ONEOK (NYSE:OKE) reported first-quarter financial results on Wednesday. The transcript from the company’s first-quarter earnings call has been provided below.
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Summary
ONEOK reported strong first-quarter earnings with a 12% year-over-year increase in net income, reaching $776 million, and raised its 2026 financial guidance due to robust performance and favorable market conditions.
The company is focusing on strategic initiatives such as the expansion of its natural gas and NGL infrastructure, including projects in the Permian and Powder River Basins, while maintaining a strong balance sheet and financial flexibility.
Management emphasized the long-term demand for U.S. energy infrastructure, driven by increasing LNG export capacity and rising natural gas demand, and highlighted ongoing operational excellence and customer relationship management as key to future growth.
ONEOK’s adjusted EBITDA guidance for 2026 was increased to a midpoint of $8.25 billion, reflecting strong business segment performance and improved market dynamics.
Operationally, ONEOK completed the relocation of the Shadowfax natural gas processing plant and is on track with other key projects, while also seeing strong demand for its export infrastructure, particularly for LPG exports.
Full Transcript
OPERATOR
Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press Star zero and a member of our team will be happy to help you.
Megan Patterson (Vice President, Investor Relationship)
Thank you. everyone welcome to one of the first quarter 2026 earnings call. We issued our earnings release and presentation after the markets closed yesterday and those materials are available on our website. After our prepared remarks, management will be available to take your questions. Statements made during this call that might include oneok’s expectations or predictions should be considered forward looking statements and are covered by the Safe harbor provision of the securities Acts of 1933 and 1934. Actual results could differ materially from those projected in forward looking statements. For a discussion of factors that could cause actual results to differ, please refer to our SEC filings. With that, I’ll turn the call over to Pierce Norton, President and Chief Executive Officer.
Pierce Norton (President and Chief Executive Officer)
Thank you Megan and good morning everyone and thank you for joining us today. Joining me on the call are Walt Hulse, Chief Financial Officer, Randy Lentz, Chief Operating Officer and Sheridan Swartz, our Chief Commercial Officer. Yesterday we reported first quarter earnings and raised our 2026 financial guidance, reflecting strong performance and building momentum. Before we get into the quarter, I’d like to take a step back and frame the environment we’re operating in and how we think about ONEOK’s role within it. Energy markets remain dynamic, but long term fundamentals are strong. It remains clear that the US Energy infrastructure is essential for economic growth, industrial competitiveness, power demand and global energy security. Midstream’s role is simple. We connect supply and demand safely and efficiently across cycles, not around them. That’s where ONEOK differentiates itself. We built a regionally diversified integrated platform at scale across natural gas liquids, natural gas, crude oil and refined products, anchored by an innovative employee base, the interconnectivity of our assets, customer relationships and a predominantly fee based model. Our systems sit in and around some of the most resilient basins and durable demand centers, including power generation, industrial demand and export markets. As we look to the remainder of 2026, our high level priorities remain consistent operate safely and reliably, execute our capital growth program with discipline, maintain balance sheet strength and financial flexibility and leverage our integrated asset advantage and strong customer relationships to continue driving volume growth across all of our systems. These priorities are grounded in what we see across the US Energy landscape where long term demand remains constructive both domestically and globally. US Natural gas demand is growing across power generation for emerging data center demand, industrial activity and liquefied natural gas exports. LNG export capacity alone is projected to more than double over the next decade, reinforcing the durable global call on U.S. energy and natural gas infrastructure. 65% of U.S. natural gas production contains recoverable natural gas liquids. That means the infrastructure to handle natural gas liquids must be addressed alongside natural gas. This requires full value chain infrastructure and continued investments in natural gas, natural gas liquids, crude oil and refined product assets. Companies like one of at the same time, NGL demand remains strong globally driven by petrochemical and international markets, with US Supply playing an increasingly critical role. And finally, the resilience and innovation of the US Energy industry continues to stand out through consistent efficiency gains and reliable results. Recent global events have only reinforced the importance of secure, resilient energy supply and the critical role U.S. energy plays in providing it. The world has seen that the most expensive energy is the energy that does not show up as global demand continues to grow. Infrastructure, not supply, is the constraint and that is exactly where oneok is positioned providing scalable, strategically located infrastructure with capacity and the ability to respond to evolving demand dynamics. I’ll now turn the call over to
Walt Hulse (Chief Financial Officer)
Walt Hulse for our financial update. Thank you, Pierce. As Pierce mentioned, we are increasing our 2026 financial guidance reflecting the strong performance we delivered in the first quarter across ONEOKs integrated systems and our higher expectations for the remainder of the year. We now expect 2026 net income to increase to a midpoint of approximately $3.5 billion, with diluted earnings per share increasing to a midpoint of $5.53. We are also increasing our adjusted EBITDA guidance to a midpoint of $8.25 billion. These updates reflect strong underlying business segment performance as well as increased opportunities across our system, driven in part by by a more constructive market environment that developed late in the first quarter. As we move into the back half of the year, the combination of higher volumes, completed projects and market tailwinds should be reflected more clearly in our results for the balance of this year and into 2027 our total 2026 capital expenditures guidance remains unchanged and at $2.7 billion to $3.2 billion. Turning to the first quarter performance, ONEOK reported net income of $776 million or $1.23 per diluted share, a 12% increase compared with the first quarter of 2025. Results included a non cash impairment of $60 million or $0.07 per diluted share after tax related to our Powder Springs logistic joint venture in the refined products and crude segment. Adjusted EBITDA for the quarter totaled approximately $2 billion, a 13% year over year increase driven by higher volumes and strong segment level performance. As market conditions strengthened toward the end of the quarter, we also saw additional opportunities across our system. We continue to expect the first quarter to be our lowest EBITDA quarter of the year, consistent with our typical annual cadence and seasonal dynamics. Importantly, our balance sheet and capital framework remains strong. We continue to prioritize financial flexibility while investing in the business and returning capital to shareholders. In April, we redeemed nearly $500 million of outstanding notes due July 2026 and we entered into a $1.2 billion term loan, further enhancing balance sheet flexibility in a rapidly changing market. Our results reflect the same themes that underpin our strategy a high quality, largely fee based earnings mix, strong performance across our integrated systems and disciplined cost and capital management. And our increased financial guidance reflects both this consistent execution year to date and improving market dynamics. I’ll turn it over to Randy for an operational and large capital projects update.
Randy Lentz (Chief Operating Officer)
Thank you Walt. From an operational standpoint, our focus remains on safe and reliable performance across our integrated assets. Our teams continue to execute well across all four business segments managing normal seasonality and weather related impacts. The scale and diversity of our systems allow us to absorb those seasonal dynamics while continuing to provide reliable service to our customers. Winter Storm Fern created temporary wellhead freeze offs that briefly reduced throughput, but as a reminder there were no material downtime on our assets on those related. Those impacts were already reflected in our original 2026 guidance. Turning to capital projects, we made strong progress so far this year. In the first quarter we completed the relocation of our 150 million cubic feet per day Shadowfax natural gas processing plant from North Texas to the Midland Basin. We expect a steady ramp up of volumes as producer activity remains solid in the area. We’re also on track to complete expansions of our Delaware Basin processing assets in the third quarter, increasing our capacity in the basin by 110 million cubic feet per day. In addition to our 300 million cubic feet per day Bighorn processing plant that remains on schedule for completion in mid-2027 in the powder River Basin. We’re on track to complete construction of our 60 million cubic feet per day cutter plant in the fourth quarter of 2026. This plant will increase our processing capacity in the Powder river to more than 100 million cubic feet per day. We expect capacity to fill quickly from wells already drilled and expected to be drilled by our 15% JV partnering plant. Across other segments, our Denver area refined products pipeline expansion will add 35,000 barrels per day of capacity when it enters service mid year and phase one of our Medford NGL fractionator will add 100,000 barrels per day of mid continent fractionation capacity in the fourth quarter. These projects remain on schedule and are positioned to deliver meaningful near term benefits by improving reliability, expanding connectivity and increasing optionality by also creating long term durable value across our footprint. I’ll now turn it over to Sheridan for a commercial update.
Sheridan Swartz (Chief Commercial Officer)
Thank you Randy Commercially we continue to see active engagement across our asset portfolio. Demand is supported by downstream pull, particularly from power generation, industrial and petrochemical demand and export linked markets. These dynamics reinforce the importance of strategically located infrastructure and long term relationships. Looking at the first quarter, we delivered strong year over year volume performance across our assets despite typically seasonal headwinds starting with the natural gas liquid segment performance was led by broad based volume growth across all three of our core regions. In the Rocky Mountain region, NGL volumes increased 11% year over year driven by higher base volume and increased ethane recovery. In the Mid Continent volumes increased 4% year over year driven entirely by C3 plus volume even as the region experienced some temporary impacts from winter storms earlier in the quarter. In the Gulf Coast Permian region volumes increased more than 30% year over year primarily reflecting base volume growth from newly connected third party plants that were delayed last year as well as higher short term volume opportunity. From a global perspective, NGL demand remains structurally strong and recent geopolitical dynamics have further reinforced the attractiveness of U.S. supply. We pressed request for capacity on our announced LPG export dock were already increasing and have accelerated more recently as customers look to diversify supply toward the US Turning to the refined products and crude segment, year over year refined products volumes increased 12% supported by strong gasoline and diesel demand, refinery maintenance dynamics, favorable regional basis differentials and wide crack spreads that drove strong refinery utilization. Blending volumes were also strong during the quarter we entered the spring blending season significantly hedged which limited our exposure to widening RBOB to butane spreads Historically wide basis differentials between New York harbor where we hedge and the Mid Continent where we sell product also impacted realized margins. Looking ahead, we’ve secured additional hedges on fall volumes at higher prices and extended new hedges into spring 2027. Importantly, blending volumes continue to be driven primarily by system throughput rather than EPA RVP waivers which typically create only modest incremental opportunities. Increased gasoline throughput and completed synergy projects provide a much greater benefit allowing us to optimize blending activity across our system. More broadly, the reach and flexibility of refined products systems remain a key advantage. We are the only refined products pipeline system with bi directional access between the Mid Continent and the Gulf coast which allows us to attract incremental volume and respond to changing market conditions. Demand fundamentals remain strong. We continue to see very strong diesel demand across our system which we expect to remain as we move into spring agricultural season. We also anticipate a robust summer travel season supported gasoline demand across our footprint. Additionally, if jet fuel supply remains constrained for an extended period, we could see incremental demand for gasoline. Refined products and crude exports have increased in recent months amid global supply tightness particularly related to diesel, and we are well positioned with dock capacity across multiple Gulf coast marine facilities. Crude dock utilization remain robust at our highly contracted seabora joint venture and we are in discussions to extend our contract expiring capacity at favorable rates. Finally, higher margin Permian crude oil gathering volumes increased compared with the fourth quarter as activity in the basin remains favorable but discipline moving to the natural gathering and processing segment, we delivered strong year over year volume led by the Mid continent where volumes increased 7%. Mid continent producers continue to focus activity across both gas focused and liquid rich plays and we have 11 rigs currently operating at cost our more than 1 million dedicated acres in this region. In the Rocky Mountain region, process volumes increased year over year even with winter weather and heater treater impacts. As operating conditions normalize, we expect volumes to strengthen in the second and third quarters. There are currently 11 rigs on our dedicated acreage with producers continue to drive efficiency gains through longer lapses. In the Permian basin, process volumes increased 4% year over year and we currently have 11 rigs operating across our footprint. As Randy mentioned earlier, our expanded capacity in the Permian enhances system flexibility and positions us well to support producers development plans across both the Midland and Delaware basins, customer activity remains strong and we are increasingly encouraged by the depth of opportunities the Permian Basin brings to our portfolio. From a financial perspective, realized commodity prices were lower in the first quarter as a result of entering the year fully hedged. Importantly, underlying throughput volumes increased year over year across all regions, reinforcing the long term earning capacity and resilience of our gathering and processing portfolio. Producer behavior remains disciplined and execution focused. We are seeing some acceleration in completion activity which supports our confidence in the 2026 volume outlook. That confidence is driven by direct visibility into producer plans and rather than an expectation of higher commodity prices. This view is consistent with recent earnings commentary for oilfield services companies that noted early signs of increasing activity, particularly among private and single basin operators. DUC inventories can also provide an avenue for this acceleration. Our producer base across ONEOK’s approximately 7bcf per day system is well balanced among large public companies, private operators and private equity backed producers. That diversity provides both scale and durability while allowing activity to adjust incrementally. I’ll close with our natural gas pipeline segment where strong results continued in the first quarter with all regions outperforming expectations. Results benefited from wider than planned Waha to Katy location price differentials as well as incremental marketing opportunities created by Winter Storm firm across our Louisiana assets. Looking ahead, we expect Waha to Katy differentials to normalize as new pipeline egress comes online in the second half of the year. Firm transportation demand remains strong with high contracted capacity and strong utilization. We also continue to see significant interest from data center related opportunities in Oklahoma and Texas and we remain in advanced discussion with several counterpoints. Additionally, LNG related demand remains strong both near term and long term, reinforcing the durability demand for natural gas pipeline assets. Pierce, that concludes my remarks.
Pierce Norton (President and Chief Executive Officer)
Thank you Sheridan, Randy and Walt for those comments to close. I’ll come back to where I started. The energy landscape will continue to evolve, but the need for reliable, scalable US Energy infrastructure is not cyclical. It is driven by long term demand fundamentals. Oneok is built for this environment. Having an integrated platform with capacity, a strong balance sheet and disciplined execution results durable long term value creation. Most importantly, none of this happens without our people. I want to thank our employees for their continued focus on safety, operational excellence, innovation and service and thank you to our investors for your continued trust and support in one up with that operator.
OPERATOR
We’re now ready to take questions. We will now begin the question and answer session. If you would like to ask a question, press Star one on your telephone keypad to leave the queue at any time, press Star two. We do ask that you limit yourself to one question and a follow up to fit in as many of you as we can. Once Again, that is Star One to ask a question. And our first question will come from Spiro Dunas with Citi. Your line is now open. Please go ahead.
Spiro Dunas
Thanks operator. Morning team. Maybe just start with the improved outlook. Just looking for a little more granularity on how much that $150 million move is maybe early realized during the first quarter and I guess what level of visibility you …
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