnerable to general adverse
economic and industry conditions, limit our ability to borrow
additional funds, and/or place us at competitive disadvantages
compared to our competitors that have less debt, or have other
adverse consequences;
* actions by rating agencies concerning the credit ratings of ONEOK
and ONEOK Partners;
* the results of administrative proceedings and litigation, regulatory
actions and receipt of expected 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 gathering, processing,
fractionation and pipeline facilities, including production declines
that 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 and outcome of pending and future litigation;
* the ability to market pipeline capacity on favorable terms,
including the effects of:
- future demand for and prices of natural gas and NGLs;
- competitive conditions in the overall energy market;
- availability of supplies of Canadian and United States natural
gas; and
- availability of additional storage capacity;
* performance of contractual obligations by our customers, service
providers, contractors and shippers;
* the timely receipt of approval by applicable governmental entities
for construction and operation of our pipeline and other projects
and required regulatory clearances;
* our ability to acquire all necessary permits, consents or other
approvals in a timely manner, to promptly obtain all necessary
materials and supplies required for construction, and to construct
gathering, processing, storage, fractionation and transportation
facilities without labor or contractor problems;
* the mechanical integrity of facilities operated;
* demand for our services in the proximity of our facilities;
* our ability to control operating costs;
* adverse labor relations;
* acts of nature, sabotage, terrorism or other similar acts that cause
damage to our facilities or our suppliers' or shippers' facilities;
* economic climate and growth in the geographic areas in which we do
business;
* the risk of a prolonged slowdown in growth or decline in the United
States economy or the risk of delay in growth recovery in the United
States economy, including increasing liquidity risks in United
States credit markets;
* 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;
* 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 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 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;
* the composition and quality of the natural gas and NGLs we gather
and process in our plants and transport on our pipelines;
* the efficiency of our plants in processing natural gas and
extracting and fractionating NGLs;
* the impact of potential impairment charges;
* 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;
* our ability to control construction costs and completion schedules
of our pipelines and other projects; 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. These and other risks are described in greater
detail in Item 1A, Risk Factors, in our Annual Report on Form 10-K. 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.
OKE-FE
Analyst Contact: Dan Harrison
918-588-7950
Media Contact: Megan Washbourne
918-588-7572
ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Years Ended
December 31, December 31,
(Unaudited) 2008 2007 2008 2007
(Thousands of dollars, except per share amounts)
Revenues $2,843,245 $3,984,968 $16,157,433 $13,477,414
Cost of sales and fuel 2,369,484 3,447,569 14,221,906 11,667,306
Net Margin 473,761 537,399 1,935,527 1,810,108
Operating Expenses
Operations and
maintenance 175,334 198,564 694,597 675,575
Depreciation and
amortization 64,498 59,506 243,927 227,964
General taxes 16,236 23,618 82,315 85,935
Total Operating Expenses 256,068 281,688 1,020,839 989,474
Gain (Loss) on Sale of
Assets 997 16 2,316 1,909
Operating Income 218,690 255,727 917,004 822,543
Equity earnings from
investments 26,627 24,933 101,432 89,908
Allowance for equity
funds used during
construction 15,118 5,852 50,906 12,538
Other income 179 4,488 16,838 21,932
Other expense (11,128) (5,666) (27,475) (7,879)
Interest expense (81,067) (68,822) (264,167) (256,325)
Income before Minority
Interests and Income
Taxes 168,419 216,512 794,538 682,717
Minority interests in
income of consolidated
subsidiaries (53,147) (58,186) (288,558) (193,199)
Income taxes (47,098) (55,402) (194,071) (184,597)
Net Income $68,174 $102,924 $311,909 $304,921
Earnings Per Share of
Common Stock
Net Earnings Per Share,
Basic $0.65 $0.99 $2.99 $2.84
Net Earnings Per Share,
Diluted $0.65 $0.98 $2.95 $2.79
Average Shares of Common
Stock (Thousands)
Basic 104,520 103,763 104,369 107,346
Diluted 105,512 105,555 105,760 109,298
Dividends Declared Per
Share of Common Stock $0.40 $0.36 $1.56 $1.40
ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(Unaudited) 2008 2007
Assets (Thousands of dollars)
Current Assets
Cash and cash equivalents $510,058 $19,105
Accounts receivable, net 1,265,300 1,723,212
Gas and natural gas liquids in storage 858,966 841,362
Commodity exchanges and imbalances 56,248 82,938
Energy marketing and risk management assets 362,808 143,941
Other current assets 324,222 140,917
Total Current Assets 3,377,602 2,951,475
Property, Plant and Equipment
Property, plant and equipment 9,476,619 7,893,492
Accumulated depreciation and
amortization 2,212,850 2,048,311
Net Property, Plant and Equipment 7,263,769 5,845,181
Investments and Other Assets
Goodwill and intangible assets 1,038,226 1,043,773
Energy marketing and risk management assets 45,900 3,978
Investments in unconsolidated affiliates 755,492 756,260
Other assets 645,073 461,367
Total Investments and Other Assets 2,484,691 2,265,378
Total Assets $13,126,062 $11,062,034
ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
December 31, December 31,
(Unaudited) 2008 2007
Liabilities and Shareholders' Equity (Thousands of dollars)
Current Liabilities
Current maturities of long-term debt $118,195 $420,479
Notes payable 2,270,000 202,600
Accounts payable 1,122,761 1,436,005
Commodity exchanges and imbalances 188,030 252,095
Energy marketing and risk management
liabilities 175,006 133,903
Other current liabilities 319,772 436,585
Total Current Liabilities 4,193,764 2,881,667
Long-term Debt, excluding current
maturities 4,112,581 4,215,046
Deferred Credits and Other Liabilities
Deferred income taxes 890,815 680,543
Energy marketing and risk management
liabilities 46,311 26,861
Other deferred credits 715,052 486,645
Total Deferred Credits and Other
Liabilities 1,652,178 1,194,049
Commitments and Contingencies
Minority Interests in Consolidated
Subsidiaries 1,079,369 801,964
Shareholders' Equity
Common stock, $0.01 par value:
authorized 300,000,000 shares; issued
121,647,007 shares and outstanding
104,845,231 shares at December 31, 2008;
issued 121,115,217 shares and outstanding
103,987,476 shares at December 31, 2007 1,216 1,211
Paid in capital 1,301,153 1,273,800
Accumulated other comprehensive loss (70,616) (7,069)
Retained earnings 1,553,033 1,411,492
Treasury stock, at cost: 16,801,776
shares at December 31, 2008 and 17,127,741
shares at December 31, 2007 (696,616) (710,126)
Total Shareholders' Equity 2,088,170 1,969,308
Total Liabilities and Shareholders'
Equity $13,126,062 $11,062,034
ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended
December 31,
(Unaudited) 2008 2007
Operating Activities (Thousands of dollars)
Net income $311,909 $304,921
Depreciation and amortization 243,927 227,964
Allowance for equity funds used
during construction (50,906) (12,538)
Gain on sale of assets (2,316) (1,909)
Minority interests in income of
consolidated subsidiaries 288,558 193,199
Equity earnings from investments (101,432) (89,908)
Distributions received from
unconsolidated affiliates 93,261 103,785
Deferred income taxes 165,191 65,017
Stock-based compensation expense 30,791 20,909
Allowance for doubtful accounts 13,476 14,578
Inventory adjustment, net 9,658 -
Investment securities gains (11,142) -
Changes in assets and liabilities
(net of acquisition and disposition
effects):
Accounts and notes receivable 433,859 (378,876)
Gas and natural gas liquids in storage (370,662) 88,937
Accounts payable (340,584) 343,144
Commodity exchanges and imbalances, net (37,375) 40,572
Unrecovered purchased gas costs (35,790) 9,530
Accrued interest 16,002 9,001
Energy marketing and risk management
assets and liabilities 60,846 41,649
Fair value of firm commitments 505 5,631
Pension and postretirement benefit plans (83,254) 28,573
Other assets and liabilities (158,845) 15,481
Cash Provided by Operating Activities 475,677 1,029,660
Investing Activities
Changes in investments in
unconsolidated affiliates 3,963 (3,668)
Acquisitions 2,450 (299,560)
Capital expenditures (less allowance for
equity funds used during construction) (1,473,136) (883,703)
Proceeds from sale of assets 2,630 4,022
Proceeds from insurance 9,792 -
Changes in short-term investments - 31,125
Cash Used in Investing Activities (1,454,301) (1,151,784)
Financing Activities
Borrowing (repayment) of notes
payable, net 1,197,400 196,600
Borrowing of notes
payable with maturities over 90 days 870,000 -
Issuance of debt, net of issuance costs - 598,146
Long-term debt financing costs - (5,805)
Payment of debt (416,040) (13,588)
Repurchase of common stock (29) (390,213)
Issuance of common stock 16,495 20,730
Issuance of common units, net of discounts 146,969 -
Dividends paid (162,785) (150,188)
Distributions to minority interests (201,658) (182,891)
Other financing activities 19,225 170
Cash Provided by Financing Activities 1,469,577 72,961
Change in Cash and Cash Equivalents 490,953 (49,163)
Cash and Cash Equivalents at
Beginning of Period 19,105 68,268
Cash and Cash Equivalents at End of
Period $510,058 $19,105
Supplemental Cash Flow Information:
Cash Paid for Interest $237,577 $253,678
Cash Paid for Taxes $82,965 $57,281
ONEOK, Inc. and Subsidiaries
INFORMATION AT A GLANCE
Three Months
Ended Years Ended
December 31, December 31,
(Unaudited) 2008 2007 2008 2007
(Millions of dollars, except as noted)
ONEOK Partners
Net margin $265.8 $259.1 $1,140.7 $895.9
Operating costs $99.1 $100.0 $371.8 $337.4
Depreciation and amortization $34.4 $29.4 $124.8 $113.7
Operating income $133.0 $129.7 $644.8 $446.8
Natural gas gathered (BBtu/d) 1,136 1,177 1,164 1,171
Natural gas processed (BBtu/d) 639 641 641 621
Natural gas transported (MMcf/d) 3,749 3,639 3,665 3,579
Residue gas sales (BBtu/d) 279 287 279 281
NGLs gathered (MBbl/d) 290 267 276 248
NGL sales (MBbl/d) 306 259 283 231
NGLs fractionated (MBbl/d) 356 385 373 356
NGLs transported (MBbl/d) 391 305 333 299
Capital expenditures $393.7 $301.5 $1,253.9 $709.9
Conway-to-Mount Belvieu OPIS average
price differential Ethane ($/gallon) $0.12 $0.07 $0.15 $0.06
Natural Gas Gathering and Processing:
Realized composite NGL sales prices
($/gallon) $0.78 $1.31 $1.27 $1.06
Realized condensate sales price
($/Bbl) $63.05 $85.16 $89.30 $67.35
Realized natural gas sales price
($/MMBtu) $4.42 $6.24 $7.34 $6.21
Realized gross processing spread
($/MMBtu) $9.15 $7.14 $7.47 $5.21
Distribution
Net margin $190.4 $189.0 $680.9 $663.6
Operating costs $89.7 $98.8 $375.3 $377.8
Depreciation and amortization $29.5 $29.5 $116.8 $111.6
Operating income $71.2 $60.7 $188.8 $174.1
Customers per employee 706 727 719 732
Capital expenditures $42.6 $53.3 $169.0 $162.0
Natural gas volumes (Bcf)
Gas Sales 57.8 56.4 174.8 176.6
Transportation 56.0 55.4 219.4 204.0
Natural gas margins
Gas Sales $156.6 $157.6 $552.3 $547.6
Transportation $23.2 $21.8 $87.3 $80.6
Energy Services
Net margin $16.8 $88.5 $110.7 $247.4
Operating costs $7.6 $12.2 $35.6 $39.9
Depreciation and amortization $0.2 $0.5 $0.9 $2.1
Operating income $9.3 $75.7 $75.7 $205.4
Natural gas marketed (Bcf) 294 305 1,160 1,191
Natural gas gross margin ($/Mcf) $0.04 $0.29 $0.07 $0.19
Physically settled volumes (Bcf) 602 576 2,359 2,370
ONEOK, Inc. and Subsidiaries
CONSOLIDATING INCOME STATEMENT
Three Months Ended December 31, 2008
Consoli-
ONEOK dating Consoli-
(Unaudited) ONEOK Partners Entries dated
(Millions of dollars)
Operating Income
ONEOK Partners $- $133 $- $133
Distribution 71 - - 71
Energy Services 9 - - 9
Other 6 - - 6
Operating Income 86 133 - 219
Equity in earnings of ONEOK Partners 69 - (69) -
Other income (expense) (8) 38 - 30
Interest expense (38) (43) - (81)
Minority interest - - (53) (53)
Income taxes (41) (6) - (47)
Net Income $68 $122 $(122) $68
Year Ended December 31, 2008
Consoli-
ONEOK dating Consoli-
(Unaudited) ONEOK Partners Entries dated
(Millions of dollars)
Operating Income
ONEOK Partners $- $645 $- $645
Distribution 189 - - 189
Energy Services 76 - - 76
Other 7 - - 7
Operating Income 272 645 - 917
Equity in earnings of ONEOK Partners 337 - (337) -
Other income (expense) (2) 144 - 142
Interest expense (113) (151) - (264)
Minority interest - - (289) (289)
Income taxes (182) (12) - (194)
Net Income $312 $626 $(626) $312
ONEOK, Inc. and Subsidiaries
CONSOLIDATING INCOME STATEMENT
Three Months Ended December 31, 2007
Consoli-
ONEOK dating Consoli-
(Unaudited) ONEOK Partners Entries dated
(Millions of dollars)
Operating Income
ONEOK Partners $- $130 $- $130
Distribution 61 - - 61
Energy Services 76 - - 76
Other (11) - - (11)
Operating Income 126 130 - 256
Equity in earnings of ONEOK Partners 63 - (63) -
Other income (expense) (4) 33 - 29
Interest expense (29) (40) - (69)
Minority interest - - (58) (58)
Income taxes (53) (2) - (55)
Net Income $103 $121 $(121) $103
Year Ended December 31, 2007
Consoli-
ONEOK dating Consoli-
(Unaudited) ONEOK Partners Entries dated
(Millions of dollars)
Operating Income
ONEOK Partners $- $447 $- $447
Distribution 174 - - 174
Energy Services 205 - - 205
Other (3) - - (3)
Operating Income 376 447 - 823
Equity in earnings of ONEOK Partners 215 - (215) -
Other income (expense) 7 109 - 116
Interest expense (117) (139) - (256)
Minority interest - - (193) (193)
Income taxes (176) (9) - (185)
Net Income $305 $408 $(408) $305
ONEOK, Inc. and Subsidiaries
REGULATION G GAAP RECONCILIATION
ONEOK, Inc. Stand-Alone Cash Flow, Before Changes in Working Capital
Year Ended
(Unaudited) December 31, 2008
(Millions of dollars)
Net income $311.9
Depreciation and amortization 119.2
Gain on sale of assets (1.6)
Distributions received from unconsolidated affiliates 251.5
Income from equity investments, net (337.5)
Deferred income taxes 165.2
Stock based compensation expense 30.8
Allowance for doubtful accounts 13.5
Inventory adjustment, net 9.7
Investment securities gains (11.1)
Cash flow, before changes in working capital (a) $551.6
(a) ONEOK, Inc. stand-alone cash flow, before changes in working capital,
is a non-GAAP financial measure used by management, industry analysts,
investors, lenders, and rating agencies to assess the financial
performance and the operating results of our fundamental business
activities. ONEOK, Inc. stand-alone cash flow, before changes in
working capital, should not be considered in isolation or as a
substitute for net income, income from operations, or other measures
of cash flow.
SOURCE ONEOK, Inc.
-0- 02/23/2009
/CONTACT: Analyst, Dan Harrison, +1-918-588-7950, Media, Megan
Washbourne, +1-918-588-7572, both of ONEOK, Inc./
/Web site: http://www.oneok.com /
(OKE OKS)
CO: ONEOK, Inc.; ONEOK Partners, L.P.
ST: Oklahoma
IN: OIL
SU: ERN CCA
ND-KB
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8161 02/23/2009 17:14 EST http://www.prnewswire.com