Upping its guidance slightly above 2003 expectations, Oneok Inc. on Friday announced earnings guidance for 2004 in the range of $2.12 to $2.18 per share of common stock. The company noted that its guidance includes the Wagner & Brown Ltd. reserve acquisition announced in late October and expected to close on Dec. 22 (see Daily GPI, Oct. 30).

In addition, Oneok reaffirmed its previous guidance for 2003 in the range of $2.08 to $2.12 per share of common stock coming from continuing operations and expects the final number to be at the upper end of the range. However, the company noted that business segment adjustments have been made to the previous 2003 forecast primarily based upon commodity price movements and weather.

“It looks like we will finish fiscal 2003 strong, and I am pleased with the outlook for 2004, especially considering our estimate of a $14 million increase in health care and post-employment benefit costs,” said David Kyle, CEO.

Looking to 2004, Oneok said it expects operating income from the production segment to increase with the Wagner & Brown Ltd. acquisition by 220% to $48 million, which includes depreciation of $29 million. Capital expenditures are estimated at $43 million, which is an increase over 2003 due to anticipated drilling resulting from the acquisition.

The company estimated that annual natural gas production should be approximately 18 Bcf with an anticipated average wellhead price of $5.10/Mcf. More than 89% of the expected volumes are hedged. Oneok said oil production for the year is estimated to be over 400 MBbls at an average price of about $29 per barrel.

Regarding the gathering and processing segment, Oneok expects the operating income in 2004 to be comparable to 2003. The company said it expects natural gas prices for 2004 to come in at an average Nymex price of $5.40, which is close to the price experienced this year.

Operating income in 2004 from transportation and storage is also expected to be comparable to 2003. Oneok said sales margins will be higher primarily due to efforts to improve contracts and the inclusion of a large generation sales customer for the entire year.

Marketing and trading’s contribution to operating income is forecast to be $182 million in 2002 based on a more normal year of price volatility, especially as compared to the first quarter of 2003. The 2003 operating income forecast from the segment is $202 million.

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.