ONEOK Inc (OKE) Q1 2026 Earnings Call Transcript
ONEOK, Inc., together with its subsidiaries, engages in gathering, processing, storage, and transportation of natural gas in the United States. It operates through Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines segments. The company owns natural gas gathering pipelines and processing plants in the Mid-Continent and Rocky Mountain regions. It also gathers, treats, fractionates, and transports natural gas liquids (NGL), as well as stores, markets, and distributes NGL products. The company owns NGL gathering and distribution pipelines in Oklahoma, Kansas, Texas, New Mexico, Montana, North Dakota, Wyoming, and Colorado; terminal and storage facilities in Kansas, Missouri, Nebraska, Iowa, and Illinois; and NGL distribution and refined petroleum products pipelines in Kansas, Missouri, Nebraska, Iowa, Illinois, and Indiana, as well as owns and operates truck- and rail-loading, and -unloading facilities connected to NGL fractionation, storage, and pipeline assets. In addition, it operates regulated interstate and intrastate natural gas transmission pipelines and natural gas storage facilities. Further, the company owns and operates a parking garage in downtown Tulsa, Oklahoma; and leases excess office space. It operates 17,500 miles of natural gas gathering pipelines; 1,500 miles of FERC-regulated interstate natural gas pipelines; 5,100 miles of state-regulated intrastate transmission pipeline; six NGL storage facilities; and eight NGL product terminals. It serves integrated and independent exploration and production companies; NGL and natural gas gathering and processing companies; crude oil and natural gas production companies; propane distributors; municipalities; ethanol producers; and petrochemical, refining, and NGL marketing companies, as well as natural gas distribution and electric generation companies, producers, processors, and marketing companies. The company was founded in 1906 and is headquartered in Tulsa, Oklahoma.
ONEOK delivered 2025 earnings growth with a durable, fee-based mix and guided a robust 2026 plan anchored by synergies from acquisitions and high-return projects.
⭐ Key Highlights
✔Positive Signals
- Significant synergies from Magellan and other acquisitions ( ~$500M total, ~$250M in 2025 )
- High reliance on fee-based earnings (~90%), improving durability
- Strong 2026 EBITDA guidance at $8.1B with visible project-driven growth
- Dividend increase of 4% reaffirming shareholder returns
- Strategic large-cap projects (Denver expansion, Shadowfax, Medford) on track
✖Negative Signals
- 2025-2026 guidance assumes lower crude prices and weaker Bakken volumes than prior expectations
- 2025 EBITDA bridge shows a net headwind of about $150M from pricing and differential changes
- Weather-related volume volatility (Fern) impacting 2026 first quarter
- Open capacity and Waha basis dynamics remain uncertain near year-end visibility
- Potential deceleration in near-term NGL/ G&P volumes if ethane recovery underperforms
📊Financial Results
- Q4 2025 net income $977M ($1.55 per share); full-year net income $3.39B ($5.42 per share), up 12% vs 2024
- Full-year 2025 adjusted EBITDA >$8.0B; Q4 2025 adjusted EBITDA $2.15B
- Debt reduction: retired >$1.75B in senior notes in Q4; nearly $3.1B of long-term debt extinguished in 2025
- Shareholder returns: ~ $2.7B returned via dividends and buybacks in 2025; 4% quarterly dividend increase
- 2026 guidance: net income ~$3.45B; adjusted EBITDA ~$8.10B; 2026 cash tax guidance indicating minimal cash taxes until 2029
🔮Future Guidance
- 2026 adjusted EBITDA midpoint raised to $8.10B, reflecting volume growth, project start-ups, and $150M synergistic benefits
- Average 2026 WTI price assumption of $55–$60/ bbl; quarterly earnings cadence expected to build through the year
- Capex step-down anticipated in coming years as current projects wrap, supporting free cash flow and capital allocation flexibility
- No meaningful cash taxes expected until 2029, strengthening free cash flow generation
- Expect 2026 earnings upside from optimization opportunities (e.g., ethane recovery, market-based spreads) but with conservative pricing backdrop
💡Interesting Insights
- Management emphasizes a disciplined, optionality-driven capital allocation approach, balancing debt reduction with growth opportunities while maintaining a 3.5x leverage target as a flexible anchor
Detailed Analysis
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