TULSA, Okla., Nov 03, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- ONEOK Partners, L.P. (NYSE: OKS) today announced third-quarter 2009 earnings of $1.00 per unit, compared with $1.97 per unit for the third quarter 2008. Net income attributable to ONEOK Partners was $121.5 million in the third quarter 2009, compared with $203.9 million in the same period in 2008.
For the nine-month period ended Sept. 30, 2009, net income attributable to ONEOK Partners was $318.6 million, or $2.67 per unit, compared with $503.4 million, or $4.93 per unit, in the same period in 2008.
The partnership also updated its 2009 limited partners' net income per unit guidance to the range of $3.40 to $3.60 per unit from its previous range of $3.25 to $3.65 per unit. The partnership's distributable cash flow is expected to be in the range of $530 million to $550 million.
"The partnership posted solid results in the third quarter," said John W. Gibson, chairman and chief executive officer of ONEOK Partners. "We achieved continued volume growth in both our natural gas and natural gas liquids businesses, which helped offset significantly lower commodity prices and narrower NGL product price differentials compared with a year ago."
"We successfully completed our more than $2 billion capital investment program," Gibson said. "These investments, coupled with the additional opportunities we've identified over the next five years, establish a strong foundation for growth in both our fee-based earnings and distributions to unitholders."
Cash flow, as measured by earnings before interest, taxes, depreciation and amortization (EBITDA), was $211.4 million in the third quarter 2009, compared with $252.6 million in the third quarter 2008. Distributable cash flow (DCF) in the third quarter 2009 was $144.1 million, or $1.24 per unit, compared with $191.0 million, or $1.85 per unit, in the third quarter 2008.
Year-to-date 2009 EBITDA was $577.7 million, compared with $672.8 million in the same period last year. Nine-month 2009 DCF was $409.6 million, or $3.63 per unit, compared with $526.7 million, or $5.23 per unit, in the same period last year.
Operating income for the third quarter 2009 was $144.7 million, compared with $197.5 million for the third quarter 2008. For the nine months 2009, operating income was $394.4 million, compared with $511.8 million in the same period last year.
The operating income decreases in both the three- and nine-month 2009 periods were due primarily to lower realized commodity prices in the natural gas gathering and processing segment; narrower NGL product price differentials and prior-year operational measurement gains in the natural gas liquids segment; and the impact of lower natural gas prices on retained fuel in the natural gas pipelines segment.
These decreases were partially offset by increased NGL throughput in the natural gas liquids segment, primarily associated with the completion of the Overland Pass Pipeline and related expansion projects, and the Arbuckle Pipeline, as well as new supply connections; higher natural gas volumes processed and sold in the natural gas gathering and processing segment; and higher natural gas transportation margins, as a result of the Guardian Pipeline expansion and extension and an increase in contracted volumes on Midwestern Gas Transmission as a result of a new interconnect with the Rockies Express Pipeline in the natural gas pipelines segment.
Operating costs were $105.1 million in the third quarter 2009, compared with $97.5 million in the same period last year. Nine-month 2009 operating costs were $295.0 million, compared with $272.7 million in the same period last year. The operating cost increases for both the three- and nine-month periods were due primarily to incremental costs associated with the operation of the Overland Pass Pipeline and the Arbuckle Pipeline, and higher operating expenses at fractionation facilities, including the expanded Bushton fractionator.
Equity earnings from investments were $20.1 million in the third quarter 2009, compared with $29.4 million in the same period last year. For the nine months 2009, equity earnings from investments were $55.5 million, compared with $74.8 million in the same period last year. The equity earnings from investments decreased for both the three- and nine-month 2009 periods, primarily as the result of lower subscription volumes and rates on Northern Border Pipeline and lower volumes gathered at various natural gas gathering and processing investments in the Powder River Basin of Wyoming. Third-quarter and nine-month 2008 results included an $8.3 million gain on the sale of Bison Pipeline LLC by Northern Border Pipeline.
THIRD-QUARTER 2009 SUMMARY AND ADDITIONAL UPDATES:
-- Operating income of $144.7 million, compared with $197.5 million in the
third quarter 2008;
-- Natural gas gathering and processing segment operating income of $40.2
million, compared with $63.5 million in the third quarter 2008;
-- Natural gas pipelines segment operating income of $41.7 million,
compared with $33.3 million in the third quarter 2008;
-- Completing the consolidation of the natural gas liquids gathering and
fractionation and natural gas liquids pipelines segments into one
reporting segment and recasting prior reporting periods;
-- Natural gas liquids segment operating income of $63.3 million, compared
with $101.2 million in the third quarter 2008;
-- Equity earnings from investments of $20.1 million, compared with $29.4
million in the third quarter 2008;
-- Capital expenditures of $169.4 million, compared with $335.6 million in
the third quarter 2008;
-- Completing construction in July of the 440-mile Arbuckle Pipeline
project, which transports unfractionated NGLs from southern Oklahoma and
the Barnett Shale in north Texas to the Texas Gulf Coast;
-- Placing into service in October the 150-mile Piceance Lateral Pipeline,
connecting NGL production from the Piceance Basin to the Overland Pass
Pipeline;
-- Completing in October the $14.7 million expansion of the Fargo Lateral
segment of the Viking natural gas pipeline;
-- Electing Julie H. Edwards, Jim W. Mogg, Shelby E. Odell and Craig F.
Strehl to the board of directors, which increases the number of those
serving on the board of directors to 10 from six, and the number of
independent directors to seven from three; and
-- Increasing the quarterly cash distribution to $1.09 per unit, payable
Nov. 13, 2009, to unitholders of record as of Oct. 30, 2009.
THIRD-QUARTER AND YEAR-TO-DATE 2009 BUSINESS-UNIT RESULTS
Natural Gas Gathering and Processing Segment
The natural gas gathering and processing segment's operating income for the third quarter 2009 was $40.2 million, compared with $63.5 million for the third quarter 2008.
Third-quarter 2009 results decreased $33.7 million due to lower realized commodity prices, partially offset by an $11.4 million increase as the result of higher volumes processed and sold. Operating costs for the third quarter 2009 were $33.6 million, compared with $35.7 million in the same period last year.
Operating income for the nine-month 2009 period was $120.9 million, compared with $198.8 million in the same period in 2008.
Nine-month 2009 results decreased $95.1 million, due primarily to lower realized commodity prices, partially offset by a $20.1 million increase from higher volumes processed and sold. Operating costs for the segment decreased to $99.4 million, compared with $101.5 million in the same period in 2008.
Depreciation and amortization expense increased for both the three- and nine-month periods ended Sept. 30, 2009, compared with 2008, primarily as the result of completed capital projects.
Equity earnings from investments decreased for both the three- and nine-month periods ended Sept. 30, 2009, compared with the prior year, primarily as a result of lower volumes in various natural gas gathering system investments in the Powder River Basin of Wyoming.
NGL shrink, plant fuel and condensate shrink discussed in the table below refer to the Btus that are removed from natural gas through the gathering and processing operation. The following table contains margin information for the periods indicated:
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
-------------------------------------------------------------------------
Percent of proceeds
Wellhead purchases (MMBtu/d) 49,472 65,804 55,545 68,564
NGL sales (Bbl/d) 5,408 3,998 5,215 4,637
Residue gas sales (MMBtu/d) 46,406 42,119 41,698 38,570
Condensate sales (Bbl/d) 1,488 1,469 1,786 1,711
Percentage of total net
margin 50% 64% 49% 62%
Fee-based
Wellhead volumes (MMBtu/d) 1,100,202 1,145,656 1,131,018 1,173,894
Average rate ($/MMBtu) $0.31 $0.27 $0.30 $0.26
Percentage of total net
margin 35% 22% 36% 23%
Keep-whole
NGL shrink (MMBtu/d) 16,843 20,016 17,875 21,978
Plant fuel (MMBtu/d) 1,954 2,106 2,100 2,301
Condensate shrink (MMBtu/d) 1,407 1,574 1,893 1,941
Condensate sales (Bbl/d) 285 318 383 393
Percentage of total net
margin 15% 14% 15% 15%
-------------------------------------------------------------------------
The natural gas gathering and processing segment is exposed to commodity price risk, primarily NGLs, as a result of receiving commodities in exchange for services. The following table provides updated hedging information in the natural gas gathering and processing segment for the remainder of 2009 and for 2010:
Three Months Ending
December 31, 2009
--------------------------------------
Volumes Percentage
Hedged Average Price Hedged
--------------------------------------------------------------
NGLs (Bbl/d) (a) 7,857 $1.04 / gallon 87%
Condensate
(Bbl/d) (a) 2,064 $2.08 / gallon 91%
--------------------------------------------------------------
Total (Bbl/d) 9,921 $1.26 / gallon 88%
==============================================================
Natural gas
(MMBtu/d) 17,009 $4.25 / MMBtu 88%
--------------------------------------------------------------
(a) - Hedged with fixed-price swaps.
Year Ending
December 31, 2010
--------------------------------------
Volumes Percentage
Hedged Average Price Hedged
--------------------------------------------------------------
NGLs (Bbl/d) (a) 3,881 $1.19 / gallon 55%
Condensate
(Bbl/d) (a) 1,696 $1.79 / gallon 75%
--------------------------------------------------------------
Total (Bbl/d) 5,577 $1.38 / gallon 60%
==============================================================
Natural gas
(MMBtu/d) 25,225 $5.55 / MMBtu 75%
--------------------------------------------------------------
(a) - Hedged with fixed-price swaps.
The partnership currently estimates that a 1 cent per gallon decrease in the composite price of NGLs would decrease annual net margin by approximately $1.1 million. A $1.00 per barrel decrease in the price of crude oil would decrease annual net margin by approximately $1.0 million. Also, a 10 cent per MMBtu decrease in the price of natural gas would decrease annual net margin by approximately $1.1 million. All of these sensitivities exclude the effects of hedging and assume normal operating conditions.
Natural Gas Pipelines Segment
The natural gas pipelines segment reported third-quarter 2009 operating income of $41.7 million, compared with $33.3 million for the third quarter 2008.
Third-quarter 2009 results include a $10.1 million increase in transportation margins, primarily as the result of incremental margin from the Guardian Pipeline expansion and extension that was completed in February 2009 and an increase in contracted volumes on Midwestern Gas Transmission as a result of a new interconnect with the Rockies Express Pipeline that was placed in service in June 2009. These increases were partially offset by a $4.8 million decrease from the effect of lower natural gas prices on retained fuel.
Operating income for the nine months was $106.1 million, compared with $102.7 million in the same period in 2008.
Nine-month 2009 results reflect a $23.3 million increase in transportation margins, primarily as the result of the completion of the Guardian Pipeline expansion and extension project, partially offset by an $18.3 million decrease from the effect of lower natural gas prices on retained fuel.
Third-quarter 2009 equity earnings from investments were $11.0 million, compared with $20.2 million in the third quarter 2008. Nine-month 2009 equity earnings from investments were $32.8 million, compared with $49.4 million in 2008. The decreases were primarily due to lower subscription volumes and rates on Northern Border Pipeline, in which the partnership has a 50 percent interest. Third-quarter and nine-month 2008 results included an $8.3 million gain on the sale of Bison Pipeline LLC by Northern Border Pipeline.
Natural Gas Liquids Segment
As previously announced, beginning in the third quarter 2009, the natural gas liquids gathering and fractionation segment and the natural gas liquids pipelines segment were consolidated into one reporting segment - natural gas liquids. Prior reporting periods have been recast to reflect the consolidation.
The natural gas liquids segment reported third-quarter 2009 operating income of $63.3 million, compared with $101.2 million for the third quarter 2008.
Third-quarter 2009 results decreased $28.0 million due to narrower NGL product price differentials and decreased $11.6 million as the result of prior-year operational measurement gains. These decreases were offset by an $18.2 million increase as the result of higher NGL volumes gathered, fractionated and transported, primarily associated with the completion of the Overland Pass Pipeline and related expansion projects, and the Arbuckle Pipeline, as well as new supply connections.
Operating income for the nine-month 2009 period was $168.0 million, compared with $211.9 million in the same period last year.
Nine-month 2009 operating income decreased $38.4 million due to narrower NGL product price differentials and decreased $12.5 million as the result of prior-year operational measurement gains. These decreases were offset by a $46.2 million increase as the result of higher NGL volumes gathered, fractionated and transported, primarily associated with the completion of the Overland Pass Pipeline and related expansion projects, and the Arbuckle Pipeline, as well as new supply connections.
Third-quarter 2009 operating costs were $49.6 million, compared with $37.9 million in the third quarter 2008. Nine-month 2009 operating costs were $129.8 million, compared with $103.7 million in the same period last year. The increases resulted primarily from the operation of the Overland Pass Pipeline, the Arbuckle Pipeline and the recently expanded Bushton fractionator, as well as increased outside service expenses at other fractionators, incremental ad valorem taxes and higher employee-related costs.
The Conway-to-Mont Belvieu average ethane price differential in the third quarter 2009, based on Oil Price Information Service (OPIS) pricing, was 15 cents per gallon, compared with 24 cents per gallon in the same period last year. For the nine-month 2009 period, the average ethane price differential was 12 cents per gallon, compared with 15 cents per gallon in the same period 2008.
GROWTH ACTIVITIES
The partnership recently completed more than $2 billion of internally generated growth projects. Following is a review of these projects and updated throughput expectations (all cost estimates exclude allowance for funds used during construction, or AFUDC).
In October 2009, the partnership placed into service the Piceance Lateral Pipeline, a 150-mile pipeline connecting the Piceance Basin with the Overland Pass Pipeline. The pipeline has the capacity to transport as much as 100,000 barrels per day (bpd) of unfractionated NGLs. The project is expected to cost approximately $135 million to $140 million. Throughput is expected to reach approximately 30,000 bpd during the fourth quarter 2009.
In July 2009, construction of the Arbuckle Pipeline was completed. The 440-mile NGL pipeline extends from southern Oklahoma through the Barnett Shale of north Texas and on to the partnership's fractionation and storage facilities at Mont Belvieu on the Texas Gulf Coast. The pipeline has the capacity to transport 160,000 bpd of unfractionated NGLs, expandable to 240,000 bpd with additional pump facilities. The estimated cost for the current pipeline capacity is approximately $490 million. During the month of October 2009, volumes reached 80,000 bpd, and supply commitments from producers are expected to be sufficient to transport up to 210,000 bpd over the next three to five years.
In March 2009, the $70 million D-J Basin Lateral Pipeline, a 125-mile pipeline connecting the Denver-Julesburg Basin with the Overland Pass Pipeline, was placed into service. The pipeline has the capacity to transport as much as 55,000 bpd of unfractionated NGLs. Throughput reached 30,000 bpd during the third quarter 2009, with an additional 10,000 bpd anticipated in the next two years.
In November 2008, the Overland Pass Pipeline - the $575 million, 760-mile NGL pipeline extending from Opal, Wyo., to Conway, Kan. - was placed into service with the capacity to transport approximately 110,000 bpd of unfractionated NGLs. The Overland Pass Pipeline Company is a joint venture with a subsidiary of The Williams Companies, Inc., which owns 1 percent. Approximately 99,000 bpd is currently flowing on Overland Pass, and the pipeline's capacity can be increased to approximately 255,000 bpd with the addition of pump facilities. By the end of the fourth quarter 2009, expected throughput on Overland Pass Pipeline will be approximately 130,000 to 140,000 bpd.
The partnership has identified additional growth projects, depending on market needs, in the range of approximately $300 million to $500 million per year between 2010 and 2015, with more than half of the planned investments in the natural gas liquids segment.
2009 EARNINGS GUIDANCE
The partnership updated its 2009 limited partners' net income per unit guidance to the range of $3.40 to $3.60 per unit from its previous range of $3.25 to $3.65 per unit. The partnership's distributable cash flow is expected to be in the range of $530 million to $550 million. Exhibits A and B include updated information on the partnership's 2009 earnings guidance.
Earnings guidance was updated due primarily to lower than anticipated interest expense and higher AFUDC.
The average prices for unhedged volumes used in the updated 2009 guidance for the remaining three months of 2009 are $77 per barrel for New York Mercantile Exchange (NYMEX) crude oil, $4.50 per MMBtu for NYMEX natural gas and $1.00 per gallon for composite natural gas liquids. The average Conway-to-Mont Belvieu OPIS average price differential used for ethane for the remaining three months of 2009 is 8 cents per gallon.
CONFERENCE CALL AND WEBCAST
ONEOK and ONEOK Partners management will conduct a joint conference call on Wednesday, Nov. 4, 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 866-837-9787, pass code 1399341, or log on to www.oneok.com or www.oneokpartners.com.
If you are unable to participate in the conference call or the webcast, the replay will be available on ONEOK's Web site, www.oneok.com, and ONEOK Partners' Web site, 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 1399341.
NON-GAAP FINANCIAL MEASURES
The partnership has disclosed in this news release 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 EBITDA to net income and operating income and computations of DCF are included in the financial tables attached to this release.
ONEOK Partners, L.P. (NYSE: OKS) is one of the largest publicly traded master 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 NGL supply in the Mid-Continent and Rocky Mountain regions with key market centers. Its general partner is a wholly owned subsidiary of ONEOK, Inc. (NYSE: OKE), a diversified energy company, which owns 45.1 percent of the partnership. 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 site at www.oneokpartners.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, and Section 21E of the Exchange Act, 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, which are applicable only as of the date of this news release. 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,
demand for our services and energy prices;
-- competition from other United States and foreign energy suppliers and
transporters, as well as alternative forms of energy, including, but not
limited to, solar power, wind power, geothermal energy and biofuels such
as ethanol and biodiesel;
-- 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, authorized rates of 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;
-- difficulties or delays experienced by trucks or pipelines in delivering
products to or from our terminals or pipelines;
-- changes in demand for the use of natural gas because of market
conditions caused by concerns about global warming;
-- conflicts of interest between us, our general partner, ONEOK Partners
GP, and related parties of ONEOK Partners GP;
-- the impact of unforeseen changes in interest rates, equity markets,
inflation rates, economic recession and other external factors over
which we have no control;
-- 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 with our
competitors that have less debt or have other adverse consequences;
-- actions by rating agencies concerning the credit ratings of us or our
general partner;
-- the results of administrative proceedings and litigation, regulatory
actions and receipt of expected clearances involving the Oklahoma
Corporation Commission (OCC), Kansas Corporation Commission (KCC), Texas
regulatory authorities or any other local, state or federal regulatory
body, including the Federal Energy Regulatory Commission (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 control 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 and 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;
-- 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 U.S.
economy or the risk of delay in growth recovery in the U.S. economy,
including increasing liquidity risks in U.S. credit markets;
-- the impact of recently issued and future accounting updates 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 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 Securities and Exchange Commission (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 Part I, Item 1A, Risk Factors, in our Annual Report. 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.
OKS-FE
Analyst Contact: Andrew Ziola 918-588-7163
Media Contact: Brad Borror 918-588-7582
ONEOK Partners, L.P. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
September 30, September 30,
(Unaudited) 2009 2008 2009 2008
-------------------------------------------------------------------
(Thousands of dollars, except per unit amounts)
Revenues $1,560,003 $2,241,107 $4,207,925 $6,444,034
Cost of sales and
fuel 1,267,124 1,915,707 3,399,523 5,569,176
-------------------------------------------------------------------
Net margin 292,879 325,400 808,402 874,858
-------------------------------------------------------------------
Operating expenses
Operations and
maintenance 92,855 86,456 258,246 243,929
Depreciation and
amortization 41,857 30,408 121,750 90,383
General taxes 12,253 11,032 36,815 28,799
-------------------------------------------------------------------
Total operating
expenses 146,965 127,896 416,811 363,111
-------------------------------------------------------------------
Gain (loss) on
sale of assets (1,180) 22 2,760 50
-------------------------------------------------------------------
Operating income 144,734 197,526 394,351 511,797
-------------------------------------------------------------------
Equity earnings
from investments 20,054 29,412 55,464 74,805
Allowance for
equity funds used
during
construction 7,290 15,616 25,761 35,788
Other income 5,026 990 8,841 3,724
Other expense (299) (5,784) (2,728) (7,951)
Interest expense (50,371) (34,447) (152,167) (107,681)
-------------------------------------------------------------------
Income before
income taxes 126,434 203,313 329,522 510,482
-------------------------------------------------------------------
Income taxes (4,729) 670 (10,668) (6,703)
-------------------------------------------------------------------
Net income 121,705 203,983 318,854 503,779
Less: Net income
attributable to
noncontrolling
interests 212 111 232 368
-------------------------------------------------------------------
Net income
attributable to
ONEOK Partners,
L.P. $121,493 $203,872 $318,622 $503,411
===================================================================
Limited partners'
interest in net
income:
Net income
attributable to
ONEOK Partners,
L.P. $121,493 $203,872 $318,622 $503,411
General partner's
interest in net
income (25,010) (24,397) (70,710) (65,790)
-------------------------------------------------------------------
Limited
partners'
interest in net
income $96,483 $179,475 $247,912 $437,621
===================================================================
Limited partners'
net income per
unit, basic and
diluted $1.00 $1.97 $2.67 $4.93
===================================================================
Number of units
used in
computation
(thousands) 96,402 90,920 92,932 88,768
===================================================================
ONEOK Partners, L.P. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
(Unaudited) 2009 2008
--------------------------------------------------------------------------
Assets (Thousands of dollars)
Current assets
Cash and cash equivalents $30,535 $177,635
Accounts receivable, net 445,185 317,182
Affiliate receivables 21,532 25,776
Gas and natural gas liquids in storage 187,773 190,616
Commodity exchanges and imbalances 85,073 55,086
Derivative financial instruments 5,983 63,780
Other current assets 41,713 28,176
--------------------------------------------------------------------------
Total current assets 817,794 858,251
--------------------------------------------------------------------------
Property, plant and equipment
Property, plant and equipment 6,250,762 5,808,679
Accumulated depreciation and amortization 933,264 875,279
--------------------------------------------------------------------------
Net property, plant and equipment 5,317,498 4,933,400
--------------------------------------------------------------------------
Investments and other assets
Investments in unconsolidated affiliates 774,347 755,492
Goodwill and intangible assets 670,786 676,536
Other assets 36,619 30,593
--------------------------------------------------------------------------
Total investments and other assets 1,481,752 1,462,621
--------------------------------------------------------------------------
Total assets $7,617,044 $7,254,272
==========================================================================
Liabilities and partners' equity
Current liabilities
Current maturities of long-term debt $261,931 $11,931
Notes payable 515,000 870,000
Accounts payable 508,331 496,763
Affiliate payables 32,489 23,333
Commodity exchanges and imbalances 204,401 191,165
Other current liabilities 159,154 100,832
--------------------------------------------------------------------------
Total current liabilities 1,681,306 1,694,024
--------------------------------------------------------------------------
Long-term debt, excluding current maturities 2,826,016 2,589,509
Deferred credits and other liabilities 60,717 54,773
Commitments and contingencies
Partners' equity
ONEOK Partners, L.P. partners' equity:
General partner 83,798 77,546
Common units: 59,912,777 and 54,426,087
units issued and outstanding at
September 30, 2009 and December 31,
2008, respectively
1,571,123 1,361,058
Class B units: 36,494,126 units issued
and outstanding at September 30, 2009
and December 31, 2008 1,386,000 1,407,016
Accumulated other comprehensive income 2,499 64,405
--------------------------------------------------------------------------
Total ONEOK Partners, L.P. partners'
equity 3,043,420 2,910,025
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Noncontrolling interests in consolidated
subsidiaries 5,585 5,941
--------------------------------------------------------------------------
Total partners' equity 3,049,005 2,915,966
--------------------------------------------------------------------------
Total liabilities and partners' equity $7,617,044 $7,254,272
==========================================================================
ONEOK Partners, L.P. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended
September 30,
(Unaudited) 2009 2008
-------------------------------------------------------------------------
(Thousands of dollars)
Operating activities
Net income $318,854 $503,779
Depreciation and amortization 121,750 90,383
Allowance for equity funds used during construction (25,761) (35,788)
Gain on sale of assets (2,760) (50)
Equity earnings from investments (55,464) (74,805)
Distributions received from unconsolidated
affiliates 56,896 67,812
Changes in assets and liabilities:
Accounts receivable (128,003) 98,214
Affiliate receivables 4,244 9,245
Gas and natural gas liquids in storage 2,843 (59,690)
Derivative financial instruments (3,035) (47,017)
Accounts payable 20,375 (52,516)
Affiliate payables 9,156 11,401
Commodity exchanges and imbalances, net (16,751) (3,521)
Accrued interest 29,695 32,117
Other assets and liabilities 16,999 29,101
-------------------------------------------------------------------------
Cash provided by operating activities 349,038 568,665
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Investing activities
Changes in investments in unconsolidated affiliates (19,878) 3,063
Acquisitions - 2,450
Capital expenditures (less allowance for equity
funds used during construction) (491,256) (860,167)
Proceeds from sale of assets 8,528 133
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Cash used in investing activities (502,606) (854,521)
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Financing activities
Cash distributions:
General and limited partners (370,094) (332,090)
Noncontrolling interests (588) (223)
Borrowing of notes payable, net 515,000 180,000
Repayment of notes payable with maturities over 90
days (870,000) -
Issuance of long-term debt, net of discounts 498,325 -
Long-term debt financing costs (4,000) -
Repayment of long-term debt (8,948) (8,947)
Issuance of common units, net of discounts 241,643 450,198
Contribution from general partner 5,130 9,508
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Cash provided by financing activities 6,468 298,446
-------------------------------------------------------------------------
Change in cash and cash equivalents (147,100) 12,590
Cash and cash equivalents at beginning of period 177,635 3,213
-------------------------------------------------------------------------
Cash and cash equivalents at end of period $30,535 $15,803
=========================================================================
ONEOK Partners, L.P. and Subsidiaries
INFORMATION AT A GLANCE
Three Months Ended Nine Months Ended
September 30, September 30,
(Unaudited) 2009 2008 2009 2008
--------------------------------------------------------------------------
(Millions of dollars, except as noted)
Natural Gas Gathering and Processing
------------------------------------
Net margin $89.3 $111.7 $261.7 $336.7
Operating costs $33.6 $35.7 $99.4 $101.5
Depreciation and amortization $15.3 $12.5 $44.2 $36.4
Operating income $40.2 $63.5 $120.9 $198.8
Equity earnings from investments $8.4 $8.8 $20.6 $24.0
Natural gas gathered (BBtu/d) 1,100 1,146 1,131 1,174
Natural gas processed (BBtu/d) 664 649 658 641
NGL sales (MBbl/d) 43 39 42 39
Residue gas sales (BBtu/d) 297 281 291 280
Realized composite NGL sales price
($/gallon) $0.76 $1.51 $0.70 $1.44
Realized condensate sales price ($/Bbl) $79.46 $99.61 $70.66 $96.91
Realized residue gas sales price
($/MMBtu) $2.99 $8.33 $3.11 $8.39
Realized gross processing spread
($/MMBtu) $6.54 $6.69 $6.41 $6.94
Capital expenditures - growth $17.4 $27.8 $60.9 $82.6
Capital expenditures - maintenance $5.8 $8.0 $14.7 $16.0
Natural Gas Pipelines
---------------------
Net margin $75.9 $65.8 $208.3 $196.1
Operating costs $22.9 $23.9 $67.5 $67.9
Depreciation and amortization $10.6 $8.6 $34.0 $25.5
Operating income $41.7 $33.3 $106.1 $102.7
Equity earnings from investments $11.0 $20.2 $32.8 $49.4
Natural gas transportation capacity
contracted (MMcf/d) 5,764 4,765 5,461 4,877
Transportation capacity subscribed 87% 81% 83% 83%
Average natural gas price
Mid-Continent region ($/MMBtu) $2.94 $8.44 $3.01 $8.27
Capital expenditures - growth $8.5 $97.7 $40.8 $146.2
Capital expenditures - maintenance $5.5 $10.1 $7.5 $13.6
Natural Gas Liquids
-------------------
Net margin $128.9 $148.4 $341.4 $344.0
Operating costs $49.6 $37.9 $129.8 $103.7
Depreciation and amortization $15.9 $9.3 $43.5 $28.4
Operating income $63.3 $101.2 $168.0 $211.9
Equity earnings from investments $0.6 $0.4 $2.1 $1.4
NGL sales (MBbl/d) 382 273 388 275
NGLs fractionated (MBbl/d) 496 375 458 379
NGLs transported-gathering lines
(MBbl/d) 385 253 358 255
NGLs transported-distribution lines
(MBbl/d) 446 430 451 347
Conway-to-Mont Belvieu OPIS average
price differential
Ethane ($/gallon) $0.15 $0.24 $0.12 $0.15
Capital expenditures - growth $126.9 $184.0 $352.4 $584.8
Capital expenditures - maintenance $4.9 $8.0 $14.2 $16.9
ONEOK Partners, L.P. and Subsidiaries
RECONCILIATION OF EBITDA NON-GAAP FINANCIAL MEASURES
Three Months Ended Nine Months Ended
September 30, September 30,
(Unaudited) 2009 2008 2009 2008
-----------------------------------------------------------------------
(Thousands of dollars)
Reconciliation of Net Income to EBITDA
-----------------------------------------------------------------------
Net income $121,705 $203,983 $318,854 $503,779
Interest expense 50,371 34,447 152,167 107,681
Depreciation and amortization 41,857 30,408 121,750 90,383
Income taxes 4,729 (670) 10,668 6,703
Allowance for equity funds
used during construction (7,290) (15,616) (25,761) (35,788)
-----------------------------------------------------------------------
EBITDA $211,372 $252,552 $577,678 $672,758
=======================================================================
Natural Gas Gathering and Processing Reconciliation of Operating
Income to EBITDA
-----------------------------------------------------------------------
Operating income $40,218 $63,538 $120,864 $198,774
Depreciation and amortization 15,312 12,533 44,225 36,431
Equity earnings from
investments 8,396 8,819 20,583 23,989
Other income (expense) 1,357 (2,191) 1,486 (3,128)
-----------------------------------------------------------------------
EBITDA $65,283 $82,699 $187,158 $256,066
=======================================================================
Natural Gas Pipelines Reconciliation of Operating Income to EBITDA
-----------------------------------------------------------------------
Operating income $41,732 $33,303 $106,078 $102,708
Depreciation and amortization 10,607 8,607 34,029 25,547
Equity earnings from
investments 11,039 20,207 32,802 49,421
Other income (expense) 1,102 (1,391) 1,429 (1,983)
-----------------------------------------------------------------------
EBITDA $64,480 $60,726 $174,338 $175,693
=======================================================================
Natural Gas Liquids Reconciliation of Operating Income to EBITDA
-----------------------------------------------------------------------
Operating income $63,272 $101,202 $167,895 $211,879
Depreciation and amortization 15,944 9,262 43,488 28,388
Equity earnings from
investments 619 386 2,079 1,395
Other income (expense) 1,562 (2,649) 723 (4,169)
-----------------------------------------------------------------------
EBITDA $81,397 $108,201 $214,185 $237,493
=======================================================================
ONEOK Partners, L.P. and Subsidiaries
RECONCILIATION OF DISTRIBUTABLE CASH FLOW NON-GAAP FINANCIAL MEASURES
Three Months Ended Nine Months Ended
September 30, September 30,
(Unaudited) 2009 2008 2009 2008
------------------------------------------------------------------------
(Thousands of dollars, except per unit
amounts)
Reconciliation of EBITDA to Distributable Cash Flow
------------------------------------------------------------------------
EBITDA $211,372 $252,552 $577,678 $672,758
(Gain)/loss on sale of assets 1,180 (22) (2,760) (50)
Interest expense (50,371) (34,447) (152,167) (107,681)
Maintenance capital (16,120) (26,146) (36,436) (46,564)
Distributions to
noncontrolling interests (99) (75) (588) (223)
Equity earnings from
investments (20,054) (29,412) (55,464) (74,805)
Distributions received from
unconsolidated affiliates 19,615 30,466 83,088 91,093
Current income tax expense
and other (1,386) (1,961) (3,767) (7,790)
------------------------------------------------------------------------
Distributable cash flow $144,137 $190,955 $409,584 $526,738
========================================================================
Distributions to general
partner (25,075) (22,739) (71,924) (62,760)
------------------------------------------------------------------------
Distributable cash flow to
limited partners $119,062 $168,216 $337,660 $463,978
========================================================================
Distributable cash flow per
limited partner unit $1.24 $1.85 $3.63 $5.23
========================================================================
Distributions declared per
limited partner unit $1.09 $1.08 $3.25 $3.18
========================================================================
Coverage ratio 1.14 1.71 1.12 1.64
========================================================================
Number of units used in
computation (thousands) 96,402 90,920 92,932 88,768
========================================================================
ONEOK Partners, L.P. and Subsidiaries Exhibit A
EARNINGS GUIDANCE*
Updated Previous
2009 2009
Guidance Guidance Change
-----------------------------
(Millions of dollars, except
per unit amounts)
Operating income
---------------------------------------------------------------------
Natural Gas Gathering and Processing $164 $164 $-
Natural Gas Pipelines 144 141 3
Natural Gas Liquids 232 231 1
Other (2) 1 (3)
---------------------------------------------------------------------
Operating income 538 537 1
Equity earnings from investments 75 80 (5)
Other income (expense) 35 28 7
Interest expense (208) (214) 6
---------------------------------------------------------------------
Income before income taxes 440 431 9
---------------------------------------------------------------------
Income taxes (16) (14) (2)
---------------------------------------------------------------------
Net income 424 417 7
Less: Net income attributable to
noncontrolling interests - - -
---------------------------------------------------------------------
Net income attributable to ONEOK
Partners, L.P. $424 $417 $7
=====================================================================
---------------------------------------------------------------------
Limited partners' net income per
unit, basic and diluted $3.50 $3.45 $0.05
=====================================================================
-
Number of units used in computation
(millions) 93.8 93.8 -
Capital expenditures
---------------------------------------------------------------------
Natural Gas Gathering and Processing $113 $108 $5
Natural Gas Pipelines 73 82 (9)
Natural Gas Liquids 397 380 17
---------------------------------------------------------------------
Total capital expenditures $583 $570 $13
=====================================================================
Growth $523 $509 $14
Maintenance 60 61 (1)
---------------------------------------------------------------------
Total capital expenditures $583 $570 $13
=====================================================================
*Amounts shown are midpoints of ranges provided.
ONEOK Partners, L.P. and Subsidiaries Exhibit B
EARNINGS GUIDANCE*
Updated Previous
2009 2009
Guidance Guidance Change
-----------------------------
(Millions of dollars)
Reconciliation of Net Income to EBITDA
-----------------------------------------------------------------------
Net income $424 $417 $7
Interest expense 208 214 (6)
Depreciation and amortization 166 164 2
Income taxes 16 14 2
Allowance for equity funds used during
construction (27) (22) (5)
-----------------------------------------------------------------------
EBITDA $787 $787 $-
=======================================================================
Reconciliation of EBITDA to Distributable Cash Flow
-----------------------------------------------------------------------
EBITDA $787 $787 $-
(Gain)/loss on sale of assets (4) (4) -
Interest expense (208) (214) 6
Maintenance capital (60) (61) 1
Equity earnings from investments (75) (80) 5
Distributions received from investments 104 104 -
Current income tax expense and other (4) (7) 3
-----------------------------------------------------------------------
Distributable cash flow $540 $525 $15
=======================================================================
*Amounts shown are midpoints of ranges provided.
SOURCE ONEOK Partners, L.P.
http://www.oneokpartners.com
Copyright (C) 2009 PR Newswire. All rights reserved