Oklahoma
|
73-1520922
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer Identification No.)
|
100
West Fifth Street, Tulsa, OK
|
74103
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Part
I.
|
Financial
Information
|
Page
No.
|
Item
1.
|
Financial
Statements (Unaudited)
|
|
Consolidated
Statements of Income - Three and Six Months Ended June 30, 2010 and
2009
|
5
|
|
Consolidated
Balance Sheets - June 30, 2010, and December 31, 2009
|
6-7
|
|
Consolidated
Statements of Cash Flows - Six Months Ended June 30, 2010 and
2009
|
9
|
|
Consolidated
Statement of Changes in Equity - Six Months Ended June 30,
2010
|
10-11
|
|
Consolidated
Statements of Comprehensive Income - Three and Six Months Ended June 30,
2010 and 2009
|
12
|
|
Notes
to Consolidated Financial Statements
|
13-34
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
35-56
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
56-57
|
Item
4.
|
Controls
and Procedures
|
58
|
Part
II.
|
Other
Information
|
|
Item
1.
|
Legal
Proceedings
|
58
|
Item
1A.
|
Risk
Factors
|
58
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
59
|
Item
3.
|
Defaults
Upon Senior Securities
|
59
|
Item
4.
|
(Removed
and Reserved)
|
59
|
Item
5.
|
Other
Information
|
59
|
Item
6.
|
Exhibits
|
59-60
|
Signature
|
61 |
|
AFUDC.............................................................
|
Allowance
for funds used during construction
|
|
Annual
Report.................................................
|
Annual
Report on Form 10-K for the year ended December 31,
2009
|
|
ASU...................................................................
|
Accounting
Standards Update
|
|
Bbl.....................................................................
|
Barrels,
one barrel is equivalent to 42 United States
gallons
|
|
Bbl/d..................................................................
|
Barrels
per day
|
|
BBtu/d...............................................................
|
Billion
British thermal units per day
|
|
Bcf.....................................................................
|
Billion
cubic feet
|
|
Bcf/d..................................................................
|
Billion
cubic feet per day
|
|
Btu(s)................................................................
|
British
thermal units, a measure of the amount of heat required to raise the
temperature of
one pound of water one degree
Fahrenheit
|
|
Bushton
Plant..................................................
|
Bushton
Gas Processing Plant
|
|
Clean
Air Act...................................................
|
Federal
Clean Air Act, as amended
|
|
Clean
Water Act..............................................
|
Federal
Water Pollution Control Act Amendments of 1972, as
amended
|
|
EBITDA............................................................
|
Earnings
before interest, taxes, depreciation and
amortization
|
|
EPA...................................................................
|
United
States Environmental Protection
Agency
|
|
Exchange
Act...................................................
|
Securities
Exchange Act of 1934, as amended
|
|
FASB.................................................................
|
Financial
Accounting Standards Board
|
|
FERC.................................................................
|
Federal
Energy Regulatory Commission
|
|
GAAP................................................................
|
Accounting
principles generally accepted in the United States of
America
|
|
KCC...................................................................
|
Kansas
Corporation Commission
|
|
KDHE................................................................
|
Kansas
Department of Health and
Environment
|
|
LDCs.................................................................
|
Local
distribution companies
|
|
LIBOR...............................................................
|
London
Interbank Offered Rate
|
|
MBbl.................................................................
|
Thousand
barrels
|
|
MBbl/d..............................................................
|
Thousand
barrels per day
|
|
Mcf....................................................................
|
Thousand
cubic feet
|
|
MMBbl.............................................................
|
Million
barrels
|
|
MMBtu.............................................................
|
Million
British thermal units
|
|
MMBtu/d.........................................................
|
Million
British thermal units per day
|
|
MMcf................................................................
|
Million
cubic feet
|
|
MMcf/d............................................................
|
Million
cubic feet per day
|
|
Moody’s...........................................................
|
Moody’s
Investors Service, Inc.
|
|
NGL
products..................................................
|
Marketable
natural gas liquid purity products, such as ethane, ethane/propane mix,
propane,
iso-butane, normal butane and natural
gasoline
|
|
NGL(s)...............................................................
|
Natural
gas liquid(s)
|
|
Northern
Border Pipeline...............................
|
Northern
Border Pipeline Company
|
|
NYMEX............................................................
|
New
York Mercantile Exchange
|
|
OBPI..................................................................
|
ONEOK
Bushton Processing Inc.
|
|
OCC...................................................................
|
Oklahoma
Corporation Commission
|
|
ONEOK.............................................................
|
ONEOK,
Inc.
|
|
ONEOK
Credit Agreement.............................
|
ONEOK’s
$1.2 billion Amended and Restated Credit Agreement dated
July 14,
2006
|
|
|
ONEOK
Partners.............................................
|
ONEOK
Partners, L.P.
|
|
ONEOK
Partners Credit Agreement.............
|
ONEOK
Partners’ $1.0 billion Amended and Restated Revolving Credit
Agreement dated
March 30, 2007
|
|
ONEOK
Partners GP.......................................
|
ONEOK
Partners GP, L.L.C., a wholly owned subsidiary of ONEOK and the
sole
general
partner of ONEOK Partners
|
|
OPIS..................................................................
|
Oil
Price Information Service
|
|
Overland
Pass Pipeline Company.................
|
Overland
Pass Pipeline Company LLC
|
|
Quarterly
Report(s).........................................
|
Quarterly
Report(s) on Form 10-Q
|
|
S&P...................................................................
|
Standard
& Poor’s Rating Group
|
|
SEC....................................................................
|
Securities
and Exchange Commission
|
|
Securities
Act..................................................
|
Securities
Act of 1933, as amended
|
|
Viking
Gas Transmission...............................
|
Viking
Gas Transmission Company
|
|
XBRL.................................................................
|
eXtensible
Business Reporting Language
|
PART
I - FINANCIAL INFORMATION
|
||||||||||||||||
ITEM
1. FINANCIAL STATEMENTS
|
||||||||||||||||
ONEOK,
Inc. and Subsidiaries
|
||||||||||||||||
CONSOLIDATED STATEMENTS
OF INCOME
|
||||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
(Unaudited)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
(Thousands
of dollars, except per share amounts)
|
||||||||||||||||
Revenues
|
$ | 2,807,131 | $ | 2,227,627 | $ | 6,731,098 | $ | 5,017,454 | ||||||||
Cost
of sales and fuel
|
2,349,054 | 1,795,201 | 5,653,701 | 4,033,617 | ||||||||||||
Net
margin
|
458,077 | 432,426 | 1,077,397 | 983,837 | ||||||||||||
Operating
expenses
|
||||||||||||||||
Operations
and maintenance
|
178,478 | 184,874 | 358,750 | 346,593 | ||||||||||||
Depreciation
and amortization
|
75,510 | 71,249 | 153,367 | 143,375 | ||||||||||||
General
taxes
|
25,103 | 25,261 | 48,176 | 50,488 | ||||||||||||
Total
operating expenses
|
279,091 | 281,384 | 560,293 | 540,456 | ||||||||||||
Gain
(loss) on sale of assets
|
(273 | ) | 3,762 | (1,058 | ) | 4,426 | ||||||||||
Operating
income
|
178,713 | 154,804 | 516,046 | 447,807 | ||||||||||||
Equity
earnings from investments (Note J)
|
20,676 | 14,188 | 41,792 | 35,410 | ||||||||||||
Allowance
for equity funds used during construction
|
235 | 9,468 | 482 | 18,471 | ||||||||||||
Other
income
|
711 | 7,939 | 3,620 | 9,604 | ||||||||||||
Other
expense
|
(7,552 | ) | (1,399 | ) | (8,606 | ) | (5,343 | ) | ||||||||
Interest
expense
|
(75,361 | ) | (73,392 | ) | (151,881 | ) | (151,353 | ) | ||||||||
Income
before income taxes
|
117,422 | 111,608 | 401,453 | 354,596 | ||||||||||||
Income
taxes
|
(31,048 | ) | (30,258 | ) | (128,359 | ) | (109,697 | ) | ||||||||
Net
income
|
86,374 | 81,350 | 273,094 | 244,899 | ||||||||||||
Less:
Net income attributable to noncontrolling interests
|
44,650 | 39,671 | 76,831 | 80,935 | ||||||||||||
Net
income attributable to ONEOK
|
$ | 41,724 | $ | 41,679 | $ | 196,263 | $ | 163,964 | ||||||||
Earnings
per share of common stock (Note K)
|
||||||||||||||||
Net
earnings per share, basic
|
$ | 0.39 | $ | 0.40 | $ | 1.85 | $ | 1.56 | ||||||||
Net
earnings per share, diluted
|
$ | 0.39 | $ | 0.39 | $ | 1.82 | $ | 1.55 | ||||||||
Average
shares of common stock (thousands)
|
||||||||||||||||
Basic
|
106,356 | 105,335 | 106,244 | 105,249 | ||||||||||||
Diluted
|
107,838 | 105,950 | 107,624 | 105,848 | ||||||||||||
Dividends
declared per share of common stock
|
$ | 0.44 | $ | 0.40 | $ | 0.88 | $ | 0.80 | ||||||||
See
accompanying Notes to Consolidated Financial Statements.
|
ONEOK,
Inc. and Subsidiaries
|
||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||
June
30,
|
December
31,
|
|||||||
(Unaudited)
|
2010
|
2009
|
||||||
Assets
|
(Thousands
of dollars)
|
|||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ | 103,251 | $ | 29,399 | ||||
Accounts
receivable, net
|
904,325 | 1,437,994 | ||||||
Gas
and natural gas liquids in storage
|
572,941 | 583,127 | ||||||
Commodity
imbalances
|
71,289 | 186,015 | ||||||
Energy
marketing and risk management assets (Notes B and C)
|
88,183 | 113,039 | ||||||
Other
current assets
|
138,266 | 238,890 | ||||||
Total
current assets
|
1,878,255 | 2,588,464 | ||||||
Property,
plant and equipment
|
||||||||
Property,
plant and equipment
|
10,304,502 | 10,145,800 | ||||||
Accumulated
depreciation and amortization
|
2,457,162 | 2,352,142 | ||||||
Net
property, plant and equipment
|
7,847,340 | 7,793,658 | ||||||
Investments
and other assets
|
||||||||
Goodwill
and intangible assets
|
1,026,726 | 1,030,560 | ||||||
Energy
marketing and risk management assets (Notes B and C)
|
19,686 | 23,125 | ||||||
Investments
in unconsolidated affiliates
|
757,232 | 765,163 | ||||||
Other
assets
|
590,672 | 626,713 | ||||||
Total
investments and other assets
|
2,394,316 | 2,445,561 | ||||||
Total
assets
|
$ | 12,119,911 | $ | 12,827,683 | ||||
See
accompanying Notes to Consolidated Financial Statements.
|
ONEOK,
Inc. and Subsidiaries
|
||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||
June
30,
|
December
31,
|
|||||||
(Unaudited)
|
2010
|
2009
|
||||||
Liabilities
and equity
|
(Thousands
of dollars)
|
|||||||
Current
liabilities
|
||||||||
Current
maturities of long-term debt
|
$ | 643,225 | $ | 268,215 | ||||
Notes
payable (Note E)
|
680,000 | 881,870 | ||||||
Accounts
payable
|
830,015 | 1,240,207 | ||||||
Commodity
imbalances
|
205,967 | 394,971 | ||||||
Energy
marketing and risk management liabilities (Notes B and C)
|
35,628 | 65,162 | ||||||
Other
current liabilities
|
480,773 | 488,487 | ||||||
Total
current liabilities
|
2,875,608 | 3,338,912 | ||||||
Long-term
debt, excluding current maturities
|
3,697,585 | 4,334,204 | ||||||
Deferred
credits and other liabilities
|
||||||||
Deferred
income taxes
|
1,053,931 | 1,037,665 | ||||||
Energy
marketing and risk management liabilities (Notes B and C)
|
5,081 | 8,926 | ||||||
Other
deferred credits
|
617,132 | 662,514 | ||||||
Total
deferred credits and other liabilities
|
1,676,144 | 1,709,105 | ||||||
Commitments
and contingencies (Note H)
|
||||||||
Equity
(Note F)
|
||||||||
ONEOK
shareholders' equity:
|
||||||||
Common
stock, $0.01 par value:
|
||||||||
authorized
300,000,000 shares; issued 122,676,368 shares and
outstanding
|
||||||||
106,415,009
shares at June 30, 2010; issued 122,394,015 shares and
|
||||||||
outstanding
105,906,776 shares at December 31, 2009
|
1,227 | 1,224 | ||||||
Paid-in
capital
|
1,375,090 | 1,322,340 | ||||||
Accumulated
other comprehensive loss (Note D)
|
(103,486 | ) | (118,613 | ) | ||||
Retained
earnings
|
1,788,501 | 1,685,710 | ||||||
Treasury
stock, at cost: 16,261,359 shares at June 30, 2010 and
|
||||||||
16,487,239
shares at December 31, 2009
|
(674,103 | ) | (683,467 | ) | ||||
Total
ONEOK shareholders' equity
|
2,387,229 | 2,207,194 | ||||||
Noncontrolling
interests in consolidated subsidiaries
|
1,483,345 | 1,238,268 | ||||||
Total
equity
|
3,870,574 | 3,445,462 | ||||||
Total
liabilities and equity
|
$ | 12,119,911 | $ | 12,827,683 | ||||
See
accompanying Notes to Consolidated Financial Statements.
|
ONEOK,
Inc. and Subsidiaries
|
||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||
Six
Months Ended
|
||||||||
June
30,
|
||||||||
(Unaudited)
|
2010
|
2009
|
||||||
(Thousands
of dollars)
|
||||||||
Operating
activities
|
||||||||
Net
income
|
$ | 273,094 | $ | 244,899 | ||||
Depreciation
and amortization
|
153,367 | 143,375 | ||||||
Allowance
for equity funds used during construction
|
(482 | ) | (18,471 | ) | ||||
Loss
(gain) on sale of assets
|
1,058 | (4,426 | ) | |||||
Equity
earnings from investments
|
(41,792 | ) | (35,410 | ) | ||||
Distributions
received from unconsolidated affiliates
|
39,034 | 38,233 | ||||||
Deferred
income taxes
|
42,794 | 40,865 | ||||||
Share-based
compensation expense
|
10,205 | 8,551 | ||||||
Other
|
3,416 | (767 | ) | |||||
Changes
in assets and liabilities:
|
||||||||
Accounts
receivable
|
531,537 | 492,441 | ||||||
Gas
and natural gas liquids in storage
|
1,618 | 285,271 | ||||||
Accounts
payable
|
(407,513 | ) | (324,364 | ) | ||||
Commodity
imbalances, net
|
(74,278 | ) | (18,352 | ) | ||||
Unrecovered
purchased gas costs
|
89,026 | 42,766 | ||||||
Energy
marketing and risk management assets and liabilities
|
64,050 | 35,373 | ||||||
Fair
value of firm commitments
|
(68,968 | ) | 179,582 | |||||
Other
assets and liabilities
|
(25,039 | ) | (33,714 | ) | ||||
Cash
provided by operating activities
|
591,127 | 1,075,852 | ||||||
Investing
activities
|
||||||||
Changes
in investments in unconsolidated affiliates
|
9,448 | 17,393 | ||||||
Capital
expenditures (less allowance for equity funds used during
construction)
|
(179,704 | ) | (407,600 | ) | ||||
Proceeds
from sale of assets
|
371 | 10,029 | ||||||
Cash
used in investing activities
|
(169,885 | ) | (380,178 | ) | ||||
Financing
activities
|
||||||||
Repayment
of notes payable, net
|
(201,870 | ) | (710,090 | ) | ||||
Repayment
of notes payable with maturities over 90 days
|
- | (870,000 | ) | |||||
Issuance
of debt, net of discounts
|
- | 498,325 | ||||||
Long-term
debt financing costs
|
- | (4,000 | ) | |||||
Repayment
of debt
|
(256,543 | ) | (107,970 | ) | ||||
Repurchase
of common stock
|
(5 | ) | (250 | ) | ||||
Issuance
of common stock
|
7,884 | 4,342 | ||||||
Issuance
of common units of ONEOK Partners, net of discounts
|
322,704 | 220,458 | ||||||
Dividends
paid
|
(93,472 | ) | (84,202 | ) | ||||
Distributions
to noncontrolling interests
|
(126,088 | ) | (105,307 | ) | ||||
Cash
used in financing activities
|
(347,390 | ) | (1,158,694 | ) | ||||
Change
in cash and cash equivalents
|
73,852 | (463,020 | ) | |||||
Cash
and cash equivalents at beginning of period
|
29,399 | 510,058 | ||||||
Cash
and cash equivalents at end of period
|
$ | 103,251 | $ | 47,038 | ||||
See
accompanying Notes to Consolidated Financial Statements.
|
ONEOK,
Inc. and Subsidiaries
|
||||||||||||||||
CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
|
||||||||||||||||
ONEOK
Shareholders' Equity
|
||||||||||||||||
Accumulated
|
||||||||||||||||
Common
|
Other
|
|||||||||||||||
Stock
|
Common
|
Paid-in
|
Comprehensive
|
|||||||||||||
(Unaudited)
|
Issued
|
Stock
|
Capital
|
Income
(Loss)
|
||||||||||||
(Shares)
|
(Thousands
of dollars)
|
|||||||||||||||
December
31, 2009
|
122,394,015 | $ | 1,224 | $ | 1,322,340 | $ | (118,613 | ) | ||||||||
Net
income
|
- | - | - | - | ||||||||||||
Other
comprehensive income
|
- | - | - | 15,127 | ||||||||||||
Repurchase
of common stock
|
- | - | - | - | ||||||||||||
Common
stock issued
|
282,353 | 3 | 2,019 | - | ||||||||||||
Common
stock dividends -
|
||||||||||||||||
$0.88
per share
|
- | - | - | - | ||||||||||||
Issuance
of common units of ONEOK Partners
|
- | - | 50,731 | - | ||||||||||||
Distributions
to noncontrolling interests
|
- | - | - | - | ||||||||||||
June
30, 2010
|
122,676,368 | $ | 1,227 | $ | 1,375,090 | $ | (103,486 | ) | ||||||||
See
accompanying Notes to Consolidated Financial Statements.
|
ONEOK,
Inc. and Subsidiaries
|
||||||||||||||||
CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
|
||||||||||||||||
(Continued)
|
||||||||||||||||
ONEOK
Shareholders' Equity
|
|
|||||||||||||||
Noncontrolling
|
||||||||||||||||
Interests
in
|
||||||||||||||||
Retained
|
Treasury
|
Consolidated
|
Total
|
|||||||||||||
(Unaudited)
|
Earnings
|
Stock
|
Subsidiaries
|
Equity
|
||||||||||||
(Thousands
of dollars)
|
||||||||||||||||
December
31, 2009
|
$ | 1,685,710 | $ | (683,467 | ) | $ | 1,238,268 | $ | 3,445,462 | |||||||
Net
income
|
196,263 | - | 76,831 | 273,094 | ||||||||||||
Other
comprehensive income
|
- | - | 22,361 | 37,488 | ||||||||||||
Repurchase
of common stock
|
- | (5 | ) | - | (5 | ) | ||||||||||
Common
stock issued
|
- | 9,369 | - | 11,391 | ||||||||||||
Common
stock dividends -
|
||||||||||||||||
$0.88
per share
|
(93,472 | ) | - | - | (93,472 | ) | ||||||||||
Issuance
of common units of ONEOK Partners
|
- | - | 271,973 | 322,704 | ||||||||||||
Distributions
to noncontrolling interests
|
- | - | (126,088 | ) | (126,088 | ) | ||||||||||
June
30, 2010
|
$ | 1,788,501 | $ | (674,103 | ) | $ | 1,483,345 | $ | 3,870,574 |
ONEOK,
Inc. and Subsidiaries
|
||||||||||||||||
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
||||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
(Unaudited)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
(Thousands
of dollars)
|
||||||||||||||||
Net
income
|
$ | 86,374 | $ | 81,350 | $ | 273,094 | $ | 244,899 | ||||||||
Other
comprehensive income (loss), net of tax
|
||||||||||||||||
Unrealized
gains (losses) on energy marketing and risk management
|
||||||||||||||||
assets/liabilities,
net of tax of $(4,689), $9,743, $(23,526) and
|
||||||||||||||||
$(28,340),
respectively
|
14,036 | (22,177 | ) | 57,527 | 38,469 | |||||||||||
Realized
gains in net income, net of tax of $748, $5,176, $8,769
|
||||||||||||||||
and
$32,853, respectively
|
(1,717 | ) | (16,793 | ) | (11,776 | ) | (70,713 | ) | ||||||||
Unrealized
holding gains (losses) on available-for-sale securities,
|
||||||||||||||||
net
of tax of $107, $(200), $168 and $(319), respectively
|
(169 | ) | 318 | (267 | ) | 505 | ||||||||||
Change
in pension and postretirement benefit plan liability, net of
tax
|
||||||||||||||||
of
$2,533, $2,057, $5,066 and $3,655, respectively
|
(4,016 | ) | (3,260 | ) | (8,032 | ) | (5,795 | ) | ||||||||
Other,
net of tax of $(11), $(11), $(22) and $(62), respectively
|
18 | 18 | 36 | 208 | ||||||||||||
Total
other comprehensive income (loss), net of tax
|
8,152 | (41,894 | ) | 37,488 | (37,326 | ) | ||||||||||
Comprehensive
income
|
94,526 | 39,456 | 310,582 | 207,573 | ||||||||||||
Less:
Comprehensive income attributable to noncontrolling
interests
|
50,723 | 24,731 | 99,192 | 55,953 | ||||||||||||
Comprehensive
income attributable to ONEOK
|
$ | 43,803 | $ | 14,725 | $ | 211,390 | $ | 151,620 | ||||||||
See
accompanying Notes to Consolidated Financial Statements.
|
June
30, 2010
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Netting
|
Total
|
||||||||||||||||
(Thousands
of dollars)
|
||||||||||||||||||||
Assets
|
||||||||||||||||||||
Derivatives
(a)
|
||||||||||||||||||||
Commodity
contracts
|
||||||||||||||||||||
Financial
contracts
|
$ | 104,965 | $ | 8,173 | $ | 340,770 | $ | - | $ | 453,908 | ||||||||||
Physical
contracts
|
- | 21,841 | 23,245 | - | 45,086 | |||||||||||||||
Netting
|
- | - | - | (391,142 | ) | (391,142 | ) | |||||||||||||
Foreign
Exchange contracts
|
17 | - | - | - | 17 | |||||||||||||||
Total
derivatives
|
104,982 | 30,014 | 364,015 | (391,142 | ) | 107,869 | ||||||||||||||
Trading
securities (b)
|
6,643 | - | - | - | 6,643 | |||||||||||||||
Available-for-sale
investment securities (c)
|
2,252 | - | - | - | 2,252 | |||||||||||||||
Total assets | $ | 113,877 | $ | 30,014 | $ | 364,015 | $ | (391,142 | ) | $ | 116,764 | |||||||||
Liabilities
|
||||||||||||||||||||
Derivatives
(a)
|
||||||||||||||||||||
Commodity
contracts
|
||||||||||||||||||||
Financial
contracts
|
$ | (74,431 | ) | $ | (2,291 | ) | $ | (262,402 | ) | $ | - | $ | (339,124 | ) | ||||||
Physical
contracts
|
- | (4,419 | ) | (12,501 | ) | - | (16,920 | ) | ||||||||||||
Netting
|
- | - | - | 315,348 | 315,348 | |||||||||||||||
Foreign
Exchange contracts
|
(13 | ) | - | - | - | (13 | ) | |||||||||||||
Total
derivatives
|
(74,444 | ) | (6,710 | ) | (274,903 | ) | 315,348 | (40,709 | ) | |||||||||||
Fair
value of firm commitments (d)
|
- | - | (65,653 | ) | - | (65,653 | ) | |||||||||||||
Total liabilities | $ | (74,444 | ) | $ | (6,710 | ) | $ | (340,556 | ) | $ | 315,348 | $ | (106,362 | ) | ||||||
(a)
- Our derivative assets and liabilities are presented in our Consolidated
Balance Sheets as energy marketing and risk management assets and
liabilities on a net basis. We net derivative assets and liabilities,
including cash collateral, when a legally enforceable master-netting
arrangement exists between the counterparty to a derivative contract and
us. At June 30, 2010, we held $78.9 million of cash collateral and
had posted $3.1 million of cash collateral with various
counterparties.
|
||||||||||||||||||||
(b)
- Our trading securities are presented in our Consolidated Balance Sheets
as other current assets.
|
||||||||||||||||||||
(c)
- Our available-for-sale investment securities are presented in our
Consolidated Balance Sheets as other assets.
|
||||||||||||||||||||
(d)
- Our fair value of firm commitments are presented in our Consolidated
Balance Sheets as other current liabilities and other deferred
credits.
|
December
31, 2009
|
||||||||||||||||||||
Level
1
|
Level
2
|
Level
3
|
Netting
|
Total
|
||||||||||||||||
(Thousands
of dollars)
|
||||||||||||||||||||
Assets
|
||||||||||||||||||||
Derivatives
(a)
|
$ | 149,034 | $ | 4,898 | $ | 672,631 | $ | (690,399 | ) | $ | 136,164 | |||||||||
Trading
securities (b)
|
7,927 | - | - | - | 7,927 | |||||||||||||||
Available-for-sale
investment securities (c)
|
2,688 | - | - | - | 2,688 | |||||||||||||||
Total
assets
|
$ | 159,649 | $ | 4,898 | $ | 672,631 | $ | (690,399 | ) | $ | 146,779 | |||||||||
Liabilities
|
||||||||||||||||||||
Derivatives
(a)
|
$ | (109,713 | ) | $ | (8,481 | ) | $ | (535,937 | ) | $ | 580,043 | $ | (74,088 | ) | ||||||
Fair
value of firm commitments (d)
|
- | - | (134,620 | ) | - | (134,620 | ) | |||||||||||||
Total
liabilities
|
$ | (109,713 | ) | $ | (8,481 | ) | $ | (670,557 | ) | $ | 580,043 | $ | (208,708 | ) | ||||||
(a)
- Our derivative assets and liabilities are presented in our Consolidated
Balance Sheets as energy marketing and risk management assets and
liabilities on a net basis. We net derivative assets and liabilities,
including cash collateral, when a legally enforceable master-netting
arrangement exists between the counterparty to a derivative contract and
us. At December 31, 2009, we held $136.5 million of cash collateral
and had posted $26.1 million of cash collateral with various
counterparties.
|
||||||||||||||||||||
(b)
- Our trading securities are presented in our Consolidated Balance Sheets
as other current assets.
|
||||||||||||||||||||
(c)
- Our available-for-sale investment securities are presented in our
Consolidated Balance Sheets as other assets.
|
||||||||||||||||||||
(d)
- Our fair value of firm commitments are presented in our Consolidated
Balance Sheets as other current liabilities and other deferred
credits.
|
||||||||||||||||||||
Derivative
Assets
(Liabilities)
|
Fair
Value of
Firm
Commitments
|
Total
|
|||||||||||
(Thousands
of dollars)
|
|||||||||||||
April
1, 2010
|
$ | 147,573 | $ | (111,597 | ) | $ | 35,976 | ||||||
Total
realized/unrealized gains (losses):
|
|||||||||||||
Included
in earnings
|
(52,606 | ) |
(a)
|
45,944 |
(a)
|
(6,662 | ) | ||||||
Included
in other comprehensive income (loss)
|
8,484 | - | 8,484 | ||||||||||
Transfers
into Level 3
|
431 | - | 431 | ||||||||||
Transfers
out of Level 3
|
(14,770 | ) | - | (14,770 | ) | ||||||||
June
30, 2010
|
$ | 89,112 | $ | (65,653 | ) | $ | 23,459 | ||||||
Total
gains (losses) for the period included in
earnings
attributable to the change in unrealized
gains
(losses) relating to assets and liabilities
still
held as of June 30, 2010 (a)
|
$ | (24,529 | ) | $ | 13,481 | $ | (11,048 | ) | |||||
(a)
- Reported in revenues and cost of sales and fuel in our Consolidated
Statements of Income.
|
Derivative
Assets
(Liabilities)
|
Fair
Value of
Firm
Commitments
|
Total
|
|||||||||||
(Thousands
of dollars)
|
|||||||||||||
April
1, 2009
|
$ | 170,238 | $ | (111,212 | ) | $ | 59,026 | ||||||
Total
realized/unrealized gains (losses):
|
|||||||||||||
Included
in earnings
|
34,202 |
(a)
|
(26,191 | ) |
(a)
|
8,011 | |||||||
Included
in other comprehensive income (loss)
|
(52,330 | ) | - | (52,330 | ) | ||||||||
Transfers
in and/or out of Level 3
|
18,304 | - | 18,304 | ||||||||||
June
30, 2009
|
$ | 170,414 | $ | (137,403 | ) | $ | 33,011 | ||||||
Total
gains (losses) for the period included in
earnings
attributable to the change in unrealized
gains
(losses) relating to assets and liabilities
still
held as of June 30, 2009 (a)
|
$ | 57,041 | $ | (44,189 | ) | $ | 12,852 | ||||||
(a)
- Reported in revenues and cost of sales and fuel in our Consolidated
Statements of Income.
|
Derivative
Assets
(Liabilities)
|
Fair
Value of
Firm
Commitments
|
Total
|
||||||||||
(Thousands
of dollars)
|
||||||||||||
January
1, 2010
|
$ | 136,694 | $ | (134,620 | ) | $ | 2,074 | |||||
Total
realized/unrealized gains (losses):
|
||||||||||||
Included
in earnings (a)
|
(56,032 | ) | 68,967 | 12,935 | ||||||||
Included
in other comprehensive income (loss)
|
21,705 | - | 21,705 | |||||||||
Transfers
into Level 3
|
1,423 | - | 1,423 | |||||||||
Transfers
out of Level 3
|
(14,678 | ) | - | (14,678 | ) | |||||||
June
30, 2010
|
$ | 89,112 | $ | (65,653 | ) | $ | 23,459 | |||||
Total
gains (losses) for the period included in
earnings
attributable to the change in unrealized
gains
(losses) relating to assets and liabilities
still
held as of June 30, 2010 (a)
|
$ | (5,761 | ) | $ | 8,532 | $ | 2,771 | |||||
(a)
- Reported in revenues and cost of sales and fuel in our Consolidated
Statements of Income.
|
Derivative
Assets
(Liabilities)
|
Fair
Value of
Firm
Commitments
|
Long-Term
Debt
|
Total
|
|||||||||||||
(Thousands
of dollars)
|
||||||||||||||||
January
1, 2009
|
$ | 42,355 | $ | 42,179 | $ | (171,455 | ) | $ | (86,921 | ) | ||||||
Total
realized/unrealized gains (losses):
|
||||||||||||||||
Included
in earnings
|
188,038 |
(a)
|
(179,582 | ) |
(a)
|
1,455 |
(b)
|
9,911 | ||||||||
Included
in other comprehensive income (loss)
|
(60,060 | ) | - | - | (60,060 | ) | ||||||||||
Maturities
|
- | - | 100,000 | 100,000 | ||||||||||||
Terminations
prior to maturity
|
- | - | 70,000 | 70,000 | ||||||||||||
Transfers
in and/or out of Level 3
|
81 | - | - | 81 | ||||||||||||
June
30, 2009
|
$ | 170,414 | $ | (137,403 | ) | $ | - | $ | 33,011 | |||||||
Total
gains (losses) for the period included in
earnings
attributable to the change in unrealized
gains
(losses) relating to assets and liabilities
still
held as of June 30, 2009 (a)
|
$ | 189,866 | $ | (162,734 | ) | $ | - | $ | 27,132 | |||||||
(a)
- Reported in revenues and cost of sales and fuel in our Consolidated
Statements of Income.
|
||||||||||||||||
(b)
- Reported in interest expense in our Consolidated Statements of
Income.
|
·
|
Commodity price
risk - We are exposed to the risk of loss in cash flows and future
earnings arising from adverse changes in the price of natural gas, NGLs
and crude oil. We use commodity derivative instruments such as
futures, physical forward contracts, swaps and options to mitigate the
commodity price risk associated with a portion of the forecasted purchases
and sales of commodities and natural gas and natural gas liquids in
storage;
|
·
|
Basis risk - We
are exposed to the risk of loss in cash flows and future earnings arising
from adverse changes in the price differentials between pipeline receipt
and delivery locations. Our firm transportation capacity allows
us to purchase gas at a pipeline receipt point and sell gas at a pipeline
delivery point. Our Energy Services segment periodically enters
into basis swaps between the transportation receipt and delivery points in
order to protect the fair value of these location price differentials
related to our firm commitments;
and
|
·
|
Currency exchange rate
risk - As a result of our Energy Services segment’s activities in
Canada, we are exposed to the risk of loss in cash flows and future
earnings from adverse changes in currency exchange rates on our commodity
purchases and sales primarily related to our firm transportation and
storage contracts that are transacted in a currency other than our
functional currency, the U.S. dollar. To reduce our exposure to
exchange-rate fluctuations, we use physical forward transactions, which
result in an actual two-way flow of currency on the settlement date in
which we exchange U.S. dollars for Canadian dollars with another
party.
|
·
|
Futures
contracts - Standardized exchange-traded contracts to purchase
or sell natural gas or crude oil at a specified price, requiring delivery
on or settlement through the sale or purchase of an offsetting contract by
a specified future date under the provisions of exchange
regulations;
|
·
|
Forward
contracts - Commitments to purchase or sell natural gas, crude
oil or NGLs for delivery at some specified time in the future. We
also use currency forward contracts to manage our currency exchange rate
risk. Forward contracts are different from futures in that forwards are
customized and non-exchange traded;
|
·
|
Swaps -
Financial trades involving the exchange of payments based on two different
pricing structures for a commodity. In a typical commodity swap,
parties exchange payments based on changes in the price of a commodity or
a market index, while fixing the price they effectively pay or receive for
the physical commodity. As a result, one party assumes the risks and
benefits of movements in market prices, while the other party assumes the
risks and benefits of a fixed price for the commodity;
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 non-exchange
traded.
|
·
|
reducing
the variability of cash flows by locking in the price for all or a portion
of anticipated index-based physical purchases and sales, transportation
fuel requirements, asset management transactions and customer-related
business activities;
|
·
|
locking
in a price differential to protect the fair value between transportation
receipt and delivery points and to protect the fair value of natural gas
or NGLs that are purchased in one month and sold in a later month;
and
|
·
|
reducing
our exposure to fluctuations in foreign currency exchange
rates.
|
Recognition
and Measurement
|
||||||||
Accounting
Treatment
|
Balance
Sheet
|
Income
Statement
|
||||||
Normal
purchases and
normal
sales
|
- |
Fair
value not recorded
|
- |
Change
in fair value not recognized in earnings
|
||||
Mark-to-market
|
- |
Recorded
at fair value
|
- |
Change
in fair value recognized in earnings
|
||||
Cash
flow hedge
|
- |
Recorded
at fair value
|
- |
Ineffective
portion of the gain or loss on the derivative instrument is recognized in
earnings
|
||||
- |
Effective
portion of the gain or loss on the derivative instrument is reported
initially as a component of accumulated other comprehensive income
(loss)
|
- |
Effective
portion of the gain or loss on the derivative instrument is reclassified
out of accumulated other comprehensive income (loss) into earnings when
the forecasted transaction affects earnings
|
|||||
Fair
value hedge
|
- |
Recorded
at fair value
|
- |
The
gain or loss on the derivative instrument is recognized in
earnings
|
||||
- |
Change
in fair value of the hedged item is recorded as an adjustment to book
value
|
- |
Change
in fair value of the hedged item is recognized in
earnings
|
June
30, 2010
|
December
31, 2009
|
|||||||||||||
Fair
Values of Derivatives (a)
|
Fair
Values of Derivatives (a)
|
|||||||||||||
Assets
|
(Liabilities)
|
Assets
|
(Liabilities)
|
|||||||||||
(Thousands
of dollars)
|
||||||||||||||
Derivatives
designated as hedging instruments
|
||||||||||||||
Commodity
contracts
|
||||||||||||||
Financial
contracts
|
$ | 187,813 |
(b)
|
$ | (49,132 | ) | $ | 311,009 |
(c)
|
$ | (130,831 | ) | ||
Physical
contracts
|
756 | (176 | ) | 1,702 | (937 | ) | ||||||||
Total
derivatives designated as hedging instruments
|
188,569 | (49,308 | ) | 312,711 | (131,768 | ) | ||||||||
Derivatives
not designated as hedging instruments
|
||||||||||||||
Commodity
contracts
|
||||||||||||||
Non-trading
instruments
|
||||||||||||||
Financial
contracts
|
226,532 | (252,735 | ) | 407,475 | (447,714 | ) | ||||||||
Physical
contracts
|
44,330 | (16,744 | ) | 46,598 | (16,234 | ) | ||||||||
Trading
instruments
|
||||||||||||||
Financial
contracts
|
39,563 | (37,257 | ) | 59,751 | (58,334 | ) | ||||||||
Total
commodity contracts
|
310,425 | (306,736 | ) | 513,824 | (522,282 | ) | ||||||||
Foreign
exchange contracts
|
17 | (13 | ) | 28 | (81 | ) | ||||||||
Total
derivatives not designated as hedging instruments
|
310,442 | (306,749 | ) | 513,852 | (522,363 | ) | ||||||||
Total
derivatives
|
$ | 499,011 | $ | (356,057 | ) | $ | 826,563 | $ | (654,131 | ) | ||||
(a)
- Included on a net basis in energy marketing and risk management assets
and liabilities on our Consolidated Balance Sheets.
|
||||||||||||||
(b)
- Includes $11.3 million of derivative assets associated with cash flow
hedges of inventory that were adjusted to reflect the lower of cost or
market value. The deferred gains associated with these assets have
been reclassified from accumulated other comprehensive
loss.
|
||||||||||||||
(c)
- Includes $37.7 million of derivative assets associated with cash flow
hedges of inventory that were adjusted to reflect the lower of cost or
market value. The deferred gains associated with these assets have
been reclassified from accumulated other comprehensive
loss.
|
||||||||||||||
June
30, 2010
|
December
31, 2009
|
||||||||||||||||
Contract
Type
|
Purchased/
Payor
|
Sold/
Receiver
|
Purchased/
Payor
|
Sold/
Receiver
|
|||||||||||||
Derivatives
designated as hedging instruments:
|
|||||||||||||||||
Cash flow
hedges
|
|||||||||||||||||
Fixed
price
|
|||||||||||||||||
-
Natural gas (Bcf)
|
Exchange
futures
|
5.4 | (12.5 | ) | 6.4 | (20.7 | ) | ||||||||||
Swaps
|
3.2 | (65.3 | ) | 18.1 | (80.7 | ) | |||||||||||
- Crude
oil and NGLs
(MMBbl)
|
Swaps
|
- | (1.8 | ) | - | (2.4 | ) | ||||||||||
Basis
|
|||||||||||||||||
-
Natural gas (Bcf)
|
Forwards
and swaps
|
8.9 | (71.7 | ) | 23.7 | (99.6 | ) | ||||||||||
Fair value
hedges
|
|||||||||||||||||
Basis
|
|||||||||||||||||
-
Natural gas (Bcf)
|
Forwards
and swaps
|
187.3 | (187.3 | ) | 210.4 | (210.4 | ) | ||||||||||
Derivatives
not designated as hedging instruments:
|
|||||||||||||||||
Fixed
price
|
|||||||||||||||||
-
Natural gas (Bcf)
|
Exchange
futures
|
23.9 | (15.0 | ) | 38.8 | (22.7 | ) | ||||||||||
Forwards
and swaps
|
83.3 | (104.0 | ) | 100.6 | (117.4 | ) | |||||||||||
Options
|
115.4 | (75.1 | ) | 102.6 | (80.6 | ) | |||||||||||
- Crude
and NGLs (MBbl)
|
Forwards
and swaps
|
1.1 | (1.6 | ) | - | - | |||||||||||
-
Foreign currency
(Millions of dollars)
|
Swaps
|
$ | 1.6 | $ | - | $ | 4.6 | $ | - | ||||||||
Basis
|
|||||||||||||||||
-
Natural gas (Bcf)
|
Forwards
and swaps
|
704.2 | (708.7 | ) | 940.7 | (947.1 | ) | ||||||||||
Index
|
|||||||||||||||||
-
Natural gas
(Bcf)
|
Forwards
and swaps
|
46.8 | (11.0 | ) | 66.4 | (33.1 | ) |
Three
Months Ended
|
Six
Months Ended
|
||||||||||
Derivatives
in Cash Flow
Hedging
Relationships
|
June
30,
|
June
30,
|
|||||||||
2010
|
2009
|
2010
|
2009
|
||||||||
(Thousands
of dollars)
|
|||||||||||
Commodity
contracts
|
$ | 18,725 | $ | (32,363 | ) | $ | 81,053 | $ | 66,245 | ||
Interest
rate contracts
|
- | 443 | - | 564 | |||||||
Total
gain (loss) recognized in other
comprehensive
income (loss) on
derivatives
(effective portion)
|
$ | 18,725 | $ | (31,920 | ) | $ | 81,053 | $ | 66,809 | ||
Location
of Gain (Loss) Reclassified from
Accumulated
Other Comprehensive Income
(Loss)
into Net Income (Effective Portion)
|
Three
Months Ended
|
|||||||
Derivatives
in Cash Flow
Hedging
Relationships
|
June
30,
|
|||||||
2010
|
2009
|
|||||||
(Thousands
of dollars)
|
||||||||
Commodity
contracts
|
Revenues
|
$ | 5,490 | $ | 31,157 | |||
Commodity
contracts
|
Cost
of sales and fuel
|
(3,246 | ) | (9,624 | ) | |||
Interest
rate contracts
|
Interest
expense
|
221 | 436 | |||||
Total
gain (loss) reclassified from accumulated other comprehensive income
(loss)
into net income on derivatives (effective portion)
|
$ | 2,465 | $ | 21,969 | ||||
Location
of Gain (Loss) Reclassified from
Accumulated
Other Comprehensive Income
(Loss)
into Net Income (Effective Portion)
|
Six Months
Ended
|
|||||||
Derivatives
in Cash Flow
Hedging
Relationships
|
June
30,
|
|||||||
2010
|
2009
|
|||||||
(Thousands of dollars)
|
||||||||
Commodity
contracts
|
Revenues
|
$
|
35,446
|
$
|
113,872
|
|||
Commodity
contracts
|
Cost
of sales and fuel
|
(15,343
|
)
|
(11,178
|
)
|
|||
Interest
rate contracts
|
Interest
expense
|
442
|
872
|
|||||
Total
gain (loss) reclassified from accumulated other comprehensive
income
(loss)
into net income on derivatives (effective portion)
|
$
|
20,545
|
$
|
103,566
|
Location
of Gain (Loss) Recognized in Income
on
Derivatives (Ineffective Portion and Amount
Excluded
from Effectiveness Testing)
|
Three
Months Ended
|
|||||||
Derivatives
in Cash Flow
Hedging
Relationships
|
June
30,
|
|||||||
2010
|
2009
|
|||||||
(Thousands of dollars)
|
||||||||
Commodity
contracts
|
Revenues
|
$
|
98
|
$
|
(228
|
) | ||
Commodity
contracts
|
Cost
of sales and fuel
|
58
|
|
(217
|
)
|
|||
Total
gain (loss) reclassified from accumulated other comprehensive
income
(loss)
into net income on derivatives (effective portion)
|
$
|
156
|
$
|
(445
|
) |
Location
of Gain (Loss) Recognized in Income
on
Derivatives (Ineffective Portion and Amount
Excluded
from Effectiveness Testing)
|
Six
Months Ended
|
|||||||
Derivatives
in Cash Flow
Hedging
Relationships
|
June
30,
|
|||||||
2010
|
2009
|
|||||||
(Thousands of dollars)
|
||||||||
Commodity
contracts
|
Revenues
|
$
|
1,114
|
$
|
2,820
|
|||
Commodity
contracts
|
Cost
of sales and fuel
|
(819
|
)
|
(747
|
)
|
|||
Total
gain (loss) reclassified from accumulated other comprehensive
income
(loss)
into net income on derivatives (effective portion)
|
$
|
295
|
$
|
2,073
|
Three
Months Ended
|
Six
Months Ended
|
||||||||||||
Derivatives
Not Designated as
Hedging
Instruments
|
Location
of Gain
(Loss)
|
June
30,
|
June
30,
|
||||||||||
2010
|
2009
|
2010
|
2009
|
||||||||||
(Thousands
of dollars)
|
|||||||||||||
Commodity
contracts - trading
|
Revenues
|
$ | 1,358 | $ | 104 | $ | 3,386 | $ | 3,409 | ||||
Commodity
contracts - non-trading (a)
|
Cost
of gas and fuel
|
2,413 | 2,476 | 2,372 | 1,937 | ||||||||
Foreign
exchange contracts
|
Revenues
|
(69 | ) | 585 | (10 | ) | 323 | ||||||
Total
gain (loss) recognized in income on derivatives
|
$ | 3,702 | $ | 3,165 | $ | 5,748 | $ | 5,669 | |||||
(a)
- For the six months ended June 30, 2010 and 2009, we recognized $5.4
million and $2.1 million of losses associated with the fair value of
derivative instruments entered into by our Distribution segment that were
deferred as they are included in, and recoverable through, the monthly
purchased-gas cost mechanism. Recognized losses were immaterial for
the three months ended June 30, 2010 and 2009,
respectively.
|
|||||||||||||
ONEOK
|
||||||||||||
ONEOK
|
Partners
|
Total
|
||||||||||
(Millions
of dollars)
|
||||||||||||
Remainder
of 2010
|
$ | 3.2 | $ | 1.9 | $ | 5.1 | ||||||
2011
|
$ | 3.4 | $ | 0.9 | $ | 4.3 | ||||||
2012
|
$ | 1.7 | $ | - | $ | 1.7 | ||||||
2013
|
$ | 1.7 | $ | - | $ | 1.7 | ||||||
2014
|
$ | 1.7 | $ | - | $ | 1.7 | ||||||
Thereafter
|
$ | 23.6 | $ | - | $ | 23.6 |
June
30, 2010
|
|||||||||||||
Investment
|
Non-investment
|
Not
|
|||||||||||
Grade
|
Grade
|
Rated
|
Total
|
||||||||||
Counterparty
sector
|
(Thousands
of dollars)
|
||||||||||||
Gas
and electric utilities
|
$ | 40,166 | $ | 1,665 | $ | 895 | $ | 42,726 | |||||
Oil
and gas
|
27,052 | - | 1,248 | 28,300 | |||||||||
Industrial
|
61 | - | 5,053 | 5,114 | |||||||||
Financial
|
31,716 | - | - | 31,716 | |||||||||
Other
|
- | 13 | - | 13 | |||||||||
Total
|
$ | 98,995 | $ | 1,678 | $ | 7,196 | $ | 107,869 |
December
31, 2009
|
|||||||||||||
Investment
|
Non-investment
|
Not
|
|||||||||||
Grade
|
Grade
|
Rated
|
Total
|
||||||||||
Counterparty
sector
|
(Thousands
of dollars)
|
||||||||||||
Gas
and electric utilities
|
$ | 26,964 | $ | 2,668 | $ | 7,972 | $ | 37,604 | |||||
Oil
and gas
|
54,578 | 224 | 10,084 | 64,886 | |||||||||
Industrial
|
689 | - | 3 | 692 | |||||||||
Financial
|
32,880 | - | 7 | 32,887 | |||||||||
Other
|
- | 55 | 40 | 95 | |||||||||
Total
|
$ | 115,111 | $ | 2,947 | $ | 18,106 | $ | 136,164 |
Unrealized
Gains
(Losses)
on Energy
Marketing
and
Risk
Management
Assets/Liabilities
|
Unrealized
Holding
Gains
(Losses) on
Investment
Securities
|
Pension
and Postretirement
Benefit
Plan
Obligations
|
Accumulated
Other
Comprehensive
Income
(Loss)
|
|||||||||
(Thousands
of dollars)
|
||||||||||||
December
31, 2009
|
$ |
(6,151
|
) | $ |
1,441
|
$ |
(113,903
|
) | $ |
(118,613
|
) | |
Other
comprehensive income (loss)
attributable
to ONEOK
|
23,426
|
(267
|
) |
(8,032
|
) |
15,127
|
||||||
June
30, 2010
|
$ |
17,275
|
$ |
1,174
|
$ |
(121,935
|
) | $ |
(103,486
|
) |
·
|
a
$400 million sublimit for the issuance of standby letters of
credit;
|
·
|
a
limitation on ONEOK’s stand-alone debt-to-capital ratio, which may not
exceed 67.5 percent at the end of any calendar
quarter;
|
·
|
a
requirement that ONEOK maintain the power to control the management and
policies of ONEOK Partners; and
|
·
|
a
limit on new investments in master limited
partnerships.
|
Three
Months Ended
|
Three
Months Ended
|
|||||||||||||||||||||||
June
30, 2010
|
June
30, 2009
|
|||||||||||||||||||||||
ONEOK
Shareholders' Equity
|
Noncontrolling
Interests in Consolidated Subsidiaries
|
Total
Equity
|
ONEOK
Shareholders' Equity
|
Noncontrolling
Interests in Consolidated Subsidiaries
|
Total
Equity
|
|||||||||||||||||||
(Thousands
of dollars)
|
||||||||||||||||||||||||
Beginning
balance
|
$ | 2,380,697 | $ | 1,498,944 | $ | 3,879,641 | $ | 2,183,293 | $ | 1,057,840 | $ | 3,241,133 | ||||||||||||
Net
income
|
41,724 | 44,650 | 86,374 | 41,679 | 39,671 | 81,350 | ||||||||||||||||||
Other
comprehensive income (loss)
|
2,078 | 6,074 | 8,152 | (26,808 | ) | (14,940 | ) | (41,748 | ) | |||||||||||||||
Repurchase
of common stock
|
- | - | - | (3 | ) | - | (3 | ) | ||||||||||||||||
Common
stock issued
|
9,501 | - | 9,501 | 6,354 | - | 6,354 | ||||||||||||||||||
Common
stock dividends
|
(46,771 | ) | - | (46,771 | ) | (42,122 | ) | - | (42,122 | ) | ||||||||||||||
Issuance
of common units of ONEOK Partners
|
- | (17 | ) | (17 | ) | - | 220,458 | 220,458 | ||||||||||||||||
Distributions
to noncontrolling interests
|
- | (66,306 | ) | (66,306 | ) | - | (52,556 | ) | (52,556 | ) | ||||||||||||||
Ending
balance
|
$ | 2,387,229 | $ | 1,483,345 | $ | 3,870,574 | $ | 2,162,393 | $ | 1,250,473 | $ | 3,412,866 |
Six
Months Ended
|
Six
Months Ended
|
|||||||||||||||||||||||
June
30, 2010
|
June
30, 2009
|
|||||||||||||||||||||||
ONEOK
Shareholders' Equity
|
Noncontrolling
Interests in Consolidated Subsidiaries
|
Total
Equity
|
ONEOK
Shareholders' Equity
|
Noncontrolling
Interests in Consolidated Subsidiaries
|
Total
Equity
|
|||||||||||||||||||
(Thousands
of dollars)
|
||||||||||||||||||||||||
Beginning
balance
|
$ | 2,207,194 | $ | 1,238,268 | $ | 3,445,462 | $ | 2,088,170 | $ | 1,079,369 | $ | 3,167,539 | ||||||||||||
Net
income
|
196,263 | 76,831 | 273,094 | 163,964 | 80,935 | 244,899 | ||||||||||||||||||
Other
comprehensive income (loss)
|
15,127 | 22,361 | 37,488 | (12,344 | ) | (24,982 | ) | (37,326 | ) | |||||||||||||||
Repurchase
of common stock
|
(5 | ) | - | (5 | ) | (250 | ) | - | (250 | ) | ||||||||||||||
Common
stock issued
|
11,391 | - | 11,391 | 7,055 | - | 7,055 | ||||||||||||||||||
Common
stock dividends
|
(93,472 | ) | - | (93,472 | ) | (84,202 | ) | - | (84,202 | ) | ||||||||||||||
Issuance
of common units of ONEOK Partners
|
50,731 | 271,973 | 322,704 | - | 220,458 | 220,458 | ||||||||||||||||||
Distributions
to noncontrolling interests
|
- | (126,088 | ) | (126,088 | ) | - | (105,307 | ) | (105,307 | ) | ||||||||||||||
Ending
balance
|
$ | 2,387,229 | $ | 1,483,345 | $ | 3,870,574 | $ | 2,162,393 | $ | 1,250,473 | $ | 3,412,866 |
Pension
Benefits
|
Pension
Benefits
|
|||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Thousands
of dollars)
|
||||||||||||||||
Components
of net periodic benefit cost
|
||||||||||||||||
Service
cost
|
$ | 4,819 | $ | 4,984 | $ | 9,638 | $ | 9,968 | ||||||||
Interest
cost
|
14,536 | 13,454 | 29,072 | 28,659 | ||||||||||||
Expected
return on assets
|
(18,413 | ) | (16,508 | ) | (36,826 | ) | (33,016 | ) | ||||||||
Amortization
of unrecognized prior service cost
|
320 | 391 | 640 | 782 | ||||||||||||
Amortization
of net loss
|
6,888 | 4,330 | 13,777 | 11,144 | ||||||||||||
Net
periodic benefit cost
|
$ | 8,150 | $ | 6,651 | $ | 16,301 | $ | 17,537 |
Postretirement
Benefits
|
Postretirement
Benefits
|
|||||||||||||||
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Thousands
of dollars)
|
||||||||||||||||
Components
of net periodic benefit cost
|
||||||||||||||||
Service
cost
|
$ | 1,232 | $ | 1,294 | $ | 2,463 | $ | 2,587 | ||||||||
Interest
cost
|
3,911 | 4,229 | 7,822 | 8,459 | ||||||||||||
Expected
return on assets
|
(1,974 | ) | (1,702 | ) | (3,948 | ) | (3,404 | ) | ||||||||
Amortization
of unrecognized net asset at adoption
|
798 | 797 | 1,595 | 1,594 | ||||||||||||
Amortization
of unrecognized prior service cost
|
(501 | ) | (501 | ) | (1,002 | ) | (1,002 | ) | ||||||||
Amortization
of net loss
|
1,752 | 2,415 | 3,504 | 4,830 | ||||||||||||
Net
periodic benefit cost
|
$ | 5,218 | $ | 6,532 | $ | 10,434 | $ | 13,064 |
June
30, 2010
|
ONEOK
Partners
(a)
|
Distribution
(b)
|
Energy
Services
|
Other
and Eliminations
|
Total
|
||||||||||||||
(Thousands
of dollars)
|
|||||||||||||||||||
Sales
to unaffiliated customers
|
$ | 1,947,032 | $ | 338,476 | $ | 520,856 | $ | 767 | $ | 2,807,131 | |||||||||
Intersegment
revenues
|
108,089 | 3,757 | 134,885 | (246,731 | ) | - | |||||||||||||
Total
revenues
|
$ | 2,055,121 | $ | 342,233 | $ | 655,741 | $ | (245,964 | ) | $ | 2,807,131 | ||||||||
Net
margin
|
$ | 288,162 | $ | 161,481 | $ | 7,669 | $ | 765 | $ | 458,077 | |||||||||
Operating
costs
|
97,958 | 98,245 | 6,544 | 834 | 203,581 | ||||||||||||||
Depreciation
and amortization
|
43,987 | 30,877 | 193 | 453 | 75,510 | ||||||||||||||
Gain
(loss) on sale of assets
|
(260 | ) | (13 | ) | - | - | (273 | ) | |||||||||||
Operating
income
|
$ | 145,957 | $ | 32,346 | $ | 932 | $ | (522 | ) | $ | 178,713 | ||||||||
Equity
earnings from investments
|
$ | 20,676 | $ | - | $ | - | $ | - | $ | 20,676 | |||||||||
Capital
expenditures
|
$ | 62,867 | $ | 46,947 | $ | - | $ | 1,617 | $ | 111,431 | |||||||||
(a)
- Our ONEOK Partners segment has regulated and non-regulated
operations. Our ONEOK Partners segment's regulated operations had
revenues of $151.9 million, net margin of $126.5 million and operating
income of $66.9 million.
|
|||||||||||||||||||
(b)
- Our Distribution segment has regulated and non-regulated
operations. Our Distribution segment's regulated operations had
revenues of $275.8 million, net margin of $159.0 million and operating
income of $31.9 million.
|
Three
Months Ended
June
30, 2009
|
ONEOK
Partners
(a)
|
Distribution
(b)
|
Energy
Services
|
Other
and Eliminations
|
Total
|
||||||||||||||
(Thousands
of dollars)
|
|||||||||||||||||||
Sales
to unaffiliated customers
|
$ | 1,289,487 | $ | 329,069 | $ | 608,300 | $ | 771 | $ | 2,227,627 | |||||||||
Intersegment
revenues
|
107,570 | 1,764 | 113,865 | (223,199 | ) | - | |||||||||||||
Total
revenues
|
$ | 1,397,057 | $ | 330,833 | $ | 722,165 | $ | (222,428 | ) | $ | 2,227,627 | ||||||||
Net
margin
|
$ | 261,982 | $ | 146,403 | $ | 23,274 | $ | 767 | $ | 432,426 | |||||||||
Operating
costs
|
100,507 | 101,149 | 8,848 | (369 | ) | 210,135 | |||||||||||||
Depreciation
and amortization
|
39,953 | 30,733 | 130 | 433 | 71,249 | ||||||||||||||
Gain
(loss) on sale of assets
|
3,276 | 486 | - | - | 3,762 | ||||||||||||||
Operating
income
|
$ | 124,798 | $ | 15,007 | $ | 14,296 | $ | 703 | $ | 154,804 | |||||||||
Equity
earnings from investments
|
$ | 14,188 | $ | - | $ | - | $ | - | $ | 14,188 | |||||||||
Capital
expenditures
|
$ | 129,366 | $ | 32,632 | $ | - | $ | 2,575 | $ | 164,573 | |||||||||
(a)
- Our ONEOK Partners segment has regulated and non-regulated
operations. Our ONEOK Partners segment's regulated operations had
revenues of $117.8 million, net margin of $97.8 million and operating
income of $41.5 million.
|
|||||||||||||||||||
(b)
- Our Distribution segment has regulated and non-regulated
operations. Our Distribution segment's regulated operations had
revenues of $276.5 million, net margin of $139.6 million and operating
income of $9.9 million.
|
Six
Months Ended
June
30, 2010
|
ONEOK
Partners
(a)
|
Distribution
(b)
|
Energy
Services
|
Other
and Eliminations
|
Total
|
||||||||||||||
(Thousands
of dollars)
|
|||||||||||||||||||
Sales
to unaffiliated customers
|
$ | 4,014,107 | $ | 1,336,384 | $ | 1,379,089 | $ | 1,518 | $ | 6,731,098 | |||||||||
Intersegment
revenues
|
245,020 | 7,248 | 470,487 | (722,755 | ) | - | |||||||||||||
Total
revenues
|
$ | 4,259,127 | $ | 1,343,632 | $ | 1,849,576 | $ | (721,237 | ) | $ | 6,731,098 | ||||||||
Net
margin
|
$ | 549,287 | $ | 408,307 | $ | 118,288 | $ | 1,515 | $ | 1,077,397 | |||||||||
Operating
costs
|
194,266 | 198,021 | 13,971 | 668 | 406,926 | ||||||||||||||
Depreciation
and amortization
|
87,857 | 64,222 | 346 | 942 | 153,367 | ||||||||||||||
Gain
(loss) on sale of assets
|
(1,045 | ) | (13 | ) | - | - | (1,058 | ) | |||||||||||
Operating
income
|
$ | 266,119 | $ | 146,051 | $ | 103,971 | $ | (95 | ) | $ | 516,046 | ||||||||
Equity
earnings from investments
|
$ | 41,792 | $ | - | $ | - | $ | - | $ | 41,792 | |||||||||
Investments
in unconsolidated
affiliates
|
$ | 757,232 | $ | - | $ | - | $ | - | $ | 757,232 | |||||||||
Total
assets
|
$ | 7,780,642 | $ | 2,951,755 | $ | 627,190 | $ | 760,324 | $ | 12,119,911 | |||||||||
Noncontrolling
interests in
consolidated
subsidiaries
|
$ | 5,276 | $ | - | $ | - | $ | 1,478,069 | $ | 1,483,345 | |||||||||
Capital
expenditures
|
$ | 98,694 | $ | 78,325 | $ | 52 | $ | 2,633 | $ | 179,704 | |||||||||
(a)
- Our ONEOK Partners segment has regulated and non-regulated
operations. Our ONEOK Partners segment's regulated operations had
revenues of $303.9 million, net margin of $252.2 million and operating
income of $36.2 million.
|
|||||||||||||||||||
(b)
- Our Distribution segment has regulated and non-regulated
operations. Our Distribution segment's regulated operations had
revenues of $1,133.4 million, net margin of $401.6 million and operating
income of $143.2 million.
|
Six
Months Ended
June
30, 2009
|
ONEOK
Partners
(a)
|
Distribution
(b)
|
Energy
Services
|
Other
and Eliminations
|
Total
|
||||||||||||||
(Thousands
of dollars)
|
|||||||||||||||||||
Sales
to unaffiliated customers
|
$ | 2,396,217 | $ | 1,178,423 | $ | 1,441,284 | $ | 1,530 | $ | 5,017,454 | |||||||||
Intersegment
revenues
|
251,705 | 4,074 | 402,950 | (658,729 | ) | - | |||||||||||||
Total
revenues
|
$ | 2,647,922 | $ | 1,182,497 | $ | 1,844,234 | $ | (657,199 | ) | $ | 5,017,454 | ||||||||
Net
margin
|
$ | 515,523 | $ | 385,356 | $ | 81,448 | $ | 1,510 | $ | 983,837 | |||||||||
Operating
costs
|
189,953 | 192,587 | 14,994 | (453 | ) | 397,081 | |||||||||||||
Depreciation
and amortization
|
79,893 | 62,359 | 261 | 862 | 143,375 | ||||||||||||||
Gain
(loss) on sale of assets
|
3,940 | 486 | - | - | 4,426 | ||||||||||||||
Operating
income
|
$ | 249,617 | $ | 130,896 | $ | 66,193 | $ | 1,101 | $ | 447,807 | |||||||||
Equity
earnings from investments
|
$ | 35,410 | $ | - | $ | - | $ | - | $ | 35,410 | |||||||||
Capital
expenditures
|
$ | 321,860 | $ | 77,284 | $ | - | $ | 8,456 | $ | 407,600 | |||||||||
(a)
- Our ONEOK Partners segment has regulated and non-regulated
operations. Our ONEOK Partners segment's regulated operations had
revenues of $237.2 million, net margin of $193.3 million and operating
income of $86.8 million.
|
|||||||||||||||||||
(b)
- Our Distribution segment has regulated and non-regulated
operations. Our Distribution segment's regulated operations had
revenues of $1,026.4 million, net margin of $374.1 million and operating
income of $122.7 million.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Thousands
of dollars)
|
||||||||||||||||
Northern
Border Pipeline
|
$ | 12,372 | $ | 5,454 | $ | 27,218 | $ | 21,492 | ||||||||
Bighorn
Gas Gathering, L.L.C.
|
1,811 | 1,824 | 2,048 | 3,910 | ||||||||||||
Fort
Union Gas Gathering, L.L.C.
|
3,581 | 3,805 | 7,139 | 6,015 | ||||||||||||
Lost
Creek Gathering Company, L.L.C.
|
1,454 | 1,312 | 2,856 | 2,202 | ||||||||||||
Other
|
1,458 | 1,793 | 2,531 | 1,791 | ||||||||||||
Equity
earnings from investments
|
$ | 20,676 | $ | 14,188 | $ | 41,792 | $ | 35,410 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Thousands
of dollars)
|
||||||||||||||||
Income
Statement
|
||||||||||||||||
Operating
revenues
|
$ | 98,077 | $ | 87,951 | $ | 197,308 | $ | 194,017 | ||||||||
Operating
expenses
|
$ | 44,896 | $ | 44,429 | $ | 89,611 | $ | 89,232 | ||||||||
Net
income
|
$ | 45,955 | $ | 32,129 | $ | 92,866 | $ | 82,645 | ||||||||
Distributions
paid to us
|
$ | 26,115 | $ | 30,142 | $ | 49,644 | $ | 63,473 |
Three
Months Ended June 30, 2010
|
||||||||||||
Per
Share
|
||||||||||||
Income
|
Shares
|
Amount
|
||||||||||
(Thousands,
except per share amounts)
|
||||||||||||
Basic
EPS from continuing operations
|
||||||||||||
Net
income attributable to ONEOK available for common stock
|
$ | 41,724 | 106,356 | $ | 0.39 | |||||||
Diluted
EPS from continuing operations
|
||||||||||||
Effect
of options and other dilutive securities
|
- | 1,482 | ||||||||||
Net
income attributable to ONEOK available for common stock
|
||||||||||||
and common stock equivalents | $ | 41,724 | 107,838 | $ | 0.39 |
Three
Months Ended June 30, 2009
|
||||||||||||
Per
Share
|
||||||||||||
Income
|
Shares
|
Amount
|
||||||||||
(Thousands,
except per share amounts)
|
||||||||||||
Basic
EPS from continuing operations
|
||||||||||||
Net
income attributable to ONEOK available for common stock
|
$ | 41,679 | 105,335 | $ | 0.40 | |||||||
Diluted
EPS from continuing operations
|
||||||||||||
Effect
of options and other dilutive securities
|
- | 615 | ||||||||||
Net
income attributable to ONEOK available for common stock
|
||||||||||||
and common stock equivalents | $ | 41,679 | 105,950 | $ | 0.39 |
Six
Months Ended June 30, 2010
|
||||||||||||
Per
Share
|
||||||||||||
Income
|
Shares
|
Amount
|
||||||||||
(Thousands,
except per share amounts)
|
||||||||||||
Basic
EPS from continuing operations
|
||||||||||||
Net
income attributable to ONEOK available for common stock
|
$ | 196,263 | 106,244 | $ | 1.85 | |||||||
Diluted
EPS from continuing operations
|
||||||||||||
Effect
of options and other dilutive securities
|
- | 1,380 | ||||||||||
Net
income attributable to ONEOK available for common stock
|
||||||||||||
and common stock equivalents | $ | 196,263 | $ | 107,624 | $ | 1.82 |
Six
Months Ended June 30, 2009
|
||||||||||||
Per
Share
|
||||||||||||
Income
|
Shares
|
Amount
|
||||||||||
(Thousands,
except per share amounts)
|
||||||||||||
Basic
EPS from continuing operations
|
||||||||||||
Net
income attributable to ONEOK available for common stock
|
$ | 163,964 | 105,249 | $ | 1.56 | |||||||
Diluted
EPS from continuing operations
|
||||||||||||
Effect
of options and other dilutive securities
|
- | 599 | ||||||||||
Net
income attributable to ONEOK available for common stock
|
||||||||||||
and common stock equivalents | $ | 163,964 | 105,848 | $ | 1.55 |
June
30,
|
December
31,
|
|||
2010
|
2009
|
|||
General
partner interest
|
2.0%
|
2.0%
|
||
Limited
partner interest (a)
|
40.8%
|
43.1%
|
||
Total
ownership interest
|
42.8%
|
45.1%
|
||
(a)
- Represents 5.9 million common units and approximately 36.5 million Class
B units, which are convertible, at our option, into common
units.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||
June
30,
|
June
30,
|
|||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||
(Thousands
of dollars)
|
||||||||||||
General
partner distributions
|
$ | 2,874 | $ | 2,551 | $ | 5,707 | $ | 4,970 | ||||
Incentive
distributions
|
26,689 | 21,437 | 52,399 | 41,757 | ||||||||
Total
distributions to general partner
|
$ | 29,563 | $ | 23,988 | $ | 58,106 | $ | 46,727 |
Three
Months Ended
|
Six
Months Ended
|
||||||||||||
June
30,
|
June
30,
|
||||||||||||
2010
|
2009
|
2010
|
2009
|
||||||||||
(Thousands
of dollars)
|
|||||||||||||
Revenues
|
$ | 108,089 | $ | 107,570 | $ | 245,020 | $ | 251,705 | |||||
Expenses
|
|||||||||||||
Cost
of sales and fuel
|
$ | 11,215 | $ | 9,416 | $ | 28,974 | $ | 26,054 | |||||
Administrative
and general expenses
|
51,974 | 49,855 | 102,999 | 98,478 | |||||||||
Total
expenses
|
$ | 63,189 | $ | 59,271 | $ | 131,973 | $ | 124,532 |
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
·
|
increased
net margin in our Energy Services segment, due primarily to higher
realized storage differentials and marketing margins, net of hedging
activities, offset partially by decreased premium-services
margins;
|
·
|
increased
net margin in our ONEOK Partners segment, due primarily to the
following:
|
-
|
higher
NGL volumes gathered, fractionated and transported, associated with the
completion of ONEOK Partners’ capital projects, as well as new NGL supply
connections, offset partially by lower optimization margins as increasing
NGL volumes from customers under fee-based contracts limited the
fractionation and transportation capacity available for optimization
activities;
|
-
|
increased
natural gas transportation capacity contracted and the impact of higher
natural gas prices on retained fuel;
and
|
·
|
increased
net margin in our Distribution segment, due primarily to new rates in
Oklahoma, which have a rate design that lowers our volumetric
sensitivity.
|
Three
Months Ended
|
Six
Months Ended
|
Increase
(Decrease)
|
Increase
(Decrease)
|
||||||||||||||||||||||||
June
30,
|
June
30,
|
Three
Months
|
Six
Months
|
||||||||||||||||||||||||
Financial
Results
|
2010
|
2009
|
2010
|
2009
|
2010
vs. 2009
|
2010
vs. 2009
|
|||||||||||||||||||||
(Millions of dollars) | |||||||||||||||||||||||||||
Revenues
|
$ | 2,807.1 | $ | 2,227.6 | $ | 6,731.1 | $ | 5,017.4 | $ | 579.5 | 26 | % | $ | 1,713.7 | 34 | % | |||||||||||
Cost
of sales and fuel
|
2,349.0 | 1,795.2 | 5,653.7 | 4,033.6 | 553.8 | 31 | % | 1,620.1 | 40 | % | |||||||||||||||||
Net
margin
|
458.1 | 432.4 | 1,077.4 | 983.8 | 25.7 | 6 | % | 93.6 | 10 | % | |||||||||||||||||
Operating
costs
|
203.6 | 210.1 | 406.9 | 397.1 | (6.5 | ) | (3 | %) | 9.8 | 2 | % | ||||||||||||||||
Depreciation
and amortization
|
75.5 | 71.2 | 153.4 | 143.4 | 4.3 | 6 | % | 10.0 | 7 | % | |||||||||||||||||
Gain
(loss) on sale of assets
|
(0.3 | ) | 3.7 | (1.1 | ) | 4.5 | (4.0 | ) | * | (5.6 | ) | * | |||||||||||||||
Operating
income
|
$ | 178.7 | $ | 154.8 | $ | 516.0 | $ | 447.8 | $ | 23.9 | 15 | % | $ | 68.2 | 15 | % | |||||||||||
Equity
earnings from investments
|
$ | 20.7 | $ | 14.2 | $ | 41.8 | $ | 35.4 | $ | 6.5 | 46 | % | $ | 6.4 | 18 | % | |||||||||||
Allowance
for equity funds used
during
construction
|
$ | 0.2 | $ | 9.5 | $ | 0.5 | $ | 18.5 | $ | (9.3 | ) | (98 | %) | $ | (18.0 | ) | (97 | %) | |||||||||
Interest
expense
|
$ | (75.4 | ) | $ | (73.4 | ) | $ | (151.9 | ) | $ | (151.4 | ) | $ | 2.0 | 3 | % | $ | 0.5 | 0 | % | |||||||
Net
income attributable to
noncontrolling
interests
|
$ | (44.7 | ) | $ | (39.7 | ) | $ | (76.8 | ) | $ | (80.9 | ) | $ | 5.0 | 13 | % | $ | (4.1 | ) | (5 | %) | ||||||
Capital
expenditures
|
$ | 111.4 | $ | 164.6 | $ | 179.7 | $ | 407.6 | $ | (53.2 | ) | (32 | %) | $ | (227.9 | ) | (56 | %) | |||||||||
*
Percentage change is greater than 100 percent.
|
·
|
increased
net margin in our ONEOK Partners segment, due primarily
to:
|
-
|
higher
NGL volumes gathered, fractionated and transported, associated with the
completion of ONEOK Partners’ capital projects, as well as new NGL supply
connections, offset partially by lower optimization margins as increasing
NGL volumes from customers under fee-based contracts limited the
fractionation and transportation capacity available for optimization
activities, offset partially by increased volumes
marketed;
|
-
|
increased
natural gas transportation capacity contracted and the impact of higher
natural gas prices on retained
fuel;
|
·
|
increased
net margin in our Distribution segment from new rates in Oklahoma, which
have a rate design that lowers our volumetric sensitivity; offset
partially by
|
·
|
decreased
net margin in our Energy Services segment, due primarily
to:
|
-
|
decreased
transportation margins, net of hedging, due primarily to lower realized
Mid-Continent-to-Gulf Coast location differentials;
and
|
-
|
lower
realized seasonal storage differentials and marketing margins, net of
hedging activities.
|
·
|
increased
net margin in our Energy Services segment, due primarily
to:
|
-
|
higher
realized seasonal storage differentials and marketing margins, net of
hedging activities; offset partially
by
|
-
|
decreased
premium-services margins, associated primarily with lower demand fees and
managing increased demand to meet customer-peaking requirements due to
colder weather in the first quarter of 2010, compared with the same period
last year;
|
·
|
increased
net margin in our ONEOK Partners segment, due primarily
to:
|
-
|
higher
NGL volumes gathered, fractionated and transported, associated with the
completion of ONEOK Partners’ capital projects, as well as new NGL supply
connections; and
|
-
|
higher
natural gas transportation margins from an increase in capacity contracted
on Midwestern Gas Transmission, Viking Gas Transmission’s Fargo lateral
that was completed in October 2009 and from the Guardian Pipeline
expansion and extension project that was completed in February 2009;
offset partially by
|
-
|
lower
optimization margins as increasing NGL volumes from customers under
fee-based contracts limited the fractionation and transportation capacity
available for optimization activities, offset partially by increased
volumes marketed;
|
·
|
increased
net margin in our Distribution segment from new rates in Oklahoma, which
have a rate design that lowers our volumetric
sensitivity.
|
Three
Months Ended
|
Six
Months Ended
|
Increase
(Decrease)
|
Increase
(Decrease)
|
||||||||||||||||||||
June
30,
|
June
30,
|
Three
Months
|
Six
Months
|
||||||||||||||||||||
Financial
Results
|
2010
|
2009
|
2010
|
2009
|
2010
vs. 2009
|
2010
vs. 2009
|
|||||||||||||||||
(Millions
of dollars)
|
|||||||||||||||||||||||
Revenues
|
$ | 2,055.1 | $ | 1,397.1 | $ | 4,259.1 | $ | 2,647.9 | $ | 658.0 | 47 | % | $ | 1,611.2 | 61 | % | |||||||
Cost
of sales and fuel
|
1,766.9 | 1,135.1 | 3,709.8 | 2,132.3 | 631.8 | 56 | % | 1,577.5 | 74 | % | |||||||||||||
Net
margin
|
288.2 | 262.0 | 549.3 | 515.6 | 26.2 | 10 | % | 33.7 | 7 | % | |||||||||||||
Operating
costs
|
97.9 | 100.5 | 194.3 | 190.0 | (2.6 | ) | (3 | %) | 4.3 | 2 | % | ||||||||||||
Depreciation
and amortization
|
44.0 | 40.0 | 87.9 | 79.9 | 4.0 | 10 | % | 8.0 | 10 | % | |||||||||||||
Gain
(loss) on sale of assets
|
(0.3 | ) | 3.3 | (1.0 | ) | 3.9 | (3.6 | ) | * | (4.9 | ) | * | |||||||||||
Operating
income
|
$ | 146.0 | $ | 124.8 | $ | 266.1 | $ | 249.6 | $ | 21.2 | 17 | % | $ | 16.5 | 7 | % | |||||||
Equity
earnings from investments
|
$ | 20.7 | $ | 14.2 | $ | 41.8 | $ | 35.4 | $ | 6.5 | 46 | % | $ | 6.4 | 18 | % | |||||||
Allowance
for equity funds used
during
construction
|
$ | 0.2 | $ | 9.5 | $ | 0.5 | $ | 18.5 | $ | (9.3 | ) | (98 | %) | $ | (18.0 | ) | (97 | %) | |||||
Interest
expense
|
$ | (53.3 | ) | $ | (50.9 | ) | $ | (107.5 | ) | $ | (101.8 | ) | $ | 2.4 | 5 | % | $ | 5.7 | 6 | % | |||
Capital
expenditures
|
$ | 62.9 | $ | 129.4 | $ | 98.7 | $ | 321.9 | $ | (66.5 | ) | (51 | %) | $ | (223.2 | ) | (69 | %) | |||||
*
Percentage change is greater than 100 percent.
|
·
|
an
increase of $26.7 million due to higher NGL volumes gathered, fractionated
and transported, associated with the completion of ONEOK Partners’ capital
projects, as well as new NGL supply
connections;
|
·
|
an
increase of $5.2 million due to an increase in natural gas transportation
capacity contracted and the impact of higher natural gas prices on
retained fuel;
|
·
|
an
increase of $4.4 million due to the impact of NGL operational measurement
gains and losses, compared with the same period last year;
and
|
·
|
an
increase of $4.0 million from higher net realized commodity prices; offset
partially by
|
·
|
a
decrease of $14.2 million related to lower optimization margins as
increasing NGL volumes from customers under fee-based contracts limited
the fractionation and transportation capacity available for optimization
activities, offset partially by increased volumes
marketed.
|
·
|
an
increase of $44.8 million due to higher NGL volumes gathered, fractionated
and transported, associated with the completion of ONEOK Partners’ capital
projects, as well as new NGL supply
connections;
|
·
|
an
increase of $11.7 million from higher natural gas transportation margins
from an increase in capacity contracted on Midwestern Gas Transmission,
Viking Gas Transmission’s Fargo lateral that was completed in October 2009
and from the Guardian Pipeline expansion and extension project that was
completed in February 2009; and
|
·
|
an
increase of $4.8 million due to higher natural gas storage margins as a
result of contract renegotiations; offset partially
by
|
·
|
a
decrease of $29.0 million related to lower optimization margins as
increasing NGL volumes from customers under fee-based contracts limited
the fractionation and transportation capacity available for optimization
activities, offset partially by increased volumes
marketed.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
Operating
Information
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Natural
gas gathered (BBtu/d)
(a)
|
1,088 | 1,130 | 1,090 | 1,147 | ||||||||||||
Natural
gas processed (BBtu/d)
(a)
|
690 | 658 | 677 | 655 | ||||||||||||
Natural
gas transportation capacity contracted (MMcf/d)
|
5,454 | 5,192 | 5,656 | 5,220 | ||||||||||||
Transportation
capacity subscribed
|
84 | % | 79 | % | 87 | % | 79 | % | ||||||||
Residue
gas sales (BBtu/d)
(a)
|
290 | 291 | 283 | 288 | ||||||||||||
NGL
sales (MBbl/d)
|
449 | 401 | 438 | 391 | ||||||||||||
NGLs
fractionated (MBbl/d)
|
524 | 479 | 508 | 472 | ||||||||||||
NGLs
transported-gathering lines (MBbl/d)
|
480 | 364 | 460 | 344 | ||||||||||||
NGLs
transported-distribution lines (MBbl/d)
|
482 | 461 | 475 | 453 | ||||||||||||
Conway-to-Mont
Belvieu OPIS average price differential
|
||||||||||||||||
Ethane
($/gallon)
|
$ | 0.16 | $ | 0.12 | $ | 0.12 | $ | 0.10 | ||||||||
Realized
composite NGL net sales price ($/gallon) (a)
(b)
|
$ | 0.90 | $ | 0.84 | $ | 0.94 | $ | 0.85 | ||||||||
Realized
condensate net sales price ($/Bbl) (a)
(b)
|
$ | 63.45 | $ | 77.03 | $ | 62.92 | $ | 72.51 | ||||||||
Realized
residue gas net sales price ($/MMBtu) (a)
(b)
|
$ | 5.37 | $ | 3.21 | $ | 5.33 | $ | 3.42 | ||||||||
Realized
gross processing spread
($/MMBtu) (a)
|
$ | 3.48 | $ | 6.34 | $ | 3.70 | $ | 6.34 | ||||||||
(a)
- Statistics relate to ONEOK Partners’ natural gas gathering and
processing business.
|
||||||||||||||||
(b)
- Includes equity volumes only.
|
Six Months Ended | ||||||||||
December 31, 2010 | ||||||||||
Volumes
Hedged
|
Average
Price
|
Percentage
Hedged
|
||||||||
NGLs
(Bbl/d)
(a)
|
5,166 | $ | 1.05 |
/
gallon
|
60 | % | ||||
Condensate
(Bbl/d)
(a)
|
1,611 | $ | 1.83 |
/
gallon
|
76 | % | ||||
Total
(Bbl/d)
|
6,777 | $ | 1.24 |
/
gallon
|
63 | % | ||||
Natural
gas
(MMBtu/d)
|
23,345 | $ | 5.55 |
/
MMBtu
|
95 | % | ||||
(a)
- Hedged with fixed-price swaps.
|
Year
Ending
|
|||||||||||||
December
31, 2011
|
|||||||||||||
Volumes
Hedged
|
Average
Price
|
Percentage
Hedged
|
|||||||||||
NGLs
(Bbl/d)
(a)
|
902 | $ | 1.34 |
/
gallon
|
10 | % | |||||||
Condensate
(Bbl/d)
(a)
|
596 | $ | 2.12 |
/
gallon
|
26 | % | |||||||
Total
(Bbl/d)
|
1,498 | $ | 1.65 |
/
gallon
|
13 | % | |||||||
Natural
gas
(MMBtu/d)
|
22,541 | $ | 5.72 |
/
MMBtu
|
75 | % | |||||||
(a)
- Hedged with fixed-price swaps.
|
·
|
a
$0.01 per gallon decrease in the composite price of NGLs would decrease
annual net margin by approximately $1.3
million;
|
·
|
a
$1.00 per barrel decrease in the price of crude oil would decrease annual
net margin by approximately $1.1 million;
and
|
·
|
a
$0.10 per MMBtu decrease in the price of natural gas would decrease annual
net margin by approximately $1.0
million.
|
Three
Months Ended
|
Six
Months Ended
|
Increase
(Decrease)
|
Increase
(Decrease)
|
||||||||||||||||||||
June
30,
|
June
30,
|
Three
Months
|
Six
Months
|
||||||||||||||||||||
Financial
Results
|
2010
|
2009
|
2010
|
2009
|
2010
vs. 2009
|
2010
vs. 2009
|
|||||||||||||||||
(Millions
of dollars)
|
|||||||||||||||||||||||
Gas
sales
|
$ | 313.3 | $ | 300.2 | $ | 1,275.8 | $ | 1,113.4 | $ | 13.1 | 4 | % | $ | 162.4 | 15 | % | |||||||
Transportation
revenues
|
18.5 | 19.2 | 48.1 | 45.8 | (0.7 | ) | (4 | %) | 2.3 | 5 | % | ||||||||||||
Cost
of gas
|
180.8 | 184.4 | 935.3 | 797.1 | (3.6 | ) | (2 | %) | 138.2 | 17 | % | ||||||||||||
Net
margin, excluding other revenues
|
151.0 | 135.0 | 388.6 | 362.1 | 16.0 | 12 | % | 26.5 | 7 | % | |||||||||||||
Other
revenues
|
10.5 | 11.4 | 19.7 | 23.3 | (0.9 | ) | (8 | %) | (3.6 | ) | (15 | %) | |||||||||||
Net
margin
|
161.5 | 146.4 | 408.3 | 385.4 | 15.1 | 10 | % | 22.9 | 6 | % | |||||||||||||
Operating
costs
|
98.3 | 101.1 | 198.0 | 192.6 | (2.8 | ) | (3 | %) | 5.4 | 3 | % | ||||||||||||
Depreciation
and amortization
|
30.9 | 30.7 | 64.2 | 62.3 | 0.2 | 1 | % | 1.9 | 3 | % | |||||||||||||
Gain
(loss) on sale of assets
|
- | 0.4 | - | 0.4 | (0.4 | ) | (100 | %) | (0.4 | ) | (100 | %) | |||||||||||
Operating
income
|
$ | 32.3 | $ | 15.0 | $ | 146.1 | $ | 130.9 | $ | 17.3 | * | $ | 15.2 | 12 | % | ||||||||
Capital
expenditures
|
$ | 46.9 | $ | 32.6 | $ | 78.3 | $ | 77.3 | $ | 14.3 | 44 | % | $ | 1.0 | 1 | % | |||||||
*
Percentage change is greater than 100 percent.
|
Three
Months Ended
|
Six
Months Ended
|
Increase
(Decrease)
|
Increase
(Decrease)
|
||||||||||||||||||||
June
30,
|
June
30,
|
Three
Months
|
Six
Months
|
||||||||||||||||||||
Net
margin, excluding other revenues
|
2010
|
2009
|
2010
|
2009
|
2010
vs. 2009
|
2010
vs. 2009
|
|||||||||||||||||
Gas
sales
|
(Millions
of dollars)
|
||||||||||||||||||||||
Regulated
|
|||||||||||||||||||||||
Residential
|
$ | 106.0 | $ | 88.4 | $ | 271.1 | $ | 244.9 | $ | 17.6 | 20 | % | $ | 26.2 | 11 | % | |||||||
Commercial
|
22.5 | 19.1 | 58.9 | 56.5 | 3.4 | 18 | % | 2.4 | 4 | % | |||||||||||||
Industrial
|
0.6 | 0.6 | 1.3 | 1.4 | - | 0 | % | (0.1 | ) | (7 | %) | ||||||||||||
Wholesale
|
0.1 | 0.1 | 0.2 | 0.2 | - | 0 | % | - | 0 | % | |||||||||||||
Public
Authority
|
0.8 | 0.7 | 2.3 | 2.0 | 0.1 | 14 | % | 0.3 | 15 | % | |||||||||||||
Retail
marketing
|
2.5 | 6.9 | 6.7 | 11.3 | (4.4 | ) | (64 | %) | (4.6 | ) | (41 | %) | |||||||||||
Net
margin on gas sales
|
132.5 | 115.8 | 340.5 | 316.3 | 16.7 | 14 | % | 24.2 | 8 | % | |||||||||||||
Transportation
margin
|
18.5 | 19.2 | 48.1 | 45.8 | (0.7 | ) | (4 | %) | 2.3 | 5 | % | ||||||||||||
Net
margin, excluding other revenues
|
$ | 151.0 | $ | 135.0 | $ | 388.6 | $ | 362.1 | $ | 16.0 | 12 | % | $ | 26.5 | 7 | % |
·
|
an
increase of $17.2 million from new rates in Oklahoma, which have a rate
design that lowers our volumetric sensitivity and provides more consistent
revenues each month; and
|
·
|
an
increase of $1.4 million from increased rider and surcharge recoveries;
offset partially by
|
·
|
a
decrease of $4.3 million in retail marketing margins associated primarily
with reduced customer risk-management
services.
|
·
|
an
increase of $17.1 million from new rates in Oklahoma, which have a rate
design that lowers our volumetric sensitivity and provides more consistent
revenues each month;
|
·
|
an
increase of $4.2 million from increased rider and surcharge
recoveries;
|
·
|
an
increase of $2.9 million from higher gas sales volumes, primarily in the
first quarter;
|
·
|
an
increase of $1.8 million from capital-recovery mechanisms;
and
|
·
|
an
increase of $1.7 million from higher transportation volumes; offset
partially by
|
·
|
a
decrease of $4.5 million in retail marketing margins associated primarily
with reduced customer risk-management
services.
|
·
|
a
decrease of $8.1 million in employee-related costs; offset partially
by
|
·
|
an
increase of $3.8 million related to the recognition of previously deferred
Integrity Management Program costs in Oklahoma that have been approved for
recovery in our revenues.
|
·
|
an
increase of $6.9 million related to the recognition of previously deferred
Integrity Management Program costs in Oklahoma that have been approved for
recovery in our revenues; and
|
·
|
an
increase of $1.4 million related to contract and outside services costs;
offset partially by
|
·
|
a
decrease of $4.8 million in employee-related
costs.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||
June
30,
|
June
30,
|
|||||||||||
Volumes
(MMcf)
|
2010
|
2009
|
2010
|
2009
|
||||||||
Gas
sales
|
||||||||||||
Residential
|
12,246 | 13,388 | 74,702 | 68,745 | ||||||||
Commercial
|
4,245 | 4,459 | 21,423 | 20,211 | ||||||||
Industrial
|
232 | 156 | 625 | 668 | ||||||||
Wholesale
|
3,234 | 3,578 | 3,475 | 4,712 | ||||||||
Public
Authority
|
387 | 371 | 1,630 | 1,218 | ||||||||
Total
volumes sold
|
20,344 | 21,952 | 101,855 | 95,554 | ||||||||
Transportation
|
48,154 | 47,432 | 110,308 | 103,396 | ||||||||
Total
volumes delivered
|
68,498 | 69,384 | 212,163 | 198,950 |
Three
Months Ended
|
Six
Months Ended
|
|||||||||||
June
30,
|
June
30,
|
|||||||||||
Number
of Customers
|
2010
|
2009
|
2010
|
2009
|
||||||||
Residential
|
1,917,053 | 1,904,675 | 1,923,865 | 1,909,012 | ||||||||
Commercial
|
154,231 | 157,463 | 155,859 | 158,957 | ||||||||
Industrial
|
1,282 | 1,364 | 1,289 | 1,368 | ||||||||
Wholesale
|
35 | 27 | 35 | 27 | ||||||||
Public
Authority
|
2,680 | 2,858 | 2,651 | 2,903 | ||||||||
Transportation
|
7,757 | 9,075 | 9,447 | 9,911 | ||||||||
Total
customers
|
2,083,038 | 2,075,462 | 2,093,146 | 2,082,178 |
Three
Months Ended
|
Six
Months Ended
|
Increase
(Decrease)
|
Increase
(Decrease)
|
||||||||||||||||||||||
June
30,
|
June
30,
|
Three
Months
|
Six
Months
|
||||||||||||||||||||||
Financial
Results
|
2010
|
2009
|
2010
|
2009
|
2010
vs. 2009
|
2010
vs. 2009
|
|||||||||||||||||||
(Millions
of dollars)
|
|||||||||||||||||||||||||
Revenues
|
$ | 655.7 | $ | 722.2 | $ | 1,849.6 | $ | 1,844.2 | $ | (66.5 | ) | (9 | %) | $ | 5.4 | 0 | % | ||||||||
Cost
of sales and fuel
|
648.1 | 698.9 | 1,731.3 | 1,762.8 | (50.8 | ) | (7 | %) | (31.5 | ) | (2 | %) | |||||||||||||
Net
margin
|
7.6 | 23.3 | 118.3 | 81.4 | (15.7 | ) | (67 | %) | 36.9 | 45 | % | ||||||||||||||
Operating
costs
|
6.5 | 8.9 | 14.0 | 15.0 | (2.4 | ) | (27 | %) | (1.0 | ) | (7 | %) | |||||||||||||
Depreciation
and amortization
|
0.2 | 0.1 | 0.3 | 0.2 | 0.1 | 100 | % | 0.1 | 50 | % | |||||||||||||||
Operating
income
|
$ | 0.9 | $ | 14.3 | $ | 104.0 | $ | 66.2 | $ | (13.4 | ) | (94 | %) | $ | 37.8 | 57 | % |
Three
Months Ended
|
Six
Months Ended
|
Increase
(Decrease)
|
Increase
(Decrease)
|
||||||||||||||||||||||
June
30,
|
June
30,
|
Three
Months
|
Six
Months
|
||||||||||||||||||||||
2010
|
2009
|
2010
|
2009
|
2010
vs. 2009
|
2010
vs. 2009
|
||||||||||||||||||||
(Millions
of dollars)
|
|||||||||||||||||||||||||
Marketing,
storage and transportation, gross
|
$ | 51.6 | $ | 74.7 | $ | 215.0 | $ | 186.6 | $ | (23.1 | ) | (31 | %) | $ | 28.4 | 15 | % | ||||||||
Storage
and transportation costs
|
45.3 | 51.6 | 100.0 | 108.6 | (6.3 | ) | (12 | %) | (8.6 | ) | (8 | %) | |||||||||||||
Marketing, storage
and transportation, net
|
6.3 | 23.1 | 115.0 | 78.0 | (16.8 | ) | (73 | %) | 37.0 | 47 | % | ||||||||||||||
Financial
trading, net
|
1.3 | 0.2 | 3.3 | 3.4 | 1.1 | * | (0.1 | ) | (3 | %) | |||||||||||||||
Net
margin
|
$ | 7.6 | $ | 23.3 | $ | 118.3 | $ | 81.4 | $ | (15.7 | ) | (67 | %) | $ | 36.9 | 45 | % | ||||||||
*
Percentage change is greater than 100 percent.
|
·
|
a
decrease of $8.1 million in transportation margins, net of hedging, due
primarily to lower realized Mid-Continent-to-Gulf Coast location
differentials;
|
·
|
a
decrease of $5.9 million from lower realized seasonal storage
differentials and marketing margins, net of hedging activities;
and
|
·
|
a
decrease of $2.7 million in premium-services margins, associated primarily
with lower demand fees; offset partially
by
|
·
|
an
increase of $1.1 million in financial trading
margins.
|
·
|
an
increase of $65.7 million from higher realized seasonal storage
differentials and marketing margins, net of hedging activities; offset
partially by
|
·
|
a
decrease of $25.3 million in premium-services margins, associated
primarily with lower demand fees and managing increased demand to meet
customer-peaking requirements due to colder weather in the first quarter
of 2010, compared with the same period last year;
and
|
·
|
a
decrease of $3.3 million in transportation margins, net of hedging, due
primarily to lower realized Mid-Continent-to-Gulf Coast transportation
margins; partially offset by the
following:
|
-
|
favorable
fair-value changes on non-qualifying economic hedge activity and
ineffectiveness on qualified hedges;
and
|
-
|
higher
realized Rocky Mountain-to-Mid-Continent transportation
margins.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||
June
30,
|
June
30,
|
|||||||||||
Operating
Information
|
2010
|
2009
|
2010
|
2009
|
||||||||
Natural
gas marketed (Bcf)
|
201 | 257 | 468 | 585 | ||||||||
Natural
gas gross margin ($/Mcf)
|
$ | 0.04 | $ | 0.09 | $ | 0.26 | $ | 0.14 | ||||
Physically
settled volumes (Bcf)
|
435 | 542 | 944 | 1,176 |
June
30,
|
December
31,
|
|||||||
2010
|
2009
|
|||||||
Long-term
debt
|
53% | 57% | ||||||
Total
equity
|
47% | 43% | ||||||
Debt
(including notes payable)
|
56% | 61% | ||||||
Total
equity
|
44% | 39% |
June
30,
|
December
31,
|
|||||||
2010
|
2009
|
|||||||
Long-term
debt
|
39% | 41% | ||||||
ONEOK
shareholders' equity
|
61% | 59% | ||||||
Debt
(including notes payable)
|
39% | 46% | ||||||
ONEOK
shareholders' equity
|
61% | 54% |
2010
Projected Capital Expenditures
|
||||
(Millions
of dollars)
|
||||
ONEOK
Partners
|
$ |
477
|
||
Distribution
|
216
|
|||
Other
|
23
|
|||
Total projected
capital expenditures
|
$ |
716
|
ONEOK
|
ONEOK
Partners
|
||||
Rating
Agency
|
Rating
|
Outlook
|
Rating
|
Outlook
|
|
Moody’s
|
Baa2
|
Stable
|
Baa2
|
Stable
|
|
S&P
|
BBB
|
Stable
|
BBB
|
Stable
|
Six
Months Ended
|
Variances
|
|||||||||||||||
June
30,
|
2010
vs. 2009
|
|||||||||||||||
2010
|
2009
|
Increase
(Decrease)
|
||||||||||||||
(Millions
of dollars)
|
||||||||||||||||
Total
cash provided by (used in):
|
||||||||||||||||
Operating
activities
|
$ | 591.1 | $ | 1,075.9 | $ | (484.8 | ) | (45 | %) | |||||||
Investing
activities
|
(169.9 | ) | (380.2 | ) | 210.3 | 55 | % | |||||||||
Financing
activities
|
(347.4 | ) | (1,158.7 | ) | 811.3 | 70 | % | |||||||||
Change in cash and
cash equivalents
|
73.8 | (463.0 | ) | 536.8 | * | |||||||||||
Cash and cash
equivalents at beginning of period
|
29.4 | 510.0 | (480.6 | ) | (94 | %) | ||||||||||
Cash and cash
equivalents at end of period
|
$ | 103.2 | $ | 47.0 | $ | 56.2 | * | |||||||||
*
Percentage change is greater than 100 percent.
|
·
|
the
timing of payments for purchases of commodities and other expenses
resulting in decreased accounts payable; offset partially
by
|
·
|
the
timing of cash receipts from our revenues resulting in decreased accounts
receivable.
|
·
|
Net
repayments of notes payable were $201.9 million during the first six
months of 2010, compared with net repayments of $1.6 billion for the same
period in 2009;
|
·
|
In
March 2009, ONEOK Partners completed an underwritten public offering of
senior notes and received proceeds of approximately $498.3 million, net of
discounts but before offering expenses. ONEOK Partners used the
net proceeds from the notes to repay borrowings under the ONEOK Partners
Credit Agreement;
|
·
|
In
June 2010, ONEOK Partners repaid $250.0 million of maturing long-term debt
with available cash and short-term borrowings. In February
2009, ONEOK repaid $100.0 million of maturing long-term debt with
available cash and short-term
borrowings;
|
·
|
The
change in net proceeds generated from ONEOK Partners’ common unit
offerings for the six months ended June 30, 2010, compared with the same
period last year, due primarily to the
following:
|
-
|
In
February 2010, ONEOK Partners’ common unit offering generated net proceeds
of approximately $322.7 million. In addition, ONEOK Partners GP
contributed $6.8 million in order to maintain its 2 percent general
partner interest. ONEOK Partners used the proceeds to repay
borrowings under the ONEOK Partners Credit Agreement and for general
partnership purposes;
|
-
|
In
June 2009, ONEOK Partners’ common unit offering generated net proceeds of
approximately $220.5 million. In addition, ONEOK Partners GP
contributed $4.7 million in order to maintain its 2 percent general
partner interest. ONEOK Partners used the proceeds to repay
borrowings under the ONEOK Partners Credit Agreement and for general
partnership purposes;
|
·
|
ONEOK’s
dividends paid were $93.5 million and $84.2 million for the six months
ended June 30, 2010 and 2009, respectively. Dividends paid were
$0.88 per share and $0.80 per share for the six months ended June 30, 2010
and 2009, respectively; and
|
·
|
ONEOK
Partners’ distributions paid to noncontrolling interests in consolidated
subsidiaries were $126.1 million and $105.3 million for the six months
ended June 30, 2010 and 2009, respectively. Distributions paid
to limited partners by ONEOK Partners were $2.21 per unit and $2.16 per
unit for the six months ended June 30, 2010 and 2009,
respectively.
|
·
|
the
effects of weather and other natural phenomena on our operations,
including energy sales and 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
status of deregulation of retail natural gas
distribution;
|
·
|
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, and 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 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;
|
·
|
changes
in demand for the use of natural gas because of market conditions caused
by concerns about global warming;
|
·
|
the
impact of unforeseen changes in interest rates, equity markets, inflation
rates, economic recession and other external factors over which we have no
control, including the effect on pension expense and funding resulting
from changes in stock and bond market
returns;
|
·
|
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 with our competitors that
have less debt, or have other adverse
consequences;
|
·
|
actions
by rating agencies concerning the credit ratings of ONEOK and ONEOK
Partners;
|
·
|
the
results of administrative proceedings and litigation, regulatory actions
and receipt of expected clearances involving the OCC, KCC, Texas
regulatory authorities or any other local, state or federal regulatory
body, including the 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
controls 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;
|
-
|
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 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
mechanical integrity of facilities
operated;
|
·
|
demand
for our services in the proximity of our
facilities;
|
·
|
our
ability to control operating costs;
|
·
|
adverse
labor relations;
|
·
|
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 United States economy,
including liquidity risks in United States credit
markets;
|
·
|
the
impact of recently issued and future accounting updates 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
possible loss of gas distribution franchises or other adverse effects
caused by the actions of
municipalities;
|
·
|
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
SEC, which are incorporated by
reference.
|
Fair
Value Component of Energy Marketing and Risk Management Assets and
Liabilities
|
||||
(Thousands of dollars)
|
||||
Net
fair value of derivatives outstanding at December 31, 2009
|
$
|
2,725
|
||
Derivatives
reclassified or otherwise settled during the period
|
(3,675
|
)
|
||
Fair value of new
derivatives entered into during the period
|
5,231
|
|||
Other changes in
fair value
|
1,571
|
|||
Net
fair value of derivatives outstanding at June 30, 2010 (a)
|
$
|
5,852
|
||
(a) - The maturities of
derivatives are based on injection and withdrawal periods from April
through March, which
is consistent with our business strategy. The maturities
are as follows: $2.9 million matures through
March 2011 and $3.0 million matures through March 2012
.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
|
June
30,
|
|||||||||||||||
Value-at-Risk
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
(Millions
of dollars)
|
||||||||||||||||
Average
|
$ | 7.7 | $ | 9.0 | $ | 7.0 | $ | 9.6 | ||||||||
High
|
$ | 9.1 | $ | 13.0 | $ | 9.6 | $ | 14.1 | ||||||||
Low
|
$ | 5.0 | $ | 6.5 | $ | 3.9 | $ | 6.2 |
Period
|
Total
Number of Shares
Purchased
|
Average
Price
Paid
per Share
|
Total
Number of
Shares
Purchased
as
Part of Publicly
Announced
Plans or
Programs
|
Maximum
Number (or
Approximate
Dollar Value)
of
Shares (or Units) that
May
Be Purchased Under
the
Plans or Programs
|
|||||||
April
1-30, 2010
|
10,373
|
(a),
(b)
|
$30.05
|
-
|
-
|
||||||
May
1-31, 2010
|
80,161
|
(a),
(b)
|
$17.28
|
-
|
-
|
||||||
June
1-30, 2010
|
-
|
$0.00
|
-
|
-
|
|||||||
Total
|
90,534
|
$18.74
|
-
|
-
|
|||||||
(a)
- Includes shares withheld pursuant to attestation of ownership and deemed
tendered to us in connection with the exercise
|
|||||||||||
of stock options under the ONEOK, Inc. Long-Term Incentive Plan, as
follows:
|
|||||||||||
10,369
shares for the period of April 1-30, 2010
|
|||||||||||
80,132
shares for the period of May 1-31, 2010
|
|||||||||||
(b)
- Includes shares repurchased directly from employees, pursuant to our
Employee Stock Award Program, as follows:
|
|||||||||||
4
shares for the period April 1-30, 2010
|
|||||||||||
29
shares for the period May 1-31, 2010
|
10.1
|
Commercial
Paper Dealer Agreement between ONEOK Partners, L.P. and Citigroup Global
Markets Inc. dated
as of June 16, 2010 (incorporated by reference to Exhibit 10.1
to
ONEOK Inc.’s Current Report on Form
8-K filed on June 22, 2010).
|
|
10.2
|
Commercial
Paper Dealer Agreement between ONEOK Partners, L.P. and Banc of America
Securities LLC dated as of June 16, 2010 (incorporated by reference to
Exhibit 10.2 to ONEOK Inc.’s Current Report on Form 8-K filed on June 22,
2010).
|
|
10.3
|
Commercial
Paper Dealer Agreement between ONEOK Partners, L.P. and SunTrust Robinson
Humphrey, Inc. dated as of June 16, 2010 (incorporated by reference to
Exhibit 10.3 to ONEOK Inc.’s Current Report on Form 8-K filed on June 22,
2010).
|
|
31.1
|
Certification
of John W. Gibson pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certification
of Curtis L. Dinan pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.1
|
Certification
of John W. Gibson 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 Curtis L. Dinan 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
|
XBRL
Instance Document
|
|
101.SCH
|
XBRL
Taxonomy Extension Schema Document
|
|
101.CAL
|
XBRL
Taxonomy Calculation Linkbase
Document
|
|
101.DEF
|
XBRL
Taxonomy Extension Definitions
Document
|
|
101.LAB
|
XBRL
Taxonomy Label Linkbase Document
|
|
101.PRE
|
XBRL
Taxonomy Presentation Linkbase
Document
|
ONEOK,
Inc.
Registrant
|
||
Date: August 4,
2010
|
By:
|
/s/
Curtis L. Dinan
|
Curtis
L. Dinan
Senior
Vice President,
Chief
Financial Officer and Treasurer
(Principal
Financial Officer)
|