ONEOK (OKE) Q4 FY25 earnings call: guidance and Q&A

Asked about conservatism in the 2026 guidance, particularly around commodity assumptions, and potential optimization opportunities that could provide upside to the guide.

Management noted the $55-$60 WTI assumption for conservatism and highlighted potential upsides from stronger pricing. They identified discretionary ethane recovery, spot offloads in Permian G&P, and NGL/refined products spread capture as commercial optimization opportunities not fully baked into the guidance.

“We've also had on the G&P side, especially the Permian, we have a little bit of open capacity. They've been able to have some offloads, some spot off loads as they get throughout the year as they continue to work with producers and leverage our customer relationships.”

asked by Spiro Dounis · answered by Sheridan Swords

Inquired about the progress and potential scale of power opportunities, specifically with data centers, and when announcements could be expected.

Sheridan Swords confirmed advanced negotiations with several hyperscalers, expressing optimism for announcements in the near future. He noted that these opportunities are scaling up beyond initial expectations.

“Yes, they are scaling up a little bit, and we are in some advanced negotiations with some hyperscalers out there that we feel really good about. We're hoping that we can announce something in the fairly near future.”

asked by Spiro Dounis · answered by Sheridan Swords

Asked about the amount of open capacity available to capture Waha basis spreads and the specific Waha spread assumed in the 2026 guidance.

Sheridan Swords stated that they have contracted capacity on the Eiger Pipeline system beyond their current needs for plant volumes, allowing them to capture spreads. He noted current spreads are above forecast and sees potential upside through Q3 before new pipelines come online, but did not disclose exact open capacity.

“We are seeing good spreads right now above what our forecast was as we continue to go forward, but as a forecast for the whole year. And we think that will go through the third quarter before the next pipelines come online, that will bring that spread back together.”

asked by Michael Blum · answered by Sheridan Swords

Sought clarification on the $150 million of incremental synergies underlying the 2026 guidance, specifically regarding the visibility and confidence in capturing these opportunities.

Sheridan Swords affirmed that all $150 million of synergies are identified, in the plan, and underway, expressing very high confidence in their capture during 2026. He added that they would come from the same buckets as previously outlined.

“What I would tell you about that $150 million of synergies that was outlined by Walt is, they are all identified, and they are in the plan, and they are underway and as we continue to grow. So we have a very high confidence that we are going to be able to capture these synergies in 2026.”

asked by Theresa Chen · answered by Sheridan Swords

Questioned why NGL throughput volumes on Slide 14 were forecast as basically flat for 2026 despite growing gas-to-oil ratios, asking about market share loss or ethane recovery changes.

Sheridan Swords explained that the flat forecast is due to an 18,000 bbl/day contract rolling off in the Bakken, a prediction of more ethane rejection in the Mid-Continent for 2026 compared to 2025, and not forecasting the same high level of discretionary ethane recovery as seen in 2025.

“Obviously in the Bakken we've talked about it for a period of time. We have a contract coming off this year. We're going to lose about 18,000 barrels a day going over to the Kinder Morgan system.”

asked by Jean Ann Salisbury · answered by Sheridan Swords

Asked for an update on efforts to attract more third-party volumes to the Permian NGL system and plans for capacity beyond nameplate.

Sheridan Swords stated that the West Texas NGL pipeline has over 740,000 bbl/day capacity, with approximately 300,000 bbl/day currently available. They are actively pursuing third-party volumes from G&P operators not associated with NGL pipelines and producers with existing kind-ride contracts, leveraging their advantaged capacity and frac capabilities at Medford.

“We still have right now roughly around 300,000 barrels a day on our West Texas NGL pipeline. Remember, as we continue to loop that system. We finally had to loop the whole thing and now we're sitting at well over 740,000 barrels a day on the system.”

asked by Robert Mosca · answered by Sheridan Swords

Inquired about the expected use of excess free cash flow for debt repayment, projected leverage at year-end, and the timeline to reach the 3.5x leverage target.

Walt Hulse clarified that the 3.5x leverage target is self-imposed, allowing flexibility. While they are on track, lower EBITDA expectations in 2025 mean it will take slightly longer than originally expected. Debt reduction will accelerate in the second half of 2027 once current CapEx projects are completed.

“But we're on track and we're aggressively reducing debt through 2025. And we still have a pretty strong CapEx project this year, backlog this year. So -- we won't be able to lean in too much into the debt reduction until we start to complete those in the second half of '27.”

asked by Keith Stanley · answered by Walter Hulse

Asked if there is a desire to further grow the RP&C business inorganically, given the success with Magellan and the company's unique footprint.

Pierce Norton stated that the company's focus remains on executing the 2026 plan and beyond, with no glaring holes in their current portfolio. He emphasized that any M&A, including in RP&C, would be intentional, disciplined, and align with strategic objectives and criteria.

“Our focus continues to be on executing for 2026 plan and beyond. And we don't see any really glaring holes in our portfolio right now. So we're really pleased with what we got.”

asked by Jason Gabelman · answered by Pierce Norton