Q2 2026 ONEOK Inc Earnings Call Transcript
Key Points
- ONEOK Inc (OKE) raised its 2026 financial guidance for the second time this year, with adjusted EBITDA midpoint now at $8.35 billion, reflecting strong year-to-date performance and momentum.
- Record NGL throughput volumes and strong refined products demand drove a 7% year-over-year increase in adjusted EBITDA to $2.12 billion in Q2 2026.
- The company secured 80% contracting for its 200,000 barrels per day LPG export capacity, with robust customer interest extending into the next decade.
- ONEOK Inc (OKE) extended its cash tax runway to 2031, with cumulative cash tax benefits now estimated at $2.6 billion, enhancing future free cash flow generation.
- The Denver area refined products expansion was placed in service, adding 35,000 barrels per day of capacity and a direct jet fuel connection to Denver International Airport.
- Permian processing capacity is set to increase to nearly 2.4 billion cubic feet per day with the Bighorn plant upsized to 400 million cubic feet per day, supporting producer growth.
- The company secured a 1-gigawatt power generation supply agreement, expanding its participation in the growing natural gas demand from data centers and power generation.
- Mid- to high-single-digit adjusted EBITDA growth is targeted over the next five to seven years, supported by a growing pipeline of high-return organic projects and operating leverage.
- Seabrook crude export joint venture throughput increased approximately 20% quarter-over-quarter, with record crude loadings in May and fully contracted take-or-pay agreements.
- Midland crude gathering volumes increased 10% quarter-over-quarter, with more than 30 rigs operating on the acreage, reflecting strength in this higher-margin business.
- NGL margins were slightly softer in Q2 due to increased ethane recovery, which carries lower rates than C3+ volumes, impacting overall segment margins.
- The company's hedge position limited its ability to fully capture the benefit of wider spring blending spreads in the Refined Products segment.
- Natural Gas Pipelines segment earnings are expected to decline in the second half of 2026 as Permian takeaway capacity enters service and Waha-to-Katy differentials narrow.
- Commercialization of data center projects has taken longer than anticipated, with several projects not yet reaching FID, delaying potential revenue contributions.
- Some Mid-Continent contracts are expected to roll off at lower market rates, potentially impacting future margins in that region.
- The company's 2026 capital expenditure guidance remains unchanged at $2.7 billion to $3.2 billion, with spending expected to accelerate in the second half of the year.
- The Bakken contract roll effective at the beginning of the quarter was a headwind, though it was offset by growth in other areas.
- The company's long-term growth outlook assumes no major M&A, with the majority of growth driven by organic projects and operational optimization.
- The 1-gigawatt power generation supply agreement requires over $100 million in capital, which may pressure near-term free cash flow.
- The company's growth is partly dependent on continued producer activity and rig additions, which could be subject to market volatility.
Good morning, and welcome to ONEOK's second-quarter 2026 earnings call. As a reminder, this call is being recorded. (Operator Instructions)
At this time, I would like to turn the conference over to Megan Patterson, Vice President, Investor Relations. Megan, please go ahead.
Thank you, Jess. Welcome to ONEOK's second quarter 2026 earnings call. We issued our earnings release and presentation after the markets closed yesterday, and those materials are available on our website. After our prepared remarks, management will be available to take your questions.
Statements made during this call that might include ONEOK's expectations or predictions should be considered forward-looking statements and are covered by the Safe Harbor provision of the Securities Acts of 1933 and 1934. Actual results could differ materially from those projected in forward-looking statements. For a discussion of factors that could cause actual results to differ, please refer to our SEC filings.
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