The paragraph is a transcript of the opening segment of ONEOK's First Quarter 2025 Earnings Conference Call. The call is introduced by the operator, who sets the listen-only mode and informs participants of the recording. Megan Patterson welcomes the participants and mentions that ONEOK's earnings release and presentation are available on their website. She notes that forward-looking statements are covered by securities laws, cautioning that actual results may differ due to various factors outlined in SEC filings. Participants are reminded to limit their questions to allow more participation. Pierce Norton, along with other executives like Walter Hulse and Sheridan Swords, will discuss the company's first quarter results, attributing the success to their integrated systems and dedicated employees.

In the second paragraph, ONEOK reports that their quarterly results met expectations and reaffirmed their financial guidance for 2025 and outlook for 2026. Post-winter, their system volumes have increased, setting up potential growth for the rest of the year, especially in the peak second and third quarters. They mention nearing completion on several growth projects, including pipeline expansions, and highlight progress on synergy-related projects that are expected to boost earnings in 2025 and 2026. These include connecting Easton Energy's NGL assets with their Gulf Coast infrastructure. Despite the positive outlook, ONEOK acknowledges the need to navigate a volatile macroeconomic environment carefully.

The paragraph describes how ONEOK is well-positioned to deliver value through various cycles due to its strategic structure and operations. The company has focused on expanding scale, diversifying geographically, and integrating systems, which helps it manage uncertainty. ONEOK benefits from unique earnings catalysts, such as acquisition synergies, that are not reliant on production volume growth. Its strategic assets are located in productive U.S. shale basins, connected with major producers. The company maintains a strong balance sheet and investment-grade credit ratings, supporting financial flexibility and disciplined capital investments. The business derives strength from its geographic diversity, integrated operations, innovative employees, and strong commercial relationships, providing long-term value. The paragraph concludes with Walter Hulse mentioning first quarter 2025 net income of $636 million or $1.04 per share.

In the first quarter, the company reported an adjusted EBITDA of up to $1.81 billion, driven by contributions from acquired assets EnLink and Medallion, and increased processing volumes in the Rocky Mountain region. However, earnings were partially offset by the absence of revenues from divested interstate pipeline assets. The proceeds from these divestments helped reduce debt. The acquisitions added nearly $450 million to quarterly results, and the company expects $250 million in synergies by 2025. They shared a presentation highlighting anticipated growth through synergies, efficiencies, and disciplined capital execution. Despite progressing with integration, the company maintains balance sheet strength, ending the quarter with significant cash reserves and no borrowings. Additionally, they repaid $250 million in senior notes with cash on hand.

The paragraph discusses the company's financial outlook and performance expectations. They anticipate that leverage will reach a target of 3.5x by 2026 and reaffirm their balanced financial guidance for 2025. The first quarter results matched their forecasts, and they expect improvements in the coming quarters due to increased demand, volume growth, completed projects, and synergies. The company is committed to disciplined capital allocation and cost management, ready to adjust plans if the economic environment shifts. Sheridan Swords then provides an update on the Natural Gas Liquids segment, noting a 4% year-over-year volume increase in the first quarter, driven by growth in the Rocky Mountain and Gulf Coast regions, despite some seasonal challenges in the Mid-Continent.

The paragraph discusses the transport and volume growth of EnLink NGL in the Mid-Continent and Gulf Coast Permian regions, noting a year-over-year increase and additional volumes not previously counted. Winter weather impacted throughput, but volumes improved in April and are expected to continue rising due to better weather and increased activity from ONEOK plants and third-party commitments. The company is focusing on integrating and enhancing its infrastructure by connecting Mont Belvieu and Conway NGL facilities with Houston and Mid-Continent assets, aiming for completion in the second half of the year. The anticipated increase in NGL volumes will support a Texas City LPG export joint venture, ensuring a fully integrated product solution. Additionally, refined product volumes remained stable year-over-year.

The paragraph discusses anticipated increases in gasoline and diesel demand from agriculture and summer travel, leading to higher crude oil volumes due to expanded gathering infrastructure. First quarter 2025 Midland crude gathered volumes rose over 20% year-over-year, with plans to channel more volumes to long-haul pipelines. In the natural gas segment, the company has broadened its gathering and processing capacity by acquiring assets in the Permian Basin and Mid-Continent, doubling processing capacity in the latter. Currently operating 16 rigs in the Permian Basin, the company is expanding infrastructure and processing capabilities, including moving a plant to Midland and expanding Delaware operations. The recent acquisitions have provided a significant growth opportunity and synergies within the Mid-Continent region, particularly in Oklahoma, boosting the company's confidence in expanding customer services.

The paragraph discusses the operations and future outlook of natural gas processing and production in various regions, including Oklahoma, the Rocky Mountains, and the Williston Basin. It highlights the presence of 14 rigs in Oklahoma and ongoing projects to optimize assets, with processing volumes averaging more than 2.4 Bcf per day. The Rocky Mountain region saw a slight decrease in volumes during the first quarter of 2025 due to winter weather but expects a ramp-up in spring. The Williston Basin, with 15 rigs, is benefiting from operational efficiencies and longer laterals, with a projection that 3-mile laterals will comprise over 35% of the wells drilled in 2025. The paragraph also notes the competitiveness of customers, who are among the lowest-cost operators in North America. There is no significant change in drilling or completion activity. Additionally, there is a focus on the Natural Gas Pipelines segment, with ongoing negotiations for power demand in Oklahoma and Texas, as well as industrial demand along the Mississippi River corridor. The completion of a new storage expansion project in Oklahoma, which adds 4 Bcf of working storage capacity, is also mentioned.

The paragraph discusses ONEOK's Jefferson Island storage hub expansion project in Louisiana, which aims to increase storage capacity by approximately 8.5 Bcf and will be completed in two phases, with completion expected in 2028 and 2029. The project is fully subscribed with third-party commitments. Pierce Norton, the speaker, concludes by expressing confidence in the long-term fundamentals and growth prospects of the business, highlighting the strength of integrated assets, market understanding, and adaptive capabilities. He emphasizes the role of ONEOK's dedicated employees in achieving success and strategic expansion in high-growth areas like the Permian Basin. The paragraph ends with the start of a question-and-answer session, where Jeremy Tonet from JPMorgan asks about synergies and the forward outlook amid market uncertainties.

The paragraph discusses the company's outlook for 2025 and 2026, highlighting confidence in strong growth driven by several factors. This includes LNG exports and AI data center developments, particularly in the Gulf Coast area where significant construction is underway. The demand for LNG and LPGs is expected to remain strong globally. Additionally, the company is focusing on synergies that are not dependent on volume, such as improving efficiency in blending normal butane and connecting NGL infrastructure with byproduct infrastructure. These synergies are expected to provide benefits regardless of crude oil price fluctuations, and efficiency improvements are anticipated in mid and upstream operations.

The paragraph discusses the strategic focus on improving efficiency and capturing synergies in the gas and crude oil processing and transportation business. It highlights opportunities to reduce costs through increased procurement and rolling off old contracts over the next few years. In conversations with producers, there is an emphasis on collaboration and finding mutually beneficial solutions, particularly in the context of service providers involved in well drilling and production completion. The primary focus is on immediate operational efficiencies and re-contracting opportunities.

In the paragraph, Sheridan Swords discusses their company's strategy with producers, emphasizing the importance of win-win situations and value addition in contract negotiations. They focus on creating synergy through acquisitions and a bundling strategy. Doug Irwin asks about potential tariffs on LPG exports and their impact on commercialization strategies. Swords responds that tariffs have not affected their project or contracting approach, as LPG is a byproduct that must be exported to clear the market, and they've maintained steady exports despite price fluctuations.

The paragraph discusses the company's strategies for navigating the macroeconomic environment, particularly in the context of crude oil storage and capital expenditure (CapEx) management. Sheridan Swords mentions the potential benefits of storing crude oil if the market shifts into a contango situation, where future prices are higher than current prices, as it would allow for profitable forward selling. Theresa Chen from Barclays asks about the company's ability to adjust CapEx plans in response to economic downturns. Walter Hulse responds that the company has experience in flexibly managing its capital program, as demonstrated in 2020. They can naturally reduce spending on routine growth driven by producer activity, which accounts for about $1 billion annually. For larger projects, they have the capability to put them on hold and resume them as the market recovers. However, he notes that the current environment does not necessitate such measures.

The paragraph discusses the progress of synergies and projects related to the company's 2025 guidance. It highlights that a substantial portion of the synergies are already in progress, involving capital projects such as the connection of EnLink and Medallion systems. Some synergies from the Medallion acquisition are ongoing and expected to be fully realized by mid-2026. Additionally, the company is working on projects to integrate the NGL system with the refined product system on the Gulf Coast and in the Mid-Continent, which are slated for completion in the second half of the year.

The paragraph discusses the confidence in future synergies resulting from acquisitions, such as Magellan, EnLink, and Medallion. Pierce Norton emphasizes that the synergies, like batching, blending, and bundling, are within the company's control and not dependent on external contracts. Walter Hulse adds that since gaining full control of the EnLink system on February 1, the company has identified cost savings opportunities, such as combining property insurance for EnLink and Medallion, which started yielding benefits on April 1. This process of cost consolidation is ongoing and expected to continue benefiting the company throughout the year. Following these discussions, Michael Blum from Wells Fargo is introduced for the next question.

In the paragraph, Sheridan Swords responds to Michael's question about the company's recovery in volumes post-wildfire and the outlook for the rest of the year. Sheridan expresses confidence that they will meet or exceed their full-year guidance with just low single-digit growth, attributing this optimism to strong performance as they come out of winter, particularly in the Bakken region. The expected improvement as they move into May is also highlighted. Michael then inquires about the sensitivity of ethane recovery in the Bakken to market pricing, questioning whether prolonged market weakness could impact recovery or if it primarily depends on heat rate concerns on Northern Border.

The paragraph discusses Sheridan Swords' insights on ethane pricing and market dynamics. Currently, pricing affects their operations, with an emphasis on recovering ethane and capturing natural gas spreads between the Bakken and Mont Belvieu. If ethane prices drop in Mont Belvieu, they can adjust their strategy by pulling volume off the market. This flexibility allows them to manage market impacts and pre-lock some volume. The paragraph also mentions China's relaxation of tariffs on U.S. ethane, highlighting ongoing demand. Michael Blum and Jean Ann Salisbury's exchange notes that first-quarter NGL volumes were light, but improvements are expected in April.

In the paragraph, Sheridan Swords explains that the level of ethane rejection in the first quarter was consistent with their expectations and previous guidance. He notes that ethane recovery tends to increase during the summer months as gas prices decrease, and they foresee this trend continuing throughout the year. Swords highlights that the Permian Basin is generally in full ethane recovery, the Mid-Continent region experiences intermittent recovery, and the Rockies mostly do not recover ethane unless it's economically beneficial. Jean Ann Salisbury expresses satisfaction with the information, while Manav Gupta requests clarification on a specific slide from a presentation.

In the paragraph, Walter Hulse discusses the potential for an additional $1.3 billion of incremental EBITDA by 2027 through combining four companies. The strategy involves achieving synergies and pursuing growth projects, such as a pipeline expansion to Denver, which could be seen as both a synergy and a growth opportunity. Hulse explains the focus on both Magellan synergies and expected quicker synergies with EnLink and Medallion, describing how these will contribute to long-term growth. Manav Gupta then inquires about the impact of adverse weather in the first quarter, suggesting it may have led to lost revenue or EBITDA opportunities. Hulse acknowledges that better weather conditions could have resulted in higher EBITDA.

The paragraph discusses a company's financial outlook and weather-related impacts on its performance. The speaker acknowledges that weather in North Dakota affects their first quarter results but mentions that they are prepared for it. They also look forward to improved market activity in the second and third quarters. During a call, Keith Stanley from Wolfe Research asks about the company's 2025 EBITDA guidance and future growth. Walter Hulse confirms that the financial guidance remains firm and highlights expected synergies and growth in 2026 and 2027, indicating substantial year-over-year improvements, particularly in 2027 with new projects contributing to growth.

The paragraph describes a discussion between AJ O'Donnell and Sheridan Swords regarding the Permian volume guidance. AJ inquires about the expected volume growth and whether it will result from capturing inefficiencies or new well connections. Sheridan responds that the growth will primarily come from new well connections, as they had no presence in the Permian before acquiring the EnLink system. Confidence in future growth is based on current numbers and ongoing quick expansion opportunities in the Delaware region. These expansions are expected to be completed by the year's end, supporting further asset filling as stated in previous remarks.

The paragraph involves a discussion about the blending business and LPG export dock facilities. A question is posed regarding the widening spreads between butane and RBOB compared to Q4, and whether a situation similar to the unseasonal uptick in Q2 product margins in 2024 might occur again. Sheridan Swords explains that the same strategy from spring 2024 is being used in 2025, where products are forward sold to Q2 and beyond, which could benefit margins in the second and third quarters. Sunil Sibal from Seaport Global Securities then asks about LPG export dock facilities, clarifying that the company produces enough propane to fill its dock capacity and currently sells into the open market. Sheridan Swords confirms that they produce enough propane to more than fill the dock capacity and are selling it to various third-party export docks.

The paragraph discusses the natural gas pipeline business's strong first-quarter performance, attributing it to high demand and favorable market conditions. Despite some divestitures, the business is on track to potentially exceed its full-year EBITDA guidance. The company is bringing online 4 Bcf of storage next month, with most of it already subscribed. They plan to use the remaining capacity for operational storage or potential opportunities like parking loans. Additionally, the company is in advanced discussions to secure demand in the industrial corridor of Louisiana, which is a key growth area for them. Despite being the smallest segment, it is expected to perform well throughout the year.

The question-and-answer session has concluded, and Megan Patterson provided closing remarks. She mentioned that their second quarter prior period starts when they close their books in July, extending to the earnings release in early August. Details for the conference call will be shared later, and the investor relations team is available for follow-ups. The presentation is now concluded, and participants can disconnect.

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