ONEOK, Inc. (OKE) | The Buildout — AI Infrastructure
The Verdict
ONEOK owns and operates midstream energy infrastructure — gathering, processing, fractionation, transportation, storage, and marine export — across a roughly 60,000-mile pipeline network. It moves natural gas, natural gas liquids, refined products, and crude oil between producers at the wellhead and end markets such as refiners, petrochemical plants, exporters, utilities, and power plants. Its link to the AI buildout is on the demand side: data centers need large amounts of power, gas-fired plants supply much of it, and ONEOK owns intrastate pipelines and laterals that can deliver the gas.
| Market Cap | — |
| Revenue (TTM) | $39.4B |
| Revenue Growth | +40.8% |
| EBITDA Margin (TTM) | 22.4% |
| Net Debt | $32.9B |
| Earnings Beats | 4 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Guidance raised twice in 2026: the adjusted EBITDA midpoint moved from $8.1B to $8.25B to $8.35B.
- Roughly 90% of 2026 consolidated earnings are expected to be fee-based, per the 10-Q MD&A.
- $6,972 million of unsatisfied performance obligations as of March 31, 2026, with contracts running up to 23 years.
- The LPG export dock reached its 80% contracting threshold for 200,000 bpd of capacity.
- Cumulative cash tax benefits are now roughly $2.6 billion, deferring meaningful cash taxes until 2031.
What We’re Watching
- NGL margins are diluted by an ethane-heavy mix under tiered T&F rates, which pay less for ethane than for C3+.
- The Waha-to-Katy differential lifted Q1 and Q2; management expects lower H2 earnings as Permian takeaway capacity enters service.
- Data-center commercialization is slower than anticipated, and multi-large-scale developments are not yet FID.
- Capex is trending toward the upper end of $2.7–$3.2 billion, and management notes long lead times on materials and equipment, entering procurement agreements for long-lead items for potential projects.
The thesis is strengthening on the base business and unproven on the AI angle. Guidance has been raised twice, volumes grew in every segment in Q2, and a dense project conveyor enters service through 2028. But the AI-linked growth is still unquantified: the 1 GW power supply agreement was awarded but its economics are undisclosed, and the multi-large-scale data-center developments are not yet FID. The open question is whether those projects convert into signed, contracted capital, or stay an option while NGL mix and the Waha-Katy fade pressure the near term.
Earnings Beat
ONEOK reported second-quarter 2026 revenue of $12.0 billion. Net income rose 13% year-over-year, to $1.53 per diluted share, and adjusted EBITDA rose 7% year-over-year to $2.12 billion. NGL raw feed throughput rose 7% and refined products volumes shipped rose 8%, both year-over-year, with management noting growth across all regions.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $12.0B | $9.6B | $7.9B | +52.8% |
| Gross margin | 14.2% | 26.7% | 19.5% | -530bps |
| EBITDA | $2.0B | $1.8B | $1.8B | +8.7% |
| EPS | $1.53 | $1.23 | $1.34 | +14.2% |
| LPG export capacity contracted | 80% of 200,000 bpd | n/a | n/a | — |
we were recently awarded a supply agreement for 1 gigawatt of power plant demand— Sheridan Swords, Chief Commercial Officer, 2026-08-04
Management tone: Management raised 2026 guidance for the second time this year and left the door open to a third update, saying it might update again in Q3 if the momentum holds. The Q1-to-Q2 shift moved from sizing the data-center opportunity to hitting harder milestones — the LPG dock reached its 80% contracting threshold, the 1 GW power supply agreement was awarded, and Bighorn was upsized to 400 MMcf/d. Management also acknowledged slower-than-anticipated data-center commercialization, NGL margin dilution from an ethane-heavy mix, and an expected H2 fade in Waha-to-Katy differentials.
Management Guidance
Management guided FY2026 net income to a $3.6 billion midpoint, diluted EPS to $5.68, and adjusted EBITDA to $8.35 billion — the second raise of the year and $250 million above the original February adjusted EBITDA guidance. Capex guidance is $2.7–$3.2 billion, unchanged but trending toward the upper end. The company reaffirmed a long-term target of mid- to high-single-digit adjusted EBITDA growth over five to seven years and a 3.5x leverage target, and said EPS growth should exceed EBITDA growth. Management expects lower second-half earnings in Natural Gas Pipelines as Permian takeaway capacity enters service and Waha-to-Katy differentials narrow.
Trajectory
Revenue growth decelerated quarter-over-quarter through 2026 on reported figures, and EBITDA margin compressed. The 10-Q cautions that commodity-price and volume moves affect revenue and cost of sales together and are 'largely offset,' so reported revenue is heavily commodity pass-through. The volume signal is steadier: NGL raw feed throughput rose 7% year-over-year in Q2 and refined products volumes rose 8%. Margin direction is mixed — an ethane-heavy NGL mix is dilutive under tiered T&F rates, and Natural Gas Pipelines benefited from wider Waha-to-Katy differentials that management expects to fade in the second half.
The Model
The model projects FY+1 revenue of $44,100 million and EBITDA of $8,423 million, a 19.1% margin. For FY+2 it projects revenue of $47,600 million and EBITDA of $9,568 million, a 20.1% margin. The near-term anchor is the project conveyor entering service from Q3 2026 through 2028 — Delaware and Powder River processing, Medford fractionation, and Bighorn — plus the Brazos acquisition. FY+2 depends on whether the pre-FID data-center projects convert into contracted capital and whether NGL mix pressure eases.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $33.6B | $44.1B | $47.6B |
| YoY Growth | — | +31.1% | +7.9% |
| EBITDA | $8.5B | $8.4B | $9.6B |
| EBITDA Margin | 25.2% | 19.1% | 20.1% |
Projections are the median of 5 independent model runs. The model’s revenue sits 7.0% above analyst consensus.
Management guided FY2026 net income to a $3.6 billion midpoint, diluted EPS to $5.68, and adjusted EBITDA to $8.35 billion — the second raise of the year and $250 million above the original February adjusted EBITDA guidance. Capex guidance is $2.7–$3.2 billion, unchanged but trending toward the upper end. The company reaffirmed a long-term target of mid- to high-single-digit adjusted EBITDA growth over five to seven years and a 3.5x leverage target, and said EPS growth should exceed EBITDA growth. Management expects lower second-half earnings in Natural Gas Pipelines as Permian takeaway capacity enters service and Waha-to-Katy differentials narrow.
What Could Go Right — and Wrong
- The multi-large-scale data center developments reach FID and ONEOK signs firm supply contracts with disclosed capacity.
- The remaining 20% of the LPG export dock contracts at favorable terms, and the dock enters service.
- The ethane-heavy NGL mix stabilizes, easing margin dilution as the C3+ share recovers.
- The Brazos acquisition closes and integrates accretively, supporting the deleverage path.
- Free cash flow inflects and management buys back shares, lifting growth above EBITDA growth.
- Data-center commercialization stalls further and multi-large-scale developments never reach FID.
- Producer capital pulls back in the Permian, Mid-Continent, or Bakken, reducing gathering and NGL throughput.
- Waha-to-Katy volumes do not persist after the differential normalizes, dragging Natural Gas Pipelines into 2027.
- A persistent ethane-heavy mix and Mid-Continent contract rollovers compress NGL margin faster than volume can offset.
- Project cost inflation or integration pressure delays in-service dates and keeps capex above the $2.0–$2.5 billion run-rate, delaying the free-cash-flow inflection.
Looking Ahead
Over the next 12 months ONEOK completes a dense slate of projects: Delaware Basin processing and the Powder River Cutter plant and Medford Phase 1 in the second half of 2026, then Bighorn in mid-2027 and Cutter 2 in Q1 2028. Management has flagged a possible third guidance update. The catalysts that matter most are data-center FID conversion, the Brazos acquisition close, and the leverage path.
- Q3 2026Delaware processing online — +110 MMcf/d Delaware Basin processing expansion enters service
- Q3 2026Possible third guidance update — Management flagged a possible third 2026 guidance update if momentum holds
- Q4 2026Powder River Cutter online — 60 MMcf/d Cutter plant; Powder River capacity to exceed 100 MMcf/d
- Q4 2026Medford Phase 1 online — +100,000 bpd Mid-Continent fractionation capacity
- Q1 2027Medford Phase 2 online — Phase 2 of the Medford NGL fractionator
- Mid-2027Bighorn plant online — Upsized 400 MMcf/d Permian processing plant
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $21.7B | $33.6B | $39.4B | +55.0% |
| Gross Margin | 26.1% | 21.2% | 21.9% | 490bps |
| EBITDA | $6.1B | $8.5B | $8.8B | +38.3% |
| EBITDA Margin | 28.3% | 25.2% | 22.4% | 305bps |
| Net Income | $3.0B | $3.4B | $3.7B | +11.9% |
| Free Cash Flow | $2.9B | $2.4B | $2.9B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)21.9%
- EBITDA Margin (TTM)22.4%
- Net Margin (TTM)9.3%
- ROIC10.3%
- FCF Conversion33.0%
- SBC / Revenue0.0%
The Company
ONEOK is a North American midstream energy infrastructure company. It provides gathering, processing, fractionation, transportation, storage, and marine export services through an approximately 60,000-mile pipeline network, moving natural gas, natural gas liquids, refined products, and crude oil. Midstream sits between producers at the wellhead and end markets — refiners, petrochemical plants, exporters, utilities, and power plants — earning fees to move and process molecules. Management states roughly 90% of 2026 consolidated earnings are expected to be fee-based.
ONEOK operates as an integrated, multi-molecule platform across four segments: Natural Gas Gathering and Processing, Natural Gas Liquids, Natural Gas Pipelines, and Refined Products and Crude. Its footprint spans the Permian Basin, the Mid-Continent, the Rocky Mountain/Bakken/Powder River region, and the Gulf Coast, plus a refined-products line into Denver International Airport. Because it owns gathering, processing, fractionation, pipelines, storage, and export docks across the same basins, it can move a molecule from wellhead to water; management calls it a regionally diversified integrated platform at scale.
Business Segments
Competitive Landscape
The source material describes ONEOK's differentiator as a 'regionally diversified integrated platform at scale across natural gas liquids, natural gas, crude oil and refined products,' and cites sole bidirectional Mid-Continent/Gulf Coast refined-products access. The one documented competitive dynamic is Phillips 66's Western Gateway refined-products pipeline versus ONEOK's Sunbelt Connector, on which management said there is only room for one project. Notably, if Western Gateway goes forward, the source says it could benefit ONEOK by pulling volume out of the Gulf Coast into the Mid-Continent and lengthening tariff paths.
- Phillips 66 (PSX)Documented competitor: its Western Gateway refined-products pipeline competes with ONEOK's Sunbelt Connector; management says there is only room for one project, and a PSX win could lengthen ONEOK tariff paths by pulling volume out of the Gulf Coast.
- Enterprise Products (EPD)Named in the source's competitor wiring for NGL midstream, NGL pipelines, fractionation, and exports; not discussed beyond the listing.
- Energy Transfer (ET)Named in the competitor wiring for NGL, natural gas pipelines, and data center gas supply; not discussed beyond the listing.
- Kinder Morgan (KMI)Named in the competitor wiring for natural gas pipelines and data center gas supply; not discussed beyond the listing.
- Targa Resources (TRGP)Named in the competitor wiring for NGL fractionation and processing in the Permian and Mid-Continent; not discussed beyond the listing.
Supply Chain
ONEOK sits between producers at the wellhead and end markets — refiners, petrochemical plants, exporters, utilities, and power plants — collecting fees to move and process molecules. Its wiring map lists 13 suppliers and 13 customers, but no neighbor transcript mentions ONEOK by name.
More on OKE: Earnings recap