The ONEOK Second Quarter 2024 Earnings Conference Call and Webcast was held, with the operator introducing the call and instructions for participants. The Vice President of Investor Relations then gave a brief overview of the call, including a reminder about forward-looking statements and the format for the Q&A portion. The President and CEO, CFO, and other executives were present to discuss the company's financial results and answer questions.

ONEOK has announced strong second quarter earnings and affirmed their full-year financial guidance, with record volumes in the Rocky Mountain region and progress on acquisition-related synergies. They have seen increasing demand for their products and services and have identified opportunities for expansion and growth, including recent acquisitions and organic growth projects. They have also received their first shipment of sustainable aviation fuel at their Galena Park Marina terminal, showing their commitment to sustainable fuels.

ONEOK has announced multiple NGL-related growth projects, including fractionation and pipeline expansions, and is confident in its future growth due to long-term volume commitments and strong operating performance. The company has seen significant synergies and new growth opportunities since the acquisition of Magellan, and its integrated assets have proven their value. In the second quarter, ONEOK's net income and adjusted EBITDA increased due to higher NGL and natural gas processing volumes, increased transportation services, and the sale of nonstrategic assets in Kansas. The company has affirmed its 2024 financial guidance.

The company is confident in meeting or exceeding their adjusted EBITDA midpoint and cost and commercial synergy targets. They have extended the maturity of their credit facility and have a strong balance sheet. The company plans to continue returning value to investors through a balanced capital allocation approach. In the natural gas liquids segment, volume growth in the Rocky Mountain and Mid-Continent regions contributed to higher earnings in the second quarter. The Permian Basin saw higher volumes committed for longer terms.

ONEOK is seeing opportunities to recover ethane and is expecting favorable ethane economics. They have made significant progress on their capital growth projects and now expect the West Texas NGL pipeline expansion and MB-6 fractionator to be in service by the end of 2024. They are also announcing a project to rebuild their NGL fractionator in Medford, Oklahoma, which is expected to be completed in two phases by the first quarter of 2027. This project will provide strategic benefits such as cost efficiency, increased reliability, and the ability to accommodate volume growth from various regions. The Medford fractionator will also produce additional refined products for blending opportunities in the Mid-Continent.

In this paragraph, the speaker discusses a recent strategic acquisition of NGL assets in the Houston area, which will provide connectivity with key customers and generate earnings. They also mention plans to complete connections and capture value downstream through blending. In addition, they discuss strong demand for gasoline and jet fuel and the expansion of their refined products pipeline system. The project is fully subscribed and expected to be completed in mid-2026. They then move on to discuss the natural gas gathering and processing segment.

In the Rocky Mountain region, processing volumes increased by 10% and there are currently 40 rigs in the Williston Basin. The company is reaffirming its volume guidance due to improved drilling techniques. In the Mid-Continent region, there are currently 35 rigs operating, with six on the company's acreage. The demand for natural gas storage remains high and expansion projects in Texas and Oklahoma are making progress. The company's Houston-based employees showed dedication and professionalism during Hurricane Beryl despite challenging weather conditions and power outages.

The speaker thanks the employees for their dedication and commitment to responsible operations, which has been recognized with awards. They also mention their sustainability report and are confident in their performance for the rest of the year, potentially beating their midpoint guidance.

The speaker is addressing a question about the company's guidance and mentions that they will provide more information in the third quarter. They also discuss the potential impact of a competitor's NGL pipeline in the Bakken region, but do not expect it to significantly affect their business. They mention their long-term contracts in the region and the benefits of their integrated system. The next question is about synergies.

Sheridan Swords, speaking on behalf of the company, explains that the recent Easton acquisition has provided a way to move their product more efficiently downstream to end users, with the Magellan acquisition allowing for even faster and more cost-effective connections. Despite a decrease in well connects, the company's volume guidance remains on track due to the increasing efficiency of wells.

The speaker, Sheridan Swords, is confident in the company's volumes for the rest of the year and into 2025. They are seeing strong synergy capture and expect to meet or exceed their outlined goal of $175 million. There is some seasonality and refinery turnarounds, but the current issues in Chicago are creating tailwinds for the company. They are also confident in the economics of their expansion project in Denver.

Sheridan Swords, speaking on behalf of the company, discusses the potential for expansion in the infrastructure of their pipeline system to meet the growing demand for volume. He also mentions the volatility of ethane prices, which are currently trending better than expected due to a strong recovery in the Permian and Mid-Continent regions. However, the company remains cautious and has only included a modest amount of ethane recovery in their guidance for the year. They have locked in some incentivized ethane and anticipate further recovery as petrochemicals continue to run at high utilization rates.

The speaker, Sheridan Swords, responds to a question about the potential impact of recent mergers among producer customers in the Bakken region. She explains that the company has good relationships with these producers and does not expect the mergers to significantly affect production or their business. She also mentions the possibility of increased drilling activity in core areas.

The speaker discusses the consolidation of a project in Denver and the potential for growth in the refined products business. They also mention potential opportunities for growth in the El Paso area and the possibility of AI-related projects in the gas pipeline segment.

The company has identified five potential projects with a combined capacity of approximately one billion cubic feet per day. They are also working on the Saguaro project, which is commercially strong and has world-class customers. The company does not anticipate any major capital spending on this project in 2024. The company is also exploring opportunities for ethane and butane blending in their system, which could result in cost savings and increased efficiency. They have already seen some success in this area and have plans for further blending projects next year.

During a recent earnings call, a representative from a company discussed their plans for capital allocation and the potential impact of their growth projects on their free cash flow in the future. They mentioned a previous authorization to buy up to $2 billion worth of stock and their commitment to finding high-growth projects and maintaining their balance sheet. The company expects to complete the stock buyback program and is currently focusing on a maturity coming up in September. In response to a question about the impact of recent market activity on their data center projects, the representative stated that there have been no changes to their demand forecast and conversations about new projects are continuing as planned.

Neal Dingmann asks Charles Kelley about the impact of recent market activity on discussions, to which Kelley responds that the market is still looking long term and there has been no impact on discussions. Dingmann then asks about GOR trends in the Williston Basin, to which Kelley explains that GORs are expected to increase as wells age. The next question from Neil Mehta is about the share repurchase program and whether the company will start executing it after the September debt maturity or if there are other factors they are waiting for.

Walter Hulse explains that the plan is to allocate capital over several years, with a commitment to completing the program by September. Neil Mehta asks about the decision to move forward with the Medford rebuild, questioning if it is necessary with the Magellan merger and Easton acquisition. Sheridan Swords explains that the low cost of fractionation capacity and the efficiency of keeping volumes in the Mid-Continent make the Medford rebuild a beneficial investment for ONEOK.

The company is pleased with the performance of its facilities and is excited about the potential for growth. By optimizing their systems and acquiring new assets, they have created opportunities for increased blending and lending, which will result in asymmetric upside in the future.

Sheridan Swords and Pierce Norton discuss the potential growth and stability of the company, citing the recent Magellan acquisition and the success of their bundled service. They also mention the Medford project and how it will provide additional fractionation capacity, leading to a strong project with a good fit into their system.

The company has a project in Medford that will increase their capacity and allow them to meet growing demand from customers. They also have plans to expand their processing capacity in the Bakken region as needed to ensure reliable service for customers. The main focus is on providing outlets for gas and NGLs so that producers can focus on their crude oil production. The conference call is now concluded.

The company's quiet period for the third quarter will begin in October and last until earnings are released in late October. Details for the conference call will be provided at a later date. The conference has now ended and attendees may disconnect.

This summary was generated with AI and may contain some inaccuracies.