ONEOK Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jeremy Tonet - JPMorgan - Analyst : Hi, good morning. Thanks for the color on the call today. I was wondering if you might be able to expand a little bit more on the synergies and I guess the forward outlook? There's a lot of uncertainty in the market, but from what you see right now for the balance of '25 not really just hitting REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 3:00PM, OKE.N - Q1 2025 ONEOK Inc Earnings Call the guide there, but really, the commentary on 2026 appears unchanged as far as strong growth there. And just wondering if you could elaborate a bit more maybe on what you see there, synergy capture that gives you the confidence to stick with that at this point?

Question: Jeremy Tonet - JPMorgan - Analyst : Got it. That's helpful. Thank you. And then, maybe just shifting a little bit to producer conversations here, we've seen reports of producers asking for meaningful concessions from midstreamers and just wondering, I guess, how your producer customer conversations go with regards to that? And I guess, could there be the potential for win-win solutions? Or just any color there would be great.

Question: Jeremy Tonet - JPMorgan - Analyst : Got it. That's helpful. I'll leave it there, thanks.

Question: Doug Irwin - Citi - Analyst : Hey, this is [Doug Irwin] on for Spiro. Maybe just to start with the LPG export project. I'm just curious if and how the potential for tariffs on LPGs has impacted your approach for commercializing this project moving forward?

Question: Doug Irwin - Citi - Analyst : Okay, great. That's helpful. And my follow-up maybe just on the macro environment, just curious if we see crew to go into contango here, how should we think about potential storage tailwinds across your system?

Question: Doug Irwin - Citi - Analyst : Great. I'll leave it there. Thanks.

Question: Theresa Chen - Barclays - Analyst : Morning. Well, I wanted to go back to your comments about protecting the balance sheet in the event of further macro deterioration. With your CapEx plans in place for the near to medium term, how much can you flex down if things get worse? Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer Well, Theresa, I would say that we've lived that scenario a couple times over the last 10 years. Clearly, that was something that had to take place in 2020, and I think we demonstrated a very significant ability to flex our capital program. Clearly, your routine growth, which is often driven by producer activity, will come off kind of naturally. If activity slows, we won't be spending that portion, and that's about $1 billion of our annual capital that can be flexed. And then the longer-term larger projects, as in 2020, we actually put some of those on hold and then spent the money to do that properly so as the market came back, we were able to restart those projects and meet our customer demand. We will look at across all of our projects, those that are critical to continuing to deliver on the plan will be executed in due course. So we look at everything today, we don't see it an environment where that's necessary. But we did want to highlight that we did it back in 2016, we did it in 2020. So if we see a macro outlook or global demand destruction, we're in a position to know how to manage the balance sheet and protect it as we've done in the past.

Question: Theresa Chen - Barclays - Analyst : Thank you.

Question: Michael Blum - Wells Fargo Securities - Analyst : Thanks, good morning, everyone. I had a couple of questions on the Bakken. Obviously, the data shows some recovery in volumes, but you're not quite back to pre-wildfire level. So just wondering how you're seeing the rest of the year trending and I recognize now that Bakken is a smaller piece of the overall pie, but how much Bakken growth do you need to hit your full year guidance?

Question: Michael Blum - Wells Fargo Securities - Analyst : Okay, thanks for that, Sheridan. And then as I think about ethane recovery in the Bakken, how sensitive is that to market pricing? So like if we see a prolonged China weakness, for example, would that have an impact or is it really just the ethane that's getting recovered there? Is it really just a heat rate concern on northern border and it's not really driven by pricing? Thanks.

Question: Jean Ann Salisbury - Bank of America - Analyst : Hi, good morning. I just have one. It's kind of a follow-on to Michael's. NGL volume seemed light across the board in the first quarter, so I really appreciated Sheridan's discussions around how it compared to your internal projections and how things are ticking up in April on the NGL volume front. I did just want to ask if there was more ethane rejection in the mid counter Bakken or anything like that than you had sort of anticipated, which would potentially impact the rest of the year? Or if that is basically kind of what you had already forecast for the first quarter?

Question: Manav Gupta - UBS - Analyst : Hi, guys, I actually just wanted to focus on slide 5, a very interesting sort of slide, but some of us are slightly visually challenged. So help us understand the slide a little better. Are you trying to imply that by combining these four companies, there's about an additional $1.3 billion of incremental EBITDA realizable by 2027? Can you help us walk through this slide? There's a lot of very good information on here. Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer Yes, I mean, that's exactly the punch line there as you get out into 2027. What we wanted to do was go back and give a base. So if you look at the projections that were there at the time of the acquisitions, and then we layer in the synergies and growth projects and we wanted to put both of those in because a great example of that is the refined products pipeline expansion out to Denver. Is that a synergy or is that really a growth opportunity that presented itself as we brought these two companies together? Either way, it's going to be a great contributor as we look going forward. So we wanted to couple those together and show you how that would build over time because as Sheridan spent time here talking today, we're just now getting in a position to get some of those Magellan synergies where we had to spend some capital to connect the system. And there will be some of those with EnLink and Medallion. Hopefully, they'll come in a little bit quicker, because they're a little bit smaller in scale as to what needs to happen. But we wanted to give you a view of how we see those playing forward so that as you think about a longer-term growth rate, you can understand what we think some of those opportunities are.

Question: Keith Stanley - Wolfe Research - Analyst : Hi, good morning. So you've had a lot of confidence on the call on the 2025 outlook and good details on recovery this spring. Would you say even with Q1 that as of now you're still tracking to the midpoint of the 2025 EBITDA guidance generally? Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer Yeah, I would say that we reaffirmed guidance just as we gave it in February with the same -- where we'd end up, so we are in line, affirming financial guidance as it was given in February.

Question: AJ O'Donnell - Tudor Pickering Holt & Co - Analyst : Morning, everyone, I just wanted to go back to the permian volume guidance. Thinking with the current asset footprint and 1.7 BCF capacity, just wondering if you could elaborate a little bit more about how you envisioned that volume, kind of the cadence stepping up the rest of the year? How much of the volume growth do you think there could be from inefficiencies that you could capture on the system, or is just the volume growth entirely driven by new well connects? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 30, 2025 / 3:00PM, OKE.N - Q1 2025 ONEOK Inc Earnings Call

Question: AJ O'Donnell - Tudor Pickering Holt & Co - Analyst : Okay, great, then maybe if I just shift to refined products. I was wondering if you could spend a little bit time talking about the blending business. Spreads between the butane and RBOB seem to be wider than they were relative to Q4, and I know that there's more that goes into that business, such as like logistical costs and differentials. I was hoping that maybe you could explain the Q1 results and maybe if we're getting ourselves into a situation like we did in 2024 or like you did in 2024, where you kind of saw an unseasonal uptick in Q2 product margins?

Question: Sunil Sibal - Seaport Global Securities - Analyst : Yeah, hi, good morning, folks, and thanks for all the color on the call. So I just wanted to start off by clarifying some comment, which was made in the prepared remarks with regard to the LPG export dock facilities. So are you indicating that the amount of volumes that you need to fill up your facilities is something that you're already moving on your systems, but I guess with third-party export docks? Did I get that right?

Question: Sunil Sibal - Seaport Global Securities - Analyst : Understood, thanks for that. And then on the gas pipeline business, seems like you had a pretty solid start, although you had some investitures in that business. And then you also talked about a few gas storage expansion projects that are kicking in now, so I was curious, when I look at how you performed in the first quarter versus your full your guidance, am I missing something that -- you seem to be on a pretty good track to exceed the full year EBITDA guidance in that segment?