ONEOK's Q3 2025 Earnings Call: Contradictions Emerge on 2026 Guidance, Capex, LPG Exports, and EnLink NGL Transition

Date of Call: October 29, 2025

Financials Results

• EPS: $1.49 per share, up 10% vs Q2 2025 (net income $940M)

Guidance:

• Affirmed 2025 net income guidance of $3.17B–$3.65B and adjusted EBITDA guidance of $8.0B–$8.45B (excludes onetime transaction costs).
• Total 2025 capital expenditures expected to be $2.8B–$3.2B.
• Expect approximately $250M of synergy-related adjusted EBITDA in 2025; ~ $500M realized since Sept 2023.
• Do not expect meaningful cash taxes until 2029; 2029 cash tax rate expected below full 15% AMT.
• Long-term leverage target 3.5x, expected to approach on a run-rate basis by Q4 2026; disciplined capital allocation continues.

Business Commentary:

• Operational and Financial Performance:
• ONEOK's third quarter adjusted EBITDA increased 7% compared to the second quarter and 20% for the year, reaching $2.12 billion.

• The growth is attributed to increased volumes across operations, stable demand, and strategic integrations following acquisitions.

• Synergy and Earnings Impact:

• ONEOK is on track to realize approximately $250 million in synergy-related adjusted EBITDA in 2025, with nearly $500 million realized since acquiring Magellan in September 2023.

• These synergies are a result of strategic integration and operational efficiencies, exceeding initial expectations.

• Capital Allocation and Debt Management:

• The company repurchased over 600,000 shares and retired over $500 million in senior notes in the third quarter.

• The combination of share repurchases and debt management is part of ONEOK's balanced capital allocation strategy, aiming to support shareholder value creation.

• Regional Growth and Volume Trends:

• In the Rocky Mountain region, natural gas liquids volumes averaged more than 490,000 barrels per day, a 5% increase from the previous quarter.
• The growth is driven by higher propane plus and ethane recovery volumes, highlighting the region's potential for continued strategic growth.

Sentiment Analysis:

Overall Tone: Positive

• Management affirmed higher Q3 results, a 7% sequential adjusted EBITDA increase and a 10% rise in EPS vs Q2, reiterated 2025 guidance ranges, and reiterated being 'on track to realize approximately $250 million' of 2025 synergies while approaching a 3.5x leverage target—all indicating confidence and execution.

Q&A:

• Question from Vrathan Reddy (JPMorgan Chase & Co, Research Division): Can you frame tailwinds vs headwinds for earnings growth into 2026; is mid- to high-single-digit growth still appropriate?
  Response: Tailwinds are synergies (Easton, Conway full-year benefit), growth projects (Denver expansion, >500 MMcf/d Permian processing additions), and Permian market-share gains—these drive 2026 growth.

• Question from Vrathan Reddy (JPMorgan Chase & Co, Research Division): How are you thinking about buybacks vs debt paydown and other capital allocation priorities?
  Response: As leverage approaches the 3.5x target, management will add modest buybacks alongside opportunistic debt repurchases; third-quarter saw a modest buyback and bond opportunities executed.

• Question from Michael Blum (Wells Fargo Securities, LLC, Research Division): You removed mid- to high-single-digit growth language for 2026 in the deck—what's changed and how are you thinking about 2026?
  Response: Management is focused on finishing 2025 and will finalize 2026 guidance in early Q1 2026; they remain confident in a positive trajectory but will provide specific guidance later.

• Question from Michael Blum (Wells Fargo Securities, LLC, Research Division): Can you quantify the potential impact of Waha spreads widening and ability to capture via EnLink/WesTex capacity?
  Response: Waha-to-Houston spreads have been a positive driver; combining ONEOK West Texas, EnLink and legacy gathering capacity has allowed them to capture incremental value and leverage parking/loan opportunities.

• Question from Spiro Dounis (Citigroup Inc. Exchange Research): How are you thinking about where the next marginal dollar of CapEx goes across basins and asset types?
  Response: Each project is evaluated standalone with an expand-and-extend bias off existing assets; management expects overall CapEx to trend down over the next several years due to operating leverage and projects coming online.

• Question from Spiro Dounis (Citigroup Inc. Exchange Research): Thoughts on the competing Sunbelt Connector open season and whether Arizona demand can support multiple projects?
  Response: Sunbelt is competitive and attractive due to ONEOK's connectivity to Mid-Con refiners and Gulf Coast; strong customer interest in open season but final outcomes depend on customer commitments.

• Question from Theresa Chen (Barclays Bank PLC, Research Division): Any early indications on producer budgets and how volumes across supply-push assets will trend into next year?
  Response: Management sees current drilling activity sufficient to keep crude volumes flat and expects gas volumes to grow (rising GORs notably in Bakken); Permian and Cherokee formation show visibility for continued growth into 2026.

• Question from Theresa Chen (Barclays Bank PLC, Research Division): Update on LPG export commercialization efforts and market interest?
  Response: Significant interest in docks; ONEOK has ample supply and is pleased with its contracting position but remains tight-lipped due to competitive dynamics.

• Question from Jean Ann Salisbury (BofA Securities, Research Division): Is Mid-Con gas egress a potential limitation for gas and NGL growth given LNG ramping?
  Response: Management believes there is substantial room for Mid-Con growth before egress becomes constrained and can add capacity as needed; some customers are shifting to gassier plays which helps G&P.

• Question from Jean Ann Salisbury (BofA Securities, Research Division): Bakken trending above guide and Permian below—how much is market share vs basin growth?
  Response: Permian was slower early due to delayed pads but volumes are catching up; Bakken outperformance is largely due to higher discretionary ethane recovery driven by low gas prices enabling record NGL throughput.

• Question from Manav Gupta (UBS Investment Bank, Research Division): How can ONEOK benefit from the AI/data-center build cycle?
  Response: Over 30 data-center projects have engaged ONEOK seeking nearby gas for power; ONEOK's intrastate assets provide speed-to-market and low-capex, attractive supply opportunities to nearby data centers.

• Question from Manav Gupta (UBS Investment Bank, Research Division): Importance and rationale for the Eiger Express pipeline project?
  Response: Eiger complements existing projects (Matterhorn), targets Permian-to-LNG demand, and provides additional capacity and equity exposure to move gas from ONEOK plants toward LNG markets.

• Question from Keith Stanley (Wolfe Research, LLC): Could Sunbelt partners include refiners/strategics and are there discussions to commercialize the project?
  Response: OPEN to strategic partners that add value; cannot comment on specific conversations but remain open to partnerships.

• Question from Keith Stanley (Wolfe Research, LLC): Do you want more scale in the Permian and where are EnLink volumes transitioning to ONEOK pipelines?
  Response: Management favors organic growth and scale in the Permian (adding >500 MMcf/d processing); ~50,000 bpd of legacy EnLink NGL volumes are expected to migrate to ONEOK from 2026–2028 as contracts roll.

• Question from John Mackay (Goldman Sachs Group, Inc., Research Division): Can you bridge the crude-side softness year-to-date and how should we think about crude volumes into 2026?
  Response: Softer results are concentrated in high-volume, low-margin short-haul/non-core crude; core gathering and long-haul crude volumes remain within expectations and drive the segment's resiliency.

• Question from John Mackay (Goldman Sachs Group, Inc., Research Division): Can you frame the mid-cycle size of the blending business on an annual run rate?
  Response: Blending volumes are up ~15% YTD from synergy execution; blending economics are spread-dependent and fluctuate, and blending remains a relatively small component versus fee-based volume businesses.

• Question from Sunil Sibal (Seaport Global Securities): Is the midpoint of 2025 adjusted EBITDA guidance ($8.225B) still a useful anchor for Q4 goals after MB-4 incident?
  Response: Management affirmed the full-year guidance range and is confident of achieving it; will monitor fourth-quarter outcomes but will keep guidance range as announced.

• Question from Sunil Sibal (Seaport Global Securities): Clarify Bakken rig count—is it up to 16 and how should it trend?
  Response: Rig count is up one to 16 on ONEOK-dedicated acreage; rig mobility is flexible and producers are finalizing 2026 budgets—management is optimistic about momentum into 2026.

• Question from Jason Gabelman (TD Cowen, Research Division): You noted NGL benefited from selling product out of inventory and refined products from timing—please elaborate underlying earnings drivers this quarter.
  Response: NGL marketing realized timing gains by selling stored purity products in Q3; refined-products benefited from opportunistic sale of over/short positions in the quarter—both are timing effects in marketing activities.

• Question from Jason Gabelman (TD Cowen, Research Division): As EBITDA growth moderates from prior years, how important is maintaining a competitive growth rate to attract equity capital?
  Response: Management believes positive growth attracts capital, points to consistent YOY EBITDA growth since 2014, and expects continued earnings growth and the ability to pursue buybacks as cash flow allows.

Contradiction Point 1

2026 Guidance and Growth Expectations

It involves changes in financial forecasts and growth expectations for 2026, which are critical for investor confidence.

Why was the mid-to-high single-digit growth guidance for 2026 removed? What is your outlook for 2026? - Michael Blum (Wells Fargo Securities, LLC, Research Division)

2025Q3: Our focus is on finishing 2025 strong and carrying momentum into 2026. We'll finalize 2026 guidance in early Q1, but we're confident in a positive trajectory. - Pierce Norton(CEO)

Could you clarify the 2026 revised outlook and the impact from contractual volumes, synergies, and cost savings? - Spiro Michael Dounis (Citi)

2025Q2: The 2026 outlook was adjusted to reflect current market conditions and spread differentials. Significant contributions to incremental earnings are expected from projects coming online in 2026. - Pierce H. Norton (President, CEO, and Director)

Contradiction Point 2

Capex and Capital Allocation

It involves changes in capital expenditure spending and allocation priorities, which impact future investment decisions and financial performance.

How do you prioritize repurchasing shares versus repaying debt or other capital allocation priorities? - Vrathan Reddy (JPMorgan Chase & Co, Research Division)

2025Q3: We're getting closer to our 3.5x debt-to-EBITDA target, allowing flexibility for share buybacks. We bought back some stock and repurchased senior notes due to favorable bond opportunities. - Walter Hulse(CFO, Treasurer and Executive VP of Investor Relations & Corporate Development)

What portion of the processing plant's CapEx will affect 2025, and how should we compare 2026 to 2025 CapEx? - Brandon B. Bingham (Scotiabank)

2025Q2: Little impact in '25; significant spend expected in '26 with numerous projects rolling off and new projects underway. - Walter S. Hulse

Contradiction Point 3

LPG Export and Market Dynamics

It involves differing perspectives on the economic viability of LPG exports and market demand, which could impact strategic decisions and financial performance.

What are your LPG export commercialization efforts and market interest? - Theresa Chen (Barclays Bank PLC, Research Division)

2025Q3: There is strong interest in our docks, and we're pleased with our contracting strategy. We are well positioned with supply and continue to see competitive interest. - Sheridan Swords(Executive Vice President & Chief Commercial Officer)

How does ONEOK address competitors' assessments of new LPG export facility economics? What is the status of the Texas City terminal? - Theresa Chen (Barclays)

2025Q2: ONEOK's Texas City terminal enjoys a prime location, with rates aligned with economic estimates. Interest in the project remains strong. - Sheridan C. Swords (Executive Vice President and Chief Commercial Officer)

Contradiction Point 4

EnLink NGL Volumes Transition

It involves differing statements on the timeline and details of the transition of EnLink NGL volumes to the ONEOK system, which impacts strategic and operational planning.

Can ONEOK benefit from increased scale in the Permian? How is the EnLink volume transition progressing? - Keith Stanley (Wolfe Research, LLC)

2025Q3: EnLink NGL volumes will transition to our system from 2026 to 2028. - Sheridan Swords(EVP, Chief Commercial Officer)

Are there additional growth opportunities with EnLink in the Permian and Mid-Continent regions? - Neal Dingmann (Truist Securities)

2024Q4: EnLink NGL volumes are expected to fully transition to our system by year-end 2025. - Pierce Norton(CEO)

Contradiction Point 5

Mid-Single Digit to High Single-Digit Growth Expectations

It involves inconsistencies in the company's financial growth expectations, which are important for investor decision-making and long-term planning.

What are the key drivers of earnings growth for next year, and is mid-to-high single-digit growth still achievable? - Vrathan Reddy (JPMorgan Chase & Co, Research Division)

2025Q3: In 2026, we expect continued market share growth in the Permian and other basins to drive growth. - Sheridan Swords(CMO)

Can you discuss the synergies and outlook for 2025 and 2026, considering market uncertainties? - Jeremy Tonet (JPMorgan)

2025Q1: Our outlook for 2025 and 2026 remains positive, driven by -- and I'll just go through some of those again, but the long-term growth outlook, the need for clean energy and LNG continues to be strong, and our growth projects are well positioned to benefit from that. - Pierce Norton(CEO)