ONEOK Q4 2025 Earnings Call Transcript

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Provided by AlphaStreet
February 25, 2025
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Operator

Good day, and welcome to OneOak's 4th-Quarter 2024 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on a touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded.I would now like to turn the conference over to Andrew Zeola, Vice-President and of Investor Relations. Please go-ahead.

Andrew Ziola
Vice President, Investor Relations and Corporate Affairs at ONEOK

Thank you, Wyatt, and good morning, and welcome to 4th-quarter year-end 2024 earnings call. After the markets closed yesterday, we issued news releases announcing our 2024 results and our 2025 guidance and 2026 outlook. Those materials are on our website. After our prepared remarks, management will be available to take your questions. Statements made during this call that might include OneOak's expectations or predictions should be considered forward-looking statements and are covered by the Safe-Harbor provision of the Securities Acts of 1933 and 1934.

Actual results could differ materially from those projected in forward-looking statements. For a discussion of factors that could cause actual results to differ, please refer to our SEC filings. Just a reminder for Q&A, we ask that you limit yourself to one question and a follow-up in order to fit-in as many of you as we can.

With that, I'll turn the call over to Piers Norton, President and Chief Executive Officer. Piers?

Pierce H. Norton
President and Chief Executive Officer at ONEOK

Thanks, Andrew. Good morning, and thank you for joining us. On today's call is Walt Holtz, Chief Financial Officer, Treasurer, Executive Vice-President Of Investor Relations and Corporate Development; and Sheridan Swords, Executive Vice-President and Chief Commercial Officer. Also on the call today is Randy Lentz, Executive Vice-President and Chief Operating Officer. Randy joined us from Medallion Midstream, and we welcome him to the OneOak team. Yesterday, we announced higher 4th-quarter and full-year 2024 earnings driven by contributions from multiple strategic acquisitions, volume growth and continued execution on the synergies identified in our refined products and crude oil businesses acquired in 2023. We also announced 2025 financial guidance and provided a 2026 growth outlook. For 2025, we expect strong earnings growth driven by our expanded operations, completed projects and higher volumes. For our 2026 growth outlook, we expect greater than 15% earnings per share growth and adjusted EBITDA growth approaching 10% compared with our 2025 guidance midpoints. Walton Sheridan will provide additional details on those guidance and the growth outlook shortly. Over the past two years, OneOak has executed on our intentional and disciplined growth strategy, creating unique opportunities with our more regionally diversified product and service offering offerings and delivering value across our expanded footprint. We've transformed our company into -- in multiple ways, making it even stronger, more resilient and better-positioned to play a leading role in contributing to energy addition. I'll touch on a few of these key areas that we believe will drive our continued success and further enhance our strategic competitive advantage. First, we've significantly grown our integrated operations, both in terms of our product mix, demand pull versus supply push drivers and geographic diversity. We've added refined products in crude oil transportation and crude oil gathering to our integrated value chain, and we've significantly extended and expanded our presence in the Permian Basin in Louisiana. Second, we've added significant operational scale through our now approximately 60,000-mile pipeline network, enhancing our connectivity with key producers, basins and market centers. The scale and integrated connectivity further strengthened our resilience and position OneOak for success across various market cycles. Third, we continue to prioritize organic growth opportunities by expanding and extending our now even larger asset-base. Key projects have included NGL pipeline expansions in the Bakken and Permian Basins, additional NGL fractionation capacity in Mont Belvieu and the Mid-Continent, refined products pipeline expansions into the Denver market and natural gas storage expansions in Oklahoma and Texas. Most recently, we announced an LPG export project joint-venture with MPLX. With -- with LPG exports added to our service mix, we will provide an integrated NGL wellhead to water solution for our customers, enhancing our product offerings. Fourth, we continue to prioritize innovation, commercial development and customer service across our operations. Numerous additional project opportunities remain in various stages of development. These unannounced projects span across regions and products and they include synergy projects and traditional growth opportunities. Examples include projects to interconnect and optimize recently-acquired assets, top-line and facility expansions in key basins, additional natural gas infrastructure driven by continued demand for the AI-driven data centers and LNG demand and debottlenecking projects across our operations to accommodate growth are just to name a few. Finally, we remain committed to returning meaningful value to our investors. We've proven our ability to sustain and grow our long-standing dividend, invest in high-return growth projects and maintain financial flexibility, including the ability to begin executing on our share repurchase authorization. We've provided 11 consecutive years of adjusted EBITDA growth and our 2025 adjusted EBITDA guidance is well over double what it was just three years ago. All of these successes and extraordinary growth and the scale of OneOak's transformation doesn't happen overnight. And it doesn't happen without the dedication of our employees. Their continued focus on safety, service and innovation has enabled this level of change to occur and will continue to drive additional meaningful growth and value across our operations. I'll now turn it over to Walt and Sheridan to provide their financial and commercial updates. Walt?

Walter S. Hulse
Executive Vice President, Chief Financial Officer, Treasurer, Investor Relations and Corporate Devel at ONEOK

Thank you, Pierce. I'll start with a brief overview of our 4th-quarter and full-year financial performance and then move on to our '25 guidance and 2026 outlook. 2024 results were in-line with our guidance expectations that we increased in both the first and third quarters of 2024. Net income attributable to 10 totaled $923 million or $1.57 per share in the 4th-quarter 2024 and totaled $3 billion or $5.17 per share for the full-year. Adjusted EBITDA totaled nearly $2.2 billion in the 4th-quarter 2024 and more than $6.7 billion for the full-year. These results include $375 million of adjusted EBITDA and $73 million of transaction costs related to the and Medallion acquisitions that we began consolidating in October.

As of December 31, we had more than $730 million in cash-on-hand, no commercial paper outstanding and no borrowings outstanding under our credit agreement. Our 4th-quarter 2024 annualized run-rate net-debt to EBITDA ratio was 3.6 times. We continue to demonstrate our ability to utilize various capital allocation levers in 2024 by returning nearly $2.5 billion of value to shareholders through dividends and share repurchases. We repurchased $172 million of stock in the 4th-quarter and in January 2025, we increased our quarterly dividend by 4%. Now moving on to our guidance.

As Pierce mentioned, in addition to yesterday's earnings announcement, we provided detailed 2025 financial and volume guidance and a 2026 growth outlook. For 2025, we expect an 8% increase in earnings per share to a midpoint of $5.37 compared with 2024 when excluding one-time time items in 2024, such as transactional related costs and divestitures. This EPS guidance does not include an assumption for share repurchases. But we remain committed to executing on our Board-approved $2 billion share repurchase program over the course of these next few years. From an adjusted EBITDA perspective, we expect a 21% increase in adjusted EBITDA in 2025 to $8.225 billion, excluding approximately $50 million of transaction costs compared with 2024.

Key drivers of our 2025 guidance include higher earnings driven by a full-year of earnings from recent acquisitions, volume growth from increases in-production and completed growth projects and fee-based earnings. Our 2025 financial guidance also includes approximately $250 million of incremental commercial and cost synergies related to our acquisitions of Magellan, Medallion and. This is additive to what we've already realized through the end of 2024. As it relates to capital expenditures, our guidance assumes a range of $2.8 billion to $3.2 billion, which includes growth and maintenance capital. This range reflects the investments necessary to accommodate expected increases in-production and invest in attractive return growth projects such as our recently-announced LPG export doc. Our 2026 outlook of greater than 15% earnings per share growth and adjusted EBITDA growth approaching 10% compared with the 2025 guidance midpoints is driven by Expected volumes from increase production and recently-completed synergy and growth projects. Key contributors include a full-year of earnings from the Elk Creek and West Texas NGL pipeline expansions and synergy projects completed in 2025, along with a partial year benefit from the completion of the Denver area refined products expansion and the connection of our Mount Bellevu assets to the Houston Ship Channel distribution assets. We also expect to realize additional synergies in 2026. I'll now turn the call over to Sheridan for a commercial update.

Sheridan Swords
Executive Vice President and Chief Commercial Officer at ONEOK

Thank you, Walt. We saw a strong year-over-year performance in 2024. The Refined Products and Crude segment contributed its first full-year of earnings, benefiting from higher average refined product tariff rates, blending and marketing opportunities as well as higher earnings on our long-haul crude oil pipelines. Continued strength in Rocky Mountain volumes during the year continued to support earnings with NGL raw feed throughput volumes up 8% and natural gas volumes processed up 6% in the region. The natural gas pipeline segment exceeded the high-end of its 2024 financial guidance, even excluding divestitures and acquisitions. The segment's outperformance continued to be driven by strong demand for our intra-state pipeline and storage services.

Turning to 2025 and starting with the natural gas liquids segment, we expect higher year-over-year adjusted EBITDA and raw feed throughput volumes to be driven primarily by growth out-of-the Permian and Rocky Mountain regions. We've assumed high levels of ethane recovery continue in the Permian Basin and partial recovery in the Mid-Continent. We also expect to see continued opportunities to incentivized ethane recovery in the Rocky Mountain region. In the Permian Basin, we expect recently-completed and connected third-party processing plants, new contracts and increasing volume from legacy InLink plants to contribute to higher volumes feeding our West Texas NGL pipeline.

As legacy InLink contracts roll-off in future years, significant incremental volumes is expected to move to our Permian NGL system. Recently-completed NGL growth projects will contribute to higher volumes and earnings in 2025, including NB6 and expansions of our Elk Creek and West Texas NGL pipelines in the Williston and Permian Basins. We also expect increasing contributions from the acquired Eastern Energy assets as we complete connections to our Houston-based system in 2025, helping us to realize additional synergies. As mentioned earlier this month, we announced strategic joint-venture projects to construct a 400,000 barrels per day LPG export terminal in Texas City, Texas and a pipeline connecting OneOak's Mont Belvieu storage facility to the new terminal. Our collaboration with MPLX on this project enables us to provide a new wellhead to water solution to customers across our entire system.

The world scaled dock has multiple strategic benefits over other currently operating facilities, including a premier open water location, brownfield economics, timing and cost benefits driven by the proximity to the existing Marathon refinery and infrastructure and strategic access to our NGL storage in Mont Belvieu. The project is expected to be completed in early 2028. In the Refined Products and Crude segment, we expect continued growth in refined products margins and a significant increase in crude oil volumes driven by our added crude oil gathering infrastructure from both the Medallion and InLink acquisitions. We expect to fill existing gathering capacity over-time, which will feed and fill our long-haul crude oil pipelines connecting key suppliers with critical refining and marketing centers. We also expect continued benefits from the ability to execute certain blending related commercial and cost synergies between the natural gas liquids and refined product businesses.

We expect these type of synergies to ramp-up as projects come online this year. Moving to the natural gas-gathering and processing segment. We expect volume growth in all of our regions across our footprint in 2025. We guided to Rocky Mountain region volume growth of 8.5% at the midpoint compared with 2024 and have average of more than 1.7 Bcf per day-in 2025. Williston Basin volumes continue to benefit from increasing efficiencies that have been well-documented by our producer customers, strong gas-to-oil ratios and overall producer activity. Part of those efficiencies that we continue to benefit from is the drilling of longer laterals and higher well performance on traditional laterals without the need for as many well connects.

In 2025, we expect 35% of our well connections to be with three-mile laterals as opposed to traditional shorter laterals. Through recent acquisitions, we've extended our gathering and processing assets into the strategic and growing Permian Basin and added assets in the Mid-Continent. In the Mid-Continent, we expect volume growth in addition to the full-year impact of the acquisition with average annual volume of nearly 2.5 Bcf per day-in 2025. Projects are already underway to connect and optimize assets. As Pierce mentioned, as Pierce mentioned, these synergies are captured in the 2026 outlet Walt provided. In the Permian Basin, we expect natural gas processing volumes to average approximately 1.6 Bcf per day at the midpoint.

We are in the process of relocating 150 million cubic-feet per day legacy natural gas processing plant to the region from North Texas, which we expect to be completed in the first-quarter of 2026. And we continue looking at expected infrastructure needs going-forward as existing customers and potential opportunities provide line-of-sight -- line-of-sight for strong growth in the coming years. In the natural gas pipeline segment, our assets are well-positioned to benefit from industrial demand growth driven by data centers, LNG exports and ammonia facilities. Our newly-acquired assets in Louisiana provide direct connectivity to major LNG exporters and industrial customers. There are also approximately 30 potential power plant expansion projects across our footprint that could provide more than 4 Bcf per day of incremental event demand if they move forward.

Natural gas storage expansions continue to be an opportunity for us as well with key projects ongoing in Oklahoma and in Louisiana. Pierce, that concludes my remarks.

Pierce H. Norton
President and Chief Executive Officer at ONEOK

Thank you, Sheridan, and thank you, Walt. We are proud of our strong performance over the past year. Through strategic acquisitions and organic initiatives, we've extended our reach and built a platform for future growth that leaves us poised for continued success. The potential before us is significant and we remain committed to delivering the value to our employees, shareholders, customers and communities.

Before we close, I want to recognize our employees' efforts related to the recent severe cold across our footprint. As always, our teams demonstrated incredible commitment and dedication to maintaining safety and delivering reliable service, regardless of the challenging conditions. This unwavering focus on safety and customer service is a testament to the character and resilience of our people. I want to thank all of our employees for their hard work and dedication throughout another year of significant change in growth. It is their commitment and passion that drive our success and make us stronger as an organization.

Thank you to our shareholders for your continued trust and support. We're excited about the journey ahead and look-forward to sharing our progress with you in the future.

Operator, we're now ready for questions.

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Operator

Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speaker phone, please pick-up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.And the first question will come from Theresa Chen with Barclays. Please go-ahead.

Theresa Chen
Analyst at Barclays

Good morning. Thank you for taking my questions. Would you be able to provide some additional details behind bridging the 2025 to 2026 guidance? It sounds like much of it is driven by project contribution, but are there other details and color around synergies or assumptions on volume and pricing you can share at this point.

Walter S. Hulse
Executive Vice President, Chief Financial Officer, Treasurer, Investor Relations and Corporate Devel at ONEOK

Well, Theresa, the -- what we're really seeing is the benefit of the synergy capital That we've been spending, primarily connecting the Eastern assets so that all of our assets down in Bellevue and the Houston channel. Those should get completed here in 2025 and we'll get that full benefit into 2026. We'll start to see some of these other projects wrap-up in later 2025 or early 2026 and contributing benefit. So this last -- this last phase of capital investment is coming at a great time

Theresa Chen
Analyst at Barclays

Hello?

Operator

Pardon me, ladies and gentlemen, it appears we have lost connection to our speaker line. Please standby while we reconnect. Thank all right, ladies and gentlemen, the speakers are back. And Theresa, you may go-ahead. I believe you were asking a question.

Theresa Chen
Analyst at Barclays

Yes. If we want to move on to the second question, and I just wanted to unpack two components of your organic project backlog a little bit more. On the LPG side, can you speak more to the strategic benefits behind your export JV with NPLX and how exactly will One and NPLX be competitive versus the incumbents on export economics? And then secondly, within your refined products portfolio, what other capacity additions are there like the Denver pipeline expansion? And beyond the initial 35,000 barrels per day, how much can you actually send up that 16-inch line given the pretty significant cost of the project.

Sheridan Swords
Executive Vice President and Chief Commercial Officer at ONEOK

Yes, Theresa, this is Sheridan. I'll start with the OP. We are excited to collaborate with a great partner like MPLX on this to strategic projects for both companies. And our strategic rationale is really, you can say location, location, location. The first location is, as I mentioned before, we have access to open waters. We're within two hours of open waters at this location, significantly better than the other dogs in the area. This location because we're next to Marathon's refinery. It is a brownfield and construction site where we have a lot of other infrastructure there that greatly reduces the cost of this venture. And then obviously, the location to our -- the NGL system and storage where we easily can be able to get our product into that -- into our dock as we go there.

And you know, we have been looking at this for a long-time. We've been intentional and disciplined about going-forward with this type of a project. I mean we've been to evaluated for over eight years and at this time, we're really comfortable with where this project sits today and how we can compete into the marketplace as well as it advances our, as I mentioned, our wellhead to water strategy across our entire system. And with a project that actually we can grow into as this dock and pipeline are both expandable beyond the 400,000 barrels a day. So that's really as we think about this dock and the strategic significance and how we can compete in the marketplace as we continue to go-forward.

As we talk about the Denver expansion as we get going-forward, the Denver expansion, we put a 16-inch pipeline and we've said that we have commitments up to 35,000 barrels a day. Obviously, a 16-inch pipeline can move a lot more on volume than that. But as that area grows in-demand or supply to that area is disrupted in any way from refinery closures, we can capily efficiently increase the capacity of that pipeline by adding more pumps all the way up to as much as 250,000 barrels a day, if so needed depending on the demand.

Theresa Chen
Analyst at Barclays

Thank you very much.

Operator

And our next question will come from Salsbury with Bank of America. Please go-ahead.

Jean Ann Salisbury
Analyst at Bank of America

Hi. I guess just to follow-up on Theresa's question about the LPG export doc. It seems like LPG exports are getting overbuilt and spot rates could fall significantly. Can you just speak about your assumptions for uncontracted rates, whether you share that view and whether in your numbers, the uncontracted capacity is a meaningful contributor to the economics that you're projecting?

Sheridan Swords
Executive Vice President and Chief Commercial Officer at ONEOK

Yeah, what I would tell you as you said this is coming on in 2028 as we think about LPG doc. And as we continue to look at the growth across our entire system, especially coming out-of-the Permian, we see a significant amount of LPGs be able to come on the market. And we already control a significant amount of that volume that is going across other docks today that we -- once the stock is up, we will be pointing to the stock. So we don't share the view that docks are going to be overbuilt when we get-out into the 2028 timeframe when this dock will be up that we'll be able to compete very well with it.

We have not assumed on our spot rate, we have assumed a typical market rate on any spot volume that we've included in our economics. So nothing that is what we are seeing in-line with what we're seeing today.

Jean Ann Salisbury
Analyst at Bank of America

Okay. That's helpful. Thank you. And then things are looking bullish for gas price over the next couple of years. Rig -- in the Haynesville has been flattish, but maybe creeping up in the Mid-Con. From what you're hearing from customers, do you think that the gas strip is high enough that we could see material gas growth the next year or two in the Mid-Con, which I don't think most are anticipating?

Sheridan Swords
Executive Vice President and Chief Commercial Officer at ONEOK

Well, as we've been talking to our customers in the Mid-Contin and looking at rail drips and everything else, we definitely are seeing increased activity in the Mid-Continent. And that's really one of the things that is driving our increase in our volume outlook as we look-forward is the increased drilling activity we are seeing in conversations with our producers. So I think you are seeing a little bit of an uptick from there seeing the gas -- from the gas price.

Pierce H. Norton
President and Chief Executive Officer at ONEOK

Theresa, this is Pierce. The only thing that I would add to that is the demand tailwinds that we're seeing basically in the industry. I mean, we just recently not we but the industry brought on 16 Bcf a day of export capabilities coming on LNG. That's expected to expand to somewhere around 30 Bcf of different projections out there, but AI could go from 3 to 6 Bcf a day. And then you still have coal plant conversions. So all of that is going to kind of point to somewhere around plus 20%, maybe 25% growth in the demand for natural gas in the future. That comes with natural gas liquids. So I think that's -- that's going to help with prices as well.

Jean Ann Salisbury
Analyst at Bank of America

Great. I'll leave it there. Thank you.

Operator

And our next question will come from Jeremy with JPMorgan. Please go-ahead.

Unidentified Participant
at ONEOK

Hey, good morning, guys. This is Rothan Reddy on for Jeremy. For the '25 capex guide, could you help us bridge spend on the three larger projects in your backlog versus those smaller capital opportunities such as well connects, plant connections and synergy-related opportunities

Walter S. Hulse
Executive Vice President, Chief Financial Officer, Treasurer, Investor Relations and Corporate Devel at ONEOK

I was trying to decide who was going to take that question. This is Walt. We have the three larger projects being the Medford frac, which is kind of in its heavy build stage at the moment as we move forward. The Denver pipeline also kind of in that phase. The addition of the plant down in North Texas, which is a reasonably quick and concentrated spend during that period and we're wrapping up the Easton acquisition. So that's the kind Kind of focus there in '26. Clearly, as some of those projects come on, some of that capital intensity will fall away. We'll have the dock project kind of being ramping-up in '26 and hit a stride as you get-out in the next couple of years after that. But towards the back-half of this year, we'll be getting into a pretty good spend rate as well. So that's really the gist of it. A lot of the other capital that we're spending around synergies and the like, they are very small -- extremely high-return projects that we've been working on to connect the refined products and the NGL system to really enhance the ability to move product around the system to be more efficient in blending activities and the like. So those are -- those are coming to completion and those are going to be additive in-kind of singles and doubles across the way as we build-out those synergies for '25 and '26.

Unidentified Participant
at ONEOK

Perfect. Thank you for that. And then the materials highlighted roughly 30 potential power plant expansion projects across your footprint, including the data centers. Just curious if you could provide an update on commercial development, how that's progressed and just our strategic positioning with fully in the portfolio now?

Sheridan Swords
Executive Vice President and Chief Commercial Officer at ONEOK

Yeah. This is Sheridan again. And what I would say we -- obviously, all 30 are at different levels, stages that we're talking to, some are further along than others. We do think we have a very good competitive advantage when we look at a lot of these data centers and that is especially in our Oklahoma and Texas assets that we're sitting so close to supply that is really cuts down on the transportation costs as we go-forward and with our integrated network to be able to -- with our OWT system out of West Texas being able to draw from all different plants in that area and the same thing in Oklahoma. So we're working on that. There are some, as always, you would expect, some are progressing more than others are progressing, but not all of them will get done.

And we're -- of that 30, that is, as Pierce mentioned, about 4 Bcf of demand that we're looking at. We kind of look across the United States, there's only about three somewhere between 3 and 6 Bcf of demand that we think will come into play. So we're going to have a look at a majority of that volume and we're very confident we're going to get our fair share of the demand from data centers.

Unidentified Participant
at ONEOK

Great. Thanks for the time.

Operator

The next question will come from Michael Bloom with Wells Fargo. Please go-ahead.

Michael Blum
Analyst at Wells Fargo & Company

Thanks. Good morning, everyone. I wanted to ask about 2026 capex. I realize you're not giving an estimate here, but just directionally, obviously, you have a big pickup in '25. Given the larger size and scale of the company now, is this -- is this kind of a new run-rate for the company?

Walter S. Hulse
Executive Vice President, Chief Financial Officer, Treasurer, Investor Relations and Corporate Devel at ONEOK

No, Michael, this is Walt. I think you definitely are seeing a kind of a peak here in '25 as we wrap-up Medford and the Denver project as it is in-full swing. Will we as a larger company, have a higher run-rate, rate definitely. But I think that you will see it as some of those come off and some of the synergy capital that we've been spending completed that our baseline will come down over '26 and into '27. But clearly, it will be higher than it would have been prior to the and the Medallion acquisitions. We definitely want to make sure that we continue to make sure that we have capacity available for our customers in the Permian and some of the new markets that we're entering.

Michael Blum
Analyst at Wells Fargo & Company

Okay. Thanks for that, Walt. And then just wanted to ask our level-set on synergies. Just wondering if you can just sort of clarify for us where synergies are tracking for, let's say, Magellan and Lincoln Medallion versus your original targets that you laid out? And then specifically the $250 million that you called out, is that incremental to what you had originally laid out or you're just saying this is the number for 2025? Thanks.

Walter S. Hulse
Executive Vice President, Chief Financial Officer, Treasurer, Investor Relations and Corporate Devel at ONEOK

Yeah. So in 2024, we had said that originally that we would have $175 million of synergies. Throughout the year, we signaled that we would exceed that amount and we clearly have. You can look at the results in RP&C for '24 versus what would have been a '23 range, and we've definitely seen a benefit from some of that starting to come home. And so we did better than the 175 as we headed into '25. We had said that there would be an additional 125, is it related to Magellan in 2025. And so we're layering in another 125 on-top of that. Recognizing that we may have achieved some of those the original planned out 2025 Magellan in 2024.

So I think it speaks to the increased opportunities that we've continued to see as the teams have gotten together to do those singles and doubles and really, really optimize the NGL and refined product systems to open up a lot of new opportunities.

Michael Blum
Analyst at Wells Fargo & Company

Got it. Thank you

Operator

And the next question will come from Manav Gupta with UBS. Please go-ahead.

Manav Gupta
Analyst at UBS Group

Good morning. On your 2025 guide, can you help us understand what drives you towards the top-end of the guide, especially for the natural gas liquids and refined products and fruit segments, like what could get you to $3.1 billion and $2.3 billion, respectively in 2025 for those two segments.

Walter S. Hulse
Executive Vice President, Chief Financial Officer, Treasurer, Investor Relations and Corporate Devel at ONEOK

I think that as you look at the business, some of it's the timing of when we bring in some of these synergies. As we are able to get certain assets connected, we are going to bring those -- bring those earnings home quicker. Clearly, know, there can be opportunities as our producers if they see continued strength in commodity prices or gas prices here, they can help us out on that front. But I think that while we're not going to have to rely just on increased producer activity, I do think that we have the innovation of our team as they continue to look for opportunities to optimize. Those smaller synergies, they may only be a $10 million, $15 million add to EBITDA, but you do a bunch of them and they start to add-up pretty quick.

Manav Gupta
Analyst at UBS Group

Perfect. My quick follow-up here is now that you're operating with Medallion and, are there any opportunities operationally that you are seeing which you did not see earlier when you actually did the deal? So those are like-kind of positive surprises. Can you talk a little bit about any positive surprises of these two deals

Sheridan Swords
Executive Vice President and Chief Commercial Officer at ONEOK

This is. I would say as we continue as we saw with Magellan, when we start getting our people together and the people that really run these assets and they start talking to each other and working together, the synergy opportunities almost start just kind of boiling out. When we went and bought and we looked at-the-money we think we could made before we bought it, we knew predominantly where they were going to come from and we knew kind of what we thought was there, but we didn't as with Magellan, we didn't know the scale of what that could be when you really get the people operating those assets to continue to go-forward. You know, we're seeing a bunch of opportunities in the Mid-Continent for G&P for quick connects between our two systems up there where we can get gas to more efficient gas plants that produces more NGLs or our NGL system.

We knew that was there, but how fast we can get there and how big that is has been -- has been a really good supply. You get down into the Permian, you talk about, we've been able to very quickly be able to put ourselves into positions to be able to-market crude oil in that area, which helps us to put more crude oil right away onto our long-haul pipes. The speed that we were able to do that has been -- has been phenomenal. We've been really excited about that being able to go-forward. And then a couple of things that we didn't even really consider was the synergies between our in-link crude oil system and our medallion crude oil system have really been a positive mover for us that they found different ways to be able to connect those systems as we continue to go-forward. Or even just simple things as we've had opportunities where we have crew trucks that were driving an in-link crew truck that was driving by a medallion terminal that we've been able to lower our crew trucking cost just by bringing it to lower -- closer locations to the wellhead. So we continue to see that.

And as Walt mentioned, as we think about how do we get to the higher-end of the 2025 guidance is how fast we can put these together and how New ones continue to come on, which is what we saw as I mentioned before, what we saw with the Magell and with the Magellan acquisition is getting the teams together and define this.

Manav Gupta
Analyst at UBS Group

Thank you so much.

Operator

All right. The next question will come from Keith Stanley with Wolfe Research. Please go-ahead.

Keith Stanley
Analyst at Wolfe Research

Hi, good morning. Wanted to follow-up first on the 2026 EBITDA outlook and synergies. So you said $250 million of incremental synergies this year. Is there a number you can provide for 2026? It sounds like a lot of the projects are coming on of incremental synergies versus this year.

Walter S. Hulse
Executive Vice President, Chief Financial Officer, Treasurer, Investor Relations and Corporate Devel at ONEOK

Yeah, we're not going to guide to a specific number. At this point in time, it's kind of baked into our outlook at this point. But what I would say is that the further we get down the path with multiple acquisitions, you know, some of the supply-chain type of synergies start to blend together. When we're buying for the four companies together as opposed to just legacy OneOak, they're a little bit less easy to identify where we should point them to, whether they're Magellan synergies or Medallion synergies or unlinked. So some of those kind of get grouped together and we're just seeing a net benefit to the company.

So at this point in '26, we're going to just leave it at those synergies that we have identified today are baked into that number and we'll continue to try to find more and refine that number as we get closer to when we provide actual guidance for '26, but that is our outlook today with what we know so-far.

Keith Stanley
Analyst at Wolfe Research

Great. And maybe on the export facility, can you give a sense of expected returns on the project or contracts that are in-place today? And then separately on exports, just how it affects your strategy and how you're thinking about organic growth or M&A, particularly in the Permian once you have this facility in-place.

Sheridan Swords
Executive Vice President and Chief Commercial Officer at ONEOK

We'll start with the one at the end is, our strategy across our whole-system, not just in the Permian, is to touch a barrel as many times as we can to be fully-integrated that we can bring. And that way we feel we can bring the most value to our customer -- to our producer customers. And this is just one more -- one more stop or one more leg in this integration that we think it's critical to be able to continue to be competitive in all the areas that we're across. We continue to see a lot of demand for the as we continue to go-forward. We're -- our returns are going to be in the mid-teens to higher teens on this project as we continue to go for that's kind of what our economics are looking like right now.

But it is an integrated -- it's more of our integrated play that we're trying to do is touch the barrel as many times as we can, so we can offer a full suite of offerings to our producer customers and to be able to test the barrels as many times as possible.

Pierce H. Norton
President and Chief Executive Officer at ONEOK

This is Pierce. I think you had a question about M&A, in particular in the Permian. The way I would answer that is that we continue to be focused on the integration of the companies that we've bought so-far. And we're -- we're focused on realizing those synergies across that footprint. Having said that, there's a couple of ways that things come on the market. One is strategic, which is usually public-to-public and then the other one is through the private-equity chain. There probably is going to be some of those things coming on the market in the future. We look at everything, but it will be -- left to be seen whether or not those transact or not, but we're going to be intentional and disciplined in the way that we approach all of our M&A future opportunities.

Keith Stanley
Analyst at Wolfe Research

Thank you.

Operator

And the next question will come from Sunil Sapal with Seaport Global Securities. Please go-ahead.

Sunil Sibal
Analyst at Seaport Global Securities

Hi, good morning, everybody, and thanks for the time. I was going-in and out, so I'm not sure if this was addressed. But I wanted to start-off on the Permian side of things. I believe your processing capacity is around 1.7 Bcf per day there. Could you tell us what kind of utilization that is running at? And then the downstream of the processing plants, approximately how much of the NGL volumes you control from the marketing point-of-view?

Sheridan Swords
Executive Vice President and Chief Commercial Officer at ONEOK

So what I would say on the -- on the 1.5 to 1.7 Bcf and the utilization of that. As we mentioned, we are moving a gas plant out-of-the North Texas down into the Permian Basin and we wouldn't be doing that unless we were anticipating that the volume -- the capacity that we have in the Permian Basin today is going to be fully utilized as we continue to go-forward. So that's how we think about volume going-forward in 2025. As it relates to on the downstream side of that, with utilization on NGL pipe, we've talked about that we have plenty capacity with the expansion of the West Texas NGL system that will be here in this year up to 740,000 barrels a day with a lot of capacity that wasn't spoken for because we didn't need that much to sanction that project.

And as we continue -- continue to go-forward on that. And as what we're seeing in is all the new volume -- majority of the new volume that we are getting on the system and the majority of the volume that is on that system, we have the marketing rights to. We control it. There are some legacy contracts with Magella that has a significant amount of volume that they have that we have the marketing rights to it, but we already had in-place NGL contracts to other service providers. And when that volume rolls off-contract, that will automatically come over to our system at that time.

Sunil Sibal
Analyst at Seaport Global Securities

Okay. Okay, got it. Thanks for that. And then on the -- on the stock buybacks, I think your previous guidance, sorry, can you hear me? All right?

Unidentified Speaker
at ONEOK

Yeah.

Sunil Sibal
Analyst at Seaport Global Securities

Yeah. So I think your previous guidance on leverage was exiting 2025 at 3.9% 3.9 and obviously, with the new guidance, you're talking about 3.5 times leverage in 2026, so it seems like you're making good progress there. So I was kind of curious how should we think about the cadence of the stock buyback program that you have.

Walter S. Hulse
Executive Vice President, Chief Financial Officer, Treasurer, Investor Relations and Corporate Devel at ONEOK

Well, I mean, clearly, the -- we are mindful to make sure that we get our debt metrics in-line with our goals and we're looking at the business as we go-forward. That said, we have the full intention of completing the $2 billion of buybacks over the course of the program that the Board set forward. And we saw a situation there at year end where we had the proceeds from the sale of assets to DTM, where we were sitting on a very large amount of cash. And as I mentioned before, we -- even with those, we closed out the year with $773 million of cash on the balance sheet. So we were opportunistic there to get started on that program and we'll look at things during 2025.

But clearly, I think that the bulk of the $2 billion will be back-weighted as we get-in the final two years as our metrics have hit our goals from a debt to debt metric side.

Sunil Sibal
Analyst at Seaport Global Securities

Got it. Thanks for that.

Operator

And the next question will come from Neil Bingman with Truist Securities. Please go-ahead.

Neal Dingmann
Analyst at Truist Securities

Good morning. Thanks for the time. I guess just you've hit a lot of these. I guess my question just on -- heard a lot of the overall producers just give their new plans for 2025. And to me, they all sound quite good or at least the same. I'm just wondering, based on what you've heard now from plans and what you guys have had with conversations. Do you still have sort of the same expectations for production in some of your key areas as you did last year?

Sheridan Swords
Executive Vice President and Chief Commercial Officer at ONEOK

Yeah. Yeah, we've had a lot of conversations with our producers and what they're seeing going-forward. And I would probably say we are at or above where we thought we would be last year a lot with the -- let's take the Bakken, the consolidation that's up in the Bakken. We're bringing producers with different types of efficiency on the wellhead. They're consolidating acreage so they can drill longer laterals. That's going to bring more volume into our system. We're seeing that also in the Mid-Continent where a little bit, as we mentioned earlier today, gas prices are up a little bit more.

We're seeing people starting to come in a little bit harder in the Mid-Continent, which -- and all this is reflected into our guidance. But I would say we're at or above where we would thought we would be three, four months ago for sure.

Neal Dingmann
Analyst at Truist Securities

No, that's great to hear. And then just maybe just a quick follow-up on EnLink. I'm just wondering now fully under your control. I'm just wonder, are you all seeing additional opportunities to accelerate and maybe just how customer demand is looking there also?

Sheridan Swords
Executive Vice President and Chief Commercial Officer at ONEOK

Yeah. I mean, we are. I think especially in the Permian, you know, we have a team out there that's highly focused on growing that Permian asset and they are getting after it. We see a lot of opportunities. There's a lot of RFPs coming out right now that we are looking at. And we are excited about what we see out there and bring this new plan on, look at what else we can do with our integrated footprint out there that -- so within Link and thinking about G&P, very much excited there, then you get up in the Mid-Continent. We have a much wider expanse across that area, especially as you look out to the western side where we see a lot of activity with the combination of the in-link assets and to be able to serve those producers out there, it -- I think that -- I think the team is pretty jazzed up to be able to continue to put these two things together and continue to grow this with all the activity we're seeing.

Neal Dingmann
Analyst at Truist Securities

Great to hear it. Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Pierce Norton, CEO for any closing remarks.

Pierce H. Norton
President and Chief Executive Officer at ONEOK

Thank you. Before I wrap-up today, I want to take a moment to recognize two individuals who have contributed significantly to OneOak's success over the years. Chuck Kelly is retiring after 25 years of service. Most recently, he was our Senior Vice-President of Natural Gas Pipelines, but has also served in key leadership roles in energy services, corporate development and natural gas-gathering and processing over the years. And Andrew Ziola, the Vice-President of Investor Relations who after 20 years of dedicated service, he has announced his retirement. Andrew has been an important part of the organization through significant change in-progress.

Many of you have known and worked with Andrew for years and his presence will be -- certainly be missed. Both of these gentlemen have made contributions that will have a lasting impact on our company. Please join me in congratulating them on an outstanding careers and in wishing them the very best-in their next exciting chapter. I'm also pleased to announce that Megan Patterson, who many of you know and who you worked alongside Andrew for a number of years will be stepping into Andrew's role.

With that, I'll now turn the call over to Megan for closing remarks.

Megan Patterson
Director, Investor Relations at ONEOK

Thank you, Pierce. Our quiet period for the full-quarter starts when we close our books in early-April and extends until we release in late April. We'll provide details for that conference call at a later date. The IR team will be available throughout the day-today for any follow-ups. Thank you for joining us and have a great day.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect

Corporate Executives
  • Andrew Ziola
    Vice President, Investor Relations and Corporate Affairs
  • Pierce H. Norton
    President and Chief Executive Officer
  • Walter S. Hulse
    Executive Vice President, Chief Financial Officer, Treasurer, Investor Relations and Corporate Devel
  • Sheridan Swords
    Executive Vice President and Chief Commercial Officer
  • Unidentified Speaker
  • Megan Patterson
    Director, Investor Relations
Analysts

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