While ONEOK’s energy marketing and trading and production units prospered in the second quarter, gathering and processing suffered as a result of lower processing spreads, cutting net income to $23.6 million or 20 cents per diluted share, compared to $27.2 million or 23 cents per diluted share for the same period a year ago.

Results for the first half were more attractive, coming in at $69.9 million or 74 cents per diluted share, compared with $55.2 million or 47 cents per diluted share for the same period in 2000. All 2000 numbers are adjusted for a two-for-one stock split, effective June 11, 2001.

“Although we are pleased with what we have achieved so far in 2001, the outlook for earnings this year based upon current commodity pricing is that a 10% increase over last year’s earnings is more likely than the 20% previously discussed,” said David Kyle, ONEOK chairman. “The 10% growth is more in line with ONEOK’s longer term annual growth rate.”

Kyle said returns were bolstered by strong natural gas prices and hedges put in place last year. Those same higher prices, however, also narrowed processing margins and increased corporate interest costs and bad debts for distribution operations.

ONEOK’s energy marketing and trading segment increased net income to $36.2 million in the second quarter, from $25.4 million a year ago. Its income from gathering and processing, however, decreased to $6.9 million for April through June, 2001 from $29.6 million for the same quarter in 2000. “Higher natural gas prices were the key contributor to lower processing margins under the segment’s keep-whole contracts,” the company said.

Production operating income increased to $19.7 million in the quarter ending June 30 from $3.6 million in 2Q 2000. ONEOK’s hedging strategy produced an average gas price of $4.93/Mcf, a 54% increase over the same period in 2000. Production volumes, however, declined 5.3%.

The company’s transportation and storage operating income of $15.6 million was basically flat from year to year, while distribution operations lost $6.5 million in the just completed quarter, compared to a gain of $2.3 million for the same period in 2000.

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