Exhibit 99.1
| | |
| | News |
| | | | |
| May 2, 2006 | | Analyst Contact: | | Dan Harrison |
| | | | 918-588-7950 |
| | Media Contact: | | Megan Washbourne |
| | | | 918-588-7572 |
ONEOK Announces Higher First-Quarter 2006 Earnings
TULSA, Okla. – May 2, 2006 – ONEOK, Inc. (NYSE: OKE) announced today that its first-quarter 2006 net income increased to $129.5 million, or $1.17 per diluted share, compared with $107.7 million, or $0.97 per diluted share, in the same period last year.
First-quarter 2006 results include operating income increases in the company’s energy services, natural gas liquids, and pipelines and storage segments, with the gathering and processing and distributions segments down slightly.
“The natural gas liquids assets we acquired last year continue to perform as expected, benefiting both our natural gas liquids and pipelines and storage segments,” said David Kyle, ONEOK chairman, president and chief executive officer.
“Our energy services segment turned in an outstanding performance as we continued to provide value to our customers through the delivery of physical products and risk management services through our portfolio of contracted transportation and storage capacity. Improved natural gas basis differentials and storage margins from increased demand fees also positively affected the energy services segment’s performance,” Kyle stated.
ONEOK adopted Financial Accounting Standards Board Emerging Issues Task Force Issue No. 04-5, requiring the company to consolidate its investment in Northern Border Partners, L.P. in its financial statements, effective Jan. 1, 2006. The adoption did not have an effect on the company’s net income; however, reported revenues, costs and expenses are higher, reflecting the activities of the partnership. First-quarter 2006 results reflect the consolidation, which resulted in increased operating income of $63.8 million.
ONEOK’s first-quarter results also include income from the three segments – gathering and processing, natural gas liquids and pipelines and storage – that were sold to Northern Border Partners, effective April 1, 2006. Beginning with the second quarter 2006, results from those segments will be included in the partnership’s stand-alone financial results but will still be included in ONEOK’s consolidated results.
“With our completion of the transactions with Northern Border Partners and TransCanada in early April, we have established a strong foundation for future growth,” Kyle
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added. “As the general partner and a 45.7 percent owner of the partnership, our interests are clearly aligned with the partnership as it pursues opportunities to grow, benefiting not only the partnership’s unit holders but also ONEOK’s shareholders.”
FIRST-QUARTER 2006 RESULTS INCLUDED:
| | • | | Operating income of $311.5 million, compared with $186.4 million in 2005, reflecting the consolidation of the partnership’s results and higher operating income in the company’s energy services, natural gas liquids, and pipelines and storage segments; |
| | • | | Operating costs of $263.6 million in the first quarter, compared with $184.0 million in the same period a year earlier, primarily because of the consolidation of the partnership’s financial results and the purchase of the natural gas liquids assets in July 2005; |
| | • | | Announcement of the transactions with Northern Border Partners, L.P. and TransCanada, which were subsequently completed, effective April 1, 2006, in which ONEOK became the sole owner of the general partner interest, owner of 45.7 percent of the partnership and received $1.35 billion in cash and transferred certain assets to the partnership; |
| | • | | Settlement of the company’s equity units in February, which resulted in the issuance of 19.5 million shares of common stock and receipt of $402.4 million that was used to reduce short-term debt; |
| | • | | Consolidated long-term debt of 57 percent of total capitalization; ONEOK stand-alone long-term debt of 46 percent of capitalization; |
| | • | | Consolidated cash flow from continuing operations, before changes in working capital, of $281.0 million, which exceeded capital expenditures, dividends and minority interest distributions of $142.8 million by $138.2 million; |
| | • | | Recognition by FORTUNE Magazine as one of the country’s “most admired” companies, including a number-one rating in the energy sector in the categories of social responsibility, use of corporate assets, and quality of management and products/services. |
FIRST-QUARTER 2006 BUSINESS-UNIT RESULTS
For comparison purposes, the segment financial and operating results for 2005 have been reclassified to reflect the transfer of the company’s legacy natural gas liquids marketing business, which was previously in the gathering and processing segment, to the natural gas liquids segment.
Gathering and Processing
The gathering and processing segment’s operating income for the first quarter 2006 was $32.5 million, compared with $33.0 million in the same quarter 2005. Higher commodity prices offset an operating income reduction of $9.4 million attributed to the sale of the Texas assets.
Net margin for the first quarter was $62.4 million, compared with $71.1 million in the same period 2005. Net margin decreased $18.8 million due to the sale of the Texas gathering and processing assets in December 2005. Margins were $3.4 million higher, related to the company’s realized gross processing margins, net of hedging, on its keep-whole contracts. Higher natural gas and natural gas liquids prices on percent-of-proceeds contracts contributed an additional $9.9 million in net margin, net of hedging, compared with the same period last year. A
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decrease of $3.2 million was due to reduced volumes processed because of natural production declines and contract expirations. In the quarter, the volume of gas gathered, processed and sold also declined as a result of the sale of the Texas assets.
As a result of the Texas asset sale, operating costs declined $7.2 million, depreciation, depletion and amortization expense decreased $2.2 million and capital expenditures declined $1.4 million. These operating cost decreases were partially offset by higher employee-related expenses.
The following table provides realized prices, net of hedging:
| | | | | | |
Realized Prices, net of Hedging | | | |
| | | Three Months Ended
March 31, 2006 |
| | | 2006 | | 2005 |
Realized composite NGL sales price($/Gal) | | $ | 0.81 | | $ | 0.71 |
Realized condensate sales price($/bbl) | | $ | 57.67 | | $ | 44.06 |
Realized natural gas sales price($/MMBtu) | | $ | 7.96 | | $ | 5.94 |
Realized gross processing spread($/MMBtu) | | $ | 3.43 | | $ | 2.94 |
The following table contains margin information for the time periods indicated. NGL shrink, plant fuel and condensate shrink refer to the Btus that are removed from natural gas through the gathering and processing operation.
| | | | | | | | |
| | | Three Months Ended
March 31, 2006 | | | Three Months Ended
March 31, 2005 | |
Keep whole: | | | | | | | | |
NGL shrink(MMBtu/d) | | | 40,968 | | | | 71,722 | |
Plant fuel(MMBtu/d) | | | 5,114 | | | | 9,179 | |
Condensate shrink(MMBtu/d) | | | 3,403 | | | | 5,280 | |
Condensate sales(Bbls/d) | | | 699 | | | | 1,084 | |
Percentage of total net margin | | | 15 | % | | | 17 | % |
| | |
Percentage of Proceeds: | | | | | | | | |
Wellhead purchases(MMBtu/d) | | | 129,813 | | | | 195,639 | |
NGL sales(Bbls/d) | | | 4,423 | | | | 6,625 | |
Residue sales(MMBtu/d) | | | 16,505 | | | | 24,804 | |
Condensate sales(Bbls/d) | | | 1,093 | | | | 1,642 | |
Percentage of total net margin | | | 65 | % | | | 59 | % |
| | |
Fee: | | | | | | | | |
Wellhead volumes(MMBtu/d) | | | 879,677 | | | | 1,109,878 | |
Average rate($/MMBtu) | | $ | 0.16 | | | $ | 0.17 | |
Percentage of total net margin | | | 20 | % | | | 24 | % |
The following tables contain hedging information for the gathering and processing segment in 2006:
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| | | | | |
| | | Nine Months ending December 31, 2006 |
Product | | Volumes Hedged | | Average Price |
Percent of Proceeds: | | | | | |
Condensate [a] | | 225 MBbls | | $ | 52.00 - 60.00/Bbl |
Natural Gas [a] | | 1.4 Bcf | | $ | 6.15 - 11.00/MMBtu |
| | [a] | Hedged with NYMEX-based costless collars. |
Natural Gas Liquids
The natural gas liquids segment had operating income of $17.1 million in the first quarter 2006, compared with $4.8 million in the same period 2005.
Net margin increased to $33.7 million in the first quarter 2006, compared with $7.3 million in 2005. The acquisition of the natural gas liquids assets in July 2005 contributed $28.2 million in additional net margin. These increases were partially offset by a $1.8 million margin decrease in the company’s legacy NGL marketing business, primarily caused by lower sales volumes as a result of the Texas gathering and processing asset sale.
Natural gas liquids supplies connected to the company’s assets continue to grow as expected, despite periods of ethane rejection. During the quarter, the natural gas liquids segment completed construction to connect two new natural gas processing plants to its system in the mid-continent area, which came on line in April 2006. Construction is also scheduled to begin mid-year to connect two additional mid-continent gas processing plants.
Operating costs in the first quarter 2006 increased to $11.2 million versus $2.4 million in the first quarter 2005, with $8.9 million of the increase associated with the acquisition of the natural gas liquids assets in July 2005. Depreciation, depletion and amortization increased $5.4 million year over year, with $5.3 million of the increase related to the asset acquisition.
Pipelines and Storage
The pipelines and storage segment reported operating income of $27.7 million in the first quarter 2006, compared with $14.2 million in the same period 2005. Net margin in the period increased to $52.1 million, compared with $30.1 million in the same quarter last year.
The margin increase was primarily the result of the natural gas liquids gathering and distribution pipelines acquired in July 2005, which contributed $14.1 million in additional net margin. Natural gas transportation net margins increased $6.1 million due to increased throughput, improved fuel position and higher commodity prices. Storage margins increased $1.3 million as a result of new and renegotiated contracts.
Operating costs increased $5.2 million to $16.8 million in the first quarter 2006, with $4.6 million of the increase resulting from the acquisition of the natural gas liquids assets and the balance associated with higher regulatory compliance and employee-related costs. Depreciation,
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depletion and amortization expense increased $3.2 million in the quarter, primarily related to operating the newly acquired NGL pipelines.
Energy Services
The energy services segment posted operating income of $93.3 million in the first quarter 2006, compared with $52.7 million in the first quarter 2005. Net margin increased to $103.2 million from $61.2 million in the same period last year.
Net margin increases included: $28.2 million in transportation margins, net of hedges, due to improved natural gas basis differentials in the mid-continent and Gulf Coast regions; $9.5 million in storage margins due to increases in demand fees associated with peaking and load-following services, and; a $4.1 million increase from natural gas trading operations, primarily due to favorable natural gas basis spreads.
Natural gas volumes marketed declined 5 percent, and natural gas storage withdrawals declined 28.2 percent as a result of record-setting warmer weather in January 2006.
Financial trading margins were $11.9 million in the first quarter 2006, compared with $7.8 million in the first quarter 2005, with the increase related to the previously mentioned favorable natural gas basis spreads.
Operating costs for the first quarter 2006 increased to $9.3 million, compared with $8.0 million in the same period last year, due primarily to higher employee-related costs.
On March 31, 2006, natural gas in storage was 42.3 Bcf, compared with 40.2 Bcf a year earlier. Natural gas in storage on April 30, 2006, was 58.7 Bcf. Natural gas storage capacity under lease was 86 Bcf on March 31, 2006, compared with 87 Bcf a year earlier.
The net margin for the energy services segment was derived from the following sources:
| | | | | | | | |
| | | Three Months Ended March 31, | |
| | | 2006 | | | 2005 | |
| | | (Thousands of dollars) | |
Marketing and storage, gross | | $ | 135,068 | | | $ | 91,487 | |
Less: Storage and transportation costs | | | (49,259 | ) | | | (43,302 | ) |
| | | | | | | | |
Marketing and storage, net | | | 85,809 | | | | 48,185 | |
Retail marketing | | | 5,449 | | | | 5,210 | |
Financial trading | | | 11,896 | | | | 7,800 | |
| | | | | | | | |
Net margin | | $ | 103,154 | | | $ | 61,195 | |
| | | | | | | | |
Distribution
The distribution segment reported first-quarter 2006 operating income of $76.9 million, compared with $80.6 million in the same period last year. Net margin was $195.9 million versus $201.2 million in the same period a year earlier.
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Net margins improved $14.9 million as the result of implementation of new rates in Oklahoma in 2005, offset by a $12.2 million decline related to expiring riders in Oklahoma. The segment experienced an additional $6.7 million decline in customer sales due to warmer weather throughout its service territory.
Total volumes delivered declined 7 percent as a result of warmer weather, while operating income declined 5 percent. The impact of warmer than normal weather in the quarter was moderated by approved weather-protection mechanisms in all three states; other rate mechanisms in Texas and the implementation of a new two-tier rate structure in Oklahoma. The new Oklahoma rate structure reduces volumetric sensitivity while providing more consistent earnings and cash flow over time.
Operating costs were $90.8 million in the quarter, compared with $90.6 million in the same quarter 2005, primarily as a result of $2.1 million in higher labor and employee benefit costs, offset by a $1.9 million decrease in bad debt expense.
Depreciation, depletion and amortization expense was $28.2 million, compared with $30.0 million in the first quarter 2005. The decrease was primarily related to $2.0 million in cathodic protection and service lines amortization in Oklahoma that expired in 2005.
Northern Border Partners
Partnership operating income increased to $63.8 million in the first quarter 2006, compared with $63.5 million in the same period a year earlier. Net margin was $126.8 million in the first quarter 2006 versus $127.9 million. Depreciation, depletion and amortization expense was $21.3 million in the first quarter 2006, compared with $21.4 million in the same period last year. 2005 operating income is not consolidated in ONEOK’s financial results.
The operating income increase is the result of higher revenues in the partnership’s gathering and processing business, offset by expenses related to the transactions with ONEOK and TC PipeLines Intermediate Limited Partnership.
Effective April 1, 2006, the partnership sold to TC PipeLines Intermediate Limited Partnership, a publicly traded partnership affiliated with TransCanada, a 20 percent interest in Northern Border Pipeline Company for approximately $297 million. The price of the 20 percent interest, along with a related share of Northern Border Pipeline’s outstanding debt, totals $418 million. As a result, Northern Border Partners and TC PipeLines, LP, will each own a 50-percent interest in the pipeline, with an affiliate of TransCanada becoming operator of the pipeline in April 2007.
EARNINGS CONFERENCE CALL
ONEOK and Northern Border Partners management will conduct a joint conference call on May 3, 2006, at 11 a.m. Eastern Daylight Time (10 a.m. Central Daylight Time). The call will also be carried live on ONEOK’s and Northern Border Partners’ Web sites.
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To participate in the telephone conference call, dial 866-836-4700, pass code 890050, or log on towww.oneok.com orwww.northernborderpartners.com.
If you are unable to participate in the conference call or the webcast, the replay will be available on ONEOK’s Web sitewww.oneok.com and Northern Border Partners’ Web sitewww.northernborderpartners.com for 30 days. A recording will be available by phone for seven days. The playback call may be accessed at 866-837-8032, pass code 890050.
ONEOK, Inc. (NYSE: OKE) is a diversified energy company. We are the general partner and own 45.7 percent of Northern Border Partners, L.P. (NYSE:NBP), one of the largest publicly traded limited partnerships, which is a leader in the gathering, processing, storage and transportation of natural gas in the U.S. and owns one of the nation’s premier natural gas liquids (NGL) systems, connecting much of the natural gas and NGL supply in the mid-continent with key market centers. ONEOK is among the largest natural gas distributors in the United States, serving more than 2 million customers in Oklahoma, Kansas and Texas. Our energy services operation focuses primarily on marketing natural gas and related services throughout the U.S. ONEOK is a Fortune 500 company.
For information about ONEOK, Inc. visit the Web site:www.oneok.com.
Some of the statements contained and incorporated in this press release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements relate to: anticipated financial performance; management’s plans and objectives for future operations; business prospects; outcome of regulatory and legal proceedings; market conditions and other matters. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements in certain circumstances.
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ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
| | | | | | | |
| | | Quarters Ended March 31, |
| | | 2006 | | | 2005 |
| | | (Thousands of dollars, except
per share amounts) |
Revenues | | | | | | | |
| | |
Operating revenues, excluding energy trading revenues | | $ | 3,910,952 | | | $ | 2,697,848 |
Energy trading revenues, net | | | 7,370 | | | | 9,192 |
| | | | | | | |
Total Revenues | | | 3,918,322 | | | | 2,707,040 |
| | | | | | | |
Cost of sales and fuel | | | 3,343,173 | | | | 2,336,643 |
| | | | | | | |
Net Margin | | | 575,149 | | | | 370,397 |
| | | | | | | |
Operating Expenses | | | | | | | |
Operations and maintenance | | | 167,985 | | | | 123,502 |
Depreciation, depletion and amortization | | | 69,426 | | | | 43,217 |
General taxes | | | 26,190 | | | | 17,300 |
| | | | | | | |
Total Operating Expenses | | | 263,601 | | | | 184,019 |
| | | | | | | |
Operating Income | | | 311,548 | | | | 186,378 |
| | | | | | | |
Other income | | | 12,555 | | | | 5,298 |
Other expense | | | 5,844 | | | | 782 |
Interest expense | | | 62,890 | | | | 26,090 |
| | | | | | | |
Income before Minority Interest and Income Taxes | | | 255,369 | | | | 164,804 |
| | | | | | | |
Minority interest in income of consolidated subsidiaries | | | 45,497 | | | | — |
Income taxes | | | 80,141 | | | | 63,026 |
| | | | | | | |
Income from Continuing Operations | | | 129,731 | | | | 101,778 |
Discontinued operations, net of taxes: | | | | | | | |
Income (loss) from operations of discontinued components, net of tax | | | (239 | ) | | | 5,886 |
| | | | | | | |
Net Income | | $ | 129,492 | | | $ | 107,664 |
| | | | | | | |
Earnings Per Share of Common Stock | | | | | | | |
Basic: | | | | | | | |
Earnings per share from continuing operations | | $ | 1.21 | | | $ | 0.98 |
Earnings (loss) per share from operations of discontinued components, net of tax | | | — | | | | 0.06 |
| | | | | | | |
Net earnings per share, basic | | $ | 1.21 | | | $ | 1.04 |
| | | | | | | |
Diluted: | | | | | | | |
Earnings per share from continuing operations | | $ | 1.17 | | | $ | 0.92 |
Earnings (loss) per share from operations of discontinued components, net of tax | | | — | | | | 0.05 |
| | | | | | | |
Net earnings per share, diluted | | $ | 1.17 | | | $ | 0.97 |
| | | | | | | |
Average Shares of Common Stock(Thousands) | | | | | | | |
Basic | | | 107,143 | | | | 103,666 |
Diluted | | | 110,756 | | | | 111,001 |
| | | | | | | |
Dividends Declared Per Share of Common Stock | | $ | 0.28 | | | $ | 0.25 |
| | | | | | | |
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ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
| | | | | | |
| | | March 31,
2006 | | December 31,
2005 |
| | | (Thousands of dollars) |
Assets | | | | | | |
| | |
Current Assets | | | | | | |
Cash and cash equivalents | | $ | 36,800 | | $ | 7,915 |
Trade accounts and notes receivable, net | | | 1,501,651 | | | 2,202,895 |
Gas and natural gas liquids in storage | | | 625,029 | | | 911,393 |
Commodity exchanges | | | 39,704 | | | 133,159 |
Energy marketing and risk management assets | | | 348,958 | | | 765,157 |
Other current assets | | | 259,054 | | | 385,274 |
| | | | | | |
Total Current Assets | | | 2,811,196 | | | 4,405,793 |
| | | | | | |
| | |
Property, Plant and Equipment | | | | | | |
Property, plant and equipment | | | 8,648,194 | | | 5,575,365 |
Accumulated depreciation, depletion and amortization | | | 2,718,333 | | | 1,581,138 |
| | | | | | |
Net Property, Plant and Equipment | | | 5,929,861 | | | 3,994,227 |
| | | | | | |
| | |
Deferred Charges and Other Assets | | | | | | |
Goodwill and intangibles | | | 991,264 | | | 683,211 |
Energy marketing and risk management assets | | | 113,415 | | | 150,026 |
Investments and other | | | 822,695 | | | 716,298 |
| | | | | | |
Total Deferred Charges and Other Assets | | | 1,927,374 | | | 1,549,535 |
| | | | | | |
| | |
Assets of Discontinued Component | | | 63,001 | | | 63,911 |
| | | | | | |
| | |
Total Assets | | $ | 10,731,432 | | $ | 10,013,466 |
| | | | | | |
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ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
| | | | | | | | |
| | | March 31,
2006 | | | December 31,
2005 | |
| | | (Thousands of dollars) | |
Liabilities and Shareholders’ Equity | | | | | | | | |
| | |
Current Liabilities | | | | | | | | |
Current maturities of long-term debt | | $ | 6,551 | | | $ | 6,546 | |
Notes payable | | | 745,000 | | | | 1,541,500 | |
Accounts payable | | | 1,308,421 | | | | 1,756,307 | |
Commodity exchanges | | | 122,547 | | | | 238,176 | |
Energy marketing and risk management liabilities | | | 450,555 | | | | 814,803 | |
Other | | | 444,633 | | | | 438,009 | |
| | | | | | | | |
Total Current Liabilities | | | 3,077,707 | | | | 4,795,341 | |
| | | | | | | | |
| | |
Long-term Debt, excluding current maturities | | | 3,104,054 | | | | 2,024,070 | |
| | |
Deferred Credits and Other Liabilities | | | | | | | | |
Deferred income taxes | | | 604,405 | | | | 603,835 | |
Energy marketing and risk management liabilities | | | 218,138 | | | | 442,842 | |
Other deferred credits | | | 347,447 | | | | 350,157 | |
| | | | | | | | |
Total Deferred Credits and Other Liabilities | | | 1,169,990 | | | | 1,396,834 | |
| | | | | | | | |
| | |
Liabilities of Discontinued Component | | | 1,963 | | | | 2,464 | |
| | |
Commitments and Contingencies | | | | | | | | |
| | |
Minority Interests in Consolidated Subsidiaries | | | 1,022,668 | | | | — | |
| | |
Shareholders’ Equity | | | | | | | | |
Common stock, $0.01 par value: | | | | | | | | |
authorized 300,000,000 shares; issued 119,439,272 shares and outstanding 117,284,487 shares at March 31, 2006; issued 107,973,436 shares and outstanding 97,654,697 shares at December 31, 2005 | | | 1,194 | | | | 1,080 | |
Paid in capital | | | 1,225,134 | | | | 1,044,283 | |
Unearned compensation | | | — | | | | (105 | ) |
Accumulated other comprehensive loss | | | (505 | ) | | | (56,991 | ) |
Retained earnings | | | 1,188,046 | | | | 1,085,845 | |
Treasury stock, at cost: 2,154,785 shares at March 31, 2006 and 10,318,739 shares at December 31, 2005 | | | (58,819 | ) | | | (279,355 | ) |
| | | | | | | | |
Total Shareholders’ Equity | | | 2,355,050 | | | | 1,794,757 | |
| | | | | | | | |
| | |
Total Liabilities and Shareholders’ Equity | | $ | 10,731,432 | | | $ | 10,013,466 | |
| | | | | | | | |
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ONEOK, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | | | |
| | | Quarters Ended March 31, | |
| | | 2006 | | | 2005 | |
| Operating Activities | | (Thousands of dollars) | |
Net income | | $ | 129,492 | | | $ | 107,664 | |
Depreciation, depletion and amortization | | | 69,426 | | | | 43,217 | |
Gain on sale of assets | | | (1,305 | ) | | | (54 | ) |
Minority interest in income of consolidated subsidiaries | | | 45,497 | | | | — | |
Income from equity investments, net | | | (6,472 | ) | | | 367 | |
Deferred income taxes | | | 38,623 | | | | 13,545 | |
Stock-based compensation expense | | | 1,510 | | | | 2,633 | |
Allowance for doubtful accounts | | | 4,182 | | | | 6,040 | |
Changes in assets and liabilities (net of acquisition and disposition effects): | | | | | | | | |
Accounts and notes receivable | | | 780,136 | | | | 163,425 | |
Inventories | | | 280,042 | | | | 292,126 | |
Unrecovered purchased gas costs | | | (27,081 | ) | | | (3,617 | ) |
Commodity exchanges | | | (22,174 | ) | | | — | |
Deposits | | | 48,202 | | | | (38,412 | ) |
Regulatory assets | | | 10,360 | | | | (4,898 | ) |
Accounts payable and accrued liabilities | | | (471,980 | ) | | | (36,213 | ) |
Energy marketing and risk management assets and liabilities | | | (62,480 | ) | | | 375 | |
Other assets and liabilities | | | (3,648 | ) | | | (26,602 | ) |
| | | | | | | | |
Cash Provided by Operating Activities | | | 812,330 | | | | 519,596 | |
| | | | | | | | |
Investing Activities | | | | | | | | |
Changes in other investments, net | | | 10,815 | | | | (23,805 | ) |
Capital expenditures | | | (64,553 | ) | | | (58,312 | ) |
Other investing activities | | | 1,102 | | | | (567 | ) |
| | | | | | | | |
Cash Used in Investing Activities | | | (52,636 | ) | | | (82,684 | ) |
| | | | | | | | |
Financing Activities | | | | | | | | |
Borrowing (repayment) of notes payable, net | | | (1,027,500 | ) | | | 44,500 | |
Termination of interest rate swaps | | | — | | | | (20,212 | ) |
Payment of debt | | | (29,258 | ) | | | (335,324 | ) |
Equity unit conversion | | | 402,447 | | | | — | |
Repurchase of common stock | | | (1,408 | ) | | | (65,282 | ) |
Issuance of common stock | | | 1,333 | | | | 4,875 | |
Dividends paid | | | (27,344 | ) | | | (26,021 | ) |
Distributions to minority interests | | | (50,855 | ) | | | — | |
Contributions from minority interests | | | 3,099 | | | | — | |
Other financing activities | | | (44,895 | ) | | | (13,411 | ) |
| | | | | | | | |
Cash Used in Financing Activities | | | (774,381 | ) | | | (410,875 | ) |
| | | | | | | | |
Change in Cash and Cash Equivalents | | | (14,687 | ) | | | 26,037 | |
Cash and Cash Equivalents at Beginning of Period | | | 7,915 | | | | 9,458 | |
Cash of Previously Unconsolidated Subsidiaries | | | 43,572 | | | | — | |
| | | | | | | | |
Cash and Cash Equivalents at End of Period | | $ | 36,800 | | | $ | 35,495 | |
| | | | | | | | |
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ONEOK Announces Higher First-Quarter 2006 Earnings
May 2, 2006
Page 12
ONEOK, Inc.
INFORMATION AT A GLANCE
| | | | | | | |
| | | Quarters Ended
March 31, | |
| | | 2006 | | 2005 | |
| | | (Millions of dollars) | |
Gathering and Processing | | | | | | | |
Net margin | | $ | 62.4 | | $ | 71.1 | |
Depreciation, depletion and amortization | | $ | 6.3 | | $ | 8.3 | |
Operating income | | $ | 32.5 | | $ | 33.0 | |
Total gas gathered (MMMBtu/d) | | | 880 | | | 1,110 | |
Total gas processed (MMMBtu/d) | | | 830 | | | 1,097 | |
Natural gas liquids sales (MBbls/d) | | | 33 | | | 49 | |
Natural gas liquids produced (MBbls/d) | | | 43 | | | 61 | |
Gas sales (MMMBtu/d) | | | 265 | | | 340 | |
Capital expenditures | | $ | 3.3 | | $ | 7.7 | |
Realized composite NGL sales price ($/Gal) | | $ | 0.81 | | $ | 0.71 | |
Realized condensate sales price ($/bbl) | | $ | 57.67 | | $ | 44.06 | |
Realized natural gas sales price ($/MMBtu) | | $ | 7.96 | | $ | 5.94 | |
Realized gross processing spread ( $/MMBtu) | | $ | 3.43 | | $ | 2.94 | |
| | |
Natural Gas Liquids | | | | | | | |
Net margin | | $ | 33.7 | | $ | 7.3 | |
Depreciation, depletion and amortization | | $ | 5.4 | | $ | — | |
Operating income | | $ | 17.1 | | $ | 4.8 | |
Natural gas liquids gathered (MBbls/d) | | | 193 | | | (a | ) |
Natural gas liquids sales (MBbls/d) | | | 208 | | | 98 | |
Natural gas liquids fractionated (MBbls/d) | | | 284 | | | (a | ) |
Capital expenditures | | $ | 3.0 | | $ | 1.7 | |
| | |
Pipelines and Storage | | | | | | | |
Net margin | | $ | 52.1 | | $ | 30.1 | |
Depreciation, depletion and amortization | | $ | 7.6 | | $ | 4.4 | |
Operating income | | $ | 27.7 | | $ | 14.2 | |
Natural gas transported (MMcf) | | | 132,475 | | | 131,330 | |
Natural gas liquids transported (MBbls/d) | | | 193 | | | (a | ) |
Natural gas liquids gathered (MBbls/d) | | | 55 | | | (a | ) |
Capital expenditures | | $ | 3.6 | | $ | 1.7 | |
Average natural gas price ($/MMBtu) (mid-continent region) | | $ | 7.23 | | $ | 5.71 | |
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ONEOK Announces Higher First-Quarter 2006 Earnings
May 2, 2006
Page 13
| | | | | | | |
Energy Services | | | | | | | |
Net margin | | $ | 103.2 | | $ | 61.2 | |
Depreciation, depletion and amortization | | $ | 0.6 | | $ | 0.4 | |
Operating income | | $ | 93.3 | | $ | 52.7 | |
Natural gas marketed (Bcf) | | | 310 | | | 325 | |
Natural gas gross margin ($/Mcf) | | $ | 0.28 | | $ | 0.15 | |
Physically settled volumes (Bcf) | | | 602 | | | 625 | |
Capital expenditures | | $ | — | | $ | — | |
| | |
Distribution | | | | | | | |
Net margin | | $ | 195.9 | | $ | 201.2 | |
Depreciation, depletion and amortization | | $ | 28.2 | | $ | 30.0 | |
Operating income | | $ | 76.9 | | $ | 80.6 | |
Customers per employee | | | 712 | | | 688 | |
Capital expenditures | | $ | 36.7 | | $ | 27.7 | |
Natural gas margins | | | | | | | |
Gas Sales | | $ | 162.8 | | $ | 165.4 | |
Transportation | | $ | 22.9 | | $ | 28.4 | |
Natural gas volumes (MMcf) | | | | | | | |
Gas Sales | | | 74,137 | | | 85,242 | |
Transportation | | | 69,707 | | | 69,172 | |
| | |
Northern Border Partners | | | | | | | |
Net margin | | $ | 126.8 | | $ | 127.9 | (b) |
Depreciation, depletion and amortization | | $ | 21.3 | | $ | 21.4 | (b) |
Operating income | | $ | 63.8 | | $ | 63.5 | (b) |
Interstate natural gas pipeline: | | | | | | | |
Natural gas delivered (MMcf) | | | 305,280 | | | 306,692 | (b) |
Natural gas average throughput (MMcf/d) | | | 3,468 | | | 3,501 | (b) |
Natural gas gathering and processing: | | | | | | | |
Natural gas gathered (MMcf/d) | | | 1,095 | | | 1,049 | (b) |
Natural gas processed (MMcf/d) | | | 65 | | | 60 | (b) |
Capital expenditures | | $ | 17.8 | | $ | 9.8 | (b) |
(a) — No data available as the acquisition of these assets was completed on July 1, 2005.
(b) — Northern Border Partners was consolidated beginning January 1, 2006. The 2005 data is presented for comparison purposes only.
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ONEOK Announces Higher First-Quarter 2006 Earnings
May 2, 2006
Page 14
ONEOK, Inc. and Subsidiaries
REGULATION G GAAP RECONCILIATION
| | | | |
| | | Quarter Ended
March 31, 2006 | |
| | | (Millions of Dollars) | |
Cash used in operating activities | | $ | 812.3 | |
Accounts and notes receivable | | | (780.1 | ) |
Inventories | | | (280.0 | ) |
Unrecovered purchased gas costs | | | 27.1 | |
Commodity Exchanges | | | 22.2 | |
Deposits | | | (48.2 | ) |
Regulatory assets | | | (10.4 | ) |
Accounts payable and accrued liabilities | | | 472.0 | |
Energy marketing and risk management assets and liabilities | | | 62.5 | |
Other assets and liabilities | | | 3.6 | |
| | | | |
Cash flow, before changes in working capital (a) | | $ | 281.0 | |
| | | | |
(a) Cash flow from operations, before changes in working capital, is a non-GAAP financial measure used by industry analysts, investors, lenders, and rating agencies to assess the financial performance and the operating results of a company’s fundamental business activities. Cash flow from operations, before changes in working capital, should not be considered in isolation or as a substitute for net income, income from operations, or other measures of cash flow.
