Notching a small drop-off from the previous year’s earnings, Oneok Inc. posted full-year 2003 net income of $112.5 million, or $1.22 per share, compared to $166.6 million, or $1.39 per share for 2002. Despite the fall-off in full-year earnings, net income for 4Q2003 jumped to $62.9 million, or 66 cents per diluted share, compared to $37.9 million, or 33 cents per diluted share during 4Q2002.

Oneok’s recorded income from continuing operations for fiscal 2003 of $214.3 million, or $2.13 per diluted share, compared with income from continuing operations of $156 million, or $1.30 per diluted share for 2002. Fourth quarter 2003 income from continuing operations was $61.5 million, or 65 cents per diluted share, compared with $34.6 million, or 30 cents per diluted share for 4Q2002.

“Obviously, I am pleased with the 2003 performance,” said David Kyle, CEO. “The results clearly show that our focus on executing our business strategy brings positive results for shareholders. We continue to look for opportunities to expand while we look to improve upon our existing operations.”

For the year, operating income from production increased to $16.1 million compared with $10.3 million in 2002. The company attributed its results to higher realized natural gas and crude oil prices, higher natural gas production volumes and lower depreciation and depletion rates. Oneok’s production segment owns, develops and produces natural gas and oil reserves in Oklahoma and Texas. The segment focuses on acquisition and development of reserves, rather than exploratory drilling.

Higher gas and oil prices also helped to boost the company’s gathering and processing business, increasing operating income on the year by almost 90% to $62.7 million, compared with $33.1 million for 2002. The company noted that approximately 0.2 Bcf/d of its 2 Bcf/d processing capacity is currently idle. The segment owns approximately 13,800 miles of gathering pipelines.

Oneok’s transportation and storage segment saw its operating income decrease to $50.8 million in 2003, compared with $53.3 million in 2002, as a result of the sale of operational inventory gas in 2002, which provided $12.7 million in net revenues, partially offset by revenues from the increased storage capacity created by those sales. The transportation and storage segment owns and operates intrastate pipelines and natural gas transmission pipelines, natural gas storage and gas gathering facilities in Oklahoma, Kansas and Texas. The company reported that the storage facilities have a combined working capacity of 59.6 Bcf, of which 8 Bcf is temporarily idle.

Oneok’s distribution segment, which includes Oklahoma Natural Gas Co., Kansas Gas Service Co. and Texas Gas Service Co., increased its operating income contribution in 2003 to $117.8 million, compared with $95.2 million in 2002. The company attributed the jump to the addition of $25.1 million of operating income resulting from the Texas gas distribution assets acquired in January 2003 and the approval of a rate order in Kansas, which increased operating income by $9.8 million.

Taking advantage of a number of factors, including the volatility in gas prices in the first part of 2003, colder than normal weather and the expansion of retail operations into Wyoming, Nebraska and Texas, Oneok’s marketing and trading segment contributed operating income of $197 million in 2003, compared with $181.5 million in 2002.

Looking forward, Oneok reaffirmed its Dec. 19, 2003 earnings guidance for 2004 in the range of $2.12 to $2.18 per share.

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