TULSA, Okla., April 28, 2020 /PRNewswire/ -- ONEOK, Inc. (NYSE: OKE) today announced first quarter 2020 financial results, provided a 2020 outlook and reduced 2020 capital expenditures.
First Quarter 2020 Results, Compared With The First Quarter 2019:
2020 Outlook:
Given the current industry and economic environment, it is impractical for ONEOK to provide traditional financial guidance for 2020 and beyond at this time. Providing specific volume and commodity price guidance would not be appropriate for ONEOK due to the number of potential variations of outcomes that are possible for price forecasts, curtailment quantities and the duration and pace of economic recovery on a worldwide basis among other factors. ONEOK has performed a scenario analysis, and based on currently available information, believes the range of possible 2020 net income results will likely be between $500 million and $900 million, which includes the $641.8 million impact of first quarter impairment charges, and 2020 adjusted EBITDA results will likely be between $2,600 million and $3,000 million.
Additionally, growth capital expenditures have been further reduced from the March 11, 2020, decrease of $500 million, and are now expected to range from $1,400 million to $1,800 million, including more than $900 million spent in the first quarter 2020.
ONEOK has paused the majority of construction activities on the following projects, which can be restarted quickly when drilling activity resumes:
"In response to COVID-19, we continue to prioritize the health and safety of our employees and stakeholders while remaining focused on operating responsibly and providing the essential services that our customers rely on us for," said Terry K. Spencer, ONEOK president and chief executive officer.
"Given the uncertainty around the global pandemic and its impact on commodity prices and global energy demand, the company's 2020 financial guidance published on February 24, 2020, is not reflective of the prevailing economic downturn and its potential duration," added Spencer. "The company's 2020 outlook better reflects a wider range of current and potential actions by producers, customers and energy markets. While the near-term view of the world is changing every day, the long-term fundamentals of our strategic businesses remain strong and financially well-positioned to continue growth when global energy demand recovers."
FIRST QUARTER 2020 FINANCIAL PERFORMANCE:
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
(Millions of dollars, except per | |||||||
Net income (loss) (a) | $ | (141.9) | $ | 337.2 | |||
Net income (loss) per diluted share (a) | $ | (0.34) | $ | 0.81 | |||
Adjusted EBITDA (b) (c) | $ | 700.8 | $ | 637.5 | |||
DCF (b) | $ | 522.3 | $ | 506.8 | |||
DCF in excess of dividends paid (b) | $ | 135.7 | $ | 152.6 | |||
Dividend coverage ratio (b) | 1.35 | 1.43 | |||||
Operating income (loss) (d) | $ | (83.5) | $ | 468.7 | |||
Operating costs | $ | 207.1 | $ | 240.8 | |||
Depreciation and amortization | $ | 132.4 | $ | 114.2 | |||
Equity in net earnings from investments | $ | 44.6 | $ | 43.5 | |||
Capital expenditures | $ | 949.7 | $ | 889.7 |
(a) Amounts for the three months ended March 31, 2020, include noncash charges of $641.8 million, or $1.17 per diluted share after-tax, related primarily to impairments in the natural gas gathering and processing segment. Amounts also include benefits of $18.8 million, or 3 cents per diluted share after-tax, related to the mark-to-market of ONEOK's share-based deferred compensation plan and $15.8 million, or 3 cents per diluted share after-tax, related to a gain on extinguishment of debt. |
(b) Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), distributable cash flow (DCF) and dividend coverage ratio are non-GAAP measures. Reconciliations to relevant GAAP measures are included in this news release. |
(c) Amount for the three months ended March 31, 2020, includes a $15.8 million gain on extinguishment of debt. |
(d) Amount for the three months ended March 31, 2020, includes noncash impairment charges of $604.0 million. |
ONEOK reported a net loss of $141.9 million in the first quarter 2020, which includes noncash impairment charges of $641.8 million. The impairment charges relate primarily to goodwill and long-lived assets in western Oklahoma, Kansas and the Powder River Basin in ONEOK's natural gas gathering and processing segment.
Adjusted EBITDA increased 10%, compared with the same period in 2019. Higher results were due primarily to natural gas liquids (NGL) and natural gas volume growth, higher average fee rates, primarily in the Permian Basin, in the natural gas liquids segment and increased transportation services in the natural gas pipelines segment, compared with the first quarter 2019. Results were partially offset by lower earnings from optimization and marketing in the natural gas liquids segment and lower realized commodity prices in the natural gas gathering and processing segment.
HIGHLIGHTS:
BUSINESS-SEGMENT RESULTS:
Natural Gas Liquids Segment
The natural gas liquids segment's first quarter 2020 adjusted EBITDA increased 9%, compared with the first quarter 2019, due primarily to higher volumes in the Rocky Mountain region and the Permian Basin. First quarter 2020 NGL raw feed throughput volumes increased 6%, compared with the same period in 2019.
The segment connected ONEOK's Demicks Lake II natural gas processing facility and one third-party natural gas processing plant in the Permian Basin to its system in the first quarter 2020. Two existing third-party plant connections in the Rocky Mountain region were also expanded during the quarter.
Three Months Ended | |||||||
March 31, | |||||||
Natural Gas Liquids Segment | 2020 | 2019 | |||||
(Millions of dollars) | |||||||
Adjusted EBITDA | $ | 410.9 | $ | 377.6 | |||
Capital expenditures | $ | 746.2 | $ | 639.3 |
The increase in first quarter 2020 adjusted EBITDA, compared with the first quarter 2019, primarily reflects:
Natural Gas Gathering and Processing Segment
The natural gas gathering and processing segment's first quarter 2020 adjusted EBITDA increased 5%, compared with the same period in 2019. Continued volume growth in the Williston Basin drove higher first quarter 2020 results, including a 5% increase in total natural gas volumes processed, compared with the first quarter 2019.
Three Months Ended | |||||||
March 31, | |||||||
Natural Gas Gathering and Processing Segment | 2020 | 2019 | |||||
(Millions of dollars) | |||||||
Adjusted EBITDA | $ | 159.6 | $ | 152.2 | |||
Capital expenditures | $ | 181.6 | $ | 215.1 |
First quarter 2020 adjusted EBITDA increased, compared with the first quarter 2019, which primarily reflects:
Natural Gas Pipelines Segment
The natural gas pipelines segment's adjusted EBITDA increased 6% in the first quarter 2020, compared with the same period in 2019, due primarily to higher firm transportation capacity contracted due to completed expansion projects in 2019 and higher firm transportation rates.
Three Months Ended | |||||||
March 31, | |||||||
Natural Gas Pipelines Segment | 2020 | 2019 | |||||
(Millions of dollars) | |||||||
Adjusted EBITDA | $ | 112.5 | $ | 106.6 | |||
Capital expenditures | $ | 16.6 | $ | 28.7 |
EARNINGS CONFERENCE CALL AND WEBCAST:
ONEOK executive management will conduct a conference call at 11 a.m. Eastern Daylight Time (10 a.m. Central Daylight Time) on April 29, 2020. The call also will be carried live on ONEOK's website.
To participate in the telephone conference call, dial 800-458-4121, pass code 8831658, or log on to www.oneok.com.
If you are unable to participate in the conference call or the webcast, the replay will be available on ONEOK's website, www.oneok.com, for 30 days. A recording will be available by phone for seven days. The playback call may be accessed at 888-203-1112, pass code 8831658.
LINK TO EARNINGS TABLES AND PRESENTATION:
https://ir.oneok.com/financial-information/financial-reports/2020
NON-GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) FINANCIAL MEASURES:
ONEOK has disclosed in this news release adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), distributable cash flow and dividend coverage ratio, which are non-GAAP financial metrics, used to measure the company's financial performance and are defined as follows:
These non-GAAP financial measures described above are useful to investors because they, and similar measures, are used by many companies in the industry as a measure of financial performance and are commonly employed by financial analysts and others to evaluate our financial performance and to compare our financial performance with the performance of other companies within our industry. Adjusted EBITDA, ONEOK distributable cash flow and dividend coverage ratio should not be considered in isolation or as a substitute for net income (loss) or any other measure of financial performance presented in accordance with GAAP.
These non-GAAP financial measures exclude some, but not all, items that affect net income (loss). Additionally, these calculations may not be comparable with similarly titled measures of other companies. Reconciliations of net income (loss) to adjusted EBITDA, distributable cash flow and coverage ratio are included in the tables.
ONEOK, Inc. (pronounced ONE-OAK) (NYSE: OKE) is a leading midstream service provider and owner of one of the nation's premier natural gas liquids (NGL) systems, connecting NGL supply in the Rocky Mountain, Mid-Continent and Permian regions with key market centers and an extensive network of natural gas gathering, processing, storage and transportation assets.
ONEOK is a FORTUNE 500 company and is included in the S&P 500.
For information about ONEOK, visit the website: www.oneok.com
For the latest news about ONEOK, find us on LinkedIn, Instagram, Facebook and Twitter.
Given the current environment, continued commodity price and market volatility, and uncertainty surrounding the COVID-19 pandemic, ONEOK is withdrawing its 2020 guidance expectations and 2021 outlook, originally provided on Feb. 24, 2020, as well as its prior dividend guidance. Previously provided guidance and outlooks should no longer be relied upon.
This news release contains certain "forward-looking statements" within the meaning of federal securities laws. Words such as "anticipates," "believes," "continues," "could," "estimates," "expects," "forecasts," "goal," "guidance," "intends," "may," "might," "outlook," "plans," "potential," "projects," "scheduled," "should," "will," 'would," and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect our current views about future events. Such forward-looking statements include, but are not limited to, statements about the benefits of the transaction involving us, including future financial and operating results, our plans, objectives, expectations and intentions, and other statements that are not historical facts, including future results of operations, projected cash flow and liquidity, business strategy, expected synergies or cost savings, and other plans and objectives for future operations. No assurances can be given that the forward-looking statements contained in this news release will occur as projected and actual results may differ materially from those projected.
Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties, many of which are beyond our control, and are not guarantees of future results. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in such statements and, therefore, you should not place undue reliance on any such statements and caution must be exercised in relying on forward-looking statements. These risks and uncertainties include, without limitation, the following:
These reports are also available from the sources described below. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. ONEOK undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or changes in circumstances, expectations or otherwise.
The foregoing review of important factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included herein and elsewhere, including the Risk Factors included in the most recent reports on Form 10-K and Form 10-Q and other documents of ONEOK on file with the SEC. ONEOK's SEC filings are available publicly on the SEC's website at www.sec.gov.
Analyst Contact: | Megan Patterson 918-561-5325 |
Media Contact: | Brad Borror 918-588-7582 |
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SOURCE ONEOK, Inc.