ONEOK Reaches Agreement on Medford NGL Facility Insurance Claim for $930 million

Rhea-AI Summary

ONEOK has settled its insurance claims for $930 million related to the July 2022 Medford incident, receiving $100 million to date. The remaining payment is due from insurers within 45 days. Following this resolution, ONEOK plans to construct a new 125,000 bpd NGL fractionator at Mont Belvieu, Texas, expected to cost $550 million and complete in 24 months. This facility will enhance their fractionation capacity to meet Gulf Coast demand for purity ethane. The new project is set to improve operational efficiency and align with market trends in NGL supply.

Positive

• Settlement of $930 million for Medford incident insurance claims enhances financial certainty.
• New 125,000 bpd fractionator will increase total capacity to approximately 700,000 bpd in Mont Belvieu.
• Construction expected to be completed in 24 months, improving operational efficiency.
• Shifts production to purity ethane, aligning with market demand trends.

Negative

• None.

Announces Plans to Build NGL Fractionator in Mont Belvieu

Preserving Medford Equipment for Potential Future Use

TULSA, Okla., Jan. 9, 2023 /PRNewswire/ -- ONEOK, Inc. (NYSE: OKE) today announced that it has reached an agreement with its insurers to settle all claims for physical damage and business interruption related to the Medford incident that occurred in July 2022.

Under the terms of the settlement agreement, ONEOK agreed to resolve its claim for total insurance payments of $930 million, including $100 million received to date. The outstanding settlement payment is required to be paid by the insurers within 45 days. The proceeds will serve as settlement for property damage and as a payment in lieu of future business interruption insurance claims.

With the insurance claim now resolved, the company is also announcing plans to construct a new 125,000-barrel per day (bpd) NGL fractionator at its Mont Belvieu, Texas, facility. Upon completion, the new fractionator, MB-6, will increase the company's total fractionation capacity in Mont Belvieu to approximately 700,000 bpd and better align ONEOK's fractionation capacity with NGL market demand in the Gulf Coast.

Additionally, the MB-6 fractionator will produce purity ethane instead of an ethane/propane (E/P) mix previously produced at the Medford facility. The new 125,000 bpd MB-6 fractionator would be equivalent to approximately 185,000 bpd of capacity at the Medford facility. The demand for E/P mix has decreased while the demand for purity ethane has increased in the Gulf Coast, causing much of the Medford E/P mix to be transported south and split into purity ethane and propane consuming capacity at ONEOK's existing Mont Belvieu facilities. ONEOK's E/P mix output from the remaining Mid-Continent fractionation facilities at Bushton, Hutchinson and Conway is expected to be enough to meet market demand.

Construction of MB-6 is expected to be completed in approximately 24 months at a total cost of approximately $550 million and has a more favorable completion schedule when compared with rebuilding at Medford due to the following:

• Permitting for the MB-6 facility is complete by applicable regulatory agencies;
• Engineering is substantially complete due to the ability to utilize similar engineering designs and purchase orders from the two previous fractionation facilities, MB-5 and MB-4; and
• The company's ability to efficiently transition the existing construction resources at ONEOK's MB-5 fractionator to the MB-6 fractionator.

MB-5, having a capacity of 125,000 bpd, remains on schedule to be completed early in the second quarter 2023 thus reducing the current need for third-party fractionation through the rebuild process.

ONEOK will continue to operate NGL pipeline assets in Medford along with existing offices for regional operations. In addition, ONEOK is preserving assets for future potential NGL facilities that could be constructed in Medford to enhance its NGL business as the market evolves.

"We are pleased to have come to a successful agreement with our insurance carriers that was the result of a collaborative process," said Pierce H. Norton II, ONEOK president and chief executive officer. "This agreement provides us the certainty of insurance recovery, and shortens the construction period to restore the most efficient fractionation capacity to our integrated system to meet expected growth in NGL supply for petrochemical and export demand."

When the insurance proceeds are received, the company expects to apply cash from the settlement payment to the balance of any insurance receivables outstanding as of December 31, 2022, and record a gain for the remaining settlement proceeds in the first quarter 2023.

ONEOK, Inc. (pronounced ONE-OAK) (NYSE: OKE) is a leading midstream service provider and owner of one of the nation's premier natural gas liquids (NGL) systems, connecting NGL supply in the Rocky Mountain, Mid-Continent and Permian regions with key market centers and an extensive network of natural gas gathering, processing, storage, and transportation assets.

ONEOK is a FORTUNE 500 company and is included in S&P 500.

For information about ONEOK, visit the website: www.oneok.com.

For the latest news about ONEOK, find us on LinkedIn, Instagram, Facebook and Twitter.

Some of the statements contained and incorporated in this news release are forward-looking statements as defined under federal securities laws. The forward-looking statements relate to our anticipated financial performance (including projected levels of quarterly and annual dividends), liquidity, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under federal securities laws and other applicable laws.

Forward-looking statements include the items identified in the preceding paragraph, the information concerning possible or assumed future results of our operations and other statements contained or incorporated in this news release identified by words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "guidance," "intend," "may," "might," "plan," "potential," "proposed," "project," "scheduled," "should," "will," "would" and other words and terms of similar meaning.

One should not place undue reliance on forward-looking statements. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Those factors may affect our operations, markets, products, services and prices. These and other risks are described in greater detail in Item 1A, Risk Factors, in our most recent Annual Report on Form 10-K and in the other filings that we make with the Securities and Exchange Commission (SEC), which are available on the SEC's website at www.sec.gov. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Any such forward-looking statement speaks only as of the date on which such statement is made, and, other than as required under securities laws, we undertake no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.

Analyst Contact:	Andrew Ziola
	918-588-7683
Media Contact:	Brad Borror
	918-588-7582

View original content:https://www.prnewswire.com/news-releases/oneok-reaches-agreement-on-medford-ngl-facility-insurance-claim-for-930-million-301716780.html

SOURCE ONEOK, Inc.

FAQ

What is ONEOK's recent insurance settlement related to the Medford incident?

ONEOK reached a $930 million insurance settlement for the Medford incident that occurred in July 2022.

What are the plans for the new NGL fractionator at Mont Belvieu?

ONEOK plans to construct a new 125,000 bpd NGL fractionator at Mont Belvieu to enhance capacity and meet market demand.

When will the new Mont Belvieu fractionator be completed?

The new fractionator is expected to be completed in approximately 24 months.

How will the new fractionator impact ONEOK's operational capacity?

The new fractionator will increase ONEOK's total fractionation capacity to around 700,000 bpd.

What will happen to the existing fractionation facilities at Medford?

ONEOK is preserving Medford assets for future potential NGL facilities, but focusing on Mont Belvieu for current operations.