ONEOK (OKE) Q1 FY26 earnings call: guidance and Q&A

How much of the $150M guidance increase is already realized, and how much of the forward component is locked in, especially regarding butane hedging?

The increase is a blend of stronger volume expectations due to higher commodity prices and differential opportunities. While 75% of volumes are typically hedged, higher expected volumes will benefit from full commodity prices. Winter Storm Firm impact was already in original guidance.

“The increase was really a blend of stronger volume expectations driven by higher commodity prices, continued expected differential opportunities, and then we, of course, expect to realize some benefit from the higher commodity prices.”

asked by Spiro Dounis · answered by Walter Hulse

Update on timing to reach leverage targets and thoughts on buybacks or other uses of free cash flow once targets are met.

Projects are on time and budget, with most larger CapEx completed by mid-2027, leading to significant free cash flow. Increased EBITDA will accelerate reaching leverage targets. Prioritizes high-return capital projects, debt repayment, and then returning capital to shareholders (dividends, buybacks).

“As those wind down, as we've stated in the past, most of our CapEx -- larger CapEx will be completed by midyear of 2027. And that's when we'll really see the free cash flow kicking in.”

asked by Spiro Dounis · answered by Walter Hulse

Elaborate on conversations with producers, near/medium-term expectations for upstream activity, and what prices are needed to stimulate a material uptick in production.

Producers are "leaning in" to production, quickly bringing down assets back online, increasing completion crews (impacting DUCs), and some are seeking additional rigs. Higher back-end commodity prices are making producers more excited. Rig additions would impact volumes in late 2026/early 2027.

“The first thing we're seeing with producers is what we call kind of leaning in to production. And that starts with the first 1 starts with -- if there's anything that goes down there quickly getting that back up quicker than they do in a much more lower price environment.”

asked by Theresa Chen · answered by Sheridan Swords

Upside potential from existing liquids export docks (utilization, spot cargoes, brownfield investment) and progress on LPG dock commercialization.

Increased activity at existing refined products docks with room for expansion. Crude dock highly utilized, seeing interest for contract extensions at favorable rates. LPG dock commercialization has accelerated, with high confidence in contracting targeted utilization soon, driven by geopolitical dynamics and U.S. LNG/NGL growth.

“Concerns our LPG dock, yes, we are seeing an acceleration of interest. We are sowing interest before the Middle East conflict, we're seeing even more of that interest. And 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.”

asked by Theresa Chen · answered by Sheridan Swords

Specifics on butane blending hedges (75% hedged?) and their seasonality.

Entered Q1 highly hedged for butane to RBOB. Secured additional hedges for fall volumes at higher prices and extended into spring 2027. Increased gasoline volume across the system and synergy projects provide tailwinds for blending operations in Q1 and Q4.

“We came in highly hedged 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 complex going forward.”

asked by Michael Blum · answered by Sheridan Swords

Impact of the final FERC oil pipeline index on the RPC segment, exposure to FERC index rates, and changes to earnings outlook.

The FERC index came in better than expected, which is beneficial. However, 70% of RPC volume is market-based rates, not FERC index. The impact in 2026 will be marginal, but there's a compounding effect over time. It's a nice tailwind but doesn't substantially change the RPC segment's outlook.

“I'll remind you that 70% of our volume on the RPC system is market-based rates, not FERC index. So the impact in 2026 is going to be very marginal, as we go in there. But there's a compounding effect as we continue to go forward that, that will build out every year in a little bit more as we go forward.”

asked by Robert Mosca · answered by Sheridan Swords

Longer-term incremental opportunities in the natural gas segment, particularly exposure to power demand and commercial discussions.

In advanced discussions with AI and power demand clients, with nice projects in the queue and more in development. Very excited about natural gas demand in Oklahoma/Texas for power and AI, with projects expected in 2026 and 2027. Initially, AI opportunities seemed smaller, but hyperscalers now require larger volumes, necessitating bigger pipelines and reaching further into the system.

“We are in advanced discussions with both AI and power demand right now. We have some very nice projects that are in the queue, and then we actually have projects behind that, that we're even working on as well as they continue to move forward.”

asked by Jacqueline Koletas · answered by Sheridan Swords

Confirming if data center-related projects, initially estimated at $50 million, are now coming in at $400 million to $700 million.

Confirmed the figures. Originally, projects were smaller as facilities were sited near existing pipelines. Hyperscalers' demand for 5-gigawatt facilities requires building larger pipelines and reaching further into the system where gas is available, increasing project costs significantly.

“Yes. The thing is, originally, when we go back to that $50 million, that was couple of years ago when we first started seeing opportunities and people talked about citing these facilities, they were dropping them right next to pipelines, thinking that they could take the gas off of those pipelines.”

asked by Jason Gabelman · answered by Walter Hulse