What were the dynamics driving NGL volumes and softer margins in Q2, and what's the outlook for H2 margins?

Sheridan Swords noted a slight reduction in overall NGL margins due to increased ethane recovery across all regions (Permian, Mid-Continent, Bakken). Ethane typically has lower transport rates than C3+ products. He highlighted a strong increase in Permian NGL volumes in July/August, tied to the narrowing Waha-Katy spread, which is expected to continue. “As that more ethane comes on, it can have a little bit of effect on our overall margins that we have in there. But we are seeing a lot of increase of [indiscernible] across our system.”

What is the expected run rate growth CapEx budget to support the long-term outlook, and how much of that is allocated to power generation/data center projects?

Walter Hulse stated that the backlog is building with mid-sized projects, and CapEx should moderate to a $2 billion to $2.5 billion run rate going forward, generating significant free cash flow. Sheridan Swords added that power generation and AI data center projects, like the secured 1-gigawatt supply contract, are typically mid-sized ($100M to $400M-$500M) and fit well within this capital budget, contributing to the growth outlook. “The backlog that we have is more in the midsized projects. We don't have any $1 billion plus right now on the horizon. So that should moderate our CapEx from the current levels. down into that $2 billion, $2.5 billion kind of run rate going forward.”

How is the opportunity set for exports evolving, including LPG, brownfield expansions, and recontracting for existing liquids export infrastructure?

Sheridan Swords expressed satisfaction with reaching the 80% contracting threshold for LPG exports and noted discussions for contracts extending into the next decade. He highlighted a resurgence of interest in U.S. energy supply security for both LPG and crude oil, with the Seabrook crude export dock fully contracted. He also mentioned good volume growth in refined products export capacity and the potential for further expansion of the Denver pipeline system to meet growing PADD IV demand. “We have seen since the war that there's been a lot of additional new entrants wanting to talk about the security of the U.S. supply for both LPG and crude oil.”

OKE

ONEOK (OKE) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Aug 4, 2026

Source: earnings call transcript

Executive summary

ONEOK Q2 FY26 — Raised Guidance, Record NGL Volumes, and Extended Cash Tax Runway

ONEOK delivered a strong second quarter, driven by record NGL throughput and robust refined products demand, leading to a second upward revision of its 2026 financial guidance. The company's integrated asset footprint continues to capture growth opportunities across multiple commodities and regions, supported by strategic project completions and an extended cash tax runway. Management remains confident in its long-term mid- to high single-digit adjusted EBITDA growth target, underpinned by operational leverage and a growing pipeline of high-return organic projects.

Highlights

Raised 2026 financial guidance for the second time, increasing adjusted EBITDA midpoint by $250 million to $8.35 billion.
Achieved record NGL throughput volumes, with Gulf Coast Permian NGL volumes increasing 15% year-over-year.
Extended cash tax runway by approximately 2 years until 2031, due to $2.6 billion in cumulative cash tax benefits.
Denver area refined products expansion placed in service, adding 35,000 barrels per day of capacity.
Reached 80% targeted contracting threshold for 200,000 barrels per day of LPG export capacity.

Concerns

NGL segment experienced a slight reduction in overall margin due to increased ethane recovery, which typically commands lower transport rates than C3+ products.
Mid-Continent contracts rolling off may reprice at current market rates, potentially impacting future margins, though factored into guidance.
Natural Gas Pipeline segment expects lower earnings in the second half of the year as Permian takeaway capacity comes online and Waha-Katy differentials narrow.
Final Investment Decisions (FIDs) for large-scale AI data center projects have taken longer than anticipated.

Guidance & targets

Category	Target	Timeline	Confidence
2026 Net Income midpoint	$3.6 billion high materiality	FY26	High
2026 Diluted Earnings Per Share midpoint	$5.68 high materiality	FY26	High
2026 Adjusted EBITDA midpoint	$8.35 billion high materiality	FY26	High
2026 Capital Expenditure	$2.7 billion to $3.2 billion high materiality	FY26	High
Long-term Adjusted EBITDA growth	mid- to high single-digit high materiality	next 5 to 7 years	High
Long-term Leverage Target	3.5x debt-to-EBITDA medium materiality	long-term	High
Cash Tax Payments Deferral	until 2031 high materiality	future	High
EPS growth rate	exceed EBITDA growth rate medium materiality	long-term	High
Bakken volume growth (implied in long-term outlook)	low single-digit medium materiality	long-term	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Natural Gas Liquids Rate throughput volumes increased 7% year-over-year, driven by increased customer activity, improved seasonal demand, and producer activity. Utilization continued to increase across the system. Higher NGL pricing and export demand supported ethane recovery, which is expected to remain favorable into Q3. Permian NGL volumes saw a strong increase in July/August due to narrowing Waha to Katy spread. Gulf Coast Permian NGL volumes: up 15% year-over-yearRocky Mountain NGL volumes: increased year-over-yearEthane recovery: continued strength	—	7%	—	—
Refined Products and Crude Demand fundamentals remained positive, supporting an 8% year-over-year increase in refined products volumes, driven by gasoline and diesel demand and high refinery utilization. Blended volumes were strong. Seabrook crude export JV saw record oil loadings in May. Midland crude gathering experienced increased activity with over 30 rigs operating on acreage. Bidirectional connectivity between Mid-Continent and Gulf Coast is a competitive advantage. Refined Products volumes shipped: increased 8% year-over-yearBlended volumes: strongSeabrook crude export joint venture throughput: increased 20% compared with Q1Midland crude gathering volumes: increased 10% compared with Q1Rigs on Midland crude gathering acreage: >30 rigs	—	8%	—	—
Natural Gas Gathering and Processing Volumes increased across all regions compared with both Q2 last year and Q1 this year. Producer activity remains healthy, and development plans track expectations. Permian capacity expansions position the company to support increased activity. Both Mid-Continent and Rocky Mountain regions saw seasonal pickup in activity driven by higher well completions. Rigs in Mid-Continent: 11 rigsRigs in Rocky Mountain: 13 rigs (up 2 rigs QoQ)	—	increased	increased	—

OKE operating KPIs by quarter

OKE operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	Sep 2025 Q3 FY25	Dec 2025 Q4 FY25	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Active rigs Permian Basin	16 In the Permian Basin, we currently have 16 active rigs on our dedicated acreage. Source: earnings call transcript	—	20 Currently, we have 20 active rigs on our dedicated acreage, driving the need for recently announced capacity expansions, totaling more than 550 million cubic feet per day across the Midland and Delaware basins. Source: earnings call transcript	—	11 In the Permian basin process volumes increased 4% year-over-year, and we currently have 11 rigs operating across our footprint. Source: earnings call transcript	—	—
Active rigs Oklahoma	14 There are 14 rigs on our dedicated acreage in Oklahoma and a number of projects underway to connect and optimize these assets in the region. Source: earnings call transcript	12 In the Mid-Continent, there are 12 rigs running on our dedicated acreage in Oklahoma and a number of projects underway to connect and optimize assets in the region. Source: earnings call transcript	11 There are 11 rigs on our dedicated acreage in Oklahoma. Source: earnings call transcript	—	—	—	-8.3%
Active rigs Mid-Continent	—	—	—	13 We have 13 rigs currently operating across more than [ 1 million ] dedicated acres in the Mid-Con. Source: earnings call transcript	11 Mid-Continent producers continue to focus activity across both gas-focused and liquid-rich plays, and we have 11 rigs currently operating at costs more than 1 million dedicated acres in this region. Source: earnings call transcript	11 We currently have 11 rigs on our acreage in the Mid-Continent and 13 in the Rocky Mountain region, up 2 rigs in the Rockies compared with last quarter. Source: earnings call transcript	0%

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

LPG Export Capacity Contracted 80% of 200,000 bbl/d Q2 FY26

Targeted contracting threshold reached for capacity under construction; discussions for contracts extending into the next decade.

Seabrook Crude Export Joint Venture Highly contracted Q2 FY26

Under firm take-or-pay agreements for the foreseeable future.

Deals & partnerships

Multiple high-quality counterparties Long-term contracts for LPG export capacity extending into the next decade

Reached 80% targeted contracting threshold for 200,000 bpd LPG export capacity under construction as part of export dock joint venture.

Power plant Supply agreement for natural gas demand

Awarded a supply agreement for 1 gigawatt of power plant demand, further expanding participation in a growing source of natural gas demand.

Capital programs

Denver Area Refined Products Expansion completed

Benefit:35,000 bbl/d capacity, new direct jet fuel connection to Denver International Airport

Project adds capacity into one of the fastest-growing markets in the footprint.

Permian Basin Delaware Plant Expansion Projects underway

Benefit:110 million cubic feet per day

On track for completion during the third quarter to support growing producer activity.

Bighorn Plant (Permian Basin) underway

Benefit:400 million cubic feet per day (upsized from 300 million)

Capacity increased based on production outlooks; remains on schedule for completion.

Cutter 2 Plant (Powder River Basin) underway

Benefit:120 million cubic feet per day

Construction has begun on this plant, following the initial 60 MMcf/d Cutter plant.

Medford Fractionation Project Phase 1 underway

Benefit:100,000 bbl/d Mid-Continent fractionation capacity

Remains on track for completion during the fourth quarter.

Medford Fractionation Project Phase 2 underway

Expected to be completed in the first quarter of 2027.

Risks & headwinds

NGL margin reduction from increased ethane recovery Q2 FY26

a little bit of reduction in the margin

Mitigation:Increased overall NGL volumes and strong Permian NGL uptake partially offset this.

Mid-Continent contract re-negotiation risk next year

some of these contracts come back to more of what we see the market is at this time

Mitigation:Factored into guidance numbers; value can be shifted between basins with large contractors.

Narrowing Permian natural gas differentials second half of the year

lower earnings

Mitigation:Consistent with full-year outlook and guidance assumptions; offset by overall strong performance.

Delays in AI data center project FIDs current

taken a little bit longer than what we had anticipated

Mitigation:Continued commercial discussions reinforce confidence in scale and durability of opportunity; strong competitive position.

What to watch in Q3 FY26

Permian NGL volume growth

next quarter

Current Strong increase in July/August

Target Continued strong growth

Why it matters

Sustained strong NGL volumes from third-party plants in the Permian, driven by Waha-Katy spread, could provide further upside to guidance.

We've seen here in the last month or 2, a strong increase in our volumes, a substantial increase in our volumes. And really look at it, it was kind of tied to the way Waha to Katy spread. As that spread came in and Waha became positive. We saw a lot more volume than we had anticipated behind our NGL system come on in that area.

Find out whether OKE delivers this. Inve re-checks your case every morning.

Q&A highlights

How much of the mid- to high single-digit EBITDA growth is from white space utilization versus new infrastructure, and what are the key vertical drivers?

Pierce Norton explained that growth is driven by multiple reinforcing factors, not just white space, including Permian, Mid-Continent, Powder River growth, stable Bakken growth, rising U.S. LPG exports, shifting global crude demand, and increasing natural gas demand from LNG exports, power generation, and industrial use. These factors underpin confidence in the long-term growth target across all business segments.

“So it's not just one thing, it's a multitude of things, and it's across all 5 of our business segments.”

asked by Spiro Dounis · answered by Pierce Norton

3 min read 6 chapters

Detailed narrative

Strategic Asset Footprint & Integration

ONEOK's integrated platform, spanning natural gas, NGLs, crude oil, and refined products, is strategically positioned across premier growth basins and export markets. This connectivity provides multiple avenues for earnings growth, asset optimization, and capital allocation, not confined to a single commodity or region.

The company's confidence in its mid- to high single-digit adjusted EBITDA growth target over the next 5-7 years is reinforced by this diversified and integrated system, which allows it to capture value from various demand drivers.

Financial Strength & Capital Allocation

The company reported strong Q2 performance, leading to a second upward revision of its 2026 financial guidance, with the adjusted EBITDA midpoint now at $8.35 billion. Significant cash tax benefits of $2.6 billion have extended the cash tax runway until 2031, enhancing future free cash flow generation.

This robust financial position provides flexibility to invest in the business, return capital to shareholders, and pursue long-term value-creating opportunities, while progressing towards a long-term leverage target of 3.5x debt-to-EBITDA.

Project Execution & Capacity Expansion

ONEOK continues to advance its project portfolio, with several major projects nearing completion or recently placed in service. The Denver area refined products expansion, adding 35,000 bpd, is now operational. In the Permian Basin, 110 MMcf/d of Delaware Basin plant expansion projects are on track for Q3 completion, and the Bighorn plant capacity was upsized to 400 MMcf/d for mid-2027 completion.

Additionally, construction has begun on the 120 MMcf/d Cutter 2 plant in the Powder River Basin, expected online in Q1 2028, and Medford fractionation Phase 1 (100,000 bpd) is on track for Q4 completion.

Commercial Momentum & Demand Drivers

Commercial activity remained strong across all four business segments, driven by increased customer activity, healthy domestic and international demand, and continued production growth in key basins. NGL throughput volumes increased 7% year-over-year, with significant growth in the Gulf Coast Permian region.

Refined products volumes shipped increased 8% year-over-year, supported by strong gasoline and diesel demand. Natural gas gathering and processing volumes also increased across all regions, with healthy producer activity and rig counts.

LPG Export & Refined Products Market

ONEOK has successfully reached its targeted contracting threshold of 80% for its 200,000 bpd LPG export capacity, with robust customer interest extending into the next decade. The Seabrook crude export joint venture remains highly contracted under take-or-pay agreements, with throughput increasing 20% quarter-over-quarter.

The refined products system, with its unique bidirectional connectivity, continues to optimize operations and connect supply with strong demand markets, including increasing pulls for U.S. refined products exports along the Gulf Coast.

Emerging Demand: Power Generation & Data Centers

The company is actively pursuing opportunities in emerging demand sectors, having secured a supply agreement for 1 gigawatt of power plant demand, further expanding its participation in natural gas-fired electric generation. Commercial discussions are also advancing for multiple large-scale data center developments, reinforcing confidence in the scale and durability of this opportunity, despite some delays in Final Investment Decisions.

ONEOK's intrastate natural gas pipeline system is well-positioned to serve future demand growth from these sectors.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.