ONEOK Inc Q4 2024 Earnings Call Summary

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

Question: Theresa Chen - Barclays - Analyst : Would you be able to provide some additional details behind bridging the 2025 to 2026 guidance? Sounds like much of it is driven by project contribution. But are there other details and color around synergies or assumptions on volume and pricing can you share at this point? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 25, 2025 / 4:00PM, OKE.N - Q4 2024 ONEOK Inc Earnings Call Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer Well, Theresa, the -- what we're really seeing is the benefit of the synergy capital that we've been spending primarily connecting the Easton assets, so that all of our assets down in Mont Belvieu and the Houston channel. Those should get completed here in 2025, and we'll get that full benefit into 2026. We'll start to see some of these other projects wrap up in later 2025 or early 2026 and contributing benefit. So this last phase of capital investment is coming at a great time (technical difficulty)

Question: Theresa Chen - Barclays - Analyst : Yeah. If we want to move on to the second question, I just wanted to unpack two components of your organic project backlog a little bit more. On the LPG side, can you speak more to the strategic benefits behind your export JV with MPLX and how exactly will ONEOK and MPLX be competitive versus the incumbent from export economics? And then secondly, within your refined product portfolio, what other capacity additions are there like the Denver pipeline expansion? And beyond the initial 35,000 barrels per day, how much can you actually send up that 16-inch line given the pretty significant cost of the project?

Question: Jean Ann Salisbury - BofA Global Research - Analyst : I guess just a follow-up on Theresa's question about the LPG export dock. It seems like LPG ports are getting overbuilt and spot rates could fall significantly. Can you just speak about your assumptions for uncontracted rates, whether you share that view and whether in your numbers, the uncontracted capacity as a meaningful contributor to the economics that you're projecting?

Question: Jean Ann Salisbury - BofA Global Research - Analyst : Okay. That's helpful. And then things are looking bullish for gas price over the next couple of years. Rig count in the Haynesville has been flattish, but maybe creeping up in the Mid-Con, from what you're hearing from customers, do you think that the gas strip is high enough that we could see material gas growth in the next year or two in the Mid-Con, which I don't think most are anticipating?

Question: Vrathan Reddy - JPMorgan - Analyst : This is Vrathan Reddy on for Jeremy. For the '25 CapEx guide, could you help us bridge spend on the three larger projects in your backlog versus those smaller capital opportunities such as well connects, well connections, and synergy-related opportunities. Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer Trying to decide who was going to take that question. This is Walt. We have the three larger projects being the Medford frac, which is in its heavy build stage at the moment as we move forward; the Denver pipeline, also in that phase. The addition of the plant down in North Texas, which is a reasonably quick and concentrated spend during that period, and we're wrapping up the Easton acquisition. So that's the focus there in the '26. Clearly, as some of those projects come on, some of that capital intensity will fall away. We'll have the dock project being ramping up in '26 and hit a stride as you get out in the next couple of years after that. But towards the back half of this year, we'll be a pretty good spend rate as well. So that's really the gist of it. A lot of the other capital we're spending around synergies and the like, they are very small, extremely high return projects that we've been working on to connect the refined products and the NGL system to really enhance the ability to move product around the system to be more efficient in blending activities and the like. So those are coming to completion, and those are going to be additive in singles and doubles across the way as we build out those synergies for '25 and '26.

Question: Michael Blum - Wells Fargo Securities, LLC - Analyst : Well, I wanted to ask about 2026 CapEx. I realize you're not giving an estimate here. But just directionally, obviously, you have a big pickup in '25. Given the larger size and scale of the company now, is this a new run rate for the company? Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer Michael, this is Walt. I think we definitely are seeing a peak here in '25 as we wrap up Medford and the Denver project is in full swing. Will we, as a larger company, have a higher run rate, definitely. But I think that you will see it as some of those come off and some of the synergy capital that we've been spending completed that our baseline will come down over '26 and into '27. But clearly, it will be higher than it would have been prior to the EnLink and Medallion acquisitions. We definitely want to make sure that we continue to make sure that we have capacity available for our customers in the Permian and some of the new markets that we're entering.

Question: Manav Gupta - UBS Equities - Analyst : On your 2025 guide, can you help us understand what drives you towards the top end of the guide, especially for the natural gas liquids and refined products and crude segments? Like what could get you to $3.1 billion and $2.3 billion, respectively, in 2025 for those two segments? Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer I think that as you look at the business -- because some of it is the timing of when we bring in some of these synergies. As we are able to get certain assets connected, we are going to bring those earnings home quicker. Clearly, there can be opportunities as our producers, if they see continued strength in commodity prices or gas prices here. They can help us out on that front. But I think that while we're not going to have to rely just on increased producer activity, I do think that we have the innovation of our team as they continue to look for opportunities to optimize those smaller synergies. They may only be a $10 million, $15 million add to EBITDA, but you do a bunch of them and they start to add up pretty quick.

Question: Keith Stanley - Wolfe Research - Analyst : Just a follow-up first on the '26 EBITDA outlook and synergies. So you said $250 million of incremental synergies this year. Is there a number you can provide for 2026? It sounds like a lot of the projects are coming on of incremental synergies versus this year. Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer Yeah. We're not going to guide to a specific number at his point in time. It's baked into our outlook at this point. But what I would say is that further we get down the path with multiple acquisitions, some of supply chain type of synergies start to blend together. When we're buying for the four companies together as opposed to just legacy ONEOK, they're a little bit less easy to identify where we should point them to, whether they're Magellan synergies or Medallion synergies or EnLink. So some of those get grouped together, and we're just seeing a net benefit to the company. So at this point, in '26, we're going to just leave it at those synergies that we have identified today are baked into that number. And we'll continue to try to find more and refine that number as we get closer to when we provide actual guidance for '26. But that is our outlook today with what we know so far.

Question: Sunil Sibal - Seaport Global Securities LLC) - Analyst : I was going in and out, so I'm not sure if this was addressed. But I wanted to start off on the Permian side of things. I believe your processing capacity is around 1.7 Bcf per day there. Could you tell us what utilization that is running at? And then the downstream of the processing plants, approximately how much of the NGL volumes you control from the marketing point of view.

Question: Sunil Sibal - Seaport Global Securities LLC) - Analyst : Okay. Got it. And then on the stock buybacks, I think in your previous guidance -- sorry, can you hear me? Walter Hulse - ONEOK Inc - Chief Financial Officer, Executive Vice President of Investor Relations and Corporate Development, Treasurer Yes, we can.

Question: Neal Dingmann - Truist Securities - Analyst : I guess just -- you've had a lot of these, I guess, my question just on per lot of the overall producers just give their new plan for 2025. And to me, they all some quite good or at least the same. I'm just wondering, based on what you've heard now from plans and what REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 25, 2025 / 4:00PM, OKE.N - Q4 2024 ONEOK Inc Earnings Call you guys have had with conversations, do you still have the same expectations for production in some of your key areas as you did last year? Unidentified Company Representative Yeah. Yeah, we've had a lot of conversations with our producers and what they're seeing going forward. And I would probably say we are at or above where we thought we would be last year, a lot with the -- let's take the Bakken, the consolidation that's up in the Bakken. We are bringing producers with different types of efficiency on the wellhead. They're consolidating acreage so they can drill longer laterals. That's going to bring more volume into our system. We're seeing that also in the Mid-Continent, where a little bit, as we mentioned earlier today, gas prices are up a little bit more. We're seeing people start to come in a little bit harder in the Mid-Continent, and all this is reflected into our guidance. But I would say we're at or above where we would thought we would be three, four months ago for sure.