ONEOK, Inc. (OKE) | The Buildout — AI Infrastructure
The Verdict
ONEOK is an integrated midstream operator that gathers, processes, fractionates, transports, stores, and exports natural gas, NGLs, refined products, and crude oil. Its relevance to the AI buildout is indirect: it supplies and moves natural gas to gas-fired power generation in Oklahoma and Texas, one of the pathways for powering data centers. Management frames the company as scalable, strategically located infrastructure in a market where infrastructure, not supply, is the constraint.
| Market Cap | — |
| Revenue (TTM) | $35.2B |
| Revenue Growth | +41.0% |
| EBITDA Margin (TTM) | 24.6% |
| Net Debt | $33.5B |
| Earnings Beats | 4 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- FY2026 adjusted EBITDA midpoint raised to $8.35 billion, up $250 million from original guidance, with capex unchanged at $2.7–3.2 billion.
- Natural Gas Pipelines transportation capacity was 93% contracted in Q1 2026, up from 91% a year earlier.
- Unsatisfied performance obligations totaled $6,972 million, with $978 million expected in the remainder of 2026.
- LPG export dock reached the 80% contracted threshold for 200,000 bpd; discussions extend into the next decade.
- Cumulative cash tax benefits now expected near $2.6 billion, deferring meaningful cash taxes to 2031.
What We’re Watching
- Waha–Katy differential normalization is expected to lower Natural Gas Pipelines earnings in H2 2026 as new Permian egress enters service.
- Higher discretionary ethane recovery compresses NGL margins even as volumes rise, visible in Q2 2026.
- Large data-center projects remain pre-FID; management says commercialization has taken longer than anticipated.
- One unnamed customer represented about 12% of FY2025 consolidated revenue, touching all segments.
The near-term thesis is intact and strengthening: two guidance raises in five months, record NGL throughput, 93% contracted transport capacity, and an extended cash-tax runway support margin and free-cash-flow momentum. The AI/power-gen leg is the clear uncertainty—one 1 GW award is signed, but the larger $400–700 million project class remains pre-FID. The key open question is whether data-center commercialization converts ahead of the Waha–Katy fade in H2 2026.
Earnings Beat
For Q2 2026, ONEOK reported net income of $965 million on the call transcript (one internal scan flags $967 million), diluted EPS of $1.53, and adjusted EBITDA of $2.12 billion, up 7% year over year. The standout was record NGL raw feed throughput, up 7% across all regions.
| Metric | Q1 FY2026 | Q4 FY2025 | Q1 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $9.6B | $9.1B | $8.0B | +19.6% |
| Gross margin | 26.7% | 29.4% | 16.8% | +990bps |
| EBITDA | $1.8B | $3.1B | $1.6B | +10.0% |
| EPS | $1.23 | $1.55 | $1.04 | +18.0% |
We raised guidance for the second time this year, extended our cash tax runway, advanced key projects and strengthened visibility into earnings growth and free cash flow through 2027.— Pierce Norton, August 4, 2026
Management tone: Management's tone brightened from constructive in Q1 to more confident on the Q2 2026 call, after raising guidance for the second time and leaving the door open to a Q3 update. It volunteered the Waha–Katy fade and data-center commercialization delay rather than waiting to be asked. Management declined to give a specific 2027 hedging percentage.
Management Guidance
Management raised FY2026 guidance on August 4, 2026: net income midpoint of $3.6 billion, diluted EPS midpoint of $5.68, and adjusted EBITDA midpoint of $8.35 billion, up $150 million and $250 million versus the February guide. Capital spending remained $2.7–3.2 billion and is expected toward the upper end; Natural Gas Pipelines and Refined Products and Crude are performing toward the upper end of their ranges, while NGLs and gathering and processing remain positioned through the balance of the year.
Trajectory
Revenue is decelerating sequentially but still elevated: Q1 FY2026 total revenue of $9,618 million was up 19.6% year over year, while trailing four-quarter average revenue growth remained near 45%. Gross margin expanded, but operating and EBITDA margins compressed. Management attributed EBITDA margin pressure to higher discretionary ethane recovery at lower tiered rates and expects the Waha–Katy spread tailwind to fade in H2 2026, partly offset by higher Permian NGL volumes.
The Model
The model projects FY+1 revenue of $39,700 million with EBITDA of $7,583 million, a 19.1% EBITDA margin, and FY+2 revenue of $42,600 million with EBITDA of $8,307 million, a 19.5% margin. Near-term revenue is anchored by the project wave completing through 2027 and fee-based transportation contracts; FY+2 adds full-year contributions from Medford, Bighorn, Cutter 2, and LPG export capacity. Large data-center and power-gen projects remain pre-FID and are treated as optionality, not baseline.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $33.6B | $39.7B | $42.6B |
| YoY Growth | — | +18.1% | +7.3% |
| EBITDA | $8.5B | $7.6B | $8.3B |
| EBITDA Margin | 25.2% | 19.1% | 19.5% |
Projections are the median of 5 independent model runs. The model’s revenue sits 14.0% above analyst consensus.
Management raised FY2026 guidance on August 4, 2026: net income midpoint of $3.6 billion, diluted EPS midpoint of $5.68, and adjusted EBITDA midpoint of $8.35 billion, up $150 million and $250 million versus the February guide. Capital spending remained $2.7–3.2 billion and is expected toward the upper end; Natural Gas Pipelines and Refined Products and Crude are performing toward the upper end of their ranges, while NGLs and gathering and processing remain positioned through the balance of the year.
What Could Go Right — and Wrong
- Large data-center projects reach FID, converting the $400–700 million project class into contracted capital and firm gas demand.
- The remaining 20% of LPG export capacity contracts, completing targeted utilization and extending revenue duration.
- Permian NGL volumes sustain the post-Waha normalization step-up, with processing and fractionation assets filling without new capital.
- Public E&P rig activity broadens beyond private operators into 2027, lifting gathering and processing volumes across all basins.
- Legacy EnLink migration of about 50,000 bbl/d onto ONEOK pipelines from late 2026 through 2028 lands on schedule.
- Data-center FIDs continue to slip, leaving the highest-profile growth option unrealized.
- Ethane recovery stays elevated while C3+ growth slows, compressing NGL margins more than volume growth implies.
- Waha–Katy differentials normalize faster or deeper than guidance, worsening the H2 2026 Natural Gas Pipelines decline.
- The unnamed 12% customer reprices or leaves, forcing recontracting across all segments.
- Large public producer discipline persists through 2027, weakening the volume growth embedded in the algorithm.
Looking Ahead
The next 12 months run through a project-completion wave: Delaware Basin expansions in Q3 2026, Medford Phase 1 and Cutter in Q4 2026, Medford Phase 2 in Q1 2027, and Bighorn in mid-2027. Management has also signaled a possible third guidance update in Q3 2026 and expects legacy EnLink volumes to begin migrating onto ONEOK's NGL pipelines from late 2026. The watch item is whether large data-center developments move from late-stage discussions to FID.
- Q3 2026Possible third guidance update — Management said it could update again if momentum holds.
- Q3 2026Delaware Basin expansions — 110 MMcf/d expected in service; expected to fill quickly.
- Q4 2026Medford Phase 1 and Cutter — 100,000 bbl/d fractionation and 60 MMcf/d PRB plant expected online.
- Q1 2027Medford Phase 2 online — Second fractionator phase expected in service.
- Late 2026–2028EnLink volume migration — About 50,000 bbl/d expected to roll onto ONEOK NGL pipelines.
- Mid-2027Bighorn plant online — 400 MMcf/d upsized; brings Permian processing to nearly 2.4 Bcf/d.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $21.7B | $33.6B | $35.2B | +55.0% |
| Gross Margin | 26.1% | 21.2% | 23.9% | 490bps |
| EBITDA | $6.1B | $8.5B | $38.9B | +38.3% |
| EBITDA Margin | 28.3% | 25.2% | 24.6% | 305bps |
| Net Income | $3.0B | $3.4B | $3.5B | +11.9% |
| Free Cash Flow | $2.9B | $2.4B | $11.1B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)23.9%
- EBITDA Margin (TTM)24.6%
- Net Margin (TTM)10.0%
- ROIC10.1%
- FCF Conversion25.9%
- SBC / Revenue0.0%
The Company
ONEOK is an integrated midstream service provider across natural gas gathering, processing, fractionation, transportation, storage, and marine export. Its roughly 60,000-mile pipeline network moves natural gas, NGLs, refined products, and crude oil for domestic and international demand. The company reports four segments: Natural Gas Gathering and Processing, Natural Gas Liquids, Natural Gas Pipelines, and Refined Products and Crude. Management expects approximately 90% fee-based earnings in 2026, so commodity-sales movements are largely offset in cost of sales.
The platform is physically integrated from wellhead to water. Magellan closed in September 2023; EnLink and Medallion have also been integrated, with nearly $500 million of total synergies since the Magellan close and $250 million in 2025 alone. Disclosed scale includes up to 740,000 bbl/d of West Texas LPG NGL pipeline capacity after expansion, Permian processing capacity nearing 2.4 Bcf/d after Bighorn, and 100,000 bbl/d of added Mid-Continent fractionation at Medford Phase 1.
Business Segments
Competitive Landscape
ONEOK describes itself as one of the largest integrated energy infrastructure companies in North America, with a regionally diversified platform anchored by interconnectivity, customer relationships, and a predominantly fee-based model. Management argues that infrastructure, not supply, is the constraint, positioning the company for demand from power generation, LPG exports, and industrial demand.
Supply Chain
ONEOK sits between wellhead production and downstream demand, operating dedicated basin infrastructure that feeds natural gas, NGL, crude, refined products, and export markets. No external neighbor in the verified read-through mentioned ONEOK by name.
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