Q3 2023 Earnings Summary
Reported on Nov 1, 2023 (After Market Close)
Pre-Earnings Price$64.54Last close (Nov 1, 2023)
Post-Earnings Price$64.10Open (Nov 2, 2023)
Price Change
$-0.44(-0.68%)
- ONEOK's financial flexibility is increasing, with leverage metrics improving faster than expected, aiming for a debt-to-EBITDA ratio of 3.5x or lower sooner than anticipated. This strengthens their ability for capital allocation and potential increased shareholder returns.
- Secured long-term contracts in the Permian underpin their LPG and NGL expansions, ensuring favorable returns and competitiveness even as new pipelines emerge. They are expanding capacity from approximately 430,000 barrels per day to over 740,000 barrels per day, highlighting significant growth potential.
- In the Bakken, ONEOK holds a 60% market share in Gathering and Processing, securing volumes for their NGL pipeline and positioning them to maintain and capture growth despite potential new competition.
- Decrease in Q3 volumes on the West Texas LPG system: OKE experienced a step down in volumes in Q3 2023 on its West Texas LPG system, raising concerns about operational or demand issues.
- Risk of NGL pipeline overbuild in the Permian basin: Analysts noted the potential for a severe Permian NGL pipe overbuild in 2025, which could lead to excess capacity and lower returns on OKE's pipeline expansion investments. Long-term contracts become crucial in this scenario.
- Potential increased competition in the Bakken region: Peers considering the development of LNG infrastructure in the Bakken may threaten OKE's 60% market share in the region, posing risks to its future growth and volumes.
Research analysts covering ONEOK INC /NEW/.