ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
TULSA, Okla. – Aug. 4, 2009 – ONEOK Partners, L.P. (NYSE: OKS) today announced second-quarter 2009 earnings of 81 cents per unit, compared with $1.46 per unit for the second quarter 2008. Net income attributable to ONEOK Partners was $97.5 million in the second quarter 2009, compared with $154.5 million in the same period in 2008.
Year-to-date 2009 net income attributable to ONEOK Partners was $197.1 million, or $1.66 per unit, compared with $299.5 million, or $2.94 per unit, in the prior year.
The partnership also updated its 2009 limited partners’ net income per unit guidance to the range of $3.25 to $3.65 per unit from its previous range of $3.15 to $3.75 per unit. The partnership's distributable cash flow is expected to be in the range of $505 million to $545 million.
“The partnership posted solid results in the second quarter, benefiting from continued volume growth in both the natural gas and natural gas liquids businesses, despite significantly lower commodity prices,” said John W. Gibson, chairman and chief executive officer of ONEOK Partners. “We also raised $241 million of equity through a common unit offering, providing the partnership with additional financial flexibility to fund its growth and maintain a balanced capital structure.
“We are nearing completion of the $2 billion of internal growth projects that we started in 2007, as we have just completed construction on the Arbuckle natural gas liquids pipeline in late July,” Gibson said. “The committed throughput from these projects will continue to increase over the next few years as additional supplies are connected to our natural gas liquids infrastructure,” Gibson added.
Cash flow, as measured by earnings before interest, taxes, depreciation and amortization (EBITDA), was $182.0 million in the second quarter 2009, compared with $212.0 million in 2008. Distributable cash flow (DCF) for the second quarter 2009 was $130.9 million, or $1.17 per unit, compared with $176.9 million, or $1.72 per unit, in the second quarter 2008.
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 2
Year-to-date 2009 EBITDA was $366.3 million, compared with $420.2 million in the same period last year. DCF for the first six months of 2009 was $265.4 million, or $2.40 per unit, compared with $335.8 million, or $3.37 per unit, in the same period last year.
Operating income for the second quarter 2009 was $124.8 million, compared with $163.7 million for the second quarter 2008. For the first six months of 2009, operating income was $249.6 million, compared with $314.3 million the prior year. The decreases in both the three- and six-month periods were due primarily to significantly lower realized commodity prices in the natural gas gathering and processing segment and lower realized NGL product price differentials in the natural gas liquids gathering and fractionation segment. These decreases were partially offset by increased NGL throughput in the natural gas liquids businesses, primarily associated with the completion of the Overland Pass Pipeline, and incremental natural gas transportation margins as a result of the Guardian Pipeline expansion and extension.
Operating costs were $100.5 million in the second quarter 2009, compared with $87.2 million in the same period last year. Operating costs for the six months ended June 30, 2009, were $190.0 million, compared with $175.2 million in the same period last year. Operating costs for the three- and six-month 2009 periods increased due to higher operating expenses at fractionation facilities, including incremental expenses associated with the recently expanded Bushton fractionator that began operations in the third quarter 2008; and incremental expenses associated with the Overland Pass Pipeline.
SECOND-QUARTER 2009 SUMMARY INCLUDES:
| · | Operating income of $124.8 million, compared with $163.7 million in the second quarter last year; |
| · | Natural gas gathering and processing segment operating income of $40.9 million, compared with $76.2 million in the second quarter 2008; |
| · | Natural gas pipelines segment operating income of $31.7 million, compared with $37.7 million in the second quarter 2008; |
| · | Natural gas liquids gathering and fractionation segment operating income of $34.5 million, compared with $41.7 million in the second quarter 2008; |
| · | Natural gas liquids pipelines segment operating income of $17.8 million, compared with $9.9 million in the second quarter 2008; |
| · | Equity earnings from investments of $14.2 million, compared with $17.6 million in the second quarter 2008; |
| · | Capital expenditures of $129.4 million, compared with $257.5 million in the second quarter 2008; |
| · | Completing a public offering of common units, generating net proceeds of approximately $241.3 million; |
| · | Having $360.0 million outstanding under the partnership’s $1.0 billion revolving credit facility at June 30, 2009; |
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 3
| · | Declaring a quarterly cash distribution of $1.08 per unit payable on Aug. 14, 2009, to unitholders of record as of July 31, 2009; and |
| · | Announcing the retirement of James C. Kneale, president and chief operating officer, effective Jan. 1, 2010, and the promotion of Terry K. Spencer to chief operating officer, effective July 16, 2009. |
SECOND-QUARTER AND YEAR-TO-DATE 2009 BUSINESS UNIT RESULTS
Natural Gas Gathering and Processing Segment
The natural gas gathering and processing segment reported second-quarter 2009 operating income of $40.9 million, compared with $76.2 million in the second quarter 2008.
Second-quarter 2009 results decreased $34.0 million due to lower realized natural gas, NGL and condensate prices. Operating costs in the second quarter 2009 were $34.0 million, compared with $32.8 million in the same period last year.
Operating income for the six months was $80.6 million in 2009, compared with $135.2 million in the same period last year.
Six-month 2009 results decreased primarily due to $61.4 million in lower realized natural gas, NGL and condensate prices, partially offset by a $7.4 million increase from higher volumes processed and sold. Operating costs for the segment were unchanged from the six-month period in 2008.
Depreciation and amortization expense increased for both the three- and six-month periods ended June 30, 2009, compared with 2008, primarily as a result of completed capital projects.
Equity earnings from investments decreased for both the three- and six-month periods ended June 30, 2009, compared with the prior year, primarily as a result of lower volumes in various gathering system investments.
The following table contains margin information for the periods indicated. NGL shrink, plant fuel and condensate shrink refer to the Btus that are removed from natural gas through the gathering and processing operation.
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 4
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| Percent of proceeds | | | | | | | | | | | | |
Wellhead purchases (MMBtu/d) | | | 56,788 | | | | 69,389 | | | | 58,632 | | | | 69,960 | |
NGL sales (Bbl/d) | | | 5,346 | | | | 5,111 | | | | 5,210 | | | | 4,960 | |
Residue gas sales (MMBtu/d) | | | 41,054 | | | | 36,947 | | | | 38,979 | | | | 36,776 | |
Condensate sales (Bbl/d) | | | 1,825 | | | | 1,844 | | | | 1,925 | | | | 1,833 | |
| Percentage of total net margin | | | 49% | | | | 64% | | | | 49% | | | | 62% | |
| Fee-based | | | | | | | | | | | | | | | | |
Wellhead volumes (MMBtu/d) | | | 1,130,169 | | | | 1,184,654 | | | | 1,146,681 | | | | 1,188,169 | |
Average rate ($/MMBtu) | | $ | 0.31 | | | $ | 0.26 | | | $ | 0.30 | | | $ | 0.26 | |
| Percentage of total net margin | | | 36% | | | | 21% | | | | 36% | | | | 22% | |
| Keep whole | | | | | | | | | | | | | | | | |
NGL shrink (MMBtu/d) | | | 18,874 | | | | 22,433 | | | | 18,528 | | | | 22,970 | |
Plant fuel (MMBtu/d) | | | 2,166 | | | | 2,313 | | | | 2,174 | | | | 2,400 | |
Condensate shrink (MMBtu/d) | | | 2,042 | | | | 2,242 | | | | 2,113 | | | | 2,127 | |
Condensate sales (Bbl/d) | | | 413 | | | | 454 | | | | 428 | | | | 430 | |
| Percentage of total net margin | | | 15% | | | | 15% | | | | 15% | | | | 16% | |
The natural gas gathering and processing segment is exposed to commodity price risk, primarily NGLs, as a result of receiving commodities in exchange for services. The following table provides updated hedging information in the natural gas gathering and processing segment for the remainder of 2009 and for 2010:
| | | Six Months Ending | |
| | | December 31, 2009 | |
| | | Volumes Hedged | | | Average Price | | Percentage Hedged | |
NGLs (Bbl/d) (a) | | | 6,445 | | | | $1.08 | | / gallon | | | 75% | |
Condensate (Bbl/d) (a) | | | 1,449 | | | | $2.18 | | / gallon | | | 72% | |
Total (Bbl/d) | | | 7,894 | | | | $1.29 | | / gallon | | | 74% | |
Natural gas (MMBtu/d) | | | 8,753 | | | | $4.20 | | / MMBtu | | | 45% | |
| (a) - Hedged with fixed-price swaps. | | | | | | | | | | | | | |
| | | Year Ending | |
| | | December 31, 2010 | |
| | | Volumes Hedged | | | Average Price | | Percentage Hedged | |
NGLs (Bbl/d) (a) | | | 451 | | | | $1.37 | | / gallon | | | 5% | |
Condensate (Bbl/d) (a) | | | 1,072 | | | | $1.70 | | / gallon | | | 49% | |
Total (Bbl/d) | | | 1,523 | | | | $1.60 | | / gallon | | | 14% | |
Natural gas (MMBtu/d) | | | 7,828 | | | | $5.71 | | / MMBtu | | | 37% | |
| (a) - Hedged with fixed-price swaps. | | | | | | | | | | | | | |
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 5
The partnership currently estimates that a 1 cent per gallon decrease in the composite price of NGLs would decrease annual net margin by approximately $1.2 million. A $1.00 per barrel decrease in the price of crude oil would decrease annual net margin by approximately $1.0 million. Also, a 10 cent per MMBtu decrease in the price of natural gas would decrease annual net margin by approximately $0.7 million. All of these sensitivities exclude the effects of hedging and assume normal operating conditions.
Natural Gas Pipelines Segment
The natural gas pipelines segment reported second-quarter 2009 operating income of $31.7 million, compared with $37.7 million for the second quarter 2008.
Second-quarter 2009 results include an $8.3 million increase in transportation margins, primarily as a result of the Guardian Pipeline expansion and extension being placed into service in February 2009, partially offset by a $7.4 million decrease from the effect of lower natural gas prices on retained fuel.
Operating costs were $24.5 million in the second quarter 2009, compared with $20.5 million in 2008, primarily due to increased general taxes. Depreciation and amortization expense was $10.6 million in the second quarter 2009, compared with $8.5 million in the same period last year, primarily as a result of the completed Guardian Pipeline expansion and extension project.
Operating income for the six months 2009 was $64.3 million, compared with $69.4 million in the same period in 2008.
Six-month 2009 results reflect $13.2 million from increased transportation margins, primarily as a result of the Guardian Pipeline expansion and extension project, partially offset by an $11.7 million decrease from the effect of lower natural gas prices on retained fuel.
Operating costs for the six-months 2009 were relatively unchanged from the same period last year. Depreciation and amortization expense was $23.4 million for the six-month period 2009, compared with $17.0 million in the same period last year, primarily as a result of the completed Guardian Pipeline expansion and extension project.
Equity earnings from investments were $5.6 million in the second quarter 2009, compared with $9.2 million in the same period in 2008. Six-month 2009 equity earnings from investments were $21.8 million, compared with $29.2 million in the same period in 2008. The decreases were primarily due to lower subscription volumes and rates on the Northern Border Pipeline, in which the partnership has a 50 percent interest.
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 6
Natural Gas Liquids Gathering and Fractionation Segment
The natural gas liquids gathering and fractionation segment reported second-quarter 2009 operating income of $34.5 million, compared with $41.7 million for the second quarter 2008.
Second-quarter 2009 results benefited $20.3 million from higher volumes, primarily associated with the Overland Pass Pipeline, as well as new supply connections; offset by $14.8 million in higher tariff costs paid to the natural gas liquids pipelines segment; and a $7.1 million decrease as a result of narrower NGL product price differentials.
Operating income for the six months 2009 was $64.5 million, compared with $87.0 million in 2008.
Six-month 2009 results benefited $41.6 million from higher volumes, primarily associated with the Overland Pass Pipeline, as well as new supply connections; but was more than offset by $25.6 million in higher tariff costs paid to the natural gas liquids pipelines segment; and a $28.0 million decrease as a result of narrower NGL product price differentials.
Operating costs were $25.5 million in the second quarter 2009, compared with $20.0 million in the second quarter 2008. Six-month 2009 operating costs were $48.3 million, compared with $38.6 million in the same period last year. The increases resulted primarily from higher operating costs at fractionation facilities, which included incremental expenses associated with the recently expanded Bushton fractionator that began operations in the third quarter 2008.
The Conway-to-Mont Belvieu average price differential for ethane in the second quarter 2009, based on Oil Price Information Service (OPIS) pricing, was 12 cents per gallon, compared with 13 cents per gallon in the same period in 2008. For the six months 2009, the average OPIS price differential for ethane was 10 cents per gallon, compared with 11 cents per gallon in the same period last year.
Natural Gas Liquids Pipelines Segment
The natural gas liquids pipelines segment reported second-quarter 2009 operating income of $17.8 million, compared with $9.9 million for the second quarter 2008.
Second-quarter 2009 results increased $18.0 million due to increased volumes, primarily associated with the Overland Pass Pipeline including tariffs received from the natural gas liquids gathering and fractionation segment, as well as new supply connections. Operating costs were $19.1 million in the second quarter 2009, compared with $13.8 million in the same period last year. Depreciation and amortization expense was $7.1 million in the second quarter 2009, compared with $3.7 million in 2008. These increases were due primarily to incremental operating expenses associated with the Overland Pass Pipeline.
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
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Operating income for the six months 2009 was $40.1 million, compared with $23.7 million in 2008.
Six-month 2009 results increased $31.6 million due to increased volumes, primarily from the Overland Pass Pipeline including tariffs received from the natural gas liquids gathering and fractionation segment, as well as new supply connections.
Six-month 2009 operating costs for the segment were $34.7 million, compared with $27.2 million in the same period last year. Depreciation and amortization expense was $13.4 million for the six months 2009, compared with $7.8 million in the same period in 2008. These increases were due primarily to incremental operating expenses associated with the Overland Pass Pipeline.
GROWTH ACTIVITIES
The partnership is nearing completion of approximately $2 billion of internally generated growth projects. Following is a status report on current projects (all cost estimates exclude allowance for funds used during construction, or AFUDC):
In late July 2009, construction on the Arbuckle Pipeline was completed. The 440-mile NGL pipeline extends from southern Oklahoma through the Barnett Shale of north Texas and on to the partnership’s fractionation and storage facilities at Mont Belvieu on the Texas Gulf Coast. The pipeline has the capacity to transport 160,000 barrels per day (bpd) of unfractionated NGLs, expandable to 210,000 bpd with additional pump facilities. The estimated cost for the pipeline is approximately $490 million. During the third quarter 2009, flow on the pipeline is expected to reach 65,000 bpd, and supply commitments from producers are sufficient to fill the expanded 210,000 bpd capacity level over the next three to five years.
In March 2009, the $70 million D-J Basin Lateral Pipeline, a 125-mile pipeline connecting the Denver-Julesburg Basin with the Overland Pass Pipeline, was placed into service. The pipeline has the capacity to transport as much as 55,000 bpd of unfractionated NGLs. Volumes are expected to exceed 31,000 bpd on this pipeline during the third quarter 2009, with an additional 10,000 bpd in the next two years.
In November 2008, the Overland Pass Pipeline – the $575 million, 760-mile NGL pipeline extending from Opal, Wyo., to Conway, Kan. – was placed into full service with the capacity to transport approximately 110,000 bpd of unfractionated NGLs. The Overland Pass Pipeline Company is a joint venture with a subsidiary of The Williams Companies, Inc., which owns 1 percent. Currently, approximately 98,000 bpd are flowing on Overland Pass, and the pipeline’s capacity can be increased to approximately 255,000 bpd with additional pump facilities. By the end of the third quarter 2009, when the Piceance Lateral Pipeline is anticipated to be in service, volumes are expected to be approximately 140,000 bpd on Overland Pass.
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 8
In October 2008, the partnership began construction on the Piceance Lateral Pipeline, a 150-mile pipeline connecting the Piceance Basin with the Overland Pass Pipeline. The project is expected to cost in the range of $110 million to $140 million and be completed in the third quarter 2009. The pipeline will have the capacity to transport as much as 100,000 bpd of unfractionated NGLs. Initial flow on this pipeline is expected to be approximately 37,000 bpd.
The partnership has identified approximately $300 million of potential growth projects per year between 2010 and 2015, two-thirds of which are in the natural gas liquids businesses.
2009 EARNINGS GUIDANCE
The partnership updated its 2009 limited partners’ net income per unit guidance to the range of $3.25 to $3.65 per unit from its previous range of $3.15 to $3.75 per unit. The partnership's distributable cash flow is expected to be in the range of $505 million to $545 million. Exhibits A and B include updated information on the partnership’s 2009 earnings guidance.
The average unhedged prices used in the updated 2009 guidance for the remaining six months of 2009 are $64 per barrel for New York Mercantile Exchange (NYMEX) crude oil, $4 per MMBtu for NYMEX natural gas and 67 cents per gallon for composite natural gas liquids. The average Conway-to-Mont Belvieu OPIS average price differential used for ethane for the remaining six months of 2009 is 10 cents per gallon.
The earnings-per-unit calculation has been updated as a result of the June equity offering. The guidance also reflects additional interest expense associated with a $500 million debt offering in March, which was partially offset by lower interest on the partnership’s revolving credit facility. This higher expense was offset by increased other income from higher equity AFUDC than in previous guidance.
Operating income guidance increased, compared with previous guidance, due primarily to higher anticipated NGL product price differentials in the partnership’s natural gas liquids gathering and fractionation segment. This increase is partially offset by lower expected equity earnings due primarily to lower volumes in the natural gas gathering and processing segment’s equity investments.
The guidance was also updated to reflect increased capital expenditures, primarily due to the increased costs associated with the Arbuckle Pipeline in the natural gas liquids pipelines segment.
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
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EARNINGS CONFERENCE CALL AND WEBCAST
ONEOK Partners and ONEOK management will conduct a joint conference call on Wednesday, Aug. 5, 2009, at 11 a.m. Eastern Daylight Time (10 a.m. Central Daylight Time). The call will also be carried live on ONEOK Partners’ and ONEOK’s Web sites.
To participate in the telephone conference call, dial 866-802-4305, pass code 1376622, or log on to www.oneokpartners.com or www.oneok.com.
If you are unable to participate in the conference call or the webcast, the replay will be available on ONEOK Partners’ Web site, www.oneokpartners.com, and ONEOK’s Web site, www.oneok.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 1376622.
NON-GAAP FINANCIAL MEASURES
The partnership has disclosed in this news release EBITDA and DCF amounts that are non-GAAP financial measures. Management believes EBITDA and DCF provide useful information to investors as a measure of comparison with peer companies. However, these calculations may vary from company to company, so the partnership's computations may not be directly comparable with those of other companies. DCF is not necessarily the same as available cash as defined in the Partnership Agreement. Management further uses EBITDA to compare the financial performance of its segments and to internally manage those business segments. Reconciliations of EBITDA to net income and operating income and computations of DCF are included in the financial tables attached to this news release.
ONEOK Partners, L.P. (NYSE: OKS) is one of the largest publicly traded master limited partnerships and 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 NGL supply in the Mid-Continent and Rocky Mountain regions with key market centers. Its general partner is a wholly owned subsidiary of ONEOK, Inc. (NYSE: OKE), a diversified energy company, which owns 45.1 percent of the partnership. ONEOK is one of the largest natural gas distributors in the United States, and its energy services operation focuses primarily on marketing natural gas and related services throughout the U.S.
For more information about ONEOK Partners, L.P., visit: www.oneokpartners.com.
Some of the statements contained and incorporated in this news release are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act, as amended. The forward-looking statements relate to our anticipated financial performance, management’s plans and objectives for our future operations, 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 the Private Securities Litigation Reform Act of 1995. 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.
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 news
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
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release identified by words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “should,” “goal,” “forecast,” “could,” “may,” “continue,” “might,” “potential,” “scheduled” and other words and terms of similar meaning.
You should not place undue reliance on forward-looking statements, which are applicable only as of the date of this news release. 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 effects of weather and other natural phenomena on our operations, demand for our services and energy prices; |
| · | 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; |
| · | the capital intensive nature of our businesses; |
| · | the profitability of assets or businesses acquired or constructed by us; |
| · | our ability to make cost-saving changes in operations; |
| · | 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 and costs of environmental remediation; |
| · | the timing and extent of changes in energy commodity prices; |
| · | the effects of changes in governmental policies and regulatory actions, including changes with respect to income and other taxes, environmental compliance, climate change initiatives, authorized rates of recovery of gas and gas transportation costs; |
| · | the impact on drilling and production by factors beyond our control, including the demand for natural gas and refinery-grade crude oil; producers’ desire and ability to obtain necessary permits; reserve performance; and capacity constraints on the pipelines that transport crude oil, natural gas and NGLs from producing areas and our facilities; |
| · | difficulties or delays experienced by trucks or pipelines in delivering products to or from our terminals or pipelines; |
| · | changes in demand for the use of natural gas because of market conditions caused by concerns about global warming; |
| · | conflicts of interest between us, our general partner, ONEOK Partners GP, and related parties of ONEOK Partners GP; |
| · | the impact of unforeseen changes in interest rates, equity markets, inflation rates, economic recession and other external factors over which we have no control; |
| · | our indebtedness 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 to our competitors that have less debt or have other adverse consequences; |
| · | actions by rating agencies concerning the credit ratings of us or our general partner; |
| · | the results of administrative proceedings and litigation, regulatory actions and receipt of expected clearances involving the Oklahoma Corporation Commission (OCC), Kansas Corporation Commission (KCC), Texas regulatory authorities or any other local, state or federal regulatory body, including the Federal Energy Regulatory Commission (FERC); |
| · | our ability to access capital at competitive rates or on terms acceptable to us; |
| · | risks associated with adequate supply to our gathering, processing, fractionation and pipeline facilities, including production declines that outpace new drilling; |
| · | the risk that material weaknesses or significant deficiencies in our internal control over financial reporting could emerge or that minor problems could become significant; |
| · | the impact and outcome of pending and future litigation; |
| · | the ability to market pipeline capacity on favorable terms, including the effects of: |
| - | future demand for and prices of natural gas and NGLs; |
| - | competitive conditions in the overall energy market; |
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 11
| - | availability of supplies of Canadian and United States natural gas; and |
| - | availability of additional storage capacity; |
| · | performance of contractual obligations by our customers, service providers, contractors and shippers; |
| · | the timely receipt of approval by applicable governmental entities for construction and operation of our pipeline and other projects and required regulatory clearances; |
| · | our ability to acquire all necessary permits, consents and 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 mechanical integrity of facilities operated; |
| · | demand for our services in the proximity of our facilities; |
| · | our ability to control operating costs; |
| · | acts of nature, sabotage, terrorism or other similar acts that cause damage to our facilities or our suppliers’ or shippers’ facilities; |
| · | economic climate and growth in the geographic areas in which we do business; |
| · | the risk of a prolonged slowdown in growth or decline in the U.S. economy or the risk of delay in growth recovery in the U.S. economy, including increasing liquidity risks in U.S. credit markets; |
| · | the impact of recently issued and future accounting pronouncements and other changes in accounting policies; |
| · | 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 in the Middle East and elsewhere; |
| · | the risk of increased costs for insurance premiums, security or other items as a consequence of terrorist attacks; |
| · | 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 impact of unsold pipeline capacity being greater or less than expected; |
| · | 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 composition and quality of the natural gas and NGLs we gather and process in our plants and transport on our pipelines; |
| · | the efficiency of our plants in processing natural gas and extracting and fractionating NGLs; |
| · | the impact of potential impairment charges; |
| · | the risk inherent in the use of information systems in our respective businesses, implementation of new software and hardware, and the impact on the timeliness of information for financial reporting; |
| · | our ability to control construction costs and completion schedules of our pipelines and other projects; and |
| · | the risk factors listed in the reports we have filed and may file with the Securities and Exchange Commission (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 have material adverse effects on our future results. These and other risks are described in greater detail in Part I, Item 1A, Risk Factors, in our Annual Report. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. 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. OKS-FE
###
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 12
| ONEOK Partners, L.P. and Subsidiaries | | | | | | | | | | | | |
| CONSOLIDATED STATEMENTS OF INCOME | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| (Unaudited) | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | (Thousands of dollars, except per unit amounts) | |
| | | | | | | | | | | | | |
| Revenues | | $ | 1,397,057 | | | $ | 2,143,892 | | | $ | 2,647,922 | | | $ | 4,202,927 | |
| Cost of sales and fuel | | | 1,135,075 | | | | 1,862,959 | | | | 2,132,399 | | | | 3,653,469 | |
| Net margin | | | 261,982 | | | | 280,933 | | | | 515,523 | | | | 549,458 | |
| Operating expenses | | | | | | | | | | | | | | | | |
| Operations and maintenance | | | 87,712 | | | | 80,532 | | | | 165,391 | | | | 157,473 | |
| Depreciation and amortization | | | 39,953 | | | | 30,033 | | | | 79,893 | | | | 59,975 | |
| General taxes | | | 12,795 | | | | 6,626 | | | | 24,562 | | | | 17,767 | |
| Total operating expenses | | | 140,460 | | | | 117,191 | | | | 269,846 | | | | 235,215 | |
| Gain (loss) on sale of assets | | | 3,276 | | | | (3 | ) | | | 3,940 | | | | 28 | |
| Operating income | | | 124,798 | | | | 163,739 | | | | 249,617 | | | | 314,271 | |
| Equity earnings from investments | | | 14,188 | | | | 17,610 | | | | 35,410 | | | | 45,393 | |
| Allowance for equity funds used during construction | | | 9,468 | | | | 11,676 | | | | 18,471 | | | | 20,172 | |
| Other income | | | 3,424 | | | | 676 | | | | 3,815 | | | | 2,734 | |
| Other expense | | | (383 | ) | | | (36 | ) | | | (2,429 | ) | | | (2,167 | ) |
| Interest expense | | | (50,888 | ) | | | (34,705 | ) | | | (101,796 | ) | | | (73,234 | ) |
| Income before income taxes | | | 100,607 | | | | 158,960 | | | | 203,088 | | | | 307,169 | |
| Income taxes | | | (3,068 | ) | | | (4,305 | ) | | | (5,939 | ) | | | (7,373 | ) |
| Net income | | | 97,539 | | | | 154,655 | | | | 197,149 | | | | 299,796 | |
| Less: Net income attributable to noncontrolling interests | | | 1 | | | | 134 | | | | 20 | | | | 257 | |
| Net income attributable to ONEOK Partners, L.P. | | $ | 97,538 | | | $ | 154,521 | | | $ | 197,129 | | | $ | 299,539 | |
| | | | | | | | | | | | | | | | | |
| Limited partners’ interest in net income: | | | | | | | | | | | | | | | | |
| Net income attributable to ONEOK Partners, L.P. | | $ | 97,538 | | | $ | 154,521 | | | $ | 197,129 | | | $ | 299,539 | |
| General partner’s interest in net income | | | (23,388 | ) | | | (21,688 | ) | | | (45,700 | ) | | | (41,393 | ) |
| Limited partners’ interest in net income | | $ | 74,150 | | | $ | 132,833 | | | $ | 151,429 | | | $ | 258,146 | |
| | | | | | | | | | | | | | | | | |
| Limited partners’ net income per unit, basic and diluted | | $ | 0.81 | | | $ | 1.46 | | | $ | 1.66 | | | $ | 2.94 | |
Number of units used in computation (thousands) | | | 91,415 | | | | 90,906 | | | | 91,169 | | | | 87,680 | |
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 13
| ONEOK Partners, L.P. and Subsidiaries | | | | |
| CONSOLIDATED BALANCE SHEETS | | | | |
| | | June 30, | | December 31, |
| (Unaudited) | | 2009 | | 2008 |
| Assets | | (Thousands of dollars) |
| Current assets | | | | |
| Cash and cash equivalents | $ | 31,803 | $ | 177,635 |
| Accounts receivable, net | | 397,006 | | 317,182 |
| Affiliate receivables | | 25,831 | | 25,776 |
| Gas and natural gas liquids in storage | | 164,640 | | 190,616 |
| Commodity exchanges and imbalances | | 55,104 | | 55,086 |
| Derivative financial instruments | | 18,732 | | 63,780 |
| Other current assets | | 42,039 | | 28,176 |
| Total current assets | | 735,155 | | 858,251 |
| | | | | |
| Property, plant and equipment | | | | |
| Property, plant and equipment | | 6,149,684 | | 5,808,679 |
| Accumulated depreciation and amortization | | 930,031 | | 875,279 |
| Net property, plant and equipment | | 5,219,653 | | 4,933,400 |
| | | | | |
| Investments and other assets | | | | |
| Investments in unconsolidated affiliates | | 735,394 | | 755,492 |
| Goodwill and intangible assets | | 672,703 | | 676,536 |
| Other assets | | 37,841 | | 30,593 |
| Total investments and other assets | | 1,445,938 | | 1,462,621 |
| Total assets | $ | 7,400,746 | $ | 7,254,272 |
| | | | | |
| Liabilities and partners’ equity | | | | |
| Current liabilities | | | | |
| Current maturities of long-term debt | $ | 261,931 | $ | 11,931 |
| Notes payable | | 360,000 | | 870,000 |
| Accounts payable | | 541,190 | | 496,763 |
| Affiliate payables | | 22,604 | | 23,333 |
| Commodity exchanges and imbalances | | 165,713 | | 191,165 |
| Other current liabilities | | 113,724 | | 100,832 |
| Total current liabilities | | 1,465,162 | | 1,694,024 |
| | | | | |
| Long-term debt, excluding current maturities | | 2,829,946 | | 2,589,509 |
| | | | | |
| Deferred credits and other liabilities | | 58,231 | | 54,773 |
| | | | | |
| Commitments and contingencies | | | | |
| | | | | |
| Partners’ equity | | | | |
| ONEOK Partners, L.P. partners’ equity: | | | | |
| General partner | | 82,443 | | 77,546 |
Common units: 59,426,087 and 54,426,087 units issued and outstanding at June 30, 2009 and December 31, 2008, respectively | | 1,554,685 | | 1,361,058 |
Class B units: 36,494,126 units issued and outstanding at June 30, 2009 and December 31, 2008 | | 1,388,890 | | 1,407,016 |
| Accumulated other comprehensive income | | 15,917 | | 64,405 |
| Total ONEOK Partners, L.P. partners’ equity | | 3,041,935 | | 2,910,025 |
| | | | | |
| Noncontrolling interests in consolidated subsidiaries | | 5,472 | | 5,941 |
| | | | | |
| Total partners’ equity | | 3,047,407 | | 2,915,966 |
| Total liabilities and partners’ equity | $ | 7,400,746 | $ | 7,254,272 |
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 14
| ONEOK Partners, L.P. and Subsidiaries | | | | | | |
| CONSOLIDATED STATEMENTS OF CASH FLOWS | | Six Months Ended | |
| | | June 30, | |
| (Unaudited) | | 2009 | | | 2008 | |
| | | (Thousands of dollars) | |
| Operating activities | | | | | | |
| Net income | | $ | 197,149 | | | $ | 299,796 | |
| Depreciation and amortization | | | 79,893 | | | | 59,975 | |
| Allowance for equity funds used during construction | | | (18,471 | ) | | | (20,172 | ) |
| Gain on sale of assets | | | (3,940 | ) | | | (28 | ) |
| Equity earnings from investments | | | (35,410 | ) | | | (45,393 | ) |
| Distributions received from unconsolidated affiliates | | | 38,233 | | | | 39,904 | |
| Changes in assets and liabilities: | | | | | | | | |
| Accounts receivable | | | (79,824 | ) | | | 35,134 | |
| Affiliate receivables | | | (55 | ) | | | (14,815 | ) |
| Gas and natural gas liquids in storage | | | 25,976 | | | | (104,557 | ) |
| Derivative financial instruments | | | (2,058 | ) | | | 10,344 | |
| Accounts payable | | | 16,410 | | | | 39,225 | |
| Affiliate payables | | | (729 | ) | | | 34,558 | |
| Commodity exchanges and imbalances, net | | | (25,470 | ) | | | 55,202 | |
| Other assets and liabilities | | | (2,259 | ) | | | (59,230 | ) |
| Cash provided by operating activities | | | 189,445 | | | | 329,943 | |
| | | | | | | | | |
| Investing activities | | | | | | | | |
| Changes in investments in unconsolidated affiliates | | | 17,393 | | | | 6,480 | |
| Acquisitions | | | - | | | | 2,450 | |
| Capital expenditures (less allowance for equity funds used during construction) | | | (321,860 | ) | | | (524,587 | ) |
| Proceeds from sale of assets | | | 8,050 | | | | 111 | |
| Cash used in investing activities | | | (296,417 | ) | | | (515,546 | ) |
| | | | | | | | | |
| Financing activities | | | | | | | | |
| Cash distributions: | | | | | | | | |
| General and limited partners | | | (241,864 | ) | | | (214,794 | ) |
| Noncontrolling interests | | | (489 | ) | | | (148 | ) |
| Borrowing of notes payable, net | | | 360,000 | | | | 20,000 | |
| Repayment of notes payable with maturities over 90 days | | | (870,000 | ) | | | - | |
| Issuance of long-term debt, net of discounts | | | 498,325 | | | | - | |
| Long-term debt financing costs | | | (4,000 | ) | | | - | |
| Issuance of common units, net of discounts | | | 220,458 | | | | 450,198 | |
| Contributions from general partner | | | 4,675 | | | | 9,508 | |
| Payment of long-term debt | | | (5,965 | ) | | | (5,964 | ) |
| Cash provided by (used in) financing activities | | | (38,860 | ) | | | 258,800 | |
| Change in cash and cash equivalents | | | (145,832 | ) | | | 73,197 | |
| Cash and cash equivalents at beginning of period | | | 177,635 | | | | 3,213 | |
| Cash and cash equivalents at end of period | | $ | 31,803 | | | $ | 76,410 | |
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 15
| ONEOK Partners, L.P. and Subsidiaries | | | | | | | | | | | | |
| INFORMATION AT A GLANCE | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| (Unaudited) | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | (Millions of dollars, except as noted) | |
| Natural Gas Gathering and Processing | | | | | | | | | | | | |
| Net margin | | $ | 86.3 | | | $ | 121.1 | | | $ | 172.3 | | | $ | 225.0 | |
| Operating costs | | $ | 34.0 | | | $ | 32.8 | | | $ | 65.9 | | | $ | 65.9 | |
| Depreciation and amortization | | $ | 14.5 | | | $ | 12.1 | | | $ | 28.9 | | | $ | 23.9 | |
| Operating income | | $ | 40.9 | | | $ | 76.2 | | | $ | 80.6 | | | $ | 135.2 | |
| Equity earnings from investments | | $ | 7.7 | | | $ | 8.1 | | | $ | 12.2 | | | $ | 15.2 | |
Natural gas gathered (BBtu/d) | | | 1,130 | | | | 1,185 | | | | 1,147 | | | | 1,188 | |
Natural gas processed (BBtu/d) | | | 658 | | | | 651 | | | | 655 | | | | 637 | |
NGL sales (MBbl/d) | | | 42 | | | | 40 | | | | 41 | | | | 39 | |
Residue gas sales (BBtu/d) | | | 291 | | | | 281 | | | | 288 | | | | 279 | |
Realized composite NGL sales price ($/gallon) | | $ | 0.69 | | | $ | 1.49 | | | $ | 0.67 | | | $ | 1.41 | |
Realized condensate sales price ($/Bbl) | | $ | 72.15 | | | $ | 102.77 | | | $ | 67.04 | | | $ | 95.82 | |
Realized residue gas sales price ($/MMBtu) | | $ | 2.79 | | | $ | 9.42 | | | $ | 3.18 | | | $ | 8.41 | |
Realized gross processing spread ($/MMBtu) | | $ | 6.34 | | | $ | 6.69 | | | $ | 6.34 | | | $ | 7.06 | |
| Capital expenditures - growth | | $ | 17.9 | | | $ | 31.4 | | | $ | 43.4 | | | $ | 54.8 | |
| Capital expenditures - maintenance | | $ | 5.6 | | | $ | 4.9 | | | $ | 8.9 | | | $ | 8.0 | |
| | | | | | | | | | | | | | | | | |
| Natural Gas Pipelines | | | | | | | | | | | | | | | | |
| Net margin | | $ | 66.8 | | | $ | 66.7 | | | $ | 132.4 | | | $ | 130.4 | |
| Operating costs | | $ | 24.5 | | | $ | 20.5 | | | $ | 44.7 | | | $ | 44.0 | |
| Depreciation and amortization | | $ | 10.6 | | | $ | 8.5 | | | $ | 23.4 | | | $ | 17.0 | |
| Operating income | | $ | 31.7 | | | $ | 37.7 | | | $ | 64.3 | | | $ | 69.4 | |
| Equity earnings from investments | | $ | 5.6 | | | $ | 9.2 | | | $ | 21.8 | | | $ | 29.2 | |
Natural gas transportation capacity contracted (MMcf/d) | | | 5,264 | | | | 4,816 | | | | 5,205 | | | | 4,883 | |
Average natural gas price Mid-Continent region ($/MMBtu) | | $ | 2.66 | | | $ | 9.20 | | | $ | 3.05 | | | $ | 8.19 | |
| Capital expenditures - growth | | $ | 14.9 | | | $ | 27.6 | | | $ | 32.2 | | | $ | 48.5 | |
| Capital expenditures - maintenance | | $ | 1.9 | | | $ | 2.2 | | | $ | 2.1 | | | $ | 3.5 | |
| | | | | | | | | | | | | | | | | |
| Natural Gas Liquids Gathering and Fractionation | | | | | | | | | | | | | |
| Net margin | | $ | 67.7 | | | $ | 67.3 | | | $ | 126.9 | | | $ | 136.9 | |
| Operating costs | | $ | 25.5 | | | $ | 20.0 | | | $ | 48.3 | | | $ | 38.6 | |
| Depreciation and amortization | | $ | 7.7 | | | $ | 5.6 | | | $ | 14.1 | | | $ | 11.3 | |
| Operating income | | $ | 34.5 | | | $ | 41.7 | | | $ | 64.5 | | | $ | 87.0 | |
NGLs gathered (MBbl/d) | | | 303 | | | | 285 | | | | 284 | | | | 267 | |
NGL sales (MBbl/d) | | | 401 | | | | 265 | | | | 391 | | | | 275 | |
NGLs fractionated (MBbl/d) | | | 479 | | | | 371 | | | | 472 | | | | 381 | |
| Conway-to-Mont Belvieu OPIS average price differential | | | | | | | | | | | | | |
Ethane ($/gallon) | | $ | 0.12 | | | $ | 0.13 | | | $ | 0.10 | | | $ | 0.11 | |
| Capital expenditures - growth | | $ | 7.9 | | | $ | 50.8 | | | $ | 17.3 | | | $ | 77.5 | |
| Capital expenditures - maintenance | | $ | 2.2 | | | $ | 4.2 | | | $ | 5.8 | | | $ | 7.1 | |
| | | | | | | | | | | | | | | | | |
| Natural Gas Liquids Pipelines | | | | | | | | | | | | | | | | |
| Net margin | | $ | 44.0 | | | $ | 27.4 | | | $ | 88.2 | | | $ | 58.7 | |
| Operating costs | | $ | 19.1 | | | $ | 13.8 | | | $ | 34.7 | | | $ | 27.2 | |
| Depreciation and amortization | | $ | 7.1 | | | $ | 3.7 | | | $ | 13.4 | | | $ | 7.8 | |
| Operating income | | $ | 17.8 | | | $ | 9.9 | | | $ | 40.1 | | | $ | 23.7 | |
| Equity earnings from investments | | $ | 0.9 | | | $ | 0.3 | | | $ | 1.5 | | | $ | 1.0 | |
NGLs transported - gathering lines (MBbl/d) | | | 174 | | | | 96 | | | | 168 | | | | 94 | |
NGLs transported - distribution lines (MBbl/d) | | | 461 | | | | 308 | | | | 453 | | | | 305 | |
| Capital expenditures - growth | | $ | 76.6 | | | $ | 135.2 | | | $ | 208.2 | | | $ | 323.3 | |
| Capital expenditures - maintenance | | $ | 1.8 | | | $ | 1.2 | | | $ | 3.5 | | | $ | 1.8 | |
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 16
| ONEOK Partners, L.P. and Subsidiaries | | | | | | | | | | | | |
| RECONCILIATION OF EBITDA NON-GAAP FINANCIAL MEASURES | | | | | | | |
| | | Three Months Ended | | Six Months Ended | |
| | | June 30, | | June 30, | |
| (Unaudited) | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | (Thousands of dollars) | |
| Reconciliation of Net Income to EBITDA | | | | | | | | | | | | |
| Net income | | $ | 97,539 | | | $ | 154,655 | | | $ | 197,149 | | | $ | 299,796 | |
| Interest expense | | | 50,888 | | | | 34,705 | | | | 101,796 | | | | 73,234 | |
| Depreciation and amortization | | | 39,953 | | | | 30,033 | | | | 79,893 | | | | 59,975 | |
| Income taxes | | | 3,068 | | | | 4,305 | | | | 5,939 | | | | 7,373 | |
| Allowance for equity funds used during construction | | | (9,468 | ) | | | (11,676 | ) | | | (18,471 | ) | | | (20,172 | ) |
| EBITDA | | $ | 181,980 | | | $ | 212,022 | | | $ | 366,306 | | | $ | 420,206 | |
| | | | | | | | | | | | | | | | | |
| Natural Gas Gathering and Processing Reconciliation of Operating Income to EBITDA | | | | | |
| Operating income | | $ | 40,889 | | | $ | 76,183 | | | $ | 80,646 | | | $ | 135,236 | |
| Depreciation and amortization | | | 14,465 | | | | 12,141 | | | | 28,913 | | | | 23,898 | |
| Equity earnings from investments | | | 7,721 | | | | 8,126 | | | | 12,187 | | | | 15,170 | |
| Other income (expense) | | | 906 | | | | (105 | ) | | | 129 | | | | (937 | ) |
| EBITDA | | $ | 63,981 | | | $ | 96,345 | | | $ | 121,875 | | | $ | 173,367 | |
| | | | | | | | | | | | | | | | | |
| Natural Gas Pipelines Reconciliation of Operating Income to EBITDA | | | | | | | | | |
| Operating income | | $ | 31,724 | | | $ | 37,691 | | | $ | 64,346 | | | $ | 69,405 | |
| Depreciation and amortization | | | 10,629 | | | | 8,522 | | | | 23,422 | | | | 16,940 | |
| Equity earnings from investments | | | 5,555 | | | | 9,153 | | | | 21,763 | | | | 29,214 | |
| Other income (expense) | | | 841 | | | | (32 | ) | | | 327 | | | | (592 | ) |
| EBITDA | | $ | 48,749 | | | $ | 55,334 | | | $ | 109,858 | | | $ | 114,967 | |
| | | | | | | | | | | | | | | | | |
| Natural Gas Liquids Gathering and Fractionation Reconciliation of Operating Income to EBITDA | | | | |
| Operating income | | $ | 34,515 | | | $ | 41,687 | | | $ | 64,490 | | | $ | 86,974 | |
| Depreciation and amortization | | | 7,729 | | | | 5,668 | | | | 14,142 | | | | 11,287 | |
| Equity earnings from investments | | | - | | | | - | | | | - | | | | - | |
| Other income (expense) | | | (104 | ) | | | (340 | ) | | | (1,099 | ) | | | (1,070 | ) |
| EBITDA | | $ | 42,140 | | | $ | 47,015 | | | $ | 77,533 | | | $ | 97,191 | |
| | | | | | | | | | | | | | | | | |
| Natural Gas Liquids Pipelines Reconciliation of Operating Income to EBITDA | | | | | | | | |
| Operating income | | $ | 17,837 | | | $ | 9,890 | | | $ | 40,132 | | | $ | 23,703 | |
| Depreciation and amortization | | | 7,118 | | | | 3,697 | | | | 13,402 | | | | 7,839 | |
| Equity earnings from investments | | | 912 | | | | 331 | | | | 1,460 | | | | 1,009 | |
| Other income (expense) | | | 615 | | | | (26 | ) | | | 260 | | | | (450 | ) |
| EBITDA | | $ | 26,482 | | | $ | 13,892 | | | $ | 55,254 | | | $ | 32,101 | |
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 17
| ONEOK Partners, L.P. and Subsidiaries | | | | | | | | | | | | |
| RECONCILIATION OF DISTRIBUTABLE CASH FLOW NON-GAAP FINANCIAL MEASURES | | | | |
| | | | | | | | | | | | | |
| | | Three Months Ended | | | Six Months Ended | |
| | | June 30, | | | June 30, | |
| (Unaudited) | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| | | (Thousands of dollars, except per unit amounts) | |
| | | | | | | | | | | | | |
| Reconciliation of EBITDA to Distributable Cash Flow | | | | | | | | | | |
| EBITDA | | $ | 181,980 | | | $ | 212,022 | | | $ | 366,306 | | | $ | 420,206 | |
| (Gain)/loss on sale of assets | | | (3,276 | ) | | | 3 | | | | (3,940 | ) | | | (28 | ) |
| Interest expense | | | (50,888 | ) | | | (34,705 | ) | | | (101,796 | ) | | | (73,234 | ) |
| Maintenance capital | | | (11,534 | ) | | | (12,492 | ) | | | (20,316 | ) | | | (20,418 | ) |
| Distributions to noncontrolling interests | | | (146 | ) | | | (74 | ) | | | (489 | ) | | | (148 | ) |
| Equity earnings from investments | | | (14,188 | ) | | | (17,610 | ) | | | (35,410 | ) | | | (45,393 | ) |
| Distributions received from unconsolidated affiliates | | | 30,142 | | | | 33,214 | | | | 63,473 | | | | 60,627 | |
| Current income tax expense and other | | | (1,216 | ) | | | (3,456 | ) | | | (2,381 | ) | | | (5,829 | ) |
| Distributable cash flow | | $ | 130,874 | | | $ | 176,902 | | | $ | 265,447 | | | $ | 335,783 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Distributions to general partner | | | (23,988 | ) | | | (20,920 | ) | | | (46,727 | ) | | | (40,022 | ) |
| Distributable cash flow to limited partners | | $ | 106,886 | | | $ | 155,982 | | | $ | 218,720 | | | $ | 295,761 | |
| | | | | | | | | | | | | | | | | |
| Distributable cash flow per limited partner unit | | $ | 1.17 | | | $ | 1.72 | | | $ | 2.40 | | | $ | 3.37 | |
| Distributions declared per limited partner unit | | $ | 1.08 | | | $ | 1.06 | | | $ | 2.16 | | | $ | 2.10 | |
| Coverage ratio | | | 1.08 | | | | 1.62 | | | | 1.11 | | | | 1.61 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
Number of units used in computation (thousands) | | | 91,415 | | | | 90,906 | | | | 91,169 | | | | 87,680 | |
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 18
| ONEOK Partners, L.P. and Subsidiaries | | | | | | | | Exhibit A | |
| EARNINGS GUIDANCE* | | | | | | | | | |
| | | | | | | | | | |
| | | Updated | | | Previous | | | | |
| | | 2009 | | | 2009 | | | | |
| | | Guidance | | | Guidance | | | Change | |
| | | (Millions of dollars, except per unit amounts) | |
| | | | | | | | | | |
| Operating income | | | | | | | | | |
| Natural Gas Gathering and Processing | | $ | 164 | | | $ | 164 | | | $ | - | |
| Natural Gas Pipelines | | | 141 | | | | 141 | | | | - | |
| Natural Gas Liquids Gathering and Fractionation | | | 116 | | | | 102 | | | | 14 | |
| Natural Gas Liquids Pipelines | | | 115 | | | | 113 | | | | 2 | |
| Other | | | 1 | | | | 1 | | | | - | |
| Operating income | | | 537 | | | | 521 | | | | 16 | |
| Equity earnings from investments | | | 80 | | | | 91 | | | | (11 | ) |
| Other income (expense) | | | 28 | | | | 10 | | | | 18 | |
| Interest expense | | | (214 | ) | | | (203 | ) | | | (11 | ) |
| Income before income taxes | | | 431 | | | | 419 | | | | 12 | |
| Income taxes | | | (14 | ) | | | (16 | ) | | | 2 | |
| Net income | | | 417 | | | | 403 | | | | 14 | |
| Less: Net income attributable to noncontrolling interests | | | - | | | | - | | | | - | |
| Net income attributable to ONEOK Partners, L.P. | | $ | 417 | | | $ | 403 | | | $ | 14 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Limited partners' net income per unit, basic and diluted | | $ | 3.45 | | | $ | 3.45 | | | $ | - | |
| | | | | | | | | | | | - | |
Number of units used in computation (millions) | | | 93.8 | | | | 90.9 | | | | 2.9 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Capital expenditures | | | | | | | | | | | | |
| Natural Gas Gathering and Processing | | $ | 108 | | | $ | 119 | | | $ | (11 | ) |
| Natural Gas Pipelines | | | 82 | | | | 62 | | | | 20 | |
| Natural Gas Liquids Gathering and Fractionation | | | 52 | | | | 71 | | | | (19 | ) |
| Natural Gas Liquids Pipelines | | | 328 | | | | 173 | | | | 155 | |
| Total capital expenditures | | $ | 570 | | | $ | 425 | | | $ | 145 | |
| | | | | | | | | | | | | |
| Growth | | $ | 509 | | | $ | 355 | | | $ | 154 | |
| Maintenance | | | 61 | | | | 70 | | | | (9 | ) |
| Total capital expenditures | | $ | 570 | | | $ | 425 | | | $ | 145 | |
| | | | | | | | | | | | | |
| *Amounts shown are midpoints of ranges provided. | | | | | | | | | | | | |
ONEOK Partners Reports Second-quarter 2009 Results;
Updates 2009 Earnings Guidance
August 4, 2009
Page 19
| ONEOK Partners, L.P. and Subsidiaries | | | | | | | | Exhibit B | |
| EARNINGS GUIDANCE* | | | | | | | | | |
| | | | | | | | | | |
| | | Updated | | | Previous | | | | |
| | | 2009 | | | 2009 | | | | |
| | | Guidance | | | Guidance | | | Change | |
| | | (Millions of dollars) | |
| | | | | | | | | | |
| Reconciliation of Net Income to EBITDA | | | | | | | | | |
| Net income | | $ | 417 | | | $ | 403 | | | $ | 14 | |
| Interest expense | | | 214 | | | | 203 | | | | 11 | |
| Depreciation and amortization | | | 164 | | | | 165 | | | | (1 | ) |
| Income taxes | | | 14 | | | | 16 | | | | (2 | ) |
| Allowance for equity funds used during construction | | | (22 | ) | | | (6 | ) | | | (16 | ) |
| EBITDA | | $ | 787 | | | $ | 781 | | | $ | 6 | |
| | | | | | | | | | | | | |
| Reconciliation of EBITDA to Distributable Cash Flow | | | | | | | | | | | | |
| EBITDA | | $ | 787 | | | $ | 781 | | | $ | 6 | |
| (Gain)/loss on sale of assets | | | (4 | ) | | | - | | | | (4 | ) |
| Interest expense | | | (214 | ) | | | (203 | ) | | | (11 | ) |
| Maintenance capital | | | (61 | ) | | | (70 | ) | | | 9 | |
| Equity earnings from investments | | | (80 | ) | | | (91 | ) | | | 11 | |
| Distributions received from investments | | | 104 | | | | 114 | | | | (10 | ) |
| Current income tax expense and other | | | (7 | ) | | | (11 | ) | | | 4 | |
| Distributable cash flow | | $ | 525 | | | $ | 520 | | | $ | 5 | |
| | | | | | | | | | | | | |
| *Amounts shown are midpoints of ranges provided. | | | | | | | | | | | | |
