Tulsa, Oklahoma-based ONEOK Inc. announced March 11 that it would decrease its 2020 growth capital guidance due to the current commodity price environment. The company now expects capital growth expenditures in the range of $1.6 billion to $2.4 billion with a midpoint of $2 billion, a decrease of approximately $500 million compared with the previously announced midpoint. This updated range provides ONEOK with the flexibility to adjust accordingly based on expected producer activity.
“Given the significant inventory of flared natural gas in the Williston Basin and fully contracted growth in the Permian Basin, and factoring in the current commodity price environment and assumed rig reductions, we expect our 2020 results to be within our previously announced guidance ranges,” said Terry K. Spencer, ONEOK president and CEO. “We are working with our producers on any updates to their drilling plans and evaluating the impact on our future volume expectations, and we will make adjustments to financial guidance if appropriate.”
Break-even prices for the company’s producer customers have improved over the last several years, giving ONEOK the confidence that the Williston Basin will remain a competitive producing region through the current volatile and uncertain commodity price environment, said Spencer, adding that the potential for ethane recovery to meet downstream pipeline BTU specifications “provides a tailwind” to the company’s natural gas liquids volume expectations.
“Despite the volatile commodity price environment in recent days, ONEOK’s financial flexibility, significant dividend coverage and investment-grade balance sheet position ONEOK well to weather these challenging market conditions,” Spencer said. “We recently completed a $1.75 billion debt offering enabling us to repay all of our commercial paper, leaving us with the full borrowing capacity available on our $2.5 billion credit agreement and approximately $600 million of cash on hand, demonstrating our strong financial position.”
ONEOK has made adjustments for planned capital expenditures and is suspending the following announced expansion projects:
- The 100,000 barrel per day (bpd) additional expansion of the West Texas LPG pipeline in the Permian Basin.
- The 200 million cubic feet per day (MMcf/d) expansion of the Demicks Lake natural gas processing facility, the Demicks Lake III project and related infrastructure in the Williston Basin.
- Additionally, the scope of the Elk Creek Pipeline expansion will be reduced, with the ability to add pump stations incrementally to meet customer needs as necessary.
“The planning and work we have already completed allow us to quickly resume these suspended capital-growth projects when the environment improves and our customers require these services,” Spencer said.
“We will remain focused on operating our assets safely, reliably and environmentally responsibly,” continued Spencer. “We have uniquely positioned strategic assets and a long, rich history of our dedicated and experienced employees providing quality service to and creating value for our customers, communities and shareholders.”