What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-28 compared with 2022-03-01 · 327 added, 356 removed, 1269 unchanged (35% of the section changed)

26 unchanged sentences

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of Level 3 Commodity Derivative Assets and Liabilities

As described in Notes A and B to the consolidated financial statements, the Company’s level 3 commodity contracts derivative assets and liabilities total $9.3 million and $123.6 million, respectively, as of December 31, 2021.

As disclosed by management, commodity price risk includes basis risk, which is the difference in price between various locations where commodities are purchased and sold.

Management records all derivative instruments at fair value, with the exception of normal purchases and normal sales transactions that are expected to result in physical delivery.

Many of the contracts in its derivative portfolio are executed in liquid markets where price transparency exists.

Fair value measurements classified as Level 3 are composed predominantly of exchange-cleared and over-the-counter derivatives to hedge NGL price risk.

These measurements are based on inputs that may include one or more unobservable inputs, including internally developed commodity price curves, that incorporate market data from broker quotes and third-party pricing services.

The commodity derivatives are generally valued using forward quotes provided by third-party pricing services that are validated with other market data.

The principal considerations for our determination that performing procedures relating to the valuation of level 3 commodity derivative assets and liabilities is a critical audit matter are (i) the significant judgment by management to determine the fair value of these derivatives;

(ii) a high degree of auditor judgment, subjectivity and effort in evaluating audit evidence related to the valuation due to the use of internally developed commodity price curves that incorporate market data from broker quotes and third-party pricing services;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Accounting for the Medford Incident

As described in Note B to the consolidated financial statements, on July 9, 2022, a fire occurred at the Company’s 210 MBbl/d Medford, Oklahoma, natural gas liquids fractionation facility.

The Company has property damage and business interruption coverage against which they developed claims related to the Medford incident and recorded accruals for the expected insurance recoveries.

Management records recoveries for incurred costs and lost earnings related to its business interruption coverage for the amount probable of recovery, not to exceed the actual losses incurred, and for lost earnings that have been realized and are no longer considered a gain contingency.

Management assessed property damage to the facility and incurred costs and lost earnings related to business interruption, as well as timing of recognition under applicable insurance recovery guidance, and recorded accruals of $150.7 million for the year ended December 31, 2022, which was comprised of property damage of $45.6 million, with a corresponding write off of assets due to property damage of the facility;

$9 million related to incurred costs in excess of the deductible that were probable of recovery, with an offset to the operating and maintenance line item;

and $96.1 million primarily related to third-party fractionation costs incurred subsequent to the 45-day business interruption waiting period, with an offset to other operating (income) expense.

The Company received a $100 million unallocated payment from the insurers in the fourth quarter of 2022, and had recorded an outstanding insurance receivable of $50.7 million as of December 31, 2022.

The principal considerations for our determination that performing procedures relating to the accounting for the Medford incident is a critical audit matter are (i) the significant judgment by management when assessing the application of accounting guidance for business interruption and the resulting recognition of incurred costs and lost earnings;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s assessment of the application of accounting guidance for business interruption and the resulting recognition of incurred costs and lost earnings.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the valuation of level 3 commodity derivative assets and liabilities, including controls over the Company’s model, significant assumptions, and data.

These procedures also included, among others, the involvement of professionals with specialized skill and knowledge to assist in developing an independent estimate of the level 3 commodity derivative assets and liabilities and comparison of the independent estimate to management’s estimate to evaluate the reasonableness of management’s estimate.

Developing the independent estimate involved testing the completeness and accuracy of data provided by management and evaluating management’s assumptions related to the internally developed commodity price curves which incorporate market data from broker quotes and third-party pricing services.

These procedures included testing the effectiveness of controls relating to the application of accounting guidance for business interruption and recognition of the incurred costs and lost earnings.

These procedures also included, among others, (i) reading the related customer contracts to assess lost earnings;

(ii) evaluating management’s assessment of the incurred costs and lost earnings, including their assessment of the application of the appropriate accounting guidance for business interruption;

(iii) testing the incurred costs, lost earnings, and related recovery, which included testing the appropriate presentation within the financial statements;

and (iv) tracing the insurance payments received to the Company’s general ledger.

/s/ PricewaterhouseCoopers LLP

Tulsa, Oklahoma

March 1, 2022

February 28, 2023

We have served as the Company’s auditor since 2007.

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and Subsidiaries

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Services 1,411,430 1,360,045 1,286,983

Total revenues (Note P) 16,540,309 8,542,242 10,164,367

Total revenues (Note Q)

22,386,892 16,540,309 8,542,242

Cost of sales and fuel (exclusive of items shown separately below) 17,909,866 12,256,655 5,110,146

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Depreciation and amortization 626,132 621,701 578,662

Impairment charges (Notes D and E) — 607,200 —

Impairment charges (Notes E and F)

General taxes 191,458 166,668 125,028

(Gain) loss on sale of assets ( 1,394 ) ( 1,327 ) 2,575

Other operating (income) expense, net (Note B) ( 106,229 ) ( 1,394 ) ( 1,327 )

Operating income 2,807,419 2,596,259 1,361,357

Equity in net earnings from investments (Note M) 122,520 143,241 154,541

Impairment of equity investments (Note M) — ( 37,730 ) —

Equity in net earnings from investments (Note N)

147,720 122,520 143,241

Impairment of equity investments (Note N)

— — ( 37,730 )

Allowance for equity funds used during construction 2,551 1,682 23,662

Other income (expense) ( 3,333 ) 24,672 9,055

Other income (expense), net ( 32,099 ) ( 3,333 ) 24,672

Interest expense (net of capitalized interest of $ 57,426 , $ 25,150 and $ 75,436 , respectively)

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Income before income taxes 2,249,645 1,984,204 802,316

Income taxes (Note L) ( 484,498 ) ( 189,507 ) ( 372,414 )

Income taxes (Note M)

( 527,424 ) ( 484,498 ) ( 189,507 )

Net income 1,722,221 1,499,706 612,809

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Net income available to common shareholders $ 1,721,121 $ 1,498,606 $ 611,709

Basic EPS (Note I) $ 3.36 $ 1.42 $ 3.09

Diluted EPS (Note I) $ 3.35 $ 1.42 $ 3.07

Basic EPS (Note J)

$ 3.85 $ 3.36 $ 1.42

Diluted EPS (Note J)

$ 3.84 $ 3.35 $ 1.42

Average shares (thousands)

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See accompanying Notes to Consolidated Financial Statements.

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and Subsidiaries

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See accompanying Notes to Consolidated Financial Statements.

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and Subsidiaries

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Accumulated depreciation and amortization 5,062,609 4,500,665

Net property, plant and equipment (Note D) 19,319,874 19,154,928

Net property, plant and equipment (Note E)

19,952,526 19,319,874

Investments and other assets

Investments in unconsolidated affiliates (Note M) 797,613 805,032

Goodwill and net intangible assets (Note E) 763,295 773,723

Investments in unconsolidated affiliates (Note N)

801,794 797,613

Goodwill and net intangible assets (Note F)

752,867 763,295

Other assets 324,132 366,457

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Total assets $ 24,379,094 $ 23,621,613

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and Subsidiaries

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Current liabilities

Current maturities of long-term debt (Note F) $ 895,814 $ 7,650

Current maturities of long-term debt (Note G)

$ 925,000 $ 895,814

Accounts payable 1,359,475 1,332,391

Commodity imbalances 254,139 309,054

Accrued taxes 97,537 89,428

Accrued interest 233,053 235,602

Operating lease liability (Note O) 13,783 13,610

Operating lease liability (Note P)

12,289 13,783

Other current liabilities 267,671 397,975

Total current liabilities 3,051,627 3,184,619

Long-term debt, excluding current maturities (Note F) 12,747,636 14,228,421

Long-term debt, excluding current maturities (Note G)

12,695,834 12,747,636

Deferred credits and other liabilities

Deferred income taxes (Note L) 1,166,690 669,697

Operating lease liability (Note O) 75,636 87,610

Deferred income taxes (Note M)

1,738,525 1,166,690

Operating lease liability (Note P)

68,110 75,636

Other deferred credits 331,113 431,869

Total deferred credits and other liabilities 2,137,748 1,674,195

Commitments and contingencies (Note N)

Equity (Note G)

Commitments and contingencies (Note O)

Equity (Note H)

ONEOK shareholders’ equity:

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Paid-in capital 7,253,154 7,213,861

Accumulated other comprehensive loss (Note H) ( 471,351 ) ( 551,449 )

Accumulated other comprehensive loss (Note I)

( 108,256 ) ( 471,351 )

Retained earnings 50,396 —

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See accompanying Notes to Consolidated Financial Statements.

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and Subsidiaries

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Distributions received from unconsolidated affiliates 146,718 123,010 144,352

Deferred income tax expense 472,057 186,730 372,729

Deferred income taxes 463,419 472,057 186,730

Other, net 91,790 94,091 35,327

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See accompanying Notes to Consolidated Financial Statements.

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and Subsidiaries

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Stock Issued Common

Stock Issued Preferred

Stock Issued Common Stock Issued Preferred

Stock Paid-in

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January 1, 2020 20,000 445,016,234 $ — $ 4,450 $ 7,403,895

Cumulative effect adjustment for adoption of ASU 2016-02, “Leases (Topic 842)” — — — — —

Net income — — — — —

Other comprehensive loss — — — — —

Preferred stock dividends - $ 55.00 per share (Note G)

Preferred stock dividends - $ 55.00 per share (Note H)

— — — — ( 550 )

Common stock issued — 29,900,000 — 299 934,473

Common stock dividends - $ 3.53 per share (Note G)

Common stock dividends - $ 3.74 per share (Note H)

— — — — ( 992,741 )

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Net income — — — — —

Other comprehensive loss (Note H) — — — — —

Preferred stock dividends - $ 55.00 per share (Note G)

— — — — ( 550 )

Other comprehensive income (Note I)

Preferred stock dividends - $ 55.00 per share (Note H)

Common stock issued — — — — 6,680

Common stock dividends - $ 3.74 per share (Note G)

Common stock dividends - $ 3.74 per share (Note H)

— — — — ( 168,145 )

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Net income — — — — —

Other comprehensive income (Note H) — — — — —

Preferred stock dividends - $ 55.00 per share (Note G)

Other comprehensive income (Note I)

Preferred stock dividends - $ 55.00 per share (Note H)

Common stock issued — — — — 12,716

Common stock dividends - $ 3.74 per share (Note G)

— — — — ( 168,145 )

Common stock dividends - $ 3.74 per share (Note H)

Other, net — — — — 26,577

December 31, 2022 20,000 474,916,234 $ — $ 4,749 $ 7,253,154

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and Subsidiaries

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January 1, 2020 $ ( 374,000 ) $ — $ ( 808,394 ) $ 6,225,951

Cumulative effect adjustment for adoption of ASU 2016-02, “Leases (Topic 842)” — ( 67 ) — ( 67 )

Net income — 612,809 — 612,809

Other comprehensive loss ( 177,449 ) — — ( 177,449 )

Preferred stock dividends - $ 55.00 per share (Note G)

Preferred stock dividends - $ 55.00 per share (Note H)

— ( 550 ) — ( 1,100 )

Common stock issued — — 44,096 978,868

Common stock dividends - $ 3.53 per share (Note G)

Common stock dividends - $ 3.74 per share (Note H)

— ( 612,259 ) — ( 1,605,000 )

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Net income — 1,499,706 — 1,499,706

Other comprehensive loss (Note H) ( 177,449 ) — — ( 177,449 )

Preferred stock dividends - $ 55.00 per share (Note G)

Other comprehensive income (Note I) 80,098 — — 80,098

Preferred stock dividends - $ 55.00 per share (Note H)

— ( 1,100 ) — ( 1,100 )

Common stock issued — — 32,202 38,882

Common stock dividends - $ 3.74 per share (Note G)

Common stock dividends - $ 3.74 per share (Note H)

— ( 1,498,606 ) — ( 1,666,751 )

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Net income — 1,722,221 — 1,722,221

Other comprehensive income (Note H) 80,098 — — 80,098

Preferred stock dividends - $ 55.00 per share (Note G)

Other comprehensive income (Note I) 363,095 — — 363,095

Preferred stock dividends - $ 55.00 per share (Note H)

— ( 1,100 ) — ( 1,100 )

Common stock issued — — 25,938 38,654

Common stock dividends - $ 3.74 per share (Note G)

Common stock dividends - $ 3.74 per share (Note H)

— ( 1,670,725 ) — ( 1,670,725 )

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See accompanying Notes to Consolidated Financial Statements.

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AND SUBSIDIARIES

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The NGLs separated from the raw natural gas are sold and delivered through NGL pipelines to fractionation facilities for further processing.

Our Natural Gas Liquids segment owns and operates facilities that gather, fractionate, treat and distribute NGLs and store NGL products, primarily in Oklahoma, Kansas, Texas, New Mexico and the Rocky Mountain region, which includes the Williston, Powder River and DJ Basins.

Our Natural Gas Liquids segment owns and operates facilities that gather, fractionate, treat and distribute NGLs and store purity NGLs, primarily in Oklahoma, Kansas, Texas, New Mexico and the Rocky Mountain region, which includes the Williston, Powder River and DJ Basins.

We provide midstream services to producers of NGLs and deliver those products to the two primary market centers, one in the Mid-Continent in Conway, Kansas, and the other in the Gulf Coast in Mont Belvieu, Texas.

We own or have an ownership interest in FERC-regulated NGL gathering and distribution pipelines in Oklahoma, Kansas, Texas, New Mexico, Montana, North Dakota, Wyoming and Colorado, and terminal and storage facilities in Kansas, Missouri, Nebraska, Iowa and Illinois.

We have a 50 % ownership interest in Overland Pass Pipeline Company, which operates an interstate NGL pipeline originating in Wyoming and Colorado and terminating in Kansas.

We have a 50 % ownership interest in Overland Pass, which operates an interstate NGL pipeline originating in Wyoming and Colorado and terminating in Kansas.

The majority of the pipeline-connected natural gas processing plants in the Williston Basin, Oklahoma, Kansas and the Texas Panhandle are connected to our NGL gathering systems.

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We also own FERC-regulated NGL distribution pipelines in Kansas, Missouri, Nebraska, Iowa, Illinois and Indiana that connect our Mid-Continent assets with Midwest markets, including Chicago, Illinois.

A portion of our ONEOK North System transports refined products, including unleaded gasoline and diesel, from Kansas to Iowa.

Our Natural Gas Pipelines segment, through its wholly owned assets, provides intrastate and interstate natural gas transportation and storage services to end users.

We have 50 % ownership interests in Northern Border Pipeline and Roadrunner, which provide transportation services to various end users.

Our interstate pipelines are regulated by the FERC and are located in North Dakota, Minnesota, Wisconsin, Illinois, Indiana, Kentucky, Tennessee, Oklahoma, Texas and New Mexico.

Our intrastate natural gas pipeline and storage assets are located in Oklahoma, Kansas and Texas.

Our assets connect major natural gas producing basins and market hubs with end-use customers.

A portion of our ONEOK North System transports refined petroleum products, including unleaded gasoline and diesel, from Kansas to Iowa.

Our Natural Gas Pipelines segment, through its wholly owned assets primarily in Oklahoma, Texas and the upper Midwest, provides transportation and storage services to end users, such as natural gas distribution and electric-generation companies that require natural gas to operate their businesses regardless of location price differentials.

We have 50 % ownership interests in Northern Border and Roadrunner, which provide transportation services to various end users.

Our assets are connected to key supply areas and demand centers, including supply areas in Canada and the United States via our intrastate and interstate natural gas pipelines and Northern Border, and export markets in Mexico via Roadrunner which enable us to provide essential natural gas transportation and storage services.

Consolidation - Our Consolidated Financial Statements include our accounts and the accounts of our subsidiaries over which we have control or are the primary beneficiary.

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Under this method, an investment is carried at its acquisition cost and adjusted each period for contributions made, distributions received and our share of the investee’s comprehensive income.

For the investments we account for under the equity method, the premium or excess cost over underlying fair value of net assets is referred to as equity-method goodwill.

For the investments we account for under the equity method, the premium or excess cost over the fair value of the underlying net assets is referred to as equity-method goodwill.

Impairment of equity investments is recorded when the impairments are other than temporary.

These amounts are recorded as investments in unconsolidated affiliates on our accompanying Consolidated Balance Sheets.

See Note M for disclosures of our unconsolidated affiliates.

See Note N for disclosures of our unconsolidated affiliates.

Distributions paid to us from our unconsolidated affiliates are classified as operating activities on our Consolidated Statements of Cash Flows until the cumulative distributions exceed our proportionate share of income from the unconsolidated affiliate since the date of our initial investment.

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Use of 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 on our Consolidated Financial Statements.

Items that may be estimated include, but are not limited to, the economic useful life of assets, fair value of assets, liabilities and equity-method investments, obligations under employee benefit plans, provisions for uncollectible accounts receivable, expenses for services received but for which no invoice has been received, provision for income taxes, including any deferred tax valuation allowances, the results of litigation and various other

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recorded or disclosed amounts.

Items that may be estimated include, but are not limited to, the economic useful life of assets, fair value of assets, liabilities and equity-method investments, obligations under employee benefit plans, allowance for credit losses, expenses for services received but for which no invoice has been received, provision for income taxes, including any deferred tax valuation allowances, the results of litigation and various other recorded or

disclosed amounts.

In addition, a portion of our revenues and cost of sales and fuel are recorded based on current month prices and estimated volumes.

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We measure the fair value of a group of financial assets and liabilities consistent with how a market participant would price the net risk exposure at the measurement date.

Many of the contracts in our derivative portfolio are executed in liquid markets where price transparency exists.

Most of the contracts in our derivative portfolio are executed in liquid markets where price transparency exists.

Our financial commodity derivatives are generally settled through a NYMEX or ICE clearing broker account with daily margin requirements.

We validate our valuation inputs with third-party information and settlement prices from other sources, where available.

We compute the fair value of our derivative portfolio by discounting the projected future cash flows from our derivative assets and liabilities to present value using interest-rate yields to calculate present-value discount factors derived from the implied forward SOFR, LIBOR or other yield curve, as appropriate.

The fair value of our forward-starting interest-rate swaps is determined using financial models that incorporate the implied forward LIBOR yield curve for the same period as the future interest-rate swap settlements.

The fair value of our forward-starting interest-rate swaps is determined using financial models that incorporate the implied forward SOFR yield curve for the same period as the future interest-rate swap settlements.

We consider current market data in evaluating counterparties’, as well as our own, nonperformance risk, net of collateral, by using counterparty-specific bond yields.

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• Level 2 - fair value measurements are based on significant observable pricing inputs, including quoted prices for similar assets and liabilities in active markets and inputs from third-party pricing services supported with corroborative evidence.

These balances are composed of exchange cleared derivatives to hedge natural gas basis and NGL price risk at certain market locations and over-the-counter interest-rate derivatives.

• Level 3 - fair value measurements are based on inputs that may include one or more unobservable inputs, including internally developed commodity price curves that incorporate market data from broker quotes and third-party pricing services.

These balances are composed predominantly of exchange-cleared and over-the-counter derivatives to hedge NGL price risk at certain market locations.

These commodity derivatives are generally valued using forward quotes provided by third-party pricing services that are validated with other market data.

We believe any measurement uncertainty at December 31, 2021, is immaterial as our Level 3 fair value measurements are based on unadjusted pricing information from broker quotes and third-party pricing services.

These balances are composed of exchange cleared and over-the-counter derivatives to hedge natural gas basis and NGL price risk and over-the-counter interest-rate derivatives.

• Level 3 - fair value measurements are based on inputs that may include one or more unobservable inputs.

Determining the appropriate classification of our fair value measurements within the fair value hierarchy requires management’s judgment regarding the degree to which market data is observable or corroborated by observable market data.

We categorize derivatives based on the lowest level input that is significant to the fair value measurement in its entirety.

See Note B for our fair value measurements disclosures.

See Note C for our fair value measurements disclosures.

Cash and Cash Equivalents - Cash equivalents consist of highly liquid investments, which are readily convertible into cash and have original maturities of three months or less.

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However, the term between customer prepayments, completion of our performance obligations, invoicing and receipt of payment due is not significant.

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Performance Obligations and Revenue Sources - Revenue sources are disaggregated in Note Q and are derived from commodity sales and services revenues, as described below:

Commodity Sales (all segments) - We contract to deliver residue natural gas, condensate, unfractionated NGLs and/or NGL products to customers at a specified delivery point.

Performance Obligations and Revenue Sources - Revenue sources are disaggregated in Note R and are derived from commodity sales and services revenues, as described below:

Commodity Sales (all segments) - We contract to deliver residue natural gas, condensate, unfractionated NGLs and/or purity NGLs to customers at a specified delivery point.

Our sales agreements may be daily or longer-term contracts for a specified volume.

We consider the sale and delivery of each unit of a commodity an individual performance obligation as the customer is expected to control, accept and benefit from each unit individually.

We record revenue when the commodity is delivered to the customer as this represents the point in time when control of the product is transferred to the customer.

We record revenue when the commodity is delivered to the

customer as this represents the point in time when control of the product is transferred to the customer.

Revenue is recorded based on the contracted selling price, which is generally index-based and settled monthly.

Occasionally, we sell unfractionated NGLs to customers at an index-based price less third-party fractionation costs.

These costs are included as a reduction to commodity sales revenue.

The third-party fractionation costs we incurred associated with the Medford incident (Note B) were primarily under this type of agreement.

Gathering only contracts ( Natural Gas Gathering and Processing segment ) - Under this type of contract, we charge fees for providing midstream services, which include gathering and treating our customer’s natural gas.

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Transportation and exchange contracts ( Natural Gas Liquids segment ) - Under this type of contract, we charge fees for providing midstream services, which may include a bundled combination of gathering, transporting and/or fractionation of our customer’s NGLs.

Our performance obligation begins with delivery of unfractionated NGLs or NGL products to our system.

Our performance obligation begins with delivery of unfractionated NGLs or purity NGLs to our system.

These services represent a series of distinct services that are treated as one performance obligation that is satisfied over time.

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We use the output method based on the passage of time to measure satisfaction of the performance obligation associated with our daily stand-ready services.

Interruptible transportation contracts ( Natural Gas Pipelines segment ) - We agree to transport natural gas on our pipelines between the customer’s nominated receipt and delivery points if capacity is available after satisfying firm transportation service obligations.

Interruptible transportation contracts ( Natural Gas Pipelines segment ) - We agree to transport natural gas on our pipelines between the customer’s specified nominated-receipt and delivery points if capacity is available after satisfying firm transportation service obligations.

The transaction price is based on the transportation fees times the volumes transported.

We use the output method

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based on delivery of product to the customer to measure satisfaction of the performance obligation.

We use the output method based on delivery of product to the customer to measure satisfaction of the performance obligation.

The total consideration for delivered volumes is recorded in revenue at the time of delivery, when the customer obtains control.

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These fees and charges are not recorded until it is probable that a significant reversal of the associated revenue will not occur.

See Note P for our revenue disclosures.

See Note Q for our revenue disclosures.

Contract Assets and Contract Liabilities - Contract assets and contract liabilities are recorded when the amount of revenue recognized from a contract with a customer differs from the amount billed to the customer and recorded in accounts receivable.

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After performing these services, we sell the commodities and return a portion of the commodity sales proceeds to the producer less our contractual fees.

Purchase with fee ( Natural Gas Liquids segment ) - Under this type of contract, we purchase raw, unfractionated NGLs at an index price and charge fees for providing midstream services, which may include a bundled combination of gathering, transporting and/or fractionation of our customer’s NGLs.

Operations and Maintenance - Operations and maintenance primarily includes (i) payroll and benefit costs, (ii) third-party costs for operations, maintenance and integrity management, regulatory compliance and environmental and safety, and (iii) other business-related service costs.

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Under the majority of our NGL exchange agreements, we physically receive volumes of unfractionated NGLs, including the risk of loss and legal title to such volumes, from the exchange counterparty.

In turn, we deliver NGL products back to the customer and charge them gathering, transportation and fractionation fees.

In turn, we deliver purity NGLs back to the customer and charge them gathering, transportation and fractionation fees.

To the extent that the volumes we receive under such agreements differ from those we deliver, we record a net exchange receivable or payable position with the counterparties.

These net exchange receivables and payables are generally settled with movements of NGL products rather than with cash.

These net exchange receivables and payables are generally settled with movements of purity NGLs rather than with cash.

Natural gas pipeline imbalances are settled in cash or in-kind, subject to the terms of the pipelines’ tariffs or by agreement.

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Derivatives and Risk Management - We utilize derivatives to reduce our market-risk exposure to commodity price and interest-rate fluctuations and to achieve more predictable cash flows.

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Mark-to-market - Recorded at fair value - Change in fair value recognized in earnings

Cash flow hedge - Recorded at fair value.

The gain or loss on the

Cash flow hedge - The gain or loss on the

derivative instrument is reported initially as a

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Cash flows from futures, forwards, options and swaps that are accounted for as hedges are included in the same category as the cash flows from the related hedged items in our Consolidated Statements of Cash Flows.

See Notes B and C for disclosures of our fair value measurements and risk-management and hedging activities, respectively.

See Notes C and D for disclosures of our fair value measurements and risk-management and hedging activities, respectively.

Property, Plant and Equipment - Our properties are stated at cost, including AFUDC and capitalized interest.

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Changes in the estimated economic lives of our property, plant and equipment could have a material effect on our financial position or results of operations.

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Property, plant and equipment on our Consolidated Balance Sheets includes construction work in process for capital projects that have not yet been placed in service and therefore are not being depreciated.

Assets are transferred out of construction work in process when they are substantially complete and ready for their intended use.

See Note D for our property, plant and equipment disclosures.

See Note E for our property, plant and equipment disclosures.

Impairment of Goodwill and Long-Lived Assets, Including Intangible Assets - We assess our goodwill for impairment at least annually as of July 1, unless events or changes in circumstances indicate an impairment may have occurred before that time.

Our qualitative goodwill impairment analysis performed as of July 1, 2021, did not result in an impairment charge nor did our analysis reflect any reporting units at risk, and subsequent to that date, no event has occurred indicating that the implied fair value of each of our reporting units is less than the carrying value of its net assets.

Goodwill - As part of our goodwill impairment test, we assess qualitative factors (including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance) to determine whether it was more likely than not that the fair value of each of our reporting units was less than their carrying amount.

Our qualitative goodwill impairment analysis performed as of July 1, 2022, did not result in an impairment charge nor did our analysis reflect any reporting units at risk, and subsequent to that date, no event has occurred indicating that the implied fair value of our reporting units with goodwill are less than the carrying value of their net assets.

Goodwill - As part of our goodwill impairment test, we assess qualitative factors (including macroeconomic conditions, industry and market considerations, cost factors and overall financial performance) to determine whether it was more likely than not that the fair value of our reporting units with goodwill are less than their carrying amount.

If further testing is necessary or a quantitative test is elected, we perform a Step 1 analysis.

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Under the income approach, we use anticipated cash flows over a period of years plus a terminal value and discount these amounts to their present value using appropriate discount rates.

The forecasted cash flows are based on probability weighted-average possible future cash flows for a reporting unit over a period of years.

Under the market approach, we apply EBITDA multiples to forecasted EBITDA.

The multiples used are consistent with recent market transactions.

The forecasted cash flows are based on probability weighted-average possible future cash flows for a reporting unit over a period of years.

Long-lived assets - We assess our long-lived assets for impairment whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverable.

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Therefore, we periodically evaluate the amount at which we carry our equity-method investments to determine whether current events or circumstances warrant adjustments to our carrying values.

See Notes D, E and M for our disclosures and related impairment charges related to long-lived assets, goodwill and intangible assets and investments in unconsolidated affiliates, respectively.

See Notes E, F and N for our disclosures and related impairment charges related to long-lived assets, goodwill and intangible assets and investments in unconsolidated affiliates, respectively.

Regulation - Depending on the specific service provided, our natural gas transmission pipelines, NGL pipelines and certain natural gas storage facilities are subject to rate regulation and/or accounting requirements by one or more of the FERC, OCC, KCC and RRC.

Accordingly, portions of our Natural Gas Liquids and Natural Gas Pipelines segments follow the accounting and reporting guidance for regulated operations.

In our Consolidated Financial Statements and our Notes to Consolidated Financial Statements, regulated operations are defined pursuant to Financial Accounting Standards Board’s (FASB) Accounting Standards Codification 980, Regulated Operations.

Accordingly, portions of our Natural Gas Liquids and Natural Gas Pipelines segments follow the accounting and reporting guidance for regulated operations as defined pursuant to Financial Accounting Standards Board’s (FASB) Accounting Standards Codification 980, Regulated Operations.

In our Notes to Consolidated Financial Statements, we also state separately certain amounts for regulated operations where they are defined by the SEC.

In Notes E and R we have made certain reclassifications to prior year amounts to conform to current year presentation.

During the rate-making process for certain of our assets, regulatory authorities set the framework for what we can charge customers for our services and establish the manner that our costs are accounted for, including allowing us to defer recognition of certain costs and permitting recovery of the amounts through rates over time as opposed to expensing such costs as incurred.

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A write-off of regulatory assets and costs not recovered may be required if all or a portion of the regulated operations have rates that are no longer (i) established by independent, third-party regulators and (ii) set at levels that will recover our costs when considering the demand and competition for our services.

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Retirement and Other Postretirement Employee Benefits - We have defined benefit retirement plans covering certain employees and former employees.

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In determining the projected benefit obligations and costs, assumptions can change from period to period and may result in changes in the costs and liabilities we recognize.

See Note K for our retirement and other postretirement employee benefits disclosures.

See Note L for our retirement and other postretirement employee benefits disclosures.

Income Taxes - Deferred income taxes are provided for the difference between the financial statement and income tax basis of assets and liabilities and carryforward items based on income tax laws and rates existing at the time the temporary differences are expected to reverse.

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We are not under any United States federal audits or statute waivers at this time.

See Note L for our income taxes disclosures.

See Note M for our income taxes disclosures.

Asset Retirement Obligations - Asset retirement obligations represent legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or normal use of the asset.

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Actual results may differ from our estimates resulting in an impact, positive or negative, on earnings.

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See Note N for additional discussion of contingencies.

See Note O for additional discussion of contingencies.

Share-Based Payments - We expense the fair value of share-based payments net of estimated forfeitures.

We estimate forfeiture rates based on historical forfeitures under our share-based payment plans.

See Note J for our share-based payments disclosures.

Earnings per Common Share - Basic EPS is calculated by dividing net income available to common shareholders by the daily weighted-average number of shares of common stock outstanding during the period, vested restricted and performance units that have been deferred and share awards deferred under the compensation plan for non-employee directors.

Diluted EPS is calculated by dividing net income available to common shareholders by the daily weighted-average number of shares of common stock outstanding during the period plus potentially dilutive components.

See Note K for our share-based payments disclosures.

Earnings per Common Share - Basic EPS is calculated based on the daily weighted-average number of shares of common stock outstanding during the period, vested restricted and performance units that have been deferred and share awards deferred under the compensation plan for non-employee directors.

Diluted EPS is calculated based on the daily weighted-average number of shares of common stock outstanding during the period plus potentially dilutive components.

The dilutive components are calculated based on the dilutive effect for each quarter.

For fiscal-year periods, the dilutive components for each quarter are averaged to arrive at the fiscal year-to-date dilutive component.

See Note I for our EPS disclosures.

See Note J for our EPS disclosures.

Segment Reporting - Our chief operating decision-maker reviews the financial performance of each of our three segments, as well as our financial performance as a whole, on a regular basis.

Adjusted EBITDA by segment is utilized in this evaluation.

We believe this 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 are commonly employed by financial analysts and others to evaluate our financial performance and to compare financial performance among companies in our industry.

We believe this financial measure is useful because it and similar measures are used by many companies in our industry as a measurement of financial performance and are commonly employed by financial analysts and others to evaluate our financial performance and to compare financial performance among companies in our industry.

Adjusted EBITDA for each segment 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 other noncash items.

This calculation may not be comparable with similarly titled measures of other companies.

See Note Q for our segments disclosures.

See Note R for our segments disclosures.

Recently Issued Accounting Standards Update - Changes to GAAP are established by the FASB in the form of ASUs to the FASB Accounting Standards Codification.

We consider the applicability and impact of all ASUs.

ASUs not listed below were assessed and determined to be either not applicable or clarifications of ASUs previously issued or listed below.

Except as discussed below, there have been no new accounting pronouncements that have become effective or have been issued that are of significance or potential significance to us.

In January 2021, we adopted ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes,” which simplifies certain concepts in Topic 740, Income Taxes.

The impact of adopting this standard was not material.

ASUs not discussed herein were assessed and determined to be either not applicable or clarifications of ASUs previously issued.

There have been no new accounting pronouncements that have become effective or have been issued that are of significance or potential significance to us.

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.

Subject to the terms and conditions of our insurance policies and any applicable sub-limits, we have property damage and business interruption coverage with a combined per occurrence limit of $ 2 billion and deductibles of $ 5 million per occurrence for property damage and a 45-day waiting period per occurrence for business interruption coverage.

Beginning in August 2022, we developed claims related to the Medford incident and recorded accruals for the expected insurance recoveries.

We assessed incurred costs and lost earnings related to business interruption and property damage to our facility, as well as timing of recognition under applicable insurance recovery guidance, and recorded accruals of $ 150.7 million in 2022.

We received a $ 100 million unallocated payment from our insurers in the fourth quarter 2022.

We assessed the property damage to our facility and wrote off assets totaling $ 45.6 million for the year ended December 31, 2022, which represents the value associated with certain damaged Medford facility property.

We recorded an insurance receivable that was probable of recovery and fully offsets our noncash property losses, resulting in no impact to our Consolidated Statement of Income.

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.

Our property insurance policy also includes coverage for expenses incurred in response to the Medford incident.

For the year ended December 31, 2022, we recorded accruals of $ 9 million related to the incurred costs in excess of our $ 5 million deductible that were probable of recovery, with an offset to the operations and maintenance line item in our Consolidated Statement of Income.

Our business interruption insurance provides coverage including, but not limited to (i) incurred costs and losses that are either unavoidable or incurred to mitigate or reduce losses and (ii) lost earnings.

We record recoveries for incurred costs and losses related to our business interruption coverage for the amount probable of recovery, not to exceed the actual losses incurred and

for lost earnings that have been realized and are no longer considered a gain contingency.

For the year ended December 31, 2022, we recorded accruals of $ 96.1 million, related primarily to third-party fractionation costs incurred subsequent to the 45-day business interruption waiting period.

Accruals for business interruption insurance proceeds are recorded to other operating (income) expense, net in our Consolidated Statement of Income.

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 January and February 2023.

The proceeds serve as settlement for property damage, business interruption claims to the date of the 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 an operational gain for the remaining $ 779.3 million.

FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements - The following tables set forth our recurring fair value measurements for the periods indicated:

Recurring Fair Value Measurements - The following tables set forth our recurring fair value measurements as of the dates indicated:

December 31, 2022

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Financial contracts $ 14,897 $ 152,338 $ — $ 167,235 $ ( 124,566 ) $ 42,669

Interest-rate contracts — 10,918 — 10,918 — 10,918

Total derivative assets $ 14,897 $ 163,256 $ — $ 178,153 $ ( 124,566 ) $ 53,587

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Financial contracts $ ( 38,187 ) $ ( 86,379 ) $ — $ ( 124,566 ) $ 124,566 $ —

Interest-rate contracts — ( 145,524 ) — ( 145,524 ) — ( 145,524 )

Total derivative liabilities $ ( 38,187 ) $ ( 86,379 ) $ — $ ( 124,566 ) $ 124,566 $ —

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We net derivative assets and liabilities when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us.

At December 31, 2021, we held no cash and posted $ 157.0 million of cash with various counterparties, including $ 99.6 million of cash collateral that is

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offsetting derivative net liability positions under master-netting arrangements in the table above.

The remaining $ 57.4 million of cash collateral in excess of derivative net liability positions is included in other current assets in our Consolidated Balance Sheet.

At December 31, 2022, we held no cash and posted $ 8.9 million of cash with various counterparties, which is included in other current assets in our Consolidated Balance Sheets.

December 31, 2021

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( Thousands of dollars )

Net assets (liabilities) at beginning of period $ ( 31,321 ) $ 30,772

Net liabilities at beginning of period $ ( 114,283 ) $ ( 31,321 )

Total changes in fair value:

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(b) - Included in change in fair value of derivatives in our Consolidated Statements of Comprehensive Income.

During the year ended December 31, 2021, transfers out of Level 3 related to commodity derivatives associated with certain locations for both NGL and natural gas basis swaps were principally due to improved transparency of market prices as a result of the volume and frequency of transactions in these markets.

During the years ended December 31, 2022 and 2021, transfers out of Level 3 related to commodity derivatives associated with certain locations for both NGL and natural gas basis swaps were principally due to improved transparency of market prices as a result of the volume and frequency of transactions in these markets.

We consider the valuation of these commodity derivatives transacted through a clearing broker and valued with an unadjusted published price from an exchange as a Level 2 valuation.

Our Level 3 fair value measurements continue to include NGL derivatives in other markets valued using forward quotes provided by third-party pricing services that are validated with other unobservable market data.

During the year ended December 31, 2020, there were no transfers in or out of Level 3 of the fair value hierarchy.

Other Financial Instruments - The approximate fair value of cash and cash equivalents, accounts receivable, accounts payable and short-term borrowings is equal to book value due to the short-term nature of these items.

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Our short-term borrowings are classified as Level 2 since the estimated fair value of the short-term borrowings can be determined using information available in the commercial paper market.

We have investments at December 31, 2021, associated with our supplemental executive retirement plan and nonqualified deferred compensation plan that are carried at fair value and primarily composed of exchange-traded mutual funds classified as Level 1.

We have investments associated with our supplemental executive retirement plan and nonqualified deferred compensation plan that are carried at fair value and primarily are composed of exchange-traded mutual funds classified as Level 1.

The estimated fair value of our consolidated long-term debt, including current maturities, was $ 12.7 billion and $ 15.6 billion at December 31, 2022 and 2021, respectively.

The book value of our consolidated long-term debt, including current maturities, was $ 13.6 billion and $ 14.2 billion at December 31, 2021 and 2020, respectively.

The estimated fair value of the aggregate

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senior notes outstanding was determined using quoted market prices for similar issues with similar terms and maturities.

The book value of our consolidated long-term debt, including current maturities, was $ 13.6 billion at December 31, 2022 and 2021.

The estimated fair value of the aggregate senior notes outstanding was determined using quoted market prices for similar issues with similar terms and maturities.

The estimated fair value of our consolidated long-term debt is classified as Level 2.

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We are also subject to the risk of interest-rate fluctuation in the normal course of business.

We use physical-forward purchases and sales and financial derivatives to secure a certain price for a portion of our natural gas, condensate and NGL products;

We use physical-forward purchases and sales and financial derivatives to secure a certain price for a portion of our natural gas, condensate and purity NGLs;

to reduce our exposure to commodity price and interest-rate fluctuations;

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Under certain fee with POP contracts, our fees and POP percentage may increase or decrease if production volumes, delivery pressures or commodity prices change relative to specified thresholds.

In certain commodity price environments, our contractual fees on these fee with POP contracts may decrease, which would impact the average fee rate in our Natural Gas Gathering and Processing segment.

We also are exposed to basis risk between the various production and market locations where we buy and sell commodities.

As part of our hedging strategy, we use the previously described commodity derivative financial instruments and physical-forward contracts to reduce the impact of price fluctuations related to natural gas, NGLs and condensate.

In our Natural Gas Liquids segment, we are primarily exposed to commodity price risk resulting from the relative values of the various NGL products to each other, the value of NGLs in storage and the relative value of NGLs to natural gas.

In our Natural Gas Liquids segment, we are primarily exposed to commodity price risk resulting from the relative values of the various purity NGLs to each other, the value of NGLs in storage and the relative value of NGLs to natural gas.

We are also exposed to location price differential risk as a result of the relative value of NGL purchases at one location and sales at another location, primarily related to our optimization and marketing business.

As part of our hedging strategy, we utilize physical-forward contracts and commodity derivative financial instruments to reduce the impact of price fluctuations related to NGLs.

In our Natural Gas Pipelines segment, we are primarily exposed to commodity price risk on our intrastate pipelines because they consume natural gas in operations and retain natural gas from our customers for operations or as part of our fee for services provided.

When the amount consumed in operations differs from the amount provided by our customers, our pipelines must buy or sell natural gas, or store or use natural gas inventory, which can expose this segment to commodity price risk depending on the regulatory treatment for this activity.

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Interest-rate risk - We may manage interest-rate risk through the use of fixed-rate debt, floating-rate debt and interest-rate swaps.

Interest-rate swaps are agreements to exchange interest payments at some future point based on specified notional

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In 2020, we settled $ 750 million of our forward-starting interest-rate swaps related to our underwritten public offerings of $ 1.75 billion senior unsecured notes resulting in a loss of $ 152.5 million, which is included in accumulated other comprehensive loss and amortized to interest expense over the term of the related debt.

We also settled the remaining $ 1.3 billion of our interest-rate swaps used to hedge our LIBOR-based interest payments in 2020 resulting in a loss of $ 48.3 million.

At December 31, 2021, and December 31, 2020, we had forward-starting interest-rate swaps with notional amounts totaling $ 1.1 billion to hedge the variability of interest payments on a portion of our forecasted debt issuances.

Interest-rate swaps are agreements to exchange interest payments at some future point based on specified notional amounts.

In 2022, we settled $ 750 million of our forward-starting interest-rate swaps related to our underwritten public offering of $ 750 million senior unsecured notes resulting in a gain of $ 28.1 million, which is included in accumulated other comprehensive loss and amortized into interest expense over the term of the related debt.

In December 2022, we terminated the remaining $ 375 million of our forward-starting interest swaps that had mandatory termination dates of December 31, 2022.

We simultaneously entered into forward-starting interest rate swaps with the same notional amounts at current market rates to hedge the variability of interest payments on a portion of our forecasted debt issuances that may result from changes in the benchmark interest rate before the debt is issued.

At December 31, 2022, and December 31, 2021, we had forward-starting interest-rate swaps with notional amounts totaling $ 0.4 billion and $ 1.1 billion, respectively, to hedge the variability of interest payments on a portion of our forecasted debt issuances.

All of our interest-rate swaps are designated as cash flow hedges.

Fair Values of Derivative Instruments - See Note A for a discussion of the inputs associated with our fair value measurements.

The following table sets forth the fair values of our derivative instruments presented on a gross basis for the periods indicated:

The following table sets forth the fair values of our derivative instruments presented on a gross basis as of the dates indicated:

December 31, 2022 December 31, 2021

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Commodity contracts (a)

Financial contracts (b) $ 204,161 $ ( 303,740 ) $ 107,461 $ ( 142,573 )

Interest-rate contracts Other current liabilities — ( 145,524 ) — —

Other deferred credits — — — ( 203,407 )

Financial contracts (b) Other current assets $ 160,390 $ ( 123,121 ) $ 204,161 $ ( 303,740 )

Other assets 6,287 ( 1,205 ) — —

Interest-rate contracts Other current assets/liabilities 10,918 — — ( 145,524 )

Total derivatives designated as hedging instruments 177,595 ( 124,326 ) 204,161 ( 449,264 )

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Commodity contracts (a)

Financial contracts (b) — — 3,037 ( 3,038 )

Financial contracts Other current assets 558 ( 240 ) — —

Total derivatives not designated as hedging instruments 558 ( 240 ) — —

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(a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheets on a net basis when a legally enforceable master-netting arrangement exists between the counterparty to a derivative contract and us.

(b) - At December 31, 2021, and December 31, 2020, our derivative net liability positions under master-netting arrangements for financial contracts were fully offset by cash collateral of $ 99.6 million and $ 35.1 million, respectively.

(b) - At December 31, 2021, our derivative net liability positions under master-netting arrangements for financial contracts were fully offset by cash collateral of $ 99.6 million.

Notional Quantities for Derivative Instruments - The following table sets forth the notional quantities for derivative instruments held for the periods indicated:

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Swaps $ 0.4 $ 1.1

(a) - Notional amounts for derivatives not designated as hedging instruments are excluded from the table above due to fully offsetting notional quantities of 0.8 MMBbl for NGLs fixed priced derivative instruments at December 31, 2020.

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Derivatives not designated as hedging instruments:

-Natural gas ( Bcf )

Futures ( 0.1 ) —

-Crude oil and NGLs ( MMBbl )

Futures 0.1 —

-Natural gas ( Bcf )

Futures ( 0.1 ) —

Cash Flow Hedges - The following table sets forth the unrealized change in fair value of cash flow hedges in other comprehensive income (loss) for the periods indicated:

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At December 31, 2022, the credit exposure from our derivative assets is with investment-grade companies in the financial services sector.

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PROPERTY, PLANT AND EQUIPMENT

The following table sets forth our property, plant and equipment by property type, for the periods indicated:

The following table sets forth our property, plant and equipment by property type, as of the dates indicated:

Estimated Useful

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Such amounts are not included in capital expenditures (less AFUDC) on the Consolidated Statements of Cash Flows.

Medford Assets - In connection with the Medford incident, 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.

Impairment Charges - In 2020, we evaluated our Natural Gas Gathering and Processing segment asset groups and determined that the carrying value of certain long-lived asset groups in the Powder River Basin, western Oklahoma and Kansas were not recoverable and exceeded their estimated fair value.

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GOODWILL AND INTANGIBLE ASSETS

Goodwill - The following table sets forth our goodwill, by segment, for the periods indicated:

Goodwill - The following table sets forth our goodwill, by segment, as of the dates indicated:

2022 December 31,

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Total goodwill $ 527,592 $ 527,592

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Impairment Charges - In 2020, we experienced a significant decline in our share price and market capitalization as the energy industry experienced historic events that led to a simultaneous demand and supply disruption.

Due to the impact of these events, we tested our goodwill for impairment and concluded that the carrying value of the Natural Gas Gathering and Processing reporting unit exceeded its estimated fair value, resulting in a noncash impairment charge of $ 153.4 million, which is included within impairment charges in our Consolidated Statement of Income for the year ended December 31, 2020.

At December 31, 2021 and 2020, we have no remaining goodwill in our Natural Gas Gathering and Processing segment.

Intangible Assets - Our intangible assets relate primarily to contracts acquired through acquisitions in our Natural Gas Liquids and Natural Gas Gathering and Processing segments, which are being amortized over periods of 15 to 40 years.

Amortization expense for intangible assets was $ 10.4 million in 2021, $ 10.8 million in 2020, and $ 11.9 million in 2019, and the aggregate amortization expense for each of the next five years is estimated to be $ 10.4 million.

The following table reflects the gross carrying amount and accumulated amortization of intangible assets for the periods presented:

We have no remaining goodwill in our Natural Gas Gathering and Processing segment.

Intangible Assets - Our intangible assets relate primarily to contracts acquired through acquisitions in our Natural Gas Liquids segment, which are being amortized over periods of 15 to 40 years.

Amortization expense for intangible assets was $ 10.4 million in 2022, $ 10.4 million in 2021, and $ 10.8 million in 2020, and the amortization expense for each of the next five years is estimated to be $ 10.4 million.

The following table reflects the gross carrying amount and accumulated amortization of intangible assets as of the dates presented:

2022 December 31,

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These charges are included within impairment charges in our Consolidated Statement of Income for the year ended December 31, 2020.

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The following table sets forth our consolidated debt for the periods indicated:

The following table sets forth our consolidated debt for as of the dates indicated:

2022 December 31,

(Thousands of dollars)

Commercial paper outstanding $ — $ —

Commercial paper outstanding (a) $ — $ —

Senior unsecured obligations:

$ 700,000 at 4.25 % due February 2022

$ 900,000 at 3.375 % due October 2022

895,814 895,814

$ 425,000 at 5.0 % due September 2023

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600,000 600,000

$ 750,000 at 6.1 % due November 2032

$ 400,000 at 6.0 % due June 2035

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300,000 300,000

Guardian Pipeline

Weighted average 7.85 % due December 2022

$ 120,000 term loan, rate of 4.06 % as of December 31, 2022, due June 2025

Total debt 13,730,895 13,756,709

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Current maturities of long-term debt ( 925,000 ) ( 895,814 )

Short-term borrowings (a) — —

Long-term debt $ 12,695,834 $ 12,747,636

(a) - Individual issuances of commercial paper under our commercial paper program generally mature in 90 days or less.

$2.5 Billion Credit Agreement - Our $ 2.5 Billion Credit Agreement, which expires in June 2024, is a revolving credit facility and contains certain financial, operational and legal covenants.

Among other things, these covenants include maintaining a ratio of indebtedness to adjusted EBITDA (EBITDA, as defined in our $2.5 Billion Credit Agreement, adjusted for all noncash charges and increased for projected EBITDA from certain lender-approved capital expansion projects) of no more than 5.0 to 1 at December 31, 2021.

Our $2.5 Billion Credit Agreement includes a $ 100 million sublimit for the issuance of standby letters of credit and a $ 200 million sublimit for swingline loans.

Under the terms of our $2.5 Billion Credit Agreement, we may request an increase in the size of the facility to an aggregate of $ 3.5 billion by either commitments from new lenders or increased commitments from existing lenders.

Our $2.5 Billion Credit Agreement contains provisions for an applicable margin rate and an annual facility fee, both of which adjust with changes in our credit ratings.

Based on our current credit ratings, borrowings, if any, will accrue at LIBOR, or alternate benchmark rate, plus 110 basis points, and the annual facility fee is 15 basis points.

At December 31,

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2021, our ratio of indebtedness to adjusted EBITDA was 4.0 to 1, and we were in compliance with all covenants under our $2.5 Billion Credit Agreement.

At December 31, 2021 and 2020, we had letters of credit issued totaling $ 7.7 million, and no borrowings outstanding under our $2.5 Billion Credit Agreement.

$2.5 Billion Credit Agreement - In June 2022, we amended and restated our $ 2.5 Billion Credit Agreement, extending its maturity to June 2027.

Our $2.5 Billion Credit Agreement is a revolving credit facility and contains certain customary conditions for borrowing, as well as customary financial, affirmative and negative covenants.

Among other things, beginning in June 2022, these covenants include maintaining a ratio of consolidated net indebtedness to adjusted EBITDA (EBITDA, as defined in our $2.5 Billion Credit Agreement, adjusted for all noncash charges and increased for projected EBITDA from certain lender-approved capital expansion projects) of no more than 5.0 to 1 at December 31, 2022.

The $2.5 Billion Credit Agreement includes a $ 100 million sublimit for the issuance of standby letters of credit and a $ 200 million sublimit for swingline loans.

Under the terms of the $2.5 Billion Credit Agreement, we may request up to an aggregate $ 1.0 billion increase in the size of the facility, upon satisfaction of customary conditions, including receipt of commitments from new lenders or increased commitments from existing lenders.

The $2.5 Billion Credit Agreement contains provisions for an applicable margin rate and an annual facility fee, both of which adjust with changes in our credit ratings.

Borrowings, if any, will accrue at Term SOFR plus an applicable margin based on our credit ratings at the time of determination plus an adjustment of 10 basis points.

Under our current credit ratings, the applicable margin on any borrowings

would be 110 basis points.

We are required to pay an annual facility fee equal to the daily amount of aggregate commitments under the $2.5 Billion Credit Agreement times an applicable rate based on our credit rating at the time of determination.

Under our current credit ratings, the applicable rate is 15 basis points .

We have the option to request two one-year maturity extensions, subject to lender approvals.

The $2.5 Billion Credit Agreement also contains various customary events of default, the occurrence of which could result in a termination of the lenders’ commitments and the acceleration of all of our obligations thereunder.

As of December 31, 2022, our ratio of consolidated net indebtedness to adjusted EBITDA was 3.7 to 1, and we were in compliance with all covenants under our $2.5 Billion Credit Agreement.

At December 31, 2022 and 2021, we had letters of credit issued totaling $ 7.9 million and $ 7.7 million, respectively, a nd no borrowings outstanding under our $2.5 Billion Credit Agreement.

Guardian Term Loan Agreement - In June 2022, Guardian entered into a $ 120 million unsecured term loan agreement.

The Guardian Term Loan Agreement matures in June 2025, and bears interest at Term SOFR plus an applicable margin based on Guardian’s credit rating at the time of determination plus an adjustment of 10 basis points.

Under Guardian’s current credit ratings, the applicable margin is 112.5 basis points .

The Guardian Term Loan Agreement allows prepayment of all or any portion outstanding without penalty or premium.

During the second quarter 2022, Guardian drew the full $120 million available under the agreement and used the proceeds to repay intercompany debt with ONEOK.

As of December 31, 2022, Guardian was in compliance with all covenants under the Guardian Term Loan Agreement.

Senior Unsecured Obligations - All notes are senior unsecured obligations, ranking equally in right of payment with all of our existing and future unsecured senior indebtedness, and are structurally subordinate to any of the existing and future debt and other liabilities of any non guarantor subsidiaries.

Issuances - In May 2020, we completed an underwritten public offering of $ 1.5 billion senior unsecured notes consisting of $ 600 million, 5.85 % senior notes due 2026;

Issuances - 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 May 2020, we completed an underwritten public offering of $ 1.5 billion senior unsecured notes consisting of $ 600 million, 5.85 % senior notes due 2026;

$ 600 million, 6.35 % senior notes due 2031;

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The remainder was used for general corporate purposes, which included repayment of other existing indebtedness and funding capital expenditures.

In August 2019, we completed an underwritten public offering of $ 2.0 billion senior unsecured notes consisting of $ 500 million, 2.75 % senior notes due 2024;

$ 750 million, 3.4 % senior notes due 2029;

and $ 750 million, 4.45 % senior notes due 2049.

The net proceeds, after deducting underwriting discounts, commissions and offering expenses, were $ 1.97 billion.

The proceeds were used for general corporate purposes, including repayment of existing indebtedness and funding capital expenditures.

In March 2019, we completed an underwritten public offering of $ 1.25 billion senior unsecured notes consisting of $ 700 million, 4.35 % senior notes due 2029 and an additional issuance of $ 550 million of our existing 5.2 % senior notes due 2048.

The net proceeds, after deducting underwriting discounts, commissions and offering expenses, and exclusive of accrued interest, were $ 1.23 billion.

The proceeds were used for general corporate purposes, including repayment of existing indebtedness and funding capital expenditures.

Repayments - In November 2021, we redeemed the remaining $ 536.1 million of our $ 700 million, 4.25 % senior notes due February 2022 at 100 % of the principal amount, plus accrued and unpaid interest, with cash on hand and short-term borrowings.

In June 2021, we repaid the remaining $ 11.7 million of Guardian Pipeline’s senior notes due December 2022 with cash on hand.

Repayments - 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.

In November 2021, we redeemed the remaining $ 536.1 million of our $ 700 million, 4.25 % senior notes due February 2022 at 100 % of the principal amount, plus accrued and unpaid interest, with cash on hand and short-term borrowings.

In June 2021, we repaid the remaining $ 11.7 million of Guardian’s senior notes due December 2022 with cash on hand.

In 2021, we repurchased in the open market outstanding principal of certain of our senior notes in the amount of $ 55.2 million for an aggregate repurchase price of $ 54.6 million with cash on hand.

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In 2020, we repurchased in the open market outstanding principal of certain of our senior notes in the amount of $ 224.4 million for an aggregate repurchase price of $ 199.6 million with cash on hand.

In connection with these open market repurchases, we recognized $ 22.3 million of net gains on extinguishment of debt, which is included in other income in our Consolidated Statement of Income for the year ended December 31, 2020.

In September 2019, we redeemed our $ 300 million, 3.8 % senior notes due March 2020 at a redemption price of $ 308.0 million, including the outstanding principal, plus accrued and unpaid interest, with cash on hand from our public offering of $2.0 billion senior unsecured notes in August 2019.

In connection with this early redemption, we incurred a $ 2.7 million loss on extinguishment of debt, which is included in other expense in our Consolidated Statements of Income for the year ended December 31, 2019.

In August 2019, we repaid $ 250 million of our $1.5 Billion Term Loan agreement with cash on hand.

Table of Cont ents

In March 2019, we repaid our $ 500 million, 8.625 % senior notes at maturity with a combination of cash on hand and short-term borrowings.

The aggregate maturities of long-term debt outstanding and interest obligations on debt as of December 31, 2021, for the years 2022 through 2026 are shown below:

Obligations Interest

In connection with these open market repurchases, we recognized $ 22.3 million of net gains on extinguishment of debt, which is included in other income (expense), net in our Consolidated Statement of Income for the year ended December 31, 2020.

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.

The aggregate maturities of long-term debt outstanding and interest payments on debt as of December 31, 2022, for the years 2023 through 2027 are shown below:

Obligations Guardian Interest

on Debt Total

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2027 $ 500.0 $ — $ 544.7 $ 1,044.7

Covenants - Our senior notes are governed by indentures containing covenants, including among other provisions, limitations on our ability to place liens on our property or assets and to sell and leaseback our property.

The indentures governing our 6.875% senior notes due 2028 include an event of default upon acceleration of other indebtedness of $ 15 million or more, and the indentures governing the remainder of our senior notes include an event of default upon the acceleration of other indebtedness of $ 100 million or more.

Such events of default would entitle the trustee or the holders of 25 % in aggregate principal amount of the outstanding senior notes to declare those senior notes immediately due and payable in full.

The indenture for the 7.5% notes due 2023 also contains a provision that allows the holders of the notes to require ONEOK to offer to repurchase all or any part of their notes if a change of control and a credit rating downgrade occur at a purchase price of 101 % of the principal amount, plus accrued and unpaid interest, if any.

We may redeem our senior notes, in whole or in part, at any time prior to their maturity at a redemption price equal to the principal amount, plus accrued and unpaid interest and a make-whole premium.

We may redeem the balance of our senior notes due 2022, 2023, 2024, 2025, 2026, 2027, 2028 (4.55%), 2029, 2030, 2031, 2041, 2043, 2047, 2048, 2049, 2050 and 2051 at a redemption price equal to the principal amount, plus accrued and unpaid interest, starting one to six months before the maturity date as stipulated in the respective contract terms.

Our senior notes are senior unsecured obligations, ranking equally in right of payment with all of our existing and future unsecured senior indebtedness.

Compliance with Debt Covenants - As of December 31, 2022, we were in compliance with the covenants contained in our various debt agreements.

Other - We amortize premiums, discounts and expenses incurred in connection with the issuance of long-term debt consistent with the terms of the respective debt instrument.

Debt Guarantees - ONEOK, ONEOK Partners and the Intermediate Partnership have cross guarantees in place for our and ONEOK Partners’ indebtedness.

The Guardian Term Loan Agreement is not guaranteed by ONEOK, ONEOK Partners or the Intermediate Partnership.

Series A and B Convertible Preferred Stock - There are no shares of Series A or Series B Preferred Stock currently issued or outstanding.

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The proceeds were used for general corporate purposes, including repayment of existing indebtedness and funding capital expenditures.

Table of Cont ents

Dividends - Holders of our common stock share equally in any dividend declared by our Board of Directors, subject to the rights of the holders of outstanding Series E Preferred Stock.

Dividends paid totaled $ 1.7 billion, $ 1.7 billion and $ 1.6 billion for 2022, 2021 and 2020, respectively.

Although dividends per share did not increase in 2021 as compared with 2020, dividends paid increased due to the increase in number of shares outstanding as a result of our equity issuances.

The following table sets forth the quarterly dividends per share paid on our common stock in the periods indicated:

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Total $ 3.74 $ 3.74 $ 3.74

Additionally, in February 2022, we maintained and paid a quarterly common stock dividend of $ 0.935 per share ($ 3.74 per share on an annualized basis), which was paid to shareholders of record as of January 31, 2022 .

Additionally, in February 2023, we paid a quarterly common stock dividend of $ 0.955 per share ($ 3.82 per share on an annualized basis), which was paid to shareholders of record as of January 30, 2023 .

The 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.

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January 1, 2021 $ ( 377,446 ) $ ( 157,635 ) $ ( 16,368 ) $ ( 551,449 )

Other comprehensive loss before reclassifications ( 165,023 ) ( 40,341 ) ( 8,635 ) ( 213,999 )

Other comprehensive income (loss) before reclassifications ( 203,868 ) 31,897 3,088 ( 168,883 )

Amounts reclassified to net income (c) 228,999 18,079 1,903 248,981

Other comprehensive loss ( 143,926 ) ( 26,154 ) ( 7,369 ) ( 177,449 )

Other comprehensive income 25,131 49,976 4,991 80,098

December 31, 2021 ( 352,315 ) ( 107,659 ) ( 11,377 ) ( 471,351 )

Other comprehensive income (loss) before reclassifications ( 203,868 ) 31,897 3,088 ( 168,883 )

Other comprehensive income before reclassifications 93,451 41,140 15,183 149,774

Amounts reclassified to net income (c) 200,933 11,624 764 213,321

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(b) - Includes amounts related to supplemental executive retirement plan.

(c) - See Note C for details of amounts reclassified to net income for risk-management assets/liabilities and Note K for retirement and other postretirement benefit plan obligations.

Table of Cont ents

The following table sets forth information about the balance of accumulated other comprehensive loss at December 31, 2021, representing unrealized losses related to risk-management assets and liabilities:

The following table sets forth information about the balance of accumulated other comprehensive loss at December 31, 2022, representing unrealized gains (losses) related to risk-management assets and liabilities, net of tax:

Assets/Liabilities (a)

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Settled interest-rate swaps to be recognized over the life of the long-term, fixed-rate debt (c)

Interest-rate swaps with future settlement dates expected to be amortized over the life of long-term debt

Interest-rate swaps with future settlement dates expected to be amortized over the life of long-term debt (d) 25,074

Accumulated other comprehensive loss at December 31, 2022 $ ( 57,931 )

(a) - All amounts are presented net of tax.

(b) - Based on commodity prices on December 31, 2021, we expect net losses of $ 76.8 million, net of tax, will be reclassified into earnings during the next 12 months.

(b) - Based on commodity prices on December 31, 2022, we expect net gains of $ 28.7 million, net of tax, will be reclassified into earnings during the next 12 months.

(d) - Includes the interest rate swaps terminated in December 2022.

See Note D for more details.

The remaining amounts in accumulated other comprehensive loss relate primarily to our retirement and other postretirement benefit plan obligations, which are expected to be amortized over the average remaining service period of employees participating in these plans.

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Our Equity Incentive Plan (EIP) provides for the granting of stock-based compensation, including restricted stock unit awards and performance unit awards, to eligible employees and the granting of stock awards to non-employee directors.

Table of Cont ents

reserved 8.5 million shares of common stock for issuance under the EIP and at December 31, 2021, we had 5.5 million shares available for issuance under the plan.

We have reserved 8.5 million shares of common stock for issuance under the EIP and at December 31, 2022, we had 4.6 million shares available for issuance under the plan.

This calculation of available shares reflects shares issued and estimated shares expected to be issued upon vesting of outstanding awards granted under the EIP, excluding estimated forfeitures expected to be returned to the plan.

Restricted Stock Units - We have granted restricted stock units to key employees that vest at the end of a three -year period and entitle the grantee to receive shares of our common stock.

Restricted Stock Units - We have granted restricted stock units to key employees that vest at the end of a designated period, typically three years, and entitle the grantee to receive shares of our common stock.

Restricted stock unit awards are measured at fair value as if they were vested and issued on the grant date and adjusted for estimated forfeitures.

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Grant date fair value of units vested (thousands of dollars) $ 14,442 $ 12,519 $ 11,204

Table of Cont ents

Performance Unit Activity

As of December 31, 2021, we had $ 31.7 million of total unrecognized compensation cost related to the nonvested performance unit awards, which is expected to be recognized over a weighted-average period of 1.8 years.

As of December 31, 2022, we had $ 33.7 million of tot al unrecognized compensation cost related to the nonvested performance unit awards, which is expected to be recognized over a weighted-average period of 1.7 years .

The following tables set forth activity and various statistics related to the performance unit awards and the assumptions used in the valuations at the respective grant dates:

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The total number of shares of our common stock available for issuance under this program is 900,000 .

Shares issued to employees under this program during 2020 and 2019 totaled 2,871 and 14,022 , respectively.

Compensation expense related to the Employee Stock Award Program was $ 0.2 million and $ 1.0 million for 2020 and 2019, respectively.

No shares were issued to employees under this program in 2021.

Shares issued to employees under this program during 2020 totaled 2,871 .

Compensation expense related to the Employee Stock Award Program was $ 0.2 million for 2020.

No shares were issued to employees under this program in 2022 or 2021.

As of the date of this report, the next award will be issued when our common stock closes at or above $ 78 .

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Shares are distributed to non-employee directors at the fair market value of our common stock at the date of distribution.

Table of Cont ents

EMPLOYEE BENEFIT PLANS

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Plan participants’ contributions — — 824 1,092

Actuarial loss (gain) ( 22,792 ) 37,951 ( 2,496 ) 2,860

Actuarial gain ( 148,988 ) ( 22,792 ) ( 11,554 ) ( 2,496 )

Benefits paid ( 19,845 ) ( 18,483 ) ( 4,461 ) ( 3,959 )

Benefit obligation, end of period (b) 567,011 583,072 51,027 54,515

Benefit obligation, end of period (a) 422,774 567,011 37,623 51,027

Change in plan assets

Fair value of plan assets, beginning of period 413,183 379,092 24,397 20,874

Actual return on plan assets (a) 41,374 36,400 5,919 ( 15,699 )

Actual return on plan assets ( 71,705 ) 41,374 ( 3,957 ) 5,919

Employer contributions — 11,200 — —

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Benefits paid ( 19,845 ) ( 18,483 ) ( 4,461 ) ( 3,488 )

Fair value of plan assets, end of period (c) 413,183 379,092 24,397 20,874

Fair value of plan assets, end of period (b) 321,633 413,183 16,803 24,397

Balance at December 31 $ ( 101,141 ) $ ( 153,828 ) $ ( 20,820 ) $ ( 26,630 )

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Balance at December 31 $ ( 101,141 ) $ ( 153,828 ) $ ( 20,820 ) $ ( 26,630 )

(a) - Other Postretirement Benefits for the year ended December 31, 2020, includes a $ 13.2 million tax loss incurred from the exit of an investment in an insurance contract.

(b) - The benefit obligation for Retirement Benefits at December 31, 2021 and 2020, include the supplemental executive retirement plan obligation.

(c) - Fair value of plan assets for Retirement Benefits exclude the assets of our supplemental executive retirement plan, which totaled $ 111.2 million and $ 116.2 million at December 31, 2021 and 2020, respectively, and are included in other assets on the Consolidated Balance Sheets.

(a) - The benefit obligation for Retirement Benefits at December 31, 2022 and 2021, include the supplemental executive retirement plan obligation.

(b) - Fair value of plan assets for Retirement Benefits exclude the assets of our supplemental executive retirement plan, which totaled $ 91.8 million and $ 111.2 million at December 31, 2022 and 2021, respectively, and are included in other assets on the Consolidated Balance Sheets.

These assets are maintained in a rabbi trust and are not treated as assets of the supplemental executive retirement plan.

The accumulated benefit obligation for our retirement plans was $ 408.6 million and $ 541.8 million at December 31, 2022 and 2021, respectively.

Table of Cont ents

The actuarial gains and losses impacting our benefit obligations for our retirement and other postretirement benefit plans are due primarily to changes in the discount rate assumptions discussed in the “Actuarial Assumptions” section below.

The actuarial gains impacting our benefit obligations for our retirement and other postretirement benefit plans are due primarily to changes in the discount rate assumptions discussed in the “Actuarial Assumptions” section below.

Components of Net Periodic Benefit Cost - The following table sets forth the components of net periodic benefit cost for our retirement and other postretirement benefit plans for the periods indicated:

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Expected return on plan assets ( 24,469 ) ( 25,109 ) ( 24,964 ) ( 1,493 ) ( 1,364 ) ( 2,894 )

Amortization of prior service cost (credit) 114 114 — — — ( 227 )

Amortization of prior service cost 114 114 114 — — —

Amortization of net loss 13,050 19,673 18,306 1,932 3,692 5

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Prior service cost — — — — — —

Amortization of prior service cost (credit) (b) 114 114 — — — ( 227 )

Amortization of net loss (b) 19,673 18,306 12,649 3,692 5 297

Amortization of prior service cost 114 114 114 — — —

Amortization of net loss 13,050 19,673 18,306 1,932 3,692 5

Deferred income taxes ( 13,970 ) ( 12,493 ) 2,897 ( 1,739 ) ( 2,471 ) 4,933

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(a) - Other Postretirement Benefits for the year ended December 31, 2020, includes a $ 13.2 million tax loss incurred from the exit of an investment in an insurance contract.

(b) - These components are recognized in accumulated other comprehensive loss and are reclassified to other expense in our Consolidated Statements of Income, with related income tax benefits of $ 5.4 million, $ 4.2 million and $ 2.9 million reclassified to income tax expense for the years ended December 31, 2021, 2020 and 2019, respectively.

The table below sets forth the amounts in accumulated other comprehensive loss that had not yet been recognized as components of net periodic benefit expense for the periods indicated:

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Prior service cost $ ( 260 ) $ ( 374 ) $ — $ —

Accumulated loss (a) ( 131,460 ) ( 185,662 ) ( 14,815 ) ( 25,558 )

Accumulated loss ( 70,833 ) ( 131,460 ) ( 7,255 ) ( 14,815 )

Accumulated other comprehensive loss ( 71,093 ) ( 131,834 ) ( 7,255 ) ( 14,815 )

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Accumulated other comprehensive loss, net of tax $ ( 48,305 ) $ ( 95,075 ) $ ( 5,142 ) $ ( 10,963 )

(a) - Other Postretirement Benefits for the year ended December 31, 2020, includes a $ 13.2 million tax loss incurred from the exit of an investment in an insurance contract.

Table of Cont ents

Actuarial Assumptions - The following table sets forth the weighted-average assumptions used to determine benefit obligations for retirement and other postretirement benefits for the periods indicated:

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As part of our risk management for the plans, minimums and maximums have been set for each of the asset classes listed above.

Table of Cont ents

The following tables set forth the plan assets by fair value category as of the measurement date for our defined benefit pension and other postretirement benefit plans:

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Corporate obligations (b) — — — — 120,877 120,877

Short-term investments (e) — — — — 4,890 4,890

Short-term investments — — — — 4,243 4,243

Other investments (c) — — — — 41,954 41,954

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(b) - This category represents bonds from diverse industries.

(c) - This category represents alternative investments in limited partnerships, which can be redeemed with a 30-day notice with no further restrictions.

(c) - This category repre sen ts alternative investments in limited partnerships, which can be redeemed with a 30-day notice with no further restrictions.

There are no unfunded capital commitments.

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(d) - Plan asset investments measured at fair value using the net asset value per share.

(e) - The fair value of short term investments in the Bank of New York Mellon EB Temporary Investment Fund was previously reported in Level 2.

We elected to consistently apply the practical expedient to all investments within common/collective trusts, and therefore, the fair value of this fund is now measured at net asset value per share and no longer classified in the fair value hierarchy.

Table of Cont ents

Other Postretirement Benefits

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( Thousands of dollars )

Equity securities (a)(b) $ 15,116 $ — $ — $ 15,116

Equity securities (a) $ 17,953 $ — $ — $ 17,953

Money market funds — 480 — 480

Municipal obligations (b) 4,950 — — 4,950

Municipal obligations 5,964 — — 5,964

Fair value of plan assets $ 23,917 $ 480 $ — $ 24,397

(a) - This category represents securities of the respective market sector from diverse industries.

(b) - Net proceeds of $ 16.2 million from the exit of an investment in an insurance contract were reinvested in various equity securities and municipal obligations.

Contributions - During 2021, we made $ 11.2 million in contributions to our defined benefit pension plan and no contributions to our other postretirement plans.

Our defined benefit pension plan elected to adopt funding relief provided by the American Rescue Plan Act of 2021 legislation.

As a result of the election, our defined benefit pension plan has no minimum required contribution in 2022.

Contributions - During 2022, we made no contributions to our defined benefit pension and other postretirement benefit plans.

Our defined benefit pension plan has a minimum required contribution of approximately $ 7 million in 2023.

We expect that any contributions to our defined benefit pension plan in 2023 will be satisfied entirely through a non-cash offset against our prefunding account balance.

We do not expect to make any contributions to our other postretirement benefit plans in 2023.

Pension and Other Postretirement Benefit Payments - Benefit payments for our defined benefit pension and other postretirement benefit plans for the period ending December 31, 2022, were $ 19.8 million and $ 4.5 million, respectively.

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Our contributions made to the plan, including profit-sharing contributions, were $ 34.7 million, $ 32.7 million and $ 27.1 million in 2022, 2021 and 2020, respectively.

Table of Cont ents

Nonqualified Deferred Compensation Plan - The 2020 Nonqualified Deferred Compensation Plan and its predecessor nonqualified deferred compensation plans (collectively, the NQDC Plan) provide a select group of management and highly compensated employees, as approved by our Chief Executive Officer, with the option to defer portions of their compensation and receive notional employer contributions that generally are not available due to limitations on employer and employee contributions to qualified defined contribution plans under federal tax laws.

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These investments are maintained in a rabbi trust.

Our contributions to the plan were not material in 2021, 2020 and 2019.

Our contributions to the plan were not material in 2022, 2021 or 2020.

The following table sets forth our provision for income taxes for the periods indicated:

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( Thousands of dollars )

Current tax expense (benefit)

Current tax expense

Federal $ 52,012 $ 2,897 $ 980

State 11,993 9,544 1,797

Total current tax expense (benefit) 12,441 2,777 ( 315 )

Total current tax expense 64,005 12,441 2,777

Deferred tax expense

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(a) The year ended December 31, 2021, includes $ 19.4 million impact from previously recognized gains on certain benefit plan investments.

Table of Cont ents

The following table sets forth the tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities for the periods indicated:

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Derivative instruments 18,759 118,063

Other 4,863 12,894

Other (a) 30,048 4,863

Total deferred tax assets 1,431,987 1,772,109

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Excess of tax over book depreciation 94,815 84,692

Investment in partnerships (a) 2,769,352 2,437,620

Investment in partnerships (b) 3,000,700 2,769,352

Total deferred tax liabilities 3,095,515 2,854,044

Net deferred tax assets (liabilities) $ ( 1,166,690 ) $ ( 669,697 )

(a) Due primarily to excess of tax over book depreciation.

As of December 31, 2021, we have federal net operating loss carryforwards of $ 6.4 billion, the majority of which have an indefinite carry forward period.

Net deferred tax liabilities $ 1,738,525 $ 1,166,690

(a) The year ended December 31, 2022, includes an indefinite-lived interest limitation carryforward of $ 24.7 million.

(b) Due primarily to excess of tax over book depreciation.

In August 2022, the U.S.

government enacted the Inflation Reduction Act into law.

The Inflation Reduction Act includes a new corporate alternative minimum tax (CAMT) of 15% on the adjusted financial statement income (AFSI) of corporations with average AFSI exceeding $1.0 billion over a three-year period.

The CAMT is effective for tax years beginning after December 31, 2022.

We expect the CAMT to have an impact on our cash taxes beginning with the 2024 tax year.

When we become subject to the CAMT and our CAMT liability is greater than our regular U.S.

federal income tax liability for any particular year, the CAMT liability would effectively accelerate our future U.S.

federal income tax obligations but provide an offsetting credit against our regular U.S.

federal income tax liability for future years.

As a result, we expect that any impact is limited to timing differences in future tax years.

As of December 31, 2022, we have federal net operating loss carryforwards of $ 5.3 billion, the majority of which have an indefinite carryforward period.

We expect to generate taxable income and utilize these net operating loss carryforwards in future periods.

We also have loss and credit carryovers in multiple states, $ 2.8 billion of which have an indefinite carry forward period and $ 1.9 billion of which will expire between 2022 and 2038.

We also have loss and credit carryovers in multiple states, $ 2.7 billion of which have an indefinite carryforward period and $ 1.7 billion of which will expire between 2024 and 2039 .

We have deferred tax assets related to federal and state net operating loss and credit carryforwards of $ 1.3 billion and $ 1.6 billion in 2022 and 2021, respectively.

We believe that it is more likely than not that the tax benefits of certain state carryforwards will not be utilized;

therefore, we recorded a valuation allowance of $ 6.4 million , $ 20.9 million and $ 11.3 million through net income related to these tax benefits in 2021, 2020 and 2019 , respectively.

therefore, we recorded a valuation allowance, which was reduced by $ 1.4 million in 2022, and increased by $ 6.4 million and $ 20.9 million in 2021 and 2020, respectively, through net income .

UNCONSOLIDATED AFFILIATES

Investments in Unconsolidated Affiliates - The following table sets forth our investments in unconsolidated affiliates for the periods indicated:

Investments in Unconsolidated Affiliates - The following table sets forth our investments in unconsolidated affiliates as of the dates indicated:

Interest December 31,

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( Thousands of dollars )

Northern Border Pipeline 50 % $ 283,170 $ 291,987

Overland Pass Pipeline 50 % 403,011 409,573

Overland Pass 50 % $ 401,244 $ 403,011

Northern Border 50 % 265,096 283,170

Roadrunner 50 % 94,271 70,777

Other (a) Various 40,655 36,678

Investments in unconsolidated affiliates (b) $ 797,613 $ 805,032

(a) - Year ended December 31, 2020, includes the impact of noncash impairment charges of $ 37.7 million related to the equity investments discussed below, offset partially by an acquisition of an additional equity interest for $ 20.0 million.

(b) - Equity-method goodwill (Note A) was $ 16.5 million at December 31, 2021 and 2020.

Table of Cont ents

Equity in Net Earnings from Investments and Impairments - The following table sets forth our equity in net earnings (loss) from investments for the periods indicated:

Other Various 41,183 40,655

Investments in unconsolidated affiliates (a) $ 801,794 $ 797,613

(a) - Equity-method goodwill (Note A) was $ 16.5 million at December 31, 2022 and 2021.

Equity in Net Earnings from Investments and Impairments - The following table sets forth our equity in net earnings from investments for the periods indicated:

Years Ended December 31,

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( Thousands of dollars )

Northern Border Pipeline $ 64,470 $ 75,409 $ 68,871

Overland Pass Pipeline 19,434 38,618 63,698

Northern Border $ 71,106 $ 64,470 $ 75,409

Roadrunner 37,114 33,293 29,017

Overland Pass 32,519 19,434 38,618

Other 6,981 5,323 197

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These impairment charges are included within impairment of equity investments in our Consolidated Statement of Income for the year ended December 31, 2020.

We incurred expenses in transactions with unconsolidated affiliates of $ 62.8 million, $ 135.4 million and $ 164.7 million for 2021, 2020 and 2019, respectively, primarily related to Overland Pass Pipeline and Northern Border Pipeline.

We incurred expenses in transactions with unconsolidated affiliates of $ 82.8 million, $ 62.8 million and $ 135.4 million for 2022, 2021 and 2020, respectively, primarily related to Overland Pass and Northern Border.

Revenue earned and accounts receivable from, and accounts payable to, our equity-method investees were not material.

Northern Border Pipeline - The Northern Border Pipeline partnership agreement provides that distributions to Northern Border Pipeline’s partners are to be made on a pro rata basis according to each partner’s ownership percentage interest.

The Northern Border Pipeline Management Committee determines the amount and timing of such distributions.

Any changes to, or suspension of, the cash distribution policy of Northern Border Pipeline requires the unanimous approval of the Northern Border Pipeline Management Committee.

Cash distributions are equal to 100 % of distributable cash flow as determined from Northern Border Pipeline’s financial statements based upon EBITDA less interest expense and maintenance capital expenditures.

As determined by the Northern Border Pipeline Management Committee, we received an additional distribution of $ 50.0 million from Northern Border Pipeline during the year ended December 31, 2019.

Loans or other advances from Northern Border Pipeline to its partners or affiliates are prohibited under its credit agreement.

In all periods presented, we made no contributions to Northern Border Pipeline.

Overland Pass Pipeline - The Overland Pass Pipeline agreement provides that distributions to Overland Pass Pipeline’s members are to be made on a pro rata basis according to each member’s ownership percentage interest.

The Overland Pass Pipeline Company Management Committee determines the amount and timing of such distributions.

Any changes to, or suspension of, the cash distributions from Overland Pass Pipeline requires the unanimous approval of the Overland Pass Pipeline Company Management Committee.

Cash distributions are equal to 100 % of available cash as defined in the limited liability company agreement.

In all periods presented, our contributions to Overland Pass Pipeline were not material.

Northern Border - The Northern Border partnership agreement provides that distributions to Northern Border’s partners are to be made on a pro rata basis according to each partner’s ownership percentage interest.

The Northern Border Management Committee determines the amount and timing of such distributions.

Any changes to, or suspension of, the cash distribution policy of Northern Border requires the unanimous approval of the Northern Border Management Committee.

Cash distributions are equal to 100 % of distributable cash flow as determined from Northern Border’s financial statements based upon EBITDA less interest expense and maintenance capital expenditures.

Loans or other advances from Northern Border to its partners or affiliates are prohibited under its credit agreement.

In all periods presented, we made no contributions to Northern Border.

Roadrunner - The Roadrunner agreement provides that distributions to members are made on a pro rata basis according to each member’s ownership interest.

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Cash distributions are equal to 100 % of available cash, as defined in the limited liability company agreement.

In all periods presented, our contributions to Roadrunner were not material.

In 2022, 2021 and 2020, our contributions to Roadrunner were not material.

We have an operating agreement with Roadrunner that provides for reimbursement or payment to us for management services and certain operating costs.

Reimbursements and payments from Roadrunner included in operating income in our Consolidated Statements of Income for all periods presented were not material.

Table of Cont ents

Overland Pass - The Overland Pass agreement provides that distributions to Overland Pass’s members are to be made on a pro rata basis according to each member’s ownership percentage interest.

The Overland Pass Management Committee determines the amount and timing of such distributions.

Any changes to, or suspension of, the cash distributions from Overland Pass requires the unanimous approval of the Overland Pass Management Committee.

Cash distributions are equal to 100 % of available cash as defined in the limited liability company agreement.

In all periods presented, our contributions to Overland Pass were not material.

COMMITMENTS AND CONTINGENCIES

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Our consolidated lease income is not material.

Table of Cont ents

The following table sets forth information about our lease assets and liabilities included in our Consolidated Balance Sheet for the periods indicated:

Leases Location in our Consolidated

Balance Sheet December 31, 2021 December 31, 2020

The following table sets forth information about our lease assets and liabilities included in our Consolidated Balance Sheet as of the dates indicated:

Leases Location in our Consolidated Balance Sheet December 31, 2022 December 31, 2021

( Thousands of dollars )

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Total lease liabilities $ 102,652 $ 113,085

The following table sets forth supplemental cash flow information related to our leases:

Years Ended December 31,

( Thousands of dollars )

Cash paid for amounts included in the measurement of lease liabilities

Operating cash flows for operating leases $ 15,690 $ 13,245

Financing cash flows for finance lease $ 2,307 $ 1,949

Right-of-use assets obtained in exchange for operating lease liabilities (noncash) (a) $ 1,150 $ 99,547

(a) - In December 2019, we entered into an operating lease for pipeline capacity with a lease term of 10 years that commenced January 1, 2020.

In connection with this lease, we recognized an operating lease right-of-use asset and a lease liability with remaining balances of $ 69.0 million and $ 69.9 million, respectively, as of December 31, 2020.

The following table sets forth information about our lease costs for the periods indicated:

Years Ended December 31,

Location in our Consolidated

Statement of Income 2021 2020

( Thousands of dollars )

Operating leases Operations and maintenance $ 17,747 $ 17,162

Finance lease

Amortization of lease assets Depreciation and amortization 1,139 1,131

Interest on lease liabilities Interest expense 2,338 2,537

Total lease cost $ 21,224 $ 20,830

Table of Cont ents

The following table sets forth information about our leases for the periods indicated:

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Present value of lease liabilities $ 22.3 $ 80.4

Our lease costs and supplemental cash flow information related to our leases for the periods ended December 31, 2022 and 2021 are not material.

Contract Assets and Contract Liabilities - Our contract asset balances at the beginning and end of the years ended December 31, 2022 and 2021, primarily relate to our firm service transportation contracts with tiered rates, which are not material.

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Balance at January 1, 2021 $ 41.4

Revenue recognized included in beginning balance (c) ( 36.1 )

Revenue recognized included in beginning balance ( 23.7 )

Net additions 33.8

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(b) - Contract liabilities of $ 23.3 million and $ 29.1 million are included in other current liabilities and other deferred credits, respectively, in our Consolidated Balance Sheet.

Receivables from Customers and Revenue Disaggregation - Substantially all of the balances in accounts receivable on our Consolidated Balance Sheets at December 31, 2022 and 2021, relate to customer receivables.

Revenues sources are disaggregated in Note Q.

Revenues sources are disaggregated in Note R.

Transaction Price Allocated to Unsatisfied Performance Obligations - We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) variable consideration on contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Table of Cont ents

The following table presents aggregate value allocated to unsatisfied performance obligations as of December 31, 2022, and the amounts we expect to recognize in revenue in future periods, related primarily to firm transportation and storage contracts with remaining contract terms ranging from one month to 22 years :

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• our Natural Gas Gathering and Processing segment gathers, treats and processes natural gas;

• our Natural Gas Liquids segment gathers, treats, fractionates and transports NGLs and stores, markets and distributes NGL products;

• our Natural Gas Liquids segment gathers, treats, fractionates and transports NGLs and stores, markets and distributes purity NGLs;

• our Natural Gas Pipelines segment transports and stores natural gas via regulated intrastate and interstate natural gas transmission pipelines and natural gas storage facilities.

Other and eliminations consist of corporate costs, the operating and leasing activities of our headquarters building and related parking facility and eliminations necessary to reconcile our reportable segments to our Consolidated Financial Statements.

For the year ended December 31, 2021, revenues from one customer in our Natural Gas Liquids segment represents approximately 11.6 % of our consolidated revenues.

For the years ended December 31, 2020 and 2019, we had no single customer from which we received 10 % or more of our consolidated revenues.

Table of Cont ents

Other and eliminations consist of corporate costs, the operating and leasing activities of our headquarters building and related parking facility, the activity of our wholly-owned captive insurance company, which began in 2022, and eliminations necessary to reconcile our reportable segments to our Consolidated Financial Statements.

For the year ended December 31, 2022, we had no single customer from which we received 10 % or more of our consolidated revenues.

For the year ended December 31, 2021, revenues from one customer in our Natural Gas Liquids segment represented approximately 11.6 % of our consolidated revenues.

For the year ended December 31, 2020, we had no single customer from which we received 10 % or more of our consolidated revenues.

Operating Segment Information - The following tables set forth certain selected financial information for our operating segments for the periods indicated:

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Equity in net earnings from investments 4,857 34,643 108,220 147,720

Noncash compensation expense and other 17,299 18,511 4,637 40,447

Noncash compensation expense 16,663 27,616 7,182 51,461

Other 1,426 88,035 1,194 90,655

Segment adjusted EBITDA $ 1,036,633 $ 2,095,212 $ 488,432 $ 3,620,277

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(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations.

Our Natural Gas Liquids segment’s regulated operations had revenues of $ 2.4 billion, of which $ 2.2 billion related to revenues within the segment, and cost of sales and fuel of $ 607.5 million.

Our Natural Gas Liquids segment’s regulated operations had revenues of $ 2.5 billion, of which $ 2.3 billion related to revenues within the segment, cost of sales and fuel of $ 686.9 million and operating costs of $ 333.7 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations.

Our Natural Gas Pipelines segment’s regulated operations had revenues of $ 394.2 million and cost of sales and fuel of $ 24.3 million.

(c) - Intersegment revenues are primarily commodity sales which are based on the contracted selling price, which is generally index-based and settled monthly, and for the Natural Gas Gathering and Processing segment totaled $ 2.9 billion.

Our Natural Gas Pipelines segment’s regulated operations had revenues of $ 438.2 million, cost of sales and fuel of $ 48.9 million and operating costs of $ 154.4 million.

(c) Intersegment revenues are primarily commodity sales, which are based on the contracted selling price that is generally index-based and settled monthly, and for the Natural Gas Gathering and Processing segment totaled $ 3.7 billion.

Intersegment revenues for the Natural Gas Liquids and Natural Gas Pipelines segments were not material.

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(a) - Noncustomer revenue for the year ended December 31, 2022, totaled $( 285.9 ) million related primarily to losses from derivatives on commodity contracts.

Table of Cont ents

Year Ended December 31, 2021 Natural Gas

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Operating costs ( 367,390 ) ( 528,084 ) ( 170,257 ) ( 1,065,731 )

Equity in net earnings (loss) from investments ( 1,123 ) 39,938 104,426 143,241

Equity in net earnings from investments 3,757 21,000 97,763 122,520

Noncash compensation expense and other 17,299 18,511 4,637 40,447

1 unchanged sentence

Depreciation and amortization $ ( 260,011 ) $ ( 298,937 ) $ ( 58,702 ) $ ( 617,650 )

Impairment charges $ ( 566,145 ) $ ( 78,785 ) $ — $ ( 644,930 )

Investments in unconsolidated affiliates $ 27,018 $ 416,648 $ 353,947 $ 797,613

2 unchanged sentences

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations.

Our Natural Gas Liquids segment’s regulated operations had revenues of $ 2.0 billion, of which $ 1.8 billion related to revenues within the segment, and cost of sales and fuel of $ 520.6 million.

Our Natural Gas Liquids segment’s regulated operations had revenues of $ 2.4 billion, of which $ 2.2 billion related to revenues within the segment, cost of sales and fuel of $ 607.5 million and operating costs of $ 308.5 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations.

Our Natural Gas Pipelines segment’s regulated operations had revenues of $ 298.5 million and cost of sales and fuel of $ 30.4 million.

Our Natural Gas Pipelines segment’s regulated operations had revenues of $ 521.3 million, cost of sales and fuel of $ 28.5 million and operating costs of $ 147.5 million.

(c) -Intersegment revenues are primarily commodity sales, which are based on the contracted selling price that is generally index-based and settled monthly, and for the Natural Gas Gathering and Processing segment totaled $ 2.9 billion.

Intersegment revenues for the Natural Gas Liquids and Natural Gas Pipelines segments were not material.

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Depreciation and amortization $ ( 617,650 ) $ ( 4,051 ) $ ( 621,701 )

Impairment charges $ ( 644,930 ) $ — $ ( 644,930 )

Equity in net earnings from investments $ 122,520 $ — $ 122,520

2 unchanged sentences

Capital expenditures $ 674,731 $ 22,123 $ 696,854

(a) - Noncustomer revenue for the year ended December 31, 2020, totaled $ 65.8 million related primarily to gains from derivatives on commodity contracts.

Table of Cont ents

(a) - Noncustomer revenue for the year ended December 31, 2021, totaled $( 565.0 ) million related primarily to losses from derivatives on commodity contracts.

Year Ended December 31, 2020 Natural Gas

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Depreciation and amortization $ ( 247,010 ) $ ( 271,900 ) $ ( 55,739 ) $ ( 574,649 )

Impairment charges $ ( 566,145 ) $ ( 78,785 ) $ — $ ( 644,930 )

Investments in unconsolidated affiliates $ 22,757 $ 423,494 $ 358,781 $ 805,032

2 unchanged sentences

(a) - Our Natural Gas Liquids segment has regulated and nonregulated operations.

Our Natural Gas Liquids segment’s regulated operations had revenues of $ 1.4 billion, of which $ 1.2 billion related to revenues within the segment, and cost of sales and fuel of $ 496.8 million.

Our Natural Gas Liquids segment’s regulated operations had revenues of $ 2.0 billion, of which $ 1.8 billion related to revenues within the segment, cost of sales and fuel of $ 520.6 million and operating costs of $ 225.8 million.

(b) - Our Natural Gas Pipelines segment has regulated and nonregulated operations.

Our Natural Gas Pipelines segment’s regulated operations had revenues of $ 285.3 million and cost of sales and fuel of $ 20.0 million.

Our Natural Gas Pipelines segment’s regulated operations had revenues of $ 410.8 million, cost of sales and fuel of $ 35.4 million and operating costs of $ 121.9 million.

(c) - Intersegment revenues are primarily commodity sales, which are based on the contracted selling price, which is generally index-based and settled monthly, and for the Natural Gas Gathering and Processing segment totaled $ 865.6 million.

Intersegment revenues for the Natural Gas Liquids and Natural Gas Pipelines segments were not material.

13 unchanged sentences

Depreciation and amortization $ ( 574,649 ) $ ( 4,013 ) $ ( 578,662 )

Impairment charges $ ( 644,930 ) $ — $ ( 644,930 )

Equity in net earnings from investments $ 143,241 $ — $ 143,241

3 unchanged sentences

(a) - Noncustomer revenue for the year ended December 31, 2020, totaled $ 65.8 million related primarily to gains from derivatives on commodity contract s.

Table of Cont ents

Years Ended December 31,

5 unchanged sentences

Depreciation and amortization 626,132 621,701 578,662

Income tax expense 484,498 189,507 372,414

Income taxes 527,424 484,498 189,507

Impairment charges — — 644,930

3 unchanged sentences

(a) - The year ended December 31, 2020, includes corporate net gains of $ 22.3 million on extinguishment of debt related to open market repurchases.

The year ended December 31, 2019, includes higher equity AFUDC related to our capital-growth projects compared with 2020.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data