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Headquartered in Tulsa, Oneok specializes in the gathering, processing, and transportation of the natural gas and liquids that help fuel the nation’s industry.

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Tulsa's Oneok (pronounced "one-oak") is an Oklahoma energy company that gathers, stores, and delivers natural gas from across the U.S. Its fortunes closely tied to the global price of crude oil, the company fell 57 spots on this year's <em>Fortune</em> 500.

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Oneok is a leading U.S. midstream energy company that provides gathering, processing, fractionation, transportation, storage, and marine export services for natural gas, natural gas liquids, refined products, and crude oil. The company operates through four main segments: natural gas gathering and processing, natural gas liquids (such as ethane, propane, and butane), natural gas pipelines, and refined products and crude, serving a broad range of energy producers and end users. Founded in 1906 as the Oklahoma Natural Gas Co., Oneok has evolved from a regional utility to a diversified energy infrastructure leader, notably expanding its portfolio through major acquisitions, such as Magellan Midstream in 2023, which added significant crude oil and refined products assets, and, more recently, EnLink Midstream. Oneok has a pipeline network spanning approximately 60,000 miles.

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Oneok (OKE): Company Profile, Stock Price, News, Rankings

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Oneok

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Good morning, and welcome to ONEOK's first quarter 2026 earnings conference call. As a reminder, this call is being recorded. After the speaker's opening remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then one on your telephone keypad. If you would like to withdraw your question, please press star two on your telephone keypad. With that, it is my pleasure to turn the program over to Megan Patterson, Vice President, Investor Relations. You may now begin.

Thank you, Angela. Welcome to ONEOK's first quarter 2026 earnings call. We issued our earnings release and presentation after the markets closed yesterday, and those materials are available on our website. After our prepared remarks, management will be available to take your questions. Statements made during this call that might include ONEOK's expectations or predictions should be considered forward-looking statements and are covered by the safe harbor provision of the Securities Acts of 1933 and 1934. Actual results could differ materially from those projected in forward-looking statements. For a discussion of factors that could cause actual results to differ, please refer to our SEC filings. With that, I'll turn the call over to Pierce Norton, President and Chief Executive Officer.

Thank you, Megan, good morning, everyone, thank you for joining us today. Joining me on the call are Walt Hulse, Chief Financial Officer, Randy Lentz, Chief Operating Officer, and Sheridan Swords, our Chief Commercial Officer. Yesterday, we reported first quarter earnings and raised our 2026 financial guidance, reflecting strong performance and building momentum. Before we get into the quarter, I'd like to take a step back and frame the environment we're operating in and how we think about ONEOK's role within it. Energy markets remain dynamic. Long-term fundamentals are strong. It remains clear that the U.S., energy infrastructure is essential for economic growth, industrial competitiveness, power demand, and global energy security. Midstream's role is simple. We connect supply and demand safely and efficiently across cycles, not around them. That's where ONEOK differentiates itself.

We built a regionally diversified, integrated platform at scale across natural gas liquids, natural gas, crude oil, and refined products, anchored by an innovative employee base, the interconnectivity of our assets, customer relationships, and a predominantly fee-based model. Our systems sit in and around some of the most resilient basins and durable demand centers, including power generation, industrial demand, and export markets. As we look to the remainder of 2026, our high level priorities remain consistent. Operate safely and reliably. Execute our capital growth program with discipline. Maintain balance sheet strength and financial flexibility. Leverage our integrated asset advantage and strong customer relationships to continue driving volume growth across all of our systems. These priorities are grounded in what we see across the U.S., energy landscape, where long-term demand remains constructive, both domestically and globally.

U.S., natural gas demand is growing across power generation for emerging data center demand, industrial activity, and liquefied natural gas exports. LNG export capacity alone is projected to more than double over the next decade, reinforcing the durable global call on U.S., energy and natural gas infrastructure. 65% of U.S., natural gas production contains recoverable natural gas liquids. That means the infrastructure to handle natural gas liquids must be addressed alongside natural gas. This requires full value chain infrastructure and continued investments in natural gas, natural gas liquids, crude oil, and refined product assets of companies like ONEOK. At the same time, NGL demand remains strong globally, driven by petrochemical and international markets, with U.S., supply playing an increasingly critical role. Finally, the resilience and innovation of the U.S., energy industry continues to stand out through consistent efficiency gains and reliable results.

Recent global events have only reinforced the importance of secure, resilient energy supply and the critical role U.S., energy plays in providing it. The world has seen that the most expensive energy is the energy that does not show up. As global demand continues to grow, infrastructure, not supply, is the constraint. That is exactly where ONEOK is positioned, providing scalable, strategically located infrastructure with capacity and the ability to respond to evolving demand dynamics. I'll now turn the call over to Walt Hulse for our financial update.

Thank you, Pierce. As Pierce mentioned, we are increasing our 2026 financial guidance, reflecting the strong performance we delivered in the first quarter across ONEOK's integrated systems and our higher expectations for the remainder of the year. We now expect 2026 net income to increase to a midpoint of approximately $3.5 billion, with diluted earnings per share increasing to a midpoint of $5.53. We are also increasing our adjusted EBITDA guidance to a midpoint of $8.25 billion. These updates reflect strong underlying business segment performance, as well as increased opportunities across our system, driven in part by a more constructive market environment that developed late in the first quarter.

As we move into the back half of the year, the combination of higher volumes, completed projects, and market tailwinds should be reflected more clearly in our results for the balance of this year and into 2027. Our total 2026 CapEx guidance remains unchanged at $2.7 billion-$3.2 billion. Turning to the first quarter performance. ONEOK reported net income of $776 million or $1.23 per diluted share, a 12% increase compared with the first quarter of 2025. Results included a non-cash impairment of $60 million or $0.07 per diluted share after tax, related to our Powder Springs Logistics joint venture in the refined products and crude segment.

Adjusted EBITDA for the quarter totaled approximately $2 billion, a 13% year-over-year increase driven by higher volumes and strong segment-level performance. As market conditions strengthened toward the end of the quarter, we also saw additional opportunities across our system. We continue to expect the first quarter to be our lowest EBITDA quarter of the year, consistent with our typical annual cadence and seasonal dynamics. Importantly, our balance sheet and capital framework remains strong. We continue to prioritize financial flexibility while investing in the business and returning capital to shareholders. In April, we redeemed nearly $500 million of outstanding notes due July 2026, and we entered into a $1.2 billion term loan, further enhancing balance sheet flexibility in a rapidly changing market.

Our results reflect the same themes that underpin our strategy: a high quality, largely fee-based earnings mix, strong performance across our integrated systems, and disciplined cost and capital management. Our increased financial guidance reflects both this consistent execution year-to-date and improving market dynamics. I'll turn it over to Randy for an operational and large capital projects update.

Thank you, Walt. From an operational standpoint, our focus remains on safe and reliable performance across our integrated assets. Our teams continue to execute well across all four business segments, managing normal seasonality and weather-related impacts. The scale and diversity of our systems allow us to absorb those seasonal dynamics while continuing to provide reliable service to our customers. Winter Storm Finn created temporary wellhead freeze-offs that briefly reduced throughput. As a reminder, there were no material downtime on our assets on those related to those impacts were already reflected in our original 2026 guidance. Turning to capital projects, we've made strong progress so far this year. In the first quarter, we completed the relocation of our 150 million cubic feet per day Shadowfax Natural Gas Processing Plant from North Texas to the Midland Basin.

We expect a steady ramp-up of volumes as producer activity remains solid in the area. We're also on track to complete expansions of our Delaware Basin processing assets in the third quarter, increasing our capacity in the basin by 110 million cubic feet per day, in addition to our 300 million cubic feet per day Bighorn Processing Plant that remains on schedule for completion in mid-2027. In the Powder River Basin, we're on track to complete construction of our 60 million cubic feet per day Cutter in the fourth quarter of 2026. This plant will increase our processing capacity in the Powder River to more than 100 million cubic feet per day. We expect capacity to fill quickly from wells already drilled and expected to be drilled by our 15% JV partner in the plant.

Across other segments, our Denver area refined products pipeline expansion will add 35,000 barrels per day of capacity when it enters service mid-year, and phase one of our Medford NGL Fractionator will add 100,000 barrels per day of mid-continent fractionation capacity in the fourth quarter. These projects remain on schedule and are positioned to deliver meaningful near-term benefits by improving reliability, expanding connectivity, and increasing optionality, while also creating long-term durable value across our footprint. I'll now turn it over to Sheridan for a commercial update.

Thank you, Randy. Commercially, we continue to see active engagement across our asset portfolio. Demand is supported by downstream pull, particularly from power generation, industrial and petrochemical demand, and export-linked markets. These dynamics reinforce the importance of strategically located infrastructure and long-term relationships. Looking at the first quarter, we delivered strong year-over-year volume performance across our assets, despite typically seasonal headwinds. Starting with the natural gas liquid segment. Performance was led by broad-based volume growth across all three of our core regions. In the Rocky Mountain region, NGL volumes increased 11% year-over-year, driven by higher base volume and increased ethane recovery. In the Mid-Continent, volumes increased 4% year-over-year, driven entirely by C3+ volume, even as the region experienced some temporary impacts from Winter Storm Fern earlier in the quarter.

In the Gulf Coast Permian region, volumes increased more than 30% year-over-year, primarily reflecting base volume growth from newly connected third-party plants that were delayed last year, as well as higher short-term volume opportunity. From a global perspective, NGL demand remains structurally strong, and recent geopolitical dynamics have further reinforced the attractiveness of U.S., supply. Refresh requests for capacity on our announced LPG export dock were already increasing and have accelerated more recently as customers look to diversify supply toward the U.S. Turning to the refined products and crude segment. Year-over-year refined products volumes increased 12%, supported by strong gasoline and diesel demand, refinery maintenance dynamics, favorable regional basis differentials, and wide crack spreads that drove strong refinery utilization. Blending volumes were also strong during the quarter. We entered the spring blending season significantly hedged, which limited our exposure to widening RBOB to butane spreads.

Historically wide basis differentials between New York Harbor, where we hedge, and the Mid-Continent, where we sell product, also impacted realized margins. Looking ahead, we've secured additional hedges on fall volumes at higher prices and extended new hedges into spring 2027. Importantly, blending volumes continue to be driven primarily by system throughput rather than EPA RVP waivers, which typically create only modest incremental opportunities. Increased gasoline throughput and completed synergy projects provide a much greater benefit, allowing us to optimize blending activity across our system. More broadly, the reach and flexibility of refined product systems remain a key advantage. We are the only refined products pipeline system with bi-directional access between the Mid-Continent and the Gulf Coast, which allows us to attract incremental volume and respond to changing market conditions. Demand fundamentals remain strong.

We continue to see very strong diesel demand across our system, which we expect to remain as we move into spring agricultural season. We also anticipate a robust summer travel season, supported gasoline demand across our footprint. Additionally, if jet fuel supply remains constrained for an extended period, we could see incremental demand for gasoline. Refined products and crude exports have increased in recent months amid global supply tightness, particularly related to diesel, and we are well positioned with dock capacity across multiple Gulf Coast marine facilities. Crude dock utilization remained robust at our highly contracted Seabrook joint venture, and we are in discussions to extend our contract expiring capacity at favorable rates. Finally, higher margin Permian crude oil gathering volumes increased compared with the fourth quarter as activity in the basin remains favorable but disciplined. Moving to the Natural Gathering and Processing Segment.

We delivered strong year-over-year volume growth, led by the Mid-Continent, where volumes increased 7%. Mid-Continent producers continue to focus activity across both gas-focused and liquid-rich plays, and we have 11 rigs currently operating at cost on more than 1 million dedicated acres in this region. In the Rocky Mountain region, processed volumes increased year-over-year, even with winter weather and heater treater impacts. As operating conditions normalize, we expect volumes to strengthen in the second and third quarters. There are currently 11 rigs on our dedicated acreage, with producers continuing to drive efficiency gains through longer laterals. In the Permian Basin, processed volumes increased 4% year-over-year, and we currently have 11 rigs operating across our footprint. As Randy mentioned earlier, our expanded capacity in the Permian enhances system flexibility and positions us well to support producers' development plans across both the Midland and Delaware Basins.

Customer activity remains strong, and we are increasingly encouraged by the depth of opportunities the Permian Basin brings to our portfolio. From a financial perspective, realized commodity prices were lower in the first quarter as a result of entering the year fully hedged. Importantly, underlying throughput volumes increased year-over-year across all regions, reinforcing the long-term earning capacity and resilience of our gathering and processing portfolio. Producer behavior remains disciplined and execution-focused. We are seeing some acceleration in completion activity, which supports our confidence in the 2026 volume outlook. That confidence is driven by direct visibility into producer plans rather than an expectation of higher commodity prices. This view is consistent with recent earnings commentary for oil field services companies that have noted early signs of increasing activity, particularly among private and single basin operators. DUC inventories can also provide an avenue for this acceleration.

Our producer base across ONEOK's approximately seven BCF per day system is well-balanced among large public companies, private operators, and private equity-backed producers. That diversity provides both scale and durability while allowing activity to adjust incrementally. I'll close with our natural gas pipeline segment, where strong results continued in the first quarter with all regions outperforming expectations. Results benefited from wider than planned Waha to Katy location price differentials, as well as incremental marketing opportunities created by Winter Storm Fern across our Louisiana assets. Looking ahead, we expect Waha to Katy differential to normalize as new pipeline egress comes online in the second half of the year. Firm transportation demand remains strong, with high contracted capacity and strong utilization across our system. We also continue to see significant interest from data center-related opportunities in Oklahoma and Texas, and we remain in advanced discussion with several counterparts.

Additionally, LNG-related demand remains strong, both near term and long term, reinforcing the durability of demand for natural gas pipeline assets. Pierce, that concludes my remarks.

Thank you, Sheridan, Randy, and Walt, for those comments. To close, I'll come back to where I started. The energy landscape will continue to evolve, but the need for reliable, scalable U.S., energy infrastructure is not cyclical. It is driven by long-term demand fundamentals. ONEOK is built for this environment, having an integrated platform with capacity, a strong balance sheet, and disciplined execution. The results, durable long-term value creation. Most importantly, none of this happens without our people. I want to thank our employees for their continued focus on safety, operational excellence, innovation and service. Thank you to our investors for your continued trust and support in ONEOK. With that, Operator, we're now ready to take questions.

We will now begin the question and answer session. If you would like to ask a question, press star one on your telephone keypad. To leave the queue at any time, press star two. We do ask that you limit yourself to one question and a follow-up to fit in as many of you as we can. Once again, that is star one to ask a question. Our first question will come from Spiro Dounis with Citi. Your line is now open. Please go ahead.

Thanks, Operator. Good morning, team. Maybe just start with the improved outlook. Just looking for a little more granularity on how much that $150 million move is maybe already realized here in the first quarter, and how much, I guess, what level of visibility you have on the remaining forward component. You know, Sheridan, you mentioned sort of hedging out butane through to 2027. Just curious how much of that forward look is locked in.

Spiro, it's Walt. First of all, I just want to clarify, make sure that it's clear that, you know, Winter Storm Fern was already in our guidance, so we had zero impact from that as it related to the increase. The increase was really a blend of stronger volume expectations, you know, driven by higher commodity prices, you know, continued expected differential opportunities. We, of course, expect to realize some benefit from the higher commodity prices, although we are hedged. You know, typically we're hedged about 75% going into a year. With the higher volume expectations, any volumes we receive going forward will enjoy the full benefit of these higher commodity prices.

Understood. Walt, second one maybe for you as well, just pivoting to capital allocation. Once again, you're trending a little bit stronger than expected. Could you just level set us on how you're thinking about the timing to sort of reach your leverage targets here? When you do free up that cash flow, just where your head's at on buybacks or any other uses of that free cash?

Sure. Nothing's really changed from our capital expenditure plan. As you know, and Randy mentioned, our projects are on time and right on budget. You know, we expect to start completing those this year with the Denver project finishing up and Medford first phase finishing up, as well as, you know, some of the smaller things. As those wind down, as we've stated in the past, most of our larger CapEx will be completed by midyear of 2027, and that's when we'll really see the free cash flow kicking in. You know, we're headed towards our leverage targets clearly, with the increased EBITDA expectations. As that denominator rises, we'll get there faster.

We continue to pay down debt and we'll be in a position to meet our targets and return capital to shareholders appropriately. I wanna make sure that everybody understands our first objective is always.

To get high return capital projects. You know, as we see those come in, we'll definitely try to prioritize those, but our expectation is free cash flow. There will be plenty for those. Our dividend, our debt repayment, as well as other forms of return to shareholders.

Great. I'll leave it there for today. Thank you, guys.

Thank you. Our next question comes from Theresa Chen with Barclays. Your line is now open.

Good morning. Going back to your comments on the upstream outlook, though it's still early on, can you elaborate further on recent conversations with your producer customers? What are your near and medium-term expectations for upstream activity in your areas of service? Where do you think prices will need to stabilize in the outer years to stimulate a material uptick in production? How long would it take to see these volumes potentially materialize on your system?

Theresa, this is Sheridan. The first thing we're seeing with producers is what we call kind of leaning in to production. That starts with the first one is if there's anything that goes down, they are quickly getting that back up quicker than they do in a much more lower price environment. We also see them bringing on more completion crews. That's kinda impacting your DUC as they go forward or bringing things on quicker that they've already drilled. The other thing, as I said in my remarks, we are starting to see some producers looking for additional rigs to bring online.

As we see the environment that we are today, where a lot of people see the back end of the curve coming up, people are getting more excited about what the price environment is gonna be going forward. Obviously, when we bring on rigs, that the rig volume is a little more delayed into the back half of 26 than in earlier. As I said earlier, bringing more completion crews on and when they have any downtime, getting that back on will be the more near-term effect on volumes.

Thank you. The second question is related to your export infrastructure and your outlook there. Given the call on U.S., energy resources and export infrastructure in particular, within your existing liquids export docks on the heels of recently building out the connectivity between Galena Park, East Houston, and your Pasadena MVP joint venture, what kind of upside could you potentially service, whether it be an optimization on utilization or commercial spot cargoes or even additional brownfield investment in Pasadena? Then on the LPG front, can you just talk through the commercialization process at this point? Have those conversations with potential counterparties accelerated?

Yeah, starting with our existing facilities, you know, we have, as you mentioned, we have two marine export facilities for refined products on the Houston Ship Channel, our Galena Park and MVP. We have seen increased activity across those docks going forward. We still have more room that we could expand forward, and we are in conversations with customers around that. There could be a little bit of upside in that area. On our crude dock, it is highly utilized right now. We have a lot more interest in there. What we're seeing is the opportunity to extend contracts or more term at more favorable rates than we historically have seen. We see some tailwinds not only in 26, but beyond in both of our export facilities.

as it concerns our LPG dock, yeah, we are seeing an acceleration of interest. We were seeing interest before the Middle East contract conflict. We're seeing even more of that interest. Right now we are not concerned at all about finishing the contracting of our targeted utilization of that dock here in the relative near future.

Theresa, this is Pierce Norton. I wanna add something to what Sheridan Swords said. You know, just to remind everybody on this call that prior to the Iran war, the U.S., and the Middle East were the only ones, only two countries that are actually gonna expand LNG facilities over the next five years. If you fast-forward to today, and you look at the damage that was done to Qatar's LNG facilities, more than likely the equipment that was ordered to do those expansions will probably go to rebuilding some of the damage that was done during these war efforts. That means that the incremental capacity is gonna really land back in the United States.

With LNG going from 18 BCF to 30 BCF, basically by 2030, I'd like to remind everybody, 65% plus of all the U.S., gas has recoverable NGLs with it. That's really gonna drive a lot of the NGL growth here in the United States, and we're well-positioned for that. I think Sheridan did a great job of explaining the LPG exports. It's providing a very constructive backdrop for the future volume growth here at ONEOK.

Thank you. If I could just squeeze in a final one. Your condensate splitter in the Gulf Coast, what utilization is that seeing currently, and what's your recontracting timeline for that?

It's highly utilized right now, especially with the spreads that we're seeing, and we have just recently recontracted that for term. That will be contracted here, you know, for the foreseeable future and we'll be running at high utilization rates.

Thank you. Our next question comes from Michael Blum with Wells Fargo. Your line is now open.

Thanks. Good morning, everyone. I wanted to go back to your comment on hedges. You said you entered the about 75% hedged. Wondering if you can give us a sense specifically on butane lending, if that's the case as well, if you're 75% hedged going into the year? Is there any kind of seasonality to those hedges? Are they sort of more back-end weighted, front-end loaded or how that plays out?

Yeah, Michael, this is Sheridan. We came in highly hedged and for the first quarter on the butane to RBOB hedges. We do have some, had some space to hedge further out into the fourth quarter that we have done that at much higher prices after the Middle East conflict going forward. The thing we're really seeing on butane that's really exciting for us right now is that we're seeing, as I mentioned in my remarks, an increased gasoline volume across our system. That gives us even more opportunity to blend.

You couple that with the synergy projects that we brought online, that we think we have some really good tailwinds behind our blending operation, both here in the first quarter, when you see a lot of blending, and into the fourth quarter, when we see the fall blending season come about.

Okay, great. Appreciate that. Just wanted to ask the status of the potential Sunbelt Connector project. As I'm sure you're aware, Western Gateway appears close to moving forward, wondering if there's a possibility that you could somehow join that project in some capacity if it does reach FID or if there's a path for both projects. Thanks.

Yeah, Michael, this is Sheridan again. As I've said before, we think there's only room for one project. What we've said before is, if either one of these projects go forward, we think it'll benefit one of from us being able to bring volume out of the Gulf Coast into the mid-continent, as volume leaves that to go to Arizona on the Phillips 66 project. We also think that we have the ability to supply it coming out of the Gulf Coast with the us being connected to all the refiners on the Gulf Coast and the ease of getting it into the El Paso area.

Thank you. Our next question comes from Jean Ann Salisbury with Bank of America. Your line is now open.

Hi, good morning. You touched on butane blending volumes, being driven by one of the systems. Can you give a little more color about how much more butane blending volume could be physically possible on your system in 2025? Just it would require CapEx, and is that something that you would consider to increase that volume potential?

Jean Ann, you are breaking up quite badly there. It's very difficult to understand what you were saying. Could you try that again? Maybe pick up your handset.

Yeah, sorry about that. I was asking about butane volumes, what it would take for ONEOK to increase butane volume on your system.

I mean, the butane on our volumes is related to blending. We've been increasing that for the last three years. I think every season we've been able to blend more and more on our system as we continue to go forward, especially as we brought these synergy projects online. To see a meaningful uptick in our system, what we need is more volume across our system on gasoline, and we are seeing that right now. We could even see that grow, as I mentioned in there, the rest of the year into the fourth quarter if you see jet fuel continue to be pricey, with prices continue to rise for people to be able to travel by airplane and move more to traveling by vehicle system.

Okay, that makes sense. Hopefully this is a little more clear. Yeah, sorry about that. My other question was that Waha spreads are wider than expected this year. Can you remind us if you lose that exposure over the course of the year or if it's all in 2027 that that goes away?

Breaking up a little bit, Jean, I think you said is that the Waha to Katy spread was wider this year in the first quarter than we anticipated, and we were able to capture that. We see that continue through the second quarter into the third quarter, when additional pipeline capacity will come online, and then it will go back to be more normalized at that time.

Thank you. Our next question comes from Jeremy Tonet with JPMorgan. Your line is now open.

Just wanted to touch on, I guess, the guide and thoughts on EBITDA for the year. If I look at 1Q results, and granted there were items that might not repeat, but if I annualize that would pretty much get you to the bottom end of the guide. If I look at last year, I look at the difference between 1Q and 4Q, it's a pretty big step up, and you talk about seasonality over the course of the year. I was wondering if you could just help us think about shaping of the year, you know, EBITDA by quarter, if that's gonna, you know, vary from your pattern before or is there kind of conservatism built into your guidance expectations at this point?

Well, Jeremy, I just point you back to the earnings presentation. I think it's page five in there, you know, where we've tried to reflect the shape of that as well as, you know, demonstrate, you know, how the first quarter was the lowest. We expect the shape of that curve to continue. You know, the only thing that might change a little bit might be a upward slope if we see some enhanced volume in the later part of the year. No change to the front end and hopefully a big change to the back end.

Got it. Annualizing the first quarter would, you know, and there's that slope, would put you over the top end, it seems like. It seems like a good year shaping up there. I was wondering, you know, as we think about the uplift in the 2026 guide, how much of that do you see recurring in 2027?

I think we're positioned very well to, you know, go into 2027 with a great tailwind behind us and, you know, really have some nice volume growth and strength. I'd remind you that we have a significant amount of operating leverage on our Bakken pipeline, on the West Texas LPG Pipeline out of the Mid-Continent. As volumes pick up in the basins we serve, we don't have any incremental CapEx that needs to be spent. All that's gonna drop to the bottom line. We're looking pretty positively as we go into 2027. Clearly, you know, we've had some benefit from the differential on the Katy, the Waha to Katy, that may not be there next year.

You know, our system is diverse, and we, you know, we find differentials all the time. You know, as we bring on Medford, we might see a pickup in the North-South differentials as well. We're there in position to capture those across our integrated system whenever they present themselves.

Understood. I'll leave it there. Thank you.

Thank you. Our next question comes from Manav Gupta with UBS. Your line is now open.

Good morning. Chief, a little bit wanted to dwell into spreads in terms of gaps. There is a couple of pipelines coming on, with you involvement also, which obviously drive higher prices, which good for your per volumes. As this gas gets to Katy and there's a possibility you could see somewhat of a gas glut develop over there. I'm trying to understand if that does happen and that South, you know, Texas part starts to dislocate from Henry Hub, are there ways ONEOK can capitalize on that opportunity?

I think it's more volume. I think what you're asking about is could there be a glut in natural gas as we see more volume come on, especially as we see more pipelines down into the Gulf Coast area. Obviously, we're seeing more LNG assets being brought online that will take that volume up. We don't think we're gonna see an overall glut in the Katy area as these LNG projects come on and also as we see more AI projects coming online as well.

Thank you. Our next question comes from Julien Dumoulin-Smith with Jefferies. Your line is now open.

Hi. Good morning, everyone. This is Rob Mosca on for Julien Dumoulin-Smith. looks like the final FERC oil pipeline index came in better than expected. Can you help contextualize maybe what this means for your RPC segment and a refresh on how much of that segment is actually exposed to those FERC indexed interstate oil pipeline rates? Does this outcome meaningfully change your earnings outlook for RPC over the next five years?

This is Sheridan. A little bit. Remember that the spread did come in better than expected, which is beneficial to us. I'll remind you that 70% of our volume on the RPC system is market-based rates, not FERC indexed. The impact in 2026 is gonna be very marginal as we go in there. There's a compounding effect as we continue to go forward that will build on every year, get a little bit more as we go forward. It's a nice little tailwind, but it's not a substantially change our outlook for the RPC segment.

Yeah, understood. Thanks for that, Sheridan. You know, maybe just turning back to the guide. I'm just wondering if the current commodity and spread environment simply holds, should we think about there being upside or something additive to guidance for the remainder of the year? I'm just trying to think through how much of that impact you're already factoring into your rest of your outlook.

Well, you know, I think that one of the things that you hear quite a few of, especially the larger producers talk about, is that the back end of the curve right now probably isn't really reflecting the actual physical damage that's been done over in the Middle East. Our expectations, you know, would be today that curve should strengthen throughout the year. We have not factored any of that into our thinking when it comes to guidance. Should that happen, we'll enjoy that benefit going forward. Clearly, if that results in more volume, that's a positive for us. You know, it takes time to bring on rigs, so maybe we get a little impact in the fourth quarter, but that's gonna send us into 2027, you know, with a lot of momentum going forward.

Understood. Appreciate that. Thanks for the time, everyone.

Thank you. Our next question comes from Jackie Koletas  with Goldman Sachs. Your line is now open.

Hi. Thank you so much for the time today. Just going back to the guide one more really quickly. You know, how would you frame up kind of the magnitude of the optimization upside that's now expected relative to that $150 million of year-over-year headwinds that was previously assumed?

You know, I, clearly, we knew going into our guidance that these pipes were gonna be constrained throughout, you know, at least the first two quarters and into the third. That was factored into our into our guidance. You know, for as it relates to the Waha to Katy spread, a good portion of that, it's been a little stronger than we had expected, so we've gotten some incremental benefit. You know, a good portion of that was already there. You know, when you looked at the bridge last year from 2025 into 2026, you know, there was a portion of that was really the hedging that was done in 2025 for 2026 as it compared to 2025 was at, you know, at some lower pricing.

That was factored into our guidance as well. Really the potential changes to the upside if we get more volume and enjoy these higher rates on all of that. Then, you know, there's still 25% that is unhedged that will enjoy the higher benefits.

That's clear. Thank you. Then just another, you know, can you touch on the incremental opportunities within the natural gas segment, maybe longer term? I mean, while benefiting from price differentials today, you know, how are you thinking about your exposure to, you know, power demand and, you know, how have those commercial discussions trended recently?

Yeah, this is Sheridan. We are in advanced discussions with both AI and power demand right now. We have some very nice projects that are in the queue. We actually have projects behind that we're even working on as well as they continue move forward. We are very excited about what we see in the natural gas demand sector and where our assets sit, especially in the Oklahoma-Texas region for the power and AI demand going forward. We'll have these projects into 2026 into 2027. It is a good time to be in the natural gas segment for sure.

What I would add, I know folks like to say the same thing, is, when we first started talking about AI opportunities as related to power generation, you know, we originally saw those as kind of short lays, smaller volumes, so not necessarily that much of a material impact. As we've now gone through time, and we're talking to more and more of these hyperscalers, the volumes that they're requiring is gonna require us to reach back further, into our systems and lay larger pipelines. I think that's the big change that I see from where I sit, versus where we were maybe a year and a half, two years ago.

Thank you. Our next question comes from Keith Stanley with Wolfe Research. Your line is now open.

Good morning. Wanted to follow up on Western Gateway. As you assess what that project could do to the market, do you see it mainly as an opportunity for longer haul volumes on your system out of the Gulf Coast? Or do you think this could create constraints and meaningful new growth investments like the Denver project to expand pipeline capacity?

Yeah, I think it's a little bit of both. Obviously, if we, if we start shipping volume out of the Gulf Coast up into the Mid-Continent to fulfill, volume that's leaving the Mid-Continent to go on that Western Gateway project, that's gonna mean we're gonna get a longer tariff because we're moving the volume from a much longer distance away. Also the tariff from Gulf Coast out to El Paso. It's a very long tariff, one of our higher tariffs. If we increase that volume as well, that's gonna have a very nice impact on when it can continue to go forward. Obviously, as we get more demand, will we see more expansion of product on our system?

Yeah, we will as people are gonna shift out of the Gulf Coast, move more over to our system to be able to get it out to El Paso and to meet this access into the Phoenix and California markets.

Thanks for that. Second question. The Bakken volumes were only down 2%-3% versus Q4. That seemed a lot better than the seasonal guidance that you had pointed to last quarter on what's typical in Q1. Would you say volumes in the Bakken surprised to the upside in Q1 versus what you were expecting?

Yeah, a little bit. I mean, you know, the winter is always a little bit, you know, we try to average it out over the four months and everything else, it can be a little bit surprising to us where, you know, where the winter actually hits and when we see the volume come online. I would say outside of, you know, Winter Storm Fern, we've been pleasantly surprised with our volumes in the Bakken.

Thank you. Our next question comes from Brandon Bingham with Scotiabank. Your line is now open.

Hey, good morning. Thanks for taking the questions here. I wanted to maybe talk about your Permian processing capacity portfolio and how you see that sort of evolving in light of all this resilient gas production. Just seeing some other operators in the basin discuss a more optimistic outlook for run rate capacity additions on an annual basis. How do you see that being incorporated into your portfolio moving forward?

Well, well, I know, I think, Randy had mentioned, you know, already right now we just put in 150 million a day, the Shadowfax plant that we moved out of the Barnett into the Midland Basin. We brought another 150 million a day on there that we see that ramping up over time. Right behind that, we have some low-cost capacity expansions in the Delaware, 110 million a day that will come up later this year. We've already announced the 300 million a day plant that we'll be putting in the Delaware beyond that. Those are what we have announced. We continue to look forward.

We see a lot of opportunity in the Permian Basin, where we're in a lot of discussions on RFPs from, especially in the Delaware, that we would have the potential to even expand that capacity even more, beyond what we see today. I think we see that and also expect that to happen as we get further into 2027. We hope there's opportunities as well. We are, as like everybody else, very optimistic on the growth out of the Permian.

Okay, great. Thank you. Just wanted to go back to some comments made earlier about better volumes expectations this year as part of the guidance increase. Could you help frame up how the new volumes expectations compare to maybe the various midpoints within the businesses? I noticed the ranges didn't necessarily change, but it sounds like within those ranges, the expectation is definitely better now.

You know, as I said, our increase in guidance was balanced across, you know, what we've seen in volumes, and Sheridan just mentioned that, you know, that we did have a little bit stronger first quarter volumes in some areas, than we might have historically expected to, you know, given what the heater treater impact and that sort of thing would have been. As we go forward, we hope that builds. You know, we've taken that and kind of projected it forward. Clearly, I think it still is to be seen, you know, what these higher commodity prices are going to do from a producer activity. Some of our smaller producers, private equity, or smaller independents seem to be a little bit quicker to think about rigs and getting them fired up.

We could see some of that impact a little quicker. Where I think the larger exploration companies are waiting for that curve to reflect what they think the fundamentals are, then they'll make their decisions. You know, we're not trying to get too far ahead of our volume expectations. We'll let that play out. We do think in this commodity environment and how it's gonna look into 2027, that we would expect to go into 2027 with a really nice tailwind behind us.

Oneok (OKE) Q1 2026 Earnings Call Transcript

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