Q1 2026 ONEOK Inc Earnings Call

April 29, 2026

Speaker #2: Please stand by. Your meeting is about to begin. Good morning and welcome to ONEOK's first quarter 2026 earnings conference call. As a reminder, this call is being recorded.

Operator: Good morning and welcome to ONEOK's Q1 2026 Earnings Conference Call. As a reminder, this call is being recorded. After the speaker's opening remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, please press star two on your telephone keypad. With that, it is my pleasure to turn the program over to Megan Patterson, Vice President, Investor Relations. You may now begin.

Speaker #2: opening remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad.

Megan Patterson: Thank you, Angela. Welcome to ONEOK's Q1 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. With that, I'll turn the call over to Pierce Norton, President and Chief Executive Officer.

Pierce Norton: Thank you, Megan, good morning, everyone, and thank you for joining us today. Joining me on the call are Walt Hulse, Chief Financial Officer, Randy Lentz, Chief Operating Officer, and Sheridan Swords, our Chief Commercial Officer. Yesterday, we reported Q1 earnings and raised our 2026 financial guidance, reflecting strong performance and building momentum. Before we get into the quarter, I'd like to take a step back and frame the environment we're operating in and ONEOK's role within it. Energy markets remain dynamic, long-term fundamentals are strong. It remains clear that the US energy infrastructure is essential for economic growth, industrial competitiveness, power demand, and global energy security. Midstream's role is simple. We connect supply and demand safely and efficiently across cycles, not around them. That's where ONEOK differentiates itself.

Energy markets, remain Dynamic, but long-term fundamentals are strong. It remains clear that the US Energy infrastructure is essential.

For economic growth industrial competitiveness.

Power demands and Global energy security.

Midstream's role is simple.

We connect supply and demand, safely and efficiently, across Cycles, not around them.

Pierce Norton: We built a regionally diversified integrated platform at scale across natural gas liquids, natural gas, crude oil, and refined products, anchored by an innovative employee base, the interconnectivity of our assets, customer relationships, and a predominantly fee-based model. Our systems sit in and around some of the most resilient basins and durable demand centers, including power generation, industrial demand, and export markets. As we look to the remainder of 2026, our high level priorities remain consistent. Operate safely and reliably. Execute our capital growth program with discipline. Maintain balance sheet strength and financial flexibility. Leverage our integrated asset advantage and strong customer relationships to continue driving volume growth across all of our systems. These priorities are grounded in what we see across the US energy landscape, where long-term demand remains constructive, both domestically and globally.

That's where 1 of differentiates itself.

We built a regionally diversified integrated platform at scale across Natural, Gas, Liquids, natural, gas, crude oil and refined products.

Anchored by an innovative employee base.

Our connectivity of our assets.

Customer relationships and a predominantly fee based model.

Our systems sit in and around some of the most resilient basins in durable, demand centers.

Including power generation, industrial demands, and export markets.

As we look to the remainder of 2026, our high-level priorities remain consistent.

Operate safely and reliably.

Execute our Capital Growth program with discipline?

Leverage or integrated asset advantage. And strong customer relationships to continue driving, volume growth across all of our systems.

Pierce Norton: US natural gas demand is growing across power generation for emerging data center demand, industrial activity, and liquefied natural gas exports. LNG export capacity alone is projected to more than double over the next decade, reinforcing the durable global call on US energy and natural gas infrastructure. 65% of US natural gas production contains recoverable natural gas liquids. That means the infrastructure to handle natural gas liquids must be addressed alongside natural gas. This requires full value chain infrastructure and continued investments in natural gas, natural gas liquids, crude oil, and refined product assets of companies like ONEOK. At the same time, NGL demand remains strong globally, driven by petrochemical and international markets, with US supply playing an increasingly critical role. Finally, the resilience and innovation of the US energy industry continues to stand out through consistent efficiency gains and reliable results.

These priorities are grounded in what we see across the U.S. energy landscape, where long-term demand remains constructive both domestically and globally.

Us natural gas demand is growing.

Across power generation for emerging data center, demand, industrial activity and liquified natural gas exports.

LNG, export capacity, alone is protected to more than double over. The next decade reinforcing the durable Global Call On Us, energy and natural gas infrastructure.

65% of us natural gas production contains recoverable, Natural Gas Liquids.

That means the infrastructure to handle Natural Gas Liquids. Must be addressed alongside Natural Gas.

This requires full value chain infrastructure and continued investments in natural gas, natural gas liquids, crude oil, and refined product assets by companies like ONEOK.

At the same time, NGL demand remains strong, Global driven by petrochemical and international markets with us Supply plague and increasingly critical role.

Pierce Norton: Recent global events have only reinforced the importance of secure, resilient energy supply and the critical role US energy plays in providing it. The world has seen that the most expensive energy is the energy that does not show up. As global demand continues to grow, infrastructure, not supply, is the constraint, and that is exactly where ONEOK is positioned, providing scalable, strategically located infrastructure with capacity and the ability to respond to evolving demand dynamics. I'll now turn the call over to Walt Hulse for our financial update.

And finally, the resilience, and innovation of the US Energy industry continues to stand out through consistent efficiency, gains, and reliable results.

Recent Global events.

Have only reinforced the importance of secure resilient energy Supply and the critical role US Energy plays in providing it. The world has seen that the most expensive energy is the energy that does not show up.

As global demand continues to grow, infrastructure—not supply—is the constraint, and that is exactly where ONEOK is positioned: providing scalable, strategically located infrastructure with capacity and the ability to respond to evolving demand dynamics.

Walt Hulse: Thank you, Pierce. As Pierce mentioned, we are increasing our 2026 financial guidance, reflecting the strong performance we delivered in the Q1 across ONEOK's integrated systems and our higher expectations for the remainder of the year. We now expect 2026 net income to increase to a midpoint of approximately $3.5 billion, with diluted earnings per share increasing to a midpoint of $5.53. We are also increasing our adjusted EBITDA guidance to a midpoint of $8.25 billion. These updates reflect strong underlying business segment performance as well as increased opportunities across our system, driven in part by a more constructive market environment that developed late in the Q1.

I'll now turn the call over to Walt Hall's for our financial updates.

Thank you, pierce.

As Pierce mentioned, we are increasing our 2026 Financial guidance. Reflecting the strong performance we delivered in the first quarter across 10 Oaks Integrated Systems and our higher expectations for the remainder of the year.

We now, expect 2026 net, income to increase to a midpoint of approximately 3.5 billion.

With diluted earnings per share, increasing to a midpoint of 553.

We are also increasing our adjusted ebitda guidance to a midpoint of 8.25 billion dollars.

These updates reflect strong, underlying business business segment performance as well as increased opportunities across our system.

Walt Hulse: As we move into H2, the combination of higher volumes, completed projects, and market tailwinds should be reflected more clearly in our results for the balance of this year and into 2027. Our total 2026 CapEx guidance remains unchanged at $2.7 to 3.2 billion. Turning to Q1 performance, ONEOK reported net income of $776 million, or $1.23 per diluted share, a 12% increase compared with Q1 2025. Results included a non-cash impairment of $60 million, or $0.07 per diluted share after tax, related to our Powder Springs Logistics, L.L.C. joint venture in the refined products and crude segment. Adjusted EBITDA for the quarter totaled approximately $2 billion, a 13% year-over-year increase driven by higher volumes and strong segment-level performance.

Driven in part by a more constructive market environment that developed late in the first quarter.

as we move into the back, half of the year, the combination of higher volumes,

Completed projects and market tailwinds should be reflected more clearly in our results for the balance of this year and into 2027.

our total 2026 capital expenditure guidance. Remains unchanged at 2.7 billion dollars to 3.2 billion dollars.

Returning to the first quarter performance.

10 Oak reported net income of 776 million or 1 dollar, and 23 cents per diluted share.

a 12% increase compared with the first quarter of 2025.

Results included a non-cash impairment of $60 million or 7 cents per diluted share after tax related to our Powder Springs logistic joint venture in the refined products in crude segment.

Adjusted debit D for the quarter total approximately 2 billion dollars.

13% year-over-year, increase driven by higher volumes.

Walt Hulse: As market conditions strengthened toward the end of the quarter, we also saw additional opportunities across our system. We continue to expect Q1 to be our lowest EBITDA quarter of the year, consistent with our typical annual cadence and seasonal dynamics. Importantly, our balance sheet and capital framework remain strong. We continue to prioritize financial flexibility while investing in the business and returning capital to shareholders. In April, we redeemed nearly $500 million of outstanding notes due July 2026, and we entered into a $1.2 billion term loan, further enhancing balance sheet flexibility in a rapidly changing market. Our results reflect the same themes that underpin our strategy: a high quality, largely fee-based earnings mix, strong performance across our integrated systems, and disciplined cost and capital management. Our increased financial guidance reflects both this consistent execution year-to-date and improving market dynamics.

Strong segment level performance.

As market conditions strengthened toward the end of the quarter, we also saw additional opportunities across our system.

We continue to expect the first quarter to be our lowest EBIT quarter of the year, consistent with our typical annual cadence and seasonal dynamics.

Importantly, our balance sheet and capital framework remains strong.

In the business and returning Capital to shareholders.

in April, we redeemed nearly 500 million about outstanding notes due July 2026,

And we entered into a 1.2 billion dollar Term Loan further enhancing balance sheet. Flexibility in a rapidly changing Market.

Our results reflect the same themes that underpin our strategy.

A high quality largely fee-based earnings. Mix strong for performance across our Integrated Systems, and discipline cost and Capital Management.

Walt Hulse: I'll turn it over to Randy for an operational and large capital projects update.

And our increase Financial guidance, reflects both this consistent, execution year to date and improving market dynamics,

Pierce Norton: Thank you, Walt. From an operational standpoint, our focus remains on safe and reliable performance across our integrated assets.

Randy Lentz: Thank you, Walt. From an operational standpoint, our focus remains on safe and reliable performance across our integrated assets.

I'll turn it over to Randy for an operational and large capital projects update.

Thank you. All.

Randy Lentz: Our teams continue to execute well across all four business segments, managing normal seasonality and weather-related impacts. The scale and diversity of our systems allow us to absorb those seasonal dynamics while continuing to provide reliable service to our customers. Winter Storm Fern created temporary wellhead freeze-offs that briefly reduced throughput. As a reminder, there were no material downtime on our assets. Related to those impacts were already reflected in our original 2026 guidance. Turning to capital projects, we've made strong progress so far this year. In Q1, we completed the relocation of our 150 million cubic feet per day Shadowfax natural gas processing plant from North Texas to the Midland Basin. We expect a steady ramp-up of volumes as producer activity remains solid in the area.

From an operational standpoint, our focus remains on safe and reliable performance across our integrated assets.

Our teams continue to execute well, across all 4 business. Segments, managing normal, seasonality and weather related impacts.

The scale and diversity of our systems allow us to absorb those seasonal Dynamics while continuing to provide reliable service to our customers.

Winter storm, firm, created temporary Wellhead, freeze offs that briefly reduced throughput.

But as a reminder, there were no material downtime.

On our assets. On those uh related to those impacts were already reflected in our original 2026 guidance.

Turning to capital projects we've made strong progress so far this year.

And the first quarter, we completed the relocation of our 150 million cubic feet per day, shadowfax natural. Gas processing plant from North Texas to the minimum basin

Randy Lentz: We're also on track to complete expansions of our Delaware Basin processing assets in Q3, increasing our capacity in the basin by 110 million cubic feet per day, in addition to our 300 million cubic feet per day Bighorn processing plant that remains on schedule for completion in mid-2027. In the Powder River Basin, we're on track to complete construction of our 60 million cubic feet per day Cutter plant in Q4 2026. This plant will increase our processing capacity in the Powder River to more than 100 million cubic feet per day. We expect capacity to fill quickly from wells already drilled and expected to be drilled by our 15% JV partner in the plant.

We expect a steady ramp up of volumes as producer, activity remains solid in the area.

We're also on track to complete expansion of our Delaware Basin processing Assets. In the third quarter, increasing our capacity in the Basin by 110 million, cubic feet per day. In addition to our 300 million, cubic feet per day, Big Horn, processing, plant, and remains on, schedule for completion in mid 2027.

And the Powder River Basin. We're on track to complete construction of our 60 million cubic feet per day in, Qatar, plant and the fourth quarter of 2026. This plant will increase our processing capacity in the Powder River to more than 100 million cubic feet per day.

Randy Lentz: Across other segments, our Denver area refined products pipeline expansion will add 35,000 bbl/d of capacity when it enters service mid-year, and Phase 1 of our Medford NGL fractionator will add 100,000 bbl/d of Midcontinent fractionation capacity in Q4. These projects remain on schedule and are positioned to deliver meaningful near-term benefits by improving reliability, expanding connectivity, and increasing optionality, while also creating long-term durable value across our footprint. I'll now turn it over to Sheridan for a commercial update.

We expect capacity to do quickly from Wells. Already drilled and expected to be drilled by our 15% JV partner in the plant.

Across other segments, our Denver area refined products pipeline expansion, will add 35,000 barrels per day of capacity. When an inner service mid-year and Phase 1 of our Medford, NGL fractionator will have 100,000 barrels per day of Mid-Continent, fractionation capacity in the fourth quarter. These projects remain on schedule and are positioned to deliver many full near-term benefits by improving reliability.

Expanding connectivity and increasing optionality by also creating long-term, durable value across our footprint.

Sheridan Swords: Thank you, Randy. Commercially, we continue to see active engagement across our asset portfolio. Demand is supported by downstream pull, particularly from power generation, industrial, and petrochemical demand, and export-linked markets. These dynamics reinforce the importance of strategically located infrastructure and long-term relationships. Looking at Q1, we delivered strong year-over-year volume performance across our assets, despite typically seasonal headwinds. Starting with the natural gas liquid segment. Performance was led by broad-based volume growth across all three of our core regions. In the Rocky Mountain region, NGL volumes increased 11% year-over-year, driven by higher base volume and increased ethane recovery. In the Midcontinent, volumes increased 4% year-over-year, driven entirely by C3+ volume, even as the region experienced some temporary impacts from Winter Storm Fern earlier in the quarter.

I'll now turn it over to Sheridan for a commercial update.

Thank you, Randy.

Commercially. We continue to see active engagement across our asset portfolio.

Demand is supported by Downstream pool, particularly from power generation industrial, and petrochemical demand, and Export link markets.

These Dynamics, reinforce the importance of strategically, located infrastructure and long-term relationships.

Looking at the first quarter, we delivered strong year-over-year, volume performance across our assets. Despite typically seasonal headlines.

Starting with the natural gas liquid segment.

Performance was led by broad-based volume growth across all 3 of our core regions.

And the rocky mountain region. NGL volumes increased 11% year-over-year driven by higher base volume and increased ethane recovery.

In the mid continent, volumes increased 4% year-over-year, driven entirely by C3. Plus volume, even as the region experienced, some temporary impacts.

Sheridan Swords: In the Gulf Coast Permian region, volumes increased more than 30% year-over-year, primarily reflecting base volume growth from newly connected third-party plants that were delayed last year, as well as higher short-term volume opportunity. From a global perspective, NGL demand remains structurally strong, and recent geopolitical dynamics have further reinforced the attractiveness of US supply. Request for capacity on our announced LPG export dock were already increasing and have accelerated more recently as customers look to diversify supply toward the US. Turning to the refined products and crude segment. Year-over-year refined products volumes increased 12%, supported by strong gasoline and diesel demand, refinery maintenance dynamics, favorable regional basis differentials, and wide crack spreads that drove strong refinery utilization. Blending volumes were also strong during the quarter.

From winter storms burn earlier in the quarter.

In the Gulf Coast, Parian region volumes increased more than 30% year-over-year.

In Bass, volume growth from newly connected third-party plants that were delayed last year.

As well as higher short-term falling opportunities.

From a global perspective, NGL demand remains structurally strong.

And recent, geopolitical Dynamics, have further reinforced, the attractiveness of the US Supply.

doc we're already increasing and have accelerated more recently, as customers look to do diversify Supply toward the US

Turning to the refined products and crude segment year-over-year, refined products volumes increased 12%.

Supported by strong gasoline and diesel demand, refinery maintenance, demand dynamics.

favorable Regional basis, differentials and wide crack spreads, that drove strong refining utilization

Sheridan Swords: We entered the spring blending season significantly hedged, which limited our exposure to widening RBOB to butane spreads. Historically wide basis differentials between New York Harbor, where we hedge, and the Midcontinent, where we sell product, also impacted realized margins. Looking ahead, we've secured additional hedges on fall volumes at higher prices and extended new hedges into spring 2027. Importantly, blending volumes continue to be driven primarily by system throughput rather than EPA RVP waivers, which typically create only modest incremental opportunities. Increased gasoline throughput and completed synergy projects provide a much greater benefit, allowing us to optimize blending activity across our system. More broadly, the reach and flexibility of refined product systems remain a key advantage. We are the only refined products pipeline system with bi-directional access between the Midcontinent and the Gulf Coast, which allows us to attract incremental volume and respond to changing market conditions.

Blending volumes were also strong during the quarter.

we entered the spring blending season, significantly hedged, which limited our exposure to winding widening, our Bob to butane spreads,

Historically wide basis, differentials between New York Harbor where we hedge and the Mid-Continent where we sell products also impacted realized margins.

Looking ahead, we secured additional hedges on fall volumes at higher prices and extended new hedges out to spring 2027.

Importantly, blending volumes continue to be driven primarily by system throughput, rather than EPA RVP waves, which typically create only modest incremental opportunities.

Increased gasoline, throughput.

Depleted, Synergy projects, provide a much greater benefit.

Allowing us to optimize blending activity across our system.

More broadly, the reach and flexibility of refined product systems, remain a key advantage.

Sheridan Swords: Demand fundamentals remain strong. We continue to see very strong diesel demand across our system, which we expect to remain as we move into spring agricultural season. We also anticipate a robust summer travel season supported gasoline demand across our footprint. Additionally, if jet fuel supply remains constrained for an extended period, we could see incremental demand for gasoline. Refined products and crude exports have increased in recent months amid global supply tightness, particularly related to diesel. We are well-positioned with dock capacity across multiple Gulf Coast marine facilities. Crude dock utilization remained robust at our highly contracted Seabrook joint venture, and we are in discussions to extend our contract expiring capacity at favorable rates. Finally, higher margin Permian crude oil gathering volumes increased compared with Q4 as activity in the basin remains favorable but disciplined. Moving to the natural gathering and processing segment.

We are the only refined products pipeline system with bidirectional access between the Midcontinent and the Gulf Coast, which allows us to attract incremental volume and respond to changing market conditions.

Demand fundamentals remain strong. We continue to see very strong diesel demand across our system.

Which we expect to remain as we move into the spring agricultural season.

We also intend anticipate a robust summer travel season.

Supported gasoline demand across our footprint. Additionally, at jet fuel supply remains constrained for an extended period. We could see incremental demand for gasoline,

refined products include exports have increased in recent months, amid Global Supply, Titans particularly rated related to diesel,

And we are well positioned with Dr. Capacity or cost multiple go Coast Marine facilities.

Crude doc utilization remained robust at

Our highly contracted seaworth joint venture. And we are in discussions to extend our contract expiring cast capacity and favorable rates,

Finally, fire margin permanent crude oil Gathering volumes increased compared with the fourth quarter as activity, in the Basin remains favorable and discipline.

Sheridan Swords: We delivered strong year-over-year volume growth, led by the Mid-Continent, where volumes increased 7%. Mid-Continent producers continued to focus activity across both gas-focused and liquid-rich plays, and we have 11 rigs currently operating at costs on more than 1 million dedicated acres in this region. In the Rocky Mountain region, processed volumes increased year-over-year, even with winter weather and heater treater impacts. As operating conditions normalize, we expect volumes to strengthen in Q2 and Q3. There are currently 11 rigs on our dedicated acreage, with producers continuing to drive efficiency gains through longer laterals. In the Permian Basin, processed volumes increased 4% year-over-year, and we currently have 11 rigs operating across our footprint.

Moving to the Natural Gathering and processing segment.

we delivered strong year-over-year volume from

led by the mid continent where volumes increase 7%.

It content producers continue to focus activity, across both gas focused and liquid Rich plays and we have 11 rigs. Currently operating at Cost are more than 1 million dedicated acres in this region.

And the rocky mountain region.

Processed volumes and crushed increased year-over-year, even with winter weather and heat Retreat or impacts.

As operating conditions normalize, we expect volumes to strengthen in the second, and third quarters.

There are currently 11 rigs on our dedicated Anchorage with producers; continue to drive efficiency gains through longer levels.

Sheridan Swords: As Randy mentioned earlier, our expanded capacity in the Permian enhances system flexibility and positions us well to support producers' development plans across both the Midland and Delaware Basin. Customer activity remains strong, we are increasingly encouraged by the depth of opportunities the Permian Basin brings to our portfolio. From a financial perspective, realized commodity prices were lower in Q1 as a result of entering the year fully hedged. Importantly, underlying throughput volumes increased year over year across all regions, reinforcing the long-term earning capacity and resilience of our gathering and processing portfolio. Producer behavior remains disciplined and execution-focused. We are seeing some acceleration in completion activity, which supports our confidence in the 2026 volume outlook. That confidence is driven by direct visibility into producer plans rather than an expectation of higher commodity prices.

And the Permian Basin processed volumes increased 4% year-over-year. And we currently have 11 rigs operating across our footprint.

As Randy mentioned earlier, our expanded capacity in the permit, enhances system, flexibility and positions us well to support producers development plans across both the Midland and Delaware basis.

Customer activity remains strong, and we are increasingly encouraged by the depth of opportunities the Puran Basin brings to our portfolio.

From a financial perspective.

Realized commodities prices were lower in the first quarter as a result of entering the year full haste.

Importantly, underlying throughput volumes increased year-over-year across all regions. Reinforcing the long-term earning capacity and resilience of our gathering and processing portfolio.

Producer behavior remains disciplined, and execution is focused. We are seeing some acceleration in completion activity, which supports our confidence in the 2026 volume output.

Sheridan Swords: This view is consistent with recent earnings commentary from oilfield services companies that have noted early signs of increasing activity, particularly among private and single-basin operators. DUC inventories can also provide an avenue for this acceleration. Our producer base across ONEOK's approximately 7Bcf per day system is well-balanced among large public companies, private operators, and private equity-backed producers. That diversity provides both scale and durability while allowing activity to adjust incrementally. I'll close with our natural gas pipeline segment, where strong results continued in Q1 with all regions outperforming expectations. Results benefited from wider-than-planned Walcott to Katy location price differentials as well as incremental marketing opportunities created by Winter Storm Fern across our Louisiana assets. Looking ahead, we expect Walcott to Katy differentials to normalize as new pipeline egress comes online in the H2 of the year.

Direct visibility into producer plans, rather than an expectation of higher commodity prices.

This views.

Earnings commentary for oil. Field services companies.

They have noted early signs of increasing activity, particularly among private and single-basin operators.

DUG inventories can also provide an avenue for this acceleration.

Our producer base across ONEOK is approximately 7 Bcf per day. The system is well balanced among large profit companies, private operators, and private equity-backed producers. That diversity provides both scale and durability while allowing activity to adjust incrementally.

I'll close with our natural gas pipeline segment for strong results. Continued in the first quarter with all regions out for performing expectations.

Result benefited from wider than planned. Wahawk. A key location price differentials as well as incremental marketing opportunities created by winter storm firm across our Louisiana essence.

Sheridan Swords: Firm transportation demand remains strong, with high contracted capacity and strong utilization across our system. We also continue to see significant interest from data center-related opportunities in Oklahoma and Texas, and we remain in advanced discussions with several counterparties. Additionally, LNG-related demand remains strong, both near term and long term, reinforcing the durability of demand for natural gas pipeline assets. Pierce, that concludes my remarks.

Looking ahead. We expect waha to Katie differentials to normalize as new pipeline e-grass comes online and the second half of the year.

Firm transportation demand remains strong, with high contracted capacity and strong utilization.

We also continue to see significant interest from data center related opportunities and Oklahoma and Texas and we remain in advanced discussion with several counterpoints.

Additionally, additionally, LNG related demand remains strong both near-term and long-term.

Reinforcing the durability of demand for natural gas pipeline assets.

Pierce Norton: Thank you, Sheridan, Randy, and Walt, for those comments. To close, I'll come back to where I started. The energy landscape will continue to evolve, but the need for reliable, scalable US energy infrastructure is not cyclical. It is driven by long-term demand fundamentals. ONEOK is built for this environment, having an integrated platform with capacity, a strong balance sheet, and disciplined execution. The results, durable long-term value creation. Most importantly, none of this happens without our people. I want to thank our employees for their continued focus on safety, operational excellence, innovation, and service. Thank you to our investors for your continued trust and support in ONEOK. With that, operator, we're now ready to take questions.

Appears that concludes my remarks. Thank you Sheridan. Randy and Walt for those comments.

To close, I'll come back to where I started.

The energy landscape will continue to evolve, but the need for reliable, scalable U.S. energy infrastructure is not cyclical.

It is driven by long-term demand fundamentals.

1 Oak is built for this environment.

Having an integrated platform with capacity.

A strong balance sheet and discipline execution.

The results.

Durable long-term value creation.

Most importantly, none of this happens without our people. I want to thank our employees for their continued focus on safety.

Operational excellence, Innovation and service.

And thank you to our investors for your continued trust and support in ONEOK.

With that operator for now. Ready to take questions?

Operator: We will now begin the question and answer session. If you would like to ask a question, press star one on your telephone keypad. To leave the queue at any time, press star two. We do ask that you limit yourself to one question and a follow-up to fit in as many of you as we can. Once again, that is star one to ask a question. Our first question will come from Spiro Dounis with Citi. Your line is now open. Please go ahead.

We will now begin the question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad.

To leave the queue at any time, press Start 2.

We do ask that you limit yourself to one question and a follow-up to fit in as many of you as we can.

Once again, that is star 1 to ask a question.

Spiro Dounis: Thanks, operator. Morning, team. Maybe just start with the improved outlook. Just looking for a little more granularity on how much that $150 million move is maybe early realized here in Q1. How much, I guess, what level of visibility you have on the remaining forward component? You know, Sheridan, you mentioned sort of hedging out butane through to 2027. Just curious how much of that forward look is locked in.

At our first question will come from Spiro Dunes with City. Your line is now open. Please go ahead.

Thanks operator. My team uh may need to start with the improved Outlook um just looking for a little more granularity on, how much that 150 million dollar move is is maybe early realized here in the first quarter. And how much I guess what level of visibility you have on the remaining forward component? Uh you know share it and you mentioned sort of hedging out butane through to 27. Just curious how much of that forward look is locked in.

Walt Hulse: Thanks, Spiro. It's Walt. First of all, I just wanna clarify, make sure that it's clear that, you know, Winter Storm Fern was already in our guidance. We had zero impact from that as it related to the increase. The increase was really a blend of stronger volume expectations, you know, driven by higher commodity prices. You know, continued expected differential opportunities. Then we of course expect to realize some benefit from the higher commodity prices, although we are hedged. You know, typically, we're hedged about 75% going into a year. With the higher volume expectations, any volumes we receive going forward will enjoy the full benefit of these higher commodity prices.

Sparrow its wall. Uh,

So, first of all, I just want to clarify, make sure that it's clear that, you know, winter storm Fern was already in our guidance. So we had zero impact from that as it related to the increase. The increase was really a blend of stronger volume expectations.

You know, driven by higher commodity prices?

Continued expected, differential opportunities. And then we, of course, real expect to realize some benefit from the higher, uh, commodity prices. Although we are, we are, uh, hedged, you know, typically we're hedged about 75%, going into a year.

Um, but with the the higher volume expectations, any volumes we receive going forward. We'll enjoy the full benefit of uh, these higher commodity prices.

Spiro Dounis: Understood. Walt, second one maybe for you as well, just pivoting to capital allocation. Once again, you're trending a little bit stronger than expected. Could you just level set us on how you're thinking about the timing to sort of reach your leverage targets here? When you do free up that cash flow, just where are your heads on buybacks or any other uses of that free cash?

Walt Hulse: Well, nothing's really changed from our capital expenditure plan. As you know, Randy mentioned, our projects are on time and right on budget. You know, we expect to start completing those this year with the Denver project finishing up and Medford, first phase finishing up, as well as, you know, some of the smaller things. As those wind down, as we stated in the past, most of our larger CapEx will be completed by midyear of 2027. That's when we'll really see the free cash flow kicking in. You know, we're headed towards our leverage targets clearly, with the increased EBITDA expectations. As that denominator rises, we'll get there faster.

Tax or any other uses of that that free cash.

Sure. Well, nothing's really changed to from our our capital expenditure uh uh

Walt Hulse: We continue to pay down debt and be in a position to meet our targets and return capital to shareholders appropriately. I wanna make sure that everybody understands our first objective is always to get high return capital projects. You know, as we see those come in, we'll definitely try to prioritize those, but our expectation is free cash flow. There'll be plenty for those, our dividend, our debt repayment, as well as other forms of return to shareholders.

Plan as as you know in Randy mentioned, our projects are on time and uh, right on budget. So, you know, we expect to start completing those this year with the Denver project finishing up in Medford. Uh, first phase finishing up, um, as well as, uh, you know, some of the smaller things as those wind down, uh, as we've stated in the past, uh, most of our capex will larger capex will be completed by mid year of 2027, and that's when we'll really see the free cash flow kicking in. Um, you know, we're uh, headed towards our, uh, our uh, leverage targets. Clearly uh, with the increased Eva expectations, is that denominator Rises? Um, we'll get there faster. Um, but uh, we continue to pay down debt and uh, uh, we'll be in a position to meet our targets and, uh, return capital.

To shareholders. But I want to make sure that every understands our first uh objective is always to get I return capital projects so you know, as we see those come in, we'll uh we'll definitely try to Prior prioritize those but our expectation is free cash flow. There will be plenty for those, our dividend, our debt repayment, as well as other forms of return to shareholders.

Spiro Dounis: Great. I will leave it there for today. Thank you, guys.

Great, I'll leave it there for today. Thank you, guys.

Walt Hulse: Thank you.

You.

Operator: Thank you. Our next question comes from Theresa Chen with Barclays. Your line is now open.

Thank you. Our next question comes from Teresa Chin with Barclays.

Your line is now open.

Theresa Chen: Good morning. Going back to your comments on the upstream outlook, though it's still early on, can you elaborate further on recent conversations with your producer customers? What are your near and medium term expectations for upstream activity in your areas of service? Where do you think prices will need to stabilize in the outer years to stimulate a material uptick in production? How long would it take to see these volumes potentially materialize on your system?

Good morning. Um going back to your comments on the Upstream Outlook. Uh those still early on can you elaborate further on recent conversations with your producer customers? What are your near and medium-term expectations for Upstream activity in your areas of service? And where do you think prices will need to stabilize um in the outer years to stimulate a material uptick in production? And how long would it take to see these followings potentially materialize on your system?

Sheridan Swords: Theresa, this is Sheridan. The first thing we're seeing with producers is what we call kind of leaning in to production. The first one starts with is if there's anything that goes down, they are quickly getting that back up quicker than they do in a much more lower price environment. We also see them bringing on more completion crews. That's kind of impacting your DUCs as they go forward or bringing things on quicker that they've already drilled. The other thing, as I said in my remarks, we are starting to see some producers looking for additional rigs to bring online.

This is Sheridan. The first thing we're seeing with producers is is what we call kind of leaning in.

Um, to production, and that starts with the first one—starts with, if there's anything that goes down, they're quickly getting that back up quicker than they do in a much more lower price environment.

Sheridan Swords: As we see the environment that we are today, where a lot of people see the back end of the curve coming up, people are getting more excited about what the price environment's gonna be going forward. Obviously, when we bring on rigs, that the rig volume is a little more delayed into the back half of 2026 than in earlier. As I said earlier, bringing more completion crews on, and when they have any downtime, getting that back on will be the more near-term effect on volumes.

We also see them bringing on more completion crew. So that's kind of impacting your Ducks. They go forward or bringing things on quicker that they've already drilled. And the other thing as I said in my remarks, where our starting to see, um some producers looking for additional rigs to to bring online. And as we see the environment that we are today where a lot of people see the back end of the curve, coming up, people are getting more excited about about what the price environment is going to be going forward. Obviously when we bring on rigs that the rig volume is a little more delayed until the back half of 26 and an earlier. But as I said earlier, bringing more completion Crews on and when they have any downtime, any that back on will be the more near-term effect on volumes.

Theresa Chen: Thank you. The second question is related to your export infrastructure and your outlook there. Given the call on US energy resources and export infrastructure in particular, within your existing liquids export docks on the heels of recently building out the connectivity between Galena Park, East Houston, and your Pasadena MVP joint venture, what kind of upside could you potentially service, whether it be, you know, optimization on utilization or incremental spot cargoes or even additional brownfield investment in Pasadena? On the LPG front, can you just talk through the commercialization process at this point? Have those conversations with potential counterparties accelerated?

Thank you. And the next question is related to your export infrastructure and your outlook there. Um, given the call on us energy, resources and Export infrastructure in particular um within your existing liquids export. Um, docs on the heels of recently building out the connectivity between going in the Park, East Houston and your Pasadena MVP joint venture, what kind of upside um, could you potentially a service? Whether it be an optimization on utilization or commitmental spot carros or even additional Brownfield investment in Pasadena.

Sheridan Swords: Yeah, starting with our existing facilities, you know, we have, as you mentioned, we have 2 marine export facilities for refined products on the Houston Ship Channel, Galena Park and MVP. We have seen increased activity across those docks going forward. We still have more room that we could expand forward, we are in conversations with customers around that. There could be a little bit of upside in that area. On our crude dock, it is highly utilized right now. We have a lot more interest in there, what we're seeing is the opportunity to extend contracts or more term at more favorable rates than we historically have seen. We see some tailwinds not only in 2026, but beyond in both of our export facilities.

And then on the LPG front. Um can you just talk through the commercialization process at this point and have that have those conversations with potential, counterparties accelerated

Sheridan Swords: As it concerns our LPG dock, yeah, we are seeing an acceleration of interest. We were seeing interest before the Middle East contract, conflict. We're seeing even more of that interest. Right now, we are not concerned at all about finishing the contracting of our targeted utilization of that dock here in the relatively near future.

Pierce Norton: Theresa, this is Pierce. I wanna add something to what Sheridan said. You know, just to remind everybody on this call that prior to the Iran war, the US and the Middle East were the only ones, only two countries that are actually gonna expand LNG facilities over the next 5 years. If you fast-forward to today, and you look at the damage that was done to Qatar's LNG facilities, more than likely the equipment that was ordered to do those expansions will probably go to rebuilding some of the damage that was done during these war efforts. That means that the incremental capacity is gonna really land back in the United States.

Gdoc, um, yeah, we are seeing an acceleration of interest. We were seeing interest before the Middle East conflict. We're seeing even more of that interest, and right now we are not concerned at all about finishing the contracting of our targeted utilization of that dock here in the relative near future.

Teresa, this is Pierce. I want to add something to what?

Uh, Sharon had said, um, you know, just to remind everybody on this call and prior to the Iran War. Uh, the US and the Middle East, were the only ones only 2 countries that were actually going to expand LNG facilities over the next 5 years.

And then if you fast forward to today and you look at the demand uh the damage that was done to qatar's LG facilities.

Pierce Norton: With LNG going from 18 Bcf to 30 Bcf, basically by 2030, I'd like to remind everybody, 65% plus of all the US gas has recoverable NGLs with it. That's really gonna drive a lot of the NGL growth here in the United States, and we're well-positioned for that. I think Sheridan did a great job of explaining the LPG exports. It's providing a very constructive backdrop for the future volume growth here at ONEOK.

More than likely the equipment that was ordered to do. Those expansions will probably go to rebuilding some of the damage, uh, that was done during this, this, these War efforts. Um, so that means that their the incremental capacity is going to really land back in the United States. Uh,

And with LNG going from 18 BCF to 30 BCF basically by 2030. Um and I'd like to remind everybody 65% plus of all the US uh gas has recoverable NGL with it. Uh so that's really going to drive a lot of the NGO growth here in the United States and we're well positioned to that. They share the did a great job of explaining the uh the

LPG exports, but it's providing a very constructive backdrop for the future. Volume growth here at Q1.

Theresa Chen: Thank you. If I could just squeeze in a final one. Your condensate splitter in the Gulf Coast, what utilization is that seeing currently, and what's your recontracting timeline for that?

Up, thank you. And if I could just squeeze in a final one—your bond didn't say splitter in the Gulf Coast. What utilization is that seeing currently, and what should be the contracting timeline for that?

Sheridan Swords: It's highly utilized right now, especially with the spreads that we're seeing. We have just recently recontracted that for term, so that will be contracted here, you know, for the foreseeable future and will be running at high utilization rates.

Um, it's highly utilized right now, especially with the spreads that we're seeing. And we have just recently, um,

recontract that for term, so that will be contracted here, um, for the foreseeable future, and, uh, at

At at what will be running at high utilization rates?

Theresa Chen: Thank you.

Thank you.

Operator: Thank you. Our next question comes from Michael Blum with Wells Fargo.

Thank you. Our next question, comes from Michael bloom with Wells. Fargo, your line is now open.

Michael Blum: Thanks. Good morning, everyone. Wanted to go back to your comment on hedges. You said you enter the about 75% hedged. Wondering if you can give us a sense specifically on butane blending, if that's the case as well, if you're 75% hedged going into the year. Is there any kind of seasonality to those hedges? Are they sort of more back-end weighted, front-end loaded or how that plays out?

Uh thanks. Good morning everyone. Um, wanted to go back to your your comment on, on Hedges. You said you you enter the year about 75% hedged wonder if you can give us a sense uh specifically on butane lending if that's the case as well. If you're 75% hedge going into the year and then uh, is there any kind of seasonality to those Hedges? Are they sort of more

Back-end waited, front-end loaded, or how that lays out.

Sheridan Swords: Yeah, Michael, this is Sheridan. We came in highly hedged in for the Q1 on the butane to RBOB hedges. We had some space to hedge further out into the Q4 that we have done that at much higher prices after the Middle East conflict going forward. The thing we're really seeing on butane that's really exciting for us right now is that we're seeing, as I mentioned in my remarks, an increased gasoline volume across our system. That gives us even more opportunity to blend.

Yeah, Michael, this is Sheridan. Um, we came in highly hedged and for the first

Quarter on the butane to ARB Bob Hedges. We do have some, um,

some, some

Sheridan Swords: You couple that with the synergy projects that we brought online, that we think we have some really good tailwinds behind our blending operation, both here in Q1, when you see a lot of blending, and into Q4, when we see the fall blending season come about.

We hedged further out into the fourth quarter than we have. We have done that at much higher prices after the, uh, Middle East conflict going forward. The thing we're really seeing on butane that's really exciting for us right now is that we're seeing, as I mentioned in my remarks, uh, an increased gasoline volume across our system. That gives us even more opportunity to blend. And you couple that with our Synergy projects that we, um, brought online, we think we have some really good tailwind behind our blending operation—both here in the first quarter, when you see a lot of blending, and in the fourth quarter, when we see the fall blending season come about.

Michael Blum: Okay, great. appreciate that. just wanted to ask the status of the potential Sunbelt Connector project. As I'm sure you're aware, Western Gateway appears close to moving forward, wondering if there's a possibility that you could somehow join that project in some capacity if it does reach FID or if there's a path for both projects? Thanks.

Okay, great. I appreciate that. And then just wanted to ask the status of, uh, the potential sun belt connector project. Uh, as I'm sure you're aware of Western Gateway, appears close to moving forward. So, wondering if there's a possibility that you could somehow join that project in some capacity, if it does reach you at 5 D or if there's a path for both projects. Thanks,

Sheridan Swords: Yeah, Michael, this is Sheridan again. As I've said before, we think there's only room for one project. What we've said before is, if either one of these projects go forward, we think it will benefit ONEOK from us being able to bring volume out of the Gulf Coast into the Mid-Continent as volume leaves that to go to Arizona on the P66 project. We also think that we have the ability to supply it coming out of the Gulf Coast with the us being connected to all the refiners on the Gulf Coast and the ease of getting it into the El Paso area.

Yeah, Michael. This is Sheridan again, as I've said before. There's I think there's only room for 1 project and what we've said before is if either 1 of those these projects go forward. We think it will benefit 1 of them from us being able to bring volume out of the Gulf Coast into the mid continent. As long as leaves that to go to Arizona on the b66 project. And we also think that we have the ability to supply it coming out of the Gulf Coast with, with the uh, us being connected to all the refineries on the Gulf Coast, and the east of getting it into the El Paso area.

Michael Blum: Thank you.

Thank you.

Operator: Thank you. Our next question comes from Jean Ann Salisbury with Bank of America. Your line is now open.

Thank you. Our next question comes from Ganan Salsbury with Bank of America. Your line is now open.

Jean Ann Salisbury: Hi, good morning. You touched on butane blending volumes, being driven by ONEOK's system. Can you give a little bit more color about how much more butane blending volume could be physically possible on your system through 2025? Just stick with your prior CapEx expansion, is that something that you would consider to increase that volume until.

And blending volume has been driven by 1. So, um, can you give a little more color about how much volume could be physically possible on your system, the 2025? And just it would require that something that you would consider to increase that volume.

Pierce Norton: Jean Ann, you are breaking up quite badly there. It is very difficult to understand what you were saying. Could you try that again, maybe pick up your handset?

Walt Hulse: Jean Ann, you are breaking up quite badly there. It is very difficult to understand what you were saying. Could you try that again, maybe pick up your handset?

And you were breaking up quite, quite badly. It was very difficult to understand what you were saying.

You try that again, maybe pick up your handset.

Jean Ann Salisbury: Yeah, sorry about that. I was asking about butane volumes, and what it would take for ONEOK to increase butane volume on your system.

You can volume um, and what it would take for 1 of 2 increase, be obtained volume on your system.

Walt Hulse: I mean, the butane on our volumes is related to blending. We've been increasing that for the last three years. I think every season we've been able to blend more and more on our system as we continue to go forward, especially as we brought these synergy projects online. To see a meaningful uptick in our system, what we need is more volume across our system on gasoline, we are seeing that right now. We could even see that grow, as I mentioned in there, the rest of the year into Q4. If you see jet fuel continue to be tightening as prices continue to rise for people to be able to travel by airplane and move more to traveling by vehicle systems.

Sheridan Swords: I mean, the butane on our volumes is related to blending. We've been increasing that for the last three years. I think every season we've been able to blend more and more on our system as we continue to go forward, especially as we brought these synergy projects online. To see a meaningful uptick in our system, what we need is more volume across our system on gasoline, we are seeing that right now. We could even see that grow, as I mentioned in there, the rest of the year into Q4. If you see jet fuel continue to be tightening as prices continue to rise for people to be able to travel by airplane and move more to traveling by vehicle systems.

I mean, the butane on our volume is related to blending. We've been increasing that um, for the last 3 years, I think every season we've been able to blend more and more on our systems as we continue to go forward, especially as we brought these Synergy projects online. Um, so to see a meaningful uptick in our system, what we need is more volume across our system on gasoline, and we are seeing that right now and and we can even see that grow as I mentioned in there. Um,

The rest of the year into the fourth quarter, if you see jet fuel continue to be Tiding and prices continue to rise for people to be able to travel by airplane and move more to a traveling by vehicle system.

Jean Ann Salisbury: Okay, that makes sense. Hopefully this is a little more clear. Sorry about that. My other question was that Waha spreads are wider than expected this year. Can you remind us if you lose that exposure over the course of the year, or if it's all in 2027 that that goes away?

Okay, um, hopefully this will be a little more clear. Um, now, sorry about that.

And, uh, my other question was that Waha spreads are wider than expected this year. Can you remind us if you lose that exposure over the course of the year, or if it's all in 2027 that goes away?

Walt Hulse: I think what you said is that the Waha to Katy spread was wider this year in the Q1 than we anticipated, and we were able to capture that. We see that continue through the Q2 into the Q3 when additional pipeline capacity will come online, then it will go back to be more normalized at that time.

Sheridan Swords: I think what you said is that the Waha to Katy spread was wider this year in the Q1 than we anticipated, and we were able to capture that. We see that continue through the Q2 into the Q3 when additional pipeline capacity will come online, then it will go back to be more normalized at that time.

Jean Ann Salisbury: Okay. Thank you.

Break it up a little bit Genie but I think you said is that the vahi to Katie spread was wider this year in the fourth quarter, first quarter than we anticipated and we were able to capture that we see that continue through the second quarter into the third quarter. When additional pipeline capacity will come online and then it will go back to be more normalized at that time.

Okay, thank you.

Operator: Thank you. Our next question comes from Jeremy Tonet with J.P. Morgan. Your line is now open.

Operator: Thank you. Our next question comes from Jeremy Tonet with JPMorgan. Your line is now open.

Jeremy Tonet: Hi. Good morning.

Thank you. And our next question comes from Jeremy Tonette with J.P. Morgan. Your line is now open.

Walt Hulse: Good morning.

Hi, good morning.

Jeremy Tonet: Just wanted to touch on, I guess, the guide and thoughts on EBITDA for the year. If I look at Q1 results, and granted there were items that might not repeat, but if I annualize that would pretty much get you to the bottom end of the guide. If I look at last year, I look at the difference between Q1 and Q4, it's a pretty big step up, and you talk about seasonality over the course of the year. I was wondering if you could just help us think about shaping of the year, you know, EBITDA by quarter if that's gonna, you know, vary from your pattern before or is there kind of conservatism built into your guidance expectations at this point?

Uh, just wanted to touch on, I guess, the guide and thoughts on Ava for the year. If I look at, one, key results—and granted, there were items that might not repeat—but if I annualize that, that would pretty much get you to the bottom end of the guide.

And if I look at last year, I look at the difference between 1 q and 4 q. It's a pretty big step up and you talk about seasonality over the course of the year. I was wondering if you could just help us think about shaping of the year, you know IBA by quarter if if that's going to, you know, vary from um your pattern before or is there kind of conservatism, uh, built into your guidance expectations at this point?

Walt Hulse: Well, Jeremy, I just point you back to the earnings presentation. I think it's page 5 in there, you know, where we've tried to reflect the shape of that as well as, you know, demonstrate, you know, how Q1 was the lowest. We expect the shape of that curve to continue. You know, the only thing that might change a little bit might be a upward slope if we see some enhanced volume in the later part of the year. No change to the front end and hopefully a big change to the back end.

Jeremy Tonet: Got it. Annualizing the Q1 would, you know, and there's that slope, would put you over the top end, it seems like. It seems like a good year shaping up there. I was wondering, you know, as we think about the uplift in the 2026 guide, how much of that do you see recurring in 2027?

Well, Jeremy, I, I just point you back to the, uh, earnings presentation. I think it's page 5 in there, you know, where we've tried to reflect the shape of that as well as, uh, you know, demonstrate to, you know, how the first quarter was the lowest. So we we, uh, we expect the shape of that curve to, uh, continue. Um, you know, the only thing that might change a little bit, might be an upward slope, if we see, uh, some enhanced volume in the later, part of the year, um, so uh, no change to the front end and hopefully a big change in the back end.

Got it. So annualizing. The first quarter would you know? And there's that slope would put you over the top end. It seems like so it seems like a a good year shaping up there. I was wondering you know as we think about the uplift in the 26 guide. Um, how much of that do you see recurring in 27?

Walt Hulse: I think we're positioned very well to, you know, go into 2027 with a great tailwind behind us and, you know, really have some nice volume growth and strength. I'd remind you that we have a significant amount of operating leverage on our Bakken pipeline, on the West Texas LPG pipeline out of the Mid-Continent. As volumes pick up in the basins we serve, we don't have any incremental CapEx that needs to be spent. All that's gonna drop to the bottom line. We're, you know, we're looking pretty positively as we go into 2027. Clearly, you know, we've had some benefit from the differential on the Katy, the Waha to Katy, that may not be there next year.

I think we're positioned very well to, uh, uh,

Walt Hulse: You know, our system is diverse, and we, you know, we find differentials all the time. You know, as we bring on Medford, we might see a pickup in the north-south differentials as well. We're there positioned to capture those across our integrated system whenever they present themselves.

Jeremy Tonet: Understood. I'll leave it there. Thank you.

Bring on Medford we might see a pickup in the north south uh differentials as well. So we're their position to capture those across our integrated system whenever they present themselves.

Understood. I'll leave it there. Thank you.

Operator: Thank you. Our next question comes from Manav Gupta with UBS. Your line is now open.

Manav Gupta: Good morning, Steve. A little bit wanted to dwell into spreads in terms of gas. There is a couple of pipelines coming on with you involvement also, which obviously drive higher volume prices, which are good for your volumes. As this gas gets to Katy and like what you said, there's a possibility you could see somewhat of a gas glut develop over there. I'm trying to understand if that does happen and that South, you know, Texas part, it starts to dislocate from Henry Hub, are there ways ONEOK can capitalize on that opportunity?

Thank you. Our next question comes from Manov Gupta with UBS. Your line is now open.

Uh, good morning to 12 to, uh, spreads in terms of gas pipelines, coming on, uh, with you, your involvement also, which obviously, Drive higher prices, which good for your volumes, but this gas gets to Katie and there's a possibility. You could see some of the gas blood, develop over there. And I'm trying to understand if that does not happen and and that South, you know, Texas part. It starts to dislocate from Henry Hub. Uh, are there ways 1 Oak can capitalize on that opportunity?

Walt Hulse: I think it's more volume. I think what you're asking about is could there be a glut in natural gas as we see more volume come on, especially as we see more pipelines down into the Gulf Coast area. Obviously, we're seeing more LNG assets being brought online that will take that volume up. We don't think we're gonna see an overall glut in the Katy area as these LNG projects come on and also as we see more AI projects coming online as well.

Sheridan Swords: I think it's more volume. I think what you're asking about is could there be a glut in natural gas as we see more volume come on, especially as we see more pipelines down into the Gulf Coast area. Obviously, we're seeing more LNG assets being brought online that will take that volume up. We don't think we're gonna see an overall glut in the Katy area as these LNG projects come on and also as we see more AI projects coming online as well.

I think it's more volume. I think what you're asking about is could there be a glut in natural gas as we see more volume? Come on, especially as we see more pipelines down into the uh, uh Gulf Coast Area. Obviously, we're seeing more LNG, um assets, being brought online that will take that volume up. So we, we don't think we're going to see an overall, um,

In in the Katy area as these LNG projects come on and also as we see more AI projects coming online as well.

Manav Gupta: Thank you. I've done it all.

Thank you. I turn it over.

Operator: Thank you. Our next question comes from Julien Dumoulin-Smith with Jefferies. Your line is now open.

Rob Mosca: Hi, good morning, everyone. This is Rob Mosca on for Julien. Looks like the final FERC oil pipeline index came in better than expected. Can you help contextualize maybe what this means for your RPC segment and a refresher on how much of that segment is actually exposed to those FERC indexed interstate oil pipeline rates? Does this outcome meaningfully change your earnings outlook for RPC over the next five years?

Thank you. And our next question, comes from Julian Dulan Smith with Jeffrey's. Your line is now open.

Hi, good morning, everyone. This is Rob Moscow on for Joanne. Um, looks like the final FCOIL pipeline index came in better than expected. Can you help contextualize maybe what this means for your RPC segment, and a refresher on how much of that segment is actually exposed to those SPARK index Interstate oil pipeline rates? And does this outcome meaningfully change your earnings outlook for RPC over the next five years?

Sheridan Swords: Yeah, this is Sheridan. A little bit, yeah. Remember that the spread did come in better than expected, which is beneficial to us. I'll remind you that 70% of our volume on the RPC system is market-based rates, not FERC indexed. The impact in 2026 is gonna be very marginal as we go in there. There's a compounding effect as we continue to go forward that will build on it every year, get a little bit more as we go forward. It's a nice little tailwind, but it's not a substantially change our outlook for the RPC segment.

Yeah, this is Sheridan a little bit. Yeah, remember that. The spread did come in better than expected which is is beneficial to us? I'll remind you that 70% of our

Volume on the RPC system is Market base rates, um, not for index. So the impact in 2026 is is going to be

Very marginal. So we go in there. But there's a compounding effect as we continue to go for that. That will build on it every year.

Get a little bit more as we go forward, but, um, it's a nice little tailwind, but it's not substantially changing our outlook for the RBC segment.

Rob Mosca: Yeah, understood. Thanks for that, Sheridan. Then, you know, maybe just turning back to the guide. I'm just wondering if the current commodity and spread environment simply holds, should we think about there being upside or something additive to guidance for the remainder of the year? I'm just trying to think through how much of that impact you're already factoring into your rest of your outlook.

And then, um, you know, maybe just just turning back to the guide, I guess, wondering if, if the current commodity and spread environment simply holds and uh, should we think about there being upside or something additive to guidance, uh, for the remainder of the year. I'm just trying to trying to think through how much, um, of that impact your already factoring into your your rest of your outlook.

Walt Hulse: Well, you know, I think that one of the things that you hear quite a few of, especially the larger producers talk about, is that the back end of the curve right now probably isn't really reflecting the actual physical damage that's been done over in the Middle East. Our expectations, you know, would be today that that curve should strengthen throughout the year. We have not factored any of that into our thinking when it comes to guidance. Should that happen, we'll enjoy that benefit going forward. Clearly, if that results in more volume, that's a positive for us. You know, it takes time to bring on rigs, maybe we get a little impact in Q4, that's gonna send us into 2027, you know, with a lot of momentum going forward.

Well, you know, I think one of the things that quite a few of, especially the larger producers, talk about is that the back end of the curve right now probably isn't really reflecting the actual physical damage that's been done over in the Middle East. So our expectations—

You know, it would be today that the curve we should strengthen throughout the year. We have not factored any of that into our thinking, um, when it comes to guidance, so should that happen, we'll enjoy that benefit going forward. Clearly, if that results in more volume,

That's a positive for us. You know, it takes time to bring on rigs, so maybe we get a little impact in the fourth quarter, but that's going to send us into '27, you know, with a lot of, uh, momentum going forward.

Rob Mosca: Understood. Appreciate that. Thanks for the time, everyone.

Understood. Appreciate that. Thanks for the time, everyone.

Operator: Thank you. Our next question comes from John C. Colettis with Goldman Sachs. Your line is now open.

Operator: Thank you. Our next question comes from Jackie Koletas with Goldman Sachs. Your line is now open.

Thank you. Our next question. Comes from Jackie ketus. With Goldman Sachs.

Your line is now open.

John C. Colettis: Hi, thank you so much for the time today. Just going back to the guide one more really quickly. You know, how would you frame up kind of the magnitude of the optimization upside that's now expected relative to that $150 million of year-over-year headwinds that was previously assumed?

Jackie Koletas: Hi, thank you so much for the time today. Just going back to the guide one more really quickly. You know, how would you frame up kind of the magnitude of the optimization upside that's now expected relative to that $150 million of year-over-year headwinds that was previously assumed?

Hi, thank you so much for the time today. Um, just going back to the guide one more time really quickly. Um, you know, how would you frame up the magnitude of the optimization upside that's now expected relative to that $150 million of year-over-year headwinds that was previously assumed?

Walt Hulse: Well, you know, clearly, we knew going into our guidance that these pipes were gonna be constrained throughout, you know, at least Q1 and Q2 and into Q3. That was factored into our guidance. You know, for as it relates to the Waha to Katy spread, a good portion of that, it's been a little stronger than we had expected, so we've gotten some incremental benefit. You know, a good portion of that was already there. You know, when you looked at the bridge last year from 2025 into 2026, you know, there was a portion of that was really the hedging that was done in 2025 for 2026 as it compared to 2025 was at, you know, at some lower pricing.

We we knew going into our guidance that, uh, these pipes were going to be constrained throughout, uh, you know, at least the first 2 quarters and into the third, so that was factored into our, uh, into our guidance. So, um, you know, for as it relates to the, uh, waha and Katie spread a good portion of that. It's been a little stronger than we had expected. So we've gotten, uh, some incremental benefit, but you know, a good portion of that, uh, was already there. You know, when you looked at the the bridge last year from, uh, 25 into 26? Um, you know, there was a a portion of that was really the, uh,

Walt Hulse: That was factored into our guidance as well. Really the potential change is to the upside if we get more volume and enjoy these higher rates on all of that. You know, there's still 25% that is unhedged that will enjoy the higher benefits.

The hedging that was done in 25426 as it compared to 25 was at, you know, at some lower pricing. So that was factored into our guidance as well.

Um, so really the, uh, the potential change is to the upside, if we get more volume and enjoy these higher rates on all of that and then, you know, there's still 25%. That is unhedged that, uh, will, uh, will enjoy the higher benefits.

John C. Colettis: That's clear. Thank you. Just another, you know, can you touch on the incremental opportunities within the natural gas segment, maybe longer term? I mean, while benefiting from price differentials today, you know, how are you thinking about your exposure to, you know, power demand and, you know, how have those commercial discussions trended recently?

Jackie Koletas: That's clear. Thank you. Just another, you know, can you touch on the incremental opportunities within the natural gas segment, maybe longer term? I mean, while benefiting from price differentials today, you know, how are you thinking about your exposure to, you know, power demand and, you know, how have those commercial discussions trended recently?

That's clear. Thank you. And then just another um, you know,

Can you touch on the incremental opportunities within the natural gas segment maybe longer term? I mean well benefiting from Price differentials today you know how are you thinking about your exposure to um you know power demand and you know how of those commercial discussions trended recently.

Sheridan Swords: Yeah, this is Sheridan. We are in advanced discussions with both AI and power demand right now. We have some very nice projects that are in the queue. We actually have projects behind that that we're even working on as well as they continue move forward. We are very excited about what we see in the natural gas demand sector and where our assets sit, especially in the Oklahoma-Texas region for the power and AI demand going forward. We'll have these projects into 2026 into 2027. It is a good time to be in the natural gas segment for sure.

And this is shared and we we have been in advance, we are in advanced discussions with uh, both Ai and power Demand right now. We have some very nice projects that are in the queue and then we actually have projects behind that that we're even working on as well as they continued move forward. So we we are very excited about what we see, um, in the natural gas demand sector and where our assets sit, especially in the Oklahoma, Texas region for the power and AI demand, um, going forward and we'll have these projects in the 2026 and the 27th.

Pierce Norton: What I would add, I know folks about to say the same thing, is, when we first started talking about AI opportunities as related to power generation, you know, we originally saw those as kind of short lays, smaller volumes, so not necessarily that much of a material impact. As we've now gone through time and we're talking to more and more of these hyperscalers, the volumes that they're requiring is going to require us to reach back further into our systems and lay larger pipelines. I think that's the big change that I see from where I sit, versus where we were maybe a year and a half, two years ago.

So it is a good time to be in the natural gas segment, for sure. So what I would add, I know Paul was about to say the same thing as—

Uh, when we first started talking about a opportunities as related to power generation, um, you know, we originally saw those, its kind of short lays, uh, smaller volumes. Uh, so not necessarily that much of a material impact.

As we've now gone through time and we're talking to more and more of these hyperscalers, uh, the volumes that they're requiring, and it's going to require us to reach back further, uh, into our systems and lay larger pipelines. Uh, so I think that's the big change that I see from where I sit, uh, versus where we were maybe a year and a half.

2 years ago.

Walt Hulse: Great. Appreciate the color. Thanks.

Jackie Koletas: Great. Appreciate the color. Thanks.

Great. Appreciate the color, thanks.

Operator: Thank you. Our next question comes from Keith Stanley with Wolfe Research. Your line is now open.

Thank you. Our next question, comes from Keith Stanley with wolf research. Your line is now open.

Keith Stanley: Good morning. Wanted to follow up on Western Gateway. As you assess what that project could do to the market, do you see it mainly as an opportunity for longer haul volumes on your system out of the Gulf Coast? Or do you think this could create constraints and meaningful new growth investments like the Denver project, to expand pipeline capacity?

Good morning.

Wanted to follow up on Western Gateway. As you assess what that project could do to the market. Do you see it? Mainly as an opportunity for longer haul volumes on your system out of the Gulf Coast? Or do you think this could create constraints and meaningful New Growth Investments like the Denver project, uh, to expand pipeline capacity?

Sheridan Swords: Yeah, I think it's a little bit of both. Obviously, if we start shipping volume out of the Gulf Coast up into the Mid-Continent to fulfill volume that's leaving the Mid-Continent to go on that Western Gateway project, that's gonna mean we're gonna get a longer tariff 'cause we're moving the volume from a much longer distance away. Also the tariff from Gulf Coast out to El Paso is a very long tariff, one of our higher tariffs. If we increase that volume as well, that's gonna have a very nice impact on when it can continue to go forward. Obviously, as we get more demand, will we see more expansion of product on our system?

Yeah, I think it's a little bit of both. Um, obviously, if we, um, if we started shipping volume out of the Gulf Coast up into the Mid-Continent to fulfill, um, volume that's leaving the Mid-Continent to go on that Western Gateway project, that's going to mean we're going to get a longer tariff because we're moving the volume from a much longer distance away. Also, is our

The Tariff from.

Gulf Coast out to El Paso. It's a very long tariff—one of our higher tariffs. If we increase that volume as well, that's going to have a very nice, uh, impact on one of the—continuing to go forward. And obviously, as we get more demand, will we see more, um,

Sheridan Swords: Yeah, we will as people are gonna shift out of the Gulf Coast more over to our system to be able to get it out to El Paso and to meet this access into the Phoenix and California markets.

Expansion of product on our system. Yeah, we will as as uh, as people are going to shift out the Gulf Coast, move more over to our system, to be able to get it out to the out to El Paso and to meet this, uh, access into the Phoenix and California markets.

Keith Stanley: Thanks for that. Second question. The Bakken volumes were only down 2% to 3% versus Q4. That seemed a lot better than the seasonal guidance that you had pointed to last quarter on what's typical in Q1. Would you say volumes in the Bakken surprised to the upside in Q1 verse what you were expecting?

Sheridan Swords: Yeah, a little bit. I mean, you know, the winter is always a little bit. You know, we try to average it out over the 4 months and everything else, it can be a little bit surprising to us where, you know, where the winter actually hits and when we see the volume come online. I would say outside of, you know, Winter Storm Fern, we've been pleasantly surprised with our volumes in the Bakken.

Thanks for that. Uh, the second question, the the bakan volumes were only down 2 to 3%, uh, versus Q4 that, that seemed a lot better than the seasonal guidance that you had pointed to last quarter on what's typical in q1? So would you say volumes in the Balkans, surprise to the upside in q1 versus versus what you were expecting?

And we try to try to average it out over the 4 months, and everything else. So it can be a little bit surprising to us where, you know,

Where the winner actually hits and when we see the volume come online. So I would say outside of, you know, winter storm firm. We we have seen, we've been pleasantly surprised with our volumes in the pocket.

Keith Stanley: Thank you.

Thank you.

Operator: Thank you. Our next question comes from Brandon Bingham with Scotiabank.

Thank you. Our next question comes from Brandon Bingham with Scotia Bank. Your line is now open.

Brandon Bingham: Hey, good morning. Thanks for taking the questions here. I wanted to maybe talk about your Permian processing capacity portfolio and how you see that sort of evolving in light of all this resilient gas production. Just seeing some other operators in the basin discuss a more optimistic outlook for run rate capacity additions on an annual basis, how do you see that in-being incorporated into your portfolio moving forward?

Hey, good morning. Thanks for taking the question here. I wanted to maybe talk about your Puran processing capacity, portfolio, and how you see that sort of evolving in light of all this resilient gas production, and just seeing some other

Operators in the basin discuss a more optimistic outlook for run rate and capacity additions on an annual basis. How do you see that being incorporated into your portfolio moving forward?

Sheridan Swords: Well, I know I think Randy had mentioned, you know, already right now we just put in 150 million a day, the Shadowfax plant that we moved out of the Barnett into the Midland Basin. We brought another 150 million a day on there that we see that ramping up over time. Right behind that, we have some low cost capacity expansions in the Delaware, 110 million a day that will come up later this year. We've already announced the 300 million a day plant that we'll be putting in the Delaware beyond that. Those are what we have announced. We continue to look forward.

Well, well, I know I think Randy had mentioned, you know, already right now, we just put in a 150 million a day. The shadowfax plant that we moved out of the, the Barnett into the Midland Basin. So we brought another 150 million a day on there that we see that ramping up over time then right behind that we have some low cost capacity, expansions in the Delaware 110 million a day that will come up later this year and then we've already announced the 300 million a day plant that will be

Putting in the Delaware beyond that.

Sheridan Swords: We see a lot of opportunity in the Permian Basin, where we're in a lot of discussions on RFPs from, especially in the Delaware, that we would have the potential to even expand that capacity even more, beyond what we see today. I think we see that and also expect that to happen as we get further into 2027. We hope there's opportunities as well. We are, as like everybody else, very optimistic on the growth out of the Permian.

Those are what we have announced. We continue to look forward. We see a lot of opportunity in the permanent base and we're we're in a lot of discussions on rfps and especially in the Delaware that we would have the potential even expand. That capacity, even more, uh, beyond what we see today. I, I think we, we see that and also expect that to happen. As we get into the, as we get further into 27, we hope there's opportunities as well. So we we are as like everybody else. Very optimistic on the growth out of the program.

Brandon Bingham: Okay, great. Thank you. Just wanted to go back to some comments made earlier about better volumes expectations this year as part of the guidance increase. Could you help frame up how the new volumes expectations compare to maybe the various midpoints within the businesses? I noticed the ranges didn't necessarily change, but it sounds like within those ranges, the expectation is definitely better now.

Okay, great, thank you. And then I just wanted to go back to some comments made earlier about better volume expectations this year. Is part of the guidance increase related to that? Could you help frame up how the new volume expectations compare to maybe the various midpoints within the businesses? I noticed the ranges didn't necessarily change, but it sounds like within those ranges, the expectation is definitely better now.

Walt Hulse: You know, as I said, our increase in guidance was balanced across, you know, what we've seen in volumes. Sheridan just mentioned that, you know, that we did have a little bit stronger Q1 volumes in some areas than we might have historically expected, you know, given what the heater treater impact and that sort of thing would have been. As we go forward, we hope that builds. You know, we've taken that and kind of projected it forward. Clearly, I think it still is to be seen, you know, what these higher commodity prices are going to do from a producer activity. Some of our smaller producers, private equity, or smaller independents seem to be a little bit quicker to think about rigs and getting them fired up.

Increasing.

Know what we've seen in volumes and Sharon just mentioned the you know that we did have a little bit stronger first quarter of volumes and in some areas. Um, then we might have historically expected to, you know, given what the heater treater impact, and that sort of thing would have been. Um, so as we go forward, we hope that builds um, and uh, you know, we've taken that kind of projected it forward.

Um, clearly, I think it still is to be seen, you know, what these higher commodity prices are going to do from producer activity.

Walt Hulse: We could see some of that impact a little quicker. I think the larger, the larger e-exploration companies are waiting for that curve to reflect what they think the fundamentals are, and then they'll make their decisions. You know, we're not trying to get too far ahead of our volume expectations. We'll let that play out. We do think in this commodity environment and how it's gonna look into 2027, that we would expect to go into 2027 with a really nice tailwind behind us.

Um, some of our smaller, producers private Equity, uh, or smaller Independents seem to be a little bit quicker to think about Rigs and, uh, getting them, getting them fired up. So we could see some of that impact a little quicker where I think the larger, uh,

The larger it. Exploration companies are are waiting for that, uh, curve to reflect what they think the fundamentals are and then they'll then they'll make their decision. So, um, you know, we're not trying to get too far ahead of our volume expectations. We'll let that, uh, lay out but we do think in this commodity environment and, and how it's going to look into 27 that, uh, we would expect to to go into 27 with a really nice Tailwind behind us.

Brandon Bingham: Okay, great. Thank you.

Okay, great. Thank you.

Operator: Thank you. Our next question comes from Sunil Sibal with Seaport Global Securities. Your line is now open.

Sunil Sibal: Yeah. Hi, good morning. Hopefully you can hear me all right. My first question was related to the hedging. I think you mentioned on the call that, you know, you put in some hedges for 2027 also. Could you indicate, you know, how much of your total 2027 commodity price exposure is hedged now?

Thank you. And our next question comes from Sunil Sabal with Seaport Global Securities, your line is now open.

Yeah. Hi, good morning, and hopefully you can hear me all right. Uh, so my first question was related to the hedging. Uh, I think you mentioned on the call that, you know, you put in some hedges for '27 also.

Could you indicate, you know, how much of your total 2027 commodity price exposure is hedged now?

Walt Hulse: No, we're not gonna get into specifics, but we've taken opportunities to make sure that we've captured at least a portion of what we see in 2027. We clearly have been focused on the tail end of 2026. Across our various businesses we've layered in some portion of 2027 at this point. In the markets that we can. It's probably important to know that in many of the markets that we are serving, there's just not a lot of liquidity in 2027, or the backwardation is just so significant that we wouldn't wanna do that. We've been opportunistic, but where we think it made sense, we've looked at it and we're gonna continue to look at it throughout the year.

No, we're not going to get into specifics but uh, we've taken opportunities uh, to make sure that we've captured at least a portion of, uh, what we see in 27. Um, we clearly have been uh, uh, focused on the tail end of 26.

Sheridan Swords: Sunil, this is Pierce. The only thing I'd add to that is that we have a, what we call a programmatic hedging program, where we just automatically hedge a certain percentage as the year goes by out. It's not until we see some of these opportunistic opportunities that we go out and do anything like Walt just described. We don't try to time the market or sit in here waiting on, you know, something to happen and then move. We just methodically go through the year and we do that because we're 90% volume times rate anyway, and so we just want to make sure we're not speculating, you know, too much on the hedging program.

Pierce Norton: Sunil, this is Pierce. The only thing I'd add to that is that we have a, what we call a programmatic hedging program, where we just automatically hedge a certain percentage as the year goes by out. It's not until we see some of these opportunistic opportunities that we go out and do anything like Walt just described. We don't try to time the market or sit in here waiting on, you know, something to happen and then move. We just methodically go through the year and we do that because we're 90% volume times rate anyway, and so we just want to make sure we're not speculating, you know, too much on the hedging program.

Uh, cleared in some, uh, some portion of 27 at this point in in the markets that we can, it's probably important to know that in many of the markets that we are serving. There's just not a lot of liquidity in 27 um or the back relation is just so significant that we wouldn't want to do that. So we've been opportunistic but where where we uh, think it made sense? Uh, We've looked at it and uh we're going to continue to look at it throughout the year.

so this is Pierce only thing I had that, that is that we have a

What we call a programmatic hedging program, uh, where we just automatically hedge, a certain percentage as the as the year goes by.

So it's not until we see some of these opportunistic.

Uh, opportunities that we go out and do anything like what I just described. But there is a pro—we don't try to time the market or sit here waiting on, you know, something to happen and then move. Uh, we just methodically go through the year, and we do that because we're 90% volume times rate anyway. And so we just want to, uh,

Make sure we're not speculating, you know, too much on the edge.

Sunil Sibal: Understood. One clarification on the potential projects that you're looking on. I think you mentioned in Texas and Oklahoma with the data center clients. Should we think about those as significant CapEx opportunities with, you know, some midstream players undertaking, or should we think about, you know, more like incremental CapEx or small incremental CapEx for those opportunities?

Understood. And then, uh,

when clarification on the potential projects that you're looking on, I think you mentioned in Texas and Oklahoma with the data center clients,

should we think about those as significant capex opportunities? Which, you know, some medium people, uh, Midstream players undertaking or it should be think about, you know, more like

Walt Hulse: Yeah. I think as we've gone through and given you know, some thoughts about 2027 and, you know, beyond 2027 into 2028, 2029 and a run rate, you know, we've looked at kind of a run rate of around $600 million of maintenance, about $1 billion, give or take, of what we call routine growth. A portion of this would be in that routine growth. Then we left, you know, kind of another $500 to $600 million to get you around that $2, little bit over $2 billion kind of run rate going forward, basically unallocated. These types of projects, while they're bigger than our expectation, you know, we originally thought they'd be $50 million projects, they're turning out to be $400 to $700 million projects.

incremental CapEx or small incremental CapEx for those opportunities.

700, you know, beyond 27, and the 28 29 and a run rate. Um, you know, we've looked at, uh, kind of a run rate of, uh,

Around $600 million of maintenance, about a million dollars, give or take, of what we call routine growth, and a portion of this would be in that routine growth. And then we left, you know, kind of another $500 to $600 million to get you around that.

Walt Hulse: They'll fit right in that window that we had left open, and they're coming in at really nice returns.

2 little bit, over 2 billion dollars, kind of run rate going forward um basically unallocated so these types of projects uh while they're bigger than our expectation. You know, we originally thought they'd be million dollar projects, they're turning out to be 4 to 700 million dollar project. So they'll fit right in that window that we had left open, um, and they're coming in at really nice returns.

Sunil Sibal: Got it. Thank you so much.

Got it. Thank you so much.

Operator: Thank you. Our next question comes from Gabe Moreen with Mizuho. Your line is now open.

Gabe Moreen: Hey, good morning, everyone. If I could just ask about petchem economics having improved quite a great deal here over the last month or 2. Are you seeing any change in behavior on ethane extraction as it relates to either the Bakken or Cajun-Sibon going into Louisiana? I'm just curious if things have changed on that end at all.

Thank you. Our next question comes from Gabe Marine with Meizuo. Your line is now open.

Hey, good morning everyone. If I could just ask about pettom economics, having improved quite a great deal here over the last month or 2. Are you seeing any change in behavior on ethane extraction as it relates to either the bach in or Cajun sewn going into Louisiana. I'm just curious if, um,

Sheridan Swords: Well, Gabe, you're right. I mean, obviously what's going on in the world right now, the ethane economics in the United States are very strong and we're seeing, you know, our petrochemical customers operating at very high utilization rates. What it has had to do it is we are seeing the ability for our discretionary ethane out of the Bakken and at times out of Oklahoma to be good, to be strong, and that's driving what we see in volume. We mentioned. Going into Cajun-Sibon, you know, that's coming out of the Mid-Continent and out of the Bakken as we divert raw feed over into our Louisiana crackers or Louisiana fractionators. That hasn't really changed that amount on that piece.

things have changed on that end at all.

Well, Gabe, you're right. I mean, obviously, what's going on in the world right now? Um, the ethane economics of the United States are, are very strong and we're seeing, you know, our petrochemical customers, uh, operating at very high utilization rate. But it has that doing as we are seeing the ability for our discretionary, ethane out of the Balkan, and at times out of the Oklahoma, um, to be good, be strong. And that's that's driving some of our what we see in void. So we mentioned, I'm going into cages of bone, you know,

that's coming off of, coming out of the Mid-Continent and out of the Bakken, uh, as we all feed over into our Louisiana,

Sheridan Swords: As I said before, I think we will see some pretty good tailwinds on ethane coming out of the Bakken and ethane coming out of the Mid-Continent through the rest of the year with the ship demand we're seeing from the petrochemical facilities.

Crackers or Louisiana fractionators, it hasn't really changed that that that amount on that piece. But um, as I said before, I think we will see some pretty good Tailwind on ethane coming out of the Balkan and ethane coming out of the on, and do the rest of the year with the uh, should demand. We're seeing from the petrochemical facilities.

Gabe Moreen: Great. If I could just a quick follow-up. The PRB new plant there sounds like it's gonna fill pretty quickly. Any visibility to more capacity there? I think there was also a call out for Northern Border performance during the quarter. Was that one-timey in nature or kind of as a step up on ratable earnings there?

Great and then if I could just a quick follow up the prb new plant, there sounds good, it's still pretty quickly. Any visibility to more capacity there and then I think there was also a call out for northern border performance during the quarter was up, 1 time in nature or kind of there's a step up on on readable earnings there.

Sheridan Swords: We'll see on the Powder River. You know, we've been working on that plant for a period of time. It's a 60 million a day plant. We mentioned we have a JV partner that's a producer up in that area coming along with us. We are getting more and more excited what we're seeing there. That's gonna fill fairly quickly. Do we see there's opportunity for more volume? Yeah, we hope so. In discussions with them, we'll continue to evaluate that, we do think there's possibility to put some more capacity up there. We continue to look forward. Northern Border. Northern Border is pretty steady. Outperformance is a little bit. Frankly, we see that kind of every year a little bit, that they come in a little bit higher than what they had predicted.

What we're seeing there that's going to feel fairly quickly. Do we see. There's opportunity more more volume? Yeah, we hope so and discussions with them will continue to evaluate that but we do think there's possibility um to put some more capacity up there so continue to look forward. Um northern border northern border is pretty steady. Uh, outperformance is a little bit um,

Sheridan Swords: We continue to see this year. We expect to continue to see that throughout the year.

Frankly, we see that kind of every year—a little bit that they come in a little bit higher than what they had predicted. We continue to see this year, and we expect to continue to see that throughout the year.

Gabe Moreen: Great. Thank you.

Gabe Moreen: Gave walk is the confidence in the volumes, is the amount of area and dedication. There's plenty of running room up there to continue to drill there in the Powder.

Pierce Norton: Gave walk is the confidence in the volumes, is the amount of area and dedication. There's plenty of running room up there to continue to drill there in the Powder.

Thank you, thank you. Okay, walk in

It's in the volumes is the amount of area and dedication.

Gabe Moreen: Gotcha. Thanks, Chris.

So there's plenty of plenty of Running Room up there to continue to drill there in the powder.

Gotcha. Thanks piss.

Operator: Thank you. Our next question comes from Jason Gabelman with TD Cowen. Your line is now open.

Jason Gabelman: Yeah. Hey, thanks for taking my question. I wanted to go back to full year guidance. I guess when I look at your slide deck from Q4 from last quarter, you show that your initial, I guess, 2026 outlook was predicated at $75 oil. That was, you know, call it $8.7 billion-ish, maybe a little higher of EBITDA for 2026. Oil moved down, so your 2026 EBITDA outlook moved lower. We've seen oil now move higher, and I understand the hedging dynamics mean maybe you don't capture all of the upside this year. Would you expect to kind of get back to capturing that upside next year based on where the commodity curves are right now?

Thank you. Our next question comes from Jason Gableman with TD. Caller, your line is now open.

Yeah. Hey thanks for taking my question. Um I wanted to go back to full your guidance and I guess when I look at your slide deck from 4 q from last quarter um you show that at the time of or your initial, I guess, 26 Outlook was predicated at 75 oil. That was, you know, call it 8.7 billion. Ish, maybe a little higher if you could do for 26.

Um, oil moved down, so your '26 EBITDA outlook moved lower, but we've seen...

Oil now, move higher. And I understand the hedging dynamics mean, maybe you don't capture all of the upside this year. But would you expect a kind of get back to capturing that upside next year, based on where, um, the commodity curves are right? Right now.

Walt Hulse: What I would say there is you're absolutely right that, you know, clearly we've got a different realized price environment so that is gonna take some time to work its way through. It also takes some time for rigs to get up and moving. When you didn't have quite as much rig activity as we had expected, you know, that has a impact that you're starting from a different point as you exit 2026. We think you know, we are going to see that type of strength. I'm not gonna give you an actual guide to a number, but we're gonna see that type of strength that we expected as volumes pick up if these prices stay or go higher.

so, what I would say there is you're absolutely right that uh, you know, clearly we've got a different, uh,

Realized price environment. So that that, that is going to take some time to work its way through. Um, and also it takes some time for rigs to uh, to get up and moving. So when you didn't have quite as much reactivity as we'd expected, um, you know, that has a a

Walt Hulse: You know, especially in the back end of the curve, there's a pretty big difference between the prompt month and, as you go out towards 2027. You know, that's gonna be the story to tell as that plays out coming forward.

Jason Gabelman: Great. Thanks. Just a quick follow-up on a comment you just made. Did I hear you right that some of the data center-related projects you're pursuing, you thought they were gonna be in the $50 million range, and they're coming in more like $400 to 700 million? Those are the right figures?

Impact that you're starting from a different point to uh as you exit 26. But we think we, you know, we are going to see that type of strength um and I'm not going to give you an actual guide to a number but we're going to see that type of strength that we expected as as the volumes pick up if these prices stay or go higher, um, you know, especially in the back, end of the curve. There's a pretty big difference between the prompt month and as you go out towards 27, so um, you know, that that's going to be the story to tell is that plays out coming forward.

Walt Hulse: Yeah. Yeah. The thing is, originally, when we go back to that 50, that was, you know, a couple of years ago when we first started seeing opportunities and people talked about siting these facilities. They were dropping them right next to pipelines, thinking that they could take the gas off those pipelines. Well, when they were doing that, you know, a lot of them were in the development stage. You didn't have a lot of hyperscalers involved, so some of the specs might not have been quite as realistic. When the hyperscalers talk about 5 GW facilities, you can't just take that kind of gas off of a fully contracted pipe. What it's caused is pure silence for us to need to look at reaching back into our system where the gas is available and building bigger pipe.

Great thanks. And just a quick uh follow up on a comment you just made. Did I hear you right that these some of the data center related projects you're pursuing. You thought they were going to be in the 50 million dollar range and they're coming in more like 400 to 700 million. Those are the right figures. Yeah. Yeah the thing is originally when we go back to that 50 that was you know a couple years ago when we first started seeing opportunities and people talked about citing these facilities, they were dropping them right next to pipelines thinking that they could take the gas off those pipelines. Well, when they were doing that, um, you know, they were a lot of them were in the development stage if you didn't have a lot of hyperscalers involved. So, some of the specs might not have been quite as realistic, but the hyperscalers talk about 5 gigawatt facilities. You can't just take that kind of gas off of a fully contracted pipe. So what it's caused is pure sinus for

Walt Hulse: That's why the size of the projects have gone up. At the end of the day, the value of getting these projects done to the hyperscalers is still well above their concern about price. They're very pleased to provide good economics to make sure that speed and reliability are there.

for us to need to look at reaching back into our system, where the gas is available and building bigger pipe. Um, and that's why the, uh, the, uh, size of the projects have gone up. Um, but at the end of the day, the the value of getting these projects done to the hyperscalers is still

Well above, uh they're concerned about price so they're they're very pleased to provide good economics to make sure that speed and reliability are there.

Jason Gabelman: Thanks.

Thanks.

Operator: Thank you. Our final question comes from Gabriel Daoud with Truist. Your line is now open.

Operator: Thank you. Our final question comes from Gabe Daoud with Truist. Your line is now open.

Thank you. And our final question comes from Gabe de with truist. Your line is now open.

Gabriel Daoud: Thanks, operator, and morning, everyone. Thanks for the time. Just quickly back to the upstream conversations, just curious if there's any notable difference in behavior or price that operators need to see on the screen, as you talk to public versus privates. Just curious, especially as looks like current rig activity is largely dominated by privates, in the Bakken for your footprint.

Gabe Daoud: Thanks, operator, and morning, everyone. Thanks for the time. Just quickly back to the upstream conversations, just curious if there's any notable difference in behavior or price that operators need to see on the screen, as you talk to public versus privates. Just curious, especially as looks like current rig activity is largely dominated by privates, in the Bakken for your footprint.

In the back in.

For your, for your, uh, footprint.

Sheridan Swords: Yeah. Gabe, this is Sheridan. We're definitely seeing more on the private sector, more activity or talking about more activity than we're seeing on the public sector, especially with the large integrated. Large integrated are still being very disciplined and looking at the pricing environment in front of it. We are seeing, especially on the private equity side, starting to look more at rigs, more completion, trying to move, you know, production up. That's where the majority of the activities happen. I think as we've stated here, as we continue to go throughout the year everybody expects the back end of this curve to move up as the paper's not reflecting what we're seeing in the physical world.

Sheridan Swords: When that happens, I think you could start seeing some of more of the integrated and larger companies lean in more at that time or start bringing rigs on that time. We still are seeing them, you know, making sure anytime they're down, they get things back up and looking to complete wells quicker than they had been in the past. Really concerning rig deployment, that is more into the private sector.

Yeah, Gabe. This is Sheridan. We're definitely seeing more on the private sector, uh, more activity or talking about more activity than we're seeing on the public sector. Especially with the large integrated, large integrated are still being very disciplined and uh, looking at the pricing requirement in front of it. We are seeing especially on the private Equity side starting to look more at Rigs more complete and trying to move you know production up that's where the majority is the activities happen. I think as we as we've stated here as we continue to go throughout the year and everybody expects the uh the back end of this curve to move up as the papers, not reflecting what we're seeing in the physical world. When that happens, I think you could see start seeing some of the more of the integrated and and larger companies lean in more at that time or start bringing rigs on that time. We still are seeing even with the larger. We are seeing them, you know, making sure they get anytime they're down, they get things back up and looking to complete, um, Wells quicker than they had been,

Walt Hulse: There's one other element I think is worth mentioning here is that they are really leaning into the efficiency of their drilling and how they're completing and the length of these laterals. I don't think we need to get too hung up on, like, numbers of rigs because the ones that are running, they're really putting a lot of emphasis on how efficient those rigs are to make them more profitable, you know, per well.

In the—it had been the past, but really in concerning rigged deployment, that is more into the private, private sector. And there's one other element I think is worth mentioning here. Is that they are

Really leaning into the efficiency of their Drilling.

And how they're completing and the length of these laterals. So

I don't think we need to get too hung up on.

numbers of rigs because the ones that are running, they're really putting a lot of emphasis on

Efficient. Those rigs are to make them more profitable, you know, per well.

Operator: Thank you. That concludes our question and answer session. I would now like to turn the call back over to Megan Patterson for closing remarks.

Thank you, that concludes our question and answer session.

I would now like to turn the call back over to Megan Patterson for closing remarks.

Megan Patterson: Our quiet period for the Q2 starts when we close our books in early July and extends until we release earnings in early August. We'll provide details for that conference call at a later date. Our IR team will be available throughout the day for any follow-up. Thank you for joining us, and have a great day.

For quite a period for the second quarter, it starts when we close our books in early July and extends until we release earnings in early August. We'll provide details for that conference call at a later date.

Our IR team will be available throughout the day for any follow-ups. Thank you for joining us and have a great day.

Operator: Thank you. That concludes today's call. You may now disconnect your lines at this time, and have a wonderful day.

Thank you, that concludes today's call. You may now disconnect your lines at this time, and have a wonderful day.

Q1 2026 ONEOK Inc Earnings Call

Request DemoDemo

ONEOK

Earnings