Analysis of Debt
Total Debt (Carrying Amount)
ONEOK Inc., balance sheet: debt
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The total debt and finance lease liability profile exhibits a significant expansion phase between 2018 and 2020, followed by a period of relative stabilization. Total obligations rose from approximately $9.41 billion in 2018 to a peak of $14.26 billion by the end of 2020, representing an increase of approximately 51.5% over two years. From 2021 through 2022, the total carrying amount remained stable, settling at $13.64 billion.
- Long-Term Debt Composition
- The primary driver of the overall debt trend is the long-term debt excluding current maturities. This component grew aggressively from $8.87 billion in 2018 to $14.23 billion in 2020. A subsequent reduction occurred in 2021, with the balance adjusting to $12.75 billion and remaining nearly flat through 2022. This suggests a period of heavy capital raising or acquisition financing followed by a shift toward debt maintenance or partial repayment.
- Current Maturity Volatility
- Current maturities of long-term debt demonstrate significant fluctuations. After a balance of $507.65 million in 2018, obligations dropped precipitously to $7.65 million in both 2019 and 2020. However, a sharp increase is observed in 2021 and 2022, with current maturities rising to $895.81 million and $925 million, respectively. This indicates a concentration of debt maturities moving into the short-term horizon.
- Short-Term Borrowings and Lease Liabilities
- Short-term borrowings were only present in 2019 at $220 million, remaining absent in all other reported years. Finance lease liabilities represent a negligible portion of the total debt structure. While current finance lease liabilities saw a gradual increase from $1.77 million in 2018 to $2.95 million in 2022, noncurrent finance lease liabilities experienced a steady decline from $26.24 million to $19.30 million over the same period.
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Total Debt (Fair Value)
| Dec 31, 2022 | |
|---|---|
| Selected Financial Data (US$ in thousands) | |
| Short-term borrowings | —) |
| Long-term debt, including current maturities | 12,700,000) |
| Current finance lease liability | 2,954) |
| Noncurrent finance lease liability | 19,299) |
| Total finance lease liability (fair value) | 22,253) |
| Total debt and finance lease liability (fair value) | 12,722,253) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.93 |
Based on: 10-K (reporting date: 2022-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt and finance lease liability: 5.09%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 5.00% | 425,000) | 21,250) | |
| 7.50% | 500,000) | 37,500) | |
| 2.75% | 500,000) | 13,750) | |
| 4.90% | 500,000) | 24,500) | |
| 2.20% | 387,000) | 8,514) | |
| 5.85% | 600,000) | 35,100) | |
| 4.00% | 500,000) | 20,000) | |
| 4.55% | 800,000) | 36,400) | |
| 6.88% | 100,000) | 6,875) | |
| 4.35% | 700,000) | 30,450) | |
| 3.40% | 714,251) | 24,285) | |
| 3.10% | 780,093) | 24,183) | |
| 6.35% | 600,000) | 38,100) | |
| 6.10% | 750,000) | 45,750) | |
| 6.00% | 400,000) | 24,000) | |
| 6.65% | 600,000) | 39,900) | |
| 6.85% | 600,000) | 41,100) | |
| 6.13% | 650,000) | 39,813) | |
| 6.20% | 400,000) | 24,800) | |
| 4.95% | 689,006) | 34,106) | |
| 5.20% | 1,000,000) | 52,000) | |
| 4.45% | 672,530) | 29,928) | |
| 4.50% | 443,015) | 19,936) | |
| 7.15% | 300,000) | 21,450) | |
| 4.06% | 120,000) | 4,872) | |
| 9.43% | 2,954) | 279) | |
| 9.43% | 19,299) | 1,820) | |
| Total | 13,753,148) | 700,658) | |
| 5.09% | |||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Weighted-average interest rate = 100 × 700,658 ÷ 13,753,148 = 5.09%
Interest Costs Incurred
ONEOK Inc., interest costs incurred
US$ in thousands
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
Total interest costs incurred demonstrated a significant upward trend from 2018 through 2020, followed by a period of gradual stabilization and slight contraction through 2022. The most pronounced increase occurred between 2019 and 2020, during which total costs rose from 599,048 thousand to 788,322 thousand, representing a growth of approximately 31.6%.
- Interest Expense Trends
- Interest expense remained relatively stable between 2018 and 2019 before experiencing a substantial surge in 2020, increasing by approximately 44.7%. This upward movement peaked in 2021 at 732,924 thousand before declining to 675,946 thousand in 2022, suggesting a reduction in total debt obligations or a favorable refinancing of existing liabilities in the final year of the period.
- Capitalized Interest Volatility
- Capitalized interest exhibited high volatility throughout the analyzed period, peaking in 2019 at 107,275 thousand. A sharp decline followed, reaching a period low of 25,150 thousand in 2021, before recovering to 57,426 thousand in 2022. These fluctuations indicate variability in the scale and timing of capital expenditure projects requiring interest capitalization.
- Composite Interest Cost Analysis
- The aggregate interest costs incurred peaked in 2020 at 788,322 thousand. While interest expense provided the primary driver for the overall increase during the 2018-2020 window, the subsequent decline in total costs from 2020 to 2022 was driven by a combination of lower interest expenses and a general reduction in the volume of capitalized interest compared to the 2019 peak.
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Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense, net of capitalized interest
= 2,925,591 ÷ 675,946 = 4.33
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 2,925,591 ÷ 733,372 = 3.99
The analysis of interest coverage ratios from 2018 to 2022 reveals a period of relative stability interrupted by a significant contraction in 2020, followed by a full recovery to baseline levels by the end of 2022.
- Interest Coverage Ratio (Without Capitalized Interest)
- This metric exhibited a slight upward movement from 4.23 in 2018 to 4.36 in 2019. A sharp decline occurred in 2020, where the ratio fell to 2.13, indicating a weakened ability to service interest obligations from operating earnings. However, a consistent recovery followed, with the ratio climbing to 3.71 in 2021 and concluding at 4.33 in 2022, returning to the levels observed prior to 2020.
- Adjusted Interest Coverage Ratio (With Capitalized Interest)
- The adjusted ratio, which incorporates capitalized interest, followed a similar trajectory but remained consistently lower than the non-adjusted figure. Starting at 3.99 in 2018, the ratio declined to 3.58 in 2019 and reached a minimum of 1.92 in 2020. The metric then recovered to 3.58 in 2021 and returned exactly to its 2018 level of 3.99 by December 31, 2022.
- Comparative Analysis and Observations
- A persistent gap is observed between the two ratios, as the inclusion of capitalized interest consistently lowers the coverage multiple, reflecting the additional financial burden of capitalization. The most acute period of volatility occurred in 2020, where both metrics reached their lowest points, suggesting a temporary compression of earnings relative to interest expenses. The return of the adjusted ratio to 3.99 in 2022 indicates a restoration of the company's historical debt-servicing capacity.
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