ONEOK Q2 2021 Earnings Report

ONEOK EPS Results

• Actual EPS: $0.77
• Consensus EPS: $0.76
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

ONEOK Revenue Results

• Actual Revenue: $3.39 billion
• Expected Revenue: $4.01 billion
• Beat/Miss: Missed by -$623.65 million
• YoY Revenue Growth: N/A

ONEOK Announcement Details

• Quarter: Q2 2021
• Date: 8/3/2021
• Time: After Market Closes
• Conference Call Date: Wednesday, August 4, 2021
• Conference Call Time: 6:52AM ET

ONEOK (NYSE:OKE) (NYSE: OKE) is a publicly traded midstream energy company headquartered in Tulsa, Oklahoma. The company owns and operates a portfolio of natural gas and natural gas liquids (NGL) pipelines, processing facilities, fractionators and storage and terminal assets. Its operations are focused on gathering, processing, transporting, fractionating and marketing NGLs and interstate natural gas, providing critical infrastructure that connects hydrocarbon production to refineries, petrochemical plants and other end markets.

ONEOK’s asset base includes pipeline systems and processing plants that move and condition natural gas, along with infrastructure for the transportation, storage and fractionation of NGLs such as ethane, propane and butane. The company also provides logistics and commercial services tied to those physical assets, including supply optimization, NGL marketing and transportation solutions. These integrated services support producers, utilities, industrial users and downstream customers by enabling reliable flow and efficient access to feedstocks and fuels.

Primarily active within the United States, ONEOK’s networks serve major producing and consuming regions by linking upstream production areas with downstream markets and export points. The company’s operations emphasize system reliability and operational safety as part of its role in the broader energy value chain. ONEOK’s commercial activities and asset investments are oriented toward meeting regional demand for natural gas and NGLs while supporting growing petrochemical and export needs.

Founded and long based in Oklahoma, ONEOK has a multi-decade history as a midstream operator and is governed by an executive management team and board of directors responsible for strategic direction and oversight. As a publicly listed company, ONEOK regularly discloses operational and governance information through regulatory filings and investor communications. The company positions itself as a provider of essential energy infrastructure and related services in the U.S. midstream sector.

ONEOK Q2 2021 Earnings Call Transcript

Key Takeaways

• 2021 guidance raised: ONEOK now expects 2021 adjusted EBITDA above the midpoint of its $3.05 billion–$3.35 billion range and sees strengthening momentum into 2022’s $3.5 billion–$4 billion outlook.
• Strong Q2 results: Net income of $342 million ($0.77/share) and adjusted EBITDA of $802 million (a 50% year-over-year increase) drove $570 million of distributable cash flow with 1.4× dividend coverage and debt/EBITDA down to 4.3×.
• Operational volumes gained traction as Q2 raw NGL throughput rose 17% and Rocky Mountain gas processing volumes climbed 6% versus Q1, with the Bear Creek expansion slated for late-Q4 completion to add 450 MMcf/d capacity.
• Ethane recovery remains partial, leaving ~225,000 bpd of discretionary ethane offline; full Rockies recovery, if economic, could contribute roughly $500 million in annual EBITDA.
• New CEO Pierce Norton is focusing on disciplined growth, energy system transformation to lower greenhouse gas emissions, and advancing projects in renewable natural gas, hydrogen, and carbon sequestration.

Presentation

[Operator]

Good day, and welcome to the second quarter 2021 ONEOK earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Andrew Ziola. Please go ahead, sir.

[Andrew Ziola, VP of Investor Relations and Communications at ONEOK]

Thank you, Casey, and welcome to ONEOK's second quarter 2021 earnings call. We issued our earnings release and presentation after the markets closed yesterday, and those materials are on our website. After our prepared remarks, we'll be available to take your questions. Statements made during this call that might include ONEOK's expectations or predictions should be considered forward-looking statements and are covered by the safe harbor provision of the Securities Acts of 1933 and 1934. Actual results could differ materially from those projected in forward-looking statements. For a discussion of factors that could cause actual results to differ, please refer to our SEC filings. Just a reminder, before we turn it over to the conference coordinator for Q&A, we ask you that you limit yourself to one question and one follow-up in order to fit in as many of you as we can.

[Andrew Ziola, VP of Investor Relations and Communications at ONEOK]

With that, I'll turn the call over to Pierce Norton, President and Chief Executive Officer. Pierce?

[Pierce Norton, President and CEO at ONEOK]

Thanks, Andrew. Good morning, everyone. Thank you for joining us today. We appreciate your interest and investment in our company. For 32 of my almost 40-year career, I had the good fortune to work with the assets and the people through various companies that are now a part of ONEOK. I'm excited and honored to be back. This company has a strong, experienced management team and a talented workforce, and we are all looking forward to the future. On today's call, we'll be discussing ONEOK's strong performance in the second quarter, and I'll provide a few of my initial thoughts as to how the management team and I will continue to build on the accomplishments of those that preceded me in this role. I'm also looking forward to reacquainting or meeting many of you in the near future.

[Pierce Norton, President and CEO at ONEOK]

Joining me on today's call is Walter Hulse, the Chief Financial Officer and Executive Vice President, Strategy and Corporate Affairs, and Kevin Burdick, Executive Vice President and Chief Operating Officer. Also available to answer questions are Sheridan Swords, Senior Vice President, Natural Gas Liquids, and Chuk Kelley, Senior Vice President, Natural Gas. I'd like to first start off this call by recognizing and congratulating Terry on his retirement and thanking him for his availability to advise me in my new role. ONEOK has seen tremendous growth and success under Terry's leadership the last seven years, as he's navigated the company through several growth cycles and industry challenges, including delivering strong results during a pandemic. Terry championed many company successes.

[Pierce Norton, President and CEO at ONEOK]

The transition to a higher fee-based business model with less commodity price exposure, significant improvements in company-wide safety and environmental performance, the successful ONEOK Partners merger transaction, and the completion of more than $10 billion in capital growth projects, to name just a few of his many accomplishments. The company has grown in many ways since I was here last, and I'm looking forward to building on what Terry, the board, the leadership team, and ONEOK's 3,000 employees have achieved. It's been extraordinary. During this first month on the job, I've been refamiliarizing myself with our business, holding strategy and planning meetings with the team, and most importantly, listening. I've met with my leadership team and many employees to hear more about their focus areas. These introductions and conversations are very important and will continue.

[Pierce Norton, President and CEO at ONEOK]

What you can expect from me as a CEO is that we will be disciplined and intentional in all that we do and continue to encourage a culture that promotes safety, reliability, employee engagement, value creation, and environmental responsibility. These principles have served ONEOK well for decades and will continue to be a key element of our daily operations and business decisions going forward. The energy systems today were designed to operate on the consumer's requirements for affordability, reliability, and resiliency. We will continue to focus on meeting our customers' needs while also transforming these energy systems to drive the overall lowering of greenhouse gas emissions. Yesterday, we reported a strong second quarter financial result, supported by increasing volumes across our system. The energy and economic backdrop continues to improve, with producer activity accelerating and demand for NGLs and natural gas strengthening.

[Pierce Norton, President and CEO at ONEOK]

Kevin will talk more in detail about how we're addressing those needs. First, I'll turn the call over to Walt to discuss our financial performance.

[Walt Hulse, CFO and EVP of Strategy and Corporate Affairs at ONEOK]

Thank you, Pierce. With yesterday's earnings announcement, we updated our 2021 financial guidance expectations. Our view of 2021 continues to improve as we now expect 2021 adjusted EBITDA to be above the midpoint of our guidance range of $3.05 billion-$3.35 billion that we provided back in April.

[Walt Hulse, CFO and EVP of Strategy and Corporate Affairs at ONEOK]

Our outlook for growth in 2022 has continued to strengthen. Higher commodity prices, accelerating producer activity, and the rising gas-to-oil ratio in the Williston Basin provide a tailwind into next year. With available capacity across our operations and the completion of our Bear Creek plant expansion later this year, significant earnings power remains across our assets without the need for significant capital investment. The strengthening momentum going into 2022 makes us confident that we will achieve or exceed the 2022 outlook we have discussed on previous calls. Now for a brief overview of our second quarter financial performance. ONEOK's second quarter 2021 net income totaled $342 million or $0.77 per share. Second quarter adjusted EBITDA totaled $802 million, a 50% increase year-over-year and a 3% increase compared with the first quarter 2021, after backing out the benefit from Winter Storm Uri.

[Walt Hulse, CFO and EVP of Strategy and Corporate Affairs at ONEOK]

We ended the second quarter with a higher inventory of unfractionated NGLs due to planned and unplanned outages at some of our fractionation facilities. We expect to recognize $12.5 million of earnings in the second half of 2021 as our current inventory is fractionated and sold, the majority of which will be recognized in the third quarter. Distributable cash flow was $570 million in the second quarter, and dividend coverage was nearly 1.4x. We generated more than $150 million of distributable cash flow in excess of dividends paid during the quarter. Our June 30 net debt to EBITDA on an annualized run rate basis was 4.3x, and we continue to work towards our goal of sub-4x. We ended the second quarter with no borrowings outstanding on our $2.5 billion credit facility and nearly $375 million in cash.

[Walt Hulse, CFO and EVP of Strategy and Corporate Affairs at ONEOK]

In July, the board of directors declared a dividend of $0.935 or $3.74 per share on an annualized basis, unchanged from the previous quarter. Our strong balance sheet, ample liquidity, and increasing EBITDA from volume growth in our system provide a solid financial backdrop and flexibility as we enter the second half of the year. I'll now turn the call over to Kevin for an operational update.

[Kevin Burdick, EVP and COO at ONEOK]

Thank you, Walt. Our second quarter NGL raw feed throughput and natural gas processing volumes increased compared with the first quarter 2021, driven by increasing producer activity, ethane recovery, and gas-to-oil ratios that continue to rise in the Williston Basin. We expect these tailwinds to carry into the second half of the year and into 2022. In our natural gas liquids segment, total NGL raw feed throughput volumes increased 17% compared with the first quarter 2021. Second quarter raw feed throughput from the Rocky Mountain region increased 18% compared with the first quarter 2021 and more than 85% compared with the second quarter 2020, which included significant production curtailments resulting from the pandemic. As a reference point, volumes reached approximately 330,000 bbl/d in this region early this month.

[Kevin Burdick, EVP and COO at ONEOK]

At this volume level, we still have more than 100,000 bbl/d of NGL pipeline capacity from the region, allowing us to capture increasing volumes on our system, including volume from a new 250 MMcf/d third-party plant that came online in early July, an expansion of another third-party plant that is underway, and our Bear Creek plant expansion, which is expected to be complete in the first half of the fourth quarter this year. Total Midcontinent region NGL raw feed throughput volumes increased 16% compared with the first quarter 2021 and 10% compared with the second quarter 2020. The Arbuckle 2 expansion was completed in the second quarter, increasing its capacity up to 500,000 bbl/d, adding additional transportation capacity between the Midcontinent region and the Gulf Coast.

[Kevin Burdick, EVP and COO at ONEOK]

In the Permian Basin, NGL volumes increased 16% compared with the first quarter 2021, primarily as a result of increased ethane recovery and producer activity. Petrochemical demand continues to strengthen and has seen support from a continuing global pandemic recovery. This led to increased ethane recovery across our system in the second quarter. Ethane volumes on our system in the Rocky Mountain region increased compared with the first quarter 2021 as we continued to incent some ethane recovery on a short-term basis. Continued ethane recovery in the Rockies in the second half of 2021 will depend on regional natural gas and ethane pricing. We have not included ethane recovery from the Rockies for the remainder of the year in our updated financial guidance. Ethane volumes on our Midcontinent system increased compared with the first quarter 2021 due to both favorable recovery economics and some incentivized recovery.

[Kevin Burdick, EVP and COO at ONEOK]

We continue to forecast partial ethane recovery in our guidance for the second half of the year in this region. Ethane volumes in the Permian Basin increased in the second quarter compared with the first quarter 2021. We continue to expect the basin to be in near full recovery in the second half of the year. Discretionary ethane on our system, or said differently, the amount of ethane that we estimate could be operationally recovered at any given time, but is not economic to recover at current prices without incentives, is approximately 225,000 bbl/d. Of that total opportunity, 125,000 bbl/d are available in the Rocky Mountain region and 100,000 bbl/d in the Mid-Continent. Full recovery in the Rockies region would provide an opportunity for $500 million in annual adjusted EBITDA at full rates. Moving on to the natural gas gathering and processing segment.

[Kevin Burdick, EVP and COO at ONEOK]

In the Rocky Mountain region, second quarter processed volumes averaged more than 1.25 BCF/d, an increase of 6% compared with the first quarter 2021, and more than 50% year-over-year. An outage at one of our plants, which has since come back online, decreased second quarter volumes by approximately 15 MMcf/d. Toward the end of June, volumes reached 1.3 BCF/d, and we have line of sight to even higher processed volumes later in the year, given the recent increase in completion crews and rigs in the basin. Conversations with our producers in the region continue to point to higher activity levels in the second half of 2021 and 2022, particularly in Dunn County, where construction on our Bear Creek processing plant is on track for completion in the first half of the fourth quarter of this year.

[Kevin Burdick, EVP and COO at ONEOK]

Once in service, we will have approximately 1.7 BCF/d of processing capacity in the basin and will be able to grow our volumes with minimal capital. In the second quarter, we connected 84 wells in the Rocky Mountain region and still expect to connect more than 300 this year. Based on the most recent producer completion schedules, we expect a significant increase in well connects in the second half of the year, with some producers aligning the timing of well completions closer to the completion of Bear Creek. There are currently 23 rigs operating in the basin, with nine on our dedicated acreage, and there continues to be a large inventory of drilled but uncompleted wells with more than 650 basin-wide and approximately 325 on our dedicated acreage.

[Kevin Burdick, EVP and COO at ONEOK]

We expect the current DUC inventory to get worked down before we see producers bring back more rigs to the basin to replenish inventory levels. As we said last quarter, the eight completion crews currently operating in the basin is enough to reach our Well-connect guidance for the year. Any additional completion crews would present upside to our guidance. Rising gas-to-oil ratios and natural gas flaring in the basin continue to present opportunities for volume growth without the need for additional producer activity. Since 2016, GORs have increased more than 75%. Recent projections from the North Dakota Pipeline Authority show that even in a flat crude oil production environment, GORs could increase an additional 45% in the next seven years.

[Kevin Burdick, EVP and COO at ONEOK]

This could add 1.3 BCF/d of gas production and approximately 150,000 bbl/d of C3+ NGL volume to the basin during that same time period. Again, this growth in natural gas is only based on increasing GORs and assumes flat crude oil production. Any growth in crude oil would be upside to those projections. We've added a new slide in our earnings materials to show these latest North Dakota projections, which include various production scenarios. During the second quarter, the gathering and processing segment's average fee rate increased to a $1.06 per MMBtu, driven by higher Rocky Mountain region volumes. We now expect the fee rate for 2021 to average between $1 and $1.05 per MMBtu. The Mid-Continent region average process volumes increased 4% compared with the first quarter 2021, as volumes returned following freeze-offs in the first quarter.

[Kevin Burdick, EVP and COO at ONEOK]

While the region has received some attention as commodity prices strengthen, producer activity has been more moderate than other areas. In the natural gas pipeline segment, the segment reported a solid quarter of stable fee-based earnings. The decrease in earnings year-over-year was driven by a one-time contract settlement that provided a $13.5 million benefit to earnings in the second quarter of 2020. We continue to see increased interest from our customers for additional long-term transportation and storage capacity on our system following the extreme winter weather events earlier this year. Since the first quarter, we have renewed or recontracted additional long-term storage capacity in both Texas and Oklahoma, including a successful open season for more than 1 BCF of incremental firm storage capacity at our West Texas storage assets.

[Kevin Burdick, EVP and COO at ONEOK]

We'll continue to work with customers to contract additional long-term capacity as we head into the winter heating season. Pierce, that concludes my remarks.

[Pierce Norton, President and CEO at ONEOK]

Thank you, Kevin. The results achieved so far this year, only 12 months removed from the unprecedented conditions in the second quarter of 2020, are nothing short of amazing. The resiliency of our assets and our employees and the caliber of our customers, we're able to work with and provide a long-term runway of many opportunities. Key to our success will continue to be operating safely, sustainably, and responsibly with the health and safety of our communities and employees at the forefront of all that we do. To learn more about our commitment to responsible operations, I encourage you to review our most recent Corporate Sustainability Report, which was just published to our website last week. The report details our most recent environmental, social, and governance-related performance and programs, and highlights key initiatives underway across the company.

[Pierce Norton, President and CEO at ONEOK]

It's ONEOK employees who carry out these initiatives every day and who prioritize the safety and wellbeing of their fellow employees, customers, and the public. Thank you for your continued hard work and your dedication to safety to this company. Again, I'm excited to be back at ONEOK and looking forward to the opportunities and the challenges ahead. Operator, we're now ready for questions.

[Operator]

Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad now. If you're using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Again, that is star one if you would like to ask a question. We'll take our first question from Shneur Gershuni with UBS.

[Shneur Gershuni, Analyst at UBS]

Hi, good morning, everyone. Pierce, nice to hear your voice on a different conference call, and I would like to send a congratulations to Terry on a very successful career and congrats on starting a new chapter. Maybe to position, and sorry, Pierce, to put you on the hot seat right off the bat here. I was wondering if we can talk about your thoughts around buybacks and CapEx for 2022. I imagine there's not much on the CapEx front, just sort of given where you are at this point right now. Maybe a completion of the frozen frac at this point, just with the higher ethane recovery and Kevin's comments about C3 plus with respect to GORs. Outside of that, doesn't appear to be much on the CapEx side.

[Shneur Gershuni, Analyst at UBS]

When I sort of take the soft outlooks that have been presented in the past, $3.5 billion-$4 billion has kind of been thrown around as a potential 2022 run rate. It sort of suggests it's the leverage for what else is going to be sub to 4x leverage ratio target. Does this set up for buybacks in 2022? If so, how should we think about execution around buybacks? Have I got the thought process wrong on CapEx? Just curious on your thoughts.

[Pierce Norton, President and CEO at ONEOK]

Shneur, first of all, thank you for the welcome back. We will certainly pass on your comments to Terry, and I think we all echo those as well. I'm going to make some kind of a broad comment, and then I'm going to let Walt kind of answer kind of more specifically. We're in the process of looking at our strategic plan and our earnings projection, not only for 2022, but also for the next five years. As a part of that, we'll be assessing what I would consider our capital allocation opportunities. I don't have a specific answer to you, exactly for the buybacks for next year. I would say that that's all a part of our capital allocation plan and the strategy that we're actually currently talking about now.

[Pierce Norton, President and CEO at ONEOK]

I'd like Walt to kind of weigh in on any more particulars and insights that he might have.

[Walt Hulse, CFO and EVP of Strategy and Corporate Affairs at ONEOK]

Sure. Thanks, Pierce. Well, Shneur, basically, I would agree with your assessment of the tailwinds that are behind our business today, and we're excited about the opportunities that are forward. The cash flows that we'll generate from that will continue to enhance our de-leveraging strategy that's been in place for quite some time, and we're starting to see some of our end goals in the near term coming forward. As we get closer to our goals of sub 4x leverage, then obviously we will expand the horizon of things that we'll look at from a capital allocation. I think as we spend time with Pierce, we'll look at all of our options as we go forward. You're right that there isn't any major CapEx project on the horizon here.

[Walt Hulse, CFO and EVP of Strategy and Corporate Affairs at ONEOK]

We really doubled the capacity of our long-haul pipes in the NGL business over the last several years. That gives us a lot of running room going forward. You highlighted that we have a couple of projects that we paused back with the pandemic. Over the course of next year or two, as producer activity picks up, I would assume that we'll likely clean some of those up and finish them up to meet our customers' needs. It's really going to be routine growth and some smaller growth projects that are very attractive going forward. We'll have plenty of free cash flow to continue to de-leverage and then look at all of those capital allocation opportunities over the next couple of years.

[Shneur Gershuni, Analyst at UBS]

Yeah. Really appreciate the detailed color there. Maybe as a follow-up question here, just given the fact that Terry's been at the company for so long and set the strategy and so forth, Pierce, you're coming in now. How are things going to change, or are they going to stay the same with respect to strategy? Were there any specific marching orders that were given to you from the board upon your arrival? Just kind of curious if you can sort of talk to that holistically.

[Pierce Norton, President and CEO at ONEOK]

Sure. I'll be glad to answer that. I think it's not so much about what's going to change immediately in the company. I think it's more about what's changing in the energy industry. I think we can probably all agree that the energy systems across the United States, it's going to be very important that we continue to transition into a lower carbon energy system across the United States. Really it's about how we at ONEOK and the assets and the people and the skill sets that we have are actually going to transform with that energy system. I view that as a three-step process. First of all, you got to understand what the transformation of the energy systems look like. You prepare for what you've learned and what you understand, and then you innovate.

[Pierce Norton, President and CEO at ONEOK]

I think that's the three focus areas that I would say that we have going forward, is understanding where we are preparing and innovating for the future, while at the same time continuing to grow the base business that we have and the use of natural gas and natural gas liquids. I think the global pull, most countries are not where we are in the U.S. as far as the maturity of our systems and the transparency that we have in the energy systems here in the U.S. I think that's going to continue to pull for natural gas demand as well as natural gas liquids growth. At the same time, we're going to be able to use the skill sets and the talents that we have in our company to transform. I do think transformation is a better word than transition.

[Pierce Norton, President and CEO at ONEOK]

Transition, to me, indicates that you're going to leave one thing and go to another. Transformation, in my opinion, it means that you're going to use something that you have and maybe use it a little bit slightly different, in the future to meet some of the problems that we have. I do think it's important for the United States to lead in the effort of lower carbon, because I think the other parts of the world can learn from what we do. Although there's only 6.6 Gt of CO2 emissions in the United States versus 51 Gt over the globe. We're a small percentage, but I think it's important for the U.S. to lead in these efforts. I do feel like that ONEOK is positioned over a long period of time.

[Pierce Norton, President and CEO at ONEOK]

A lot of these things, as you look at CNG and hydrogen and LNG for long haul and carbon sequestration and capturing methane, those are all going to be opportunities that we experience over the next several decades.

[Shneur Gershuni, Analyst at UBS]

Great. No, really appreciate the color and congratulations on the new role.

[Pierce Norton, President and CEO at ONEOK]

Well, thanks again.

[Operator]

Our next question comes from Christine Cho with Barclays.

[Christine Cho, Analyst at Barclays]

Thank you. Pierce, welcome back to the side of ONEOK. I thought I would maybe start with an ethane question. This quarter you guys took out more ethane in the Bakken, you talk about 25,000 bbl/d of ethane extraction being an incremental $100 million. That's predicated on you collecting the full $0.28 T&F. You haven't been collecting that when you're doing it more opportunistically. When you do provide more ethane to the market this way, it sort of puts a lid on what prices can be. Curious, how do you balance this and make sure you don't provide too much supply that it negatively impacts the frac spread economics in the other basins that you're in? What really has to happen in order for producers to sign up for long-term contracts for ethane T&F out of the Bakken?

[Christine Cho, Analyst at Barclays]

Is it really only a firm BTU resolution on Northern Border?

[Pierce Norton, President and CEO at ONEOK]

Christine, thanks for the welcome back. I think Kevin and Sheridan can probably add more color to your question.

[Kevin Burdick, EVP and COO at ONEOK]

Go ahead, Sheridan.

[Sheridan Swords, Senior VP of Natural Gas Liquids at ONEOK]

Christine, this is Sheridan. I think in your first question on how do we determine how much ethane to bring out of the Bakken and what's the right amount before putting a lid on ethane prices. Really what we try to understand is where the next incremental ethane will come out, and is that coming off our system or somebody else's system. If we don't bring it out of our system, is somebody else going to bring ethane out of their side of the system? We will lose the whole uplift that we'll have from buying it at gas and selling it at ethane value. It's an ongoing process that we look at every month, and we try to make that determination. That's why we don't bring all the ethane out of the Bakken that we could.

[Sheridan Swords, Senior VP of Natural Gas Liquids at ONEOK]

We could incentivize more, we just bring what we feel is the right amount of ethane to come out. Really on your question of what would it take for producers to sign up for ethane? They have already signed up for ethane. They have the option today whether or not to bring ethane on the system or not to bring ethane on the system. We have the capacity for them, and they signed up for a certain amount of capacity. What it really comes down to now is what is going to drive the price high enough that we'd get a full T&F rate or the full $0.28 that the ethane would come out.

[Sheridan Swords, Senior VP of Natural Gas Liquids at ONEOK]

What's going to need to happen for that is you're going to need to continue to have a strong ethane to ethylene spread like we have today, very widespread, so that ethane can continue to rise, prices continue to rise, and that pet chems can continue to make money off of that. The second thing is you need to have more demand, we need to see more exports coming out. There is more export capacity out there, we need to see more crackers. In the second quarter of next year, the ExxonMobil Pasadena cracker is going to come online as well. That's going to bring on more demand. I think the third thing you need to look at is you need to look at the regional gas prices between the Bakken and the other areas.

[Sheridan Swords, Senior VP of Natural Gas Liquids at ONEOK]

If we would see the Bakken gas prices dip down like we typically see in the summer, I think all those things together, if they work, that you have a possibility of an opportunity to see ethane come out of the Bakken at full prices.

[Christine Cho, Analyst at Barclays]

Got it. That was really helpful. Then just moving over to guidance. On a prior quarter call, you guys gave us soft 2022 guidance of about $3.4 billion. Are you guys still feeling good about this? What sort of ethane extraction assumptions are you including in that?

[Pierce Norton, President and CEO at ONEOK]

Christine, I'd start by saying, we haven't issued our 2022 guidance yet. We're in the process of looking at that, but I will let Walt or Kevin chime in on that past comment.

[Kevin Burdick, EVP and COO at ONEOK]

Yeah, Christine. I think that number's still out there that we talked about as far as where we'd be in 2022. Since last quarter, everything's strengthened since that time. Prices have strengthened. The comments and the feedback we get from our producers have strengthened. That's the way I would frame 2022 up is, it is definitely more constructive today than it was three months ago.

[Christine Cho, Analyst at Barclays]

Got it. Thank you.

[Operator]

Our next question will come from Tristan Richardson with Truist Securities.

[Tristan Richardson, Analyst at Truist Securities]

Hey, good morning, guys. Really appreciate the comments on kind of what you're seeing in the second half, particularly the comment on July. I think you noted maybe at one point in time, the system touched 330 a day. Is that including some recovery or at least incentivized recovery? Are you seeing some recovery in the Rockies starting in the second half?

[Kevin Burdick, EVP and COO at ONEOK]

Yeah. Tristan, this is Kevin. Yes, that would include some incentivized recovery, which we talked about in the remarks.

[Tristan Richardson, Analyst at Truist Securities]

Okay. I appreciate it, Kevin. Lastly, Walt, I think you in the past have talked about the earnings engine at ONEOK and the potential for this business to produce EBITDA with a 4 handle. Without asking about a timeframe or anything, can you talk about some of the conditions necessary to hit that type of potential? Are you seeing some of that as you look out over the near and medium term?

[Walt Hulse, CFO and EVP of Strategy and Corporate Affairs at ONEOK]

Well, I think that the way we'd framed that up in the past was that we have the assets in place, especially in the Bakken, to achieve those types of earnings levels without any meaningful need for CapEx. As you continue to see gas volumes, there may be at some point in the future a need for another plant up there, but that's not in the near term. We've got plenty of capacity in McKenzie County, and now we're going to have capacity down in Dunn County. We've got room to run, and we've got room to run on the NGL side. As we get closer to those numbers that would start with a four, we're probably going to have to have some downstream additions, like MB-5 and things like that would need to be completed.

[Walt Hulse, CFO and EVP of Strategy and Corporate Affairs at ONEOK]

None of those are major dollars in the scheme of the earnings power of the company. We're pretty excited about the operating leverage that we have in the company and the ability to continue to grow significantly with modest capital needs.

[Tristan Richardson, Analyst at Truist Securities]

I appreciate it. Thank you guys very much.

[Walt Hulse, CFO and EVP of Strategy and Corporate Affairs at ONEOK]

Welcome. Thank you.

[Operator]

Our next question will come from Jeremy Tonet with JPMorgan.

[Jeremy Tonet, Analyst at JPMorgan]

Hi, good morning.

[Walt Hulse, CFO and EVP of Strategy and Corporate Affairs at ONEOK]

Morning, Jeremy.

[Kevin Burdick, EVP and COO at ONEOK]

Morning, Jeremy.

[Jeremy Tonet, Analyst at JPMorgan]

Wanted to send Terry K. Spencer our best going forward into retirement there. Best of luck. Maybe picking up on energy transformation as you laid out there, be it RNG, biofuels, hydrogen, CCUS, just wondering if there's any specific initiatives that ONEOK is working on right now. Seems like there's some things on the RNG side, but just wondering specifically right now if there's anything near medium-term opportunities that ONEOK is focused on.

[Pierce Norton, President and CEO at ONEOK]

I think you picked up on probably the one that is probably the most likely the quickest, and that is the renewable to gas opportunities, primarily coming from. These are kind of listed in order of agriculture, wastewater, and landfills. I'm going to kick it over to Chuck here in just a second because he can give you some updates on what we're doing as it relates to some of the RNG efforts. The CNG and LNG for the long haul, I think is another thing that could be a possibility

[Pierce Norton, President and CEO at ONEOK]

Hydrogen is probably out into the future because primarily, right now you can't take a certain amount of hydrogen based on the tariffs on the intrastate and the interstate assets across the U.S. I do think that's a developing opportunity. It's left to be seen economically how that stuff plays off out. You got carbon sequestration because 24% of all the carbon emitted of the 6.6 gigatons actually comes from electric generation from coal, oil, and natural gas, primarily coal and natural gas. I think that's going to be important to solve that equation. Of course, transportation has about 28% of that 6.6 gigatons. If you converted all the cars today to EVs, then you just switched the problem from transportation over to electric generation. You didn't really solve the problem.

[Pierce Norton, President and CEO at ONEOK]

Chuck, I'm going to let you talk a little bit about our RNG opportunities and what we've already done and then are doing.

[Chuck Kelley, Senior VP of Natural Gas at ONEOK]

Sure, Pierce. Just a little color, Jeremy, on our interstate pipes, particularly if you think about where they're located, upper Midwest, we've got, as you know, quite a few dairy farms up in that area. You have agricultural waste. We've connected 3 RNG facilities that are originated from dairy farms already up there. Looking at another one. Here on our intrastate business, particularly in Oklahoma, we've already connected a large landfill waste site recycling facility. Looking at another. Of course, there's some large feedlots in our Texas intrastate market. We've been involved in connecting RNG and bringing that gas into our stream, delivering it to customers downstream. This has been ongoing over the past three years, and we're seeing that accelerate. Excited by the RNG aspects that we see out there.

[Pierce Norton, President and CEO at ONEOK]

I'd just kind of summarize that by saying that as part of our strategic plan, we look to develop business plans around all these different aspects of these opportunities. I think more importantly, as far as what these opportunities do is they make the existing natural gas pipelines in the U.S. relevant. Instead of just moving methane that you traditionally get from the wellheads, you're actually capturing methane that is emitted to the air, which is 25x more potent than the CO2s. You get the uplift in the CO2 equivalents, you get the extra benefit of removing that, you're using existing assets to help other industries reduce their environmental footprint. The relevancy of it is the important part as opposed to some great business opportunity to boost your EBITDA.

[Pierce Norton, President and CEO at ONEOK]

It's really designed around the relevancy of making essentially 2.6 million miles of pipeline in the U.S. very important to the energy transformation future.

[Jeremy Tonet, Analyst at JPMorgan]

That's very helpful. Thanks. Just wanted to follow up a little bit as it relates to CCUS, because it seems like North Dakota has kind of separated themselves from a lot of other states given the multiple initiatives there for CCUS with power generation, for actually having primacy on the Class VI wells and really kind of solving that problem and streamlining it, and then kind of really proving up quite a sizable sequestration resource within the state. Just given your positioning in North Dakota, I was wondering if you see an opportunity for ONEOK to play a role in all these developments since it seems like things are moving more real time in North Dakota than other parts of the country.

[Kevin Burdick, EVP and COO at ONEOK]

Definitely. Tristan, this is Kevin. We absolutely see that as an opportunity and have started and have been in with our presence up there. We've got strong relationships with state university systems, et cetera, and are involved in projects and analysis to understand the Class VI permits that much of the storage has up there, the ability that puts you further ahead for those opportunities. We are definitely involved in those conversations and have a long history and track record of partnering with the state and would expect that to continue as it relates to CCUS.

[Jeremy Tonet, Analyst at JPMorgan]

Got it. Great. This is Jeremy. Thank you so much for taking the questions.

[Pierce Norton, President and CEO at ONEOK]

Thank you.

[Operator]

Our next question will come from Michael Blum with Wells Fargo.

[Michael Blum, Analyst at Wells Fargo]

Thanks. Just wanted to add, welcome back, Pierce, as well.

[Pierce Norton, President and CEO at ONEOK]

Thank you, Michael.

[Michael Blum, Analyst at Wells Fargo]

I wanted to go back to the Bakken for a minute. You kind of touched on some of this, but just to ask it more directly, how much ethane are you voluntarily recovering in the Bakken today? It looks to us at least like the BTU limits are either close or have been reached on Northern Border. Do you envision at some point here involuntarily recovering ethane out of the Bakken?

[Kevin Burdick, EVP and COO at ONEOK]

Michael, this is Kevin. We said last quarter, we're not going to get into and talk about the actual volume of ethane we're recovering, other than to say we have incented some ethane to come out. That's been economic driven. With that ethane recovery, that's actually pulling down the BTU level on Northern Border. It's maybe pushing that out a little bit. If you just go back to the kind of production growth that, whether it's GORs or activity levels that are both increasing, at some point, we continue to believe it's just math, that blended BTU rate is going to go up and become a problem. Northern Border or TransCanada continues to have discussions with the various partners and counterparties up there, both on the supply side and the demand side, to understand what a BTU spec might look like.

[Kevin Burdick, EVP and COO at ONEOK]

We expect those conversations with the counterparties and FERC to continue, and hopefully we'll have something, a resolution here in the next several months.

[Michael Blum, Analyst at Wells Fargo]

Got it. Thanks for that. The other question I wanted to ask was about the Midcontinent NGL volumes. It looks like they were up sequentially. Just want to make sure I understand, is that being driven by just the Arbuckle II expansion? Because in the G&P segment there in the MidCon, you cited production decline. I just want to make sure I'm understanding the dynamics there. Thanks.

[Sheridan Swords, Senior VP of Natural Gas Liquids at ONEOK]

Michael, this is Sheridan. Obviously, the Arbuckle II expansion helps us move those volumes. Really what we're seeing is we did incentivize some ethane in the Midcontinent more in the second quarter than we did in the first quarter. We're also seeing some increased producer activity. We've seen our C3+ volumes increase as well, and we're probably back to a level that on the C3+ volumes, that is equivalent to pretty close to where we were in the fourth quarter of 2019. We've seen some pretty good recovery from the pandemic, recovery from the ice storm, and some growth. We're seeing a little bit of activity there. Now we are predicting that the Midcontinent will stay relatively flat this year going forward, but we have seen a little uptick in volume.

[Michael Blum, Analyst at Wells Fargo]

Great. Thank you very much.

[Operator]

We'll take our next question from Becca Followill with U.S. Capital Advisors.

[Becca Followill, Analyst at U.S. Capital Advisors]

Hi, guys, and welcome back, Pierce.

[Pierce Norton, President and CEO at ONEOK]

Thank you, Becca.

[Becca Followill, Analyst at U.S. Capital Advisors]

First question is on the fee rate on G&P. It's up to a $1.06, keeps ticking higher. It looks like the mix continues to be where I realize it's mix dependent, but it looks like the mix continues to be where the Bakken's going to grow faster than the Midcontinent. Should we expect that to continue to tick higher or is $1.06 kind of a cap here?

[Chuck Kelley, Senior VP of Natural Gas at ONEOK]

Becca, this is Chuck. I think in Kevin's remarks, we talked about a $1-$1.05 range. We still believe that somewhere in that $1-$1.05 range is probably a good number for the balance of the year. The $1.06 was a little stronger than we thought it would be, frankly, and it was driven really by the contract mix in the Bakken.

[Becca Followill, Analyst at U.S. Capital Advisors]

Okay, thank you. The second one's on LPG export facilities. You've talked, I think pre-COVID, you talked about it, we've got NGLs that hit record levels in May in the U.S. Any current thoughts on an NGL export facility for you guys?

[Kevin Burdick, EVP and COO at ONEOK]

Becca, it's Kevin. We continue to look at it. It remains a priority for us. It has continued there. Clearly, the pandemic and the pullback in production slowed down some of those discussions. Like you mentioned, with exports continuing to be very strong through this and production picking back up, so have the conversations. We will continue to look at that. As we said before, whether we're talking LPG or ethane, if we get the right counterparties, the right project, then we'll announce something. Still looking at it, and it's still a priority for us.

[Becca Followill, Analyst at U.S. Capital Advisors]

Thank you.

[Operator]

Our next question will be taken from Spiro Dounis with Credit Suisse.

[Spiro Dounis, Analyst at Credit Suisse]

Hey, good morning, team. First one, Walt, sorry if I missed it. Just curious.

[Walt Hulse, CFO and EVP of Strategy and Corporate Affairs at ONEOK]

Spiro, you're breaking up a little bit. If you could say whatever you're saying over again, please.

[Spiro Dounis, Analyst at Credit Suisse]

Walt, sorry if I missed this on the CapEx range. Curious if that's trending in any direction either. Would imagine a lot of the higher activity levels are pushing that higher, but maybe not the case.

[Walt Hulse, CFO and EVP of Strategy and Corporate Affairs at ONEOK]

Okay. I think I got it. You're looking at CapEx in 2021. We continue to stay within our range. Obviously, as producer activity picks up, we're going to spend a little bit more on well-connects, that might move us towards the higher end of the range. We're very comfortable with the 2021 range that we have out there at this point.

[Spiro Dounis, Analyst at Credit Suisse]

Sure. Some M&A will be helpful here. I know in the past you've expressed interest on some of the gas assets that were being marketed by some of the utilities out there. We've seen some of those change hands at this point. I am curious if there's still assets out there that could interest you.

[Pierce Norton, President and CEO at ONEOK]

Spiro, I'll just make a broad comment about M&A. I've been about 30 years in the midstream business, and there's always been some level of M&A activity. It did slow down during the years where most of the assets got sucked over into the MLPs. I guess what I would say about that is, I've only been back for 30 days, and I'd point you back to the comments.

[Pierce Norton, President and CEO at ONEOK]

That I made in the original opening, that whatever we do, it's going to be intentional, it's going to be disciplined. Whether or not we do or don't participate in the M&A market, that's going to be our guiding principles.

[Spiro Dounis, Analyst at Credit Suisse]

Understood. Thanks for that, Pierce. Congrats and good luck to Terry.

[Pierce Norton, President and CEO at ONEOK]

Thanks.

[Operator]

Our next question will come from Jean Ann Salisbury with Bernstein.

[Jean Ann Salisbury, Analyst at Bernstein]

Is there still any ethane being rejected in the MidCon, or is this number for the volume kind of all potential ethane from the MidCon, but, as you noted, 100,000 of it is sort of discretionarily being recovered?

[Sheridan Swords, Senior VP of Natural Gas Liquids at ONEOK]

This is Sheridan. There still is some ethane being rejected in the Mid-Continent, but here as we get into August, that number is quite low. We think we're at or getting close to full ethane recovery in the Mid-Continent right now. For the second quarter, we did still have quite a bit of ethane off in the Mid-Continent. We did incentivize some in the Mid-Continent in the second quarter. In August, we have very little that we are incentivizing out.

[Jean Ann Salisbury, Analyst at Bernstein]

That's really helpful. Thank you. Then this new slide nine with the gas production at flat Bakken crude is really interesting. This would suggest an add of like 1 BCFD from here over the next five years, even if oil production is just flat. There's obviously not anywhere near 1 BCFD of gas takeaway left out of the Bakken. How do you see this getting resolved, and would you participate in a solution for that, if that's what it took?

[Kevin Burdick, EVP and COO at ONEOK]

Jean Ann, this is Kevin. That's something we'll absolutely keep an eye on. The good thing there is we've got time. You've still got some capacity on Northern Border that you can displace Canadian gas. Going back pre-pandemic, we had talked about looking at other avenues out, whether that was expansions on Northern Border or moving gas to the west and taking advantage of existing assets that are in the ground to go to the west and south. My guess is those things would come back up. We'll have those conversations as we see volumes materialize. The good thing is we do have some time, and we've got some available capacity to get us to that point.

[Jean Ann Salisbury, Analyst at Bernstein]

Great. That's all for me. Thank you.

[Operator]

Our next question comes from Craig Shere with Tuohy Brothers.

[Craig Shere, Analyst at Tuohy Brothers]

Morning, team. Pierce, welcome back, and congrats to Terry on retirement and job well done. Historically, there was some interest in getting into the crude gathering and transportation. Are you just so gangbusters on the wet gas and NGLs that this is kind of off the table at the moment, or how does this look going forward?

[Pierce Norton, President and CEO at ONEOK]

Craig, I think our core business is pretty well-defined with natural gas and natural gas liquids, and that's the direction I would see in the future.

[Craig Shere, Analyst at Tuohy Brothers]

Very good. Just what kind of running room do we have for increased MidCon firm capacity demand to avoid further winter market dislocations? In terms of maybe ongoing steady state EBITDA uplift that could reduce volatility in the MidCon.

[Pierce Norton, President and CEO at ONEOK]

Let me kind of rewind us back to Winter Storm Uri, because I saw that up close and personal. The Mid-Continent area, which is defined as Southwest Kansas and the Texas Panhandle and Oklahoma, is a net exporter of natural gas, even during the month of February, during the middle of winter, to the tune of about 3 BCF a day. That turned back between the demand that we saw in the Mid-Continent and the lack of production for various reasons to basically only 5% exports. The real issue is to talk about resiliency of the supply chain and how we can potentially get gas in those kind of situations back from maybe the Southeast up into the Mid-Continent, if it ever happens again. Those are things that we would be looking at.

[Pierce Norton, President and CEO at ONEOK]

It really is looking at not necessarily the capacity that's there today or the contracting of that capacity. We are addressing a little bit of that, which is some uptick in storage and some additional volumes there. That's not going to get you through a second Winter Storm Uri. It's going to have to be a holistic approach between the exploration and production folks, the midstream folks, and the utilities to really get us to a point where we can take on another Winter Storm Uri. I will say volumetrically, there were very few customers lost in the state of Oklahoma. That volumetrically was a very positive force. The issue was where the price went to, not necessarily the stability and the reliability of being able to perform. I think the focus needs to be on resiliency and.

[Pierce Norton, President and CEO at ONEOK]

There's going to be a lot of people that's going to be involved in that process.

[Craig Shere, Analyst at Tuohy Brothers]

Can this process de-risk some of the MidCon EBITDA?

[Kevin Burdick, EVP and COO at ONEOK]

Craig, this is Kevin. I think those assets are highly contracted and have been highly contracted for a long time. We would expect that to continue. I think what this does is maybe provide opportunities for expansion. This team has done a really good job of whether it's connecting new power plants or doing smaller projects to bring gas from other areas. To Pierce's comments, we've done some of that. We just think there may be more opportunities for that in the future.

[Craig Shere, Analyst at Tuohy Brothers]

Great. Thank you.

[Operator]

Our next question will come from Michael Cusimano with Pickering Energy Partners.

[Michael Cusimano, Analyst at Pickering Energy Partners]

Good morning, everyone, and congrats on the new roles. I have more of a strategic question. Hypothetically, using Elk Creek 540,000 bbl a day of expandable capacity as kind of a ceiling being filled by even like the 330 you touched on earlier this month and the 125,000 bbl a day of available ethane that you mentioned. It still leaves us about 85,000 of capacity available for the GOR and volume growth opportunities that you mentioned. With that in mind, I'm trying to understand the strategic rationale for Overland Pass today. Is that just spare capacity available for potential growth beyond Elk Creek? If you can mention, just talk about how that fits into the portfolio today.

[Sheridan Swords, Senior VP of Natural Gas Liquids at ONEOK]

Yeah, this is Sheridan. I think when you think about the strategic rationale of OPPL, you need to think about Elk Creek as one system, and the Bakken pipeline delivering into OPPL as a second system. To reach the total 540,000 bbl a day of capacity that we could achieve by expanding Elk Creek, Elk Creek will run 400,000 of that. The other 140,000 will be on the Bakken pipeline tie and delivering that into OPPL and delivering all that into Bushton. That's where OPPL fits into our strategic plan for volumes out of the Bakken.

[Michael Cusimano, Analyst at Pickering Energy Partners]

Okay. It's more of thinking of Elk Creek from Rockies before it touches into where OPPL would connect. That's more of like a 400,000 bbl/d capacity.

[Sheridan Swords, Senior VP of Natural Gas Liquids at ONEOK]

It is if we would put the additional pumps on. Right now, we've stated that that's $300,000.

[Michael Cusimano, Analyst at Pickering Energy Partners]

Okay, perfect. Yeah, that's really helpful. Thank you.

[Operator]

Our next question comes from Michael Lapides with Goldman Sachs.

[Michael Lapides, Analyst at Goldman Sachs]

Hey, guys. Want to wish Terry K. Spencer a congrats, and Pierce H. Norton II, congrats to you as well. Look forward to getting together at some point. Have a volume question. Someone made the comment on the call about 330,000 bbl/d is kind of what you're seeing right now out of the Bakken. Can you give same data points for what you're seeing right now in the MidCon and the Permian relative to kind of what the second quarter run rate I think on slide four was?

[Sheridan Swords, Senior VP of Natural Gas Liquids at ONEOK]

I haven't looked specifically at what we're running right now. I will say that we are running higher on both those systems than we did in the second quarter, but I haven't specifically looked at what we have reached on each one of these systems. We are trending higher on both of those systems.

[Michael Lapides, Analyst at Goldman Sachs]

Got it. When I look at your guidance, your volumetric guidance across G&P and NGL throughput, do you think there's material upside to this? I am a little surprised given today's numbers and then the comment on the 330,000 that you didn't kind of do a volumetric guidance raise here.

[Kevin Burdick, EVP and COO at ONEOK]

Well, Michael, we're still within this Kevin, we're still within the range in both segments. Clearly, as we see strengthening activity that you'd see some there would definitely be some upside to those numbers. The other dynamic that's going on is when you look at an annual average, you had a pretty tough first quarter with the Winter Storm Uri as it related to volume. I do think you're going to see a much stronger volume in the second half of the year than you did in the first half.

[Michael Lapides, Analyst at Goldman Sachs]

Got it.

[Kevin Burdick, EVP and COO at ONEOK]

Still tracking inside the guidance at this point.

[Michael Lapides, Analyst at Goldman Sachs]

Got it. Super helpful. Last question, just on frac capacity. Can you talk about, and I know you had the outage this period, so it may be a little hard, what the utilization of your fracs are and when you actually think the earliest you might need new capacity would be?

[Sheridan Swords, Senior VP of Natural Gas Liquids at ONEOK]

Well, right now, the utilization of our fracs is as much as we can get through them because we're trying to frac off that backlog of inventory that we had carry over from the second quarter as we go forward. In terms of adding new frac capacity, we're continuing to evaluate that. We're seeing good, strong volume growth in our area. We're trying to understand when the right time is to kick that project off, and we're hoping that volumes continue to grow, and we can see that come up pretty quick.

[Walt Hulse, CFO and EVP of Strategy and Corporate Affairs at ONEOK]

Michael, I would just add that to add that capacity, all we would be doing is completing MB-5, and you're just talking a couple hundred million dollars to finish up that project.

[Michael Lapides, Analyst at Goldman Sachs]

Got it. Is that something you think could be needed next year, or do you think it's more longer term down the road?

[Sheridan Swords, Senior VP of Natural Gas Liquids at ONEOK]

Well, it possibly could be needed next year. I think when we get it up, it'll take a little bit longer than that to get it up and going. That's why we need to look out longer than a year. It'll probably take us a little bit longer than that to get it up, to complete what we need to have done there. There's a possibility it could be needed next year. Still, there's quite a bit of capacity in the industry right now that outside frac deals could be done in the short term.

[Michael Lapides, Analyst at Goldman Sachs]

Got it. Thank you, guys. Much appreciated.

[Operator]

We'll take our final question from Sunil Sibal with Seaport Global Securities.

[Sunil Sibal, Analyst at Seaport Global Securities]

Yes. Hi. Good afternoon, everybody, and welcome back to Pierce, and then also congrats to Terry on his retirement. A couple of quick questions for me. Seems like there's been a fair bit of debate between the activity levels, public versus private. Could you remind us how much of your volumes come from private producers versus public producers in Bakken?

[Kevin Burdick, EVP and COO at ONEOK]

Obviously, we've got the big There's a lot of publics out there when you think about ConocoPhillips and Continental and ExxonMobil and so forth. The majority of those are coming from the publics up in the Bakken. We do have some of our smaller customers are the privates. We really haven't seen a distinguishing factor between who's bringing rigs back. It's really more an independent company, just depending on what their financial situation is and how they're viewing their balance sheet, et cetera. Pretty much across the board, we have seen all those customers talk about increasing activity as we move through the rest of this year into 2022.

[Sunil Sibal, Analyst at Seaport Global Securities]

Got it. Thanks for that. Seems like, when I look at Q2 versus Q1, you had a fairly decent uptick in volumes, but your OPEX were flattish to lower sequentially. I was curious, is there any specific thing which is driving that, and how should we be thinking about your OPEX going forward?

[Kevin Burdick, EVP and COO at ONEOK]

I think we've had a couple of quarters of a pretty close run rate here. From sequential quarter to quarter, it was really just some timing coming out of the winter, starting to execute on some expense projects that we'll typically do as the weather gets better. Some of that was occurring in the NGL segment. As we think going forward, other than maybe a little uptick with Bear Creek when it becomes operational later this year, other than that, the current run rate would probably be a decent number to use.

[Sunil Sibal, Analyst at Seaport Global Securities]

Got it. Thanks.

[Kevin Burdick, EVP and COO at ONEOK]

Thank you.

[Operator]

This concludes today's question and answer session. I will now turn it back to Andrew Ziola for closing remarks.

[Andrew Ziola, VP of Investor Relations and Communications at ONEOK]

All right. Well, thank you all. Our quiet period for the third quarter, excuse me, starts when we close our books in October and extends until we release earnings in early November. We'll provide details for the conference call at a later date. Thank you for joining us, and the IR team will be available throughout the day. Thank you.

[Operator]

Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect your phone lines.

Participants

Executives

• Andrew Ziola, VP of Investor Relations and Communications
• Chuck Kelley, Senior VP of Natural Gas
• Kevin Burdick, EVP and COO
• Pierce Norton, President and CEO
• Sheridan Swords, Senior VP of Natural Gas Liquids
• Walt Hulse, CFO and EVP of Strategy and Corporate Affairs

Analysts

• Becca Followill, Analyst at U.S. Capital Advisors
• Christine Cho, Analyst at Barclays
• Craig Shere, Analyst at Tuohy Brothers
• Jean Ann Salisbury, Analyst at Bernstein
• Jeremy Tonet, Analyst at JPMorgan
• Michael Blum, Analyst at Wells Fargo
• Michael Cusimano, Analyst at Pickering Energy Partners
• Michael Lapides, Analyst at Goldman Sachs
• Shneur Gershuni, Analyst at UBS
• Spiro Dounis, Analyst at Credit Suisse
• Sunil Sibal, Analyst at Seaport Global Securities
• Tristan Richardson, Analyst at Truist Securities