ONEOK, Inc. Q2 FY2025 earnings call

• Pierce Norton noted higher second quarter results and affirmed 2025 financial guidance ranges, highlighting incremental synergy capture and supply/demand strength.
• Walter Hulse reported second quarter net income attributable to ONEOK totaled $841 million or $1.34 per share, a over 30% increase from the first quarter. Adjusted EBITDA totaled $1.98 billion. Debt reduction and tax benefits were discussed.
• Sheridan Swords discussed volume rebounds in NGL, refined products, crude, and natural gas gathering and processing segments, including details on the new Permian processing plant and strategic growth in the Permian Basin.

NGL and Natural Gas Processing: Second quarter adjusted EBITDA increased 12% compared with the first quarter. Total NGL raw feed throughput volumes increased 18% compared with the first quarter. Rocky Mountain region volumes averaged nearly 470,000 barrels per day, a record. Mid-Continent and Permian NGL volumes both increased 20% compared with the first quarter. Refined Products: Second quarter refined product volumes rebounded following first quarter seasonality. Regional supply disruptions in Mid-Continent affected gasoline volumes but recovered. Refined products pipeline to Denver area on track for mid-2026 completion. Crude: Gathering and long-haul assets performed well, but overall crude volumes decreased compared with the first quarter due to low-margin exchange volumes. Natural Gas Gathering and Processing: Volumes increased in all regions compared with the first quarter of 2025. Permian Basin saw 4% growth in volumes in Q2, reaching 1.6 billion cubic feet per day in July. A new natural gas processing plant in the Permian's Delaware Basin was finalized with 300 million cubic feet per day capacity.

• Affirmed 2025 financial guidance ranges: net income attributable to ONEOK of $3.1 billion to $3.6 billion and adjusted EBITDA range of $8 billion to $8.45 billion.
• Adjusted 2026 EBITDA outlook downward by approximately 2% or $200 million due to current commodity prices and spread differentials, but expect mid- to upper single-digit EBITDA growth in 2026.
• Expected a tax benefit of more than $1.3 billion in lower cash taxes over the next 5 years due to tax legislation enhancements, expecting minimal cash taxes until 2028.

• General market volatility and commodity price fluctuations could impact results.
• Execution risks related to the timely completion and performance of ongoing projects, such as pipeline expansions and processing plant constructions.

Q: About the 2026 outlook, how lean is the revised outlook and how much growth is hardwired by contractual volumes, synergies, cost savings?

A: Pierce Norton said it's due to market volatility and spread differentials, and Walter Hulse added it comes from ongoing projects and synergies layering in with producer activity.

Q: On natural gas, can you give more color on what's driving it and if it's ratable enough for forward guidance, and status on AI/data center discussions?

A: Sheridan Swords said they're in discussions with over 30 parties on AI/data center and industrial demand, but it's still opportunistic; natural gas growth is from EnLink asset integration and ongoing synergies.

Q: On BridgeTex, performance this quarter and outlook?

A: Sheridan Swords said volume on BridgeTex is increasing as it feeds into downstream assets, and with increased stake, it's more advantageous to direct volume, expecting continued growth.

Q: On LPG export facility commercialization progress and response to competitor's disparagement?

A: Sheridan Swords said they have seen interest in their Texas City terminal with a premium location, rates in line with estimated economics.

Q: On Elk Creek pipeline expansion status?

A: Sheridan Swords said the Elk Creek pipeline expansion is completed, with capacity at 435,000 barrels a day combined with Bakken pipeline at 575,000 barrels a day.

Q: On CapEx related to Delaware Basin processing plant, how much in 2025 and '26 outlook?

A: Walter Hulse said very little CapEx in 2025, more in 2026, with CapEx guidance to be provided in February, and CapEx expected to trail downward in 2026 and forward.

Q: On synergies beyond highlighted ones, any others?

A: Sheridan Swords said there are many smaller synergies from acquisitions, like system integrations and cost reductions in crude and NGL operations.

Q: On blending margins, hedging strategy?

A: Sheridan Swords said they're in line with last year on hedging, opportunistic with spreads, and volume makeup for spread compression.

Q: On Delaware Basin JV benefits?

A: Walter Hulse said buying the remaining stake enhanced flexibility to grow the business and allocate capital as desired.

Q: On 2026 commodity price expectations underpinning outlook?

A: Walter Hulse said the adjustment to 2026 EBITDA was based on current market, around $65-$66 crude range.