●  ONEOK INC /NEW/ · FY 2025 

Market Risk

As energy companies navigate volatile markets, assessing quantitative risk exposure is critical. For ONEOK Inc., the sensitivity to commodity price fluctuations has noticeably increased, with the estimated change in fair value from a hypothetical 10% price shift rising to $89 million in 2025. This growing exposure underscores the continuous challenge of managing market volatility while utilizing sophisticated hedging strategies to maintain stability in underlying cash flows.

OKE L1 Synthesis
●  SYMBOLOGY.ONLINE l1 SYNTHESIS 

Oneok Inc /new Market Risk Synthesis

Quantitative Market Risk Exposure Assessment: ONEOK INC

This report synthesizes the market risk disclosures from ONEOK INC's 10-K filing, providing a structured assessment of the company’s exposure to market-driven financial risks.

Interest Rate Sensitivity

The company is exposed to interest-rate risk primarily through its $3.5 Billion Credit Agreement, commercial paper program, and long-term debt issuances.

Exposure and Magnitude

  • Nature of Exposure: The risk stems from future increases in commercial paper rates or bond yields, which could increase interest costs on future borrowings.
  • Fixed vs. Variable Rate: The company manages this exposure using a mix of fixed-rate and floating-rate debt instruments.
  • Current Status: As of December 31, 2025, and December 31, 2024, the company reported having no outstanding interest-rate derivative instruments.

Mitigation Strategies and Changes

  • Strategies Employed: Management utilizes Treasury locks and interest-rate swaps to manage variability.
  • Recent Activity (Changes): In 2025, the company actively used Treasury locks as cash flow hedges:
    • Q2 2025: Entered $700 million notional quantity of Treasury locks.
    • Q3 2025: Entered $300 million notional quantity of Treasury locks.
    • Q3 2025: Settled all outstanding $1.0 billion notional quantity of Treasury locks related to an August 2025 public offering.

Assessment

  • Strength: The company demonstrates proactive risk management by utilizing Treasury locks specifically designated as cash flow hedges to mitigate interest payment variability on forecasted debt issuances.
  • Weakness: The reliance on temporary hedging instruments (Treasury locks) suggests that the underlying debt structure requires continuous management to maintain predictable cash flows.

Commodity Price Risk

The company is exposed to volatility in the prices of natural gas, NGLs, Refined Products, condensate, and crude oil.

Exposure and Magnitude

  • Key Commodities: Natural gas, NGLs, Refined Products, crude oil.
  • Magnitude (Sensitivity Analysis): The company uses a sensitivity analysis model based on a hypothetical 10% movement in underlying commodity prices.
    • 2025 Exposure: The total estimated change in fair value of commodity contracts was $89 million (comprising $80M for Refined Products, crude oil and NGLs; and $9M for natural gas).
    • 2024 Exposure: The total estimated change in fair value was $70 million.
  • Trend: There is an increase in the estimated potential impact of a 10% price movement, rising from $70 million in 2024 to $89 million in 2025.

Mitigation Strategies and Changes

  • Strategies Employed: The company uses commodity derivative financial instruments and physical-forward contracts to reduce the impact of near-term price fluctuations.
  • Risk Offset: The company notes that because the derivatives are used for hedging, the change in market value of the derivative portfolio would typically be offset by a corresponding gain or loss on the hedged item.

Assessment

  • Strength: The company maintains a clear, quantitative risk management framework (sensitivity analysis) and actively employs hedging instruments to mitigate price volatility.
  • Weakness: The increasing magnitude of the estimated fair value change ($70M to $89M) indicates that the company's exposure sensitivity is growing, requiring continued vigilance in hedging effectiveness.

Foreign Currency Exposure

  • Assessment: The provided document does not contain any disclosures regarding foreign currency exposure, currencies involved, or related hedging strategies.

Equity Price Risk

  • Assessment: The provided document does not contain any disclosures regarding investment portfolios, equity holdings, or the impact of mark-to-market fluctuations related to equities.

Quantitative Measures

The company relies on a sensitivity analysis model as its primary quantitative measure of market risk.

Methodology and Scope

  • Model: Sensitivity analysis measures the potential change in fair value of derivative instruments.
  • Variables Assessed: The model assesses hypothetical 10% movements in underlying commodity prices and interest rates, as well as fluctuations in notional amounts and discount rates.
  • Disclosures: Specific quantitative results are provided for commodity price risk (e.g., the $89 million total change in 2025).
  • Missing Measures: Value-at-Risk (VaR) and detailed stress test results are not disclosed in this section.

Assessment

  • Strength: The use of a standardized sensitivity analysis model provides measurable, forward-looking estimates of potential losses based on defined market movements.
  • Weakness: The absence of disclosures regarding Value-at-Risk (VaR) or comprehensive stress testing limits the depth of quantitative insight into extreme market scenarios.