ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our unaudited Consolidated Financial Statements and the Notes to Consolidated Financial Statements in this Quarterly Report, as well as our Annual Report.

RECENT DEVELOPMENTS

Please 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 Quarterly Report for additional information.

Gulf Coast NGL Pipelines Acquisition - In June 2024, we completed the acquisition of a system of NGL pipelines from Easton Energy, a Houston-based midstream company, for approximately $280 million. This acquisition in our Natural Gas Liquids segment includes approximately 450 miles of liquids products pipelines located in the strategic Gulf Coast market centers for NGLs, Refined Products and crude oil. A portion of the Easton assets are already connected to our Mont Belvieu assets. We expect to add connections to our Houston-based assets beginning in mid-2025 through the end of 2025.

Market Conditions and Business Update - Earnings increased in the second quarter of 2024, compared with the second quarter of 2023, due primarily to higher NGL and natural gas processing volumes in the Rocky Mountain region, increased transportation services in the Natural Gas Pipelines segment and contributions from the Refined Products and Crude segment. With the addition of our Refined Products and Crude segment due to the Magellan Acquisition, our extensive and integrated assets are located in, and connected with, some of the most productive shale basins, as well as refineries and demand centers, in the United States. Although the energy industry has experienced many commodity cycles, we have positioned ourselves to reduce exposure to direct commodity price volatility. Each of our four reportable segments are primarily fee-based, and we expect our consolidated earnings to be more than 85% fee-based in 2024.

Ethane Economics - Price differentials between ethane and natural gas can cause natural gas processors to recover 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. Ethane volumes under long-term contracts delivered to our NGL system during the second quarter of 2024 remained relatively unchanged compared with the second quarter of 2023. We estimate that there are approximately 250 MBbl/d of discretionary ethane, consisting of approximately 150 MBbl/d in the Rocky Mountain region and approximately 100 MBbl/d in the Mid-Continent region, which could be recovered and transported on our system.

Capital Projects - Our primary capital projects are outlined in the table below:

ProjectScopeApproximateCost (a)

Expected Completion

Natural Gas Liquids(In millions)

MB-6 fractionator125 MBbl/d NGL fractionator in Mont Belvieu, Texas$550Year-End 2024 (b)

West Texas NGL pipeline expansion

Increase capacity via pipeline looping in the Permian Basin

$520Year-End 2024 (b)

Elk Creek pipeline expansionIncrease capacity to 435 MBbl/d out of the Rocky Mountain region$355First Quarter 2025

Refined Products and Crude

Greater Denver pipeline expansion

Increase total system capacity by 35 MBbl/d and additional expansion capabilities

$480Mid-2026

(a) - Excludes capitalized interest/AFUDC.

(b) - This project originally had an estimated completion of first quarter 2025.

In July 2024, we announced plans to expand our Refined Products pipeline capacity, connecting Mid-Continent and Gulf Coast supply with the greater Denver area, to meet growing demand and increase connectivity with the Denver International Airport (DIA). The project includes construction of a new 230-mile, 16-inch diameter pipeline from Scott City, Kansas, to DIA and the addition or upgrading of certain pump stations along the existing Refined Products pipeline system. Total system capacity will increase by 35 MBbl/d and will have additional expansion capabilities. This project is fully subscribed under long-term contracts.

At the end of the first quarter of 2024, we completed the expansion of our Refined Products pipeline to El Paso, Texas. This expansion connects more supply to growing markets in Texas, New Mexico, Arizona and Mexico.

For a discussion of our capital expenditure financing, see "Capital Expenditures" in the "Liquidity and Capital Resources" section.

Share Repurchase Program - In January 2024, our Board of Directors authorized a share repurchase program to buy up to $2.0 billion of our outstanding common stock and targets the program to be largely utilized over the next four years. We expect shares to be acquired from time to time in open-market transactions or through privately negotiated transactions at our discretion, subject to market conditions and other factors. We expect any purchases to be funded by cash on hand, operating cash flows and short-term borrowings. The program will terminate upon completion of the repurchase of $2.0 billion of common stock or on January 1, 2029, whichever occurs first. As of July 29, 2024, no shares have been repurchased under the program.

Dividends - In February and May 2024, we paid a quarterly common stock dividend of 99 cents per share ($3.96 per share on an annualized basis), an increase of 3.7% compared with the same quarters in the prior year. Our dividend growth is due primarily to the increase in cash flows resulting from the growth of our operations. We declared a quarterly common stock dividend of 99 cents per share in July 2024. The quarterly common stock dividend will be paid August 14, 2024, to shareholders of record at the close of business on August 1, 2024.

FINANCIAL RESULTS AND OPERATING INFORMATION

How We Evaluate Our Operations

Management 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. See reconciliation of net income to adjusted EBITDA in the "Non-GAAP Financial Measures" subsection. 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, noncash compensation expense and certain other noncash items. Following the Magellan Acquisition, we performed a review of our calculation methodology of adjusted EBITDA and, beginning in 2023, we updated our calculation to include the adjusted EBITDA related to our unconsolidated affiliates using the same recognition and measurement methods used to record equity in net earnings from investments. Adjusted EBITDA from our unconsolidated affiliates is calculated consistently with the definition above and excludes items such as interest, depreciation, income taxes and other noncash items. Although the amounts related to our unconsolidated affiliates are included in the calculation of adjusted EBITDA, such inclusion should not be understood to imply that we have control over the operations and resulting revenues, expenses or cash flows of such unconsolidated affiliates.

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.

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Consolidated Operations

Selected Financial Results - The following table sets forth certain selected financial results for the periods indicated:

Three Months EndedSix Months EndedThree MonthsSix Months

June 30,June 30,2024 vs. 20232024 vs. 2023

Financial Results2024202320242023$ Increase (Decrease)$ Increase (Decrease)

(Millions of dollars, except per share amounts)

Revenues

Commodity sales$3,994 $3,371 $7,922 $7,527 623 395

Services900 361 1,753 726 539 1,027

Total revenues4,894 3,732 9,675 8,253 1,162 1,422

Cost of sales and fuel (exclusive of items shown separately below)2,891 2,482 5,788 5,829 409 (41)

Operating costs573 343 1,145 639 230 506

Depreciation and amortization262 170 516 332 92 184

Other operating income, net(61)- (67)(781)61 (714)

Operating income$1,229 $737 $2,293 $2,234 492 59

Equity in net earnings from investments$88 $43 $164 $83 45 81

Interest expense, net of capitalized interest$(298)$(180)$(598)$(346)118 252

Net income$780 $468 $1,419 $1,517 312 (98)

Diluted EPS$1.33 $1.04 $2.42 $3.38 0.29 (0.96)

Adjusted EBITDA (a)$1,624 $981 $3,065 $2,714 643 351

Capital expenditures$479 $305 $991 $594 174 397

(a) - Beginning in 2023, we updated our calculation methodology of adjusted EBITDA to include adjusted EBITDA from our unconsolidated affiliates using the same recognition and measurement methods used to record equity in net earnings from investments. This change resulted in an additional $10 million and $26 million of adjusted EBITDA for the three and six months ended June 30, 2023, respectively.

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.

Operating income increased $492 million for the three months ended June 30, 2024, compared with the same period in 2023, primarily as a result of the following:

•Natural Gas Gathering and Processing - an increase of $51 million due primarily to the sale of certain Kansas assets and higher volumes in the Rocky Mountain region, offset partially by lower realized NGL and natural gas prices, net of hedging;

•Natural Gas Liquids - an increase of $88 million due primarily to higher exchange services;

•Natural Gas Pipelines - an increase of $11 million due primarily to higher transportation services; and

•Refined Products and Crude - contributed $338 million to operating income for the three months ended June 30, 2024, due to the impact of the Magellan Acquisition. We began allocating certain corporate costs to this segment in the first quarter of 2024, which reduced allocations to the other segments.

Operating income increased $59 million for the six months ended June 30, 2024, compared with the same period in 2023, primarily as a result of the following:

•Natural Gas Gathering and Processing - an increase of $66 million due primarily to higher volumes in the Rocky Mountain region and the sale of certain Kansas assets, offset partially by lower realized NGL and natural gas prices, net of hedging, and higher operating costs; offset by

•Natural Gas Liquids - a decrease of $622 million due primarily to an insurance settlement gain in 2023 related to the Medford incident and higher operating costs, offset partially by an increase in exchange services due primarily to higher volumes in the Rocky Mountain region; offset by

•Natural Gas Pipelines - an increase of $14 million due primarily to higher transportation services, offset partially by higher operating costs; and

•Refined Products and Crude - contributed $600 million to operating income for the six months ended June 30, 2024, due to the impact of the Magellan Acquisition. We began allocating certain corporate costs to this segment in the first quarter of 2024, which reduced allocations to the other segments.

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Net income and diluted EPS increased for the three months ended June 30, 2024, compared with the same period in 2023, due primarily to the items discussed above and higher equity in net earnings from investments, offset partially by higher interest expense from higher debt balances resulting from the Magellan Acquisition.

Net income and diluted EPS decreased for the six months ended June 30, 2024, compared with the same period in 2023, due primarily to the impact of the Medford incident in 2023 and higher interest expense from higher debt balances resulting from the Magellan Acquisition, offset partially by the items discussed above and higher equity in net earnings from investments.

Capital expenditures increased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to our capital projects, including our MB-6 fractionator and NGL pipeline expansion projects.

Additional information regarding our financial results and operating information is provided in the following discussion for each of our segments.

Natural Gas Gathering and Processing

Selected 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:

Three Months EndedSix Months EndedThree MonthsSix Months

June 30, June 30,2024 vs. 20232024 vs. 2023

Financial Results2024202320242023$ Increase (Decrease)$ Increase (Decrease)

(Millions of dollars)

NGL and condensate sales$641 $550 $1,264 $1,194 91 70

Residue natural gas sales169 219 513 787 (50)(274)

Gathering, compression, dehydration and processing fees and other revenue36 40 79 86 (4)(7)

Cost of sales and fuel (exclusive of depreciation and operating costs)(421)(385)(1,015)(1,260)36 (245)

Operating costs, excluding noncash compensation adjustments(114)(111)(227)(212)3 15

Adjusted EBITDA from unconsolidated affiliates (a)1 1 3 2 - 1

Other59 (1)60 1 60 59

Adjusted EBITDA (a)$371 $313 $677 $598 58 79

Capital expenditures$101 $84 $217 $182 17 35

(a) - Beginning in 2023, we updated our calculation methodology of adjusted EBITDA to include adjusted EBITDA from our unconsolidated affiliates using the same recognition and measurement methods used to record equity in net earnings from investments. As a result of this change, adjusted EBITDA for the three and six months ended June 30, 2023, remained relatively unchanged.

Changes in commodity prices and sales volumes affect both revenues and cost of sales and fuel and, therefore, the impact is largely offset between these line items.

Adjusted EBITDA increased $58 million for the three months ended June 30, 2024, compared with the same period in 2023, primarily as a result of the following:

•an increase of $53 million from the sale of certain Kansas assets; and

•an increase of $38 million from higher volumes due primarily to increased production in the Rocky Mountain region; offset by

•a decrease of $29 million due primarily to lower realized NGL and natural gas prices, net of hedging, offset partially by higher realized condensate prices, net of hedging.

Adjusted EBITDA increased $79 million for the six months ended June 30, 2024, compared with the same period in 2023, primarily as a result of the following:

•an increase of $64 million from higher volumes due primarily to increased production in the Rocky Mountain region; and

•an increase of $53 million from the sale of certain Kansas assets; offset by

•a decrease of $22 million due primarily to lower realized NGL and natural gas prices, net of hedging, offset partially by higher realized condensate prices, net of hedging, and higher average fee rates; and

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•an increase of $15 million in operating costs due primarily to higher outside services and employee-related costs due primarily to the growth of our operations, and higher property insurance premiums.

Capital expenditures increased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to our routine capital projects.

Three Months EndedSix Months Ended

June 30, June 30,

Operating Information (a)2024202320242023

Natural gas processed (BBtu/d) (b)

3,102 2,922 2,998 2,858

Average fee rate ($/MMBtu)

$1.22 $1.20 $1.22 $1.17

(a) - Includes volumes for consolidated entities only.

(b) - Includes volumes we processed at company-owned and third-party facilities.

Our natural gas processed volumes increased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to increased production in the Rocky Mountain region.

Our average fee rate increased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to inflation-based escalators in our contracts.

Commodity Price Risk - Our Natural Gas Gathering and Processing segment is exposed to commodity price risk as a result of retaining a portion of the commodity sales proceeds associated with our fee with POP contracts. We have hedged approximately 70% of our forecasted equity volumes for our Natural Gas Gathering and Processing segment in 2024.

Natural Gas Liquids

During the six months ended June 30, 2024, two third-party natural gas processing plants connected to our system were expanded, one in the Permian Basin and one in the Mid-Continent region.

Selected Financial Results and Operating Information - The following tables set forth certain selected financial results and operating information for our Natural Gas Liquids segment for the periods indicated:

Three Months EndedSix Months EndedThree MonthsSix Months

June 30,June 30,2024 vs. 20232024 vs. 2023

Financial Results2024202320242023$ Increase (Decrease)$ Increase (Decrease)

(Millions of dollars)

NGL and condensate sales$3,344 $3,120 $6,608 $6,671 224 (63)

Exchange service and other revenues143 135 267 269 8 (2)

Transportation and storage revenues43 45 91 95 (2)(4)

Cost of sales and fuel (exclusive of depreciation and operating costs)(2,748)(2,627)(5,446)(5,722)121 (276)

Operating costs, excluding noncash compensation adjustments(174)(154)(347)(300)20 47

Adjusted EBITDA from unconsolidated affiliates (a)27 16 44 27 11 17

Other- (2)6 776 2 (770)

Adjusted EBITDA (a)$635 $533 $1,223 $1,816 102 (593)

Capital expenditures$285 $169 $538 $306 116 232

(a) - Beginning in 2023, we updated our calculation methodology of adjusted EBITDA to include adjusted EBITDA from our unconsolidated affiliates using the same recognition and measurement methods used to record equity in net earnings from investments. This change resulted in an additional $3 million and $5 million of adjusted EBITDA for the three and six months ended June 30, 2023, respectively.

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Changes in commodity prices and sales volumes affect both revenues and cost of sales and fuel and, therefore, the impact is largely offset between these line items.

Adjusted EBITDA increased $102 million for the three months ended June 30, 2024, compared with the same period in 2023, primarily as a result of the following:

•an increase of $89 million in exchange services due primarily to higher volumes in the Rocky Mountain region, higher average fee rates, and lower inventory of unfractionated NGLs, offset partially by higher transportation costs;

•an increase of $14 million related to the Medford incident due to lower third-party fractionation costs in the current quarter; and

•an increase of $11 million in adjusted EBITDA from unconsolidated affiliates due primarily to higher volumes delivered to the Overland Pass Pipeline; offset by

•an increase of $20 million in operating costs due primarily to higher outside services and higher property taxes due to the growth of our operations.

Adjusted EBITDA decreased $593 million for the six months ended June 30, 2024, compared with the same period in 2023, primarily as a result of the following:

•a decrease of $734 million related to the Medford incident, due primarily to an insurance settlement gain in 2023 of $779 million, offset partially by $45 million of lower third-party fractionation costs in the current year; and

•an increase of $47 million in operating costs due primarily to planned asset maintenance and higher property insurance premiums; offset by

•an increase of $164 million in exchange services due primarily to higher volumes in the Rocky Mountain region, higher average fee rates, and lower inventory of unfractionated NGLs, offset partially by higher transportation costs; and

•an increase of $17 million in adjusted EBITDA from unconsolidated affiliates due primarily to higher volumes delivered to the Overland Pass Pipeline.

Capital expenditures increased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to capital projects, which includes our MB-6 fractionator and pipeline expansion projects.

Three Months EndedSix Months Ended

June 30,June 30,

Operating Information2024202320242023

Raw feed throughput (MBbl/d) (a)

1,365 1,399 1,303 1,328

Average Conway-to-Mont Belvieu OPIS price differential - ethane in ethane/propane mix ($/gallon)

$0.04 $0.03 $0.02 $0.03

(a) - Represents physical raw feed volumes for which we provide transportation and/or fractionation services.

We generally expect ethane volumes to increase or decrease with corresponding increases or decreases in overall NGL production. However, ethane volumes may experience growth or decline greater than corresponding growth or decline in overall NGL production due to ethane economics causing producers to recover or reject ethane.

While earnings increased, volumes decreased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to low-margin, short-term fractionation contracts in the prior year and a contract expiration, offset partially by increased production in the Rocky Mountain region at higher fee rates.

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Natural Gas Pipelines

Selected Financial Results and Operating Information - The following tables set forth certain selected financial results and operating information for our Natural Gas Pipelines segment for the periods indicated:

Three Months EndedSix Months Ended

Three MonthsSix Months

June 30,June 30,2024 vs. 20232024 vs. 2023

Financial Results2024202320242023$ Increase (Decrease)$ Increase (Decrease)

(Millions of dollars)

Transportation revenues$122 $102 $241 $209 20 32

Storage revenues41 44 79 82 (3)(3)

Residue natural gas sales and other revenues- - 28 26 - 2

Cost of sales and fuel (exclusive of depreciation and operating costs)(2)(1)(17)(15)1 2

Operating costs, excluding noncash compensation adjustments(50)(48)(101)(91)2 10

Adjusted EBITDA from unconsolidated affiliates (a)41 36 88 80 5 8

Other- - (1)- - (1)

Adjusted EBITDA (a)$152 $133 $317 $291 19 26

Capital expenditures$52 $39 $131 $85 13 46

(a) - Beginning in 2023, we updated our calculation methodology of adjusted EBITDA to include adjusted EBITDA from our unconsolidated affiliates using the same recognition and measurement methods used to record equity in net earnings from investments. This change resulted in an additional $7 million and $20 million of adjusted EBITDA for the three and six months ended June 30, 2023, respectively.

Adjusted EBITDA increased $19 million for the three months ended June 30, 2024, compared with the same period in 2023, due primarily to an increase of $20 million in transportation services due primarily to higher firm and interruptible rates.

Adjusted EBITDA increased $26 million for the six months ended June 30, 2024, compared with the same period in 2023, primarily as a result of the following:

•an increase of $32 million in transportation services due primarily to higher firm and interruptible rates; offset by

•an increase of $10 million in operating costs due primarily to planned asset maintenance and employee-related costs.

Capital expenditures increased for the three and six months ended June 30, 2024, compared with the same periods in 2023, due primarily to our project to reactivate previously idled storage in Texas.

Three Months EndedSix Months Ended

June 30,June 30,

Operating Information (a)2024202320242023

Natural gas transportation capacity contracted (MDth/d)

7,991 7,656 8,039 7,675

Transportation capacity contracted96 %95 %96 %95 %

(a) - Includes volumes for consolidated entities only.

Natural gas transportation capacity contracted increased for the three and six months ended June 30, 2024, compared to the same periods in 2023, due primarily to the completion of expansion projects on our assets.

In July 2023, Viking filed a proposed increase in rates pursuant to Section 4 of the Natural Gas Act with the FERC. In February 2024, Viking reached a settlement in principle with the participants in the Section 4 rate case, which, if approved by the FERC, will result in an increase in rates for Viking. We do not expect the increase in rates to impact materially our results of operations.

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Refined Products and Crude

Selected Financial Results and Operating Information - The following tables set forth certain selected financial results and operating information for our Refined Products and Crude segment for the periods indicated:

Three Months EndedSix Months Ended

June 30,June 30,

Financial Results20242024

(Millions of dollars)

Product sales$492 $843

Transportation revenues360 700

Storage, terminals and other revenues

162 315

Cost of sales and fuel (exclusive of depreciation and operating costs)

(380)(665)

Operating costs, excluding noncash compensation adjustments

(209)(419)

Adjusted EBITDA from unconsolidated affiliates

41 76

Other1 (2)

Adjusted EBITDA$467 $848

Capital expenditures$33 $75

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.

Three Months EndedSix Months Ended

June 30, June 30,

Operating Information (a)

20242024

Refined Products volume shipped (MBbl/d)

1,536 1,473

Crude oil volume shipped (MBbl/d)

731 739

(a) - Includes volumes for consolidated entities only.

Non-GAAP Financial Measures

The following table sets forth a reconciliation of net income, the nearest comparable GAAP financial performance measure, to adjusted EBITDA for the periods indicated:

Three Months EndedSix Months Ended

June 30,June 30,

(Unaudited)2024202320242023

Reconciliation of net income to adjusted EBITDA(Millions of dollars)

Net income$780 $468 $1,419 $1,517

Interest expense, net of capitalized interest298 180 598 346

Depreciation and amortization262 170 516 332

Income taxes243 145 451 475

Adjusted EBITDA from unconsolidated affiliates (b)110 53 211 109

Equity in net earnings from investments (b)(88)(43)(164)(83)

Noncash compensation expense and other19 8 34 18

Adjusted EBITDA (a)(b)$1,624 $981 $3,065 $2,714

Reconciliation of segment adjusted EBITDA to adjusted EBITDA

Segment adjusted EBITDA:

Natural Gas Gathering and Processing$371 $313 $677 $598

Natural Gas Liquids (a)635 533 1,223 1,816

Natural Gas Pipelines152 133 317 291

Refined Products and Crude467 - 848 -

Other(1)2 - 9

Adjusted EBITDA (a)(b)$1,624 $981 $3,065 $2,714

(a) - The six months ended June 30, 2023, includes $702 million related to the Medford incident, including a settlement gain of $779 million, offset partially by $77 million of third-party fractionation costs.

(b) - Beginning in 2023, we updated our calculation methodology of adjusted EBITDA to include adjusted EBITDA from our unconsolidated affiliates using the same recognition and measurement methods used to record equity in net earnings from investments. This change resulted in an additional $10 million and $26 million of adjusted EBITDA for the three and six months ended June 30, 2023, respectively.

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CONTINGENCIES

See Note J of the Notes to Consolidated Financial Statements in this Quarterly Report for discussion of regulatory and legal matters.

LIQUIDITY AND CAPITAL RESOURCES

General - Our primary sources of cash inflows are operating cash flows, proceeds from our commercial paper program and our $2.5 Billion Credit Agreement, debt issuances and the issuance of common stock for our liquidity and capital resources requirements.

We expect our sources of cash inflows to provide sufficient resources to finance our operations, acquisitions, capital expenditures, quarterly cash dividends, maturities of long-term debt, share repurchases and contributions to unconsolidated affiliates. We believe we have sufficient liquidity due to our $2.5 Billion Credit Agreement, which expires in June 2028, and access to $1.0 billion available through our "at-the-market" equity program. As of July 29, 2024, no shares have been issued through our "at-the-market" equity program.

Cash Management - At June 30, 2024, we had $36 million of cash and cash equivalents. We use a centralized cash management program that concentrates the cash assets of our nonguarantor operating subsidiaries in joint accounts for the purposes of providing financial flexibility and lowering the cost of borrowing, transaction costs and bank fees. Our centralized cash management program provides that funds in excess of the daily needs of our operating subsidiaries are concentrated, consolidated or otherwise made available for use by other entities within our consolidated group. Our operating subsidiaries participate in this program to the extent they are permitted pursuant to FERC regulations or their operating agreements. Under the cash management program, depending on whether a participating subsidiary has short-term cash surpluses or cash requirements, we provide cash to the subsidiary or the subsidiary provides cash to us.

Guarantees - ONEOK, ONEOK Partners, the Intermediate Partnership and Magellan have cross guarantees in place for ONEOK's and ONEOK Partners' indebtedness. The guarantees in place for our and ONEOK Partners' indebtedness are full, irrevocable, unconditional and absolute joint and several guarantees to the holders of each series of outstanding securities. Liabilities under the guarantees rank equally in right of payment with all existing and future senior unsecured indebtedness. The Intermediate Partnership holds all of ONEOK Partners' interests and equity in its subsidiaries, which are nonguarantors, and substantially all the assets and operations reside with nonguarantor operating subsidiaries. Magellan holds interests in its subsidiaries, which are nonguarantors, and substantially all the assets and operations reside with nonguarantor operating subsidiaries. Therefore, as allowed under Rule 13-01, we have excluded the summarized financial information for each issuer and guarantor as the combined financial information of the subsidiary issuers and parent guarantor, excluding our ownership of all the interests in ONEOK Partners and Magellan, reflect no material assets, liabilities or results of operations, apart from the guaranteed indebtedness. For additional information on our and ONEOK Partners' indebtedness, please see Note H of the Notes to Consolidated Financial Statements in our Annual Report.

Short-term Liquidity - Our principal sources of short-term liquidity consist of cash generated from operating activities, distributions received from our unconsolidated affiliates, proceeds from our commercial paper program and our $2.5 Billion Credit Agreement. As of June 30, 2024, we had no borrowings under our $2.5 Billion Credit Agreement, and we are in compliance with all covenants.

As of June 30, 2024, we had a working capital (defined as current assets less current liabilities) deficit of $1.5 billion, due primarily to current maturities of long-term debt and short-term borrowings. Generally, our working capital is influenced by several factors, including, among other things: (i) the timing of (a) debt and equity issuances, (b) the funding of capital expenditures, (c) scheduled debt payments, and (d) accounts receivable and payable; and (ii) the volume and cost of inventory and commodity imbalances. We may have working capital deficits in future periods as our long-term debt becomes current. We do not expect a working capital deficit of this nature to have a material adverse impact to our cash flows or operations.

For additional information on our $2.5 Billion Credit Agreement, see Note F of the Notes to Consolidated Financial Statements in this Quarterly Report.

Long-term Financing - In addition to our principal sources of short-term liquidity discussed above, we expect to fund our longer-term financing requirements by issuing long-term notes, as needed. Other options to obtain financing include, but are not limited to, issuing common stock, loans from financial institutions, issuance of convertible debt securities or preferred equity securities, asset securitization and the sale and lease-back of facilities.

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We may, at any time, seek to retire or purchase our or ONEOK Partners' outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market repurchases, privately negotiated transactions or otherwise. Such repurchases and exchanges, if any, will be on such terms and prices as we may determine, and will depend on prevailing market conditions, or liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Share Repurchase Program - In January 2024, our Board of Directors authorized a share repurchase program to buy up to $2.0 billion of our outstanding common stock and targets the program to be largely utilized over the next four years. We expect shares to be acquired from time to time in open-market transactions or through privately negotiated transactions at our discretion, subject to market conditions and other factors. We expect any purchases to be funded by cash on hand, operating cash flows and short-term borrowings. The program will terminate upon completion of the repurchase of $2.0 billion of common stock or on January 1, 2029, whichever occurs first. As of July 29, 2024, no shares have been repurchased under the program.

Capital Expenditures - We proactively monitor lead times on materials and equipment used in constructing capital projects, and we enter into procurement agreements for long-lead items for potential projects to plan for future growth. Our capital expenditures are financed typically through operating cash flows and short- and long-term debt.

Capital expenditures, excluding AFUDC, were $991 million and $594 million for the six months ended June 30, 2024 and 2023, respectively.

We expect total capital expenditures, excluding AFUDC and capitalized interest, of $1.75-$1.95 billion in 2024.

Credit Ratings - Our long-term debt credit ratings as of July 29, 2024, are shown in the table below:

Rating AgencyLong-Term RatingShort-Term RatingOutlook

Moody'sBaa2Prime-2Stable

S&PBBBA-2Stable

Fitch BBBF2Stable

Our credit ratings, which are investment grade, may be affected by our leverage, liquidity, credit profile or potential transactions. The most common criteria for assessment of our credit ratings are the debt-to-EBITDA ratio, interest coverage, business risk profile and liquidity. If our credit ratings were downgraded, our cost to borrow funds under our $2.5 Billion Credit Agreement could increase and a potential loss of access to the commercial paper market could occur. In the event that we are unable to borrow funds under our commercial paper program and there has not been a material adverse change in our business, we would continue to have access to our $2.5 Billion Credit Agreement, which expires in 2028. An adverse credit rating change alone is not a default under our $2.5 Billion Credit Agreement.

In the normal course of business, our counterparties provide us with secured and unsecured credit. In the event of a downgrade in our credit ratings or a significant change in our counterparties' evaluation of our creditworthiness, we could be required to provide additional collateral in the form of cash, letters of credit or other negotiable instruments as a condition of continuing to conduct business with such counterparties. We may be required to fund margin requirements with our counterparties with cash, letters of credit or other negotiable instruments.

Dividends - Holders of our common stock share equally in any common stock dividends declared by our Board of Directors, subject to the rights of the holders of outstanding preferred stock. In February and May 2024, we paid a common stock dividend of 99 cents per share ($3.96 per share on an annualized basis), an increase of 3.7% compared with the same quarter in the prior year. A common stock dividend of 99 cents per share was declared in July 2024, for the shareholders of record at the close of business on August 1, 2024, payable August 14, 2024.

Our Series E Preferred Stock pays quarterly dividends on each share of Series E Preferred Stock, when, as and if declared by our Board of Directors, at a rate of 5.5% per year. We paid dividends for the Series E Preferred Stock of $0.3 million in February and May 2024. Dividends totaling $0.3 million were declared in July 2024, for the Series E Preferred Stock and are payable August 14, 2024.

For the six months ended June 30, 2024, our cash flows from operations exceeded dividends paid by $870 million. We expect our cash flows from operations to continue to sufficiently fund our cash dividends. To the extent operating cash flows are not sufficient to fund our dividends, we may utilize cash on hand from other sources of short- and long-term liquidity to fund a portion of our dividends.

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CASH FLOW ANALYSIS

We use the indirect method to prepare our Consolidated Statements of Cash Flows. Under this method, we reconcile net income to cash flows provided by operating activities by adjusting net income for those items that affect net income but do not result in actual cash receipts or payments during the period and for operating cash items that do not impact net income. These reconciling items can include depreciation and amortization, deferred income taxes, impairment charges, allowance for equity funds used during construction, gain or loss on sale of assets, net undistributed earnings from unconsolidated affiliates, share-based compensation expense, other amounts and changes in our assets and liabilities not classified as investing or financing activities.

The following table sets forth the changes in cash flows by operating, investing and financing activities for the periods indicated:

Variances

Six Months Ended2024 vs. 2023

June 30,$ Increase(Decrease) in Cash

20242023

(Millions of dollars)

Total cash provided by (used in):

Operating activities$2,026 $1,993 $33

Investing activities(1,334)(353)(981)

Financing activities(994)(1,754)760

Change in cash and cash equivalents(302)(114)(188)

Cash and cash equivalents at beginning of period338 220 118

Cash and cash equivalents at end of period$36 $106 $(70)

Operating Cash Flows - Operating cash flows are affected by earnings from our business activities and changes in our operating assets and liabilities. Changes in commodity prices and demand for our services or products, whether because of general economic conditions, changes in supply, changes in demand for the end products that are made with our products or increased competition from other service providers, could affect our earnings and operating cash flows. Our operating cash flows can also be impacted by changes in our inventory balances, which are driven primarily by commodity prices, supply, demand and the operation of our assets.

Cash flows from operating activities, before changes in operating assets and liabilities for the six months ended June 30, 2024, increased $288 million compared with the same period in 2023, due primarily to the impact of the Magellan Acquisition in our Refined Products and Crude segment, as discussed in "Financial Results and Operating Information," offset partially by insurance proceeds received from the Medford settlement in 2023.

The changes in operating assets and liabilities decreased operating cash flows $299 million for the six months ended June 30, 2024, compared with a decrease of $44 million for the same period in 2023. This change is due primarily to changes in risk management assets and liabilities, changes in accounts receivable resulting from the timing of receipt of cash from counterparties and from inventory, both of which vary from period to period and with changes in commodity prices, and changes in our legal liability as discussed in Note J of the Notes to Consolidated Financial Statements in this Quarterly Report. These changes were offset partially by changes in accounts payable, which also vary from period to period with changes in commodity prices, and from the timing of payments to vendors, suppliers and other third parties.

Investing Cash Flows - Cash used in investing activities for the six months ended June 30, 2024, increased $981 million, compared with the same period in 2023, due primarily to an increase in both capital expenditures related to our capital projects and acquisitions in 2024, and due to insurance proceeds received from the Medford settlement in 2023.

Financing Cash Flows - Cash used in financing activities for the six months ended June 30, 2024, decreased $760 million, compared with the same period in 2023, due primarily to the repayment of long-term debt in 2023 and short-term borrowings in 2024, offset partially by increased dividends paid in 2024.

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REGULATORY, ENVIRONMENTAL AND SAFETY MATTERS

Information about our regulatory, environmental and safety matters can be found in "Regulatory, Environmental and Safety Matters" under Part I, Item 1, Business, in our Annual Report.

IMPACT OF NEW ACCOUNTING STANDARDS

See Note A of the Notes to Consolidated Financial Statements in this Quarterly Report for discussion of new accounting standards.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our Consolidated Financial Statements and related disclosures in accordance with GAAP requires us to make estimates and assumptions with respect to values or conditions that cannot be known with certainty that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. These estimates and assumptions also affect the reported amounts of revenue and expenses during the reporting period. Although we believe these estimates and assumptions are reasonable, actual results could differ from our estimates.

Information about our critical accounting estimates is included under Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Critical Accounting Estimates," in our Annual Report.

FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements in reliance on the safe harbor protections of the Securities Act of 1933, as amended, and the Exchange Act, which involve substantial risk and uncertainties. The forward-looking statements relate to our anticipated financial performance, liquidity, management's plans and objectives for our future capital projects and other future operations, our business prospects, the outcome of regulatory and legal proceedings, market conditions and other matters. The following discussion is intended to identify important factors that could cause future outcomes to differ materially from those set forth in the forward-looking statements.

Forward-looking statements and other statements in this Quarterly Report regarding our environmental, social and other sustainability targets, plans and goals are not an indication that these statements are required to be disclosed in our filings with the SEC, or that we will continue to make similar statements in the same extent or manner in future filings. In addition, historical, current and forward-looking environmental, social and sustainability-related statements may be based on standards and processes for measuring progress that are still developing and that continue to evolve, and assumptions that are subject to change in the future.

Forward-looking statements include the items identified in the preceding paragraphs, the information concerning possible or assumed future results of our operations and other statements contained in this Quarterly Report identified by words such as "anticipates," "believes," "continues," "could," "estimates," "expect," "forecasts," "goal," "guidance," "intends," "may," "might," "outlook," "plans," "potential," "projects," "scheduled," "should," "target," "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. In addition to any assumptions and other factors referred to specifically in connection with the forward-looking statements, factors that could cause our actual results to differ materially from those contemplated in any forward-looking statement include, among others, the following:

•the impact on drilling and production by factors beyond our control, including the demand for natural gas, NGLs, Refined Products and crude oil; producers' desire and ability to drill and obtain necessary permits; regulatory compliance; reserve performance; and capacity constraints and/or shut downs on the pipelines that transport crude oil, natural gas, NGLs, and Refined Products from producing areas and our facilities;

•the impact of unfavorable economic and market conditions, inflationary pressures, including increased interest rates, which may increase our capital expenditures and operating costs, raise the cost of capital or depress economic growth;

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•the impact of the volatility of natural gas, NGL, Refined Products and crude oil prices on our earnings and cash flows, which is impacted by a variety of factors beyond our control, including international terrorism and conflicts and the geopolitical instability;

•our dependence on producers, gathering systems, refineries and pipelines owned and operated by others and the impact of any closures, interruptions or reduced activity levels at these facilities;

•the impact of increased attention to ESG issues, including climate change, and risks associated with the physical impacts of climate change;

•risks associated with operational hazards and unforeseen interruptions at our operations;

•the inability of insurance proceeds to cover all liabilities or incurred costs and losses, or lost earnings, resulting from a loss;

•the risk of increased costs for insurance premiums or less favorable coverage;

•demand for our services and products in the proximity of our facilities;

•risks associated with our ability to hedge against commodity price risks or interest rate risks;

•a breach of information security, including a cybersecurity attack, or failure of one or more key information technology or operational systems;

•exposure to construction risk and supply risks if adequate natural gas, NGL, Refined Products and crude oil supply is unavailable upon completion of facilities;

•the accuracy of estimates of hydrocarbon reserves, which could result in lower than anticipated volumes;

•our lack of ownership over all of the land on which our property is located and certain of our facilities and equipment;

•the impact of changes in estimation, type of commodity and other factors on our measurement adjustments;

•excess capacity on our pipelines, processing, fractionation, terminal and storage assets;

•risks associated with the period of time our assets have been in service;

•our partial reliance on cash distributions from our unconsolidated affiliates on our operating cash flows;

•our ability to cause our joint ventures to take or not take certain actions unless some or all of our joint-venture participants agree;

•our reliance on others to operate certain joint-venture assets and to provide other services;

•increased regulation of exploration and production activities, including hydraulic fracturing, well setbacks and disposal of wastewater;

•impacts of regulatory oversight and potential penalties on our business;

•risks associated with the rate regulation, challenges or changes, which may reduce the amount of cash we generate;

•the impact of our gas liquids blending activities, which subject us to federal regulations that govern renewable fuel requirements in the U.S.;

•incurrence of significant costs to comply with the regulation of greenhouse gas emissions;

•the impact of federal and state laws and regulations relating to the protection of the environment, public health and safety on our operations, as well as increased litigation and activism challenging oil and gas development as well as changes to and/or increased penalties from the enforcement of laws, regulations and policies;

•the impact of unforeseen changes in interest rates, debt and equity markets and other external factors over which we have no control;

•actions by rating agencies concerning our credit;

•our indebtedness and guarantee obligations could cause adverse consequences, including making us vulnerable to general adverse economic and industry conditions, limiting our ability to borrow additional funds and placing us at competitive disadvantages compared with our competitors that have less debt;

•an event of default may require us to offer to repurchase certain of our or ONEOK Partners' senior notes or may impair our ability to access capital;

•the right to receive payments on our outstanding debt securities and subsidiary guarantees is unsecured and effectively subordinated to any future secured indebtedness and any existing and future indebtedness of our subsidiaries that do not guarantee the senior notes;

•use by a court of fraudulent conveyance to avoid or subordinate the cross guarantees of our or ONEOK Partners' indebtedness;

•the risks associated with pending or possible acquisitions and dispositions, including our ability to finance or integrate any such acquisitions and any regulatory delay or conditions imposed by regulatory bodies in connection with any such acquisitions and dispositions;

•risks related to the Magellan Acquisition, including the risk that we may not realize the anticipated benefits of the Magellan Acquisition or successfully integrate the two companies;

•our ability to pay dividends;

•our exposure to the credit risk of our customers or counterparties;

•a shortage of skilled labor;

•misconduct or other improper activities engaged in by our employees;

•the impact of potential impairment charges;

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•the impact of the changing cost of providing pension and health care benefits, including postretirement health care benefits, to eligible employees and qualified retirees;

•our ability to maintain an effective system of internal controls; and

•the risk factors listed in the reports we have filed and may file with the SEC.

These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other factors could also affect adversely our future results. These and other risks are described in greater detail in Part I, Item 1A, Risk Factors, in our Annual Report and in our other filings that we make with the SEC, which are available via the SEC's website at www.sec.gov and our website at www.oneok.com. 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.