# Oneok (OKE) Financial Model

Free Excel 3-statement financial model and company analysis for Oneok.

- Canonical: https://finamodel.com/companies/oneok
- Industry: Oil and Gas
- Downloadable model: Yes
- Excel download: https://finamodel.com/company-models/OKE.xlsx

## Model Purpose

This model provides a comprehensive equity valuation, cash flow forecast, and M&A synergy tracking tool for an analyst evaluating ONEOK's ability to fund its dividend, deleverage its balance sheet, and integrate recent transformational acquisitions (Magellan, Medallion, and EnLink) within its midstream energy infrastructure portfolio.

## Company Overview

- **Business Description:** ONEOK, Inc. is a leading midstream service provider in the United States, operating a 60,000-mile network of natural gas liquids (NGL), natural gas, refined products, and crude oil pipelines. The company gathers, processes, fractionates, transports, and stores hydrocarbons across key producing basins (Permian, Bakken, Mid-Continent) and market centres.
- **Business Segments:**
  - Natural Gas Liquids (NGL) (~45% of Adjusted EBITDA)
  - Refined Products and Crude (~25% of Adjusted EBITDA)
  - Natural Gas Gathering and Processing (~20% of Adjusted EBITDA)
  - Natural Gas Pipelines (~10% of Adjusted EBITDA)
- **Key Geographies:** United States (Permian Basin, Williston/Bakken Basin, Mid-Continent, Rocky Mountain region, and Gulf Coast).
- **Business Model Type:** Asset-heavy, toll-road/fee-based midstream infrastructure. Approximately 90% of earnings are fee-based, providing resilience against commodity price volatility.
- **Competitive Position:** One of the largest diversified energy infrastructure companies in the S&P 500, with a dominant NGL footprint and a newly expanded crude and refined products platform.
- **Recent Major Events:**
  - Acquired Magellan Midstream Partners for $14.1 billion (closed September 2023), adding the Refined Products and Crude segment.
  - Acquired Medallion Midstream for $2.6 billion (closed October 2024), expanding Permian crude gathering.
  - Acquired EnLink Midstream (controlling interest in October 2024, full acquisition in January 2025 for a total enterprise value impact of ~$5.9 billion), driving $250 million to $450 million in expected annual synergies.

## Revenue Deep Dive



### Natural Gas Liquids (NGL)

- **Segment Name:** Natural Gas Liquids
- **Revenue Driver Formula:** (Raw Feed Throughput Volumes x Exchange/Fee Rate) + (Fractionation Volumes x Fractionation Fee) + Optimization/Marketing Margins
- **Historical Growth Rate:** 8-12% CAGR in raw feed volumes (Rocky Mountain region grew 15% in 2025).
- **Key Growth Levers:** Bighorn processing plant completion, MB-6 fractionator, and Texas LPG Export Terminal (expected 2028).
- **Pricing Dynamics:** Primarily fee-based exchange services; optimization revenues depend on location differentials and purity NGL pricing.
- **Seasonality:** Optimization and marketing can be stronger in winter months due to heating demand for propane.

### Refined Products and Crude

- **Segment Name:** Refined Products and Crude
- **Revenue Driver Formula:** (Barrels Transported x Tariff Rate) + Storage Fees
- **Historical Growth Rate:** N/A historically (segment created in late 2023), but underlying assets grow at 2-4% annually.
- **Key Growth Levers:** Integration of Medallion's 1,200-mile Permian crude gathering system and Magellan's refined products network.
- **Pricing Dynamics:** FERC-regulated tariff escalators (often tied to PPI) and competitive spot rates.

### Natural Gas Gathering and Processing

- **Segment Name:** Natural Gas Gathering and Processing
- **Revenue Driver Formula:** (Gathered Volumes x Gathering Fee) + (Processed Volumes x Processing Fee) + Percent-of-Proceeds (POP) commodity sales
- **Historical Growth Rate:** 3-6% volume CAGR.
- **Key Growth Levers:** Producer activity in the Williston and Mid-Continent basins; integration of EnLink's gathering footprint.
- **Pricing Dynamics:** Transitioning heavily toward fee-based, though some legacy contracts retain POP exposure (where ONEOK keeps a percentage of the commodities processed).

### Natural Gas Pipelines

- **Segment Name:** Natural Gas Pipelines
- **Revenue Driver Formula:** (Firm Capacity Contracted x Reservation Rate) + (Interruptible Volumes x Usage Rate) + Storage Fees
- **Historical Growth Rate:** 1-3% CAGR (stable, utility-like).
- **Key Growth Levers:** Eiger Express Pipeline project (450-mile Permian to Katy, TX pipeline, expected mid-2028).
- **Pricing Dynamics:** Take-or-pay firm transportation contracts (demand charges) provide highly predictable revenue regardless of actual throughput.

## Cost Structure



### Variable Costs / COGS

- **Line Items:** Cost of sales and fuel (includes commodity purchases for POP contracts and optimization activities).
- **Gross Margin Range:** Midstream companies focus on "Net Margin" (Revenues less Cost of Sales). Net margin as a % of revenue fluctuates wildly with commodity prices, but absolute Net Margin dollars grow steadily.
- **Key Input Costs:** Natural gas and electricity for compressor stations and fractionators.
- **Operating Leverage:** High. Once a pipeline or fractionator covers its fixed costs, incremental volumes drop almost entirely to the bottom line.

### Operating Expenses

- **Operations and Maintenance (O&M):** Routine pipeline maintenance, integrity management, and facility operations.
- **SG&A:** Employee-related costs, outside services, and corporate overhead.
- **Depreciation & Amortisation:** Very high (typically 10-15% of revenue) due to the capital-intensive nature of pipelines and recent M&A step-ups.
- **Transaction Costs:** Significant one-time charges recently ($65 million in 2025 related to EnLink/Medallion).

### Margin Profile

- **Adjusted EBITDA Margin:** Typically evaluated on a per-unit basis (e.g., cents per gallon or dollar per barrel) rather than % of revenue, because revenue includes pass-through commodity costs.
- **Adjusted EBITDA:** $8.02 billion in 2025, up 18% YoY.
- **Margin Trend:** Expanding due to $475 million in cumulative acquisition synergies achieved through 2025 and higher fee-based contract mix.

## Balance Sheet Structure

- **Total Assets:** ~$60-65 billion post-acquisitions.
- **Key Asset Categories:** Property, Plant, and Equipment (PP&E) makes up the vast majority of tangible assets.
- **Goodwill & Intangibles:** Significant increase in 2023-2025 due to the Magellan, Medallion, and EnLink acquisitions.
- **Working Capital Profile:**
  - **DSO / DPO:** Typically 30-45 days.
  - **Net Working Capital:** Often negative or neutral. Commodity price spikes can temporarily inflate receivables and payables, causing working capital swings.
- **PP&E:** Pipelines, fractionators, processing plants, and storage terminals. Useful lives range from 15 to 65 years.

## Capital Expenditure & Investment

- **Capex Scale:** $2.7 billion to $3.2 billion guided for 2026.
- **Maintenance vs. Growth:** Maintenance capex is typically $300-$400 million; the remainder is growth capex.
- **Major Programmes:** Eiger Express Pipeline ($350M net investment), Texas LPG Export Terminal ($1B+), Bighorn processing plant.
- **M&A Pattern:** Transformational acquirer recently. Acquired Magellan ($14.1B), Medallion ($2.6B), and EnLink ($5.9B EV) between 2023 and 2025.
- **Synergies:** Targeting $250M-$450M in annual synergies from EnLink/Medallion within three years.

## Debt & Capital Structure

- **Total Debt:** Extinguished ~$3.1 billion of long-term debt in 2025 to deleverage post-M&A.
- **Leverage Ratio:** 4Q25 annualized net debt-to-EBITDA ratio of 3.8x (target is typically 3.5x).
- **Credit Rating:** Investment grade (BBB/Baa2).
- **Key Instruments:** Senior unsecured notes, commercial paper programme, and revolving credit facilities.
- **Share Repurchases:** Active programme; returned part of ~$2.7 billion to shareholders in 2025 via dividends and buybacks.
- **Dividend Policy:** Target payout ratio of ~85% or lower of free cash flow, with 3-4% annual dividend growth.

## Cash Flow Characteristics

- **OCF Conversion:** High. OCF consistently exceeds Net Income due to massive non-cash D&A charges.
- **Free Cash Flow:** Strong FCF generation, though temporarily suppressed by the heavy $2.7B-$3.2B growth capex cycle in 2026.
- **Working Capital Impact:** Can be a major source/use of cash in specific quarters depending on commodity prices at period-end, but nets out over time.
- **Cash Tax Rate:** Historically lower than statutory rates due to MACRS depreciation on pipelines, though the Magellan acquisition (a former MLP) altered the tax basis.

## Sheet Structure

1. **Assumptions:** Hardcoded drivers for volumes, fee rates, capex, and M&A synergies.
2. **Volumes & Rates:** Detailed build-up of NGL raw feed, gas gathered/processed, and liquids transported.
3. **Revenue Build:** Segment-level revenue calculated from volumes and rates.
4. **Opex & EBITDA:** Segment-level O&M, SG&A, and Adjusted EBITDA reconciliation.
5. **Income Statement:** Consolidated GAAP P&L.
6. **Balance Sheet:** Assets, Liabilities, and Equity.
7. **Cash Flow Statement:** 3-statement OCF, CFI, CFF.
8. **Capex & Depreciation:** Waterfall of maintenance vs. growth capex, and D&A schedules.
9. **Debt Schedule:** Tranche-by-tranche debt roll-forward, interest expense, and leverage covenant tracking.
10. **DCF Valuation:** Unlevered free cash flow, WACC, and terminal value.
11. **Dividend & Returns:** Distributable Cash Flow (DCF) calculation, payout ratio, and share repurchases.

## Key Financial Relationships

1. **NGL Segment Revenue** = (NGL Raw Feed Throughput x Average Fee Rate) + Optimization Revenue
2. **Gathering & Processing Revenue** = (Gathered Volumes x Gathering Fee) + (Processed Volumes x Processing Fee) + (Retained Commodity Volumes x Realised Price)
3. **Refined Products & Crude Revenue** = (Pipeline Volumes x Average Tariff) + Storage Revenue
4. **Segment Adjusted EBITDA** = Segment Revenue - Cost of Sales and Fuel - Operations & Maintenance (O&M) Expense
5. **Consolidated Adjusted EBITDA** = Sum of Segment Adjusted EBITDA + Realised M&A Synergies - Corporate Overhead
6. **Net Margin** = Total Revenues - Cost of Sales and Fuel
7. **Distributable Cash Flow (DCF)** = Adjusted EBITDA - Cash Interest - Cash Taxes - Maintenance Capex
8. **Dividend Payout Ratio** = Total Dividends Paid / Distributable Cash Flow
9. **Net Debt** = Total Short-Term Debt + Total Long-Term Debt - Cash and Cash Equivalents
10. **Net Debt to EBITDA** = Net Debt / Annualised Adjusted EBITDA

## Cross-Sheet Dependencies

- **Volumes & Rates** feeds **Revenue Build**.
- **Revenue Build** and **Assumptions** (for margins/O&M) feed **Opex & EBITDA**.
- **Opex & EBITDA** feeds the **Income Statement** and **Cash Flow Statement**.
- **Capex & Depreciation** feeds **Balance Sheet** (PP&E), **Income Statement** (D&A), and **Cash Flow Statement** (CFI).
- **Debt Schedule** is driven by the funding shortfall/surplus in the **Cash Flow Statement** and feeds Interest Expense back to the **Income Statement** (creating a circularity that requires a toggle).
- **Dividend & Returns** relies on DCF generated from **Opex & EBITDA** and **Debt Schedule** (interest).

## Sign Convention

- **Revenues and Volumes:** Positive.
- **Expenses (COGS, O&M, SG&A, Interest, Taxes):** Positive in their specific build schedules, but subtracted in aggregation formulas (e.g., Gross Margin = Revenue - COGS).
- **Cash Flow:** Inflows are positive, outflows (Capex, Dividends, Debt Repayment) are negative.
- **Balance Sheet:** Assets positive, Liabilities and Equity positive.

## Things Most Likely to Go Wrong

- **M&A Stub Periods:** The model must account for EnLink and Medallion contributing only partial quarters in late 2024 and early 2025. Annualising these incorrectly will distort 2025/2026 growth rates.
- **Commodity Price Noise:** Revenue and COGS will fluctuate wildly with natural gas and NGL prices, but Net Margin remains stable. Do not model revenue growth as a proxy for profit growth.
- **Synergy Phasing:** The $250M-$450M in EnLink/Medallion synergies will not appear on day one; they must be phased in over 2025-2027.
- **Transaction Costs:** Exclude the $65M (2025) and $73M (2024) one-time transaction costs when forecasting run-rate SG&A.
- **Divestiture Adjustments:** ONEOK sold non-strategic interstate pipelines in late 2024. Historical financials include these assets; forecasts must exclude them.
- **Distributable Cash Flow vs. Free Cash Flow:** Midstream models rely on DCF (which deducts only *maintenance* capex) to evaluate dividend safety, rather than standard FCF (which deducts all growth capex).
- **Debt Extinguishment:** The company paid down $3.1B in debt in 2025. Ensure the debt schedule reflects this lower starting balance for 2026 interest calculations.
- **Circularity:** Interest expense depends on average debt, which depends on cash flow, which depends on interest. Include a circuit breaker switch.

## Validation Checks

- "Net Debt-to-EBITDA must remain below 4.0x (company targets ~3.5x; ended 2025 at 3.8x)."
- "Dividend Payout Ratio (Dividends / DCF) should be <= 85% based on management guidance."
- "Total Capex for 2026 should reconcile to the $2.7B - $3.2B guidance range."
- "Consolidated Adjusted EBITDA for 2026 should fall within the $7.9B - $8.3B guidance range."
- "Net Income for 2026 should fall within the $3.19B - $3.71B guidance range."
- "Maintenance Capex should be approximately 10-15% of Total Capex; the rest is Growth."
- "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period."

## Key Assumptions (Default Values)

| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| 2026 Adjusted EBITDA Guidance | 8,100 | $ Millions | Midpoint of $7.9B - $8.3B guidance |
| 2026 Net Income Guidance | 3,450 | $ Millions | Midpoint of $3.19B - $3.71B guidance |
| 2026 Total Capex | 2,950 | $ Millions | Midpoint of $2.7B - $3.2B guidance |
| NGL Raw Feed Volume Growth | 5.0 | % | Normalised growth post-2025's 15% surge |
| EnLink/Medallion Synergies (Run-rate) | 350 | $ Millions | Midpoint of $250M - $450M target |
| Target Net Debt / EBITDA | 3.5 | x | Management stated long-term leverage target |
| Dividend Growth Rate | 3.5 | % | Midpoint of 3-4% annual growth policy |
| Maintenance Capex | 350 | $ Millions | Historical run-rate for combined asset base |
| Effective Tax Rate | 23.0 | % | Standard corporate rate plus state taxes |
| WACC | 8.5 | % | Standard midstream cost of capital |
| Terminal EV/EBITDA Multiple | 10.5 | x | Long-term historical average for large-cap midstream |

## Data Sources & Benchmarks

- **Filings:** SEC EDGAR (ONEOK 10-K, 10-Q, 8-K).
- **Presentations:** ONEOK Investor Relations (Q4 2025 Earnings Presentation, February 2026).
- **Peers for Benchmarking:** Enterprise Products Partners (EPD), Energy Transfer (ET), Williams Companies (WMB), Targa Resources (TRGP).
- **Industry Data:** Energy Information Administration (EIA) for NGL and natural gas production data in the Permian and Bakken basins.

## Sources

- ONEOK Q4 and Full-Year 2025 Earnings Release (February 23, 2026)
- ONEOK Investor Presentation (August 2025 / February 2026)
- ONEOK EnLink and Medallion Acquisition Press Releases (August/October 2024)
- SEC Form 10-K for ONEOK, Inc. (2024/2025)

---

## Frequently asked questions

### What is Oneok's primary business and how does it generate revenue?

Oneok is a leading midstream service provider in the United States, operating an extensive network of pipelines for natural gas liquids, natural gas, refined products, and crude oil. The company's business model is asset-heavy and primarily fee-based, with approximately 90% of its earnings derived from these stable fees.

### What are the main revenue drivers for Oneok's business segments?

Oneok's revenue is driven by its diverse midstream operations, with Natural Gas Liquids (NGL) contributing approximately 45% of Adjusted EBITDA and Refined Products and Crude contributing around 25%. Natural Gas Gathering and Processing, along with Natural Gas Pipelines, also contribute significantly to the company's earnings through fee-based services.

### What are Oneok's capital expenditure plans and what proportion is allocated to growth?

Oneok has guided capital expenditures between $2.7 billion and $3.2 billion for 2026, with maintenance capex typically ranging from $300 million to $400 million annually. The substantial remainder is allocated to growth capex, funding major projects like the Eiger Express Pipeline and the Texas LPG Export Terminal.

### What is the assumed revenue growth rate for Oneok in the financial model?

The financial model assumes a revenue growth rate of approximately 14.84% for Oneok. This assumption helps project the company's future top-line performance within the forecast horizon of FY2026–FY2030.

### What is the primary purpose of the Oneok financial model and what insights does it provide?

The Oneok financial model serves as a comprehensive tool for equity valuation, cash flow forecasting, and tracking M&A synergies. It helps analysts evaluate the company's ability to fund its dividend, deleverage its balance sheet, and integrate recent transformational acquisitions.

### Can I download an Excel financial model for Oneok and what is its forecast horizon?

Yes, an Excel financial model for Oneok is available for download. This model provides a forecast horizon covering the fiscal years FY2026 through FY2030.

[Interactive forecast calculator](https://finamodel.com/companies/oneok/forecast)