ONEOK, Inc. 10-Q Summary: Q1 2026
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. ONEOK, Inc. operates as a large accelerated filer in the midstream energy sector, managing an integrated network of gathering, processing, fractionation, transportation, storage, and marine export assets. The company's operations are divided into four segments: Natural Gas Gathering and Processing, Natural Gas Liquids, Natural Gas Pipelines, and Refined Products and Crude.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenues | $9,618 million | $8,043 million |
| Operating Income | $1,428 million | $1,220 million |
| Net Income (Attributable to ONEOK) | $774 million | $636 million |
| Diluted EPS | $1.23 | $1.04 |
| Adjusted EBITDA | $1,997 million | $1,775 million |
| Cash from Operating Activities | $934 million | $904 million |
| Capital Expenditures | $864 million | $629 million |
| Total Debt (Book Value) | $32.0 billion | $32.0 billion |
| Cash and Equivalents | $172 million | $78 million |
Liquidity: The company reported a working capital deficit of $2.3 billion, primarily due to current maturities of long-term debt and short-term borrowings. However, management states this is not expected to materially impact operations. The company maintains a $3.5 billion credit agreement and a $3.5 billion commercial paper program.
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased by $1,575 million (19.6%) year-over-year, driven by higher commodity sales ($8,445 million vs. $6,912 million) due to increased optimization, marketing activity, and higher volumes in NGL, Refined Products, and natural gas processing.
- Profitability: Operating income rose $208 million. Net income attributable to ONEOK increased $138 million (21.7%).
- Impairment Charge: A noncash impairment charge of $60 million was recorded in Q1 2026 related to the 50% investment in Powder Springs (Refined Products and Crude segment), which was not present in Q1 2025.
- Transaction Costs: Transaction costs decreased by $35 million to $7 million, as Q1 2025 included significant costs related to the EnLink Acquisition.
- Segment Performance:
- Natural Gas Liquids: Adjusted EBITDA increased $71 million due to higher optimization and marketing earnings.
- Natural Gas Pipelines: Adjusted EBITDA increased $127 million, driven by favorable price differentials and higher firm transportation revenue.
- Refined Products and Crude: Adjusted EBITDA increased $21 million despite the impairment charge, aided by higher crude marketing earnings.
- Natural Gas Gathering and Processing: Adjusted EBITDA decreased $24 million due to lower realized commodity prices, partially offset by higher volumes.
Guidance, Outlook, and Risks
- Capital Expenditure Guidance: Total capital expenditures for 2026 are expected to be between $2.7 billion and $3.2 billion.
- Dividends: The quarterly dividend remains at $1.07 per share, representing a 4% increase over the prior year. The next payment is scheduled for May 15, 2026.
- Fee-Based Earnings: Management expects consolidated earnings to be approximately 90% fee-based in 2026, supported by long-term contracts with investment-grade counterparties.
- Subsequent Events: In April 2026, the company redeemed $491 million of senior notes due July 2026 and entered into a new $1.2 billion term loan agreement.
- Risks: Key risks include geopolitical instability (specifically in the Middle East) impacting commodity prices, regulatory changes, credit risk of counterparties, and the potential for further impairment charges on equity investments.
Investor Verification Checklist
- Impairment Details: Verify the specific valuation methodology and future outlook for the Powder Springs investment following the $60 million impairment.
- Working Capital Deficit: Review the composition of the $2.3 billion working capital deficit to ensure short-term liquidity remains sufficient for operations and debt service.
- Commodity Hedging: Assess the impact of the $303 million unrealized loss on derivatives (net of tax) recorded in other comprehensive income on future earnings volatility.
- Capital Project Execution: Monitor progress on major projects (Bighorn plant, Medford fractionator, Texas City Logistics) against the $2.7-$3.2 billion 2026 capex guidance.
- Debt Covenants: Confirm continued compliance with the 5.5 to 1 leverage ratio covenant under the $3.5 billion credit agreement, which is extended through June 30, 2026.