ONEOK Inc. (NYSE:OKE) Q3 2016 Earnings Conference Call - Final Transcript

Nov 02, 2016 • 11:00 am ET


ONEOK Inc. (NYSE:OKE) Q3 2016 Earnings Conference Call - Final Transcript


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Good day, and welcome to the Third Quarter 2016 ONEOK and ONEOK Partners 2016 Earnings call. Today's conference is being recorded. And this time, I'd like to turn the conference over to Mr. TD Eureste. Please go ahead, sir.

T.D. Eureste

Thank you, and welcome to ONEOK and ONEOK Partners' Third Quarter 2016 Earnings Conference Call.

(Forward-Looking Cautionary Statements)

Our first speaker is Terry Spencer, President and CEO of ONEOK and ONEOK Partners. Terry?

Derek Reiners

Thank you, TD. Good morning, and thank you for joining today. As always, we appreciate your continued interest and investment in ONEOK and ONEOK Partners. On this conference call is Walt Hulse, Executive Vice President of Strategic Planning and Corporate Affairs; Derek Reiners, Senior Vice President and Chief Financial Officer; and Senior Vice Presidents, Wes Christensen, Operations; Sheridan Swords, Natural Gas Liquids; Kevin Burdick, Natural Gas Gathering and Processing; and Phill May, Natural Gas Pipelines.

In yesterday's earnings releases, we reiterated that ONEOK and ONEOK Partners expect to finish 2016 in line with financial guidance. In addition we provided updated 2016 volume estimates for the gathering and processing, and natural gas liquids segments in the third-quarter earnings presentation.

As I have discussed previously, our industry is experiencing one of many down cycles in my career, and it has been particularly challenging, due to the duration of the low commodity price environment. While the cyclical nature of this industry continues, we are seeing more positive data points from our producer and end-user customers. Industry fundamentals seem to be improving, and most importantly, ONEOK Partners is well-positioned to benefit from growth opportunities in 2017 and beyond.

Our businesses have performed well in a tough environment, and we remain disciplined and committed to making prudent operational, commercial, and financial decisions. As I think about our opportunities I remain confident in our ability to serve our petrochemical customers. As their ethane demand grows, we also continue to see producer activity ramping up in the STACK and SCOOP, which we expect will benefit all three of our business segments. And most importantly, the available capacity in our natural gas liquids and natural gas gathering and processing segments gives us room to grow, without the need for large capital spending.

Our more than $9 billion of investments over the last 10 years gives us the flexibility to grow with our producer and end-user customers, without needing to spend significant capital. The efforts we have taken during this downcycle to better position ONEOK and ONEOK Partners will allow us to continue providing value to our stakeholders. Derek, that concludes my opening remarks.

Derek Reiners

Okay. Thanks, Terry. Starting with the Partnership, third-quarter 2016 adjusted EBITDA increased 3% compared with the second quarter of 2016. And year to date adjusted EBITDA of approximately $1.4 billion represents a 23% increase compared with the same period last year, benefiting from recently-completed capital growth projects across our system, and sustained higher average fee rates in the natural gas gathering and processing segment.

ONEOK Partners' distribution coverage ratio was 1.11 times for both