ITEM 3. LEGAL PROCEEDINGSInformation about our legal proceedings is included in Note O of the Notes to Consolidated Financial Statements in this Annual Report.ITEM 4. MINE SAFETY DISCLOSURESNot applicable.PART IIITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESOur common stock is listed on the NYSE under the trading symbol "OKE." The corporate name ONEOK is used in stock listings.At February 21, 2023, there were 13,064 holders of record of our 447,220,972 outstanding shares of common stock.For information regarding our Employee Stock Award Program and other equity compensation plans, see Note K of the Notes to Consolidated Financial Statements and "Equity Compensation Plan Information" included in Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, in this Annual Report. 35Table of ContentsPERFORMANCE GRAPHThe following performance graph compares the performance of our common stock with the S&P 500 Index, the Alerian Midstream Energy Select Index and a ONEOK Peer Group during the period beginning on December 31, 2017, and ending on December 31, 2022. Value of a $100 Investment, Assuming Reinvestment of Distributions/Dividends,at December 31, 2017, and at the End of Every Year Through December 31, 2022. Cumulative Total Return Years Ended December 31, 20182019202020212022ONEOK, Inc.$106.28 $157.06 $88.96 $146.64 $174.36 S&P 500 Index$95.62 $125.72 $148.85 $191.58 $156.88 ONEOK Peer Group (a)$88.62 $104.19 $76.75 $102.24 $129.86 Alerian Midstream Energy Select Index (b)$82.33 $100.72 $77.13 $108.56 $129.35 (a) - The current ONEOK Peer Group is composed of the following companies: DCP Midstream, LP; Energy Transfer LP; EnLink Midstream, LLC; Enterprise Products Partners L.P.; Kinder Morgan, Inc.; Magellan Midstream Partners, L.P.; MPLX LP; NuStar Energy L.P.; Plains All American Pipeline, L.P.; Targa Resources Corp.; Western Midstream Partners, LP; and The Williams Companies, Inc.(b) - The Alerian Midstream Energy Select Index measures the composite performance of approximately 29 North American energy infrastructure companies who are engaged in midstream activities involving energy commodities.ITEM 6. [RESERVED]36Table of ContentsITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following discussion and analysis should be read in conjunction with Part I, Item 1, Business, our audited Consolidated Financial Statements and the Notes to Consolidated Financial Statements in this Annual Report.RECENT DEVELOPMENTSPlease refer to the "Financial Results and Operating Information" and "Liquidity and Capital Resources" sections of Management's Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report for additional information.Market Conditions - We experienced earnings growth in 2022, compared with 2021, due primarily to increased producer activity across our operations, higher realized commodity prices, net of hedging and higher average fee rates. In 2023, we expect to benefit from higher volumes, our completed Demicks Lake III natural gas processing plant and the expected completion of our MB-5 NGL fractionator, highlighting our extensive and integrated assets that are located in some of the most productive shale basins in the United States.Medford Incident - On July 9, 2022, a fire occurred at our 210 MBbl/d Medford, Oklahoma, natural gas liquids fractionation facility. All personnel were safe and accounted for with temporary evacuations of local residents taken as a precautionary measure.Net income for the year ended December 31, 2022, includes the unfavorable impact of our $5 million property deductible and approximately $30 million of losses incurred associated with the 45-day waiting period for business interruption coverage. Beginning in August 2022, we developed claims related to the Medford incident and recorded accruals for expected insurance recoveries. The table below sets forth our 2022 insurance accruals associated with the Medford incident:2022 Insurance Accruals(Millions of dollars)Business interruption$96.1 Noncash property losses45.6 Medford response expenses9.0 Total insurance recoveries accrued (a)$150.7 (a) - We received a $100 million payment in the fourth quarter 2022, leaving a receivable balance at December 31, 2022, of $50.7 million.Our business interruption insurance includes coverage for (i) incurred costs and losses that are either unavoidable or incurred to mitigate or reduce losses and (ii) lost earnings. Our business interruption insurance accruals in the table above primarily represent third-party fractionation costs and fully offset the actual losses incurred in 2022, subsequent to the 45-day waiting period. We assessed the property damage to our facility and wrote off assets totaling $45.6 million, which represents the carrying value associated with certain damaged Medford facility property. These noncash property losses are fully offset by insurance recoveries noted in the table above. We expect to continue to operate NGL pipeline assets in Medford along with existing offices for regional operations. In addition, we are preserving certain Medford assets for future potential NGL facilities that could be constructed in Medford to enhance our NGL business as the market evolves. For additional information on the Medford incident, see Note B of the Notes to Consolidated Financial Statements in this Annual Report. Subsequent Event - On January 9, 2023, we reached an agreement with our insurers to settle all claims for physical damage and business interruption related to the Medford incident. Under the terms of the settlement agreement, we agreed to resolve the claims for total insurance payments of $930 million, $100 million of which was received in 2022. The remaining $830 million was received in the first quarter 2023. The proceeds serve as settlement for property damage, business interruption claims to the date of settlement and as payment in lieu of future business interruption insurance claims. In the first quarter 2023, we applied the $830 million received to our outstanding insurance receivable at December 31, 2022, of $50.7 million, and recorded a gain in operating income for the remaining $779.3 million. We expect our cash from operations in the remainder of 2023 and in 2024 to be impacted by incurred costs and losses resulting from the Medford incident for which we will no longer receive business interruption proceeds. 37Table of ContentsDue to market demand and a more favorable completion schedule, we announced plans to construct a new 125 MBbl/d MB-6 NGL fractionator in Mont Belvieu, Texas, instead of rebuilding our Medford NGL fractionator at this time. The MB-6 fractionator will have the capability to produce purity ethane instead of the ethane/propane mix previously produced at the Medford facility. The 125 MBbl/d capacity of the MB-6 fractionator is expected to be economically equivalent to the capacity lost at Medford. In addition, our 125 MBbl/d MB-5 NGL fractionator remains on schedule to be completed early in the second quarter of 2023, which is expected to reduce the need for third-party fractionation while the new MB-6 fractionator is being constructed. Until these projects are completed, we expect to continue to provide midstream services through existing arrangements with industry peers, along with our integrated NGL pipeline system between the Mid-Continent and Gulf Coast regions and our fractionation and storage assets. Ethane Production - Price differentials between ethane and natural gas can cause natural gas processors to extract ethane or leave it in the natural gas stream, known as ethane rejection. As a result of these ethane economics, ethane volumes on our system can fluctuate. In the second half of 2022, ethane prices decreased relative to natural gas prices, as overall demand decreased, and were further impacted by lower petrochemical plant utilization, both planned and unplanned. This resulted in higher ethane rejection across most basins where we operate, with the largest impact in the Mid-Continent region, compared with the first half of 2022. As utilization increases and demand for feedstock returns, we expect improvement in ethane economics; however, price fluctuations are expected to continue. Ethane volumes under long-term contracts delivered to our NGL system increased approximately 20 MBbl/d to an average of 450 MBbl/d in 2022, compared with 430 MBbl/d in 2021, due primarily to changes in ethane extraction economics. We estimate that there are more than 225 MBbl/d of discretionary ethane, consisting of more than 125 MBbl/d in the Rocky Mountain region and approximately 100 MBbl/d in the Mid-Continent region, that can be recovered and transported on our system.Growth Projects - We operate an integrated, reliable and diversified network of NGL and natural gas gathering, processing, fractionation, transportation and storage assets connecting supply in the Rocky Mountain, Mid-Continent and Permian regions with key market centers. Our primary capital-growth projects are outlined in the table below:ProjectScopeApproximateCosts (a)CompletionNatural Gas Gathering and Processing(In millions)Demicks Lake III plant200 MMcf/d processing plant in the core of the Williston Basin$188CompletedSupported by acreage dedications with primarily fee-based contracts Natural Gas LiquidsMB-5 fractionator125 MBbl/d NGL fractionator in Mont Belvieu, Texas$750Second Quarter 2023MB-6 fractionator125 MBbl/d NGL fractionator in Mont Belvieu, Texas$550First Quarter 2025Natural Gas PipelinesViking compressor stationsElectrification and replacement of certain compressor assets$95Third Quarter 2023(a) - Excludes capitalized interest/AFUDC.Debt Issuances and Repayments - In November 2022, we completed an underwritten public offering of $750 million, 6.1% senior unsecured notes due 2032. The net proceeds, after deducting underwriting discounts, commissions and offering expenses, were $742 million. The proceeds were used primarily to repay all outstanding amounts under our commercial paper program. The remainder was used for general corporate purposes.In July 2022, we redeemed the remaining $895.8 million of our 3.375% senior notes due October 2022 at 100% of the principal amount, plus accrued and unpaid interest, with cash on hand and short-term borrowings. Subsequent event - We elected to redeem our $425 million, 5.0% senior notes due September 2023, with a redemption effective date in late February 2023. We expect the redemption price to equal 100% of the principal amount of the notes, plus accrued and unpaid interest, which we will pay with cash on hand.Dividends - During 2022, we paid common stock dividends totaling $3.74 per share, which is consistent with the prior year. In February 2023, we paid a quarterly common stock dividend of $0.955 per share ($3.82 per share on an annualized basis), an increase of 2% compared with the same quarter in the prior year. Our dividend growth is primarily due to the increase in cash flows resulting from the growth of our operations.38Table of ContentsFINANCIAL RESULTS AND OPERATING INFORMATIONHow We Evaluate Our OperationsManagement uses a variety of financial and operating metrics to analyze our performance. Our consolidated financial metrics include: (1) operating income; (2) net income; (3) diluted EPS; and (4) adjusted EBITDA. We evaluate segment operating results using adjusted EBITDA and our operating metrics, which include various volume and rate statistics that are relevant for the respective segment. These operating metrics allow investors to analyze the various components of segment financial results in terms of volumes and rate/price. Management uses these metrics to analyze historical segment financial results and as the key inputs for forecasting and budgeting segment financial results. For additional information on our operating metrics, see the respective segment subsections of this "Financial Results and Operating Information" section.Non-GAAP Financial Measures - Adjusted EBITDA is a non-GAAP measure of our financial performance. Adjusted EBITDA is defined as net income adjusted for interest expense, depreciation and amortization, noncash impairment charges, income taxes, allowance for equity funds used during construction, noncash compensation expense and certain other noncash items. We believe this non-GAAP financial measure is useful to investors because it and similar measures are used by many companies in our industry as a measurement of financial performance and is commonly employed by financial analysts and others to evaluate our financial performance and to compare financial performance among companies in our industry. Adjusted EBITDA should not be considered an alternative to net income, EPS or any other measure of financial performance presented in accordance with GAAP. Additionally, this calculation may not be comparable with similarly titled measures of other companies.Consolidated OperationsSelected Financial Results - The following table sets forth certain selected financial results for the periods indicated: Years Ended December 31,2022 vs. 20212021 vs. 2020Financial Results202220212020$ Increase (Decrease) (Millions of dollars, except per share amounts)RevenuesCommodity sales$20,975.5 $15,180.3 $7,255.2 5,795.2 7,925.1 Services1,411.4 1,360.0 1,287.0 51.4 73.0 Total revenues22,386.9 16,540.3 8,542.2 5,846.6 7,998.1 Cost of sales and fuel (exclusive of items shown separately below)17,909.9 12,256.7 5,110.1 5,653.2 7,146.6 Operating costs1,149.7 1,067.0 886.1 82.7 180.9 Depreciation and amortization626.1 621.7 578.7 4.4 43.0 Impairment charges- - 607.2 - (607.2)Other operating (income) expense, net(106.2)(1.4)(1.3)104.8 0.1 Operating income$2,807.4 $2,596.3 $1,361.4 211.1 1,234.9 Equity in net earnings from investments$147.7 $122.5 $143.2 25.2 (20.7)Impairment of equity investments$- $- $(37.7)- (37.7)Interest expense, net of capitalized interest$(675.9)$(732.9)$(712.9)(57.0)20.0 Net income$1,722.2 $1,499.7 $612.8 222.5 886.9 Diluted EPS$3.84 $3.35 $1.42 0.49 1.93 Adjusted EBITDA$3,619.7 $3,379.7 $2,723.7 240.0 656.0 Capital expenditures$1,202.1 $696.9 $2,195.4 505.2 (1,498.5)See reconciliation of net income to adjusted EBITDA in the "Non-GAAP Financial Measures" section.Changes in commodity prices and sales volumes affect both revenues and cost of sales and fuel in our Consolidated Statements of Income and, therefore, the impact is largely offset between these line items, except where noted. Operating income for the year ended December 31, 2022, includes $96.1 million of business interruption insurance recoveries, which are included in the other operating (income) expense, net line item above, and an approximately $30 million unfavorable impact from the 45-day business interruption coverage waiting period related to the Medford incident in our Natural Gas Liquids segment. 39Table of Contents2022 vs. 2021 - Operating income increased $211.1 million primarily as a result of the following:•Natural Gas Gathering and Processing - an increase of $127.7 million due primarily to higher realized commodity prices, net of hedging, and higher average fee rates and $53.8 million from higher volumes in the Rocky Mountain and Mid-Continent regions; and •Natural Gas Liquids - an increase of $102.8 million in exchange services related primarily to higher average fee rates and higher volumes in the Rocky Mountain region and Permian Basin, offset partially by higher fuel and power costs and third-party fractionation costs; an increase of $46.2 million due to the unfavorable impact of Winter Storm Uri in the first quarter 2021 and $18.2 million in higher optimization and marketing earnings; offset by•Natural Gas Pipelines - a decrease of $134.7 million due to the favorable impact of Winter Storm Uri in the first quarter 2021, offset partially by increases of $92.1 million due primarily to higher storage and transportation services, higher average earnings on natural gas sales and higher pricing on compression services; and•Consolidated Operating Costs - an increase of $82.7 million due primarily to higher outside services, materials and supplies expense and property taxes, related primarily to the growth of our operations. Net income and diluted EPS increased due primarily to the items discussed above, lower interest expense related to increased capitalized interest and lower debt balances and higher equity in net earnings from investments. These increases were offset partially by higher income taxes and losses related to the mark-to-market of investments associated with certain benefit plan investments. Capital expenditures increased due primarily to our capital-growth projects, including the construction of our Demicks Lake III natural gas processing plant, our MB-5 fractionator and the Viking compression project. Additional information regarding our financial results and operating information is provided in the following discussion for each of our segments. Selected Financial Results and Operating Information for the Year Ended December 31, 2021 vs. 2020 - The consolidated and segment financial results and operating information for the year ended December 31, 2021, compared with the year ended December 31, 2020, are included in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations of our 2021 Annual Report on Form 10-K, which is available via the SEC's website at www.sec.gov and our website at www.oneok.com.Natural Gas Gathering and ProcessingGrowth Projects - Our Natural Gas Gathering and Processing segment has invested in growth projects in NGL-rich areas in the Williston Basin. See "Growth Projects" in the "Recent Developments" section for discussion of our capital-growth projects.For a discussion of our capital expenditure financing, see "Capital Expenditures" in the "Liquidity and Capital Resources" section.40Table of ContentsSelected Financial Results and Operating Information - The following tables set forth certain selected financial results and operating information for our Natural Gas Gathering and Processing segment for the periods indicated: Years Ended December 31,2022 vs. 20212021 vs. 2020Financial Results202220212020$ Increase (Decrease) (Millions of dollars)NGL and condensate sales$3,690.2 $2,821.2 $889.4 869.0 1,931.8 Residue natural gas sales2,674.4 1,483.9 771.5 1,190.5 712.4 Gathering, compression, dehydration and processing fees and other revenue168.9 156.4 159.2 12.5 (2.8)Cost of sales and fuel (exclusive of depreciation and operating costs)(5,116.6)(3,226.1)(844.0)1,890.5 2,382.1 Operating costs, excluding noncash compensation adjustments(386.6)(351.4)(320.0)35.2 31.4 Equity in net earnings (loss) from investments4.9 3.8 (1.1)1.1 4.9 Other1.4 1.3 (5.0)0.1 6.3 Adjusted EBITDA$1,036.6 $889.1 $650.0 147.5 239.1 Impairment charges$- $- $566.1 - (566.1)Capital expenditures$444.9 $275.2 $446.1 169.7 (170.9)See reconciliation of net income to adjusted EBITDA in the "Non-GAAP Financial Measures" section.Changes in commodity prices and sales volumes affect both revenue and cost of sales and fuel, and, therefore, the impact is largely offset between these line items. 2022 vs. 2021 - Adjusted EBITDA increased $147.5 million, primarily as a result of the following:•an increase of $127.7 million due primarily to higher realized commodity prices, net of hedging, and average fee rates; and•an increase of $53.8 million from higher volumes due primarily to increased producer activity in the Rocky Mountain and Mid-Continent regions, offset partially by the impact of winter weather in the Rocky Mountain region in the second and fourth quarters of 2022; offset by•an increase of $35.2 million in operating costs due primarily to higher materials and supplies expense due primarily to the growth of our operations and higher outside services.Capital expenditures increased due primarily to growth projects, including our Demicks Lake III project. Years Ended December 31,Operating Information (a)202220212020Natural gas gathered (BBtu/d)2,852 2,736 2,553 Natural gas processed (BBtu/d) (b)2,612 2,515 2,364 Average fee rate ($/MMBtu)$1.10 $1.04 $0.89 (a) - Includes volumes for consolidated entities only.(b) - Includes volumes we processed at company-owned and third-party facilities.2022 vs. 2021 - Our natural gas gathered and natural gas processed volumes increased due primarily to increased producer activity in the Rocky Mountain and Mid-Continent regions, offset partially by the unfavorable impact of winter weather in the Rocky Mountain region in the second and fourth quarters of 2022. Our average fee rate increased due primarily to increased contribution of volumes on higher fee contracts in the Williston Basin and inflation-based escalators in our contracts. Also, for certain fee with POP contracts, our contractual fees increased due to production volumes, delivery pressures, or commodity prices relative to specified contractual thresholds.Commodity Price Risk - See discussion regarding our commodity price risk under "Commodity Price Risk" in