ONEOK Inc Q3 2024 Earnings Call Summary

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

Question: Theresa Chen - Barclays Capital, Inc. - Analyst : Maybe going back to Sheridan's comments about your natural gas infrastructure business, many of your peers have expressed enthusiasm in related to the robust growth outlook for natural gas infrastructure given the backdrop of power demand for a variety of reasons, including incremental demand from data centers. As commercial discussions have progressed over the past months and quarters, can you talk about how you use your assets situated within this backdrop and how you can participate in this being?

Question: Theresa Chen - Barclays Capital, Inc. - Analyst : Okay. And then -- thank you, Sheridan earlier for giving us the data points on the medallion potential synergies to your long-haul pipeline. I'm curious, the current Medallion volumes, are they flowing primarily to Corpus or to Houston already, ie, if they can go on Longhorn incrementally in BridgeTex, would the assumption be that they would also be additive to your Houston distribution system especially in light of Lyondell, still planning to close that refinery in that area in 2025?

Question: Jean Ann Salisbury - Bank of America - Analyst : Ethane demand for the US looks pretty flat for the next few quarters until more export facilities come online. Can you talk about what you think drives the minimum possible recovery of ethane in the Bakken, whether it's a certain amount of the stream to flow on the NGL infrastructure or if it's like hitting residue gas BTU spec. And I guess, more importantly, like how far away we are from that floor? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 3:00PM, OKE.N - Q3 2024 ONEOK Inc Earnings Call

Question: Jean Ann Salisbury - Bank of America - Analyst : That makes sense. And then as a follow-up, a lot of the kind of plateauing of Bakken GOR for the past few years. has been caused by Bakken operators moving into higher oil cut areas from talking to your producers, do you feel that rate of change to the oil areas has kind of stabilized yet?

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : Maybe could you just stay on the volume discussion in the Bakken. I'm trying to square your comments that you made in the prepared remarks about volumes and GOR trends with some of the recent basin level data we're looking at, which seems to show crude volumes declining a bit the last few months, gas production kind of flattening out. So I wonder if you could just talk about what you're seeing across your footprint relative to the overall basin?

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : Okay. Sheridan. And then I wanted to ask about this over $8 billion guidance -- EBITDA guidance for '25. If I just simply annualize the Q4 results, pro forma for a full year -- a full quarter contribution for EnLink and Medallion, we're getting something around $8.3 billion EBITDA run rate. And that's before any full year contributions from West Texas, Elk Creek, et cetera. So I just want to see if we're missing something there or is that over $8 billion kind of a conservative estimate? Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer Well, Michael, I think we put the adder in there is that we were comfortably over $8 billion. So I can't argue with your math at all. Thank you.

Question: Brendan Reddy - J.P. Morgan Chase Bank, N.A. - Analyst : For the stand-alone adjusted EBITDA rate, I was wondering if you could maybe just parse through how much of that is attributable to the legacy asset sales that you guys had last quarter and the East NGL asset acquisition versus base business strength, which you guys talked a bit about in the prepared remarks. Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer I'm sorry, could you repeat that, please?

Question: Brendan Reddy - J.P. Morgan Chase Bank, N.A. - Analyst : Got it. And on the Bakken, we've hit a couple of different times. But on the lateral length, it looks like that was lowered a bit for the 2024 guidance. Curious, if you could walk through any drivers there that we haven't hit already.

Question: Neal Dingmann - Truist Securities, Inc. - Analyst : I was hoping that maybe I could ask another question around the $8 billion 2025 EBITDA guide, specifically just curious to maybe some of the base assumptions around that, such as how you're thinking about for next year commodity prices or overall production along with your CapEx? And also may be wondering, I guess, maybe you all are somewhat indifferent on these macro prices and volumes, given just the specific company upside you see post all your accretive deals. Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer Well, first of all, I want to just clarify that we didn't give 2025 guidance to kind of give you a directional outlook of where we see things going. And we will provide a whole lot more clarity around all of the different variables that you laid out there. In February when we give our full 2025 guidance. But until we get there, we're going to leave it at the remarks we've made today.

Question: Keith Stanley - Wolfe Research, LLC - Analyst : First, I wanted to check in and see if the EnLink Conflicts Committee has determined the boat requirement yet to approve a sale of the public interest? And then are there any other procedural steps that are needed prior to ONEOK being in a position to offer to buy the remaining stake. Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer We haven't disclosed our intention to pursue the acquisition of all the outstanding public units of EnLink in a tax retransaction that would provide a meaningful dividend increase to all of the unit holders. And when we have further information to disclose around that, we will, when it's appropriate. But I would say that we have cleared HSR review for both Phase 1 and Phase 2. So there are no more procedural types of things that we need to get through.

Question: Manav Gupta - UBS Investment Bank - Analyst : My first question is, it's been almost a year now that you have been operating these Magellan assets. And generally, when the year has passed, there is always some upside, the assets performed better than expectations in certain areas. So if you could highlight that, which is allowing you to raise the synergy and also if there is any area where you probably had to do a little more work than you initially thought to capture those synergies.

Question: Manav Gupta - UBS Investment Bank - Analyst : Perfect. My quick follow-up is exactly like you have seen over with Magellan. And you talked about some moving Medallion volumes on your systems. Have you also identified some growth projects stand-alone at the Medallion level which will allow you to grow the EBITDA from the assets which you're about to acquire?

Question: AJ O O'Donnell - TPH&Co. - Analyst : Just wondering if I could go to the updated consolidated financial guidance. Curious if you guys would be able to provide some comments as to the breakdown of the contributions. The increase is about $350 million to the midpoint of the stand-alone guide I'm just curious how those parts come together and if there are any early synergies from the deal that are included in that number. Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer Yes. No, I think that you can just look at the public data that we've seen out there, we clearly gave you our stand-alone guidance. So I think if you use EnLink, the Medallion will fall out as the piece that is there. As hard as we try to grab synergies in the first two-months is that's a pretty aggressive challenge. So I think right now, it's pretty much just additive from the businesses as they come in, and we start to get the teams really ginned up to work together. So stay tuned on the synergies as we go into '25.

Question: Sunil Sibal - Seaport Global Securities LLC - Analyst : So first of all, just sticking to the consolidation theme. I was curious at the time of Magellan acquisition, I think the range for synergies was given was around 200 to 400 plus, one-year out, where do you think you are in that range as of now. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 3:00PM, OKE.N - Q3 2024 ONEOK Inc Earnings Call Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer I think you might have our Medallion and our Magellan -- if we're talking about one year out, you are really referring to the Magellan synergies at that point.

Question: Sunil Sibal - Seaport Global Securities LLC - Analyst : Okay. And then I realize you're pretty early in terms of EnLink and Medallion. But I was curious if you have any thoughts on further consolidation opportunities in this space?

Question: Craig Shere - Tuohy Brothers Investment Research, Inc. - Analyst : So just real quickly, things have shifted a little bit since you announced these latest deals a couple of months ago. Could you see any notable acquisition upside in terms of overall economics from a notable relaxation of drilling and/or LNG permitting regs. And through your latest acquisitions just enhance your long-term interest and ultimately getting into liquids exports.

Question: Craig Shere - Tuohy Brothers Investment Research, Inc. - Analyst : Any other thoughts about exports?