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This statistic highlights ONEOK’s Revenue by Segment from the first quarter of 2016 till the latest quarter of 2021, split between Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines.
ONEOK, Inc. is a midstream service provider based in the U.S. The following table shows the revenue by segment of ONEOK.
|Revenue by Segment||Q3 2020||Q2 2021||Q3 2021||Revenue Mix by Segment for Q3 2021|
|Natural Gas Gathering and Processing||$0.46||$0.86||$1.23||22.9%|
|Natural Gas Liquids||$1.83||$3.00||$4.03||74.9%|
|Natural Gas Pipeline||$0.12||$0.11||$0.12||2.2%|
(All figures in billions, except percentages)
1. Natural Gas Gathering and Processing
This segment is responsible for providing midstream services like gathering, treating, and processing of natural gas to producers.
This process involves gathering raw natural gas at the wellheads, compressing and transporting the gas to processing facilities through pipelines. Later, the processed gas is recompressed and distributed to natural gas pipelines, storage facilities, and end-users. The NGLs segregated in this process are sold to the NGL segment.
This segment’s primary earnings are generated from fee with POP (Percent of Proceeds) contracts. After providing their purifying services, midstream service providers retain the products with themselves as fees, only returning a certain percentage of the proceeds to the producers. This percentage is mentioned in the fee with PoP contract.
Production volume changes, delivery pressures, and commodity price changes can result in fluctuations in this segment’s contractual fees and POP percentage. The segment possesses long-term acreage dedications in productive areas like Williston Basin that help in minimizing volumetric risk. Acreage dedications are contracts with upstream companies granting exclusive rights to an area’s production. The company utilizes physical forward contracts to deal with changing prices.
YoY Basis: Revenue of Q3 2021 is better than its last year’s counterpart. The improved revenue is attributable to increased production, recovering economic conditions, and a higher oil-to-gas ratio.
QoQ Basis: Revenue of Q3 2021 is higher than that of Q2 2021 because of higher production.
2. Natural Gas Liquids (NGLs):
This segment gathers, fractionates (purifies), treats, stores, and distributes NGLs and NGL products.
It all starts with the procurement of NGLs from third parties and the company’s Natural Gas Gathering and Processing segment. NGLs are then gathered, transported, treated, fractioned, and finally converted into marketable NGL products.
This segment owns several FERC-regulated NGL gathering and distribution pipelines spread across multiple U.S. states like Texas, Kansas, Oklahoma, etc.
The company has a 50% stake in the Overland Pass Pipeline project, encompassing an NGL pipeline extending from Wyoming to Kansas. The company’s truck- and rail-loading and -unloading facilities are connected to the company-owned fractionators, storage facilities, and pipeline systems. The segment leverages this extensive network.
These products are delivered to a market center or customer-designated location. The two primary market centers are located in Texas and Kansas.
This segment is exposed to commodity price fluctuations. Engaging in physical forward contracts allows the company to sell the products at pre-determined prices, thereby helping to reduce the impact of price fluctuations. The difference in NGL prices based on location also poses a challenge for this segment. Production volume risks arising due to factors like declining well productivity are mitigated by strategic alliances with producers working in key production areas.
YoY Basis: The segment has earned higher revenue in Q3 2021 as compared to Q3 2020 because of higher producer activity and rising ethane production. The earnings in Q3 2020 were low due to curtailed production.
QoQ Basis: The earnings of Q3 2021 have exceeded the earnings of Q2 2021 because of increased production in regions like Rocky Mountain and Permian Basin.
3. Natural Gas Pipeline
The pipeline segment is involved in the transportation of natural gas through regulated interstate and intrastate pipelines. This segment also provides storage facilities.
The company’s vast network of interstate and intrastate pipelines, storage facilities, and strategic joint ventures like Northern Border Pipeline and Roadrunner allow this segment to provide transportation and storage services to end-users.
This segment is primarily affected by commodity price changes. Natural gas is consumed during this segment’s operations. At times the consumption of natural gas can exceed the amount allowed by customers. In such an event, the segment needs to purchase natural gas, thus being exposed to price changes. This segment doesn’t face significant volumetric and location price differential risk as most of the capacity is subscribed by institutional customers under long-term fee-based contracts.
YoY Basis: Revenue of Q3 2021 is similar to that of Q3 2020. This segment’s earnings have remained stable as this segment is little affected by commodity price fluctuations.
QoQ Basis: Revenue of Q3 2021 is higher because of renewal of contracts at higher rates, followed by improved trust of customers due to the regular supply by the company even during the winter storm Uri.
About the company
Founded in 1906, ONEOK is a leading midstream service provider based in the U.S. The company is involved in gathering, processing, storing, and transporting natural gas and natural gas liquids. The company was originally incorporated as Oklahoma Natural Gas Company but changed its name to ONEOK in 1980. Headquartered in Tulsa, the company is a Fortune 500 company and also features on the S&P 500.
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