UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September 30, 2020.~~March 31, 2021.

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________.

Commission file number 001-13643

ONEOK, Inc.

(Exact name of registrant as specified in its charter)


Oklahoma			73-1520922
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

100 West Fifth Street,

Tulsa,

74103

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code (918) 588-7000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value of $0.01	OKE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On ~~October~~April 19, ~~2020,~~2021, the Company had ~~444,397,414~~445,536,572 shares of common stock outstanding.

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ONEOK, Inc.

TABLE OF CONTENTS


Part I.	Financial Information	Page No.
Item 1.	Financial Statements (Unaudited)	6
	Consolidated Statements of Income - Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~	6
	Consolidated Statements of Comprehensive Income - Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~	7
	Consolidated Balance Sheets - ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019~~2020	8
	Consolidated Statements of Cash Flows - ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~	11
	Consolidated Statements of Changes in Equity - Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2021 and 2020 ~~and 2019~~	12
	Notes to Consolidated Financial Statements	1614
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3626
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5341
Item 4.	Controls and Procedures	5543
Part II.	Other Information	5544
Item 1.	Legal Proceedings	5544
Item 1A.	Risk Factors	5544
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5644
Item 3.	Defaults Upon Senior Securities	5644
Item 4.	Mine Safety Disclosures	5644
Item 5.	Other Information	5644
Item 6.	Exhibits	5644
Signature		5846

As used in this Quarterly Report, references to “we,” “our” or “us” refer to ONEOK, Inc., an Oklahoma corporation, and its predecessors and subsidiaries, unless the context indicates otherwise.

The statements in this Quarterly Report that are not historical information, including statements concerning plans and objectives of management for future operations, economic performance or related assumptions, are forward-looking statements. Forward-looking statements may include words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “might,” “outlook,” “plan,” “potential,” “project,” “scheduled,” “should,” “will,” “would” and other words and terms of similar meaning. Although we believe that our expectations regarding future events are based on reasonable assumptions, we can give no assurance that such expectations or assumptions will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements are described under Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations “Forward-Looking Statements,” and Part II, Item 1A, “Risk Factors,” in this Quarterly Report and under Part I, Item 1A, “Risk Factors,” in our Annual Report.

INFORMATION AVAILABLE ON OUR WEBSITE

We make available, free of charge, on our website (www.oneok.com) copies of our Annual Reports, Quarterly Reports, Current Reports on Form 8-K, amendments to those reports filed or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act and reports of holdings of our securities filed by our officers and directors under Section 16 of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC. Copies of our Code of Business Conduct and Ethics, Corporate Governance Guidelines, Director Independence Guidelines, Corporate Sustainability Report, Response to COVID-19 and the written charter of our Audit Committee also are available on our website, and we will provide copies of these documents upon request.

In addition to our filings with the SEC and materials posted on our website, we also use social media platforms as additional channels of distribution to reach public investors. Information contained on our website, posted on our social media accounts, and any corresponding applications, are not incorporated by reference into this report.

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GLOSSARY

The abbreviations, acronyms and industry terminology used in this Quarterly Report are defined as follows:


$~~1.5 Billion Term Loan Agreement~~			~~The senior unsecured delayed-draw three-year $1.5 billion term loan agreement dated November 19, 2018~~
$2.5 Billion Credit Agreement			ONEOK’s $2.5 billion revolving credit agreement, as amended
AFUDC			Allowance for funds used during construction
Annual Report			Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020
ASU			Accounting Standards Update
Bbl			Barrels, 1 barrel is equivalent to 42 United States gallons
BBtu/d			Billion British thermal units per day
Bcf			Billion cubic feet
Bcf/d			Billion cubic feet per day
~~CARES Act~~			~~Coronavirus Aid, Relief, and Economic Security Act~~
CFTC			U.S. Commodity Futures Trading Commission
Clean Air Act			Federal Clean Air Act, as amended
COVID-19			Coronavirus disease 2019
DJ			Denver-Julesburg
EBITDA			Earnings before interest expense, income taxes, depreciation and amortization
EPA			United States Environmental Protection Agency
EPS			Earnings (loss) per share of common stock
Exchange Act			Securities Exchange Act of 1934, as amended
FERC			Federal Energy Regulatory Commission
Fitch			Fitch Ratings, Inc.
GAAP			Accounting principles generally accepted in the United States of America
ICE			Intercontinental Exchange
Intermediate Partnership			ONEOK Partners Intermediate Limited Partnership, a wholly owned subsidiary of ONEOK Partners, L.P.
LIBOR			London Interbank Offered Rate
MBbl/d			Thousand barrels per day
MDth/d			Thousand dekatherms per day
MMBbl			Million barrels
~~MMBbl/d~~			~~Million barrels per day~~
MMBtu			Million British thermal units
MMcf/d			Million cubic feet per day
Moody’s			Moody’s Investors Service, Inc.
Natural Gas Act			Natural Gas Act of 1938, as amended
NGL(s)			Natural gas liquid(s)
NGL products			Marketable natural gas liquid purity products, such as ethane, ethane/propane mix, propane, iso-butane, normal butane and natural gasoline
Northern Border Pipeline			Northern Border Pipeline Company, a 50% owned joint venture
NYMEX			New York Mercantile Exchange
ONEOK			ONEOK, Inc.
ONEOK Partners			ONEOK Partners, L.P., a wholly owned subsidiary of ONEOK, Inc.
OPIS			Oil Price Information Service
Overland Pass Pipeline			Overland Pass Pipeline Company, LLC, a 50% owned joint venture
PHMSA			United States Department of Transportation Pipeline and Hazardous Materials Safety Administration
POP			Percent of Proceeds
Quarterly Report(s)			Quarterly Report(s) on Form 10-Q
Roadrunner			Roadrunner Gas Transmission, LLC, a 50% owned joint venture
S&P			S&P Global Ratings
SEC			Securities and Exchange Commission
Series E Preferred Stock			Series E Non-Voting, Perpetual Preferred Stock, par value $0.01 per share
~~STACK~~			~~Sooner Trend Anadarko Canadian Kingfisher, an area in the Anadarko Basin in Oklahoma~~
~~West Texas LPG~~			~~West Texas LPG pipeline and Mesquite pipeline~~
WTI			West Texas Intermediate
XBRL			eXtensible Business Reporting Language

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


ONEOK, Inc. and Subsidiaries	ONEOK, Inc. and Subsidiaries									ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME	CONSOLIDATED STATEMENTS OF INCOME									CONSOLIDATED STATEMENTS OF INCOME
		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
(Unaudited)	(Unaudited)	2020		2019		2020		2019		(Unaudited)		2021		2020
		(Thousands of dollars, except per share amounts)										(Thousands of dollars, except per share amounts)
Revenues	Revenues									Revenues
Commodity sales	Commodity sales	$	1,852,198	$	1,947,834	$	5,004,375	$	6,567,634	Commodity sales		$	2,836,109	$	1,808,620
Services	Services	322,066		315,394		967,290		933,127		Services		358,570		328,052
Total revenues (Note L)		2,174,264		2,263,228		5,971,665		7,500,761
Total revenues (Note K)										Total revenues (Note K)		3,194,679		2,136,672
Cost of sales and fuel (exclusive of items shown separately below)	Cost of sales and fuel (exclusive of items shown separately below)	1,265,674		1,414,528		3,483,060		4,996,699		Cost of sales and fuel (exclusive of items shown separately below)		2,121,510		1,276,928

Operations and maintenance	Operations and maintenance	173,548		218,305		538,782		632,332		Operations and maintenance		207,158		175,096
Depreciation and amortization	Depreciation and amortization	153,245		121,430		426,014		350,552		Depreciation and amortization		157,120		132,353
Impairment charges (Note A)		0		0		604,024		0
Impairment charges										Impairment charges		0		604,024
General taxes	General taxes	31,381		26,830		97,651		91,257		General taxes		44,439		31,944

(Gain) loss on sale of assets		(17)		(16)		(560)		2,882
Operating income		550,433		482,151		822,694		1,427,039
Gain on sale of assets										Gain on sale of assets		(269)		(204)
Operating income (loss)										Operating income (loss)		664,721		(83,469)
Equity in net earnings from investments (Note I)	Equity in net earnings from investments (Note I)	38,046		37,576		108,001		115,175		Equity in net earnings from investments (Note I)		33,320		44,627
Impairment of equity investments (Note A)		0		0		(37,730)		0
Impairment of equity investments										Impairment of equity investments		0		(37,730)
Allowance for equity funds used during construction	Allowance for equity funds used during construction	3,084		15,792		22,347		45,175		Allowance for equity funds used during construction		812		15,409
Other income	Other income	8,175		6,643		34,390		21,685		Other income		215		16,475
Other expense	Other expense	(4,496)		(6,065)		(14,667)		(14,024)		Other expense		(5,237)		(11,948)
Interest expense (net of capitalized interest of $13,821, $27,610, $61,439 and $73,601, respectively)		(176,371)		(129,577)		(535,955)		(362,490)
Income before income taxes		418,871		406,520		399,080		1,232,560
Income taxes		(106,555)		(97,365)		(94,300)		(274,234)
Net income		312,316		309,155		304,780		958,326
Interest expense (net of capitalized interest of $5,095 and $30,875, respectively)										Interest expense (net of capitalized interest of $5,095 and $30,875, respectively)		(185,523)		(140,616)
Income (loss) before income taxes										Income (loss) before income taxes		508,308		(197,252)
Income tax (expense) benefit										Income tax (expense) benefit		(122,132)		55,395
Net income (loss)										Net income (loss)		386,176		(141,857)
Less: Preferred stock dividends	Less: Preferred stock dividends	275		275		825		825		Less: Preferred stock dividends		275		275
Net income available to common shareholders		$	312,041	$	308,880	$	303,955	$	957,501
Net income (loss) available to common shareholders										Net income (loss) available to common shareholders		$	385,901	$	(142,132)

Basic earnings per common share (Note G)		$	0.70	$	0.75	$	0.71	$	2.32
Basic EPS (Note G)										Basic EPS (Note G)		$	0.87	$	(0.34)

Diluted earnings per common share (Note G)		$	0.70	$	0.74	$	0.71	$	2.31
Diluted EPS (Note G)										Diluted EPS (Note G)		$	0.86	$	(0.34)
Average shares (thousands)	Average shares (thousands)									Average shares (thousands)
Basic	Basic	445,103		413,816		426,369		413,443		Basic		445,894		414,282
Diluted	Diluted	445,510		415,578		426,997		415,277		Diluted		446,885		414,282

See accompanying Notes to Consolidated Financial Statements.

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ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended Nine Months Ended
September 30, September 30,
(Unaudited)
2020 2019 2020 2019

(Thousands of dollars)
Net income $ 312,316 $ 309,155 $ 304,780 $ 958,326
Other comprehensive income (loss), net of tax
Change in fair value of derivatives, net of tax of $4,704, $22,050, $50,307 and $59,679, respectively (15,750) (73,822) (168,421) (199,795)
Derivative amounts reclassified to net income, net of tax of $(3,038), $2,673, $(3,360) and $8,654, respectively 5,361 (8,952) 11,210 (29,748)
Change in retirement and other postretirement benefit plan obligations, net of tax of $(1,064), $(737), $(3,192) and $(2,172), respectively 3,562 2,465 10,685 7,271
Other comprehensive income (loss) of unconsolidated affiliates, net of tax of $(332), $1,314, $3,015 and $3,164, respectively 1,112 (4,399) (10,092) (10,593)
Total other comprehensive loss, net of tax (5,715) (84,708) (156,618) (232,865)
Comprehensive income $ 306,601 $ 224,447 $ 148,162 $ 725,461


ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended
	March 31,
(Unaudited)		2021		2020
		(Thousands of dollars)
Net income (loss)		$	386,176	$	(141,857)
Other comprehensive income (loss), net of tax
Change in fair value of derivatives, net of tax of $(9,857) and $31,705, respectively		32,998		(106,141)
Derivative amounts reclassified to net income (loss), net of tax of $(12,361) and $4,518, respectively		41,387		(15,164)
Change in retirement and other postretirement benefit plan obligations, net of tax of $(1,087) and $(1,064), respectively		3,638		3,562
Other comprehensive income (loss) of unconsolidated affiliates, net of tax of $(2,339) and $2,283, respectively		7,830		(7,643)
Total other comprehensive income (loss), net of tax		85,853		(125,386)
Comprehensive income (loss)		$	472,029	$	(267,243)

See accompanying Notes to Consolidated Financial Statements.

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ONEOK, Inc. and Subsidiaries	ONEOK, Inc. and Subsidiaries					ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS	CONSOLIDATED BALANCE SHEETS					CONSOLIDATED BALANCE SHEETS

		September 30,		December 31,			March 31,		December 31,
(Unaudited)	(Unaudited)	2020		2019		(Unaudited)	2021		2020
Assets	Assets	(Thousands of dollars)				Assets	(Thousands of dollars)
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	447,129	$	20,958	Cash and cash equivalents	$	402,413	$	524,496
Accounts receivable, net	Accounts receivable, net	717,852		835,121		Accounts receivable, net	909,972		829,796
Materials and supplies	Materials and supplies	158,950		201,749		Materials and supplies	143,583		143,178

NGLs and natural gas in storage	NGLs and natural gas in storage	300,577		304,926		NGLs and natural gas in storage	369,604		227,810
Commodity imbalances	Commodity imbalances	13,289		25,267		Commodity imbalances	16,798		11,959
Other current assets	Other current assets	83,565		82,313		Other current assets	155,224		132,536
Total current assets	Total current assets	1,721,362		1,470,334		Total current assets	1,997,594		1,869,775
Property, plant and equipment	Property, plant and equipment					Property, plant and equipment
Property, plant and equipment	Property, plant and equipment	22,803,167		22,051,492		Property, plant and equipment	23,192,548		23,072,935
Accumulated depreciation and amortization	Accumulated depreciation and amortization	3,773,852		3,702,807		Accumulated depreciation and amortization	4,067,297		3,918,007
Net property, plant and equipment	Net property, plant and equipment	19,029,315		18,348,685		Net property, plant and equipment	19,125,251		19,154,928
Investments and other assets	Investments and other assets					Investments and other assets
Investments in unconsolidated affiliates (Note A)		790,373		861,844
Goodwill and intangible assets (Note A)		776,330		957,833
Investments in unconsolidated affiliates						Investments in unconsolidated affiliates	807,721		805,032��
Goodwill and intangible assets						Goodwill and intangible assets	771,116		773,723

Other assets	Other assets	463,496		173,425		Other assets	478,247		475,296
Total investments and other assets	Total investments and other assets	2,030,199		1,993,102		Total investments and other assets	2,057,084		2,054,051
Total assets	Total assets	$	22,780,876	$	21,812,121	Total assets	$	23,179,929	$	23,078,754

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ONEOK, Inc. and Subsidiaries	ONEOK, Inc. and Subsidiaries					ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS	CONSOLIDATED BALANCE SHEETS					CONSOLIDATED BALANCE SHEETS
(Continued)	(Continued)					(Continued)
		September 30,		December 31,			March 31,		December 31,
(Unaudited)	(Unaudited)	2020		2019		(Unaudited)	2021		2020
Liabilities and equity	Liabilities and equity	(Thousands of dollars)				Liabilities and equity	(Thousands of dollars)
Current liabilities	Current liabilities					Current liabilities
Current maturities of long-term debt (Note D)	Current maturities of long-term debt (Note D)	$	7,650	$	7,650	Current maturities of long-term debt (Note D)	$	543,757	$	7,650
Short-term borrowings (Note D)		0		220,000

Accounts payable	Accounts payable	624,483		1,209,900		Accounts payable	929,771		719,302

Commodity imbalances	Commodity imbalances	125,955		104,480		Commodity imbalances	209,626		186,372
Accrued taxes	Accrued taxes	103,778		75,422		Accrued taxes	65,862		89,428
Accrued interest	Accrued interest	140,506		190,750		Accrued interest	140,281		245,153
Operating lease liability (Note K)		13,646		1,883
Operating lease liability						Operating lease liability	13,408		13,610
Other current liabilities	Other current liabilities	78,124		210,213		Other current liabilities	145,249		83,032
Total current liabilities	Total current liabilities	1,094,142		2,020,298		Total current liabilities	2,047,954		1,344,547
Long-term debt, excluding current maturities (Note D)	Long-term debt, excluding current maturities (Note D)	14,249,339		12,479,757		Long-term debt, excluding current maturities (Note D)	13,638,767		14,228,421
Deferred credits and other liabilities	Deferred credits and other liabilities					Deferred credits and other liabilities
Deferred income taxes	Deferred income taxes	582,334		536,063		Deferred income taxes	814,528		669,697
Operating lease liability (Note K)		90,806		13,509
Operating lease liability						Operating lease liability	85,295		87,610
Other deferred credits	Other deferred credits	618,143		536,543		Other deferred credits	496,420		706,081
Total deferred credits and other liabilities	Total deferred credits and other liabilities	1,291,283		1,086,115		Total deferred credits and other liabilities	1,396,243		1,463,388
Commitments and contingencies (Note J)	Commitments and contingencies (Note J)					Commitments and contingencies (Note J)	0		0
Equity (Note E)	Equity (Note E)					Equity (Note E)
ONEOK shareholders’ equity:	ONEOK shareholders’ equity:					ONEOK shareholders’ equity:
Preferred stock, $0.01 par value: authorized and issued 20,000 shares at September 30, 2020, and December 31, 2019		0		0
Common stock, $0.01 par value: authorized 1,200,000,000 shares, issued 474,916,234 shares and outstanding 444,392,615 shares at September 30, 2020; issued 445,016,234 shares and outstanding 413,239,050 shares at December 31, 2019		4,749		4,450
Preferred stock, $0.01 par value: authorized and issued 20,000 shares at March 31, 2021, and December 31, 2020						Preferred stock, $0.01 par value: authorized and issued 20,000 shares at March 31, 2021, and December 31, 2020	0		0
Common stock, $0.01 par value: authorized 1,200,000,000 shares; issued 474,916,234 shares and outstanding 445,534,180 shares at March 31, 2021; issued 474,916,234 shares and outstanding 444,872,383 shares at December 31, 2020						Common stock, $0.01 par value: authorized 1,200,000,000 shares; issued 474,916,234 shares and outstanding 445,534,180 shares at March 31, 2021; issued 474,916,234 shares and outstanding 444,872,383 shares at December 31, 2020	4,749		4,749
Paid-in capital	Paid-in capital	7,448,484		7,403,895		Paid-in capital	7,305,274		7,353,396
Accumulated other comprehensive loss (Note F)	Accumulated other comprehensive loss (Note F)	(530,618)		(374,000)		Accumulated other comprehensive loss (Note F)	(465,596)		(551,449)
Retained earnings	Retained earnings	0		0		Retained earnings	0		0
Treasury stock, at cost: 30,523,619 shares at September 30, 2020, and 31,777,184 shares at December 31, 2019		(776,503)		(808,394)
Treasury stock, at cost: 29,382,054 shares at March 31, 2021, and 30,043,851 shares at December 31, 2020						Treasury stock, at cost: 29,382,054 shares at March 31, 2021, and 30,043,851 shares at December 31, 2020	(747,462)		(764,298)
Total equity	Total equity	6,146,112		6,225,951		Total equity	6,096,965		6,042,398
Total liabilities and equity	Total liabilities and equity	$	22,780,876	$	21,812,121	Total liabilities and equity	$	23,179,929	$	23,078,754

See accompanying Notes to Consolidated Financial Statements.

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ONEOK, Inc. and Subsidiaries	ONEOK, Inc. and Subsidiaries					ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS	CONSOLIDATED STATEMENTS OF CASH FLOWS					CONSOLIDATED STATEMENTS OF CASH FLOWS
		Nine Months Ended					Three Months Ended
		September 30,					March 31,
(Unaudited)	(Unaudited)	2020		2019		(Unaudited)	2021		2020
		(Thousands of dollars)					(Thousands of dollars)
Operating activities	Operating activities					Operating activities
Net income		$	304,780	$	958,326
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)						Net income (loss)	$	386,176	$	(141,857)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:						Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	426,014		350,552		Depreciation and amortization	157,120		132,353
Impairment charges	Impairment charges	641,754		0		Impairment charges	0		641,754
Equity in net earnings from investments	Equity in net earnings from investments	(108,001)		(115,175)		Equity in net earnings from investments	(33,320)		(44,627)
Distributions received from unconsolidated affiliates	Distributions received from unconsolidated affiliates	109,595		121,176		Distributions received from unconsolidated affiliates	30,862		41,577
Deferred income tax expense		93,174		269,488
Deferred income tax expense (benefit)						Deferred income tax expense (benefit)	119,194		(55,949)

Other, net	Other, net	(17,599)		(18,337)		Other, net	11,672		(30,380)
Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Accounts receivable	Accounts receivable	111,629		100,250		Accounts receivable	(85,212)		334,370
NGLs and natural gas in storage	NGLs and natural gas in storage	4,349		13,122		NGLs and natural gas in storage	(141,794)		173,885
Accounts payable	Accounts payable	(198,809)		(162,806)		Accounts payable	251,344		(350,701)

Commodity imbalances						Commodity imbalances	18,415		(37,919)
Accrued interest	Accrued interest	(50,244)		(39,314)		Accrued interest	(104,872)		(68,918)
Risk-management assets and liabilities	Risk-management assets and liabilities	(136,543)		(93,244)		Risk-management assets and liabilities	(19,302)		(78,856)
Other assets and liabilities, net		(76,971)		(57,193)
Other assets and liabilities						Other assets and liabilities	(56,966)		(92,011)
Cash provided by operating activities	Cash provided by operating activities	1,103,128		1,326,845		Cash provided by operating activities	533,317		422,721
Investing activities	Investing activities					Investing activities
Capital expenditures (less allowance for equity funds used during construction)	Capital expenditures (less allowance for equity funds used during construction)	(1,924,003)		(2,739,338)		Capital expenditures (less allowance for equity funds used during construction)	(176,734)		(949,679)

Distributions received from unconsolidated affiliates in excess of cumulative earnings	Distributions received from unconsolidated affiliates in excess of cumulative earnings	22,280		82,171		Distributions received from unconsolidated affiliates in excess of cumulative earnings	10,191		6,949
Other, net	Other, net	(80,148)		9,293		Other, net	(4,148)		(22,062)

Cash used in investing activities	Cash used in investing activities	(1,981,871)		(2,647,874)		Cash used in investing activities	(170,691)		(964,792)
Financing activities	Financing activities					Financing activities
Dividends paid	Dividends paid	(1,189,575)		(1,079,379)		Dividends paid	(416,229)		(386,667)
Repayment of short-term borrowings, net	Repayment of short-term borrowings, net	(220,000)		0		Repayment of short-term borrowings, net	0		(220,000)
Issuance of long-term debt, net of discounts	Issuance of long-term debt, net of discounts	3,244,777		4,185,435		Issuance of long-term debt, net of discounts	0		1,748,221
Debt financing costs	Debt financing costs	(28,324)		(29,777)		Debt financing costs	0		(15,444)
Repayment of long-term debt	Repayment of long-term debt	(1,433,480)		(1,055,436)		Repayment of long-term debt	(56,492)		(52,389)
Issuance of common stock		959,653		19,333

Other		(28,137)		(57,813)
Cash provided by financing activities		1,304,914		1,982,363

Other, net						Other, net	(11,988)		(20,978)
Cash provided by (used in) financing activities						Cash provided by (used in) financing activities	(484,709)		1,052,743
Change in cash and cash equivalents	Change in cash and cash equivalents	426,171		661,334		Change in cash and cash equivalents	(122,083)		510,672
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	20,958		11,975		Cash and cash equivalents at beginning of period	524,496		20,958
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	447,129	$	673,309	Cash and cash equivalents at end of period	$	402,413	$	531,630

See accompanying Notes to Consolidated Financial Statements.

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ONEOK, Inc. and Subsidiaries	ONEOK, Inc. and Subsidiaries									ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY									CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)	(Unaudited)	Common Stock Issued	Preferred Stock Issued	Common Stock		Preferred Stock		Paid-in Capital		(Unaudited)	Preferred Stock Issued	Common Stock Issued	Preferred Stock		Common Stock		Paid-in Capital
		(Shares)		(Thousands of dollars)							(Shares)				(Thousands of dollars)
January 1, 2020		445,016,234	20,000	$	4,450	$	0	$	7,403,895
Net loss		—	—	0		0		0
Other comprehensive loss (Note F)		—	—	0		0		0
January 1, 2021										January 1, 2021	20,000	474,916,234	$	0	$	4,749	$	7,353,396

Net income										Net income	—	—	0		0		0
Other comprehensive income (Note F)										Other comprehensive income (Note F)	—	—	0		0		0
Preferred stock dividends - $13.75 per share (Note E)	Preferred stock dividends - $13.75 per share (Note E)	—	—	0		0		(275)		Preferred stock dividends - $13.75 per share (Note E)	—	—	0		0		0
Common stock issued	Common stock issued	0	—	0		0		(9,286)		Common stock issued	—	0	0		0		(10,159)
Common stock dividends - $0.935 per share (Note E)	Common stock dividends - $0.935 per share (Note E)	—	—	0		0		(386,931)		Common stock dividends - $0.935 per share (Note E)	—	—	0		0		(30,234)
Other, net	Other, net	—	—	0		0		(17,950)		Other, net	—	—	0		0		(7,729)
March 31, 2020		445,016,234	20,000	$	4,450	$	0	$	6,989,453
Net income		—	—	0		0		0
Other comprehensive loss (Note F)		—	—	0		0		0
Preferred stock dividends - $13.75 per share (Note E)		—	—	0		0		(275)
Common stock issued		29,900,000	—	299		0		939,038
Common stock dividends - $0.935 per share (Note E)		—	—	0		0		(387,037)
Other, net		—	—	0		0		8,652
June 30, 2020		474,916,234	20,000	$	4,749	$	0	$	7,549,831
Net income		—	—	0		0		0
Other comprehensive loss (Note F)		—	—	0		0		0
Preferred stock dividends - $13.75 per share (Note E)		—	—	0		0		0
Common stock issued		0	—	0		0		803
Common stock dividends - $0.935 per share (Note E)		—	—	0		0		(110,948)
Other, net		—	—	0		0		8,798
September 30, 2020		474,916,234	20,000	$	4,749	$	0	$	7,448,484
March 31, 2021										March 31, 2021	20,000	474,916,234	$	0	$	4,749	$	7,305,274





(Unaudited)	Preferred Stock Issued	Common Stock Issued	Preferred Stock		Common Stock		Paid-in Capital
	(Shares)				(Thousands of dollars)
January 1, 2020	20,000	445,016,234	$	0	$	4,450	$	7,403,895

















Net loss	—	—	0		0		0
Other comprehensive loss	—	—	0		0		0
Preferred stock dividends - $13.75 per share	—	—	0		0		(275)
Common stock issued	—	0	0		0		(9,286)
Common stock dividends - $0.935 per share	—	—	0		0		(386,931)


Other, net	—	—	0		0		(17,950)
March 31, 2020	20,000	445,016,234	$	0	$	4,450	$	6,989,453

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ONEOK, Inc. and Subsidiaries	ONEOK, Inc. and Subsidiaries										ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)	CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)										CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)

(Unaudited)	(Unaudited)	Accumulated Other Comprehensive Loss		Retained Earnings (Accumulated Deficit)		Treasury Stock		Total Equity			(Unaudited)	Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Total Equity
		(Thousands of dollars)								(Thousands of dollars)
January 1, 2020		$	(374,000)	$	0	$	(808,394)	$	6,225,951
Net loss		0		(141,857)		0		(141,857)
Other comprehensive loss (Note F)		(125,386)		0		0		(125,386)
January 1, 2021											January 1, 2021	$	(551,449)	$	0	$	(764,298)	$	6,042,398

Net income											Net income	0		386,176		0		386,176
Other comprehensive income (Note F)											Other comprehensive income (Note F)	85,853		0		0		85,853
Preferred stock dividends - $13.75 per share (Note E)	Preferred stock dividends - $13.75 per share (Note E)	0		0		0		(275)			Preferred stock dividends - $13.75 per share (Note E)	0		(275)		0		(275)
Common stock issued	Common stock issued	0		0		16,375		7,089			Common stock issued	0		0		16,836		6,677
Common stock dividends - $0.935 per share (Note E)	Common stock dividends - $0.935 per share (Note E)	0		0		0		(386,931)			Common stock dividends - $0.935 per share (Note E)	0		(385,901)		0		(416,135)
Other, net	Other, net	0		0		0		(17,950)			Other, net	0		0		0		(7,729)
March 31, 2020		$	(499,386)	$	(141,857)	$	(792,019)	$	5,560,641
Net income		0		134,321		0		134,321
Other comprehensive loss (Note F)		(25,517)		0		0		(25,517)
Preferred stock dividends - $13.75 per share (Note E)		0		0		0		(275)
Common stock issued		0		0		10,530		949,867
Common stock dividends - $0.935 per share (Note E)		0		0		0		(387,037)
Other, net		0		0		0		8,652
June 30, 2020		$	(524,903)	$	(7,536)	$	(781,489)	$	6,240,652
Net income		0		312,316		0		312,316
Other comprehensive loss (Note F)		(5,715)		0		0		(5,715)
Preferred stock dividends - $13.75 per share (Note E)		0		(275)		0		(275)
Common stock issued		0		0		4,986		5,789
Common stock dividends - $0.935 per share (Note E)		0		(304,505)		0		(415,453)
Other, net		0		0		0		8,798
September 30, 2020		$	(530,618)	$	0	$	(776,503)	$	6,146,112
March 31, 2021											March 31, 2021	$	(465,596)	$	0	$	(747,462)	$	6,096,965





(Unaudited)	Accumulated Other Comprehensive Loss		Retained Earnings (Accumulated Deficit)		Treasury Stock		Total Equity
	(Thousands of dollars)
January 1, 2020	$	(374,000)	$	0	$	(808,394)	$	6,225,951

















Net loss	0		(141,857)		0		(141,857)
Other comprehensive loss	(125,386)		0		0		(125,386)
Preferred stock dividends - $13.75 per share	0		0		0		(275)
Common stock issued	0		0		16,375		7,089
Common stock dividends - $0.935 per share	0		0		0		(386,931)


Other, net	0		0		0		(17,950)
March 31, 2020	$	(499,386)	$	(141,857)	$	(792,019)	$	5,560,641

See accompanying Notes to Consolidated Financial Statements.

~~Table of Contents~~

ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)
(Unaudited)
Common
Stock Issued Preferred
Stock Issued Common
Stock Preferred
Stock Paid-in
Capital

(Shares)
(Thousands of dollars)
January 1, 2019 445,016,234 20,000 $ 4,450 $ 0 $ 7,615,138
Cumulative effect adjustment for adoption of ASU 2016-02, “Leases (Topic 842)” — — 0 0 0
Net income — — 0 0 0
Other comprehensive loss — — 0 0 0
Preferred stock dividends - $13.75 per share — — 0 0 0
Common stock issued — — 0 0 (24,779)
Common stock dividends - $0.86 per share — — 0 0 (17,438)
Other, net — — 0 0 (45,074)
March 31, 2019 445,016,234 20,000 $ 4,450 $ 0 $ 7,527,847
Net income — — 0 0 0
Other comprehensive loss — — 0 0 0
Preferred stock dividends - $13.75 per share — — 0 0 0
Common stock issued — — 0 0 6,335
Common stock dividends - $0.865 per share — — 0 0 (45,728)
Other, net — — 0 0 7,004
June 30, 2019 445,016,234 20,000 $ 4,450 $ 0 $ 7,495,458
Net income — — 0 0 0
Other comprehensive loss — — 0 0 0
Preferred stock dividends - $13.75 per share — — 0 0 0
Common stock issued — — 0 0 4,238
Common stock dividends - $0.89 per share — — 0 0 (58,960)
Other, net — — 0 0 7,363
September 30, 2019 445,016,234 20,000 $ 4,450 $ 0 $ 7,448,099

~~Table of Contents~~

ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued)
(Unaudited)
Accumulated
Other
Comprehensive
Loss Retained
Earnings Treasury
Stock Total
Equity

(Thousands of dollars)
January 1, 2019 $ (188,239) $ 0 $ (851,806) $ 6,579,543
Cumulative effect adjustment for adoption of ASU 2016-02, “Leases (Topic 842)” 0 (67) 0 (67)
Net income 0 337,208 0 337,208
Other comprehensive loss (81,285) 0 0 (81,285)
Preferred stock dividends - $13.75 per share 0 (275) 0 (275)
Common stock issued 0 0 31,039 6,260
Common stock dividends - $0.86 per share 0 (336,866) 0 (354,304)
Other, net 0 0 0 (45,074)
March 31, 2019 $ (269,524) $ 0 $ (820,767) $ 6,442,006
Net income 0 311,963 0 311,963
Other comprehensive loss (66,872) 0 0 (66,872)
Preferred stock dividends - $13.75 per share 0 (275) 0 (275)
Common stock issued 0 0 5,391 11,726
Common stock dividends - $0.865 per share 0 (311,688) 0 (357,416)
Other, net 0 0 0 7,004
June 30, 2019 $ (336,396) $ 0 $ (815,376) $ 6,348,136
Net income 0 309,155 0 309,155
Other comprehensive loss (84,708) 0 0 (84,708)
Preferred stock dividends - $13.75 per share 0 (275) 0 (275)
Common stock issued 0 0 2,837 7,075
Common stock dividends - $0.89 per share 0 (308,880) 0 (367,840)
Other, net 0 0 0 7,363
September 30, 2019 $ (421,104) $ 0 $ (812,539) $ 6,218,906

~~See accompanying Notes to Consolidated Financial Statements.~~

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ONEOK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our accompanying unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC. These statements have been prepared in accordance with GAAP and reflect all adjustments that, in our opinion, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The ~~2019~~2020 year-end Consolidated Balance Sheet data was derived from our audited Consolidated Financial Statements but does not include all disclosures required by GAAP. Certain reclassifications have been made in the prior year Consolidated Financial Statements to conform to the current year presentation. These unaudited Consolidated Financial Statements should be read in conjunction with our audited Consolidated Financial Statements in our Annual Report.

In March 2020, the CARES Act was signed into law in response to the COVID-19 pandemic, and we opted into the CARES Act payroll tax deferral program, which will modestly benefit us, and the 401(k) penalty-free hardship withdrawal and loan deferral programs for employees.

~~Goodwill Impairment Review~~ - We assess our goodwill for impairment at least annually as of July 1, unless events or changes in circumstances indicate an impairment may have occurred before that time. At July 1, 2020, we assessed qualitative factors subsequent to our first quarter 2020 impairment charges discussed below, to determine whether it was more likely than not that the fair value of our Natural Gas Liquids and Natural Gas Pipelines reporting units were less than their carrying amount. After assessing qualitative factors (including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance), we determined that it was more likely than not that the fair value of our Natural Gas Liquids and Natural Gas Pipelines reporting units were not less than their respective carrying value, no further testing was necessary and goodwill was not considered impaired. At July 1, 2020, there was no remaining goodwill associated with our Natural Gas Gathering and Processing reporting unit.

~~Impairment Charges -~~ Late in the first quarter 2020, we experienced a significant decline in our share price and market capitalization as the energy industry experienced historic events that led to a simultaneous demand and supply disruption. The World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide, which contributed to a massive economic slowdown and decreased demand for crude oil. In addition, Saudi Arabia and Russia increased production of crude oil as the two countries competed for market share. As a result, the global supply of crude oil significantly exceeded demand and led to a collapse in crude oil prices. Based on these events, we performed a Step 1 analysis in the first quarter 2020 to test our goodwill for impairment and evaluated certain long-lived asset groups and equity investments for impairment.

~~Goodwill~~ - In the Step 1 analysis, an assessment is made by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. In January 2020, we adopted ASU 2017-04 in which the requirement to calculate the implied fair value of goodwill under the two-step impairment test was eliminated.

To estimate the fair value of our reporting units, we use two generally accepted valuation approaches, an income approach and a market approach, using assumptions consistent with a market participant’s perspective. Under the income approach, we use anticipated cash flows over a period of years plus a terminal value and discount these amounts to their present value using appropriate discount rates. Under the market approach, we apply EBITDA multiples to forecasted EBITDA. The multiples used are consistent with historical asset transactions. The forecasted cash flows are based on average forecasted cash flows for a reporting unit over a period of years.

Based on the results of our impairment test, we concluded that the carrying value of the Natural Gas Gathering and Processing reporting unit exceeded its estimated fair value, resulting in a noncash impairment charge of $153.4 million, which is included within impairment charges in our Consolidated Statement of Income for the nine months ended September 30, 2020. The estimated fair value of our Natural Gas Liquids and Natural Gas Pipelines reporting units substantially exceeded their respective carrying values.

~~Table of Contents~~

~~The following table sets forth our goodwill, by segment, for the periods indicated:~~

September 30,
2020 December 31,
2019

(Thousands of dollars)
Natural Gas Gathering and Processing $ 0 $ 153,404
Natural Gas Liquids 371,217 371,217
Natural Gas Pipelines 156,375 156,375
Total goodwill $ 527,592 $ 680,996

~~Long-lived assets~~ - We assess our long-lived assets for impairment whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable. An impairment is indicated if the carrying amount of a long-lived asset exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. If an impairment is indicated, we record an impairment loss equal to the difference between the carrying value and the fair value of the long-lived asset.

In the first quarter 2020, we evaluated our Natural Gas Gathering and Processing segment asset groups and determined that the carrying value of certain long-lived asset groups in western Oklahoma, Kansas and the Powder River Basin, where lower pricing impacted drilling and production levels, were not recoverable and exceeded their estimated fair value. We recorded noncash impairment charges of $380.5 million, which includes impairment to intangible assets of $19.9 million related to supply contracts. In our Natural Gas Liquids segment, we recorded noncash impairment charges of $70.2 million related to certain inactive assets, as our expectation for future use of the assets changed. These charges are included within impairment charges in our Consolidated Statement of Income for the nine months ended September 30, 2020.

~~Investments in unconsolidated affiliates~~ - The impairment test for equity-method investments considers whether the fair value of the equity investment as a whole, not the underlying net assets, has declined and whether that decline is other than temporary. Therefore, we periodically evaluate the amount at which we carry our equity-method investments to determine whether current events or circumstances warrant adjustments to our carrying values.

In the first quarter 2020, we evaluated our investments in unconsolidated affiliates and concluded that the carrying value of our 10.2% investment in Venice Energy Services Company in our Natural Gas Gathering and Processing segment exceeded its estimated fair value, resulting in a noncash impairment charge of $30.5 million, which includes an impairment to our equity-method goodwill of $22.3 million. We also concluded that the carrying value of our 50% investment in Chisholm Pipeline Company in our Natural Gas Liquids segment exceeded its estimated fair value, resulting in a noncash impairment charge of $7.2 million. These impairment charges are included within impairment of equity investments in our Consolidated Statement of Income for the nine months ended September 30, 2020.

~~Table of Contents~~

Recently Issued Accounting Standards Update - Changes to GAAP are established by the Financial Accounting Standards Board (FASB) in the form of ASUs to the FASB Accounting Standards Codification. We consider the applicability and impact of all ASUs. ASUs not ~~listed~~discussed below or in our Annual Report were assessed and determined to be either not applicable or clarifications of ASUs previously ~~issued or listed below.~~issued. Except as discussed below or in our Annual Report, there have been no new accounting pronouncements that have become effective or have been issued that are of significance or potential significance to us. ~~The following table provides a brief description of recently~~

In January 2021, we adopted ~~accounting pronouncements and our analysis of~~ASU 2019-12, “Income Taxes (Topic 740): Simplifying the ~~effects on our financial statements:~~

~~Standard~~

~~Description~~

~~Date of Adoption~~

~~Effect on the Financial Statements or Other Significant Matters~~

~~ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”~~

The standard requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented net of the allowance for credit losses to reflect the net carrying value at the amount expected to be collected on the financial asset; and the initial allowance for credit losses for purchased financial assets, including available-for-sale debt securities, to be added to the purchase price rather than being reported as a credit loss expense.

~~First quarter 2020~~

Accounting for Income Taxes,” which simplifies certain concepts in Topic 740, Income Taxes. The impact of adopting this standard was not material.

~~ASU 2017-04, “Intangibles- Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment”~~

The standard simplifies the subsequent measurement of goodwill by eliminating the requirement to calculate the implied fair value of goodwill under step 2. Instead, an entity will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The standard does not change step zero or step 1 assessments.

~~First quarter 2020~~

~~We adopted and implemented this standard prior to recording noncash impairment charges related to our goodwill, as described above.~~

~~ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”~~

The standard provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

~~First quarter 2020~~

~~The impact of adopting this standard was not material.~~

B. FAIR VALUE MEASUREMENTS

Determining Fair Value - For our fair value measurements, we utilize market prices, third-party pricing services, present value methods and standard option valuation models to determine the price we would receive from the sale of an asset or the transfer of a liability in an orderly transaction at the measurement date. We measure the fair value of a group of financial assets and liabilities consistent with how a market participant would price the net risk exposure at the measurement date.

Many of the contracts in our derivative portfolio are executed in liquid markets where price transparency exists. Our financial commodity derivatives are generally settled through a NYMEX or ~~Intercontinental Exchange (ICE)~~ICE clearing broker account with daily margin requirements. We validate our valuation inputs with third-party information and settlement prices from other sources, where available.

We compute the fair value of our derivative portfolio by discounting the projected future cash flows from our derivative assets and liabilities to present value using interest-rate yields to calculate present-value discount factors derived from the implied forward LIBOR yield curve. The fair value of our forward-starting interest-rate swaps is determined using financial models that incorporate the implied forward LIBOR yield curve for the same period as the future interest-rate swap settlements. We consider current market data in evaluating counterparties’, as well as our own, nonperformance risk, net of collateral, by using counterparty-specific bond yields. Although we use our best estimates to determine the fair value of the derivative contracts we have executed, the ultimate market prices realized could differ materially from our estimates.

~~Table of Contents~~

Fair Value Hierarchy - At each balance sheet date, we utilize a fair value hierarchy to classify fair value amounts recognized or disclosed in our financial statements based on the observability of inputs used to estimate such fair value. The levels of the hierarchy are described below:

•Level 1 - fair value measurements are based on unadjusted quoted prices for identical securities in active markets. These balances are composed predominantly of exchange-traded derivative contracts for natural gas and crude oil.

•Level 2 - fair value measurements are based on significant observable pricing inputs, including quoted prices for similar assets and liabilities in active markets and inputs from third-party pricing services supported with corroborative evidence. These balances are composed of over-the-counter interest-rate derivatives.

•Level 3 - fair value measurements are based on inputs that may include one or more unobservable inputs, including internally developed commodity price curves that incorporate market data from broker quotes and third-party pricing services. These balances are composed predominantly of exchange-cleared and over-the-counter derivatives to hedge NGL price risk and natural gas basis risk between various transaction locations and the NYMEX Henry Hub. Our commodity derivatives are generally valued using forward quotes provided by third-party pricing services that are validated with other market data. We believe any measurement uncertainty at ~~September 30, 2020,~~March 31, 2021, is immaterial as our Level 3 fair value measurements are based on unadjusted pricing information from broker quotes and third-party

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pricing services. We do not believe that our Level 3 fair value estimates have a material impact on our results of operations, as our derivatives are primarily accounted for as hedges.

Determining the appropriate classification of our fair value measurements within the fair value hierarchy requires management’s judgment regarding the degree to which market data is observable or corroborated by observable market data. We categorize derivatives for which fair value is determined using multiple inputs within a single level, based on the lowest level input that is significant to the fair value measurement in its entirety.

Recurring Fair Value Measurements - The following tables set forth our recurring fair value measurements for the periods indicated:


		September 30, 2020													March 31, 2021
		Level 1		Level 2		Level 3		Total - Gross		Netting (a)		Total - Net			Level 1		Level 2		Level 3		Total - Gross		Netting (a)		Total - Net
		(Thousands of dollars)													(Thousands of dollars)
Derivative assets	Derivative assets													Derivative assets
Commodity contracts	Commodity contracts													Commodity contracts
Financial contracts	Financial contracts	$	4,963	$	0	$	41,896	$	46,859	$	(46,859)	$	0	Financial contracts	$	6,380	$	0	$	113,776	$	120,156	$	(120,156)	$	0

Interest-rate contracts														Interest-rate contracts	0		241		0		241		0		241
Total derivative assets	Total derivative assets	$	4,963	$	0	$	41,896	$	46,859	$	(46,859)	$	0	Total derivative assets	$	6,380	$	241	$	113,776	$	120,397	$	(120,156)	$	241
Derivative liabilities	Derivative liabilities													Derivative liabilities
Commodity contracts	Commodity contracts													Commodity contracts
Financial contracts	Financial contracts	$	(13,509)	$	0	$	(47,240)	$	(60,749)	$	60,749	$	0	Financial contracts	$	(18,986)	$	0	$	(155,570)	$	(174,556)	$	174,556	$	0

Interest-rate contracts	Interest-rate contracts	0		(231,991)		0		(231,991)		0		(231,991)		Interest-rate contracts	0		(97,363)		0		(97,363)		0		(97,363)
Total derivative liabilities	Total derivative liabilities	$	(13,509)	$	(231,991)	$	(47,240)	$	(292,740)	$	60,749	$	(231,991)	Total derivative liabilities	$	(18,986)	$	(97,363)	$	(155,570)	$	(271,919)	$	174,556	$	(97,363)

(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheet on a net basis. We net derivative assets and liabilities when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us. At ~~September 30, 2020,~~March 31, 2021, we held 0 cash and posted ~~$48.2~~$108.0 million of cash with various counterparties, including ~~$13.9~~$54.4 million of cash collateral that is offsetting derivative net liability positions under master-netting arrangements in the table above. The remaining ~~$34.3~~$53.6 million of cash collateral in excess of derivative net liability positions is included in other current assets in our Consolidated Balance Sheet.

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		December 31, 2019													December 31, 2020
		Level 1		Level 2		Level 3		Total - Gross		Netting (a)		Total - Net			Level 1		Level 2		Level 3		Total - Gross		Netting (a)		Total - Net
		(Thousands of dollars)													(Thousands of dollars)
Derivative assets	Derivative assets													Derivative assets
Commodity contracts	Commodity contracts													Commodity contracts
Financial contracts	Financial contracts	$	10,892	$	0	$	55,557	$	66,449	$	(28,588)	$	37,861	Financial contracts	$	6,697	$	0	$	103,801	$	110,498	$	(110,498)	$	0

Interest-rate contracts		0		581		0		581		0		581

Total derivative assets	Total derivative assets	$	10,892	$	581	$	55,557	$	67,030	$	(28,588)	$	38,442	Total derivative assets	$	6,697	$	0	$	103,801	$	110,498	$	(110,498)	$	0
Derivative liabilities	Derivative liabilities													Derivative liabilities
Commodity contracts	Commodity contracts													Commodity contracts
Financial contracts	Financial contracts	$	(4,811)	$	0	$	(24,785)	$	(29,596)	$	28,588	$	(1,008)	Financial contracts	$	(10,489)	$	0	$	(135,122)	$	(145,611)	$	145,611	$	0

Interest-rate contracts	Interest-rate contracts	0		(201,941)		0		(201,941)		0		(201,941)		Interest-rate contracts	0		(203,407)		0		(203,407)		0		(203,407)
Total derivative liabilities	Total derivative liabilities	$	(4,811)	$	(201,941)	$	(24,785)	$	(231,537)	$	28,588	$	(202,949)	Total derivative liabilities	$	(10,489)	$	(203,407)	$	(135,122)	$	(349,018)	$	145,611	$	(203,407)

(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheet on a net basis. We net derivative assets and liabilities when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us. At December 31, ~~2019,~~2020, we held 0 cash and posted ~~$8.8~~$63.1 million of cash with various counterparties, ~~which~~including $35.1 million of cash collateral that is offsetting derivative net liability positions under master-netting arrangements in the table above. The remaining $28.0 million of cash collateral in excess of derivative net liability positions is included in other current assets in our Consolidated Balance Sheet.

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The following table sets forth a reconciliation of our Level 3 fair value measurements for the periods indicated:

Three Months Ended Nine Months Ended
September 30, September 30,
Derivative Assets (Liabilities) 2020 2019 2020 2019

(Thousands of dollars)
Net assets at beginning of period $ 5,583 $ 19,274 $ 30,772 $ 40,484
Total changes in fair value:
Settlements included in net income (a) (6,194) (12,380) (29,471) (38,044)
New Level 3 derivatives included in other comprehensive loss (b) (2,033) 2,728 (5,140) 17,528
Unrealized change included in other comprehensive loss (b) (2,700) 18,593 (1,505) 8,247
Net assets (liabilities) at end of period $ (5,344) $ 28,215 $ (5,344) $ 28,215


	Three Months Ended
	March 31,
Derivative Assets (Liabilities)		2021		2020
		(Thousands of dollars)
Net assets (liabilities) at beginning of period		$	(31,321)	$	30,772
Total changes in fair value:

Settlements included in net income (loss) (a)		24,738		(16,146)
New Level 3 derivatives included in other comprehensive income (loss) (b)		(4,612)		20,993
Unrealized change included in other comprehensive income (loss) (b)		(30,599)		21,782
Net assets (liabilities) at end of period		$	(41,794)	$	57,401

(a) - Included in commodity sales revenues/cost of sales and fuel in our Consolidated Statements of Income.

(b) - Included in change in fair value of derivatives in our Consolidated Statements of Comprehensive Income.

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ there were 0 transfers in or out of Level 3 of the fair value hierarchy.

Other Financial Instruments - The approximate fair value of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings is equal to book value due to the short-term nature of these items. Our cash and cash equivalents are composed of bank and money market accounts and are classified as Level 1. Our short-term borrowings are classified as Level 2 since the estimated fair value of the short-term borrowings can be determined using information available in the commercial paper market.

The estimated fair value of our consolidated long-term debt, including current maturities, was ~~$14.9~~$15.8 billion and ~~$13.8~~$16.3 billion at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, respectively. The book value of our consolidated long-term debt, including current maturities, was ~~$14.3 billion and $12.5~~$14.2 billion at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019, respectively.~~2020. The estimated fair value of the aggregate long-term debt outstanding was determined using quoted market prices for similar issues with similar terms and maturities. The estimated fair value of our consolidated long-term debt is classified as Level 2.

~~Nonrecurring Fair Value Measurements~~ - In the first quarter 2020, we incurred noncash impairment charges for certain long-lived assets and equity investments. The valuation of these assets and investments required the use of significant unobservable inputs. To estimate the fair value, we used two generally accepted valuation approaches, an income approach and a market approach. Under the income approach, our discounted cash flow analysis included the following inputs that are not readily available: a discount rate reflective of industry cost of capital, our estimated contract rates, volumes, operating and maintenance costs and capital expenditures. Under the market approach, our inputs included EBITDA multiples, which were estimated from recent peer acquisition transactions, and forecasted EBITDA, which incorporates inputs similar to those used under the income

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~~approach. The estimated fair value of these assets is classified as Level 3. See Note A for additional information about our impairment charges.~~

C. RISK-MANAGEMENT AND HEDGING ACTIVITIES USING DERIVATIVES

~~Risk-Management~~Risk-management Activities - We are sensitive to changes in natural gas, crude oil and NGL prices, principally as a result of contractual terms under which these commodities are processed, purchased and sold. We are also subject to the risk of interest-rate fluctuation in the normal course of business. We use physical-forward purchases and sales and financial derivatives to secure a certain price for a portion of our natural gas, condensate and NGL products; to reduce our exposure to commodity price and interest-rate fluctuations; and to achieve more predictable cash flows. We follow established policies and procedures to assess risk and approve, monitor and report our risk-management activities. We have not used these instruments for trading purposes.

Commodity price risk - Commodity price risk refers to the risk of loss in cash flows and future earnings arising from adverse changes in the price of natural gas, NGLs and condensate. We may use the following commodity derivative instruments to reduce the near-term commodity price risk associated with a portion of the forecasted sales of these commodities:

•Futures contracts - Standardized contracts to purchase or sell natural gas and crude oil for future delivery or settlement under the provisions of exchange regulations;

•Forward contracts - Nonstandardized commitments between two parties to purchase or sell natural gas, crude oil or NGLs for future physical delivery. These contracts are typically nontransferable and can only be canceled with the consent of both parties;

•Swaps - Exchange of one or more payments based on the value of one or more commodities. These instruments transfer the financial risk associated with a future change in value between the counterparties of the transaction, without also conveying ownership interest in the asset or liability; and

•Options - Contractual agreements that give the holder the right, but not the obligation, to buy or sell a fixed quantity of a commodity at a fixed price within a specified period of time. Options may either be standardized and exchange-traded or customized and nonexchange-traded.

We may also use other instruments, including collars, to mitigate commodity price risk. A collar is a combination of a purchased put option and a sold call option, which places a floor and a ceiling price for commodity sales being hedged.

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In our Natural Gas Gathering and Processing segment, we are exposed to commodity price risk as a result of retaining a portion of the commodity sales proceeds associated with our ~~POP~~fee with ~~fee~~POP contracts. Under certain ~~POP~~fee with ~~fee~~POP contracts, our fees and POP percentage may increase or decrease if production volumes, delivery pressures or commodity prices change relative to specified thresholds. In certain commodity price environments, our contractual fees on these ~~certain~~fee with POP ~~with fee~~ contracts may decrease, which impacts the average fee rate in our Natural Gas Gathering and Processing segment. We also are exposed to basis risk between the various production and market locations where we buy and sell commodities. As part of our hedging strategy, we use the previously described commodity derivative financial instruments and physical-forward contracts to reduce the impact of price fluctuations related to natural gas, NGLs and condensate.

In our Natural Gas Liquids segment, we are primarily exposed to commodity price risk resulting from the relative values of the various NGL products to each other, the value of NGLs in storage and the relative value of NGLs to natural gas. We are also exposed to location price differential risk as a result of the relative value of NGL purchases at one location and sales at another location, primarily related to our optimization and marketing activities. As part of our hedging strategy, we utilize physical-forward contracts and commodity derivative financial instruments to reduce the impact of price fluctuations related to NGLs.

In our Natural Gas Pipelines segment, we are primarily exposed to commodity price risk on our intrastate pipelines because they consume natural gas in operations and retain natural gas from our customers for operations or as part of our fee for services provided. When the amount consumed in operations differs from the amount provided by our customers, our pipelines must buy or sell natural gas, or store or use natural gas inventory, which can expose this segment to commodity price risk depending on the regulatory treatment for this activity. To the extent that commodity price risk in our Natural Gas Pipelines segment is not mitigated by fuel cost-recovery mechanisms, we may use physical-forward sales or purchases to reduce the impact of natural gas price fluctuations. At ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, there were 0 financial derivative instruments with respect to our natural gas pipeline operations.

Interest-rate risk - We manage interest-rate risk through the use of fixed-rate debt, floating-rate debt and interest-rate swaps. Interest-rate swaps are agreements to exchange interest payments at some future point based on specified notional amounts. ~~In March 2020, we settled $750 million of our forward-starting interest-rate swaps related to our underwritten public offerings of~~

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$1.75 billion senior unsecured notes resulting in a loss of $152.5 million, which is included in accumulated other comprehensive loss and will be amortized to interest expense over the term of the related debt. In May 2020, we settled the remaining $1.3 billion of our interest-rate swaps used to hedge our LIBOR-based interest payments resulting in a loss of $48.3 million, which was recognized into interest expense upon repayment of our $1.5 Billion Term Loan Agreement.

At ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, we had forward-starting interest-rate swaps with notional amounts totaling $1.1 billion ~~and $1.8 billion, respectively,~~ to hedge the variability of interest payments on a portion of our forecasted debt issuances. At December 31, 2019, we had interest-rate swaps with notional amounts totaling $1.3 billion to hedge the variability of our LIBOR-based interest payments, all of which have settled as of September 30, 2020. All of our interest-rate swaps are designated as cash flow hedges.

Accounting Treatment - Our accounting treatment of derivative instruments is consistent with that disclosed in Note A of the Notes to Consolidated Financial Statements in our Annual Report.

Fair Values of Derivative Instruments - See Note B for a discussion of the inputs associated with our fair value measurements. The following table sets forth the fair values of our derivative instruments presented on a gross basis for the periods indicated:


			September 30, 2020				December 31, 2019						March 31, 2021				December 31, 2020
		Location in our Consolidated Balance Sheets	Assets		(Liabilities)		Assets		(Liabilities)			Location in our Consolidated Balance Sheets	Assets		(Liabilities)		Assets		(Liabilities)
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments		(Thousands of dollars)								Derivatives designated as hedging instruments		(Thousands of dollars)
Commodity contracts (a)	Commodity contracts (a)										Commodity contracts (a)
Financial contracts (b)	Financial contracts (b)	Other current assets	$	46,451	$	(60,373)	$	64,858	$	(26,997)	Financial contracts (b)		$	113,909	$	(168,369)	$	107,461	$	(142,573)
		Other deferred credits	0		0		1,591		(2,599)

Interest-rate contracts	Interest-rate contracts	Other current liabilities	0		0		0		(90,161)		Interest-rate contracts	Other current assets/ liabilities	241		(65,329)		0		0
		Other assets/other deferred credits	0		(231,991)		581		(111,780)			Other deferred credits	0		(32,034)		0		(203,407)
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments		46,451		(292,364)		67,030		(231,537)		Total derivatives designated as hedging instruments		114,150		(265,732)		107,461		(345,980)
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments										Derivatives not designated as hedging instruments
Commodity contracts (a)	Commodity contracts (a)										Commodity contracts (a)
Financial contracts (b)	Financial contracts (b)		408		(376)		0		0		Financial contracts (b)		6,247		(6,187)		3,037		(3,038)
Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments		408		(376)		0		0		Total derivatives not designated as hedging instruments		6,247		(6,187)		3,037		(3,038)
Total derivatives	Total derivatives		$	46,859	$	(292,740)	$	67,030	$	(231,537)	Total derivatives		$	120,397	$	(271,919)	$	110,498	$	(349,018)

(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheets on a net basis when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us.

(b) - At ~~September 30,~~March 31, 2021, and December 31, 2020, our derivative net liability positions under master-netting arrangements for financial contracts were fully offset by ~~$13.9~~cash collateral of $54.4 million ~~of cash collateral.~~

and $35.1 million, respectively.

2217

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Notional Quantities for Derivative Instruments - The following table sets forth the notional quantities for derivative instruments held for the periods indicated:


			September 30, 2020				December 31, 2019						March 31, 2021		December 31, 2020
		Contract Type	Purchased/ Payor		Sold/ Receiver		Purchased/ Payor		Sold/ Receiver			Contract Type	Net Purchased/Payor (Sold/Receiver)
Derivatives designated as hedging instruments:(a)	Derivatives designated as hedging instruments:(a)										Derivatives designated as hedging instruments:(a)
Cash flow hedges	Cash flow hedges										Cash flow hedges
Fixed price	Fixed price										Fixed price
- Natural gas (Bcf)	- Natural gas (Bcf)	Futures	1.7		(40.9)		0		(59.0)		- Natural gas (Bcf)	Futures	(80.9)		(43.3)

- Crude oil and NGLs (MMBbl)	- Crude oil and NGLs (MMBbl)	Futures	15.3		(22.7)		7.9		(17.4)		- Crude oil and NGLs (MMBbl)	Futures	(10.9)		(4.6)

Basis	Basis										Basis
- Natural gas (Bcf)	- Natural gas (Bcf)	Futures	1.7		(40.9)		0		(59.0)		- Natural gas (Bcf)	Futures	(80.9)		(43.3)
Interest-rate contracts (Billions of dollars)	Interest-rate contracts (Billions of dollars)	Swaps	$	1.1	$	0	$	3.1	$	0	Interest-rate contracts (Billions of dollars)	Swaps	$	1.1	$	1.1

Derivatives not designated as hedging instruments:
Fixed price
- Natural gas (Bcf)		Futures	1.5		(1.5)		0		0
- Crude oil and NGLs (MMBbl)		Futures	0.2		(0.2)		0		0
Basis
- Natural gas (Bcf)		Futures	1.5		(1.5)		0		0

~~These~~(a) - Notional amounts for derivatives not designated as hedging instruments are excluded from the table above due to fully offsetting notional ~~amounts are used to summarize the volume~~quantities of ~~financial instruments; however, they do not reflect the extent to which the positions offset one another~~0.5 MMBbl and ~~consequently, do not reflect our actual exposure to market or credit risk.~~0.8 MMBbl for NGLs fixed priced derivative instruments at March 31, 2021, and December 31, 2020, respectively.

Cash Flow Hedges - The following table sets forth the unrealized change in fair value of cash flow hedges in other comprehensive ~~loss~~income (loss) for the periods indicated:


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019				2021		2020
		(Thousands of dollars)										(Thousands of dollars)
Commodity contracts	Commodity contracts	$	(29,667)	$	32,169	$	18,472	$	43,877	Commodity contracts		$	(63,430)	$	87,195
Interest-rate contracts	Interest-rate contracts	9,213		(128,041)		(237,200)		(303,351)		Interest-rate contracts		106,285		(225,041)
Total unrealized change in fair value of cash flow hedges in other comprehensive loss		$	(20,454)	$	(95,872)	$	(218,728)	$	(259,474)
Total unrealized change in fair value of cash flow hedges in other comprehensive income (loss)										Total unrealized change in fair value of cash flow hedges in other comprehensive income (loss)		$	42,855	$	(137,846)

The following table sets forth the effect of cash flow hedges on net income (loss) for the periods indicated:

Location of Gain (Loss) Reclassified from
Accumulated Other Comprehensive
Loss into Net Income Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019

(Thousands of dollars)
Commodity contracts Commodity sales revenues $ 2,167 $ 38,234 $ 100,304 $ 85,375
Cost of sales and fuel (1,568) (19,706) (31,057) (32,751)
Interest-rate contracts (a) Interest expense (8,998) (6,903) (83,817) (14,222)
Total change in fair value of cash flow hedges reclassified from accumulated other comprehensive loss into net income on derivatives $ (8,399) $ 11,625 $ (14,570) $ 38,402

~~(a) - The nine months ended September 30, 2020, includes a loss of $48.3 million on the settlement of our remaining $1.3 billion interest-rate swaps used to hedge our LIBOR-based interest payments.~~


	Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Net Income (Loss)	Three Months Ended
		March 31,
			2021		2020
			(Thousands of dollars)
Commodity contracts	Commodity sales revenues		$	(130,518)	$	44,999
	Cost of sales and fuel		86,436		(15,039)
Interest-rate contracts	Interest expense		(9,666)		(10,278)
Total change in fair value of cash flow hedges reclassified from accumulated other comprehensive loss into net income (loss) on derivatives			$	(53,748)	$	19,682

Credit Risk - We monitor the creditworthiness of our counterparties and compliance with policies and limits established by our Risk Oversight and Strategy Committee. We maintain credit policies with regard to our counterparties that we believe minimize overall credit risk. These policies include an evaluation of potential counterparties’ financial condition (including credit ratings, bond yields and credit default swap rates), collateral requirements under certain circumstances and the use of standardized master-netting agreements that allow us to net the positive and negative exposures associated with a single counterparty. We use internally developed credit ratings for counterparties that do not have a credit rating.

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Our financial commodity derivatives are generally settled through a NYMEX or ~~Intercontinental Exchange (ICE)~~ICE clearing broker account with daily margin requirements. However, we may enter into financial derivative instruments that contain provisions that require us to maintain an investment-grade credit rating from S&P, Fitch and/or Moody’s. If our credit ratings on our senior unsecured long-term debt were to decline below investment grade, the counterparties to the derivative instruments could request collateralization on derivative instruments in net liability positions. There were 0 financial derivative instruments with contingent features related to credit risk at ~~September 30, 2020.~~March 31, 2021.

The counterparties to our derivative contracts typically consist of major energy companies, financial institutions and commercial and industrial end users. This concentration of counterparties may affect our overall exposure to credit risk, either

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positively or negatively, in that the counterparties may be affected similarly by changes in economic, regulatory or other conditions. Based on our policies, exposures, credit and other reserves, we do not anticipate a material adverse effect on our financial position or results of operations as a result of counterparty nonperformance.

At ~~September 30, 2020,~~March 31, 2021, the credit exposure from our derivative assets is with investment-grade companies in the financial services sector.

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D. DEBT

The following table sets forth our consolidated debt for the periods indicated:

September 30,
2020 December 31,
2019

(Thousands of dollars)
Commercial paper outstanding, bearing a weighted-average interest rate of 2.16% as of December 31, 2019 $ 0 $ 220,000
Senior unsecured obligations:
$1,500,000 term loan at 2.7% as of December 31, 2019, due November 2021 0 1,250,000
$700,000 at 4.25% due February 2022 547,397 547,397
$900,000 at 3.375% due October 2022 900,000 900,000
$425,000 at 5.0% due September 2023 425,000 425,000
$500,000 at 7.5% due September 2023 500,000 500,000
$500,000 at 2.75% due September 2024 500,000 500,000
$500,000 at 4.9% due March 2025 500,000 500,000
$400,000 at 2.2% due September 2025 387,000 0
$600,000 at 5.85% due January 2026 600,000 0
$500,000 at 4.0% due July 2027 500,000 500,000
$800,000 at 4.55% due July 2028 800,000 800,000
$100,000 at 6.875% due September 2028 100,000 100,000
$700,000 at 4.35% due March 2029 700,000 700,000
$750,000 at 3.4% due September 2029 714,251 750,000
$850,000 at 3.1% due March 2030 780,093 0
$600,000 at 6.35% due January 2031 600,000 0
$400,000 at 6.0% due June 2035 400,000 400,000
$600,000 at 6.65% due October 2036 600,000 600,000
$600,000 at 6.85% due October 2037 600,000 600,000
$650,000 at 6.125% due February 2041 650,000 650,000
$400,000 at 6.2% due September 2043 400,000 400,000
$700,000 at 4.95% due July 2047 689,006 700,000
$1,000,000 at 5.2% due July 2048 1,000,000 1,000,000
$750,000 at 4.45% due September 2049 723,736 750,000
$500,000 at 4.5% due March 2050 453,585 0
$300,000 at 7.15% due January 2051 300,000 0
Guardian Pipeline
Weighted average 7.85% due December 2022 15,570 21,307
Total debt 14,385,638 12,813,704
Unamortized portion of terminated swaps 13,743 15,032
Unamortized debt issuance costs and discounts (142,392) (121,329)
Current maturities of long-term debt (7,650) (7,650)
Short-term borrowings (a) 0 (220,000)
Long-term debt $ 14,249,339 $ 12,479,757

~~(a) - Individual issuances of commercial paper under our commercial paper program generally mature in 90 days or less.~~


	March 31, 2021		December 31, 2020
	(Thousands of dollars)
Commercial paper outstanding	$	0	$	0
Senior unsecured obligations:
$700,000 at 4.25% due February 2022	536,107		541,877
$900,000 at 3.375% due October 2022	895,814		895,814
$425,000 at 5.0% due September 2023	425,000		425,000
$500,000 at 7.5% due September 2023	500,000		500,000
$500,000 at 2.75% due September 2024	500,000		500,000
$500,000 at 4.9% due March 2025	500,000		500,000
$400,000 at 2.2% due September 2025	387,000		387,000
$600,000 at 5.85% due January 2026	600,000		600,000
$500,000 at 4.0% due July 2027	500,000		500,000
$800,000 at 4.55% due July 2028	800,000		800,000
$100,000 at 6.875% due September 2028	100,000		100,000
$700,000 at 4.35% due March 2029	700,000		700,000
$750,000 at 3.4% due September 2029	714,251		714,251
$850,000 at 3.1% due March 2030	780,093		780,093
$600,000 at 6.35% due January 2031	600,000		600,000
$400,000 at 6.0% due June 2035	400,000		400,000
$600,000 at 6.65% due October 2036	600,000		600,000
$600,000 at 6.85% due October 2037	600,000		600,000
$650,000 at 6.125% due February 2041	650,000		650,000
$400,000 at 6.2% due September 2043	400,000		400,000
$700,000 at 4.95% due July 2047	689,006		689,006
$1,000,000 at 5.2% due July 2048	1,000,000		1,000,000
$750,000 at 4.45% due September 2049	672,530		713,676
$500,000 at 4.5% due March 2050	443,015		451,270
$300,000 at 7.15% due January 2051	300,000		300,000
Guardian Pipeline
Weighted average 7.85% due December 2022	11,745		13,657
Total debt	14,304,561		14,361,644
Unamortized portion of terminated swaps	12,884		13,314
Unamortized debt issuance costs and discounts	(134,921)		(138,887)
Current maturities of long-term debt	(543,757)		(7,650)

Long-term debt	$	13,638,767	$	14,228,421

$2.5 Billion Credit Agreement - Our $2.5 Billion Credit Agreement is a revolving credit facility and contains certain financial, operational and legal covenants. Among other things, these covenants include maintaining a ratio of ~~net~~ indebtedness to adjusted EBITDA (EBITDA, as defined in our $2.5 Billion Credit Agreement, adjusted for all noncash charges and increased for projected EBITDA from certain lender-approved capital expansion projects) ~~of no more than 5.0 to 1 at September 30, 2020.~~. In June 2020, we amended the $2.5 Billion Credit Agreement by, among other things, modifying the leverage ratio so that we may net up to $700 million of cash on hand against our consolidated indebtedness for purposes of calculating the ratio’s numerator for the fiscal quarters ending June 30, 2020, September 30, 2020, and December 31, 2020. At September 30, 2020, we had 0 outstanding borrowings, our ratio of net indebtedness to adjusted EBITDA was 4.6 to 1, and we were in compliance with all covenants under our $2.5 Billion Credit Agreement.

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~~In October~~ 2020, we acquired additional ~~interests~~interest in one of our equity investments and a related asset for $27 million, which allowed us to elect an acquisition adjustment period under our $2.5 Billion Credit Agreement and, as a result, increased our leverage ratio covenant to 5.5 to 1 for the fourth quarter 2020 and the two following quarters. Thereafter, the covenant will decrease to 5.0 to 1. At March 31, 2021, we had 0 outstanding

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borrowings, our ratio of indebtedness to adjusted EBITDA was 4.6 to 1, and we were in compliance with all covenants under our $2.5 Billion Credit Agreement.

Debt ~~Issuances~~ - In May 2020, we completed an underwritten public offering of $1.5 billion senior unsecured notes consisting of $600 million, 5.85% senior notes due 2026; $600 million, 6.35% senior notes due 2031; and $300 million, 7.15% senior notes due 2051. The net proceeds, after deducting underwriting discounts, commissions and offering expenses, were $1.48 billion. A portion of the proceeds were used to repay the outstanding borrowings under our $1.5 Billion Term Loan Agreement. The remainder was used for general corporate purposes.

In March 2020, we completed an underwritten public offering of $1.75 billion senior unsecured notes consisting of $400 million, 2.2% senior notes due 2025; $850 million, 3.1% senior notes due 2030; and $500 million, 4.5% senior notes due 2050. The net proceeds, after deducting underwriting discounts, commissions and offering expenses, were $1.73 billion. A portion of the proceeds were used to pay all outstanding amounts under our commercial paper program. The remainder was used for general corporate purposes, which included repayment of other existing indebtedness and funding capital expenditures.

~~Debt Repayments~~Repurchases -~~In May 2020, we repaid the remaining $1.25 billion of our $1.5 Billion Term Loan Agreement with cash on hand from our May 2020 public offering of $1.5 billion senior unsecured notes.~~

Debt Guarantees - We, ONEOK Partners and the Intermediate Partnership have cross guarantees in place for our and ONEOK Partners’ indebtedness.

~~For additional discussion of our $2.5 Billion Credit Agreement, see Note F of the Notes to Consolidated Financial Statements in our Annual Report.~~

E. EQUITY

~~Equity Issuances~~ - In July 2020, we established an “at-the-market” equity program for the offer and sale from time to time of our common stock up to an aggregate offering price of $1.0 billion. The program allows us to offer and sell common stock at prices we deem appropriate through a sales agent, in forward sales transactions through a forward seller or directly to one or more of the program’s managers acting as principals. Sales of our common stock may be made by means of ordinary brokers’ transactions on the NYSE, in block transactions or as otherwise agreed to between us and the sales agent. We are under no obligation to offer and sell common stock under the program. NaN shares have been sold through our “at-the-market” program as of the date of this report.

In June 2020, we completed an underwritten public offering of 29.9 million shares of our common stock at a public offering price of $32.00 per share, generating net proceeds, after deducting underwriting discounts, commissions and offering expenses, of $937.0 million. A portion of the proceeds were, and we anticipate the remainder will be, used for general corporate purposes, including repayment of existing indebtedness and funding capital expenditures.

Dividends - Holders of our common stock share equally in any dividend declared by our Board of Directors, subject to the rights of the holders of outstanding ~~preferred stock.~~Series E Preferred Stock. Dividends paid on our common stock in February ~~2020, May 2020 and August 2020~~2021 were $0.935 per share. A dividend of $0.935 per share was declared for shareholders of record at the close of business on ~~November 2, 2020,~~April 26, 2021, payable ~~November 13, 2020.~~May 14, 2021.

Our Series E Preferred Stock pays quarterly dividends on each share of Series E Preferred Stock, when, as and if declared by our Board of Directors, at a rate of 5.5% per year. We paid dividends for the Series E Preferred Stock of $0.3 million in February ~~2020, May 2020 and August 2020.~~2021. Dividends totaling $0.3 million were declared for the Series E Preferred Stock and are payable ~~November 13, 2020.~~May 14, 2021.

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F. ACCUMULATED OTHER COMPREHENSIVE LOSS

The following table sets forth the balance in accumulated other comprehensive loss for the period indicated:

Risk-
Management
Assets/Liabilities (a) Retirement and Other
Postretirement
Benefit Plan
Obligations (a) (b) Risk-
Management
Assets/Liabilities of
Unconsolidated
Affiliates (a) Accumulated
Other
Comprehensive
Loss (a)
(Thousands of dollars)
January 1, 2020 $ (233,520) $ (131,481) $ (8,999) $ (374,000)
Other comprehensive income (loss) before reclassifications (168,421) 59 (10,893) (179,255)
Amounts reclassified to net income (c) 11,210 10,626 801 22,637
Other comprehensive income (loss) (157,211) 10,685 (10,092) (156,618)
September 30, 2020 $ (390,731) $ (120,796) $ (19,091) $ (530,618)


	Risk- Management Assets/Liabilities (a)		Retirement and Other Postretirement Benefit Plan Obligations (a) (b)		Risk- Management Assets/Liabilities of Unconsolidated Affiliates (a)		Accumulated Other Comprehensive Loss (a)
	(Thousands of dollars)
January 1, 2021	$	(377,446)	$	(157,635)	$	(16,368)	$	(551,449)
Other comprehensive income (loss) before reclassifications	32,998		(167)		7,372		40,203
Amounts reclassified to net income (c)	41,387		3,805		458		45,650
Other comprehensive income	74,385		3,638		7,830		85,853
March 31, 2021	$	(303,061)	$	(153,997)	$	(8,538)	$	(465,596)

(a) - All amounts are presented net of tax.

(b) - Includes amounts related to supplemental executive retirement plan.

(c) - See Note C for details of amounts reclassified to net income for risk-management assets/liabilities and Note H for retirement and other postretirement benefit plan obligations.

The following table sets forth information about the balance of accumulated other comprehensive loss at ~~September 30, 2020,~~March 31, 2021, representing unrealized gains (losses) related to risk-management assets and liabilities:


	Risk- Management Assets/Liabilities (a)
	(Thousands of dollars)
Commodity derivative instruments expected to be realized within the next 1533 months (b)	$	~~(10,988)~~(42,201)
Settled interest-rate swaps to be recognized over the life of the long-term, fixed-rate debt (c)	~~(201,110)~~(186,076)
Interest-rate swaps with future settlement dates expected to be amortized over the life of long-term debt	~~(178,633)~~(74,784)
Accumulated other comprehensive loss at ~~September 30, 2020~~March 31, 2021	$	~~(390,731)~~(303,061)

(a) - All amounts are presented net of tax.

(b) - Based on ~~September 30, 2020,~~ commodity prices on March 31, 2021, we expect ~~$8.4~~$47.7 million in net losses, net of tax, over the next 12 months and ~~$2.6~~$5.5 million in net ~~losses,~~gains, net of tax, thereafter.

(c) - We expect net losses of ~~$30.3~~$30.5 million, net of tax, will be reclassified into earnings during the next 12 months.

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The remaining amounts in accumulated other comprehensive loss relate primarily to our retirement and other postretirement benefit plan obligations, which are expected to be amortized over the average remaining service period of employees participating in these plans.

G. EARNINGS PER SHARE

The following tables set forth the computation of basic and diluted EPS for the periods indicated:


		Three Months Ended September 30, 2020						Three Months Ended March 31, 2021
		Income		Shares	Per Share Amount			Income		Shares	Per Share Amount
		(Thousands, except per share amounts)						(Thousands, except per share amounts)
Basic EPS	Basic EPS						Basic EPS
Net income available for common stock	Net income available for common stock	$	312,041	445,103	$	0.70	Net income available for common stock	$	385,901	445,894	$	0.87
Diluted EPS	Diluted EPS						Diluted EPS
Effect of dilutive securities	Effect of dilutive securities	0		407			Effect of dilutive securities	0		991
Net income available for common stock and common stock equivalents	Net income available for common stock and common stock equivalents	$	312,041	445,510	$	0.70	Net income available for common stock and common stock equivalents	$	385,901	446,885	$	0.86


	Three Months Ended March 31, 2020
	Loss		Shares	Per Share Amount
	(Thousands, except per share amounts)
Basic EPS
Net loss available for common stock	$	(142,132)	414,282	$	(0.34)
Diluted EPS
Effect of dilutive securities	0		0
Net loss available for common stock and common stock equivalents (a)	$	(142,132)	414,282	$	(0.34)

~~Table~~(a) - For the three months ended March 31, 2020, 1,065,880 weighted-average shares have been excluded from the calculation of ~~Contents~~

Three Months Ended September 30, 2019
Income Shares Per Share
Amount

(Thousands, except per share amounts)
Basic EPS
Net income available for common stock $ 308,880 413,816 $ 0.75
Diluted EPS
Effect of dilutive securities 0 1,762
Net income available for common stock and
common stock equivalents
$ 308,880 415,578 $ 0.74

Nine Months Ended September 30, 2020

Income Shares Per Share
Amount

(Thousands, except per share amounts)
Basic EPS
Net income available for common stock $ 303,955 426,369 $ 0.71
Diluted EPS
Effect of dilutive securities 0 628
Net income available for common stock and
common stock equivalents
$ 303,955 426,997 $ 0.71

Nine Months Ended September 30, 2019
Income Shares Per Share
Amount

(Thousands, except per share amounts)
Basic EPS
Net income available for common stock $ 957,501 413,443 $ 2.32
Diluted EPS
Effect of dilutive securities 0 1,834
Net income available for common stock and
common stock equivalents
$ 957,501 415,277 $ 2.31
diluted loss per share as their inclusion would have been anti-dilutive due to our net loss available for common stock.

H. EMPLOYEE BENEFIT PLANS

The following ~~tables set~~table sets forth the components of net periodic benefit cost for our retirement and other postretirement benefit plans for the periods indicated:


		Retirement Benefits				Other Postretirement Benefits					Retirement Benefits				Other Postretirement Benefits
		Three Months Ended				Three Months Ended					Three Months Ended				Three Months Ended
		September 30,				September 30,					March 31,				March 31,
		2020		2019		2020		2019			2021		2020		2021		2020
		(Thousands of dollars)									(Thousands of dollars)
Components of net periodic benefit cost (income)	Components of net periodic benefit cost (income)									Components of net periodic benefit cost (income)
Service cost	Service cost	$	2,036	$	1,954	$	115	$	117	Service cost	$	2,076	$	2,036	$	115	$	115
Interest cost	Interest cost	4,574		5,126		442		509		Interest cost	4,220		4,574		442		442
Expected return on plan assets	Expected return on plan assets	(6,232)		(5,892)		(722)		(570)		Expected return on plan assets	(6,269)		(6,232)		(722)		(722)
Amortization of prior service cost (credit) (a)		28		0		0		(57)
Amortization of prior service cost (a)										Amortization of prior service cost (a)	28		28		0		0
Amortization of net loss (a)	Amortization of net loss (a)	4,571		3,158		1		74		Amortization of net loss (a)	4,913		4,571		1		1
Net periodic benefit cost (income)	Net periodic benefit cost (income)	$	4,977	$	4,346	$	(164)	$	73	Net periodic benefit cost (income)	$	4,968	$	4,977	$	(164)	$	(164)

(a) - These components of net periodic benefit cost (income) are recognized in accumulated other comprehensive loss and are reclassified to other ~~income (expense)~~expense in our Consolidated Statements of Income, with related income tax benefits of $1.1 million ~~and $0.7 million~~ reclassified to income tax ~~expense~~(expense) benefit for both the three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019, respectively.~~2020.

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Retirement Benefits Other Postretirement Benefits
Nine Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019

(Thousands of dollars)
Components of net periodic benefit cost (income)
Service cost $ 6,108 $ 5,862 $ 345 $ 351
Interest cost 13,722 15,378 1,326 1,527
Expected return on plan assets (18,696) (17,676) (2,166) (1,710)
Amortization of prior service cost (credit) (a) 84 0 0 (171)
Amortization of net loss (a) 13,713 9,474 3 222
Net periodic benefit cost (income) $ 14,931 $ 13,038 $ (492) $ 219

(a) - These components of net periodic benefit cost (income) are recognized in accumulated other comprehensive loss and are reclassified to other income (expense) in our Consolidated Statements of Income, with related income tax benefits of $3.2 million and $2.2 million reclassified to income tax expense for the nine months ended September 30, 2020 and 2019, respectively.

I. UNCONSOLIDATED AFFILIATES

Equity in Net Earnings from Investments and Impairments - The following table sets forth our equity in net earnings ~~(loss)~~ from investments for the periods indicated:


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
		2020		2019		2020		2019				2021		2020
		(Thousands of dollars)										(Thousands of dollars)
Northern Border Pipeline	Northern Border Pipeline	$	22,037	$	16,102	$	57,028	$	50,593	Northern Border Pipeline		$	20,239	$	22,120
Overland Pass Pipeline	Overland Pass Pipeline	8,007		15,481		30,090		48,340		Overland Pass Pipeline		2,972		14,111
Roadrunner	Roadrunner	8,033		7,421		21,275		19,836		Roadrunner		7,749		6,433
Other	Other	(31)		(1,428)		(392)		(3,594)		Other		2,360		1,963
Equity in net earnings from investments	Equity in net earnings from investments	$	38,046	$	37,576	$	108,001	$	115,175	Equity in net earnings from investments		$	33,320	$	44,627
Impairment of equity investments	Impairment of equity investments	$	0	$	0	$	(37,730)	$	0	Impairment of equity investments		$	0	$	(37,730)

InEquity in net earnings from Overland Pass Pipeline decreased for the ~~first quarter~~three months ended March 31, 2021, compared with the same period in 2020, due primarily to lower volumes.

For the three months ended March 31, 2020, we incurred a noncash impairment charge of $30.5 million related to our 10.2% investment in Venice Energy Services Company in our Natural Gas Gathering and Processing segment, which includes $22.3 million related to equity-method goodwill, and a $7.2 million noncash impairment charge related to our 50% investment in Chisholm Pipeline Company in our Natural Gas Liquids segment. ~~Our remaining equity-method goodwill was $16.5 million at September 30, 2020. For additional information on our impairment charges, see Note A.~~

We incurred expenses in transactions with unconsolidated affiliates of ~~$35.8~~$15.6 million and ~~$41.9~~$45.3 million for the three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019, respectively, and $108.4 million and $124.2 million for the nine months ended September 30, 2020 and 2019,~~ respectively, primarily related to ~~Overland Pass~~Northern Border Pipeline and ~~Northern Border~~Overland Pass Pipeline. Accounts payable to our equity-method investees at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, were ~~$13.3~~$5.2 million and ~~$13.5~~$8.4 million, respectively.

We have an operating agreement with Roadrunner that provides for reimbursement or payment to us for management services and certain operating ~~costs. Reimbursements and payments from Roadrunner~~costs, which are included in operating income (loss) in our Consolidated Statements of ~~Income for the three and nine months ended September 30, 2020 and 2019, were not material.~~Income.

J. COMMITMENTS AND CONTINGENCIES

Environmental Matters and Pipeline Safety - The operation of pipelines, plants and other facilities for the gathering, processing, fractionation, transportation and storage of natural gas, NGLs, condensate and other products is subject to numerous and complex laws and regulations pertaining to health, safety and the environment. As an owner and/or operator of these facilities, we must comply with laws and regulations that relate to air and water quality, hazardous and solid waste management and disposal, cultural resource protection and other environmental and safety matters. The cost of planning, designing, constructing and operating pipelines, plants and other facilities must incorporate compliance with these laws, regulations and safety standards. Failure to comply with these laws and regulations may trigger a variety of administrative, civil and potentially

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criminal enforcement measures, including citizen suits, which can include the assessment of monetary penalties, the imposition of remedial requirements and the issuance of injunctions or restrictions on operation or construction. Management does not believe that, based on currently known information, a material risk of noncompliance with these laws and regulations exists that will affect adversely our consolidated results of operations, financial condition or cash flows.

Legal Proceedings - We are a party to various litigation matters and claims that have arisen in the normal course of our operations. While the results of these litigation matters and claims cannot be predicted with certainty, we believe the reasonably possible losses from such matters, individually and in the aggregate, are not material. Additionally, we believe the probable final outcome of such matters will not have a material adverse effect on our consolidated results of operations, financial position or cash flows.

K. ~~LEASES~~

In December 2019, we entered into an operating lease for pipeline capacity with a lease term of 10 years that commenced January 1, 2020. In connection with this lease, we recognized an operating lease right-of-use asset and a lease liability with remaining balances of $70.7 million and $71.4 million, respectively, as of September 30, 2020. During the nine months ended September 30, 2020, we entered into certain operating leases and recognized operating lease right-of-use assets and lease liabilities with remaining balances of $16.2 million at the end of the period. At September 30, 2020, the weighted-average remaining lease term and the weighted-average discount rate for our operating leases were 8.5 years and 3.19%, respectively.

~~The following table sets forth supplemental cash flow information related to our leases:~~

Nine Months Ended
September 30,
2020 2019
(Thousands of dollars)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases $ 9,662 $ 4,972
Financing cash flows for finance lease $ 1,443 $ 1,307
Right-of-use assets obtained in exchange for operating lease liabilities (noncash) $ 99,197 $ 3,663

~~The following table sets forth the maturity of our lease liabilities as of September 30, 2020:~~

Finance
Lease Operating
Leases
(Millions of dollars)
Remainder of 2020 $ 1.2 $ 4.1
2021 4.5 16.4
2022 4.5 15.1
2023 4.5 13.8
2024 4.5 12.5
2025 and beyond 17.1 58.2
Total lease payments 36.3 120.1
Less: Interest 11.5 15.6
Present value of lease liabilities $ 24.8 $ 104.5

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L. REVENUES

Accounting Policies - ~~Our revenue recognition policy is~~Many of the contract types described inwithin Note A of the Notes to Consolidated Financial ~~Statements~~Statement in our Annual ~~Report.~~Report contain additional fees or charges payable by customers for nonperformance (e.g., minimum volume commitments or product specifications), which are considered to be variable consideration. These fees and charges are not recorded until it is probable that a significant reversal of the associated revenue will not occur.

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Contract Assets and Contract Liabilities - Our contract asset balances at the beginning and end of the period primarily relate to our firm service transportation contracts with tiered rates, which are not material. The following table sets forth the balances in contract liabilities for the periods indicated:


Contract Liabilities	(Millions of dollars)
Balance at December 31, ~~2019~~2020 (a)	$	~~57.1~~41.4
Revenue recognized included in beginning balance ~~(b)~~	~~(35.1)~~(20.4)
Net additions	~~24.3~~12.3
Balance at ~~September 30, 2020 (c)~~March 31, 2021 (b)	$	~~46.3~~33.3

(a) - Contract liabilities of ~~$22.2~~$23.7 million and ~~$34.9~~$17.7 million are included in other current liabilities and other deferred credits, respectively, in our Consolidated Balance Sheet.

(b) - ~~Includes a contract settlement in the second quarter 2020 of revenue previously deferred.~~

~~(c) -~~ Contract liabilities of ~~$27.6~~$15.9 million and ~~$18.7~~$17.4 million are included in other current liabilities and other deferred credits, respectively, in our Consolidated Balance Sheet.

Receivables from Customers and Revenue Disaggregation - Substantially all of the balances in accounts receivable on our Consolidated Balance Sheets at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019,~~2020, relate to customer receivables. Revenues sources are disaggregated in Note M.L.

Transaction Price Allocated to Unsatisfied Performance Obligations - We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) variable consideration on contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

The following table presents aggregate value allocated to unsatisfied performance obligations as of ~~September 30, 2020,~~March 31, 2021, and the amounts we expect to recognize in revenue in future periods, related primarily to firm transportation and storage contracts with remaining contract terms ranging from one month to 2423 years:


Expected Period of Recognition in Revenue	Expected Period of Recognition in Revenue	(Millions of dollars)		Expected Period of Recognition in Revenue	(Millions of dollars)
Remainder of 2020		$	87.1
2021		320.0
Remainder of 2021				Remainder of 2021	$	247.6
2022	2022	259.9		2022	273.4
2023	2023	230.9		2023	244.3
2024 and beyond		901.0
2024				2024	204.1
2025 and beyond				2025 and beyond	796.1
Total estimated transaction price allocated to unsatisfied performance obligations	Total estimated transaction price allocated to unsatisfied performance obligations	$	1,798.9	Total estimated transaction price allocated to unsatisfied performance obligations	$	1,765.5

The table above excludes variable consideration allocated entirely to wholly unsatisfied performance obligations, wholly unsatisfied promises to transfer distinct goods or services that are part of a single performance obligation and consideration we determine to be fully constrained. The amounts we determined to be fully constrained relate to future sales obligations under long-term sales contracts where the transaction price is not known and minimum volume agreements, which we consider to be fully constrained until invoiced.

M.L. SEGMENTS

Segment Descriptions - Our operations are divided into three reportable business segments as follows:

• our Natural Gas Gathering and Processing segment gathers, treats and processes natural gas;

• our Natural Gas Liquids segment gathers, treats, fractionates and transports NGLs and stores, markets and distributes NGL products; and

• our Natural Gas Pipelines segment ~~operates~~transports and stores natural gas via regulated ~~interstate~~intrastate and ~~intrastate~~interstate natural gas transmission pipelines and natural gas storage facilities.

Other and eliminations consist of corporate costs, the operating and leasing activities of our headquarters building and related parking facility and eliminations necessary to reconcile our reportable segments to our Consolidated Financial Statements.

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Accounting Policies - The accounting policies of the segments are described in Note A of the Notes to Consolidated Financial Statements in our Annual Report.

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Operating Segment Information - The following tables set forth certain selected financial information for our operating segments for the periods indicated:


Three Months Ended September 30, 2020		Natural Gas Gathering and Processing		Natural Gas Liquids (a)		Natural Gas Pipelines (b)		Total Segments
Three Months Ended March 31, 2021										Three Months Ended March 31, 2021	Natural Gas Gathering and Processing		Natural Gas Liquids (a)		Natural Gas Pipelines (b)		Total Segments
		(Thousands of dollars)									(Thousands of dollars)
NGL and condensate sales	NGL and condensate sales	$	239,810	$	1,658,123	$	0	$	1,897,933	NGL and condensate sales	$	491,807	$	2,414,830	$	0	$	2,906,637
Residue natural gas sales	Residue natural gas sales	178,492		0		3,998		182,490		Residue natural gas sales	312,247		0		115,455		427,702
Gathering, processing and exchange services revenue	Gathering, processing and exchange services revenue	36,459		132,210		0		168,669		Gathering, processing and exchange services revenue	31,687		113,231		0		144,918
Transportation and storage revenue	Transportation and storage revenue	0		39,774		113,047		152,821		Transportation and storage revenue	0		48,728		132,947		181,675
Other	Other	4,644		2,110		251		7,005		Other	4,000		33,276		412		37,688
Total revenues (c)	Total revenues (c)	459,405		1,832,217		117,296		2,408,918		Total revenues (c)	839,741		2,610,065		248,814		3,698,620

Cost of sales and fuel (exclusive of depreciation and operating costs)	Cost of sales and fuel (exclusive of depreciation and operating costs)	(207,519)		(1,289,667)		(3,389)		(1,500,575)		Cost of sales and fuel (exclusive of depreciation and operating costs)	(555,306)		(2,060,319)		(10,013)		(2,625,638)
Operating costs	Operating costs	(69,351)		(101,223)		(34,567)		(205,141)		Operating costs	(84,598)		(124,369)		(42,317)		(251,284)
Equity in net earnings (loss) from investments		(42)		8,018		30,070		38,046
Equity in net earnings from investments										Equity in net earnings from investments	1,728		3,604		27,988		33,320
Noncash compensation expense and other	Noncash compensation expense and other	655		1,898		427		2,980		Noncash compensation expense and other	3,151		6,647		1,703		11,501
Segment adjusted EBITDA	Segment adjusted EBITDA	$	183,148	$	451,243	$	109,837	$	744,228	Segment adjusted EBITDA	$	204,716	$	435,628	$	226,175	$	866,519

Depreciation and amortization	Depreciation and amortization	$	(66,459)	$	(71,534)	$	(14,243)	$	(152,236)	Depreciation and amortization	$	(67,032)	$	(74,542)	$	(14,476)	$	(156,050)

Investments in unconsolidated affiliates										Investments in unconsolidated affiliates	$	24,584	$	420,614	$	362,523	$	807,721
Total assets										Total assets	$	6,535,260	$	13,944,887	$	2,096,459	$	22,576,606
Capital expenditures	Capital expenditures	$	63,030	$	298,891	$	12,978	$	374,899	Capital expenditures	$	39,651	$	112,021	$	21,157	$	172,829

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of ~~$541.7~~$570.6 million, of which ~~$495.4~~$516.1 million related to revenues within the segment, and cost of sales and fuel of ~~$137.5~~$135.8 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of ~~$71.8~~$181.4 million and cost of sales and fuel of ~~$9.6~~$12.8 million.

(c) - Intersegment revenues are primarily commodity sales which are based on the contracted selling price that is generally index-based and settled monthly, and for the Natural Gas Gathering and Processing segment totaled ~~$235.6~~$481.6 million. Intersegment revenues for the Natural Gas Liquids and Natural Gas Pipelines segments were not material.


Three Months Ended September 30, 2020		Total Segments		Other and Eliminations		Total
Three Months Ended March 31, 2021								Three Months Ended March 31, 2021	Total Segments		Other and Eliminations		Total
		(Thousands of dollars)							(Thousands of dollars)
Reconciliations of total segments to consolidated	Reconciliations of total segments to consolidated							Reconciliations of total segments to consolidated
NGL and condensate sales	NGL and condensate sales	$	1,897,933	$	(224,731)	$	1,673,202	NGL and condensate sales	$	2,906,637	$	(500,064)	$	2,406,573
Residue natural gas sales	Residue natural gas sales	182,490		(5,897)		176,593		Residue natural gas sales	427,702		0		427,702
Gathering, processing and exchange services revenue	Gathering, processing and exchange services revenue	168,669		0		168,669		Gathering, processing and exchange services revenue	144,918		0		144,918
Transportation and storage revenue	Transportation and storage revenue	152,821		(3,597)		149,224		Transportation and storage revenue	181,675		(3,535)		178,140
Other	Other	7,005		(429)		6,576		Other	37,688		(342)		37,346
Total revenues (a)	Total revenues (a)	$	2,408,918	$	(234,654)	$	2,174,264	Total revenues (a)	$	3,698,620	$	(503,941)	$	3,194,679

Cost of sales and fuel (exclusive of depreciation and operating costs)	Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(1,500,575)	$	234,901	$	(1,265,674)	Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(2,625,638)	$	504,128	$	(2,121,510)
Operating costs	Operating costs	$	(205,141)	$	212	$	(204,929)	Operating costs	$	(251,284)	$	(313)	$	(251,597)
Depreciation and amortization	Depreciation and amortization	$	(152,236)	$	(1,009)	$	(153,245)	Depreciation and amortization	$	(156,050)	$	(1,070)	$	(157,120)

Equity in net earnings from investments	Equity in net earnings from investments	$	38,046	$	0	$	38,046	Equity in net earnings from investments	$	33,320	$	0	$	33,320
Investments in unconsolidated affiliates								Investments in unconsolidated affiliates	$	807,721	$	0	$	807,721
Total assets								Total assets	$	22,576,606	$	603,323	$	23,179,929
Capital expenditures	Capital expenditures	$	374,899	$	5,143	$	380,042	Capital expenditures	$	172,829	$	3,905	$	176,734

(a) - Noncustomer revenue for the three months ended ~~September 30, 2020,~~March 31, 2021, totaled ~~$4.0~~$(132.2) millionrelated primarily to ~~gains~~losses from derivatives on commodity contracts.

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Three Months Ended September 30, 2019		Natural Gas Gathering and Processing		Natural Gas Liquids (a)		Natural Gas Pipelines (b)		Total Segments
Three Months Ended March 31, 2020										Three Months Ended March 31, 2020	Natural Gas Gathering and Processing		Natural Gas Liquids (a)		Natural Gas Pipelines (b)		Total Segments
		(Thousands of dollars)									(Thousands of dollars)
NGL and condensate sales	NGL and condensate sales	$	244,932	$	1,746,630	$	0	$	1,991,562	NGL and condensate sales	$	219,917	$	1,596,711	$	0	$	1,816,628
Residue natural gas sales	Residue natural gas sales	185,303		0		231		185,534		Residue natural gas sales	189,051		0		2,035		191,086
Gathering, processing and exchange services revenue	Gathering, processing and exchange services revenue	42,795		105,179		0		147,974		Gathering, processing and exchange services revenue	37,937		120,536		0		158,473
Transportation and storage revenue	Transportation and storage revenue	0		46,407		119,924		166,331		Transportation and storage revenue	0		50,755		118,364		169,119
Other	Other	3,182		2,291		1,393		6,866		Other	3,075		2,590		384		6,049
Total revenues (c)	Total revenues (c)	476,212		1,900,507		121,548		2,498,267		Total revenues (c)	449,980		1,770,592		120,783		2,341,355

Cost of sales and fuel (exclusive of depreciation and operating costs)	Cost of sales and fuel (exclusive of depreciation and operating costs)	(210,739)		(1,438,206)		(381)		(1,649,326)		Cost of sales and fuel (exclusive of depreciation and operating costs)	(202,170)		(1,278,754)		(1,539)		(1,482,463)
Operating costs	Operating costs	(91,227)		(114,903)		(40,170)		(246,300)		Operating costs	(84,470)		(89,571)		(33,307)		(207,348)
Equity in net earnings (loss) from investments		(1,837)		15,890		23,523		37,576
Equity in net earnings from investments										Equity in net earnings from investments	806		15,268		28,553		44,627
Noncash compensation expense and other	Noncash compensation expense and other	2,883		4,174		(701)		6,356		Noncash compensation expense and other	(4,498)		(6,619)		(1,966)		(13,083)
Segment adjusted EBITDA	Segment adjusted EBITDA	$	175,292	$	367,462	$	103,819	$	646,573	Segment adjusted EBITDA	$	159,648	$	410,916	$	112,524	$	683,088

Depreciation and amortization	Depreciation and amortization	$	(55,781)	$	(50,419)	$	(14,330)	$	(120,530)	Depreciation and amortization	$	(58,756)	$	(57,841)	$	(14,769)	$	(131,366)
Impairment charges (d)										Impairment charges (d)	$	(564,353)	$	(77,401)	$	0	$	(641,754)
Investments in unconsolidated affiliates										Investments in unconsolidated affiliates	$	4,276	$	435,024	$	371,179	$	810,479
Total assets										Total assets	$	6,374,552	$	12,682,807	$	2,089,362	$	21,146,721
Capital expenditures	Capital expenditures	$	245,745	$	738,038	$	27,767	$	1,011,550	Capital expenditures	$	181,610	$	746,183	$	16,590	$	944,383

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of ~~$379.7~~$435.1 million, of which ~~$315.7~~$378.2 million related to revenues within the segment, and cost of sales and fuel of ~~$129.5~~$120.4 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of ~~$72.3~~$73.9 million and cost of sales and fuel of ~~$5.1~~$6.1 million.

(c) - Intersegment revenues are primarily commodity sales, which are based on the contracted selling price that is generally index-based and settled monthly, and for the Natural Gas Gathering and Processing segment totaled ~~$244.2~~$213.3 million. Intersegment revenues for the Natural Gas Liquids and Natural Gas Pipelines segments were not material.

(d) - Includes noncash impairment charges of $380.5 million related primarily to long-lived assets, $153.4 million related to goodwill and $30.5 million related to an investment in an unconsolidated affiliate in our Natural Gas Gathering and Processing segment; and $70.2 million related to long-lived assets and $7.2 million related to an investment in an unconsolidated affiliate in our Natural Gas Liquids segment.


Three Months Ended September 30, 2019		Total Segments		Other and Eliminations		Total
Three Months Ended March 31, 2020								Three Months Ended March 31, 2020	Total Segments		Other and Eliminations		Total
		(Thousands of dollars)							(Thousands of dollars)
Reconciliations of total segments to consolidated	Reconciliations of total segments to consolidated							Reconciliations of total segments to consolidated
NGL and condensate sales	NGL and condensate sales	$	1,991,562	$	(230,080)	$	1,761,482	NGL and condensate sales	$	1,816,628	$	(199,472)	$	1,617,156
Residue natural gas sales	Residue natural gas sales	185,534		(567)		184,967		Residue natural gas sales	191,086		(1,032)		190,054
Gathering, processing and exchange services revenue	Gathering, processing and exchange services revenue	147,974		0		147,974		Gathering, processing and exchange services revenue	158,473		0		158,473
Transportation and storage revenue	Transportation and storage revenue	166,331		(4,010)		162,321		Transportation and storage revenue	169,119		(3,809)		165,310
Other	Other	6,866		(382)		6,484		Other	6,049		(370)		5,679
Total revenues (a)	Total revenues (a)	$	2,498,267	$	(235,039)	$	2,263,228	Total revenues (a)	$	2,341,355	$	(204,683)	$	2,136,672

Cost of sales and fuel (exclusive of depreciation and operating costs)	Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(1,649,326)	$	234,798	$	(1,414,528)	Cost of sales and fuel (exclusive of depreciation and operating costs)	$	(1,482,463)	$	205,535	$	(1,276,928)
Operating costs	Operating costs	$	(246,300)	$	1,165	$	(245,135)	Operating costs	$	(207,348)	$	308	$	(207,040)
Depreciation and amortization	Depreciation and amortization	$	(120,530)	$	(900)	$	(121,430)	Depreciation and amortization	$	(131,366)	$	(987)	$	(132,353)
Impairment charges								Impairment charges	$	(641,754)	$	0	$	(641,754)
Equity in net earnings from investments	Equity in net earnings from investments	$	37,576	$	0	$	37,576	Equity in net earnings from investments	$	44,627	$	0	$	44,627
Investments in unconsolidated affiliates								Investments in unconsolidated affiliates	$	810,479	$	0	$	810,479
Total assets								Total assets	$	21,146,721	$	822,719	$	21,969,440
Capital expenditures	Capital expenditures	$	1,011,550	$	7,624	$	1,019,174	Capital expenditures	$	944,383	$	5,296	$	949,679

(a) - Noncustomer revenue for the three months ended ~~September 30, 2019,~~March 31, 2020, totaled ~~$89.0~~$80.2 millionrelated primarily to gains from derivatives on commodity contracts.

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Nine Months Ended
September 30, 2020 Natural Gas
Gathering and
Processing Natural Gas
Liquids (a) Natural Gas
Pipelines (b) Total
Segments

(Thousands of dollars)
NGL and condensate sales $ 569,308 $ 4,429,414 $ 0 $ 4,998,722
Residue natural gas sales 518,435 0 6,033 524,468
Gathering, processing and exchange services revenue 110,345 370,920 0 481,265
Transportation and storage revenue 0 131,410 353,188 484,598
Other 11,106 6,779 916 18,801
Total revenues (c) 1,209,194 4,938,523 360,137 6,507,854
Cost of sales and fuel (exclusive of depreciation and operating costs) (541,910) (3,473,575) (5,096) (4,020,581)
Operating costs (232,489) (297,771) (100,966) (631,226)
Equity in net earnings (loss) from investments (1,385) 31,083 78,303 108,001
Noncash compensation expense and other (1,865) 1,541 (184) (508)
Segment adjusted EBITDA $ 431,545 $ 1,199,801 $ 332,194 $ 1,963,540
Depreciation and amortization $ (180,634) $ (198,440) $ (43,937) $ (423,011)
Impairment charges $ (564,353) $ (77,401) $ 0 $ (641,754)
Investments in unconsolidated affiliates $ 2,276 $ 426,621 $ 361,476 $ 790,373
Total assets $ 6,437,301 $ 13,449,529 $ 2,082,846 $ 21,969,676
Capital expenditures $ 362,811 $ 1,504,881 $ 40,478 $ 1,908,170


	Three Months Ended
	March 31,
		2021		2020
		(Thousands of dollars)
Reconciliation of net income (loss) to total segment adjusted EBITDA
Net income (loss)		$	386,176	$	(141,857)
Add:
Interest expense, net of capitalized interest		185,523		140,616
Depreciation and amortization		157,120		132,353
Income tax expense (benefit)		122,132		(55,395)
Impairment charges		0		641,754
Noncash compensation expense		16,283		(1,302)
Other corporate costs and equity AFUDC (a)		(715)		(33,081)
Total segment adjusted EBITDA		$	866,519	$	683,088

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $1,454.0 million, of which $1,306.2 million related to revenues within the segment, and cost of sales and fuel of $375.0 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $225.6 million and cost of sales and fuel of $22.4 million.

(c) - Intersegment revenues for the Natural Gas Gathering and Processing segment totaled $557.1 million. Intersegment revenues for the Natural Gas Liquids and Natural Gas Pipelines segments were not material.

Nine Months Ended
September 30, 2020 Total
Segments Other and
Eliminations Total
(Thousands of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales $ 4,998,722 $ (513,170) $ 4,485,552
Residue natural gas sales 524,468 (10,860) 513,608
Gathering, processing and exchange services revenue 481,265 0 481,265
Transportation and storage revenue 484,598 (11,033) 473,565
Other 18,801 (1,126) 17,675
Total revenues (a) $ 6,507,854 $ (536,189) $ 5,971,665
Cost of sales and fuel (exclusive of depreciation and operating costs) $ (4,020,581) $ 537,521 $ (3,483,060)
Operating costs $ (631,226) $ (5,207) $ (636,433)
Depreciation and amortization $ (423,011) $ (3,003) $ (426,014)
Impairment charges $ (641,754) $ 0 $ (641,754)
Equity in net earnings from investments $ 108,001 $ 0 $ 108,001
Investments in unconsolidated affiliates $ 790,373 $ 0 $ 790,373
Total assets $ 21,969,676 $ 811,200 $ 22,780,876
Capital expenditures $ 1,908,170 $ 15,833 $ 1,924,003

~~(a) - Noncustomer revenue for the nine months ended September 30, 2020, totaled $103.0 millionrelated primarily to gains from derivatives on commodity contracts.~~

~~Table of Contents~~

Nine Months Ended
September 30, 2019 Natural Gas
Gathering and
Processing Natural Gas
Liquids (a) Natural Gas
Pipelines (b) Total
Segments

(Thousands of dollars)
NGL and condensate sales $ 890,021 $ 5,826,297 $ 0 $ 6,716,318
Residue natural gas sales 725,672 0 1,242 726,914
Gathering, processing and exchange services revenue 126,073 309,571 0 435,644
Transportation and storage revenue 0 141,384 350,029 491,413
Other 11,287 7,313 4,208 22,808
Total revenues (c) 1,753,053 6,284,565 355,479 8,393,097
Cost of sales and fuel (exclusive of depreciation and operating costs) (971,397) (4,914,452) (3,785) (5,889,634)
Operating costs (271,236) (340,274) (113,043) (724,553)
Equity in net earnings (loss) from investments (4,660) 49,406 70,429 115,175
Noncash compensation expense and other 8,399 12,618 1,931 22,948
Segment adjusted EBITDA $ 514,159 $ 1,091,863 $ 311,011 $ 1,917,033
Depreciation and amortization $ (162,014) $ (143,166) $ (42,653) $ (347,833)
Investments in unconsolidated affiliates $ 35,252 $ 445,755 $ 389,504 $ 870,511
Total assets $ 6,546,417 $ 11,662,489 $ 2,083,773 $ 20,292,679
Capital expenditures $ 674,115 $ 1,969,138 $ 77,861 $ 2,721,114

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations. Our Natural Gas Liquids segment’s regulated operations had revenues of $1.0 billion, of which $853.0 million related to revenues within the segment, and cost of sales and fuel of $364.9 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $214.7 million and cost of sales and fuel of $14.4 million.

(c) - Intersegment revenues for the Natural Gas Gathering and Processing segment totaled $897.9 million. Intersegment revenues for the Natural Gas Liquids and Natural Gas Pipelines segments were not material.

Nine Months Ended
September 30, 2019 Total
Segments Other and
Eliminations Total

(Thousands of dollars)
Reconciliations of total segments to consolidated
NGL and condensate sales $ 6,716,318 $ (878,958) $ 5,837,360
Residue natural gas sales 726,914 (567) 726,347
Gathering, processing and exchange services revenue 435,644 0 435,644
Transportation and storage revenue 491,413 (11,827) 479,586
Other 22,808 (984) 21,824
Total revenues (a) $ 8,393,097 $ (892,336) $ 7,500,761
Cost of sales and fuel (exclusive of depreciation and operating costs) $ (5,889,634) $ 892,935 $ (4,996,699)
Operating costs $ (724,553) $ 964 $ (723,589)
Depreciation and amortization $ (347,833) $ (2,719) $ (350,552)
Equity in net earnings from investments $ 115,175 $ 0 $ 115,175
Investments in unconsolidated affiliates $ 870,511 $ 0 $ 870,511
Total assets $ 20,292,679 $ 1,043,228 $ 21,335,907
Capital expenditures $ 2,721,114 $ 18,224 $ 2,739,338

~~(a) - Noncustomer revenue for the nine months ended September 30, 2019, totaled $129.9 millionrelated primarily to gains from derivatives on commodity contracts.~~

~~Table of Contents~~

Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
(Thousands of dollars)
Reconciliation of net income to total segment adjusted EBITDA
Net income $ 312,316 $ 309,155 $ 304,780 $ 958,326
Add:
Interest expense, net of capitalized interest 176,371 129,577 535,955 362,490
Depreciation and amortization 153,245 121,430 426,014 350,552
Income tax expense 106,555 97,365 94,300 274,234
Impairment charges 0 0 641,754 0
Noncash compensation expense 1,606 9,757 1,261 20,412
Other corporate costs and equity AFUDC (a) (5,865) (20,711) (40,524) (48,981)
Total segment adjusted EBITDA $ 744,228 $ 646,573 $ 1,963,540 $ 1,917,033

(a) - The three ~~and nine~~ months ended ~~September 30,~~March 31, 2020, ~~include~~includes corporate gains of ~~$2.2~~$15.8 million ~~and~~ ~~$22.2 million, respectively,~~ on extinguishment of debt related to open market repurchases.

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited Consolidated Financial Statements and the Notes to Consolidated Financial Statements in this Quarterly Report, as well as our Annual Report.

RECENT DEVELOPMENTS

Please refer to the “Financial Results and Operating Information” and “Liquidity and Capital Resources” sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report for additional information.

Market Conditions, COVID-19 and Business Update - ~~Late~~Despite the COVID-19 pandemic, we expect earnings growth in 2021 due primarily to increasing volumes, available capacity and efficiency gains from recently completed capital-growth projects, continued flared natural gas capture and rising gas-to-oil ratios in the ~~first quarter 2020,~~Williston Basin. Although the energy industry has experienced ~~historic events that led to a simultaneous demand~~many up and supply disruption. The World Health Organization declared COVID-19 a global pandemic and recommended containment and mitigation measures worldwide, which contributed to a massive economic slowdown and decreased demand for crude oil. In addition, Saudi Arabia and Russia increased production of crude oil as the two countries competed for market share. As a result, the global supply of crude oil significantly exceeded demand and led to a collapse in crude oil prices resulting in crude oil and associated natural gas and NGLs production being curtailed. We are still experiencing global and regional economic disruption due primarily to COVID-19; however, in the third quarter 2020, many of our producers reversed curtailments, bringing production back to pre-COVID-19 levels as prices improved from second quarter 2020 lows and remained stable. Third quarter 2020 production volumes increased, compared with lows experienced during the second quarter 2020, across our system. Although the extent of volume growth in the future depends upon commodity prices and the pace and scale of economic recovery and corresponding demand for crude oil, we expect the improved volumes experienced in the third quarter 2020 to continue for the remainder of 2020 and into 2021.

~~We continue to monitor producers’ drilling, completion and production plans and are evaluating the impact on our future volume expectations. The energy industry has historically experienced~~ down cycles, ~~from disruptive events, and as a result,~~ we have positioned ourselves to ~~minimize~~reduce exposure to direct commodity price volatility. Each of our three ~~segments’ earnings~~reportable segments are primarily fee-based, and we expect our consolidated earnings to be ~~more than~~approximately 90% fee-based in ~~2020.~~2021. While our Natural Gas Gathering and Processing segment’s earnings are primarily fee-based, we have direct commodity price exposure related primarily to fee with POP ~~with fee~~ contracts. Under certain POP with fee contracts, our contractual fees and POP percentage may increase or decrease if production volumes, delivery pressures or commodity prices change relative to specified thresholds. In addition, ~~although~~ our Natural Gas Gathering and Processing and Natural Gas Liquids segments ~~generate primarily fee-based earnings, those segments’ results of operations~~ are exposed to volumetric risk as a result of ~~production curtailments,~~ reduced drilling and completion activity, declining well productivity, severe weather ~~disruptions,~~disruption, operational outages and ~~ethane~~crude oil, NGL and natural gas demand. Our Natural Gas Pipelines segment is not exposed to significant volumetric risk due to nearly all of our capacity being subscribed under long-term firm fee-based contracts.

In continued response to COVID-19, we remain committed to managing the impact of the pandemic on our ~~employees and the communities where we operate.~~employees. We ~~are taking actions~~continue to ~~continue safe operations,~~ protect our workforce and, ~~implement appropriate cost reduction measures. We meaningfully reduced our operating expenses in the nine months ended~~

~~Table of Contents~~

~~September 30, 2020, compared with the same period in 2019, primarily~~ as ~~a result of reduced discretionary expenses, contractor reductions and asset optimizations. We also reduced our planned 2020 capital-growth expenditures by approximately $900 million. As~~ always, we remain focused on operating our assets safely, reliably and in an environmentally responsible manner. We continue to monitor the COVID-19 outbreak and have previously implemented our business continuity plans. ONEOK is a critical infrastructure business as defined by the United States Department of Homeland Security and, therefore, our workforce has remained fully engaged ~~in the midst of~~within federal, state and local government issued guidelines and ~~safety related~~safety-related ordinances. We continue to practice remote work procedures when possible to protect the safety of our employees and their families and ~~have taken extra~~continue to take precautions for our employees who work in the field or need to report to a ONEOK facility, such as ~~increased~~ facility access restrictions, workspace modifications, social distancing, face covering protocols and sanitation procedures. As COVID-19 vaccinations are becoming more readily available, we anticipate implementing a return to office plan later this year. We continue to apply risk-management and cybersecurity measures designed ~~to ensure~~so that our systems remain functional in order to both serve our operational needs and to provide service to our customers.

In ~~the first quarter 2020, due~~February 2021, Winter Storm Uri brought significant challenges to the energy industry and our operating areas. Our employees were proactive in preparing for the severe winter weather, made the necessary operational adjustments to keep our assets running and provided exceptional service to meet the needs of our customers during the difficult weather conditions as demand for natural gas, propane and electricity soared. This increased demand, coupled with supply reductions from wellhead freeze-offs and power outages to processing plants in the Mid-Continent and Rocky Mountain regions and the Permian Basin

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and fractionators in the Mid-Continent region, resulted in record high commodity ~~price~~prices at certain market hubs, particularly in the Mid-Continent region and ~~market environment, we experienced~~in Texas. Commodity prices quickly returned to previous levels as the weather improved and natural gas supply returned.

Winter Storm Uri impacted all three of our operating segments, resulting in a ~~significant decline in our share price and market capitalization, and performed a Step 1 analysis~~net positive impact to test our goodwill for impairment and evaluated certain long-lived asset groups and equity investments for impairment. As a result, we incurred $641.8 million in noncash impairment charges, which had an adverse impact on our financial results, as our ability to meet increased demand for natural gas and NGLs during the ~~nine months ended September 30, 2020.~~ period more than offset the unfavorable volume impacts. Our well-positioned natural gas storage assets and market connected pipelines in our Natural Gas Pipelines segment were able to meet critical needs during this period of severe winter weather. The reliability of our interstate and intrastate assets enabled us to continue to provide our customers access to transportation services, park-and-loan services and additional natural gas supply if available, which improved our financial results. However, wellhead freeze-offs reduced February volumes in our Natural Gas Gathering and Processing and Natural Gas Liquids segments, which negatively impacted our financial results.

We expect to maintain sufficient liquidity and financial stability ~~for the remainder of 2020~~in 2021 due to cash ~~on hand from our June 2020 equity issuance, cash~~ flows from operations, ~~and access to~~ our undrawn $2.5 Billion Credit ~~Agreement. In the first quarter 2020, the CARES Act was signed into law~~Agreement, $402.4 million in ~~response to the COVID-19 pandemic,~~cash and ~~we opted into the CARES Act payroll tax deferral program, which will modestly benefit us,~~cash equivalents and ~~the 401(k) penalty-free hardship withdrawal and loan deferral programs for employees.~~no debt maturities until 2022.

See Part I, Item 3, Quantitative and Qualitative Disclosures About Market Risk, in this Quarterly Report for more information on our exposure to market risk.

Sustainability - We continue to look for ways to reduce our environmental impact and utilize more efficient technologies. In 2021, we qualified for inclusion in the S&P Global Sustainability Yearbook and received Industry Mover status, which is awarded to a company that recorded the strongest year-over-year improvement in its industry. In addition, we received a perfect score of 100 in the Human Rights Campaign 2021 Corporate Equality Index. We have a stand-alone environmental sustainability team, formed in 2017, that accelerated our ongoing environmental stewardship efforts and is exploring ways to lower our greenhouse gas emissions. We are actively researching opportunities that will complement our extensive midstream assets and help enhance the vital role we expect to play in a future transition to a low-carbon economy.

Natural Gas - In our Natural Gas Gathering and Processing segment, gathered and processed volumes ~~decreased~~ in the ~~nine~~Rocky Mountain region increased in the three months ended ~~September 30, 2020,~~March 31, 2021, compared with the same period in ~~2019,~~2020, due primarily to ~~production curtailments from many~~the completion of ~~our crude oil~~capital-growth projects and the capture of natural gas ~~producers, primarily~~previously flared. In February 2021, we experienced severe winter weather as a result of Winter Storm Uri that reduced volumes across our operating system. However, volume levels quickly returned and exceeded 1.2 Bcf/d in the ~~second quarter 2020,~~Rocky Mountain region in March 2021. We expect these Rocky Mountain region volumes to be sustainable for the remainder of 2021, even with no increase in producer activity, due to the completion of previously drilled but uncompleted wells, the capture of natural gas previously flared and ~~natural production declines~~rising gas-to-oil ratios in the ~~Mid-Continent region.~~Williston Basin. In ~~the third quarter 2020, many of our producers returned production to pre-COVID-19 levels~~addition, as ~~commodity prices strengthened. As~~ prices and volumes continue to strengthen, we currently have the processing capacity to benefit from production ~~growth without significant capital investment due~~growth. Our Bear Creek plant expansion, which was previously paused, is expected to ~~the recent completion of our Demicks Lake I and II natural gas processing plants,~~be completed later this year, which ~~were placed in service in the fourth quarter 2019 and the first quarter 2020, respectively. These plants have increased~~will increase our total processing capacity to approximately ~~1.5~~1.7 Bcf/d ~~in the Williston Basin and will enable us to capture natural gas previously flared from producers on our more than 3 million dedicated acres~~ in the Williston Basin.

~~Production growth may be~~In our Natural Gas Pipelines segment, our assets are connected to key supply areas and demand centers, including export markets in Mexico via our Roadrunner joint venture and supply areas in Canada and the United States via our interstate and intrastate natural gas pipelines and our Northern Border Pipeline joint venture, which enable us to provide essential natural gas transportation and storage services. Continued demand from local distribution companies, electric-generation facilities and large industrial companies resulted in low-cost expansions in 2019 and 2020 that position us well to provide additional expansions for our customers when needed. In February 2021, severe winter weather impacted our operations. Due to the reliability of our pipeline and storage assets, we were able to continue to provide services to customers serving critical needs during the winter storm. Our natural gas transportation capacity contracted is not significantly impacted by market conditions, as our end users rely on natural gas to support their business regardless of commodity price fluctuations. We continue to experience stable fee-based earnings with transportation capacity more than 95% contracted with firm commitments, and we expect these stable fee-based earnings to continue throughout 2021 at similarly contracted levels. In addition, during the ~~current litigation challenging~~first quarter 2021, we sold natural gas that we owned and held in storage, which benefited our segment’s financial results. During the continued operation of the Dakota Access Pipeline (DAPL), which is used to transport crude oil from the Williston Basin to markets in the Mid-Continent region and Gulf Coast. If DAPL is temporarily or permanently shut down, production growth could be limited due to increased crude oil transportation costs and capacity constraints in the region.extreme winter weather periods, we maximized natural gas storage withdrawals for firm service customers serving critical needs.

NGLs - In our Natural Gas Liquids segment, ~~we are~~NGL volumes decreased for the ~~largest NGL takeaway provider~~three months ended March 31, 2021, compared with the same period in 2020, due primarily to the unfavorable impact of Winter Storm Uri in February 2021 across our operations, offset partially by increased volumes in the Rocky Mountain ~~region where~~region. Volumes quickly returned, and our ~~September 2020~~ average daily raw feed throughput volumes ~~exceeded pre-COVID-19 levels and~~in March 2021 increased, ~~for the three and nine months ended September 30, 2020,~~ compared with both the ~~same periods in 2019, due primarily~~first and fourth quarters 2020, and we expect these improved NGL volumes to ~~increased production at new and existing processing plants.~~continue. We expect ~~the improved volumes experienced in the third quarter 2020 to continue in the remainder of 2020 and into 2021, and~~ to benefit from increasing volumes, without significant capital investment, ~~from~~on our integrated ~~value chain,~~assets, which ~~was~~were strengthened through our recently completed capital-growth projects. Our Elk Creek pipeline was completed in two phases during the second half of 2019. During the nine months ended September 30, 2020, we completed an extension of our Bakken NGL pipeline, the construction and extension of our Arbuckle II pipeline and the construction of our 125 MBbl/d MB-4 fractionator.

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Growth Projects - We operate an integrated, reliable and diversified network of NGL and natural gas gathering, processing, fractionation, storage and transportation assets connecting ~~NGL~~ supply in the Rocky Mountain, Mid-Continent and Permian regions with key market centers. ~~Since the beginning of 2018, we~~We have completed significant capital-growth projects that include NGL pipelines, NGL fractionators, natural gas processing plants and related natural gas and NGL infrastructure. These projects provide us the capacity to benefit from future supply growth without significant capital investment. In the first quarter 2020, due to the decline in commodity prices and economic demand ~~disruptions~~disruption caused by COVID-19, we reduced our planned 2020 capital-growth expenditures by approximately $900 million. These reductions include the suspension of our announced plans to construct the Demicks Lake III natural gas processing plant, the fourth expansion of the West Texas LPG pipeline system, a reduction in the scope of the expansion of our Elk Creek pipeline andpaused various ~~other paused~~ projects, ~~as noted in the~~

~~Table of Contents~~

~~table below,~~ which can be restarted quickly when ~~new drilling~~producer activity ~~resumes.~~warrants additional infrastructure. Our announced ~~large~~ capital-growth projects ~~that have recently been completed or are in various stages of construction~~ are outlined in the table below:


Project ~~(e)~~	Scope	Approximate Costs (a)	Expected Completion
Natural Gas Gathering and Processing		(In millions)
~~Demicks Lake I plant and related infrastructure~~	~~200 MMcf/d processing plant and related gathering infrastructure in the core of the Williston Basin~~	~~$400~~	Completed October 2019
	~~Supported by acreage dedications with long-term primarily fee-based contracts~~
~~Demicks Lake II plant and related infrastructure~~	~~200 MMcf/d processing plant and related gathering infrastructure in the core of the Williston Basin~~	~~$410~~	Completed January 2020
	~~Supported by acreage dedications with long-term primarily fee-based contracts~~

Bear Creek plant expansion and related infrastructure	200 MMcf/d processing plant expansion and related gathering infrastructure in the Williston Basin	$405	~~Paused (b)~~Q4 2021
	Supported by acreage dedications with long-term primarily fee-based contracts
Natural Gas Liquids
~~Elk Creek pipeline and related infrastructure~~	~~900-mile NGL pipeline from the Williston Basin to the Mid-Continent region, with capacity of up to 240 MBbl/d, and related infrastructure~~	~~$1,400~~	Completed December 2019
	~~Anchored by long-term contracts~~
	~~Expansion capability up to 400 MBbl/d with additional pump facilities~~
~~Arbuckle II pipeline and related infrastructure~~	~~530-mile NGL pipeline from the STACK area to Mont Belvieu, Texas, and related infrastructure~~	~~$1,360~~	Completed March 2020
	~~Supported by long-term contracts~~
	~~Expansion capability up to 1 MMBbl/d~~
~~MB-4 fractionator and related infrastructure~~	~~125 MBbl/d NGL fractionator in Mont Belvieu, Texas, and related infrastructure, which includes additional NGL storage in Mont Belvieu~~	~~$575~~	Completed March 2020 (c)
	~~Fully contracted with long-term contracts~~
~~West Texas LPG pipeline expansion and Arbuckle II connection~~	~~Increasing mainline capacity by 80 MBbl/d with additional pump facilities and pipeline looping~~	~~$295~~	Completed June 2020 (d)
	~~Connecting West Texas LPG pipeline system to the Arbuckle II pipeline~~
	~~Supported by long-term dedicated production from six third-party processing plants expected to produce up to 60 MBbl/d~~
~~Bakken NGL pipeline extension~~	~~75-mile NGL pipeline in the Williston Basin connecting to a third-party processing plant~~	~~$100~~	Completed August 2020
	~~Supported by a long-term contract with a minimum volume commitment~~
~~Arbuckle II extension project and additional gathering infrastructure~~	~~Provide additional takeaway capacity in the STACK area~~	~~$240~~	Completed August 2020
~~Allow increasing volumes on the Elk Creek pipeline access to fractionation capacity at Mont Belvieu, Texas~~








Arbuckle II pipeline expansion	Increasing mainline capacity with additional pump facilities	$60	~~Paused (b)~~Q2 2021
	Increases capacity to 500 MBbl/d
MB-5 fractionator and related infrastructure	125 MBbl/d NGL fractionator in Mont Belvieu, Texas, and related infrastructure, which includes additional NGL storage in Mont Belvieu	$750	Paused ~~(b)~~(c)
	Fully contracted with long-term contracts
West Texas LPG pipeline expansion	Increasing mainline capacity by 40 MBbl/d	$145	Paused (b)
	Supported by long-term dedicated production from third-party processing plants expected to produce up to 45 MBbl/d
Mid-Continent fractionation facility expansions	65 MBbl/d of expansions at our Mid-Continent NGL facilities	$150	Paused ~~(b)~~(c)

(a) - Excludes capitalized interest/AFUDC.

(b) - ~~Given the current environment, we paused the majority of construction activities on these projects and~~We do not expect to complete construction by the original target completion date.

(d) - We completed expansions to increase mainline capacity by approximately 45 MBbl/d in the first quarter 2020 and completed the remaining portion of this project in the second quarter 2020, which was delayed due to weather.

~~(e) - Projects listed exclude our suspended capital-growth projects, which include the Demicks Lake III natural gas processing plant, the fourth expansion~~While many of the ~~West Texas LPG pipeline system and~~construction activities on these projects were paused in 2020, some activity continued in order to complete the ~~expansion of the Elk Creek pipeline.~~

~~Table of Contents~~

infrastructure necessary to support volumes until market conditions warrant full project completion.

Ethane Production - Price differentials between ethane and natural gas can cause natural gas processors to process ethane as an NGL or leave some of the ethane component in the natural gas stream. As a result of these ethane economics, ethane volumes on our system can also fluctuate period to period. Ethane volumes under long-term contracts delivered to our NGL system ~~in the third quarter 2020~~ averaged ~~410 MBbl/d, compared with 350~~355 MBbl/d in the ~~third~~first quarter ~~2019, and increased by approximately 45 MBbl/d,~~2021, compared with 370 MBbl/d in the ~~second~~first quarter 2020, due primarily to ~~improved ethane recovery economics.~~decreased volumes related to Winter Storm Uri in February 2021 across our operations. We expect ~~fluctuation in~~ethane production to increase from the first quarter 2021 volumes and continue to fluctuate throughout 2021. We estimate that there are ethane volumes of approximately 100 MBbl/d in both the Rocky Mountain and Mid-Continent regions that represent potential ethane opportunity for ~~the remainder of 2020 and into 2021.~~our Natural Gas Liquids segment.

Debt ~~Issuances and Repayments~~ Repurchases- In May 2020, we completed an underwritten public offering of $1.5 billion senior unsecured notes consisting of $600 million, 5.85% senior notes due 2026; $600 million, 6.35% senior notes due 2031; and $300 million, 7.15% senior notes due 2051. The net proceeds, after deducting underwriting discounts, commissions and offering expenses, were $1.48 billion. A portion of the proceeds were used to repay the remaining $1.25 billion outstanding on our $1.5 Billion Term Loan Agreement. The remainder was used for general corporate purposes.

In March 2020, we completed an underwritten public offering of $1.75 billion senior unsecured notes consisting of $400 million, 2.2% senior notes due 2025; $850 million, 3.1% senior notes due 2030; and $500 million, 4.5% senior notes due 2050. The net proceeds, after deducting underwriting discounts, commissions and offering expenses, were $1.73 billion. A portion of the proceeds were used to pay all outstanding amounts under our commercial paper program. The remainder was used for general corporate purposes, which included repayment of existing indebtedness and funding capital expenditures.

~~Equity Issuances~~ - In June 2020, we completed an underwritten public offering of 29.9 million shares of our common stock at a public offering price of $32.00 per share, generating net proceeds, after deducting underwriting discounts, commissions and offering expenses, of $937.0 million. A portion of the proceeds were, and we anticipate the remainder will be, used for general corporate purposes, including repayment of existing indebtedness and funding capital expenditures.

Dividends - In February ~~2020, May 2020~~2021, we maintained and ~~August 2020, we~~ paid a quarterly ~~dividends~~dividend of $0.935 per share ($3.74 per share on an annualized basis), which ~~represented increases of 9%, 8% and 5% when compared~~is consistent with the ~~dividends paid in the respective quarters~~same quarter in the prior year. We declared a quarterly dividend of $0.935 per share ($3.74 per share on an annualized basis) in ~~October 2020.~~April 2021. The quarterly dividend will be paid ~~November 13, 2020,~~May 14, 2021, to shareholders of record at the close of business on ~~November 2, 2020.~~April 26, 2021.

~~Goodwill Impairment Review~~- We assess our goodwill for impairment at least annually as of July 1, unless events or changes in circumstances indicate an impairment may have occurred before that time. At July 1, 2020, we assessed qualitative factors subsequent to our first quarter 2020 impairment charges discussed below, to determine whether it was more likely than not that the fair value of our Natural Gas Liquids and Natural Gas Pipelines reporting units were less than their carrying amount. After assessing qualitative factors (including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance), we determined that it was more likely than not that the fair value of our Natural Gas Liquids and Natural Gas Pipelines reporting units were not less than their respective carrying value, no further testing was necessary and goodwill was not considered impaired. At July 1, 2020, there was no remaining goodwill associated with our Natural Gas Gathering and Processing reporting unit.

FINANCIAL RESULTS AND OPERATING INFORMATION

~~Impairments~~-Due to circumstances discussed above, in the first quarter 2020, we evaluated our goodwill, certain long-lived asset groups and equity investments for impairment. Based on the results, we recorded the following impairment charges:How We Evaluate Our Operations

~~Natural Gas Gathering~~Management uses a variety of financial and ~~Processing~~ ~~- In~~operating metrics to analyze our performance. Our consolidated financial metrics include: (1) operating income (loss); (2) net income (loss); (3) diluted EPS; and (4) the ~~first quarter 2020, we recorded $380.5 million~~following non-GAAP financial measures: adjusted EBITDA and distributable cash flow. We evaluate segment operating results using adjusted EBITDA and our operating metrics, which include various volume and rate statistics that are relevant for the respective segment. These operating metrics allow investors to analyze the various components of ~~noncash impairment charges related primarily to certain long-lived asset groups that were not recoverable, $153.4 million~~segment financial results in terms of ~~noncash impairment charges related to goodwill~~volumes and ~~$30.5 million of noncash impairment charges related to our 10.2% investment in Venice Energy Services Company.~~

~~Natural Gas Liquids -~~ In the first quarter 2020, we recorded $70.2 million of noncash impairment charges related to certain inactive assets and $7.2 million of noncash impairment charges related to our 50% investment in Chisholm Pipeline Company.

~~For additional information on our impairment charges, see Note A of the Notes to Consolidated Financial Statements in this Quarterly Report.~~

rate/

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~~FINANCIAL RESULTS AND OPERATING INFORMATION~~price. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results. For additional information on our operating metrics, see the respective segment subsections of this “Financial Results and Operating Information” section.

Non-GAAP Financial Measures - Adjusted EBITDA, distributable cash flow and dividend coverage ratio are non-GAAP measures of our financial performance. Adjusted EBITDA is defined as net income adjusted for interest expense, depreciation and amortization, noncash impairment charges, income taxes, allowance for equity funds used during construction, noncash compensation expense and certain other noncash items. Distributable cash flow is defined as adjusted EBITDA, computed as described above, less interest expense, maintenance capital expenditures and equity earnings from investments, excluding noncash impairment charges, adjusted for net cash distributions received from unconsolidated affiliates and certain other items. Dividend coverage ratio is defined as distributable cash flow to common shareholders divided by the dividends paid in the period. We believe these non-GAAP financial measures are useful to investors because they and similar measures are used by many companies in our industry as a measurement of financial performance and are commonly employed by financial analysts and others to evaluate our financial performance and to compare financial performance among companies in our industry. Adjusted EBITDA, distributable cash flow and dividend coverage ratio should not be considered alternatives to net income, EPS or any other measure of financial performance presented in accordance with GAAP. Additionally, these calculations may not be comparable with similarly titled measures of other companies.

Consolidated Operations

Selected Financial Results - The following table sets forth certain selected financial results for the periods indicated:


		Three Months Ended				Nine Months Ended				Three Months	Nine Months		Three Months Ended					Three Months
		September 30,				September 30,				2020 vs. 2019	2020 vs. 2019		March 31,					2021 vs. 2020
Financial Results	Financial Results	2020		2019		2020		2019		$ Increase (Decrease)	$ Increase (Decrease)	Financial Results		2021		2020			$ Increase (Decrease)
		(Millions of dollars)												(Millions of dollars, except per share amounts)
Revenues	Revenues											Revenues
Commodity sales	Commodity sales	$	1,852.2	$	1,947.8	$	5,004.4	$	6,567.6	(95.6)	(1,563.2)	Commodity sales		$	2,836.1	$	1,808.6		1,027.5
Services	Services	322.1		315.4		967.3		933.2		6.7	34.1	Services		358.6		328.1			30.5
Total revenues	Total revenues	2,174.3		2,263.2		5,971.7		7,500.8		(88.9)	(1,529.1)	Total revenues		3,194.7		2,136.7			1,058.0
Cost of sales and fuel (exclusive of items shown separately below)	Cost of sales and fuel (exclusive of items shown separately below)	1,265.7		1,414.5		3,483.1		4,996.7		(148.8)	(1,513.6)	Cost of sales and fuel (exclusive of items shown separately below)		2,121.5		1,276.9			844.6
Operating costs	Operating costs	205.0		245.1		636.5		723.6		(40.1)	(87.1)	Operating costs		251.7		207.1			44.6
Depreciation and amortization	Depreciation and amortization	153.2		121.4		426.0		350.6		31.8	75.4	Depreciation and amortization		157.1		132.4			24.7
Impairment charges	Impairment charges	—		—		604.0		—		—	604.0	Impairment charges		—		604.0			(604.0)
(Gain) loss on sale of assets		—		—		(0.6)		2.9		—	3.5
Operating income		$	550.4	$	482.2	$	822.7	$	1,427.0	68.2	(604.3)
Gain on sale of assets												Gain on sale of assets		(0.3)		(0.2)			0.1
Operating income (loss)												Operating income (loss)		$	664.7	$	(83.5)		748.2
Equity in net earnings from investments	Equity in net earnings from investments	$	38.0	$	37.6	$	108.0	$	115.2	0.4	(7.2)	Equity in net earnings from investments		$	33.3	$	44.6		(11.3)
Impairment of equity investments	Impairment of equity investments	$	—	$	—	$	(37.7)	$	—	—	37.7	Impairment of equity investments		$	—	$	(37.7)		(37.7)
Interest expense, net of capitalized interest	Interest expense, net of capitalized interest	$	(176.4)	$	(129.6)	$	(536.0)	$	(362.5)	46.8	173.5	Interest expense, net of capitalized interest		$	(185.5)	$	(140.6)		44.9
Net income		$	312.3	$	309.2	$	304.8	$	958.3	3.1	(653.5)
Net income (loss)												Net income (loss)		$	386.2	$	(141.9)		528.1
Diluted EPS												Diluted EPS		$	0.86	$	(0.34)		1.20
Adjusted EBITDA	Adjusted EBITDA	$	747.0	$	649.8	$	1,981.7	$	1,919.7	97.2	62.0	Adjusted EBITDA		$	866.4	$	700.8		165.6
Distributable cash flow												Distributable cash flow		$	661.9	$	522.3		139.6
Capital expenditures	Capital expenditures	$	380.0	$	1,019.2	$	1,924.0	$	2,739.3	(639.2)	(815.3)	Capital expenditures		$	176.7	$	949.7		(773.0)

See reconciliation of net income (loss) to adjusted EBITDA and distributable cash flow in the ~~“Adjusted EBITDA”~~“Non-GAAP Financial Measures” section.

Changes in commodity prices and sales volumes affect both revenues and cost of sales and fuel in our Consolidated Statements of Income and, therefore, the impact is largely offset between these line ~~items.~~items, except where noted.

Operating income increased $748.2 million for the three months ended ~~September 30, 2020,~~March 31, 2021, compared with the same period in ~~2019,~~2020, primarily as a result of the following:

•~~Natural Gas Liquids~~ - an increase of $103.4 million in exchange services due primarily to higher volumes across our system and lower rail and pipeline transportation costs, offset partially by a $20.9 million decrease in optimization and marketing due primarily to narrower location price differentials and lower optimization volumes; ~~and~~

•~~a decrease of $40.1 million in operating costs due primarily to reduced discretionary expenses, lower materials and supplies expenses and lower employee-related costs;~~ ~~offset partially by~~

•~~an increase of $31.8 million in depreciation expense due to capital projects placed in service;~~

•~~Natural Gas Gathering and Processing~~ ~~- a decrease of $18.8 million due primarily to lower volumes in the Mid-Continent region due to natural production declines and in the Williston Basin as a result of production curtailments;~~ ~~and~~

•~~Natural Gas Pipelines~~ ~~- a decrease of $5.4 million in transportation services due primarily to lower interruptible revenue.~~

~~Operating income decreased for the nine months ended September 30, 2020, compared with the same period in 2019, primarily as a result of the following:~~

•~~a decrease~~ of $604.0 million due to noncash impairment charges in our Natural Gas Gathering and Processing and Natural Gas Liquids ~~segments;~~segments in the three months ended March 31, 2020;

•Natural Gas ~~Gathering and Processing~~Pipelines - ~~a decrease~~an increase of ~~$57.6~~$104.9 million due primarily to ~~lower volumes in the Williston Basin as a result of production curtailments and in the Mid-Continent region due to~~increased natural ~~production declines and a decrease of $56.8 million due primarily to lower realized prices;~~ ~~and~~

•~~an increase of $75.4 million in depreciation expense due to capital projects placed in service;~~ ~~offset partially by~~gas sales;

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•Natural Gas Liquids - ~~an increase~~increases of ~~$208.8~~$63.8 million in exchange services ~~due~~related primarily to higher volumes in the Rocky Mountain region and Permian Basin, lower rail and pipeline transportation costs, lower unfractionated NGLs held in inventory and higher average fee rates primarily in the Permian Basin, offset partially by a decrease of $113.9$38.8 million in optimization and marketing, ~~due primarily to narrower location price differentials, lower optimization volumes~~offset by a $46.2 million decrease from the impact of Winter Storm Uri in exchange services; and ~~lower marketing earnings;~~

•~~a decrease~~Natural Gas Gathering and Processing - an increase of ~~$87.1~~$45.6 million due primarily to lower realized prices in the prior year impacting our fee with POP contracts; offset by

•an increase of $44.6 million in operating costs due primarily to ~~reduced discretionary expenses, lower materials and supplies expenses, lower employee-related costs and~~a benefit related to the ~~noncash~~ mark-to-market ~~impact~~ of our share-based deferred compensation ~~plan;~~plan in the prior year, higher employee-related costs, ad valorem taxes and supplies expense; and

•~~Natural Gas Pipelines~~ - an increase of ~~$6.4~~$24.7 million in ~~transportation services~~depreciation expense due ~~primarily~~ to ~~higher firm transportation revenue and a $13.5 million contract settlement, offset partially by lower interruptible revenue.~~capital projects placed in service.

Net income and diluted EPS increased for the three months ended ~~September 30, 2020, and decreased for the nine months ended September 30, 2020,~~March 31, 2021, compared with the same ~~periods~~period in ~~2019,~~2020, due primarily to the items discussed above. The nine months ended September 30, 2020, was also negatively impacted by higher interest expense related to the settlement of the remaining $1.3 billion of our interest-rate swaps used to hedge our LIBOR-based interest payments and our underwritten public debt offerings in March and May 2020above and noncash impairment charges related to equity investments in our Natural Gas Gathering and Processing and Natural Gas Liquids segments in the prior year. These increases were offset partially by ~~a gain on extinguishment of debt~~higher interest expense related to ~~open market repurchases.~~higher debt balances and lower capitalized interest, and lower equity AFUDC due to completed projects.

Capital expenditures decreased for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, compared with the same ~~periods~~period in ~~2019,~~2020, due primarily to our previously completed and paused capital-growth ~~projects as well as our paused and suspended capital-growth projects related to weakened commodity prices and economic disruptions caused by COVID-19.~~projects.

Additional information regarding our financial results and operating information is provided in the following discussion for each of our segments.

Natural Gas Gathering and Processing

Overview - Our Natural Gas Gathering and Processing segment provides midstream services to producers in North Dakota, Montana, Wyoming, Kansas and Oklahoma. Raw natural gas is typically gathered at the wellhead, compressed and transported through pipelines to our processing facilities. Processed natural gas, usually referred to as residue natural gas, is then recompressed and delivered to natural gas pipelines, storage facilities and end users. The NGLs separated from the raw natural gas are sold and delivered through NGL pipelines to fractionation facilities for further processing.

Our Natural Gas Gathering and Processing segment’s earnings are primarily fee-based, but we have some direct commodity price exposure related primarily to ~~POP~~fee with ~~fee~~POP contracts. Under certain ~~POP~~fee with ~~fee~~POP contracts, our contractual fees and POP percentage may increase or decrease if production volumes, delivery pressures or commodity prices change relative to specified thresholds. Due to the current commodity price environment and production curtailments from many of our producers during the second quarter 2020, our contractual fees on these certain POP with fee contracts in the Rocky Mountain region decreased, which has impacted our 2020 average fee rate. To mitigate the impact of this commodity price exposure, we have hedged a portion of our Natural Gas Gathering and Processing segment’s commodity price risk for the remainder of ~~2020~~2021 and ~~2021.~~into 2022. This segment has substantial long-term acreage dedications in some of the most productive areas of the Williston Basin, which helps to mitigate volumetric risk.

Growth Projects - Our Natural Gas Gathering and Processing segment has invested in growth projects in NGL-rich areas in the Williston Basin. See “Growth Projects” in the “Recent Developments” section for discussion of our capital-growth ~~projects.~~project.

For a discussion of our capital expenditure financing, see “Capital Expenditures” in the “Liquidity and Capital Resources” section.

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Selected Financial Results and Operating Information - The following ~~table sets~~tables set forth certain selected financial results and operating information for our Natural Gas Gathering and Processing segment for the periods indicated:


		Three Months Ended				Nine Months Ended				Three Months	Nine Months		Three Months Ended					Three Months
		September 30,				September 30,				2020 vs. 2019	2020 vs. 2019		March 31,					2021 vs. 2020
Financial Results	Financial Results	2020		2019		2020		2019		$ Increase (Decrease)	$ Increase (Decrease)	Financial Results		2021		2020			$ Increase (Decrease)
		(Millions of dollars)												(Millions of dollars)
NGL sales	NGL sales	$	216.3	$	198.2	$	488.7	$	743.8	18.1	(255.1)	NGL sales		$	457.6	$	178.4		279.2
Condensate sales	Condensate sales	23.5		46.7		80.6		146.2		(23.2)	(65.6)	Condensate sales		34.2		41.5			(7.3)
Residue natural gas sales	Residue natural gas sales	178.5		185.3		518.4		725.7		(6.8)	(207.3)	Residue natural gas sales		312.2		189.1			123.1
Gathering, compression, dehydration and processing fees and other revenue	Gathering, compression, dehydration and processing fees and other revenue	41.1		46.0		121.5		137.4		(4.9)	(15.9)	Gathering, compression, dehydration and processing fees and other revenue		35.7		41.0			(5.3)
Cost of sales and fuel (exclusive of depreciation and operating costs)	Cost of sales and fuel (exclusive of depreciation and operating costs)	(207.5)		(210.7)		(541.9)		(971.4)		(3.2)	(429.5)	Cost of sales and fuel (exclusive of depreciation and operating costs)		(555.3)		(202.2)			353.1
Operating costs, excluding noncash compensation adjustments	Operating costs, excluding noncash compensation adjustments	(67.4)		(87.4)		(229.8)		(259.2)		(20.0)	(29.4)	Operating costs, excluding noncash compensation adjustments		(80.7)		(87.8)			(7.1)
Equity in net loss from investments		—		(1.8)		(1.4)		(4.7)		1.8	3.3
Equity in net earnings from investments												Equity in net earnings from investments		1.7		0.8			0.9
Other	Other	(1.4)		(1.0)		(4.6)		(3.6)		(0.4)	(1.0)	Other		(0.7)		(1.2)			0.5
Adjusted EBITDA	Adjusted EBITDA	$	183.1	$	175.3	$	431.5	$	514.2	7.8	(82.7)	Adjusted EBITDA		$	204.7	$	159.6		45.1
Impairment charges	Impairment charges	$	—	$	—	$	564.4	$	—	—	564.4	Impairment charges		$	—	$	564.4		(564.4)
Capital expenditures	Capital expenditures	$	63.0	$	245.7	$	362.8	$	674.1	(182.7)	(311.3)	Capital expenditures		$	39.7	$	181.6		(141.9)

See reconciliation of net income (loss) to adjusted EBITDA in the ~~“Adjusted EBITDA”~~“Non-GAAP Financial Measures” section.

Changes in commodity prices and sales volumes affect both revenues and cost of sales and fuel and, therefore, the impact is largely offset between these line items.

Adjusted EBITDA increased ~~$7.8~~$45.1 million for the three months ended ~~September 30, 2020,~~March 31, 2021, compared with the same period in ~~2019,~~2020, primarily as a result of the following:

•an increase of $45.6 million due primarily to lower realized prices in the prior year impacting our fee with POP contracts; and

•a decrease of ~~$20.0~~$7.1 million in operating costs due primarily to lower materials and supplies ~~expenses due to reduced asset utilization, reduced discretionary expenses~~ and ~~lower employee-related costs;~~ ~~and~~

•~~an increase of $5.2 million due primarily to higher realized prices impacting our POP with fee contracts;~~outside services; offset ~~partially~~ by

•a decrease of ~~$18.8~~$9.0 million due primarily to lower volumes in the Mid-Continent region ~~due~~related to Winter Storm Uri and natural production declines, ~~and in the Williston Basin as a result of production curtailments.~~

~~Adjusted EBITDA decreased $82.7 million for the nine months ended September 30, 2020, compared with the same period in 2019, primarily as a result of the following:~~

•~~a decrease of $57.6 million due primarily to lower~~offset partially by higher volumes in the ~~Williston Basin as a result of production curtailments and in the Mid-Continent region due to natural production declines;~~ ~~and~~

•~~a decrease of $56.8 million due primarily to lower realized prices impacting our POP with fee contracts;~~ ~~offset partially by~~

•~~a decrease of $29.4 million in operating costs due primarily to lower materials and supplies expenses due to reduced asset utilization, reduced discretionary expenses and lower employee-related costs.~~Rocky Mountain region.

The ~~nine~~three months ended ~~September 30,~~March 31, 2020, includes $380.5 million of noncash impairment charges related primarily to certain long-lived asset groups in ~~western Oklahoma, Kansas and~~ the Powder River Basin, western Oklahoma and Kansas that were not recoverable, a $153.4 million noncash impairment charge related to goodwill and a $30.5 million noncash impairment charge related to our 10.2% investment in Venice Energy Services Company. ~~For additional information on our impairment charges, see Note A of the Notes to Consolidated Financial Statements in this Quarterly Report.~~

Capital expenditures decreased for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, compared with the same ~~periods~~period in ~~2019,~~2020, due primarily to capital-growth projects completed in ~~2019 and early~~ 2020, as well as ~~several~~our paused capital-growth ~~projects~~project in 2020.

~~Table of Contents~~

~~Selected Operating Information~~ ~~- The following table sets forth selected operating information for our Natural Gas Gathering and Processing segment for the periods indicated:~~


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
Operating Information (a)	Operating Information (a)	2020		2019		2020		2019		Operating Information (a)		2021		2020
Natural gas gathered (BBtu/d)	Natural gas gathered (BBtu/d)	2,514		2,825		2,503		2,742		Natural gas gathered (BBtu/d)		2,589		2,769
Natural gas processed (BBtu/d) (b)	Natural gas processed (BBtu/d) (b)	2,345		2,624		2,327		2,544		Natural gas processed (BBtu/d) (b)		2,380		2,568
NGL sales (MBbl/d)		219		233		213		223
Residue natural gas sales (BBtu/d) (b)		1,133		1,206		1,044		1,189

Average fee rate ($/MMBtu)	Average fee rate ($/MMBtu)	$	0.94	$	0.92	$	0.84	$	0.92	Average fee rate ($/MMBtu)		$	1.04	$	0.85

(a) - Includes volumes for consolidated entities only.

(b) - Includes volumes we processed at company-owned and third-party facilities.

Our natural gas gathered and natural gas processed ~~NGL sales and residue natural gas sales~~ volumes decreased for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, compared with the same ~~periods~~period in ~~2019,~~2020, due primarily to ~~production curtailments from some~~the impact of ~~our crude oil and natural gas producers in the Williston Basin~~Winter Storm Uri and natural production declines in the Mid-Continent region, offset partially by increased production in the Rocky Mountain region.

Table of Contents

Our average fee rate ~~decreased~~increased for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, compared with the same period in ~~2019,~~2020, due primarily to ~~production curtailments~~an increase in the ~~second quarter 2020 on large producer contracts with higher fees~~Rocky Mountain region’s contribution to our average fee rate and ~~lower POP components~~was also impacted by decreased volumes in the ~~Williston Basin.~~Mid-Continent region due to Winter Storm Uri.

Commodity Price Risk - See discussion regarding our commodity price risk under “Commodity Price Risk” in Item 3, Quantitative and Qualitative Disclosures about Market Risk in this Quarterly Report.

Natural Gas Liquids

Overview -Our Natural Gas Liquids segment owns and operates facilities that gather, fractionate, treat and distribute NGLs and store NGL products, primarily in Oklahoma, Kansas, Texas, New Mexico and the Rocky Mountain region, which includes the Williston, Powder River and DJ Basins. We provide midstream services to producers of NGLs and deliver those products to the two primary market centers: one in the Mid-Continent in Conway, Kansas, and the other in the Gulf Coast in Mont Belvieu, Texas. We own or have an ownership interest in FERC-regulated NGL gathering and distribution pipelines in Oklahoma, Kansas, Texas, New Mexico, Montana, North Dakota, Wyoming and Colorado, and terminal and storage facilities in Kansas, Missouri, Nebraska, Iowa and Illinois. We have a 50% ownership interest in Overland Pass Pipeline Company, which operates an interstate NGL pipeline originating in Wyoming and Colorado and terminating in Kansas. The majority of the pipeline-connected natural gas processing plants in the Williston Basin, Oklahoma, Kansas and the Texas Panhandle are connected to our NGL gathering systems. We lease rail cars and own and operate truck- and rail-loading and -unloading facilities connected to our NGL fractionation, storage and pipeline assets. We also own FERC-regulated NGL distribution pipelines in Kansas, Missouri, Nebraska, Iowa, Illinois and Indiana that connect our Mid-Continent assets with Midwest markets, including Chicago, Illinois. A portion of our ONEOK North System transports refined petroleum products, including unleaded gasoline and diesel, from Kansas to Iowa.

Growth Projects - Our Natural Gas Liquids segment invests in projects to transport, fractionate, store and deliver to market centers NGL supply from shale and other resource development areas. Our growth strategy is focused around connecting diversified supply basins from the Rocky Mountain region through the Mid-Continent region and the Permian Basin with NGL product demand from the petrochemical and refining industries and NGL export demand in the Gulf Coast. See “Growth Projects” in the “Recent Developments” section for discussion of our capital-growth projects.

In the nine months ended September 30, 2020, we connected two third-party natural gas processing plants in the Permian Basin and two third-party natural gas processing plants in the Rocky Mountain region to our NGL system. In addition, one affiliate and two third-party natural gas processing plants in the Rocky Mountain region and one third-party natural gas processing plant in the Mid-Continent region connected to our system were expanded.

For a discussion of our capital expenditure financing, see “Capital Expenditures” in the “Liquidity and Capital Resources” section.

~~Table of Contents~~


		Three Months Ended				Nine Months Ended				Three Months	Nine Months		Three Months Ended					Three Months
		September 30,				September 30,				2020 vs. 2019	2020 vs. 2019		March 31,					2021 vs. 2020
Financial Results	Financial Results	2020		2019		2020		2019		$ Increase (Decrease)	$ Increase (Decrease)	Financial Results		2021		2020			$ Increase (Decrease)
		(Millions of dollars)												(Millions of dollars)
NGL and condensate sales	NGL and condensate sales	$	1,658.1	$	1,746.6	$	4,429.4	$	5,826.3	(88.5)	(1,396.9)	NGL and condensate sales		$	2,414.8	$	1,596.7		818.1
Exchange service revenues and other	Exchange service revenues and other	134.3		107.5		377.7		316.9		26.8	60.8	Exchange service revenues and other		146.5		123.1			23.4
Transportation and storage revenues	Transportation and storage revenues	39.8		46.4		131.4		141.4		(6.6)	(10.0)	Transportation and storage revenues		48.7		50.8			(2.1)
Cost of sales and fuel (exclusive of depreciation and operating costs)	Cost of sales and fuel (exclusive of depreciation and operating costs)	(1,289.7)		(1,438.2)		(3,473.6)		(4,914.5)		(148.5)	(1,440.9)	Cost of sales and fuel (exclusive of depreciation and operating costs)		(2,060.3)		(1,278.8)			781.5
Operating costs, excluding noncash compensation adjustments	Operating costs, excluding noncash compensation adjustments	(97.0)		(109.3)		(290.6)		(322.9)		(12.3)	(32.3)	Operating costs, excluding noncash compensation adjustments		(116.0)		(94.4)			21.6
Equity in net earnings from investments	Equity in net earnings from investments	8.0		15.9		31.1		49.4		(7.9)	(18.3)	Equity in net earnings from investments		3.6		15.3			(11.7)
Other	Other	(2.3)		(1.4)		(5.6)		(4.7)		(0.9)	(0.9)	Other		(1.7)		(1.8)			0.1
Adjusted EBITDA	Adjusted EBITDA	$	451.2	$	367.5	$	1,199.8	$	1,091.9	83.7	107.9	Adjusted EBITDA		$	435.6	$	410.9		24.7
Impairment charges	Impairment charges	$	—	$	—	$	77.4	$	—	—	77.4	Impairment charges		$	—	$	77.4		(77.4)
Capital expenditures	Capital expenditures	$	298.9	$	738.0	$	1,504.9	$	1,969.1	(439.1)	(464.2)	Capital expenditures		$	112.0	$	746.2		(634.2)

See reconciliation of net income (loss) to adjusted EBITDA in the ~~“Adjusted EBITDA”~~“Non-GAAP Financial Measures” section.

Changes in commodity prices and sales volumes affect both revenues and cost of sales and fuel and, therefore, the impact is largely offset between these line items.

Table of Contents

Adjusted EBITDA increased ~~$83.7~~$24.7 million for the three months ended ~~September 30, 2020,~~March 31, 2021, compared with the same period in ~~2019,~~2020, primarily as a result of the following:

•an increase of ~~$103.4~~$63.8 million in exchange services (excluding the impact of Winter Storm Uri discussed below) due primarily ~~to $48.7~~to:

◦$51.8 million in higher volumes ~~across our system, $43.5~~in the Rocky Mountain region,

◦$32.9 million in lower ~~costs due primarily to lower rail and pipeline~~ transportation costs, ~~and $17.9~~

◦$15.8 million related to wider commodity price differentials, offset by

◦$19.0 million in lower average fee rates,

◦$13.2 million in lower volumes in the Permian Basin due to short-term contracts and increased ethane rejection, and

◦$9.5 million related to lower earnings on unfractionated NGLs held in inventory; and

•~~a decrease~~an increase of ~~$12.3 million in operating costs due primarily to reduced discretionary expenses;~~ ~~offset partially by~~

•~~a decrease of $20.9~~$38.8 million in optimization and marketing due primarily to ~~a decrease of $24.2 million due to narrower location price differentials~~increased activities during Winter Storm Uri and ~~lower optimization volumes and lower marketing earnings of $13.1 million due to lower earnings from purity NGL inventory sales and~~unfavorable changes in the value of NGLs held in inventory in 2020; offset ~~partially~~ by ~~an increase of $16.7 million due to wider product price differentials;~~ ~~and~~

•~~a decrease~~the negative impact of ~~$7.9 million from lower equity in net earnings from investments due primarily to lower volumes on Overland Pass Pipeline.~~

~~Adjusted EBITDA increased $107.9 million for the nine months ended September 30, 2020, compared with the same period in 2019, primarily as a result~~Winter Storm Uri of ~~the following:~~

•~~an increase of $208.8~~$46.2 million in exchange services due primarily to ~~$91.8 million in higher~~decreased volumes ~~in the Rocky Mountain region~~across our operations and Permian Basin, $83.6 million in lower costs due primarily to lower rail and pipeline transportation costs, $25.8 million related to lower unfractionated NGLs held in inventory, $24.1 million in higher average fee rates primarily in the Permian Basin, and $18.4 million in higher fees charged to customers with minimum volume obligations primarily in the Rocky Mountain region, offset partially by $21.8 million in lower volumes in the Mid-Continent region and $11.7 million in narrower product price differentials; ~~and~~increased electricity costs;

•~~a decrease~~an increase of ~~$32.3~~$21.6 million in operating costs due primarily to ~~reduced discretionary expenses;~~ ~~offset partially by~~

•~~a decrease of $113.9 million in optimization~~higher employee-related costs and marketing due primarily to a decrease of $75.4 million related to narrower location price differentials and lower optimization volumes, lower marketing earnings of $43.4 million due to lower earnings from purity NGL inventory sales and changes in the value of NGLs held in inventory;increased ad valorem taxes associated with our completed capital-growth projects; and

•a decrease of ~~$18.3~~$11.7 million from lower equity in net earnings from investments due primarily to lower volumes on Overland Pass Pipeline.

The ~~nine~~three months ended ~~September 30,~~March 31, 2020, includes $70.2 million of noncash impairment charges related to certain inactive assets and a $7.2 million noncash impairment charge related to our 50% investment in Chisholm Pipeline Company. ~~For additional information on our impairment charges, see Note A of the Notes to Consolidated Financial Statements in this Quarterly Report.~~

~~Table of Contents~~

~~Selected Operating Information~~ ~~- The following table sets forth selected operating information for our Natural Gas Liquids segment for the periods indicated:~~


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
Operating Information	Operating Information	2020		2019		2020		2019		Operating Information		2021		2020
Raw feed throughput (MBbl/d) (a)	Raw feed throughput (MBbl/d) (a)	1,162		1,086		1,088		1,074		Raw feed throughput (MBbl/d) (a)		1,036		1,091

Average Conway-to-Mont Belvieu OPIS price differential - ethane in ethane/propane mix ($/gallon)	Average Conway-to-Mont Belvieu OPIS price differential - ethane in ethane/propane mix ($/gallon)	$	0.03	$	0.08	$	0.01	$	0.08	Average Conway-to-Mont Belvieu OPIS price differential - ethane in ethane/propane mix ($/gallon)		$	(0.02)	$	0.01

(a) - Represents physical raw feed volumes on which we charge a fee for transportation and/or fractionation services.

Volumes ~~increased~~decreased for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, compared with the same ~~periods~~period in ~~2019,~~2020, due primarily to the unfavorable impact of Winter Storm Uri across our operations, offset partially by increased production at new and existing processing plants in the Rocky Mountain region and Permian Basin, offset partially by the unfavorable impact from producer curtailments primarily in the second quarter 2020. The three months ended September 30, 2020, was also favorably impacted by increased ethane volumes in the Mid-Continent region.

Natural Gas Pipelines

Overview - Our Natural Gas Pipelines segment, through its wholly owned assets primarily in Oklahoma, Texas and the upper Midwest, provides transportation and storage services to end users, such as natural gas distribution and electric-generation companies, that require natural gas to operate their businesses regardless of location price differentials. We have 50% ownership interests in Northern Border Pipeline and Roadrunner, which provide transportation services to various end users.

Table of Contents

Selected Financial Results and Operating Information- The following ~~table sets~~tables set forth certain selected financial results and operating information for our Natural Gas Pipelines segment for the periods indicated:


		Three Months Ended				Nine Months Ended				Three Months	Nine Months		Three Months Ended					Three Months
		September 30,				September 30,				2020 vs. 2019	2020 vs. 2019		March 31,					2021 vs. 2020
Financial Results	Financial Results	2020		2019		2020		2019		$ Increase (Decrease)	$ Increase (Decrease)	Financial Results		2021		2020			$ Increase (Decrease)
		(Millions of dollars)												(Millions of dollars)
Transportation revenues	Transportation revenues	$	96.4	$	102.4	$	303.1	$	296.2	(6.0)	6.9	Transportation revenues		$	117.1	$	101.9		15.2
Storage revenues	Storage revenues	16.6		17.5		50.1		53.8		(0.9)	(3.7)	Storage revenues		15.8		16.5			(0.7)
Residue natural gas sales and other revenues	Residue natural gas sales and other revenues	4.3		1.6		6.9		5.5		2.7	1.4	Residue natural gas sales and other revenues		115.9		2.4			113.5
Cost of sales and fuel (exclusive of depreciation and operating costs)	Cost of sales and fuel (exclusive of depreciation and operating costs)	(3.4)		(0.4)		(5.1)		(3.8)		3.0	1.3	Cost of sales and fuel (exclusive of depreciation and operating costs)		(10.0)		(1.5)			8.5
Operating costs, excluding noncash compensation adjustments	Operating costs, excluding noncash compensation adjustments	(33.4)		(38.6)		(99.0)		(108.1)		(5.2)	(9.1)	Operating costs, excluding noncash compensation adjustments		(40.1)		(34.7)			5.4
Equity in net earnings from investments	Equity in net earnings from investments	30.1		23.5		78.3		70.4		6.6	7.9	Equity in net earnings from investments		28.0		28.6			(0.6)
Other	Other	(0.8)		(2.2)		(2.1)		(3.0)		1.4	0.9	Other		(0.5)		(0.7)			0.2
Adjusted EBITDA	Adjusted EBITDA	$	109.8	$	103.8	$	332.2	$	311.0	6.0	21.2	Adjusted EBITDA		$	226.2	$	112.5		113.7

Capital expenditures	Capital expenditures	$	13.0	$	27.8	$	40.5	$	77.9	(14.8)	(37.4)	Capital expenditures		$	21.2	$	16.6		4.6

See reconciliation of net income (loss) to adjusted EBITDA in the ~~“Adjusted EBITDA”~~“Non-GAAP Financial Measures” section.

Adjusted EBITDA increased ~~$6.0~~$113.7 million for the three months ended ~~September 30, 2020,~~March 31, 2021, compared with the same period in ~~2019,~~2020, primarily as a result of the following:

•an increase of ~~$6.6~~$104.9 million ~~from higher equity in net earnings from investments~~ due primarily to ~~additional transportation capacity contracted~~higher average natural gas prices on ~~Northern Border;~~ ~~and~~

•~~a decrease~~5.2 Bcf of ~~$5.2 million~~natural gas sales in ~~operating costs due primarily to lower materials and supplies expenses and employee-related costs;~~ ~~offset partially by~~

•~~a decrease~~the first quarter 2021 of ~~$5.4 million~~volumes previously held in ~~transportation services due primarily to lower interruptible revenue.~~

~~Table of Contents~~

~~Adjusted EBITDA increased $21.2 million for the nine months ended September 30, 2020,~~inventory, compared with 1.2 Bcf in the ~~same period in 2019, primarily as a result of the following:~~

•first quarter 2020; ~~a decrease of $9.1 million in operating costs due primarily to lower materials and supplies expenses and employee-related costs;~~

•~~an increase of $7.9 million from higher equity in net earnings from investments due primarily to additional transportation capacity contracted on Northern Border;~~and

•an increase of ~~$6.4~~$15.4 million in transportation services due primarily to higher ~~firm transportation~~park-and-loan revenue and ~~a $13.5 million contract settlement, offset partially by lower~~higher interruptible transportation revenue; offset ~~partially~~ by

•~~a decrease~~an increase of ~~$3.4~~$5.4 million ~~from storage services~~in operating costs due primarily to ~~lower park~~higher employee-related costs and ~~loan activity.~~supplies expenses.

Capital expenditures ~~decreased~~increased for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, compared with the same ~~periods~~period in ~~2019,~~2020, due primarily to ~~the completion of our expansion projects in 2019.~~capital-growth projects.

~~Selected Operating Information~~ ~~- The following table sets forth selected operating information for our Natural Gas Pipelines segment for the periods indicated:~~


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
Operating Information (a)	Operating Information (a)	2020		2019		2020		2019		Operating Information (a)		2021		2020
Natural gas transportation capacity contracted (MDth/d)	Natural gas transportation capacity contracted (MDth/d)	7,349		7,628		7,485		7,568		Natural gas transportation capacity contracted (MDth/d)		7,423		7,791
Transportation capacity contracted	Transportation capacity contracted	94	%	98	%	96	%	98	%	Transportation capacity contracted		95	%	100	%

(a) - Includes volumes for consolidated entities only.

Natural gas transportation capacity contracted decreased for the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, compared with the same ~~periods~~period in ~~2019,~~2020, due primarily to a contract settlement ~~and~~in the ~~impact of current market conditions on demand for our services.~~second quarter 2020.

Roadrunner, in which we have a 50% ownership interest, has contracted all of its westbound capacity through 2041.

Northern Border Pipeline, in which we have a 50% ownership interest, has contracted substantially all of its long-haul transportation capacity through the fourth quarter ~~2020.~~2021.

In ~~June 2019,~~February 2021, our subsidiary, ~~Viking~~Midwestern Gas Transmission Company, ~~(Viking),~~ filed a proposed change in rates pursuant to Section 4 of the Natural Gas Act with the FERC. ~~In February 2020, Viking filed a Stipulation and Offer of Settlement (Settlement) with the FERC for approval.~~ The FERC ~~accepted~~is currently reviewing the ~~Settlement in July 2020, which will~~filing. While the ultimate outcome of the filing cannot be predicted, we do not expect the ultimate outcome to impact materially our results of operations.

~~Adjusted EBITDA~~

Adjusted EBITDA is a non-GAAP measure of our financial performance. Adjusted EBITDA is defined as net income adjusted for interest expense, depreciation and amortization, noncash impairment charges, income taxes, allowance for equity funds used during construction, noncash compensation expense and other noncash items. We believe this non-GAAP financial measure is useful to investors because it and similar measures are used by many companies in our industry as a measurement of financial performance and is commonly employed by financial analysts and others to evaluate our financial performance and to compare financial performance among companies in our industry. Adjusted EBITDA should not be considered an alternative to net income, earnings per share or any other measure of financial performance presented in accordance with GAAP. Additionally, this calculation may not be comparable with similarly titled measures of other companies.

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Non-GAAP Financial Measures

The following table sets forth a reconciliation of net income (loss), the nearest comparable GAAP financial performance measure, to adjusted EBITDA, distributable cash flow and dividend coverage for the periods indicated:

Three Months Ended Nine Months Ended
September 30, September 30,
2020 2019 2020 2019
Reconciliation of net income to adjusted EBITDA
(Thousands of dollars)
Net income $ 312,316 $ 309,155 $ 304,780 $ 958,326
Add:
Interest expense, net of capitalized interest 176,371 129,577 535,955 362,490
Depreciation and amortization 153,245 121,430 426,014 350,552
Income tax expense 106,555 97,365 94,300 274,234
Impairment charges — — 641,754 —
Noncash compensation expense (a) 1,606 9,757 1,261 20,412
Equity AFUDC and other noncash items (3,084) (17,532) (22,346) (46,357)
Adjusted EBITDA $ 747,009 $ 649,752 $ 1,981,718 $ 1,919,657
Reconciliation of segment adjusted EBITDA to adjusted EBITDA
Segment adjusted EBITDA:
Natural Gas Gathering and Processing $ 183,148 $ 175,292 $ 431,545 $ 514,159
Natural Gas Liquids 451,243 367,462 1,199,801 1,091,863
Natural Gas Pipelines 109,837 103,819 332,194 311,011
Other (b) 2,781 3,179 18,178 2,624
Adjusted EBITDA $ 747,009 $ 649,752 $ 1,981,718 $ 1,919,657


	Three Months Ended
	March 31,
		2021		2020
Reconciliation of net income (loss) to adjusted EBITDA, distributable cash flow and dividend coverage		(Thousands of dollars, except per share amounts and coverage ratios)
Net income (loss)		$	386,176	$	(141,857)
Add:
Interest expense, net of capitalized interest		185,523		140,616
Depreciation and amortization		157,120		132,353
Income tax expense (benefit)		122,132		(55,395)
Impairment charges		—		641,754
Noncash compensation expense (a)		16,283		(1,302)
Equity AFUDC and other noncash items		(813)		(15,409)
Adjusted EBITDA (b)		866,421		700,760
Interest expense, net of capitalized interest		(185,523)		(140,616)
Maintenance capital		(23,690)		(25,189)
Equity in net earnings from investments		(33,320)		(44,627)
Distributions received from unconsolidated affiliates		41,053		48,526
Other (b)		(3,080)		(16,524)
Distributable cash flow		661,861		522,330
Dividends paid to preferred shareholders		(275)		(275)
Distributable cash flow to shareholders		661,586		522,055
Dividends paid		(415,954)		(386,392)
Distributable cash flow in excess of dividends paid		$	245,632	$	135,663
Dividends paid per share		$	0.935	$	0.935
Dividend coverage ratio		1.59		1.35
Number of shares used in computation (thousands)		444,871		413,253

(a) - ~~The three~~Includes a loss of $3.9 million and ~~nine months ended September 30, 2020, include~~ a benefit of ~~$2.4 million and $16.9~~$18.8 million related to the mark-to-market of ~~ONEOK’s~~our share-based deferred compensation ~~plan.~~plan for the three months ended March 31, 2021 and 2020, respectively.

(b) - ~~The three and nine~~Three months ended ~~September 30,~~March 31, 2020, ~~include corporate~~includes gains of ~~$2.2~~$15.8 million ~~and~~ ~~$22.2 million, respectively,~~ on extinguishment of debt related to open market repurchases.


	Three Months Ended
	March 31,
	2021		2020
Reconciliation of segment adjusted EBITDA to adjusted EBITDA
Segment adjusted EBITDA:
Natural Gas Gathering and Processing	$	204,716	$	159,648
Natural Gas Liquids	435,628		410,916
Natural Gas Pipelines	226,175		112,524
Other (a)	(98)		17,672
Adjusted EBITDA	$	866,421	$	700,760

(a) - Three months ended March 31, 2020, includes corporate gains of $15.8 million on extinguishment of debt related to open market repurchases.

CONTINGENCIES

See Note J of the Notes to Consolidated Financial Statements in this Quarterly Report for discussion of our legal proceedings.

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LIQUIDITY AND CAPITAL RESOURCES

General - Our primary sources of cash inflows are operating cash flows, proceeds from our commercial paper program and our $2.5 Billion Credit Agreement, debt issuances and the issuance of common stock for our liquidity and capital resources requirements. In addition, we expect cash outflows for the remainder of ~~2020~~2021 to be primarily related to dividends paid to shareholders and ~~interest.~~capital expenditures.

We expect our sources of cash inflows to provide sufficient resources to finance our operations and quarterly cash dividends. We believe we have sufficient liquidity ~~in this challenging market environment~~ due to our $2.5 Billion Credit Agreement, which expires in June 2024 ~~cash on hand from our June 2020 equity issuance~~ and access to $1.0 billion available through our “at-the-market” equity program. As of the date of this report, we had no borrowings under our $2.5 Billion Credit Agreement, and no shares have been sold through our “at-the-market” equity program.

We manage interest-rate risk through the use of fixed-rate debt, floating-rate debt and interest-rate swaps. For additional information on our interest-rate swaps, see Note C of the Notes to Consolidated Financial Statements in this Quarterly Report.

Guarantees and Cash Management - ~~In March 2020, the SEC amended Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities.~~ We and ONEOK Partners are issuers of certain public debt securities. We guarantee certain indebtedness of ONEOK Partners, and ONEOK Partners and the Intermediate Partnership guarantee certain of our indebtedness. The guarantees in place for our and ONEOK Partners’ indebtedness are full, irrevocable, unconditional and absolute joint and several guarantees to the holders of each series of outstanding securities. Liabilities under the guarantees rank equally in right of payment with all existing and future senior unsecured indebtedness. As ONEOK Partners and the Intermediate Partnership are consolidated subsidiaries of ONEOK, separate financial statements for the guarantors are not required as long as the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized financial information. The Intermediate Partnership holds all of ONEOK Partners’ interests and equity in its subsidiaries, which are ~~non-guarantors. We do not have any material assets other than our ownership of all the~~

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~~interests in ONEOK Partners~~non-guarantors, and substantially all the assets and operations reside with non-guarantor operating subsidiaries. Therefore, as allowed under Rule 13-01, we have excluded the summarized financial information for each issuer and ~~guarantor.~~guarantor as the combined financial information of the subsidiary issuer and parent guarantor, excluding our ownership of all the interests in ONEOK Partners, reflect no material assets, liabilities or results of operations, apart from the guaranteed indebtedness. For additional information on our and ONEOK Partners’ indebtedness, see Note D of the Notes to Consolidated Financial Statements in this Quarterly Report.

We use a centralized cash management program that concentrates the cash assets of our non-guarantor operating subsidiaries in joint accounts for the purposes of providing financial flexibility and lowering the cost of borrowing, transaction costs and bank fees. Our centralized cash management program provides that funds in excess of the daily needs of our operating subsidiaries are concentrated, consolidated or otherwise made available for use by other entities within our consolidated group. Our operating subsidiaries participate in this program to the extent they are permitted pursuant to FERC regulations or their operating agreements. Under the cash management program, depending on whether a participating subsidiary has short-term cash surpluses or cash requirements, we provide cash to the subsidiary or the subsidiary provides cash to us.

Short-term Liquidity - Our principal sources of short-term liquidity consist of cash generated from operating activities, distributions received from our equity-method investments, proceeds from our commercial paper program and our $2.5 Billion Credit Agreement. As of ~~September 30, 2020,~~March 31, 2021, we are in compliance with all covenants of the $2.5 Billion Credit Agreement.

At ~~September 30, 2020,~~March 31, 2021, we had no borrowings under our $2.5 Billion Credit Agreement and ~~$447.1~~$402.4 million of cash and cash equivalents.

As of ~~September 30, 2020,~~March 31, 2021, we had a working capital ~~surplus~~deficit of ~~$627.2~~$50.4 million (defined as current assets less current liabilities). ~~Generally, our~~Although working capital is influenced by several factors, including, among other things: (i) the timing of (a) debt and equity issuances, (b) the funding of capital expenditures, (c) scheduled debt payments, and (d) ~~the collection and payment of~~ accounts receivable and payable; and (ii) the volume and cost of inventory and commodity ~~imbalances.~~imbalances, our working capital deficit at March 31, 2021, was driven primarily by current maturities of long-term debt. We may have working capital deficits in future periods as we continue to repay long-term ~~debt and finance~~debt. We do not expect this working capital deficit to have an adverse impact to our ~~capital-growth projects.~~cash flows or operations.

For additional information on our $2.5 Billion Credit Agreement, see Note D of the Notes to Consolidated Financial Statements in this Quarterly Report.

Long-term Financing - In addition to our principal sources of short-term liquidity discussed above, we expect to fund our longer-term financing requirements by issuing long-term notes. Other options to obtain financing include, but are not limited to, issuing common stock, loans from financial institutions, issuance of convertible debt securities or preferred equity securities, asset securitization and the sale and lease-back of facilities.

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~~Debt Issuances~~ - In May 2020, we completed an underwritten public offering of $1.5 billion senior unsecured notes consisting of $600 million, 5.85% senior notes due 2026; $600 million, 6.35% senior notes due 2031; and $300 million, 7.15% senior notes due 2051. The net proceeds, after deducting underwriting discounts, commissions and offering expenses, were $1.48 billion. A portion of the proceeds were used to repay the outstanding borrowings under our $1.5 Billion Term Loan Agreement. The remainder was used for general corporate purposes.

Debt ~~Repayments~~Repurchases - ~~In May 2020, we repaid the remaining $1.25 billion of our $1.5 Billion Term Loan Agreement with cash on hand from our May 2020 public offering of $1.5 billion senior unsecured notes.~~

During the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, we repurchased in the open market outstanding principal of certain of our senior notes in the ~~amounts~~amount of ~~$28.0~~$55.2 million ~~and $202.3 million, respectively,~~ for an aggregate repurchase price of ~~$25.4~~$54.6 million ~~and $177.7 million, respectively,~~ with cash on hand. In connection with these open market repurchases, we recognized $2.2 million and $22.2 million of gains on extinguishment of debt, which is included in other income in our Consolidated Statement of Income for the three and nine months ended September 30, 2020, respectively. We may continue to repurchase debt securities issued by us and our affiliates in the future through open market purchases, privately negotiated transactions, tender offers, exchange offers, or otherwise, upon such terms and at such prices as we may from time to time determine for cash or other consideration.

For additional information on our long-term debt, see Note D of the Notes to Consolidated Financial Statements in this Quarterly Report.

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~~Equity Issuances~~ - In July 2020, we established an “at-the-market” equity program for the offer and sale from time to time of our common stock up to an aggregate offering price of $1.0 billion. The program allows us to offer and sell common stock at prices we deem appropriate through a sales agent, in forward sales transactions through a forward seller or directly to one or more of the program’s managers acting as principals. Sales of our common stock may be made by means of ordinary brokers’ transactions on the NYSE, in block transactions or as otherwise agreed to between us and the sales agent. We are under no obligation to offer and sell common stock under the program. No shares have been sold through our “at-the-market” program as of the date of this report.

Capital Expenditures - We classify expenditures that are expected to generate additional revenue, return on investment or significant operating efficiencies as capital-growth expenditures. Maintenance capital expenditures are those capital expenditures required to maintain our existing assets and operations and do not generate additional revenues. Maintenance capital expenditures are made to replace partially or fully depreciated assets, to maintain the existing operating capacity of our assets and to extend their useful lives. Our capital expenditures are financed typically through operating cash flows and short- and long-term debt.

Capital expenditures, excluding AFUDC and capitalized interest, were ~~$1.9 billion~~$176.7 million and ~~$2.7 billion~~$949.7 million for the ~~nine~~three months ended ~~September 30,~~March 31, 2021 and 2020, ~~and 2019,~~ respectively.

We expect ~~our remaining 2020~~total capital expenditures, ~~to be funded with cash on hand. Excluding our paused~~excluding AFUDC and ~~suspended projects, we have completed all~~capitalized interest, of ~~our announced capital-growth projects. See discussion~~$525-$675 million in ~~the “Recent Developments” section.~~2021.

Credit Ratings - Our long-term debt credit ratings as of ~~October~~April 19, ~~2020,~~2021, are shown in the table below:


Rating Agency	Long-Term Rating	Short-Term Rating	Outlook
Moody’s	Baa3	Prime-3	Stable
S&P	BBB	A-2	Stable
Fitch	BBB	F2	Stable

Our credit ratings, which are investment grade, may be affected by a material change in our financial ratios or a material event affecting our business and industry. Although we are in the midst of a challenging market environment, our credit ratings ~~have not been materially affected.~~remained stable. The most common criteria for assessment of our credit ratings are the debt-to-EBITDA ratio, interest coverage, business risk profile and liquidity. If our credit ratings were downgraded, our cost to borrow funds under our $2.5 Billion Credit Agreement ~~would~~could increase and a potential loss of access to the commercial paper market could occur. In the event that we are unable to borrow funds under our commercial paper program and there has not been a material adverse change in our business, we would continue to have access to our $2.5 Billion Credit Agreement, which expires in 2024. An adverse credit rating change alone is not a default under our $2.5 Billion Credit Agreement.

In the normal course of business, our counterparties provide us with secured and unsecured credit. In the event of a downgrade in our credit ratings or a significant change in our counterparties’ evaluation of our creditworthiness, we could be required to provide additional collateral in the form of cash, letters of credit or other negotiable instruments as a condition of continuing to conduct business with such counterparties. We may be required to fund margin requirements with our counterparties with cash, letters of credit or other negotiable instruments.

Dividends - Holders of our common stock share equally in any common stock dividends declared by our Board of Directors, subject to the rights of the holders of outstanding preferred stock. In February ~~2020, May 2020 and August 2020~~2021, we paid a dividend of $0.935 per share ($3.74 per share on an annualized basis). A dividend of $0.935 per share was declared for the shareholders of record at the close of business on ~~November 2, 2020,~~April 26, 2021, payable ~~November 13, 2020.~~May 14, 2021.

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For the ~~nine~~three months ended ~~September 30, 2020, our cash dividends paid exceeded~~March 31, 2021, our cash flows from operations exceeded dividends paid by ~~$86.4 million, primarily resulting from the effects of the market conditions that began in March 2020 and the resulting impact of producer curtailments on~~$117.1 million. We expect our cash ~~flows. As a result,~~flows from operations to continue to sufficiently fund our cash dividends. To the extent operating cash flows are not sufficient to fund our dividends, we ~~utilized~~may utilize cash on hand from other sources of short- and long-term liquidity to fund a portion of our dividends. We expect the improved volumes and cash flows experienced in the third quarter 2020 to continue for the remainder of the year and into 2021. However, cash dividends paid may exceed our cash flows from operations for the year ending December 31, 2020, and therefore, we may continue to utilize cash on hand from other sources of short- and long-term liquidity to fund a small portion of our dividends.

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CASH FLOW ANALYSIS

We use the indirect method to prepare our Consolidated Statements of Cash Flows. Under this method, we reconcile net income to cash flows provided by operating activities by adjusting net income for those items that affect net income but do not result in actual cash receipts or payments during the period and for operating cash items that do not impact net income. These reconciling items can include depreciation and amortization, impairment charges, allowance for equity funds used during construction, gain or loss on sale of assets, deferred income taxes, net undistributed earnings from equity-method investments, share-based compensation expense, other amounts and changes in our assets and liabilities not classified as investing or financing activities.

The following table sets forth the changes in cash flows by operating, investing and financing activities for the periods indicated:


						Variances							Variances
		Nine Months Ended				2020 vs. 2019			Three Months Ended				2021 vs. 2020
		September 30,				Favorable (Unfavorable)			March 31,				Favorable (Unfavorable)
		2020		2019					2021		2020
		(Millions of dollars)							(Millions of dollars)
Total cash provided by (used in):	Total cash provided by (used in):							Total cash provided by (used in):
Operating activities	Operating activities	$	1,103.1	$	1,326.8	$	(223.7)	Operating activities	$	533.3	$	422.7	$	110.6
Investing activities	Investing activities	(1,981.9)		(2,647.9)		666.0		Investing activities	(170.7)		(964.8)		794.1
Financing activities	Financing activities	1,304.9		1,982.4		(677.5)		Financing activities	(484.7)		1,052.7		(1,537.4)
Change in cash and cash equivalents	Change in cash and cash equivalents	426.1		661.3		(235.2)		Change in cash and cash equivalents	(122.1)		510.6		(632.7)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	21.0		12.0		9.0		Cash and cash equivalents at beginning of period	524.5		21.0		503.5
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	447.1	$	673.3	$	(226.2)	Cash and cash equivalents at end of period	$	402.4	$	531.6	$	(129.2)

Operating Cash Flows - Operating cash flows are affected by earnings from our business activities and changes in our operating assets and liabilities. Changes in commodity prices and demand for our services or products, whether because of general economic conditions, changes in supply, changes in demand for the end products that are made with our products or increased competition from other service providers, could affect our earnings and operating cash flows. Our operating cash flows can also be impacted by changes in our NGLs and natural gas inventory balances, which are driven primarily by commodity prices, supply, demand and the operation of our assets.

Cash flows from operating activities, before changes in operating assets and liabilities for the ~~nine~~three months ended ~~September 30, 2020, decreased $116.3~~March 31, 2021, increased $128.8 million compared with the same period in ~~2019.~~2020. This ~~decrease~~increase is due primarily to ~~higher interest expense, lower volumes and lower realized prices~~natural gas sales in our Natural Gas ~~Gathering and Processing~~Pipelines segment, and lower optimization and marketing earnings in our Natural Gas Liquids segment. These decreases were offset partially by an increase in exchange services due to higher volumes and lower rail and pipeline transportation costs in our Natural Gas Liquids segment and lower operating costs across our segments, as discussed in “Financial Results and Operating Information.”

The changes in operating assets and liabilities decreased operating cash flows ~~$346.6~~$138.4 million for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, compared with a decrease of ~~$239.2~~$120.2 million for the same period in ~~2019.~~2020. This change is due primarily to changes in accounts ~~payable and other accruals and deferrals~~receivable resulting from the timing of receipt of cash from customers and NGLs and natural gas in storage, which varies from period to period and with changes in commodity prices; offset partially by changes in accounts payable resulting from the timing of payments to vendors, suppliers and other third parties; and changes in risk-management assets and liabilities ~~which include a loss on the settlement of $750 million of our forward-starting interest-rate swaps related to our March 2020 issuance of senior unsecured notes~~ and ~~changes in the fair value of risk-management assets and liabilities,~~commodity imbalances, which vary from period to period and with changes in commodity prices and interest rates.

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Investing Cash Flows - Cash used in investing activities for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, decreased ~~$666.0~~$794.1 million, compared with the same period in ~~2019,~~2020, due primarily to reduced capital expenditures related to our completed ~~paused~~ and ~~suspended~~paused capital-growth projects.

Financing Cash Flows - Cash from financing activities for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, decreased ~~$677.5 million,~~$1.5 billion, compared with the same period in ~~2019,~~2020, due primarily to the issuance of ~~$3.2~~$1.75 billion in long-term debt in March 2020, ~~compared with $4.2 billion long-term debt issuances in 2019, the repayment of long-term debt and short-term borrowings and increased dividends,~~ offset partially by the ~~issuance~~repayment of ~~common stock~~short-term borrowings in ~~June~~the first quarter 2020.

REGULATORY, ENVIRONMENTAL AND SAFETY MATTERS

Environmental Matters - We are subject to a variety of historical preservation and environmental laws and/or regulations that affect many aspects of our present and future operations. Regulated activities include, but are not limited to, those involving air emissions, storm water and wastewater discharges, handling and disposal of solid and hazardous wastes, wetlands and waterways preservation, wildlife conservation, cultural resources protection, hazardous materials transportation, and pipeline

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and facility construction. These laws and regulations require us to obtain and/or comply with a wide variety of environmental clearances, registrations, licenses, permits and other approvals. Failure to comply with these laws, regulations, licenses and permits may expose us to fines, penalties, reputational harm and/or interruptions in our operations that could be material to our results of operations or financial condition. For example, if a leak or spill of hazardous substances or petroleum products occurs from pipelines or facilities that we own, operate or otherwise use, we could be held jointly and severally liable for all resulting liabilities, including response, investigation and cleanup costs, which could affect adversely our results of operations and cash flows. In addition, emissions controls and/or other regulatory or permitting mandates under the Clean Air Act and other similar federal and state laws could require unexpected capital expenditures at our facilities. We cannot assure that existing environmental statutes and regulations will not be revised or that new regulations will not be adopted or become applicable to us. We also cannot assure that existing permits will not be revised or cancelled, potentially impacting facility construction activities or ongoing operations.

Additional information about our regulatory, environmental and safety matters can be found in “Regulatory, Environmental and Safety Matters” under Part I, Item 1, Business, in our Annual Report.

IMPACT OF NEW ACCOUNTING STANDARDS

See Note A of the Notes to Consolidated Financial Statements in this Quarterly Report for discussion of new accounting standards.

~~ESTIMATES AND~~ CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our Consolidated Financial Statements and related disclosures in accordance with GAAP requires us to make estimates and assumptions with respect to values or conditions that cannot be known with certainty that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. These estimates and assumptions also affect the reported amounts of revenue and expenses during the reporting period. Although we believe these estimates and assumptions are reasonable, actual results could differ from our estimates.

Information about our ~~estimates and~~ critical accounting policies and estimates is included under Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, ~~“Estimates~~“Critical Accounting Policies and ~~Critical Accounting Policies,~~Estimates,” in our Annual Report.

FORWARD-LOOKING STATEMENTS

Some of the statements contained and incorporated in this Quarterly Report are forward-looking statements as defined under federal securities laws. The forward-looking statements relate to our anticipated financial performance (including projected operating income, net income, capital expenditures, cash flows and projected levels of dividends), liquidity, management’s plans and objectives for our future capital-growth projects and other future operations (including plans to construct additional natural gas and NGL pipelines, processing and fractionation facilities and related cost estimates), our business prospects, the outcome of regulatory and legal proceedings, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under federal securities legislation and other applicable laws. The following discussion is intended to identify important factors that could cause future outcomes to differ materially from those set forth in the forward-looking statements.

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Forward-looking statements include the items identified in the preceding paragraph, the information concerning possible or assumed future results of our operations and other statements contained or incorporated in this Quarterly Report identified by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “guidance,” “intend,” “may,” “might,” “outlook,” “plan,” “potential,” “project,” “scheduled,” “should,” “will,” ~~“would”~~“would,” and other words and terms of similar meaning.

One should not place undue reliance on forward-looking statements. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Those factors may affect our operations, markets, products, services and prices. In addition to any assumptions and other factors referred to specifically in connection with the forward-looking statements, factors that could cause our actual results to differ materially from those contemplated in any forward-looking statement include, among others, the following:

•the impact on drilling and production by factors beyond our control, including the demand for natural gas and crude oil; producers’ desire and ability to drill and obtain necessary permits; regulatory compliance; reserve performance; and capacity constraints and/or shut downs on the pipelines that transport crude oil, natural gas and NGLs from producing areas and our facilities;

•~~the effects of weather and other natural phenomena, including climate change, on our operations, demand for our services and energy prices;~~

•~~the~~ length, severity and reemergence of a pandemic or other health crisis, such as the ~~recent~~ outbreak of COVID-19 and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities

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implement to address it, which may (as with COVID-19) precipitate or exacerbate one or more of the factors herein, reduce the demand for natural gas, NGLs and crude oil and significantly disrupt or prevent us and our customers and counterparties from operating in the ordinary course for an extended period and increase the cost of operating our business;

•operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruption;

•the ~~timing~~impact on drilling and ~~extent of changes in energy commodity prices,~~production by factors beyond our control, including ~~changes due~~the demand for natural gas and crude oil; producers’ desire and ability to ~~production decisions by other countries, such as~~drill and obtain necessary permits; regulatory compliance; reserve performance; and capacity constraints and/or shut downs on the ~~failure of countries to abide by recent agreements to reduce production volumes;~~

•~~economic climate~~pipelines that transport crude oil, natural gas and ~~growth in the geographic~~NGLs from producing areas ~~in which we operate;~~and our facilities;

•risks associated with adequate supply to our gathering, processing, fractionation and pipeline facilities, including production declines that outpace new drilling, the shutting-in of production by producers, actions taken by federal, state or local governments to require producers to prorate or to cut their production levels as a way to address any excess market supply situations or extended periods of ethane rejection;

•demand for our services and products in the proximity of our facilities;

•economic climate and growth in the geographic areas in which we operate;

•the risk of a slowdown in growth or decline in the United States or international economies, including liquidity risks in United States or foreign credit markets;

•performance of contractual obligations by our customers, service providers, contractors and shippers;

•the effects of changes in governmental policies and regulatory actions, including changes with respect to income and other taxes, pipeline safety, environmental compliance, climate change initiatives, production limits and authorized rates of recovery of natural gas and natural gas transportation costs;

•changes in demand for the use of natural gas, NGLs and crude oil because of the development of new technologies or other market conditions caused by concerns about climate change;

•the effects of weather and other natural phenomena, including climate change, on our operations, demand for our services and energy prices;

•acts of nature, sabotage, terrorism or other similar acts that cause damage to our facilities or our suppliers’, customers’ or shippers’ facilities;

•the possibility of future terrorist attacks or the possibility or occurrence of an outbreak of, or changes in, hostilities or changes in the political conditions throughout the world;

•the risk of increased costs for insurance premiums, security or other items as a consequence of terrorist attacks;

•the timing and extent of changes in energy commodity prices, including changes due to production decisions by other countries, such as the failure of countries to abide by agreements to reduce production volumes;

•competition from other United States and foreign energy suppliers and transporters, as well as alternative forms of energy, including, but not limited to, solar power, wind power, geothermal energy and biofuels such as ethanol and biodiesel;

•~~demand for our services and products in the proximity of our facilities;~~

•the ability to market pipeline capacity on favorable terms, including the effects of:

– future demand for and prices of natural gas, NGLs and crude oil;

– competitive conditions in the overall energy market;

– availability of supplies of United States natural gas and crude oil; and

– availability of additional storage capacity;

•~~acts~~the efficiency of ~~nature, sabotage, terrorism or other similar acts that cause damage to~~ our ~~facilities or our suppliers’, customers’ or shippers’ facilities;~~plants in processing natural gas and extracting and fractionating NGLs;

•the ~~possibility~~composition and quality of ~~future terrorist attacks or~~ the ~~possibility or occurrence of an outbreak of, or changes~~natural gas and NGLs we gather and process in ~~hostilities or changes in the political conditions throughout the world;~~

•~~the timely receipt of approval by applicable governmental entities for construction~~our plants and ~~operation of~~transport on our ~~pipeline and other projects and required regulatory clearances;~~

•our ability to acquire all necessary permits, consents or other approvals in a timely manner, to promptly obtain all necessary materials and supplies required for construction, and to construct gathering, processing, storage, fractionation and transportation facilities without labor or contractor problems;

•~~the profitability of assets or businesses acquired or constructed by us;~~

•~~the risk of a slowdown in growth or decline in the United States or international economies, including liquidity risks in United States or foreign credit markets;~~pipelines;

•risks of marketing, trading and hedging activities, including the risks of changes in energy prices or the financial condition of our counterparties;

•~~the uncertainty of estimates, including accruals~~our ability to control operating costs and ~~costs of environmental remediation;~~

•~~changes in demand for the use of natural gas, NGLs and crude oil because of market conditions caused by concerns about climate change;~~make cost-saving changes;

•the ~~impact~~risk inherent in the use of ~~uncontracted capacity~~information systems in our ~~assets being greater or less than expected;~~

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•our counterparties and service providers, including cyber-attacks, which, according to experts, have increased in volume and sophistication since the ~~composition and quality~~beginning of the ~~natural gas~~COVID-19 pandemic; implementation of new software and ~~NGLs we gather~~hardware; and ~~process in our plants and transport~~the impact on ~~our pipelines;~~the timeliness of information for financial reporting;

•the ~~efficiency~~timely receipt of approval by applicable governmental entities for construction and operation of our ~~plants in processing natural gas and extracting and fractionating NGLs;~~

•~~our ability to control construction costs and completion schedules of our pipelines~~pipeline and other ~~projects;~~

•~~the effects of changes in governmental policies~~projects and required regulatory actions, including changes with respect to income and other taxes, pipeline safety, environmental compliance, climate change initiatives, production limits and authorized rates of recovery of natural gas and natural gas transportation costs;clearances;

•the ability to recover operating costs and amounts equivalent to income taxes, costs of property, plant and equipment and regulatory assets in our state and FERC-regulated rates;

•the results of administrative proceedings and litigation, regulatory actions, executive orders, rule changes and receipt of expected clearances involving any local, state or federal regulatory body, including the FERC, the National Transportation Safety Board, the PHMSA, the EPA and the CFTC;

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•the mechanical integrity of facilities and pipelines operated;

•the capital-intensive nature of our businesses;

•the impact of unforeseen changes in interest rates, debt and equity markets, inflation rates, economic recession and other external factors over which we have no control, including the effect on pension and postretirement expense and funding resulting from changes in equity and bond market returns;

•actions by rating agencies concerning our credit;

•our indebtedness and guarantee obligations could make us vulnerable to general adverse economic and industry conditions, limit our ability to borrow additional funds and/or place us at competitive disadvantages compared with our competitors that have less debt or have other adverse consequences;

•our ability to access capital at competitive rates or on terms acceptable to us;

•our ability to control construction costs and completion schedules of our pipelines and other projects;

•difficulties or delays experienced by trucks, railroads or pipelines in delivering products to or from our terminals or pipelines;

•the ~~capital-intensive nature~~uncertainty of ~~our businesses;~~estimates, including accruals and costs of environmental remediation;

•the ~~mechanical integrity~~impact of ~~facilities operated;~~uncontracted capacity in our assets being greater or less than expected;

•the impact of potential impairment charges;

•the profitability of assets or businesses acquired or constructed by us;

•risks associated with pending or possible acquisitions and dispositions, including our ability to finance or integrate any such acquisitions and any regulatory delay or conditions imposed by regulatory bodies in connection with any such acquisitions and dispositions;

•the risk that material weaknesses or significant deficiencies in our internal controls over financial reporting could emerge or that minor problems could become significant;

•~~actions by rating agencies concerning our credit;~~

•~~our ability to access capital at competitive rates or on terms acceptable to us;~~

•~~the impact~~ and outcome of pending and future litigation;

•~~performance of contractual obligations by our customers, service providers, contractors and shippers;~~

•~~our ability to control operating costs and make cost-saving changes;~~

•the impact of recently issued and future accounting updates and other changes in accounting policies;

•~~the risk of increased costs for insurance premiums, security or other items as a consequence of terrorist attacks;~~

•the risk inherent in the use of information systems in our respective businesses and those of our counterparties and service providers, including cyber-attacks, which, according to experts, have increased in volume and sophistication since the beginning of the COVID-19 pandemic; implementation of new software and hardware; and the impact on the timeliness of information for financial reporting;

•~~the impact of potential impairment charges;~~ and

•the risk factors listed in the reports we have filed and may file with the SEC, which are incorporated by reference.

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other factors could also affect adversely our future results. These and other risks are described in greater detail in Part I, Item 1A, Risk Factors, in our Annual Report and in our other filings that we make with the SEC, which are available via the SEC’s website at www.sec.gov and our website at www.oneok.com. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Any such forward-looking statement speaks only as of the date on which such statement is made, and other than as required under securities laws, we undertake no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk discussed below includes forward-looking statements and represents an estimate of possible changes in future earnings that could occur assuming hypothetical future movements in interest rates or commodity prices. Our views on market risk are not necessarily indicative of actual results that may occur and do not represent the maximum possible

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gains and losses that may occur since actual gains and losses will differ from those estimated based on actual fluctuations in interest rates or commodity prices and the timing of transactions.

We are exposed to market risk due to commodity price and interest-rate volatility. Market risk is the risk of loss arising from adverse changes in market rates and prices. We may use financial instruments, including forward sales, swaps, options and futures, to manage the risks of certain identifiable or anticipated transactions and achieve more predictable cash flows. Our risk-management function follows ~~established~~ policies and procedures established by our Risk Oversight and Strategy Committee to monitor our natural gas, condensate and NGL marketing activities and interest rates to ensure our hedging activities mitigate market ~~risks.~~risks and comply with approved thresholds or limits. We do not use financial instruments for trading purposes.

We utilize a sensitivity analysis model to assess the risk associated with our derivative portfolio. The sensitivity analysis measures the potential change in fair value of our derivative instruments based upon a hypothetical 10% movement in the underlying commodity prices or interest rates. In addition to these variables, the fair value of our derivative portfolio is influenced by fluctuations in the notional amounts of the instruments and the discount rates used to determine the present values. Because we enter into these derivative instruments for the purpose of mitigating the risks that accompany certain of our

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business activities, as described below, the change in the market value of our derivative portfolio would typically be offset largely by a corresponding gain or loss on the hedged item.

COMMODITY PRICE RISK

As part of our hedging strategy, we use commodity derivative financial instruments and physical-forward contracts described in Note C of the Notes to Consolidated Financial Statements in this Quarterly Report to reduce the impact of near-term price fluctuations of natural gas, NGLs and condensate.

Although our businesses are primarily fee-based, in our Natural Gas Gathering and Processing segment, we are exposed to commodity price risk as a result of retaining a portion of the commodity sales proceeds associated with our ~~POP~~fee with ~~fee~~POP contracts. Under certain ~~POP~~fee with ~~fee~~POP contracts, our contractual fees and POP percentage may increase or decrease if production volumes, delivery pressures or commodity prices change relative to specified thresholds. We are exposed to basis risk between the various production and market locations where we buy and sell commodities.

The following table presents the effect a hypothetical 10% change in the underlying commodity prices would have on the estimated fair value of our commodity derivative instruments for the periods indicated:


Commodity Contracts	March 31, 2021		December 31, 2020
	(Millions of dollars)
Crude oil and NGLs	$	44.3	$	20.0
Natural gas	20.9		10.6
Total change in estimated fair value of commodity contracts	$	65.2	$	30.6

Our sensitivity analysis represents an estimate of the reasonably possible gains and losses that would be recognized on our commodity derivative contracts assuming hypothetical movements in future market prices and is not necessarily indicative of actual results that may occur. Actual gains and losses may differ from estimates due to actual fluctuations in market prices, as well as changes in our commodity derivative portfolio during the year.

The following tables set forth hedging information for our Natural Gas Gathering and Processing segment’s forecasted equity volumes for the periods indicated:


		Three Months Ending December 31, 2020						Nine Months Ending December 31, 2021
		Volumes Hedged	Average Price			Percentage Hedged		Volumes Hedged	Average Price			Percentage Hedged
NGLs - excluding ethane (MBbl/d) - Conway/Mont Belvieu	NGLs - excluding ethane (MBbl/d) - Conway/Mont Belvieu	9.5	$	0.55	/ gallon	70%	NGLs - excluding ethane (MBbl/d) - Conway/Mont Belvieu	10.3	$	0.51	/ gallon	59%
Condensate (MBbl/d) - WTI-NYMEX	Condensate (MBbl/d) - WTI-NYMEX	2.2	$	53.67	/ Bbl	92%	Condensate (MBbl/d) - WTI-NYMEX	2.8	$	42.87	/ Bbl	78%

Natural gas (BBtu/d) - NYMEX and basis	Natural gas (BBtu/d) - NYMEX and basis	108.3	$	2.36	/ MMBtu	89%	Natural gas (BBtu/d) - NYMEX and basis	118.7	$	2.57	/ MMBtu	75%


		Year Ending December 31, 2021						Year Ending December 31, 2022
		Volumes Hedged	Average Price			Percentage Hedged		Volumes Hedged	Average Price			Percentage Hedged
NGLs - excluding ethane (MBbl/d) - Conway/Mont Belvieu	NGLs - excluding ethane (MBbl/d) - Conway/Mont Belvieu	5.1	$	0.48	/ gallon	29%	NGLs - excluding ethane (MBbl/d) - Conway/Mont Belvieu	4.0	$	0.67	/ gallon	21%
Condensate (MBbl/d) - WTI-NYMEX	Condensate (MBbl/d) - WTI-NYMEX	0.7	$	44.55	/ Bbl	19%	Condensate (MBbl/d) - WTI-NYMEX	1.0	$	57.15	/ Bbl	24%
Natural gas (BBtu/d) - NYMEX and basis	Natural gas (BBtu/d) - NYMEX and basis	84.8	$	2.55	/ MMBtu	54%	Natural gas (BBtu/d) - NYMEX and basis	42.0	$	2.60	/ MMBtu	24%

Our Natural Gas Gathering and Processing segment’s commodity price sensitivity is estimated as a hypothetical change in the price of NGLs, crude oil and natural gas at ~~September 30, 2020.~~March 31, 2021. Condensate sales are typically based on the price of crude oil. Assuming normal operating conditions, we estimate the following for our forecasted equity volumes:

•a $0.01 per-gallon change in the composite price of NGLs, excluding ethane, would change adjusted EBITDA for the ~~three~~nine months ending December 31, ~~2020,~~2021, and for the year ending December 31, ~~2021,~~2022, by approximately ~~$0.5~~$2.0 million and ~~$2.7~~$3.0 million, respectively;

•a $1.00 per-barrel change in the price of crude oil would change adjusted EBITDA for the ~~three~~nine months ending December 31, ~~2020,~~2021, and for the year ending December 31, ~~2021,~~2022, by approximately ~~$0.2~~$1.0 million and ~~$1.4~~$1.5 million, respectively; and

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•a $0.10 per-MMBtu change in the price of residue natural gas would change adjusted EBITDA for the ~~three~~nine months ending December 31, ~~2020,~~2021, and for the year ending December 31, ~~2021,~~2022, by approximately ~~$1.1~~$4.4 million and ~~$5.8~~$6.4 million, respectively.

These estimates do not include any effects of hedging or effects on demand for our services or natural gas processing plant operations that might be caused by, or arise in conjunction with, commodity price fluctuations. For example, a change in the gross processing spread may cause a change in the amount of ethane extracted from the natural gas stream, impacting gathering and processing financial results for certain contracts.

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INTEREST-RATE RISK

We are exposed to interest-rate risk through borrowings under our $2.5 Billion Credit Agreement, commercial paper program and long-term debt issuances. Future increases in commercial paper rates or bond rates could expose us to increased interest costs on future borrowings. We manage interest-rate risk through the use of fixed-rate debt, floating-rate debt and interest-rate swaps. Interest-rate swaps are agreements to exchange interest payments at some future point based on specified notional amounts. In March 2020, we settled $750 million of our forward-starting interest-rate swaps related to our underwritten public offerings of $1.75 billion senior unsecured notes. In May 2020, we settled the remaining $1.3 billion of our interest-rate swaps used to hedge our LIBOR-based interest payments.

The following table presents the effect of a 10% hypothetical change in interest rates on the estimated fair value of our interest- rate derivative instruments for the periods indicated:


	March 31, 2021		December 31, 2020
	(Millions of dollars)
Forward-starting interest-rate swaps	$	22.6	$	12.9

Our sensitivity analysis represents an estimate of the reasonably possible gains and losses that would be recognized on our interest-rate derivative contracts assuming hypothetical movements in future interest rates and is not necessarily indicative of actual results that may occur. Actual gains and losses may differ from estimates due to actual fluctuations in interest rates, as well as changes in our interest-rate derivative portfolio during the year.

See Note C of the Notes to Consolidated Financial Statements in this Quarterly Report for more information on our hedging activities.

COUNTERPARTY CREDIT RISK

We assess the creditworthiness of our counterparties on an ongoing basis and require security, including prepayments and other forms of collateral, when appropriate. Certain of our counterparties may be impacted by a relatively low commodity price environment and could experience financial problems, which could result in nonpayment and/or nonperformance, which could impact adversely our results of operations.

The creditworthiness of our counterparties, which are primarily investment grade, ~~and our customer concentration are~~is consistent with ~~those~~that discussed in Part II, Item 7A, Quantitative and Qualitative Disclosures about Market Risk, in our Annual Report.

ITEM 4.CONTROLS AND PROCEDURES

Quarterly Evaluation of Disclosure Controls and Procedures - Our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report based on the evaluation of the controls and procedures required by Rules ~~13a-15(e)~~13a-15(b) and ~~15d-15(e)~~15d-15(b) of the Exchange Act.

Changes in Internal Control Over Financial Reporting - There have been no changes in our internal control over financial reporting during the quarter ended ~~September 30, 2020,~~March 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

Additional information about our legal proceedings is included in Note J of the Notes to Consolidated Financial Statements in this Quarterly Report and under Note N of the Notes to Consolidated Financial Statements in our Annual Report.

ITEM 1A.RISK FACTORS

~~The COVID-19 pandemic and recent energy industry developments have affected adversely, and could continue to affect adversely, our results of operations.~~

The COVID-19 pandemic has led to global and regional economic disruption, volatility in the financial markets and a weakened commodity price environment. The outbreak and government measures taken in response, including extended quarantines, closures and reduced operations of businesses have also had a significant adverse impact, both direct and indirect, on our business and the economy. Due to reductions in economic activity, the world is experiencing reduced demand for refined products, NGLs and natural gas, and weakened commodity prices, which has affected adversely our operations. Continuing uncertainty regarding the global impact of the COVID-19 impact is likely to result in reduced demand for the services we provide. We may also experience disruptions to supply chains and the availability and efficiency of our workforce as a result of

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the pandemic, which could affect adversely our ability to conduct our business and operations. Moreover, the uncertainty regarding the duration and long-term impact of the COVID-19 pandemic could further impact our access to capital markets. The spread of COVID-19 may also cause other unpredictable or unforeseen events that may affect adversely our results of operations.

Volatility in commodity prices may continue to have an impact on many of our counterparties, which, in turn, could have a negative impact on their ability to meet their obligations to us. For example, in March 2020, unsuccessful negotiations between the Organization of the Petroleum Exporting Countries (OPEC) and Russia regarding crude oil production cuts resulted in a price war between Saudi Arabia and Russia. As a result, the global supply of crude oil significantly exceeded demand and led to a collapse in crude oil prices. However, further negotiations in April 2020 resulted in an agreement to reduce production volumes. Failure to abide by these agreed-upon crude oil production cuts may further destabilize the global oil market, which is simultaneously experiencing a limitation on crude oil storage capacity and a dramatic decrease in demand due to COVID-19, and crude oil prices may continue to decline. Recently, OPEC and Russia agreed to an ease in crude oil production cuts, and these increased volumes could further negatively impact our counterparties. If adverse global or regional economic and market conditions remain uncertain or persist, spread or deteriorate further, we may continue to experience an adverse impact on our business, results of operations, financial position, cash flows and/or liquidity.

Our investors should consider ~~additional~~the risks set forth in Part I, Item 1A, Risk Factors, of our Annual Report that could affect us and our business. ~~Additionally, the impact of the COVID-19 pandemic could exacerbate many of the risks identified in our Annual Report.~~ Although we have tried to discuss key factors, our investors need to be aware that other risks may prove to be important in the future. Even after the COVID-19 pandemic has moderated and business and social distancing restrictions have eased, we may continue to experience similar adverse effects to our businesses, operating results, cash flows and/or financial condition resulting from economic slowdown that is expected to persist. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our financial performance. Investors should consider carefully the discussion of risks and the other information included or incorporated by reference in this Quarterly Report, including “Forward-Looking Statements,” which are included in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.OTHER INFORMATION

Not applicable.

ITEM 6.EXHIBITS

Readers of this report should not rely on or assume the accuracy of any representation or warranty or the validity of any opinion contained in any agreement filed as an exhibit to this Quarterly Report, because such representation, warranty or opinion may be subject to exceptions and qualifications contained in separate disclosure schedules, may represent an allocation of risk between parties in the particular transaction, may be qualified by materiality standards that differ from what may be viewed as material for securities law purposes, or may no longer continue to be true as of any given date. All exhibits attached to this Quarterly Report are included for the purpose of complying with requirements of the SEC. Other than the certifications made by our officers pursuant to the Sarbanes-Oxley Act of 2002 included as exhibits to this Quarterly Report, all exhibits are included only to provide information to investors regarding their respective terms and should not be relied upon as constituting

or providing any factual disclosures about us, any other persons, any state of affairs or other matters.

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The following exhibits are filed as part of this Quarterly Report:


Exhibit No.			Exhibit Description

3.1			Amended and Restated By-laws of ONEOK, Inc. (incorporated by reference from Exhibit 3.1 to ONEOK Inc.’s Current Report on Form 8-K , filed September 20, 2018 (File No. 1-13643)).

3.2			Amended and Restated Certificate of Incorporation of ONEOK, Inc., dated July 3, 2017, as amended (incorporated by reference from Exhibit 3.2 to ONEOK Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed November 1, 2017 (File No. 1-13643)).

10.1			~~Equity Distribution~~Form of 2021 Restricted Unit Award Agreement dated July 23, 2020, among ONEOK, Inc., and Credit Suisse Securities (USA) LLC, BofA Securities, Inc., Goldman Sachs & Co. LLC, Mizuho Securities USA LLC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc., SunTrust Robinson Humphrey, Inc. and TD Securities (USA) LLC as sales agents, principals and/or forward sellers, and Credit Suisse Capital LLC, Bank of America, N.A., Goldman Sachs & Co. LLC, Mizuho Markets Americas LLC, Morgan Stanley & Co. LLC, Royal Bank of Canada, The Bank of Nova Scotia and The Toronto-Dominion Bank as forward purchasers (incorporated by reference from Exhibit ~~1.1~~10.33 to ONEOK, Inc.’s ~~Current~~Annual Report on Form ~~8-K with a filing date of July 24, 2020~~10-K, filed February 23, 2021 (File No. 1-13643)).

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10.2			Form of ~~Master Forward Confirmation~~2021 Performance Unit Award Agreement (incorporated by reference from Exhibit ~~1.2~~10.34 to ONEOK, Inc.’s ~~Current~~Annual Report on Form ~~8-K with a filing date of July 24, 2020~~10-K, filed February 23, 2021 (File No. 1-13643)).

22.1			List of subsidiary guarantors and issuers of guaranteed securities.

31.1			Certification of Terry K. Spencer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification of Walter S. Hulse III pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1			Certification of Terry K. Spencer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished only pursuant to Rule 13a-14(b)).

32.2			Certification of Walter S. Hulse III pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished only pursuant to Rule 13a-14(b)).

101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH			Inline XBRL Taxonomy Extension Schema Document.

101.CAL			Inline XBRL Taxonomy Calculation Linkbase Document.

101.DEF			Inline XBRL Taxonomy Extension Definitions Document.

101.LAB			Inline XBRL Taxonomy Label Linkbase Document.

101.PRE			Inline XBRL Taxonomy Presentation Linkbase Document.

104			Cover Page Interactive Data File ~~(formatted in~~(embedded within the Inline XBRL document and contained in Exhibit 101).

Attached as Exhibit 101 to this Quarterly Report are the following Inline XBRL-related documents: (i) Document and Entity Information; (ii) Consolidated Statements of Income for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019;~~2020; (iii) Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019;~~2020; (iv) Consolidated Balance Sheets at ~~September 30, 2020,~~March 31, 2021, and December 31, ~~2019;~~2020; (v) Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30, 2020~~March 31, 2021 and ~~2019;~~2020; (vi) Consolidated Statements of Changes in Equity for the three ~~and nine~~ months ended ~~September 30, 2020~~March 31, 2021 and ~~2019;~~2020; and (vii) Notes to Consolidated Financial Statements.

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SIGNATURE

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	ONEOK, Inc.
	Registrant


Date: ~~October~~April 28, ~~2020~~2021	By:	/s/ Walter S. Hulse III
		Walter S. Hulse III
		Chief Financial Officer, Treasurer and
		Executive Vice President, ~~Strategic Planning~~Strategy
		and Corporate Affairs
		(Principal Financial Officer)

5846


	September 30, 2020		December 31, 2019
	(Thousands of dollars)
Natural Gas Gathering and Processing	$	0	$	153,404
Natural Gas Liquids	371,217		371,217
Natural Gas Pipelines	156,375		156,375
Total goodwill	$	527,592	$	680,996


	Risk- Management Assets/Liabilities (a)		Retirement and Other Postretirement Benefit Plan Obligations (a) (b)		Risk- Management Assets/Liabilities of Unconsolidated Affiliates (a)		Accumulated Other Comprehensive Loss (a)
	(Thousands of dollars)
January 1, 2020	$	(233,520)	$	(131,481)	$	(8,999)	$	(374,000)
Other comprehensive income (loss) before reclassifications	(168,421)		59		(10,893)		(179,255)
Amounts reclassified to net income (c)	11,210		10,626		801		22,637
Other comprehensive income (loss)	(157,211)		10,685		(10,092)		(156,618)
September 30, 2020	$	(390,731)	$	(120,796)	$	(19,091)	$	(530,618)


	Three Months Ended September 30, 2019
	Income		Shares	Per Share Amount
	(Thousands, except per share amounts)
Basic EPS
Net income available for common stock	$	308,880	413,816	$	0.75
Diluted EPS
Effect of dilutive securities	0		1,762
Net income available for common stock and common stock equivalents	$	308,880	415,578	$	0.74


	Nine Months Ended September 30, 2020
	Income		Shares	Per Share Amount
	(Thousands, except per share amounts)
Basic EPS
Net income available for common stock	$	303,955	426,369	$	0.71
Diluted EPS
Effect of dilutive securities	0		628
Net income available for common stock and common stock equivalents	$	303,955	426,997	$	0.71


	Nine Months Ended September 30, 2019
	Income		Shares	Per Share Amount
	(Thousands, except per share amounts)
Basic EPS
Net income available for common stock	$	957,501	413,443	$	2.32
Diluted EPS
Effect of dilutive securities	0		1,834
Net income available for common stock and common stock equivalents	$	957,501	415,277	$	2.31


	Finance Lease		Operating Leases
	(Millions of dollars)
Remainder of 2020	$	1.2	$	4.1
2021	4.5		16.4
2022	4.5		15.1
2023	4.5		13.8
2024	4.5		12.5
2025 and beyond	17.1		58.2
Total lease payments	36.3		120.1
Less: Interest	11.5		15.6
Present value of lease liabilities	$	24.8	$	104.5


Nine Months Ended September 30, 2020	Natural Gas Gathering and Processing		Natural Gas Liquids (a)		Natural Gas Pipelines (b)		Total Segments
	(Thousands of dollars)
NGL and condensate sales	$	569,308	$	4,429,414	$	0	$	4,998,722
Residue natural gas sales	518,435		0		6,033		524,468
Gathering, processing and exchange services revenue	110,345		370,920		0		481,265
Transportation and storage revenue	0		131,410		353,188		484,598
Other	11,106		6,779		916		18,801
Total revenues (c)	1,209,194		4,938,523		360,137		6,507,854

Cost of sales and fuel (exclusive of depreciation and operating costs)	(541,910)		(3,473,575)		(5,096)		(4,020,581)
Operating costs	(232,489)		(297,771)		(100,966)		(631,226)
Equity in net earnings (loss) from investments	(1,385)		31,083		78,303		108,001
Noncash compensation expense and other	(1,865)		1,541		(184)		(508)
Segment adjusted EBITDA	$	431,545	$	1,199,801	$	332,194	$	1,963,540

Depreciation and amortization	$	(180,634)	$	(198,440)	$	(43,937)	$	(423,011)
Impairment charges	$	(564,353)	$	(77,401)	$	0	$	(641,754)
Investments in unconsolidated affiliates	$	2,276	$	426,621	$	361,476	$	790,373
Total assets	$	6,437,301	$	13,449,529	$	2,082,846	$	21,969,676
Capital expenditures	$	362,811	$	1,504,881	$	40,478	$	1,908,170


Nine Months Ended September 30, 2019	Natural Gas Gathering and Processing		Natural Gas Liquids (a)		Natural Gas Pipelines (b)		Total Segments
	(Thousands of dollars)
NGL and condensate sales	$	890,021	$	5,826,297	$	0	$	6,716,318
Residue natural gas sales	725,672		0		1,242		726,914
Gathering, processing and exchange services revenue	126,073		309,571		0		435,644
Transportation and storage revenue	0		141,384		350,029		491,413
Other	11,287		7,313		4,208		22,808
Total revenues (c)	1,753,053		6,284,565		355,479		8,393,097

Cost of sales and fuel (exclusive of depreciation and operating costs)	(971,397)		(4,914,452)		(3,785)		(5,889,634)
Operating costs	(271,236)		(340,274)		(113,043)		(724,553)
Equity in net earnings (loss) from investments	(4,660)		49,406		70,429		115,175
Noncash compensation expense and other	8,399		12,618		1,931		22,948
Segment adjusted EBITDA	$	514,159	$	1,091,863	$	311,011	$	1,917,033

Depreciation and amortization	$	(162,014)	$	(143,166)	$	(42,653)	$	(347,833)
Investments in unconsolidated affiliates	$	35,252	$	445,755	$	389,504	$	870,511
Total assets	$	6,546,417	$	11,662,489	$	2,083,773	$	20,292,679
Capital expenditures	$	674,115	$	1,969,138	$	77,861	$	2,721,114