C L I M AT E C O N T R O L F U R N I T U R E PA C K A G I N G C L O T H I N G T E C H N O L O G Y Energy in Action 2 0 2 1 A N N U A L R E P O R T ONEOK, Inc. (pronounced ONE-OAK) (NYSE: OKE) is a leading midstream service provider and owner of one of the nation's premier natural gas liquids (NGL) systems, connecting NGL supply in the Rocky Mountain, Mid-Continent and Permian regions with key market centers and an extensive network of natural gas gathering, processing, storage and transportation assets. ONEOK is a FORTUNE 500 company and is included in the S&P 500. For the latest news about ONEOK, find us on LinkedIn, Facebook, Twitter and Instagram. Mission: We deliver energy products and services vital to an advancing world. Vision: To create exceptional value for our stakeholders by providing solutions for a transforming energy future. Core Values: S A F E T Y A N D E N V I R O N M E N TA L We commit to a zero-incident culture for the well-being of our employees, contractors and communities and to operate in an environmentally responsible manner. E XC E L L E N C E We hold ourselves and others accountable to a standard of excellence through continuous improvement and teamwork. E T H I C S We act with honesty, integrity and adherence to the highest standards of personal and professional conduct. D I V E R S I T Y A N D I N C L U S I O N We respect the uniqueness and worth of each employee, and believe that a diverse, inclusive workforce is essential for a sense of belonging, engagement and performance. S E R V I C E We invest our time, effort and resources to serve each other, our customers and communities. I N N OVAT I O N We seek to develop creative solutions by leveraging collaboration through ingenuity and technology. Letter to Investors. For ONEOK, 2021 was another year of consecutive earnings growth driven by the performance of our employees and our well-positioned and integrated assets, as the economy continued to recover in year two of the COVID-19 pandemic. Drilling activity increased and commodity prices improved as demand for natural gas and natural gas liquids (NGLs) strengthened, resulting in volume growth in 2021. ONEOK’s resiliency continues to prove that it can grow and return value to shareholders through commodity cycles. In the first quarter 2021, our employees were proactive in preparing for Winter Storm Uri and made the necessary operational adjustments to keep our assets running to meet the critical needs of our customers as record demand for natural gas, propane and electricity soared. We want to express our deep appreciation for our employees who worked tirelessly during this extreme winter weather event. 2021 was also a year of leadership transition. In September 2021, Terry K. Spencer retired after 20 years in various executive leadership positions at ONEOK, including more than seven years as President and CEO, and as a member of our board of directors. We thank him for his leadership through a tremendous period of growth for the company and for carrying on ONEOK’s history of success. Following the CEO transition, our leadership team spent a significant amount of time reflecting on our core businesses’ role and their integration into our business strategy going forward in an advancing energy future. This process resulted in creating our company’s new Mission, Vision, Core Values and Strategic Map – changes driven by an advancing world and a transforming energy future. Our new Mission, Vision and Core Values provide a road map for our employees and stakeholders to understand where we are headed as a company, why we are going in that direction and how we will get there. Our Mission is to deliver energy products and services vital to an advancing world. As a part of the global energy transformation underway, we continue to deliver products that improve lives. Natural gas provides reliable, affordable and cleaner energy. NGLs have many valuable uses including home heating, transportation fuel and feedstocks for a wide range of products, such as health care products, building materials, packaging, technology, clothing and sources of energy to promote economic growth in developing nations. The products we deliver are in action every day. Our Vision is to create exceptional value for our stakeholders by providing solutions for a transforming energy future. We set a standard to be exceptional in everything we do. Central to our Vision is the transforming energy future. Today, we provide solutions for our natural gas and NGL customers. We will continue developing additional capabilities and expertise for our company as we explore new opportunities and adapt our current assets to participate in a lower-carbon world. Our Core Values and the actions associated with them (listed on the first page of this report) act as a compass that not only sets the direction of our company culture but also guides everything we do. They are the pillars that support the success of our Mission and Vision. Among our Core Values is Safety and Environmental. ONEOK has a long history of safe, reliable and responsible operations, and we remain committed to our core operating principles while continuing to identify opportunities to reduce our operational impact to the environment. In September 2021, we announced a companywide greenhouse gas (GHG) emissions reduction target to achieve an absolute 30% reduction of Scope 1 and Scope 2 emissions by 2030, compared with 2019 base-year levels. This further demonstrates our dedication to emissions reductions through industry relationships, best management practices, the use of technology to detect and minimize emissions, and to internally set environmental targets. 1 ONEOK’s commitment to sustainability and social responsibility continues to be recognized by several leading organizations and agencies. In 2021, ONEOK received an MSCI ESG Rating of AA, was named to JUST Capital’s list of Top 100 U.S. Companies Supporting Healthy Communities and Families, and received an ESG Risk Rating placing it in the top 10% in the refiners and pipelines industry assessed by Sustainalytics, to name a few. Underscoring our commitment to create exceptional value for our stakeholders, we maintained our dividend through the pandemic and further strengthened our balance sheet in 2021, reducing our total outstanding debt by more than $600 million. Our strong 2022 outlook is supported by increasing natural gas and NGL volumes across our operations due to increasing producer activity; a favorable commodity price backdrop; a rising gas-to-oil ratio in the Williston Basin and expected volume growth from projects recently completed in our operating areas, including our Bear Creek plant expansion in North Dakota. In November, we announced the continuation of construction of our Demicks Lake III natural gas processing facility in the Williston Basin and MB-5 NGL fractionator in Mont Belvieu, Texas. This decision was driven by increasing volumes and improving demand for natural gas and NGLs. These projects, which remain fully contracted, were suspended in 2020 due to the pandemic. Demicks Lake III will support producer development plans in the core of the Williston Basin while continuing our commitment to help customers eliminate or minimize natural gas flaring. MB-5 will fractionate the incremental growth in NGL volumes from across our operations, including the Rocky Mountain region and Permian Basin. Both projects are expected to be completed in 2023. The capital being invested in current projects is expected to provide attractive returns and create earnings more quickly than typical project cycles. Many of our assets have significant capacity to grow alongside the needs of our customers as we remain focused on further enhancing the reliability of our infrastructure. The strong results for the year underscore the quality of our assets and the hard work and dedication of our more than 2,800 employees. Our employees remained disciplined and focused on safety, reliability and the responsible operations of our assets. Their hard work resulted in companywide earnings growth in 2021 and has laid the foundation for continued growth in 2022. We again thank them for their commitment to our company. Guided by our Mission, Vision, Core Values and Strategic Map, we will grow by continuing to provide solutions that meet the needs of our current and future customers as we build on our core business and transform to play a vital role in an advancing world. Thank you to our investors for your trust and commitment as you continue this journey with us and invest in ONEOK’s future. John W. Gibson Chairman March 9, 2022 Pierce H. Norton II President and Chief Executive Officer 2 Strategic Map. Desired Outcomes Sustainable Business Model Zero Incidents Maximize Total Shareholder Return Highly Engaged Workforce Stakeholder Benefits Safe, Reliable and Resilient Asset Base Environmental Responsibility Value Added Products and Services Earnings Growth and Stability Employer of Choice S U C O F S S E N I S U B E R O C N O I T A M R O F S N A R T Y G R E N E S U C O F S S E N I S U B E R O C Internal Objectives Employees Environmental, Social and Governance Growth Financial Strength Safety Greenhouse Gas Emissions Regulatory Core Opportunities Earnings Resiliency New Opportunities Advocacy Cybersecurity High Performing Workforce Develop Individuals and Leaders Advance an Inclusive, Diverse and Engaged Culture Attract, Select and Retain Talent 3 Our Assets. Natural Gas Gathering Pipelines Natural Gas Processing Plants NGL Pipelines NGL Fractionators Partial Interest Natural Gas Pipelines Natural Gas Storage Growth Projects Basins M O N T A N A N O R T H D A K O T A M I N N E S O T A POWDER RIVER BASIN W Y O M I N G WILLISTON BASIN S O U T H D A K O T A W I S C O N S I N I O W A N E B R A S K A DENVER- JULESBURG BASIN C O L O R A D O K A N S A S I N D I A N A I L L I N O I S M I S S O U R I K E N T U C K Y O K L A H O M A STACK T E N N E S S E E N E W M E X I C O SCOOP A R K A N S A S PERMIAN BASIN T E X A S L O U I S I A N A 4 4 SECURITIES ANDAA UNITED STATES A EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL AA REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021. OR ☐ TRANSIT RR ION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________. Commission file number 001-13643 ONEOK, Inc. (Exact name of registrant as specified in its charter) Oklahoma (State or other jurisdiction of incorporation or organization) 100 West Fifth Street, Tulsa, OK (Address of principal executive offices) 73-1520922 (I.R.S. Employer Identification No.) 74103 (Zip Code) Registrant’s telephone number, including area code (918) 588-7000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Common stock, par value of $0.01 Trading Symbol(s) OKE Name of each exchange on which registered New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in RuleRR 405 of the Securities Act. Yes ☒ No ☐. Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Emerging growth company ☐ Smaller reporting company ☐ Non-accelerated filer ☐ Accelerated filer ☐ ff If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒. Aggregate market value of registrant’s common stock held by non-affiliates based on the closing trade price on June 30, 2021, was $24.4 billion. On February rr 22, 2022, the Company had 446,213,285 shares of common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the definitive proxy statement to be delivered to shareholders in connection with the Annual Meeting of Shareholders to be held May 25, 2022, are incorporated by reference in Part III. ONEOK, Inc. 2021 ANNUAL REPORT Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safetff y Disclosures Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities [Reserved] Management’s Discussion and Analysis of Financial Condition and Results of Operations Part I. Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4. Part II. Item 5. Item 6. Item 7. Item 7A. Quantitative and Qualitative Disclosures about Market Risk Item 8. Item 9. Item 9A. Item 9B. Item 9C. Part III. Item 10. Item 11. Item 12. Item 13. Item 14. Part IV. Item 15. Item 16. Signatures Financial Statements and Supple u mentary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Informa ff tion Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Directors, Executive Officers and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accounting Fees and Services Exhibits, Financial Statement Schedules Form 10-K Summary Page No. 5 21 34 35 35 35 35 36 37 51 54 100 100 100 100 101 101 101 102 102 103 110 111 As used in this Annual Report, references to “we,” “our,” or “us” refer to ONEOK, Inc., an Oklahoma corporation, and its predecessors and subsidiaries, unless the context indicates otherwise. 2 GLOSSARY The abbrevia a tions, acronyms and industry terminology used in this Annual Report are defineff ff d as foll ows: $1.5 Billion Term Loan Agreement The senior unsecured delayed-draw three-year $1.5 billion term loan agreement $2.5 Billion Credit Agreement AFUDC Annual Report ASU Bbl BBtu/t d Bcf Bcf/d Btu t CFTC Clean Air Act Clean Water Act COVID-19 DJ DOT EBITDA EPA EPS ESG Exchange Act FERC Fitch GAAP Guardian Pipeline GHG Homeland Security ICE Intermediate Partnership KCC LIBOR MBbl/d MDth/d MMBbl MMBbl/d MMBtu MMcf/d Moody’s Natural Gas Act Natural Gas Policy Act NGL(s) NGL products Northern Border Pipeline NYMEX NYSE OCC ONEOK ONEOK Partners dated November 19, 2018 ritish thermal unit ONEOK’s $2.5 billion revolving credit agreement, as amended funds used during construction Allowance forff Annual Report on Form 10-K for the year ended December 31, 2021 Accounting Standards Update Barrels, 1 barrel is equivalent to 42 United States gallons Billion British thermal units per day t Billion cubic feeff Billion cubic feeff t per day B U.S. Commodity Futures Trading Commission Federal Clean Air Act, as amended Federal Water Pollution Control Act Amendments of 1972, as amended Coronavirus disease 2019, including variants thereof Denver-Julesburg United States Department of Transportation Earnings before interest expense, income taxes, depreciation and amortization United States Environmental Protection Agency Earnings per share of common stock Environmental, social and governance Securities Exchange Act of 1934, as amended Federal Energy Regulatory Commission Fitch Ratings, Inc. Accounting principles generally accepted in the United States of America Guardian Pipeline, L.L.C., a wholly owned subsidiary of ONEOK, Inc. Greenhouse gas United States Department of Homeland Security Intercontinental Exchange ONEOK Partners Intermediate Limited Partnership, a wholly owned subsidiary of ONEOK Partners, L.P. Kansas Corporation Commission London Interbank Offered Rate Thousand barrels per day Thousand dekatherms per day Million barrels Million barrels per day Million British thermal units Million cubicu Moody’s Investors Service, Inc. Natural t Natural t Natural gas liquid(s) Marketable naturat feet per day Gas Act of 1938, as amended Gas Policy Act of 1978, as amended l gas liquid purity products, such as ethane, ethane/propane t mix, propane, iso-butane, normal butane and natural gasoline Northern Border Pipeline Company, a 50% owned joint venturet New York Mercantile Exchange New York Stock Exchange Oklahoma Corporation Commission ONEOK, Inc. ONEOK Partners, L.P., a wholly owned subsidiary of ONEOK, Inc. 3 OPIS Overland Pass Pipeline PHMSA POP Quarterly Report(s) Roadrunner RRC S&P SCOOP SEC Securities Act Series E Preferred Stock SOFR STACK WTI XBRL Oil Price Information Service Overland Pass Pipeline Company, LLC, a 50% owned joint venturet United States Department of Transportation Pipeline and Hazardous Materials Safety At dministration Percent of Proceeds Quarterly Report(s) on Form 10-Q Roadrunner Gas Transmission, LLC, a 50% owned joint venturet Railroad Commission of Texas S&P Global Ratings South Central Oklahoma Oil Province, an area in the Anadarko Basin in Oklahoma Securities and Exchange Commission Securities Act of 1933, as amended Series E Non-Voting, Perpetual Preferred Stock, par value $0.01 per share Secured Overnight Financing Rate Sooner Trend Anadarko Canadian Kingfisher, an area in the Anadarko Basin in Oklahoma West Texas Intermediate eXtensible Business Reporting Language ii rr e that are not histori ion, including statements ctt ff cal informat or related assumptions, are forward-looking statements. The statements in this Annual Report of management for future operations, economic performance Forward-looking statements may include words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”t “forecast,” “goal,” “target,” “guidance,” “intend,” “may,”yy “might,” “scheduled,” “should,”ll expec e tations regarding x assumptions will be achieved. Important factors that could cause actual results t teII m 1A, Riskii Factors, and Part II,II looking statements att peO rations and “Forward-Looking Statements,” in this Aii ll Analysis “outlook,”kk “plan,” “potential,”l “project,” “will,” “would” and other words and terms of so imilar meaning. Although we believe that future events att tt o diffeff r materially from those in the forwff nt’s Discussi on and ii e re based on reasonable assumptions, we can give no assurance that re described under Part I, III f Oo of Financial Condition and Results ott our ctations or ard- oncerning plans and objectives tt such expex nnual Report. MM Item 7, M7 anageme i tt 4 ITEM 1. BUSINESS GENERAL PART I rr We are incorpor ated under the laws of the state of Oklahoma, and our common stock is listed on the NYSE under the trading symbol “OKE.” We are a leading midstream service provider and own one of the nation’s premier NGL systems, connecting NGL supply in the Rocky Mountain, Permian and Mid-Continent regions with key market centers and own an extensive network of natural gas gathering, processing, storage and transportation assets. We apply our core capabi processing, fractionating, transporting, storing and marketing natural gas and NGLs through vertical integration across the midstream value chain to provide our customers with premium services while generating consistent and sustainable earnings growth. lities of gathering, a Legend Natural Gas Gathering & Processing Producers Midstream Value Chain Natural Gas Liquids Natural Gas Pipelines Raw natural gas is typically gathered at the wellhead, compressed and transported through pipelines to our processing facilities. Most raw natural gas produced at the wellhead also contains a mixture of NGL components, including ethane, propane, iso-butane, normal butane and natural gasoline. Gas Gathering Gathered wellhead natural gas is directed to our processing plants to remove NGLs, resulting in residue natural gas (primarily methane). Gas Processing We are connected to supply in natural gas and NGL producing basins and have significant basin diversification, including the Williston, Permian, Powder River and DJ Basins and the STACK and SCOOP areas. In our Natural Gas Gathering and Processing segment, we have more than 3 million dedicated acres in the Williston Basin and approximately 300,000 a dedicated acres in the STACK and SCOOP areas. In our Natural Gas Liquids segment, we are the largest NGL takeaway provider in the Williston and Powder River Basins; Oklahoma, including the STACK and SCOOP areas; Kansas; and the Texas Panhandle. We also have a significant presence in the Permian Basin. Once processed, residue natural gas is recompressed and delivered to intrastate and interstate natural gas pipelines primarily in our Natural Gas Pipelines segment. NGL Gathering NGL Fractionation NGLs extracted at processing plants, both third- party and our own, are then gathered by our NGL gathering pipelines. Gathered NGLs are directed to our downstream fractionators in the Mid-Continent region and Mont Belvieu, Texas, to be separated into purity products. Purity products are stored or distributed to our customers, such as petrochemical companies, propane distributors, heating fuel users, ethanol producers, refineries and exporters. End-use Market & NGL Storage 5 Residue natural gas is transported to storage facilities and end users, such as large industrial customers, natural gas and electric utilities serving commercial and residential consumers, and international markets through liquefied natural gas exports and cross-border pipelines. EXECUTIVE SUMMARY Business Update and Market Conditions - We experienced earnings growth fromff 2020, due primarily to increased producer activity and rising gas-to-oil ratios in the Rocky Mountain region, production curtailments in 2020, increased ethane production in the Rocky Mountain region and higher commodity prices, in both our Natural Gas Gathering and Processing and Natural Gas Liquids segments, highlighting both the resiliency of our integrated assets and the economic recovery from the pandemic. We expect volumes to increase in 2022 due to continued increases in producer activity, continued rising gas-to-oil ratios in the Rocky Mountain region, the recent completion of our Bear Creek plant expansion and increased ethane demand from the petrochemical industry. increased volumes in 2021, compared with nd down cycles, we have positioned ourselves to reduce exposure to Although the energy industry has experienced many up au direct commodity price volatility. Each of our three segments are primarily feeff approximately 90% fee-based in 2021. While our Natural based, we have direct commodity price exposure related primarily to feeff with POP contracts. 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 and Processing and Natural normal volumetric well decline, severe weather disruption, operational outages and crude oil, NGL and natural gas demand. Our Natural Gas Pipelines segment is not exposed to significant volumetric risk dued subscribed under long-term firm fee-based contracts. gas. In addition, our Natural Gas Gathering t Gas Liquids segments are exposed to volumetric risk as a result of drilling and completion activity, Gas Gathering and Processing segment’s earnings are primarily fee- -based, and our consolidated earnings were to nearly all of our capaa city being t t In the first quarter 2021, Winter Storm Uri brought significant challenges to the energy industry and our operating areas. Our employees were proactive in preparing for the severe winter weather, made the necessary adjustments to keep our assets operational and provided exceptional service to meet the needs of our customers during the difficult weather conditions. ze-offs gas, propane and electricity, coupled with supply reductions from producer wellhead freeff Increased demand for natural and power outages impacting processing plants in the Mid-Continent and Rocky Mountain regions and the Permian Basin and fractionators in the Mid-Continent region, resulted in high commodity prices at certain market hubs, particularly in the Mid- Continent region and in Texas. Commodity prices quickly returned to previous levels as the weather improved and natural supply returned. t t t gas Winter Storm Uri impacted all three of our operating segments, resulting in a net positive impact to our financial results, primarily in the first quarter 2021, as our ability to meet increased demand for natural gas and to provide services during the period offset the unfavorable volume impacts and higher electricity costs. Our well-positioned natural gas storage assets and market connected pipelines in our Natural Gas Pipelines segment were able to meet critical needs during this period of severe winter weather. The reliabia lity of our interstate and intrastate assets, including storage, enablea d us to continue to provide our customers access to transportation services, park-and-loan services and additional naturat improved our financial results. However, this was partially offset by producer wellhead freeff volumes in our Natural Gas Gathering and Processing and Natural Gas Liquids segments. ze-offs, which reduced February l gas supply, if availablea , which d As we continue to monitor the COVID-19 pandemic, we remain committed to managing the impact of the pandemic on our on operating our assets safely, reliably employees. We continue to protect our workforce and, as always, we remain focused and in an environmentally responsible manner. ONEOK is a critical infrastructure business as defineff d by Homeland Security and, therefore, our workforce has remained full safety-rela t precautions for our employees who work in the fieff and cybersecurity measures designed so that our systems remain functional in order to both serve our operational needs and to provide service to our customers. ted ordinances. We began implementing our return to office plan in early 2022, and we will continue to take safety y engaged within federal, state and local government issued guidelines and ld or report to a ONEOK facility. We continue to apply risk-management ff ff See Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk, in this Annual Report for more information on our exposure to market risk. A to AA at MSCI Inc. ESG ratings, were named a Top 100 U.S. Companies Supporting Healthy Sustainability and Social Responsibility - In 2021 and 2022, we qualified forff ity Yearbook. In addition, we received a perfect score of 100 in the Human Rights Campaim gn 2021 Corporate Equality Index, were upgraded fromff Communities and Families, were listed as one of America’s Most Responsible Companies forff ranked in the top 10% in the Refiners and Pipelines industry group in Sustainalytics ESG Risk Ranking. We continue to look for ways to reduce our environmental impact and utilize more efficient technologies. We have an environmental sustainability team that accelerated our ongoing environmental stewardship efforts and is exploring ways to lower our GHG emissions even further. We are dedicated to the evaluation and development of renewablea energy and low-carbon projects and are actively inclusion in the S&P Global Sustainabila 2022 by Newsweek and were 6 researching opportunities that will complement our extensive midstream assets and expertise, strengthening the role we expect to play in the transformation to a lower-carbon economy. In September 2021, we announced a 30% absolute GHG emissions reduction target, or 2.2 million metric tons, of our combined Scope 1 and Scope 2 emissions by 2030, compared with 2019 base-year levels. Scope 1 and 2 emissions represent our total operational emissions, including direct emissions from sources we operate and indirect emissions from the generation of purchased power. We anticipate several potential pathways toward achieving our emissions reduction target, which could on assets across our operations, methane mitigation through best include the electrification of certain natural management practices and system optimizations. Additionally, we are identifying potential opportunities to collaborate with utilities and power generators to accelerate the availability of lower-carbon power options across our operations. We will maintain a disciplined capital approach and will continue to discuss our total capital expenditures and provide our expected total capita Analysis of Financial Condition and Results of Operations, in this, and future, al spend annually in the “Liquidity and Capital Resources” section in Part II, Item 7, Management’s Discussion and Annual Reports. m gas compressi t t Natural Gas - In our Natural Gas Gathering and Processing segment, gathered and processed volumes in the Rocky Mountain region increased in 2021, compared with 2020, due primarily to increased producer activity, rising gas-to-oil ratios and the impact of curtailed production in 2020. In November 2021, we announced the completion of our Bear Creek plant expansion, which increased our total processing capac ately 1.7 Bcf/d in the Williston Basin. In addition, as we expect to continue to benefit fromff increased producer activity and continued rising gas-to-oil ratios in the Rocky Mountain region, we recently announced plans to restart construction on our 200 MMcf/d Demicks Lake III natural ity will be approximately completion of Demicks Lake III, which is expected in the first quarter 2023, our total processing capac 1.9 Bcf/d in the Williston Basin. In the Mid-Continent region, we are experiencing increased producer drilling activity in 2022 in the SCOOP and STACK areas. gas processing plant. Upon ity to approxim a a a t In our Natural Gas Pipelines segment, our assets are connected to key supply areas and demand centers, including export markets in Mexico via Roadrunner and supply areas in Canada and the United States via our interstate and intrastate naturat pipelines and Northern Border Pipeline, which enablea gas transportation and storage services. Continued demand from local distribution companies, electric-generation facilities and large industrial companies resulted in low-cost expansions that position us well to provide additional services to our customers when needed. Our ability to provide reliablea service throughout the extreme weather conditions of Winter Storm Uri highlighted the importance of market- connected pipelines and storage assets and the value of these services. In addition, during the firff st quarter 2021, we sold natural gas that we owned and held in storage, which benefited our segment’s financial results. We continue to monitor market conditions and sell our natural we maximized natural gas storage withdrawals for firm service customers serving critical needs. gas in storage during favorablea market conditions. During the extreme winter weather periods, us to provide essential natural l gas t t NGLs - In our Natural Gas Liquids segment, NGL volumes increased in 2021, compared with 2020, due primarily to increased production in the Rocky Mountain region, Mid-Continent region and Permian Basin, increased ethane production in the Rocky Mountain region and the impact of curtailed production across our system in 2020, offset partially by the impact of Winter Storm Uri in 2021 and lower volumes in the Barnett Shale. In response to increased producer activity and the expected increased demand for ethane as two new petrochemical plants come online in 2022, we recently announced plans to restart construction on our 125 MBbl/d MB-5 fractionator in Mont Belvieu, Texas, which is fully contracted. MB-5 is expected to be completed in the third quarter 2023 and will increase our NGL fractionation capac system. ity to more than 1 MMBbl/d across our entire a See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in this Annual Report for more informa tion on our growth projects, results of operations, liquidity and capital resources. ff BUSINESS STRATEGY Our mission is to deliver energy products and services vital to an advancing world. Our vision is to create exceptional value for our stakeholders by providing solutions for a transforming energy future. Our business strategy is focused on: • • • Zero incidents - we commit to a zero-incident culture for the well-being of our employees, contractors and communities. Safety and environmental responsibility continue to be a primary focus for us, and our emphasis on personal and process safetff y has produced improving trends in the key indicators we track. Highly engaged workforce retaining talent, advancing an inclusive, diverse and engaged culture and developing individuals and leaders. Sustainablea reliablea business model - we aim to maintain prudent financial strength and fleff xibility while operating a safe,ff and resilient asset base. We seek to maintain investment-grade credit ratings and a strong balance sheet. We - we strive to be an employer of choice and continue to focus on attracting, selecting and g y g g 7 believe our internally generated cash flowff regions and to provide value-added products and services that contribute to long-term growth, profitabila business diversification. We continue to actively research opportunities that will complement our extensive midstream assets and expertise, strengthening the role we expect to play in the transformation to a lower-carbon economy. s will allow us to fund capia tal-growth projects in our existing operating ity and • Maximizing total shareholder return g al to investments that produce returns capita above our cost of capia tal. Producing consistent and strong returns invested capital will allow us to not only reward our shareholders, but also provide the means and opportunit our additional stakeholders, including employees, communities and the environment. - we plan to grow earnings and sustain our dividend by efficff t iently allocating on t y to serve t NARRATIVE DESCRIPTION OF BUSINESS We report operations in the following business segments: •• •• •• Naturalll Gas Gathering and Processing; Naturalll Gas Liquids; and Naturalll Gas Pipelines. Natural Gas Gathering & Processing Natural Gas Liquids Natural Gas Pipelines g Natuural Gas Gaaathering and Processing g Natural Gas Gathering Plants Natural Gas Liquids Fractionator Natural Gas Pipelines Storage NGL Market Hub Growth Projects Overview - Our Natural Gas Gathering and Processing segment provides midstream services to producers in North Dakota, Montana, Wyoming, Kansas and Oklahoma. Rocky Mountain region - The Williston Basin is located in portions of North Dakota and Montana and includes the oil- producing, NGL-rich Bakken Shale and Three Forks formations. Our recently completed Bear Creek plant expansion increased our gathering and processing total capac production from new wells. ately 1.7 Bcf/d and will enable us to capturet expected natural ity to approxim gas a a t 8 The Powder River Basin is primarily located in Wyoming, which includes the NGL-rich Niobrara Shale and Frontier, Turner and Sussex formations where we provide gathering and processing services to customers in the eastern portion of Wyoming. Mid-Continent region - The Mid-Continent region includes the oil-producing, NGL-rich STACK and SCOOP areas and the Cana-Woodford Shale, Woodford Shale, Springer Shale, Meramec, Granite Wash and Mississippian Lime formations of Oklahoma and Kansas, and the Hugoton Basin. ff Natural Gas Gathering and Processing Pipelines ONEOK Processing Plants Growth Projects STACK SCOOP WOODFORD CANA-WOODFORD Property - Our Natural Gas Gathering and P rocessing segmen nc t i lul ded s tt i he following assets: h f ll t • • • 17,500 miles of natural gas gathering pipelines; 13 natural gas processing plants with 1.7 Bcf/d of processing capacity gas processing plants with 0.9 Bcf/d of processing capacity in the Mid-Continent region, and up to 150 MMcf/d of processing capacity in the Mid-Continent region through a long-term processing services agreement with an unaffiliated third party; and 14 MBbl/d of NGL fractionation capacity plants. and 26 MBbl/d of de-ethanizer capacity at various natural gas processing in the Rocky Mountain region, and nine natural a a a We are in the process of constructing our 200 MMcf/d Demicks Lake III natural gas processing plant in the Williston Basin, which is not included in the assets listed above. See “Recent Developments” in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in this Annual Report for more information on our growth projects. Sources of Earnings - Earnings for this segment are derived primarily from the following types of service contracts: • • • Fee with POP contracts with no producer take-in-kind rights - We purchase raw natural gas and charge contractual fees for providing midstream services, which include gathering, treating, compressing and processing the producer’s natural gas. After performing these services, we sell the commodities and remit a portion of the commodity sales proceeds to the producer less our contractual fees. Fee with POP contracts with producer take-in-kind rights - We purchase a portion of the raw natural gas stream, charge fees for providing the midstream services listed above a sell the remaining commodities and remit a portion of the commodity sales proceeds to the producer less our contractual feeff Fee-only - Under this type of contract, we charge a feeff gathered, processed, treated and/or compressed. for the midstream services we provide, based on volumes , return primarily the residue natural gas to the producer, s. 9 For commodity sales, we contract to deliver residue natural customers at a specifiedff t delivery point. Our sales of NGLs are primarily to our affilff gas, condensate and/or unfractionated NGLs to downstream iate in the Natural Gas Liquids segment. our natural gas processing plants were 69% and 66% for 2021 and 2020, respectively, Utilization - The utilization rates forff which includes 81% and 70% in the Rocky Mountain region for 2021 and 2020, respectively. Our utilization rates in the Rocky Mountain region increased in 2021 due primarily to increased producer activity, rising gas-to-oil ratios and the impact of curtailed production in 2020. Our 2021 utilization rates include the impact of capac processing plant and Bear Creek plant expansion. We calculate utilization rates using a weighted-average approach, adjusti for the dates that assets were placed in or removed from service. by our Demicks Lake II ng ity made availablea d a Unconsolidated Affiliates - Our unconsolidated affiliates in this segment are not material. See Note M of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of our unconsolidated affilff iates. t l gas processing plant is not a facff gas processing plants are primarily involved in extracting NGLs and, therefore, are exempt Gas Act also exempts natural gas gathering facilities from the jurisdiction of the FERC. the l gas in interstate commerce and, therefore, is not subject to jurisdiction under the Natural Gas Government Regulation - The FERC traditionally has maintained that a naturat transportation or sale of naturat Act. Although the FERC has made no specific declaration as to the jurisdictional statust operations or facilities, our natural from FERC jurisdiction. The Natural t We believe our natural gas gathering facilities upstream of our natural gas processing plants meet the criteria used by the FERC for nonjurisdictional naturat l gas gathering facility status. Interstate transmission facilities remain subject to FERC jurisdiction. The FERC has historically distinguished between these two types of faci basis. We transport residue natural with Section 311(a) of the Natural statutet by-case basis if a complaint is filed against the gatherer with the appropria gas from certain of our natural Gas Policy Act. Oklahoma, Kansas, Wyoming, Montana and North Dakota also have t-specific gas processing plants to interstate pipelines in accordance s regulating, to varying degrees, the gathering of natural gas in those states. In each state, regulation is applied on a case- lities, either interstate or intrastate, on a facff of our natural gas processing te state regulatory agency. ility forff a ff t t t See further discussion in the “Regulatory, Environmental and Safety Mt atters” section. Natural Gas Liquids q ff lities that gather, fractionate, treat and distribute NGLs Overview - Our Natural Gas Liquids segment owns and operates faci 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. 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. The majori the pipeline-connected natural connected to our NGL gathering systems. We lease rail cars and own and operate truck- and rail-loading and -unloading facilities connected to our NGL fractionation, storage and pipeline assets. 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 petroleum products, including unleaded gasoline and diesel, from Kansas to Iowa. gas processing plants in the Williston Basin, Oklahoma, Kansas and the Texas Panhandle are ty of a t 10 Natural Gas Liquids Pipelines Growth Projects Natural Gas Liquids Fractionator NGL Market Hub Joint Venture Property - Our Natural Gas Liquids segment includes the following assets: city of 1,790 MBbl/d, including 6,330 miles of FERC-regulated city of 1,150 MBbl/d, including 4,180 miles of FERC- ity), including 520 MBbl/d in the Mid-Continent region and 400 MBbl/d in the Gulf Coast region; ity of 920 MBbl/d (includes interests in our proportional share • • • • • • • city of 1,490 MBbl/d; 9,120 miles of gathering pipelines with operating capaa pipelines with operating capaa 4,350 miles of distribution pipelines with operating capaa regulated pipelines with operating capaa eight NGL fraff ctionators with combined operating capac of operating capac one isomerization unit with operating capac / one ethane/propane sixi NGNGL sL torage facf t eight NGL product terminals. splitter with operating capac ililititiei s witith oh perattingi sttorage capac a a a a city of 1,080 MBbl/d; ity of 10 MBbl/d; a ity of 40 MBbl/d; itity of 3f 30 M0 MMBMBbl;bl andd In addition, we lease 10 MMBbl of annual pipeline capaa combined NGL storage capaa Coast through service agreements. city at facilities in Kansas and Texas and 60 MBbl/d of NGL fracff tionation capaa city in the Gulf city near our ONEOK North System and have access to 5 MMBbl of We are in the process of constructing our 125 MBbl/d MB-5 NGL fractionator in Mont Belvieu, Texas, which is not included in the assets listed above. See “Recent Developments” in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in this Annual Report for more information on our growth projects. 11 Sources of Earnings - Earnings for our Natural Gas Liquids segment are derived primarily from commodity sales and purchases and fee-based services. We purchase NGLs and condensate from third parties, as well as fromff Processing segment. Our business activities are categorized as follows: our Natural Gas Gathering and • • • certain product price differentials through the fraff ctionation NGL products delivered to a market center or customer-designated location. Some of Exchange services - We utilize our assets to gather, transport, treat and fractionate unfractionated NGLs, thereby converting them into marketablea these exchange volumes are under contracts with minimum volume commitments that provide a minimum level of revenues regardless of volumetric throughput. Our exchange services activities are primarily feeff -based and include a some rate-regulated tariffs; however, we also capture process. Transportation and storage services - We transport NGL products and refined petroleum products, primarily under FERC-regulated tariffs. Tariffs specify the maximum rates we may charge our customers and the general terms and conditions for transportation service on our pipelines. Our storage activities consist primarily of fee-based NGL storage services at our Mid-Continent and Gulf Coast storage facilities. Optimization and marketing - We utilize our assets, contract portfolio and market knowledge to capture product and seasonal price differentials through the purchase and sale of unfractionated NGLs and NGL products. We primarily transport NGL products between Conway, Kansas, and Mont Belvieu, Texas, to capta uret differentials between the two market centers. Our marketing activities also include utilizing our NGL storage facilities to capta uret the price seasonal price differentials and serving truck and rail markets. Our isomerization activities capturet differential when normal butane is converted into the more valuablea Kansas. iso-butane at our isomerization unit in Conway, the location price location, a a ty of our exchange services contracts, we purchase the unfractionated NGLs at the tailgate of the processing plant tionation services we must perform before we can sell them as In the majori and deduct contractual feeff NGL products. To the extent we hold unfractionated NGLs in inventory, the related contractual feeff until the unfractionated inventory is fractionated and sold. s related to the transportation and fracff s will not be recognized Utilization - Increased volumes drove higher utilization rates at our NGL fracff impact of increased capaa follows: city on our NGL gathering pipelines. The utilization rates for 2021 and 2020, respectively, were as tionators, which were offset by the fulff l year • • • our NGL gathering pipelines were 61% and 61%; our NGL distribution pipelines were 51% and 51%; and our NGL fractionators were 91% and 77%. d We calculate utilization rates using a weighted-average approach, adjusti ity associated with our ownership interests. fractionation utilization rate reflects approximate proportional capac ng for the dates that assets were placed in service. Our a Unconsolidated Affiliates - We have a 50% ownership interest in Overland Pass Pipeline Company, which operates an interstate NGL pipeline system extending 760 miles, originating in Wyoming and Colorado and terminating in Kansas. Our other unconsolidated affiliates in this segment are not material. See Note M of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of unconsolidated affiliates. Government Regulation - The operations and revenues of our NGL pipelines are regulated by various state and federal government agencies. Our interstate NGL pipelines are regulated under the Interstate Commerce Act, which gives the FERC jurisdiction to regulate the terms and conditions of service, rates, including depreciation and amortization policies, and initiation of service. In Oklahoma, Kansas and Texas, certain aspects of our intrastate NGL pipelines that provide common carrier service are subject to the jurisdiction of the OCC, KCC and RRC, respectively. See further discussion in the “Regulatory, Environmental and Safety Matters” section. Natural Gas Pipelines p Overview - Our Natural Gas Pipelines segment, through its wholly owned assets, provides 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. 12 i ines - Our interstate pipelines are regulated by the FERC and are located in North Dakota, Minnesota, Interstate Pipel Wisconsin, Illinois, Indiana, Kentucky, Tennessee, Oklahoma, Texas and New Mexico. Our interstate pipeline companies include: • • Midwestern Gas Transmission, which is a bidirectional system that interconnects with Tennessee Gas Transmission Company’s pipeline near Portland, Tennessee, and with several interstate pipelines that have access to both the Utica Shale and the Marcellus Shale at the Chicago Hub near Joliet, Illinois; Viking Gas Transmission, which is a bidirectional system that interconnects with a TC Energy Corporation pipeline at the United States border near Emerson, Canada, and ANR Pipeline Company near Marshfield, Wisconsin; Guardian Pipeline, which interconnects with several pipelines at the Chicago Hub near Joliet, Illinois, and with local natural t OkTex Pipeline, which has interconnections with several pipelines in Oklahoma, Texas and New Mexico. gas distribution and electric generation companies in Wisconsin; and • • i ines and Storage - Our intrastate naturat l gas pipeline assets in Oklahoma transport natural Intrastate Pipel state and have access to the major natural gas production areas in the Mid-Continent region, which include the STACK and SCOOP areas and the Cana-Woodford Shale, Woodford Shale, Springer Shale, Meramec, Granite Wash and Mississippian Lime formations. In Texas, our intrastate naturat the Texas Panhandle, including the Granite Wash formation and Delaware and Midland Basins in the Permian Basin. These pipelines are capabl a pipelines may be accessed forff east and the Mid-Continent market to the north. Our intrastate naturat Central Kansas Uplift Basins in Kansas. Our intrastate pipelines are also connected to our storage assets in Oklahoma and Texas. transportation to western markets, exports to Mexico, the Houston Ship Channel market to the gas throughout the western portion of Texas, including the Waha area where other l gas pipeline assets also have access to the Hugoton and l gas pipelines are connected to the majoa r natural gas producing formations in e of transporting natural gas throughout the t t t Natural Gas Pipelines Joint ventures (50% ownership interest) Natural Gas Pipelines Storage Property - Our Natural Gas Pipelines segment includes the following assets: • • • 1,500 miles of FERC-regulated interstate naturat 5,100 miles of state-regulated intrastate transmission pipelines with transportation capac six underground natural gas storage facilities with 52.2 Bcf of total active working natural l gas pipelines with 3.5 Bcf/d of transportation capac ity of 4.3 Bcf/d; and gas storage capac ity; a a a t ity. 13 Our storage includes two underground natural gas storage facilities in Oklahoma, two underground natural gas storage facilities in Kansas and two underground natural gas storage facilities in Texas. t We are in the process of expanding the capac the assets listed above. a ity of our Texas natural gas storage facilities by 1.1 Bcf, wff hich is not included in Sources of Earnings - Earnings in this segment are derived primarily fromff transportation and storage services. Our transportation earnings are primarily fee-based from the folff lowing types of services: • • d quantity of pipeline capaa Firm service - Customers reserve a fixeff the customer to pay regardless of usage. Under this type of contract, the customer pays a monthly fixeff incremental fees, known as commodity charges, which are based on the actual volumes of natural gas they transport or store. Under the firff m service contract, the customer generally is guaranteed access to the capac ity they reserve. Interruptible service - Under interruptible service transportation agreements, the customer may utilize available capac a a capac ity after firm service requests are satisfied. The customer is not guaranteed use of our pipelines unless excess ity is available. city for a specified period of time, which obligates d feeff and a t gas transportation services contracts are based upon rates stated in the respective tariffs, which have Our regulated natural generally been established through shipper specific negotiation, discounts and negotiated settlements. The rates are filed with FERC or the appropriate state jurisdictional agencies. In addition, customers typically are assessed feeff s, such as a commodity charge, and we may retain a percentage of natural gas in-kind based on the natural gas volumes transported. t Our storage earnings are primarily fee-based from the folff lowing types of services: • • d feeff ity, including injection and withdrawal rights, and s based on the quantity of capacity reserved plus an injen ction and withdrawal fee. Firm storage Firm service - Customers reserve a specific quantity of storage capac generally pay fixeff contracts typically have terms longer than one year. Park-and-loan service - An interruptible storage service offered to customers providing the ability to park (inject) or loan (withdraw) natural gas into or out of our storage, typically forff monthly or seasonal terms. Customers reserve the right to park or loan natural ity is available. gas based on a specified quantity, including injection and withdrawal rights when capac a a t Utilization - Our natural gas pipelines were 95% and 96% subscribed in 2021 and 2020, respectively, and our natural gas storage facilities were 70% and 71% subscribed in 2021 and 2020, respectively. Unconsolidated Affiliates - Our Natural Gas Pipelines segment includes the following unconsolidated affilff iates: • • 50% ownership interest in Northern Border Pipeline, which owns a FERC-regulated interstate pipeline that transports natural gas from the Montana-Saskatchewan border near Port of Morgan, Montana, and the Williston Basin in North t Dakota to a terminus near North Hayden, Indiana. 50% ownership interest in Roadrunner, a bidirectional pipeline, which has the capaa t natural transport approximately 1.0 Bcf/d of natural Roadrunner. gas from the Permian Basin in West Texas to the Mexican border near El Paso, Texas, and has capacity to gas from the Delaware Basin to the Waha area. We are the operator of city to transport 570 MMcf/d of t See Note M of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of unconsolidated affilff iates. Government Regulation - Interstate - Our interstate naturat the FERC jurisdiction to regulate virtually all aspects of this business, such as transportation of natural gas, rates and charges for services, construction of new facilities, depreciation and amortization policies, acquisition and disposition of facilities, and the initiation and discontinuation of services. l gas pipelines are regulated under the Natural Gas Act, which gives t l gas pipelines in Oklahoma, Kansas and Texas are regulated by the OCC, KCC and RRC, Intrastate - Our intrastate naturat respectively, and by the FERC under the Natural regulated natural gas pipelines. While we have fleff xibility in establishing natural gas transportation rates with customers, there is a maximum rate that we can charge our customers in Oklahoma and Kansas and for the services regulated by the FERC. In Texas and Kansas, natural Gas Policy Act for certain services where we deliver natural gas into FERC gas storage may be regulated by the state and by the FERC forff certain types of services. In t t 14 Oklahoma, natural gas storage operations are not subject to rate regulation by the state, and we have market-based rate authority from the FERC forff certain types of services. See further discussion in the “Regulatory, Environmental and Safety Matters” section. Market Conditions and Seasonalityy Supply and Demand - Supply for each of our segments depends on crude oil and natural gas drilling and production activities, which are driven by the strength of the economy; natural gas, crude oil and NGL prices; the demand forff each of these products from end users; the decline rate of existing production; producer access to capital and investment in the industry; or producer firm commitments to transportation pipelines. t gas production by producers in the regions in which we gather and process gas. Demand for NGLs and the ability of natural gas processors to successfully and economically sustain their Demand for gathering and processing services is dependent on natural operate. Producers’ targets to limit natural gas flaring have increased the need forff natural t operations affect the volume of unfractionated NGLs produced by natural gas processing plants, thereby affecff for NGL gathering, transportation and fracff conditions and the demand associated with the various industries that utilize the commodities, such as butanes and natural gasoline used by the refini crude oil. Ethane, propane, butanes and natural gasoline are also used by the petrochemical industry to produce chemical components, used for a range of products that improve our daily lives and promote economic growth, including health care products, recyclable food packaging, clothing, technology, building materials, industrial, manufacturing and energy infrastructure, lightweight vehicle components and batteries. Propane is also used to heat homes and businesses. ng industry as blending stocks for motor fuel, denaturant for ethanol and diluents forff tionation services. Natural gas and NGL products are affecff our services to capta ure, ted by economic ting the demand ff ff t -based in all three of our segments, however in our Natural Gas Gathering Commodity Prices - Our earnings are primarily feeff and Processing segment, we are exposed to commodity price risk as a result of retaining a portion of the commodity sales proceeds associated with our fee with POP contracts. Under certain fee with POP contracts, our contractual 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 feeff which would impact the average fee rate in our Natural Gas Gathering and Processing segment. In our Natural segment, we are exposed to commodity price risk associated with changes in the price of NGLs; the location differential between the Mid-Continent, Chicago, Illinois, and Gulf Coast regions; and the relative price differe NGLs and individual NGL products, which affecff storage services, and optimization and marketing financial results. NGL storage revenue may be affected by price volatility and forward pricing of NGL physical contracts versus the price of NGLs on the spot market. In our Natural Gas Pipelines segment, we are exposed to minimal commodity price risk associated with (i) changes in the price of natural costs and retained fuel in-kind received forff contracts and the price of naturat services. l gas on the spot market, which may affect our customer demand for our natural gas storage our services; and (ii) the differential between forward pricing of natural gas physical t our NGL purchases and sales, our exchange services, transportation and t gas, which impact our fuel s on these fee with POP contracts may decrease, ntial between natural gas, Gas Liquids ff t t t See additional discussion regarding our commodity price risk and related hedging activities under “Commodity Price Risk” in Part II, Item 7A, Quantitative and Qualitative Disclosures about Market Risk, in this Annual Report. Seasonality - Cold temperatures usually increase demand forff heating fuels for homes and businesses. Warm temperatures generation for residential and commercial cooling, as well as agriculture-re dryers. Demand for butanes and natural gasoline, which are primarily used by the refining industry arr motor fuel, denaturant for ethanol and diluents for crude oil, are also subject to some variabila certain government restrictions on motor fuel blending products change. During periods of peak demand for a certain commodity, prices forff lated equipment like irrigation pumps and crop s blending stocks for natural gas and certain NGL products, such as propane, which are usually increase demand for natural gas used in gas-fired electric that product typically increase. seasonal periods when d ity during t t Extreme weather conditions, seasonal temperaturet abilities of the processing equipment impact the volumes of natural transported and fractionated. Power interruptions and inaccessible well sites as a result of severe storms or freeff phenomenon where water produced fromff temporary interruption in the flow of natural gas and NGLs. ze-offs, a natural gas freezes at the wellhead or within the gathering system, may cause a changes and the impact of temperaturet gas gathered and processed and NGL volumes gathered, and humidity on the mechanical t In our Natural Gas Pipelines segment, natural gas storage is necessary to balance the relatively steady natural gas supply with the seasonal demand of residential, commercial and electric-generation users. 15 Competition - We compete for natural integrated oil companies and independent exploration and production companies that have gathering and processing assets, fractionators, intrastate and interstate pipelines and storage facilities. The factors that typically affect our ability to compete forff are: with other midstream companies, majora gas and NGL supply natural gas and NGL supply u t • • • • • • • • • • • quality of services provided; producer drilling activity; proceeds remitted and/or fees charged under our contracts; proximity of our assets to natural gas and NGL supply areas and markets; proximity of our assets to alternative energy production; location of our assets relative to those of our competm itors; ity of our operations; efficiency and reliabila lities for natural a receipt and delivery capabi storage location; the petrochemical industry’s level of capac current and forward natural gas and NGL prices; and al. cost of and access to capita a t ity utilization and feedstock requirements; gas and NGLs that exist in each pipeline system, plant, fractionator and We have remained competitive by making capita increasing gathering, processing, fractionation and pipeline capaa lities; t and improving operating efficiency so that we competm e effectively. Our and our competm itors’ infrastructure projects may affecff commodity prices and could displace supply volumes from the Mid-Continent and Rocky Mountain regions and the Permian Basin where our assets are located. We believe our assets are located strategically, connecting diverse supply areas to market centers. al investments to access and connect new supplies with end-user demand; city; increasing storage, withdrawal and injection capabi a Customers - Our Natural Gas Gathering and Processing and Natural Gas Liquids segments derive services revenue from majoa r and independent crude oil and natural gas producers. Our Natural Gas Liquids segment’s customers also include other NGL and natural gas gathering and processing companies. Our downstream commodity sales customers are primarily petrochemical, gasoline distributors, propane distributors and refining and marketing companies, utilities, large industrial companies, natural municipalities. Our Natural Gas Pipeline segment’s assets primarily serve local natural gas distribution companies, electric- generation facilities, large industrial companies, municipalities, producers, processors and marketing companies. Our utility customers generally require our services regardless of commodity prices. See discussion regarding our customer credit risk under “Counterparty Credit Risk” in Part II, Item 7A, Quantitative and Qualitative Disclosures about Market Risk, in this Annual Report. t t Other Through ONEOK Leasing Company, L.L.C. and ONEOK Parking Company, L.L.C., we own a 17-story office building (ONEOK Plaza) and a parking garage in downtown Tulsa, Oklahoma, where our headquarters are located. ONEOK Leasing Company, L.L.C. leases excess office space to others and operates our headquarters office building. ONEOK Parking Company, L.L.C. owns and operates a parking garage adjacent to our headquarters. REGULATORY, ENVIRONMENTAL AND SAFETY MATTERS t to a variety of historical preservation and environmental laws and/or regulations that operations. Regulated activities include, but are not limited to, those involving air Environmental Matters - We are subjecb affect many aspects of our present and futuret emissions, storm water and wastewater discharges, handling and disposal of solid and hazardous wastes, wetlands and waterways preservation, wildlife conservation, cultural resources protection, hazardous materials transportation, and pipeline and facility construction. These laws and regulations require us to obtain and/or comply with a wide variety of environmental clearances, registrations, licenses, permits and other approvals. Failure to comply with these laws, regulations, licenses and permits may expose us to fines, penalties, reputational harm and/or interruptions in our operations that could be material to our results of operations or financial condition. In addition, emissions controls and/or other regulatory or permitting mandates under the Clean Air Act and other similar federal and state laws could require unexpected capia tal expenditures at our facilities. We cannot assure that existing environmental statutes and regulations will not be revised or that new regulations will not be adopted or become appli to us. We also cannot assure that existing permits will not be revised or cancelled, potentially impacting facility construction activities or ongoing operations. cablea a t 16 International, federal, regional and/or state legislative and/or regulatory initiatives may attempt to control or limit GHG emissions, including initiatives directed at issues associated with climate change. Various federal and state legislative proposals have been introduced to regulate the emission of GHGs, particularly carbon Supreme Court has ruled international efforts seeking legally binding reductions in emissions of GHGs. that carbon dioxide is a pollutant subject to regulation by the EPA. In addition, there have been dioxide and methane, and the United States r r Recently, the EPA has proposed updat methane emissions, which includes increased monitoring frequency and more stringent repair requirements forff modified oil and gas faci ff methane emissions from existing facilities. new and lities. In addition, the EPA is proposing new nationwide emission guidelines for states to limit ing the New Source Performance Standards Subpart OOOO regulations to further reduce u PHMSA has submitted to the Federal Register an advisory bulletin underscoring to pipeline and pipeline facility operators requirements to minimize methane emissions in the Protecting our Infrastructure of Pipelines and Enhancing Safety ( Act of 2020. The PIPES Act directs pipeline operators to update their inspection and maintenance plans to address the elimination of hazardous leaks, and to minimize naturat address the replacement or remediation at facilities that historically have been known to experience leaks. l gas releases from pipeline facilities. The updated plans must also t PIPES) issions i issions byby 2030, compa dred i hwith 2019 bbas ye-year llevells. Scope 1 a dnd 2 e imi dreductiion ta grget, or 2.2 imilllliion met iric tons, of our combi dned bi issions represent our tot lal lonal emiissiions, iin lcluding In Septe bmber 2021, we announc ded a 30% babs lolute GHG emi Scope 1 a dnd Scope 2 e imi opera iti uding didirect e imi purchasedd power. We antiiciipate severall potentiiall pathhwayys tow dard achihi purcha iincl dlude hthe lelec itrifificatiion of cert iain nat t lural ma gnagement practiices iutilili ities dand ysystem optiimiizatiions. issions from sources we operate imi itiggatiion hthrough ggas compre ission assets across our operatiions, me hthane iies to c lolllabborat t iunit fying potentiiall opport ddAddii itionallllyy, we are idide intifying dand iindidirect emi issions i ievi gng our emi issions from hthe ggeneratiion of i couldd l dreductiion ta grget, hiwhi hch rough bbest a e wi hith dand power ggenerators to accellerate hthe availil biabilili yty of llower-ca brbon power o iptions across our operatiions. We participate in the EPA’s Natural Gas STAR Program and the Our Nation’s Energy (ONE) Future Coalition to voluntarily report methane emission reductions and to calculate our methane intensity. We continue to focus on maintaining low methane gas release rates through expanded implementation of best practices to limit the release of natural facility maintenance and operations. gas during pipeline and t We believe it is likely that future governmental legislation and/or regulation on the fedff us to limit GHG emissions associated with our operations, pay additional taxes or purchase allowances forff However, we cannot predict precisely what form these future regulations will take, the stringency of the regulations, when they will become effective or the impact on our capia tal expenditures, competitive position and results of operations. In addition to activities on the federal level, state and regional initiatives could also lead to the regulation of GHG emissions sooner than or independent of federal regulation. These regulations could be more stringent than any federal legislation that may be adopted. eral, state or regional level may require certain emissions. For additional information regarding the potential impact of laws and regulations on our operations see Item 1A “Risk Factors.” Pipeline Safety - We are subject to PHMSA safety regulations, including pipeline asset integrity-management regulations. The t mprovement Act of 2002 requires pipeline companies operating high-pressure pipelines to perform integrity Pipeline Safety I assessments on pipeline segments that pass through densely populated areas or near specifically designated high-consequence areas (HCAs). The Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011 (the 2011 Pipeline Safety Act) increased maximum penalties for violating federal pipeline safety r to conduct further review or studie stringent regulations. s on issues that may or may not be material to us and may result in the imposition of more egulations, directs the DOT and Secretary of Transportation t t In 2015, PHMSA issued notices of proposed rule-making for hazardous liquid pipeline safety regulations, natural gas transmission and gathering lines and underground natural gas storage facilities. For natural gas and natural pipelines, the new proposed regulations became known as “the Mega Rule.” Due to the large number of rules being considered, PHMSA partitioned the new rule-making into three sections. The first section of rules was final the Federal Register and became effective in July 2020. These final rulrr es mostly address congressional mandates due to former pipeline safety reauthorizations and established criteria forff PHMSA Gas Mega Rule, which is still not currently published, focuses on repair requirements for HCAs and non-HCAs. The third section of the Mega Rule establia and was published in November 2021 and will become effective in May 2022. shed new regulations for certain gas gathering lines, which were formff verifying current operating pressures. The second section of the ized and published in 2019 in erly unregulated, gas gathering ff t We do not anticipate the potential capital and operating expenditures material impact to our planned capital or operations and maintenance costs. At this point, we do not fully know the impact of related to the first and third sections of the rules to create a t 17 the regulations that remain to be finff alized. Coupled together, these new rules may provide increased requirements forff operating and maintenance, integrity management, public awareness and civil/criminal penalties; however, we do not anticipate a material impact to our planned capia tal or operations and maintenance costs resulting from compliance with the new or pending regulations. In 2020, legislation was passed to reauthorize PHMSA through 2024. Certain requirements forff integrity management, leak detection and public awareness will be subject to futuret capita to our planned capital or operations and maintenance costs resulting from compliance with the new regulations. al and operating expenditures related to the new regulations are not fully known, but we do not anticipate a material impact rule-making as a result. The potential operations and maintenance, ff Air and Water Emissions - The Clean Air Act, the Clean Water Act, analogous state laws and/or regulations impose restrictions and controls regarding the discharge of pollutants into the air and water in the United States. Under the Clean Air Act, a fede sources of significant air emissions. We may be required to incur certain capia tal expenditures forff approvals for sources of air emissions. The Clean Water Act imposes substantial potential liabila into waters of the United States and requires remediation of waters affected by such discharge. air pollution-control equipment in connection with obtaining or maintaining permits and rally enforceable operating permit is required forff pollutants discharged ity forff International, federal, regional and/or state legislative and/or regulatory initiatives may attempt to control or limit GHG emissions, including initiatives directed at issues associated with climate change. We monitor all relevant legislation and regulatory initiatives to assess the potential impact on our operations and otherwise take efforts our facilities, including methane. The EPA’s Mandatory Greenhouse Gas Reporting Rule requires annual GHG emissions reporting from affected facilities and the carbon dioxide emission equivalents forff all NGLs produced by us as if all of these products were combusted, even if they are used otherwise. to limit GHG emissions from ff Our 2020 total estimated GHG emissions were 66.7 million metric tons of carbon dioxide equivalents, which includes 3.8 million metric tons of Scope 1 emissions and 2.5 million metric tons of Scope 2 emissions. Scope 1 emissions originate from the combustion of fuel in our equipment, such as compressor engines and heaters, as well as fugitive methane emissions, Scope 2 emissions are generated fromff purchased power sources and Scope 3 emissions reflect the carbon dioxide emissions that would result from the complete combustion or oxidation of the annual quantity of NGL products produced and sold or delivered to others. The additional cost to gather and report this emission data did not have, and we do not expect it to have, a material impact on our results of operations, financial position or cash flows. In addition, Congress has considered, and may consider in the future, legislation to reduce GHG emissions, including carbon dioxide and methane. Likewise, the EPA may institutet additional future regulatory rule-making associated with GHG emissions from the oil and natural gas industry. At this time, no rule or legislation has been enacted that assesses any material costs, fees or expenses on any of these emissions. l rulrr e-makings. Generally, EPA rule-makings require expenditures We monitor proposed and finaff ilities. At this time, we do not anticipate a material impact controls, monitoring and recordkeeping requirements at affected facff to our planned capital, operations and maintenance costs resulting from compliance with the current or pending regulations and EPA actions. However, the EPA may issue additional regulations, responses, amendments and/or policy guidance, which could alter our present expectations. for updated emissions t Chemical Site Security - Homeland Security released the Chemical Facility Anti-Terrorism Standards in 2007, and the final rule associated with these regulations was issued in December 2014. We provided information regarding our chemicals via Top-Screens submitted to Homeland Security, and our facilities subsequently were assigned one of four risk-based tiers ranging from high (Tier 1) to low (Tier 4) risk, or not tiered at all due to low risk. To date, one of our facilities has been given a Tier 4 rating. Facilities receiving a Tier 4 rating are required to complete Site Security Plans, including possible physical security enhancements. The cost of the Site Security Plans and security enhancements did not have a material impact on our results of operations, financial position or cash flows. Pipeline Security - Homeland Security’s Transportation Security Administration (TSA) and the DOT have completed a review and inspection of our “critical facilities” and identified no material security issues. Also, the TSA has released new pipeline security guidelines that include broader definitions for the determination of pipeline “critical facilities.” We have reviewed our pipeline facilities according to the new guideline requirements, and there have been no material changes required to date. The TSA issued two security directives in 2021 in response to ongoing cybersecurity threats to the pipeline industry. The firff st security directive was issued in May 2021 and requires critical pipeline owners and operators to (1) report confirmed and potential cybersecurity incidents to the Cybersecurity and Infrastructure Security Agency (CISA); (2) designate a cybersecurity coordinator to be available 24 hours a day, seven days a week; (3) review current practices; and, (4) identify any gapsa related remediation measures to address cyber-related risks and report the results to TSA and CISA within 30 days. The second and 18 security directive was issued in July 2021 and requires owners and operators of TSA-designated critical pipelines to implement specific mitigation measures to protect against ransomware and other known threats to information technology and operational technology systems, develop and implement a cybersecurity contingency and recovery plan, and conduct a cybersecurity architecture design review. While compliance with the security directives is utilizing significant internal and external resources, we do not expect it to have a material impact on our results of operations, financial position or cash flows. HUMAN CAPITAL The long-term sustainability of our business is dependent on our continued ability to maintain a highly engaged workforce. To accomplish this, our business strategy includes attracting, selecting and retaining talent, advancing an inclusive, diverse and engaged culturet and developing individuals and leaders. As of December 31, 2021, we had 2,847 employees. Listed below is a summary of our human capital resources, measures and objectives that are collectively important to our success as an organization. Values - Our success relies on the skills, experience and dedication of our employees. We are committed to cultivating an inclusive and dynamic work environment where talented people can find opportunities to succeed, grow and contribute to the success of the company. Our employees work each day to provide safe and reliablea states where we operate. Our core values, listed below, guide the way in which our employees conduct our business and operations. services to a wide range of customers in the • • • • • • for the well-being of our employees, contractors and Safetyff & Environmental: we commit to a zero-incident culturet communities and to operate in an environmentally responsible manner. Ethics: we act with honesty, integrity and adherence to the highest standards of personal and professional conduct. Diversity & Inclusion: we respect the uniqueness and worth of each employee and believe that a diverse, inclusive workforce is essential for a sense of belonging, engagement and performance. Excellence: we hold ourselves and others accountable to a standard of excellence through continuous improvem teamwork. Service: we invest our time, effort and resources to serve each other, our customers and communities. Innovation: we seek to develop creative solutions by leveraging collaboration through ingenuity and technology. m ent and Diversity and Inclusion - Our diversity and inclusion (D&I) strategy is a cross-functional effort that draws upon contributions from employees at all levels of the organization and is focus strategy is guided by a D&I Council composed of a diverse group of employe locations, points of view, roles and levels of seniority. We also have a team within our human resources department that is wholly dedicated to supporting our D&I efforts. ed on enhancing the workplace to retain and attract talent. The es who represent different demographics, work m ff ff and support for five employee-led business resource groups (BRGs): a Black/African American In 2021, we provided funding Resource Group; an Indigenous/Native American Resource Group; a Latinx/Hispanic American Resource Group; a Veterans Resource Group; and a Women’s Resource Group. A new LGBTQ+ (Lesbian, Gay, Bisexual, Transgender, Queer and others) BRG has been approved for 2022. Each BRG’s purpose is to promote the attraction, development, motivation and retention of members of traditionally underrepresented groups in our industry and workplace in an effort to drive positive business outcomes. A key factor in the success of our BRGs is the active participation by officer-level executive sponsors and allies from outside the BRG’s underrepresented populations. All employees are invited to become a supporter of one or more of our BRGs. We embed D&I concepts into our core leadership development curriculum and sponsor a number of internal programs intended to promote D&I. In addition, we seek to give back to the communities where we operate by partnering on initiatives to support underrepresented community members and local charitable organizations. u f our employees is critical to our operations and success. By promoting the safety of our Employee Safety - The safety ot employees, monitoring and investing in the integrity of our assets, we are enhancing the long-term sustainability of our businesses. We continuously assess the risks our employees face in their jobs, and we work to mitigate those risks through training, appropriate engineering controls, work procedures and other preventive safety programs. Reducing incidents and improving our personal safety incident rates are important, but we are not focused only on statistics. Low personal safetyt incident rates alone cannot prevent a large-scale incident, which is why we continue to focus on enhancing our Environmental, rograms, such as key risk/key control identification and knowledge Safety and Health management systems and process safety pt sharing. We endeavor to operate our assets safely, reliablya and in an environmentally responsible manner. We maintain mature and robust programs that guide trained staff in the completion of these activities, and we continue to enhance and improve these 19 programs and our internal capabila 2022, and we will continue to take safetyff such as increased facff procedures. ities. With respect to COVID-19, we began implementing our returnt precautions for our employees who work in the fieff ld or report to a ONEOK faci to office plan in early lity, ff ility access restrictions, workspace modifications, social distancing, face covering protocols and sanitation Health and Welfare - We provide a variety of benefits to help promote the health and welfare of our employees and their families. These benefits include medical, dental and vision plans, virtual health visits and engagement of third-party service providers to offer company on-site and near-site clinics in several of our operating areas, which have access to both rapida antigen and polymerase chain reaction COVID-19 testing. In response to COVID-19, we provided temporary benefit adjustments, including waiving charges for COVID-19 diagnostic tests and COVID-19 vaccines. Current resources include a dedicated employee information site that houses regular updat es regarding COVID-19 and provides resources for prevention best practices, physical health, mental health and caregiver services. Eligible employees also have access, at no charge, to an employee assistance program, a medical second opinion service and a health care concierge service to assist with finding in- network providers and resolving claims. We offer full o 240 hours per qualifying event. We also provide up to $10,000 for reasonable and necessary expenses of a qualifying adoption and/or surrogacy. Additional benefits provided forff disability plans, health and dependent care flexible spending accounts, fertility benefits, disease prevention and management programs and full pay while on bereavement or personal and family care leave. the welfare of our employees include, among others, life insurance and long-term pay for maternity, paternity or adoption leave of up tu u ff t We also provide the opportunit donated vacation hours or monetary donations. The ONE Trust Fund is a nonprofit, charitablea employee volunteers, that serves our employees in times of personal crises due to natural other hardships. our employees to help fellow employees through the ONE Trust Fund by contributing organization run entirely by disasters, medical emergencies or y forff t Personal and Professional Development - We provide various options to assist with career growth and development. For employees just entering the workforce who desire to advance their career and continue to learn or forff interested in developing their skills, we provide education and training in a variety of areas, including leadership, functional and industry-specific topics, professional development and skill-building opportunities. Our organizational development and D&I classroom training, computer-based self-study teams provide live in-person and virtual available to all employees. and one-on-one coaching that is the professional who is ff t tion and assist eligible employees with the expense of furthering their educad We value educad up to $5,000 per year in qualifying tuition expenses. We also may reimburse employe certification examination fees. m tion in job-related fields, including es for certain job-related professional Recruiting - We make it a priority to attract, select, develop, motivate, challenge and retain the talent necessary to support our key business strategies. We use targeted recruitment events, maintain strong relationships with area technical schools, colleges and universities, and we offer compensation benefits and career opportunities that are designed to position us as an employer of choice. In response to COVID-19, we continue to recruit and hire new employe virtual t from groups that are historically underrepresented in our industry and workplace. interviews. D&I continues to be a priority in recruiting, and we deploy sourcing strategies designed to access talent es for critical positions primarily through m Retirement - We maintain a 401(k) Plan for our employees and match 100% of employee contributions up to 6% of eligible compensation each payroll period, subject to applicablea certain employees and former employees, which closed to new participants in 2005. Employees that do not participate in our defined benefit pension plan are eligible to receive quarterly and annual profit-sharing contributions under our 401(k) Plan. As of December 31, 2021, 96% of eligible employees were contributing to our 401(k) Plan. For additional information about our retirement benefits, see Note K of the Notes to Consolidated Financial Statements in this Annual Report. tax limits. We also have a defined benefit pension plan covering 20 INFORMATION ABOUT OUR EXECUTIVE OFFICERS All executive officers are elected annually by our Board of Directors. Our executive officers listed below include the officers who have been designated by our Board of Directors as our Section 16 executive officers. Name and Position John W. Gibson Chairman of the Board Pierce H. Norton II Age Business Experience in Past Five Years 69 2011 to present Chairman of the Board, ONEOK 2007 to 2017 Chairman of the Board, ONEOK Partners 62 2021 to present President and Chief Executive Officer, ONEOK President and Chief Executive Officer 2021 to present Member of the Board of Directors, ONEOK 2014 to 2021 President and Chief Executive Officer, ONE Gas, Inc. 2014 to 2021 Member of the Board of Directors, ONE Gas, Inc. Robert F. Martinovich 64 2015 to present Executive Vice President and Chief Administrative Officer, ONEOK Executive Vice President and Chief Administrative Officer Walter S. Hulse III Chief Financial Offiff cer, Treasurer and Executive Vice President, Strategy and Corporate Affairs 2015 to 2017 Executive Vice President and Chief Administrative Officer, ONEOK Partners 58 2019 to present Chief Financial Offiff cer, Treasurer and Executive Vice President, Strategy and Corporate Affairs, ONEOK 2017 to 2019 2015 to 2017 Chief Financial Offiff cer and Executive Vice President, Strategic Planning and Corporate Affairs, ONEOK Executive Vice President, Strategic Planning and Corporate Affairs, ONEOK and ONEOK Partners Kevin L. Burdick 57 2017 to present Executive Vice President and Chief Operating Officer, ONEOK Executive Vice President and Chief Operating Officer 2017 Executive Vice President and Chief Commercial Officer, ONEOK and ONEOK Partners 2016 to 2017 Senior Vice President, Natural Gas Gathering and Processing, ONEOK Partners Charles M. Kelley 63 2018 to present Senior Vice President, Natural Gas, ONEOK Senior Vice President, Natural Gas 2017 to 2018 Senior Vice President, Natural Gas Gathering & Processing, ONEOK 2015 to 2017 Senior Vice President, Corporate Planning and Development, ONEOK and ONEOK Partners Sheridan C. Swords 52 2017 to present Senior Vice President, Natural Gas Liquids, ONEOK Senior Vice President, Natural Gas Liquids 2013 to 2017 Senior Vice President, Natural Gas Liquids, ONEOK Partners Stephen B. Allen 48 2017 to present Senior Vice President, General Counsel and Assistant Secretary, ONEOK Senior Vice President, General Counsel and Assistant Secretary 2008 to 2017 Vice President and Associate General Counsel, ONEOK and ONEOK Partners Mary M. Spears 42 2019 to present Vice President and Chief Accounting Officer, ONEOK Vice President and Chief Accounting Officer 2015 to 2019 Director, SEC Reporting, ONEOK 2015 to 2017 Director, SEC Reporting, ONEOK Partners No family relationships exist between any of the executive officers, nor is there any arrangement or understanding between any executive officer and any other person pursuant to which the officer was selected. INFORMATION AVAILABLE ON OUR WEBSITE , freeff of charge, on our website (www.oneok.com) copies of our Annual Reports, Quarterly Reports, Current We make availablea Reports on Form 8-K, amendments to those reports fileff d or furnished Exchange Act and reports of holdings of our securities filed by our officers and directors under Section 16 of the Exchange Act as soon as reasonably practicablea Code of Business Conduct and Ethics, Corporate Governance Guidelines, Director Independence Guidelines, Corporate Sustainability Report, Response to COVID-19 and the written charters of our Board Committees also are availablea website, and we will provide copies of these documents upon request. after filing such material electronically or otherwise furnishing it to the SEC. Copies of our to the SEC pursuant to Section 13(a) or 15(d) of the on our ff In addition to our filings with the SEC and materials posted on our website, we also use social media platforms channels of distribution to reach public investors. Information contained on our website, posted on our social media accounts, and any corresponding applications, are not incorporated by reference into this report. as additional ff ITEM 1A. RISK FACTORS Our investors should consider the following risks that could affect us and our business. Although we have tried to identify key factors, our investors need to be aware that other risks may prove to be important in the future. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our financial performance. Investors should consider carefully the folff this Annual Report, including “Forward-Looking Statements,” which are included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations. lowing discussion of risks and the other information included or incorporated by reference in 21 RISK FACTORS RELATED TO OUR BUSINESS AND INDUSTRY The COVID-19 pandemic has affected adversely, and could further affect adversely, our results of operations. The COVID-19 pandemic led to global and regional economic disruption, volatility in the financial markets and a weakened commodity price environment. The outbrea k and government measures taken in response, including extended quarantines, closures and reduced operations of businesses had a significant adverse impacm t, both direct and indirect, on our business and the economy. t tion of global impacts dued to COVID-19. This uncertainty, and the occurrence of these Uncertainty remains regarding the durad r affect adversely our results of operations by, among other things, reducing events and measures taken in response, could furthe iency of our workforce, creating demand for the services we provide, impacting our supply chains and the availabila operational challenges and impacm ting our ability to access capital markets. The degree to which the pandemic further impacts our business and results of operations will depend on future developments beyond our control, including the success of vaccination efforts what extent economic and operating conditions resume to pre-COVID-19 levels, and the severity and duration of reduced global and regional economic activity resulting from the pandemic. and the effectiveness of such vaccines against futuret mutations of the COVID-19 virus, how quickly and to ity and efficff ff ff If the level of drilling in the regions in which we operate declines substantially near our assets, our volumes and revenues could decline. ly declines over time. As a result, our cash flows associated with these wells will also decline over time. In order to Our gathering and transportation pipeline systems are dependent upon production from natural gas and crude oil wells, which natural t maintain or increase throughput levels on our gathering and transportation pipeline systems and the asset utilization rates at our processing and fractionation facilities, we must continually obtain new supplies. Our ability to maintain or expand our businesses depends largely on the level of drilling and production by third parties in the regions in which we operate. Our natural t Drilling and production are impacted by factors beyond our control, including: gas and NGL supply volumes may be impacted if producers curtail or redirect drilling and production activities. • • • • • • natural gas, NGLs and crude oil; demand and prices forff producers’ access to capita al; producers’ finding and development costs of reserves; producers’ desire and abia lity to obtain necessary permits, drilling rights and surface access in a timely manner and on reasonable terms; crude oil and associated natural capacity constraints and/or shut downs on the pipelines that transport crude oil, natural areas and our facilities. gas field characteristics and production performance; and gas and NGLs from producing t t areas; however, a prolonged period of low commodity prices may reduce drilling and production activities across Commodity prices have experienced significant volatility. Drilling and production activity levels may vary across our geographic a all areas. If we are not able to obtain new supplies to replace the natural decline in volumes fromff existing wells or because of competition, throughput on our gathering and transportation pipeline systems and the utilization rates of our processing and fractionation facilities would decline, which could affect adversely our business, results of operations, financial position and cash flows, and our ability to pay cash dividends. Our operating results may be affected adversely by unfavorable economic and market conditions. r t the crude oil and natural the COVID-19 pandemic, an adverse change in economic conditions worldwide or in the economic gas markets, as well as in the specific segments in In addition to impacts fromff regions in which we operate could negatively affecff which we operate, resulting in reduced demand and increased price competition for our services and products. Our operating results in one or more geographic regions may also be affected by uncertain or changing economic conditions within that region. Volatility in commodity prices may have an impact on many of our suppliers and customers, which, in turn, could have a negative impact on their abia lity to meet their obligations to us. Periods of severe volatility in equity and credit markets may disrupt our access to such markets, make it difficult to obtain financing necessary to expand facilities or acquire assets, increase financing costs and result in the imposition of restrictive financial covenants. If adverse global or regional economic and market conditions remain uncertain or persist, spread or deteriorate furt business, results of operations, financial position, cash flows and liquidity. her, we may experience material impacts on our ff t 22 The volatility of natural gas, crude oil and NGL prices could affect adversely our earnings and cash flows. ff t Lower commodity prices could reduce crude oil, natural gas and NGL production which could decrease the demand for our services. Additionally, a significant portion of our revenues are derived fromff conjunction with natural gas gathering and processing services, the transportation and storage of natural purchase and sale of NGLs and NGL products. As commodity prices decline, we could be paid less forff thereby reducing our cash flows. Historically, commodity prices have been volatile and can change quickly. For example, in March 2020, unsuccessful negotiations between the Organization of the Petroleum Exporting Countries (OPEC) and Russia regarding crude crude oil significantly exceeded demand and led to a collapse in crude oil prices. It is likely that commodity prices will continue to be volatile in the futff ure. the sale of commodities that are received in gas, and from the t our commodities oil production cuts resulted in a price war between Saudi Arabia and Russia. As a result, the global supply of rr t The prices we receive for our commodities are subjeu control, including, but not limited to, the following: ct to wide fluctuations in response to a variety of facff tors beyond our overall domestic and global economic conditions; relatively minor changes in the supply of, and demand for, domestic and foreign energy; t gas, NGLs and crude oil; ity and cost of third-party transportation, natural gas processing and fractionation capac geopolitical conditions impacm ting supply and demand for natural production decisions by other countries, such as the failure of countries to abia de by recent agreements to reduce production volumes; the availabila the level of consumer product demand and storage inventory levels; ethane rejection; weather conditions; domestic and foreign governmental regulations and taxes; the price and availabila speculation in the commodity future the effecff the effecff the impact of new supplies, new pipelines, processing and fractionation facilities on location price differe technology and improved efficff and exports on the price of naturat m ts of imports t of worldwide energy-conservation measures; iency impacting supply and demand for natural gas, NGLs and crude oil. l gas, crude oil, NGL and liquefied natural ity of alternative fuels; s markets; gas; ity; a ff ff t ntials; and • • • • • • • • • • • • • • market uncertainty; • • These external facff commodities and the impact commodity price fluctuations have on our customers and their need for our services, which could affect adversely our business, results of operations, financial position and cash flows. of the energy markets make it difficult to reliably estimate future prices of tors and the volatile naturet ff Increasing attention to ESG matters, including climate change, may impact our business. There are increasing expectations that companies across all industries address ESG matters, including climate change. Changes in regulatory policies, public sentiment or widespread adoption of technologies that aim to address climate change through reducing GHG emissions may result in a reductd increased use of renewable energy. These changes could reduce the demand for our services, impacm ting our business, results of operations, financial position and cash flows. ion in the demand for hydrocarbon products, restrictions on their use or ff In addition, increasing attention to climate change has resulted in an increased likelihood of governmental regulations, investigations, shareholder activism and private litigation, which could increase our costs or otherwise affect adversely our business. For examplem , there are plans to propose new climate change disclosure requirements this year. While we do not know what form those requirements may take, we may facff e increased costs associated with complying with any new climate disclosure requirements. ff on ESG matters, including climate change. Further, organizations that provide Certain investors are increasingly focused information to investors on corporate governance and related matters have also increased their focus on ESG matters and have developed ratings processes forff increased negative investor sentiment toward us. Due to climate change concerns, some investors may choose to either not invest, or to reduce their investment, in companies that gather, process, fractionate, transport, store or market products derived from hydrocarbons. If this negative investor sentiment increases, we may see reduced demand for our securities, which could impact our liquidity or the value of our securities. Additionally, certain large institutional lenders have begun to announce their own policies to meet publicly announced climate commitments, which often involve commitments to shift lending activities in evaluating companies on various ESG initiatives. Unfavorable ESG ratings may lead to 23 the energy sector to meet GHG emissions goals. As a result, certain institutional lenders may impose additional requirements on us, or decide not to lend to us, based on ESG concerns, which could adversely affect our access to capita terms or at all and, as a result, our financial condition. To the extent financial markets view climate change and emissions of GHGs as a finaff and conditions in futuret ncial risk, this could also negatively affect our ability to access capital or cause us to receive less favorable terms al on reasonable financings. In September 2021, we announced a 30% absolute GHG reduction target, or 2.2 million metric tons, of our combined Scope 1 and Scope 2 emissions by 2030, compared with 2019 base-year levels. To the extent that the potential pathways we have identified to achieve this emissions reduction target are not available to us, or to the extent we otherwise are unable to make progress toward other ESG-related targets we may establia to meet them entirely, which could negatively impact our business and reputation. l sh, we may facff e additional costs to meet these targets, or we may faiff We may be subject to physical and financial risks associated with climate change. t For residential customers, heating and cooling represent their The threat of global climate change may create physical and financial risks to our business. Some of our customers’ energy needs vary with weather conditions, primarily temperature. largest energy use. To the extent weather conditions may be affected by climate change, customers’ energy use could increase or decrease depending on the durad tion and magnitude of any changes. Increased energy use due to weather changes may require us to invest in more pipelines and other infrastructure to serve increased demand. A decrease in energy use due to weather changes may affecff t our financial condition, through decreased revenues. Extreme weather conditions in general require more system backup, adding to costs, and can contribute to increased system stresses, including service interruptions. Weather conditions outside of our operating territory could also have an impact on our revenues. Severe weather impacts our operating territories primarily through hurricanes, thunderstorms, tornados, freezing temperatures and snow or ice storms. To the extent the severity or frequency of extreme weather events increases, this could increase our cost of providing services, including the cost of insurance, and decrease the availabila higher costs to our customers or recover all costs related to mitigating these physical risks. ity of certain insurance coverages. We may not be able to pass on the Our operations are subject to operational hazards and unforeseen interruptions, which could affect adversely our business and for which we may not be adequately insured. a ity and efficff iency. Other operational hazards and unforeseen interruptions include adverse weather Our operations are subject to all the risks and hazards typically associated with the operation of natural gas and NGL gathering, transportation and distribution pipelines, storage facilities and processing and fractionation facilities, which include, but are not ilities below limited to, leaks, pipeline ruptures, the breakdown or failure of equipment or processes and the performance of facff expected levels of capac conditions, infectious disease including a pandemic, cybersecurity attacks, geopolitical reactions, accidents, explosions, fires, the collision of equipment with our pipeline facilities (for example, this may occur if a third party were to perform excavation or construction work near our facilities) and catastrophic events such as tornados, hurricanes, earthquakes, floods, and other similar events beyond our control. Extreme cold weather can result in supply reductions from producer wellhead freeze-offs, as well as power curtailments or outages, any of which can negatively impact our business, results of operations, financial position and cash flows. Further, the United States government warned that energy assets, specifically the nation’s pipeline infrastructure, customers or those of other pipelines. A casualty occurrence may result in injury environmental damage. Liabilities incurred and interruptions to the operations of our pipeline or other faci an event could reduce our revenues and increase expenses, thereby impairing our ability to meet our obligations. may be targets of terrorist attacks. An act of terrorism could target our facilities, those of our suppliers or or loss of life, extensive property damage or ff lities caused by such n t As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially, and, in some instances, certain insurance may become unavailable or availablea we may not be able to renew existing insurance policies or purchase other desirablea terms, if at all. Insurance proceeds may not be adequate to cover all liabila ities or expenses incurred or revenues lost, and we are not fully insured against all risks inherent to our business. If we were to incur a significff ant liability for which we were not fully insured, it could affect adversely our business, results of operations, financial position and cash flows. Further, the proceeds of any such insurance may not be paid in a timely manner. only for reduced amounts of coverage. Consequently, insurance on commercially reasonable ff Continued development of supply sources outside of our operating regions could impact demand for our services. Production areas outside of our operating regions may compete with natural areas connected to our systems, which may cause natural gas and NGLs in supply areas connected to our systems to be diverted ity utilization adversely on our pipeline systems and our to markets other than our traditional market areas and may affect capac ability to renew or replace existing contracts. In our Natural Gas Gathering and Processing segment, the development of gas and NGL supply originating in production a t 24 reserves could move drilling rigs from our current service areas to other areas, which may reduced our Natural Gas Pipelines segment, the displacement of natural gas originating in supply areas connected to our pipeline systems by supply sources that are closer to the end-use markets could reduce demand for our services. Either of these possibilities could result in lower revenues, which could affect adversely our business, results of operations, financial position and cash flows. demand for our services. In We do not hedge fulff ly against commodity price risk or interest rate risk, including commodity price changes, seasonal price diffeff rentials, product price differff entials or location price differff entials. This could result in decreased revenues, increased costs and lower margins, affecting adversely our results of operations. Certain of our businesses are exposed to market risk and the impact of market fluff ctuat prices. Market risk refers to the risk of loss of future prices. Our primary commodity price exposures arise from: ff t cash flows and earnings arising from adverse changes in commodity ions in natural t gas, NGLs and crude oil • • • • • • the value of the commodities sold under feeff with POP contracts of which we retain a portion of the sales proceeds; the price differentials between the individual NGL products with respect to our NGL transportation and fractionation agreements; the location price differe ff the seasonal price differentials in natural the price risk related to electric costs to operate our facilities; and t the fuel costs and the value of the retained fuel in-kind in our natural gas and NGLs related to our storage operations; gas pipelines and storage operations. ntials in the price of natural gas and NGLs; t t ff market price fluctuations in natural gas, NGLs, crude oil and electricity prices, we may use derivative To manage the risk fromff instruments such as swaps, futures, forwards and we therefore retain some exposure to market risk. Further, hedging instruments that are used to reduce our exposure to interest-rate fluff ctuat ions could expose us to risk of financial loss where we may contract for fixed-rate swap instruments to hedge variable-rate instruments and the fixed rate exceeds the variable rate. Finally, hedging arrangements forff and purchases are used to reduce our exposure to commodity price fluctuations and may limit the benefit we would otherwise ff receive if market prices for natural commodities. and options. However, we do not hedge fully against commodity price changes, from the stated price in the hedge instrument for these gas, crude oil and NGLs differ forecasted sales t t A breach of information security, including a cybersecurity attack, or failure of one or more key information technology or operational systems, or those of third parties, may affect adversely our operations, financial results or reputation. Our businesses are dependent upon our operational systems to process a large amount of data and complex transactions. The various uses of these information technology systems, networks and services include, but are not limited to: • • • • • • • • controlling our plants and pipelines with industrial control systems including Supervisory Control and Data Acquisition; collecting and storing customer, employee, investor and other stakeholder information and data; processing transactions; summarizing and reporting results of operations; hosting, processing and sharing confidential and proprietary research, business plans and financial information; complying with regulatory, legal, finaff providing data security; and other processes necessary t ncial or tax requirements; o manage our business. rr ff tions, which could affecff If any of our systems are damaged, fail to function properly or otherwise become unavailable, we may incur substantial costs to repair or replace them and may experience loss or corruption of critical data and interruptions or delays in our ability to perform critical func l, either as a result of inadvertent error or by deliberately affected adversely if an individual causes our operational systems to faiff tampering with or manipulating our operational systems. In addition, dependence upon automated systems may further increase the risk that operational system flaws, employee tampering or manipulation of those systems will result in losses that are difficult to detect. t adversely our business and results of operations. Our financial results could also be Due to increased technology advances and an increase in remote work arrangements dued to the COVID-19 pandemic, we have become more reliant on technology to help increase efficiency in our businesses. We use software to help manage and operate our businesses, and this may subjeu pandemic there has been a rise in the number and sophistication of cyberattacks on companies’ network and information systems by both state-sponsored and criminal organizations, and as a result, the risks associated with such an event continue to ct us to increased risks. According to experts, since the beginning of the COVID-19 25 ct to liability under relevant contractual obligations and laws and regulations protecting by us and our vendors to develop, implement and maintain security measures may not be increase. A significant failure, compromise, breach or interruption in our systems, or those of our vendors, could result in a disruption of our operations, physical or environmental damages, customer dissatisfaction, damage to our reputation and a loss of customers or revenues. If any such failure, interruption or similar event results in the improper disclosure of information maintained in our information systems and networks or those of our vendors, including personnel, customer and vendor information, we could also be subjeu personal data and privacy. Efforts successful in anticipating, detecting or preventing these events fromff occurring, and any network and information systems- related events could require us to expend significant resources to identify, assess and remedy such events. Cybersecurity, physical security and the continued development and enhancement of our controls, processes and practices designed to protect ately our enterprise, information systems and data fromff report cyberattacks, remain a priority forff us. Although we believe that we have robust information security procedures and other safeguards in place, including sufficient insurance, as cyberthreats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures and/or to investigate and remediate information security vulnerabila attack, damage or unauthorized access and to identify and appropri ities. a ff Cyberattacks against us or others in our industry could result in additional regulations or contractual efforts by the federal government, such as the Improving security directives issued in May and July 2021, have utilized significant internal and external resources, and any potential future statutet capita s, regulations or orders could lead to further increased regulatory compliance costs, insurance coverage costs or We cannot predict the potential impact to our business resulting from additional regulations. Critical Infrastructure Cybersecurity executive order, and the TSA obligations. Current al expenditures. m t t Growing our business by constructing new pipelines and facilities or making modifications to our existing facilities subjects us to construction risk and supply risks, should adequate natural gas or NGL supply be unavailable upon completion of the facilities. To expand our business, we regularly construct new and modify or expand existing pipelines and gathering, processing, storage and fractionation facilities. The construction and modification of these facilities may involve the folff lowing risks: • • • • • • • • a materials and rights of way, which may, in turn, affecff projects may require significant capia tal expenditures, which may exceed our estimates, and involve numerous regulatory, environmental, political, legal and weather-related uncertainties; projects may increase demand for labor, t our costs and schedule; we may be unable to obtain new rights of way to connect new natural gas or NGL supplies to our existing gathering or transportation pipelines; if we undertake these projects, we may not be able to complete them on schedule or at the budgeted cost; our revenues may not increase immediately uponu of funds on a particular project. For instance, if we build a new pipeline, the construction will occur over an extended period of time, and we will not receive any material increases in revenues until after completion of the project; we may construct facilities to capture anticipated future production growth does not materialize; opposition from environmental and social groups, landowners, tribal groups, local groups and other advocates could result in organized protests, attempts to block or sabotage our construction activities or operations, intervention in regulatory or administrative proceedings involving our assets, or lawsuits or other actions designed to prevent, disrupt or delay the construction or operation of our assets; and we may be required to rely on third parties downstream of our facilities to have available capac t natural growth in production in a region in which anticipated gas or NGLs, which may not yet be operational. the expendituret our delivered ity forff a ff ff As a result, new faci which could affect lities may not be able to attract enough natural gas or NGLs to achieve our expected investment return, adversely our business, results of operations, financial position and cash flows. ff Estimates of hydrocarbon reserves may be inaccurate, which could result in lower than anticipated volumes. We may not be able to accurately estimate hydrocarbon reserves and production volumes expected to be delivered to us for a variety of reasons, including the unavailabila ity of sufficiently detailed information and unanticipated changes in producers’ expected drilling schedules. Accordingly, we may not have accurate estimates of total reserves committed to our assets, the anticipated life of such reserves or the expected volumes to be produced from those reserves. In such event, if we are unablea secure additional sources, then the volumes that we gather, process, fractionate and transport in the futff uret could be less than anticipated. A decline in such volumes could affect adversely our business, results of operations, financial position and cash flows. ff to 26 We do not own all of the land on which our pipelines and facilities are located, and we lease certain facil equipment, which could disrupt our operations. ff ities and We do not own all of the land on which certain of our pipelines and facilities are located, and we are, therefore, subjecb risk of increased costs to maintain necessary land use. We obtain the rights to construct and operate certain of our pipelines and related facilities on land owned by third parties and governmental agencies for a specificff period of time. Our loss of these rights, through our inabila affect adversely our business, results of operations, financial position and cash flows. ity to renew right-of-way contracts on acceptable terms or increased costs to renew such rights, could t to the Measurement adjustments on our pipeline system may be impacted materially by changes in estimation, type of commodity and other facff tors. Natural gas and NGL measurement adjustments occur as part of the normal operating conditions associated with our assets. The quantification and resolution of measurement adjustments are complicated by several facff quantities (i.e., thousands) of measurement equipment that we use across our natural gas and NGL systems, primarily around t our gathering and processing assets; (ii) varying qualities of natural systems and the mixed nature of NGLs gathered and fracff metering technologies and standards. Each of these factors may contribute to measurement adjustmd systems, which could affecff t adversely our business, results of operations, financial position and cash flows. tionated; and (iii) variances in measurement that are inherent in gas in the streams gathered and processed through our ents that may occur on our ff tors including: (i) the significant In the competition for supply, we may have significant levels of excess capacity on our natural gas and NGL pipelines, processing, fractionation and storage assets. Our natural gas and NGL pipelines, processing, fractionation and storage assets competm e with other pipelines, processing, fractionation and storage assets for natural we may have significant levels of uncontracted or discounted capaa results of operations, financial position and cash flows. gas and NGL supply delivered to the markets we serve. As a result of competition, t adversely our business, city on our assets, which could affecff t Many of our assets have been in service for several decades. Many of our pipeline and storage assets are designed as long-lived assets. Over time the age of these assets could result in increased maintenance or remediation expenditures and an increased risk of product releases and associated costs and liabilities. Any significant increase in these expenditures, financial position and cash flows, as well as our ability to pay cash dividends. costs or liabilities could affect adversely our business, results of operations, t Our operating cash flows ff are derived partially from cash distributions we receive from our unconsolidated affiliates. Our operating cash flows are derived partially fromff discussed in Note M of the Notes to Consolidated Financial Statements in this Annual Report. The amount of cash that our unconsolidated affilff respective operations, which may fluff ctuat policies of our unconsolidated affilff quarter to continue paying dividends at the current levels. iates can distribute principally depends upon the amount of cash flows these affiliates generate from their iates. This lack of control may contribute to us not having sufficient available cash each cash distributions we receive from our unconsolidated affilff quarter to quarter. We do not have any direct control over the cash distribution iates, as e fromff t Additionally, the amount of cash that we have available forff ion of profitabila working capita depreciation, amortization and provisions for asset impairments. As a result, we may be able to pay cash dividends during periods when we record losses and may not be able to pay cash dividends during periods when we record net income. u ity, which will be affected by noncash items such as cash dividends depends primarily upon al borrowings, and is not solely a funct our cash flows, including ff We may be unable to cause our joint ventures to take or not to take certain actions unless some or all of our joint- venture participants agree. u ntial investments in the joint venturet We participate in several joint ventures. Due to the naturet ventures has made substa documents contain certain features of the joint venture and to protect its investment, as well as any other assets that may be substantially dependent on or otherwise affected by the activities of that joint venture. These participation and protective features customarily include a corporate governance structure that requires at least a majority-in-interest vote to authorize many basic activities and requires a greater o 100%) to authorize more significant activities. Examples of these more significant activities voting interest (sometimes up tu designed to provide each participant with the opportunity to participate in the management and, accordingly, has required that the relevant charter ments, each participant in these joint of some of these arrange r t 27 t are large expenditures or contractual raising capia tal, transactions with affilff business, among others. Thus, without the concurrence of joint-venturet t unable to cause any of our joint ventures t interest of us or the particular joint venture. commitments, the construction or acquisition of assets, borrowing money or otherwise iates of a joint-venture participant, litigation and transactions not in the ordinary course of to take or not to take certain actions, even though those actions may be in the best participants with enough voting interests, we may be ct to contractual Moreover, subjeu ownership interest in a joint venture, whether in a transaction involving third parties or the other joint-venturet such transaction could result in us being required to partner with different or additional parties who may have business interests different from ours. owner generally may sell, transfer or otherwise modify its restrictions, any joint-venturet owners. Any t We do not operate all of our joint-venture assets nor do we employ directly all of the persons responsible for providing administrative, operating and management services. This reliance on others to operate joint-venture assets and to provide other services could affect adversely our business and results of operations. assets. We We rely on others to provide administrative, operating and management services for certain of our joint-venturet have a limited ability to control the operations and the associated costs of such operations. The success of these operations depends on a number of facff tors that are outside our control, including the competence and financial resources of the operator or an outsourced service provider. We may have to contract elsewhere for outsourced services, which may cost more than we are currently paying. In addition, we may not be able to obtain the same level or kind of service or retain or receive the services in t adversely our business and results of a timely manner, which may impact our ability to perform under our contracts and affecff operations. RISK FACTORS RELATED TO REGULATION Increased regulation of exploration and production activities, including hydraulic fracturing, well setbacks and disposal of wastewater, could result in reductions or delays in drilling and completing new crude oil and natural gas wells. The crude oil and natural gas industry is relying increasingly on supplies fromff sands. Natural gas extracted from these sources frequently requires hydraulic fracturing, which involves the pressurized injection of water, sand and chemicals into a geologic formation to stimulate crude oil and natural or regulations placing restrictions on exploration and production activities, including hydraulic fracturing and disposal of wastewater, could result in operational delays, increased operating costs and additional regulatory burdens on exploration and production operators. Any of these factors could reduce their production of unprocessed natural adversely our revenues and results of operations by decreasing the volumes of natural processed, fractionated and transported on our or our joint ventures’ t gas and, in turn, affecff gas and NGLs gathered, treated, nonconventional sources, such as shale and tight gas production. Legislation assets. t t t t Our business is subject to regulatory oversight and potential penalties. The energy industry historically has been subjeu businesses and operations, including: ct to heavy state and federal regulation that extends to many aspects of our change to federal, state and local taxation; regulatory approval and review of certain of our rates, operating terms and conditions of service; the types of services we may offer our counterparties; construction and operation of new facilities; the integrity, safety at acquisition, extension or abandonment of services or faci reporting and information posting requirements; • • • • • • • • maintenance of accounts and records; and • iate companies involved in all aspects of the natural gas and energy businesses. relationships with affilff ilities and operations; nd security of facff lities; ff Compliance with these requirements can be costly and burdensome. Future changes to laws, regulations and policies in these areas may impair our ability to compete for business or to recover costs and may increase the cost and burden of our operations. We cannot guarantee that state or fedff acquisitions that we may propose in the future will be made in a timely manner or will be free from potentially burdensome conditions. eral regulators will not challenge our safety practices or will authorize any projects or . Moreover, there can be no guarantee that, if granted, any such authorizations ff 28 Under the Natural Gas Act, which is appli to our interstate natural is applicable to our NGL pipelines, our interstate transportation rates are regulated by the FERC and many changes to our pipeline tariffs must be approved in a regulatory proceeding. Additionally, shippers, the FERC and/or state regulatory agencies may investigate our tariff rates which could result in, among other things, being ordered to reduce rates or make refunds to shippers. gas pipelines, and the Interstate Commerce Act, which cablea a t Failure to comply with all applicablea and fines. state or fedff eral statutes, rules and regulations and orders could bring substantial penalties We may face significant costs to comply with the regulation of GHG emissions. GHG emissions originate primarily from combustion engine exhaust, heater exhaust and fugitive methane gas emissions. International, federal, regional and/or state legislative and/or regulatory initiatives may attempt to control or limit GHG emissions, including initiatives directed at issues associated with climate change. Various federal and state legislative proposals have been introduced to regulate the emission of GHGs, particularly carbon Supreme Court has ruled international efforts seeking legally binding reductions in emissions of GHGs. that carbon dioxide is a pollutant subject to regulation by the EPA. In addition, there have been dioxide and methane, and the United States r r We believe it is likely that future governmental legislation and/or regulation on the fedff us either to limit GHG emissions associated with our operations, pay additional taxes or to purchase allowances for certain emissions. These legislative and/or regulatory initiatives could make some of our activities uneconomic to maintain or operate. However, we cannot predict precisely what form these future regulations will take, the stringency of the regulations, when they will become effective or the impact on our capia tal expenditures, competitive position and results of operations. In addition to activities on the federal level, state and regional initiatives could also lead to the regulation of GHG emissions sooner than or independent of federal regulation. These regulations could be more stringent than any federal legislation that may be adopted. Further, we may not be able to pass on the higher costs to our customers or recover all costs related to complying with GHG regulatory requirements. Our future results of operations, financial position or cash flows could be affected adversely if such costs are not recovered or otherwise passed on to our customers. eral, state or regional level may require Our operations are subject to federal and state laws and regulations relating to the protection of the environment, which may expose us to significant costs and liabilities. Increased litigation challenging oil and gas development and changes to laws, regulations and policies could impact adversely our business. The risk of incurring substantial environmental costs and liabilities is inherent in our business. Our operations are subject to extensive federal, state and local laws and regulations governing the discharge of materials into, or otherwise relating to the protection of, the environment. Examples of these laws include: • • • • the Clean Air Act and analogous state laws that impose obligations related to air emissions; the Clean Water Act and analogous state laws that regulate discharge of wastewater from our facilities into state and federal waters; the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and analogous state laws that regulate the cleanup of hazardous substances that may have been released at properties currently or previously owned or operated by us or locations to which we have sent waste for disposal; and the federal Resource Conservation and Recovery Act (RCRA) and analogous state laws that impose requirements for the handling and discharge of solid and hazardous waste from our facilities. Recently, the EPA has proposed updating the New Source Performance Standards Subpart OOOO regulations to further reduce new and methane emissions, which includes increased monitoring frequency and more stringent repair requirements forff modified oil and gas facff ilities. In addition, the EPA is proposing new nationwide emission guidelines for states to limit methane emissions from existing facilities. We cannot predict the potential impact to our business resulting from these additional regulations and guidelines. Various federal and state governmental authorities, including the EPA, have the power to enforce compliance with these laws and regulations and the permits issued under them. Violators are subject to administrative, civil and criminal penalties, including civil finff es, injunc CERCLA, RCRA and analogous state laws for the remediation of contaminated areas. tions or both. Joint and several, strict liability may be incurred without regard to fault under the n There is an inherent risk of incurring environmental costs and liabila gather, transport, process and store, air emissions related to our operations, past industry orr ities in our business due to our handling of the products we perations and waste disposal 29 practices, some of which may be material. Private parties, including the owners of properties through which our pipeline systems pass, may have the right to pursue legal actions to enforce compliance as well as to seek damages for noncompliance with environmental laws and regulations or for personal injury or property damage arising from our operations. Some sites we operate are located near current or former third-party hydrocarbon storage and processing operations, and there is a risk that contamination has migrated from those sites to ours. In addition, increasingly strict laws, regulations and enforcement policies could increase significantly our compliance costs and the cost of any remediation that may become necessary, some of which may be material. Additional information is included under Item 1, Business, under “Regulatory, Environmental and Safetyt Matters” and in Note N of the Notes to Consolidated Financial Statements in this Annual Report. Increased litigation challenging oil and gas development, changes to laws, regulations and policies, as well as changes in regulators’ interpretation or application of such laws, regulations and policies could impact our business. These actions could, among other things, impact our customers’ activities, our existing permits and our ability to obtain permits for new development projects, which could affecff t adversely our business, financial position, or results of operations. Our insurance may not cover all environmental risks and has limits on coverage in the event an environmental claim is made against us. Our business may be affected adversely by increased costs due to stricter pollution-control requirements or liabilities resulting from noncompliance with required operating or other regulatory permits. New or revised environmental regulations might also affect adversely our products and activities, and federal and state agencies could impose additional safety requirements, all of which could affecff t adversely our profitability. RISK FACTORS RELATED TO FINANCING OUR BUSINESS Changes in interest rates could affect adversely our business. We use both fixed and variable rate debt, and we are exposed to market risk dued borrowings. Our results of operations, cash flows in interest rates fromff current levels. and finaff ff to the floff ating interest rates on our short-term ncial position could be affected adversely by significant fluctuations nnounced the desire to phase out the use of LIBOR In July 2017, the head of the United Kingdom Financial Conduct Authority at by the end of 2021. However, in March 2021, the administrator of LIBOR, the ICE Benchmark Administration, announced all U.S. dollar LIBOR tenors will continue to be published through June 2023, with the exception of one-week and two-month tenors, which ceased at the end of 2021. The U.S. Federal Reserve concurrently issued a statement advising banks to stop new LIBOR issuances by the end of 2021. It is impossible to predict whether and to what extent banks will continue to provide LIBOR submissions to the administrator of LIBOR or whether any additional reforms Kingdom or elsewhere. Actions by the British Bankers Association, the United Kingdom Financial Conduct Authority ot regulators or law enforcement agencies as a result of these or futuret events, may result in changes to the manner in which LIBOR is determined. In addition, any further changes or reforms to the determination or supervision of LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. to LIBOR may be enacted in the United r other ff At this time, no consensus exists as to what rate or rates will become accepted alternatives to LIBOR, although on July 29, ons t 2021, the Alternative Reference Rates Committee, a U.S.-based steering committee composed of large US financial instituti convened by the U.S. Federal Reserve Board and the Federal Reserve Bank of New York, formally recommended SOFR Term rates. Given the inherent differences between LIBOR and SOFR, or any other alternative benchmark rate that is established, there are many uncertainties regarding a transition from LIBOR, including how this will impact the cost of our variablea rate debt and certain derivative financial instruments, or whether the COVID-19 pandemic will have further effect on LIBOR transition plans. In addition, although financial institutions are increasingly utilizing SOFR in credit facilities, it is unknown whether SOFR or any other alternative reference rate will attain market acceptance as a replacement for LIBOR. Our $2.5 Billion Credit Agreement includes provisions that grant the administrative agent discretion to establia rate for LIBOR, if necessary, which could increase our short-term borrowing costs for amounts issued under this facff sh a replacement ility. Any reduction in our credit ratings could affect adversely our business, results of operations, financial position and cash flows. Our long-term debt has been assigned an investment-grade credit rating of “Baa3” by Moody’s and “BBB” by both S&P and Fitch. Our commercial paper program has been assigned an investment-grade credit rating of Prime-3, A-2 and F-2 by Moody’s, S&P and Fitch, respectively. We cannot provide assurance that any of our current ratings will remain in effect forff any given period of time or that a rating will not be lowered or withdrawn entirely by these credit rating agencies. If these agencies were to downgrade our long-term debt or our commercial paper rating, particularly below investment grade, our 30 borrowing costs could increase, which would affecff funding sources could decrease. Ratings from these agencies are not recommendations to buy, sell or hold our securities. Each rating should be evaluated independently of any other rating. t adversely our financial results, and our potential pool of investors and Our indebtedness and guarantee obligations could impair our financial condition and our ability to fulfill our obligations. As of December 31, 2021, we had total indebtedness of $13.6 billion. Our indebtedness and guarantee obligations could have significant consequences. For example, they could: • make it more difficff ult for us to satisfy our obligations with respect to senior notes and other indebtedness due to the increased debt-service obligations, which could, in turn, result in an event of default on such other indebtedness or the senior notes; impair our ability to obtain additional finff ancing in the future for working capita general business purposes; diminish our ability to withstand a downturn in our business or the economy; require us to dedicate a substantial portion of our cash flows fromff availability of cash for working capita limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and place us at a competitive disadvantage compared with our competitors that have proportionately less debt and fewer guarantee obligations. operations to debt-service payments, reducing the acquisitions, dividends or general corporate purposes; al, capital expenditures, al, capital expenditures, acquisitions or ff t t • • • • • We are not prohibited under the indentures governing the senior notes fromff agreements do subject us to certain operational limitations summarized in the next paragraph. If we incur significant additional indebtedness, it could worsen the negative consequences mentioned above and could affect adversely our ability to repay our other indebtedness. incurring additional indebtedness, but our debt Our $2.5 Billion Credit Agreement contains provisions that restrict our ability to finff ance futff uret al needs or to expand or pursue our business activities. For example, our $2.5 Billion Credit Agreement contains provisions that, among other things, limit our ability to make loans or investments, make material changes to the naturet or engage in asset sales, grant liens or make negative pledges. It also requires us to maintain certain financial ratios, which limit the amount of additional indebtedness we can incur, as described in the “Liquidity and Capia tal Resources” section of Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in this Annual Report. These restrictions could result in higher costs of borrowing and impair our ability to generate additional cash. Future financing agreements we may enter into may contain similar or more restrictive covenants. of our business, merge, consolidate operations or capita If we are unable to meet our debt-service obligations or comply with financial covenants, we could be forcff refinance our indebtedness, seek additional equity capital or sell assets. We may be unablea satisfactory terms, or at all. to obtain finaff ed to restructure or ncing or sell assets on An event of default may require us to offer to repurchase certain of our and ONEOK Partners’ senior notes or may impair our ability to access capital. The indentures governing certain of our and ONEOK Partners’ senior notes include an event of default upon the acceleration of other indebtedness of $15 million or more for certain of our senior notes or $100 million or more for certain of our and ONEOK Partners’ senior notes. Such events of default would entitle the trustee or the holders of 25% in aggregate principal amount of our and ONEOK Partners’ outstanding senior notes to declare those senior notes immediately dued not have sufficient cash on hand to repurchase and repay any accelerated senior notes, which may cause us to borrow money under our credit facff ility or seek alternative financing sources to finance the repurchases and repayment. We could also face difficulties accessing capita al expenditures, capita al or our borrowing costs could increase, impacm ting our ability to obtain financing for acquisitions or to refinance indebtedness and to fulff fill our debt obligations. in full. We may and payablea t The right to receive payments on our outstanding debt securities and subsidiary guarantees is unsecured and will be effectively subordinated to any future secured indebtedness as well as to any existing and future indebtedness of our subsidiaries that do not guarantee the senior notes. Although ONEOK Partners and the Intermediate Partnership have guaranteed our debt securities, the guarantees are subjeu release under certain circumstances, and we have subsidiaries that are not guarantors. In those cases, the debt securities effectively are subordinated to the claims of all creditors, including trade creditors and tort claimants, of our subsidiaries that ct to 31 are not guarantors. In the event of the insolvency, bankruptcy, liquidation, reorganization, dissolution or winding up of the business of a subsidiary that is not a guarantor, creditors of that subsidiary would generally have the right to be paid in full before any distribution is made to us or the holders of the debt securities. A court may use fraudulent conveyance considerations to avoid or subordinate the cross guarantees of our and ONEOK Partners’ indebtedness. ONEOK, ONEOK Partners and the Intermediate Partnership have cross guarantees in place for our and ONEOK Partners’ indebtedness. A court may use fraudulent conveyance laws to subordinat ONEOK Partners’ indebtedness. It is also possible that under certain circumstances, a court could avoid or subordinate the guarantor’s guarantee of our and ONEOK Partners’ indebtedness in favor of the guarantor’s other debts or liabilities to the extent that the court determined either of the folff lowing were true at the time the guarantor issued the guarantee: e or avoid the cross guarantees of certain of our and u • • the guarantor incurred the guarantee with the intent to hinder, delay or defraud any of its present or futuret creditors or the guarantor contemplated insolvency with a design to favor one or more creditors to the total or partial exclusion of others; or the guarantor did not receive fair consideration or reasonable equivalent value for issuing the guarantee and, at the time it issued the guarantee, the guarantor: – was insolvent or rendered insolvent by reason of the issuance of the guarantee; – was engaged or about to engage in a business or transaction for which its remaining assets constituted a unreasonably small capital; or intended to incur, or believed that it would incur, debts beyond its abia lity to pay such debts as they maturet d. – The measure of insolvency forff Generally, however, an entity would be considered insolvent for purposes of the foregoing if: purposes of the foreff going will vary drr epending upon the law of the relevant jurisdiction. • • • the sum of its debts, including contingent liabilities, were greater than the faiff valuation; the present fair saleablea on its existing debts, including contingent liabilities, as they become absolute and mature; or it could not pay its debts as they become dued . r saleablea value of its assets was less than the amount that would be required to pay its probable liabila ity value of all of its assets at a faiff r Among other things, a legal challenge of the cross guarantees of our and ONEOK Partners’ indebtedness on fraudulent conveyance grounds may focus issuance of such debt. To the extent the guarantor’s guarantee of our and ONEOK Partners’ indebtedness is avoided as a result of fraudulent conveyance or held unenforceable forff any other reason, the holders of such debt would cease to have any claim in respect of the guarantee. on the benefits, if any, realized by the guarantor as a result of our and ONEOK Partners’ ff GENERAL RISK FACTORS Holders of our common stock may receive dividends that vary fromff anticipated amounts, or no dividends at all. We may not have sufficient cash each quarter to pay dividends or maintain current or expected levels of dividends. The actual amount of cash we pay in the form of dividends may fluctuat of which are beyond our control, including our working capia tal needs, our ability to borrow, the restrictions contained in our indentures and credit facility, our debt service requirements and the cost of acquisitions, if any. A fail dividends or to pay dividends at expected levels could result in a loss of investor confidence, reputational damage and a decrease in the value of our stock price. quarter to quarter and will depend on various factors, some ff ure either to pay e fromff t We are exposed to the credit risk of our customers or counterparties, and our credit-risk management may not be adequate to protect against such risk. We are subject to the risk of loss resulting from nonpayment and/or nonperformance by our customers and counterparties. Our customers or counterparties may experience rapid deterioration of their finaff ncial condition as a result of changing market conditions, commodity prices or financial difficulties that could impact their creditworthiness or ability to pay us for our services. We assess the creditworthiness of our customers and counterparties and obtain collateral or contractual terms as we deem appropria a financial conditions, including possible declines in our customers’ and counterparties’ creditworthiness. Our customers and counterparties may not perform or adhere to our existing or future contractual counterparties are in finff ancial distress or commence bankruptcy proceedings, contracts with them may be subject to te. We cannot, however, predict to what extent our business may be impacted by deteriorating market or arrangements. To the extent our customers and t 32 ff a renegotiation or rejee ction under appl customers and counterparties, any material and procedures fail to assess adequately the creditworthiness of existing or futuret nonpayment or nonperformance by our customers and counterparties due to inabila ity or unwillingness to perform or adhere to contractual arrangements could affect adversely our business, results of operations, financial position, cash flows and ability to pay cash dividends to our shareholders. icable provisions of the United States Bankruptcy Code. If our risk-management policies We are connected to market areas located in the Mid-Continent, Rocky Mountain, Permian Basin, Midwest markets, including Chicago, Illinois, and Gulf Coast regions of the U.S. Our counterparties are primarily major integrated and independent exploration and production, pipeline, marketing and petrochemical companies and natural our counterparties may be similarly affected by changes in economic, regulatory or other factors that may affect our overall credit risk. gas and electric utilities. Therefore, t A shortage of skilled labor may make it difficult for us to maintain labor productivity and competitive costs. Our operations require skilled and experienced workers with proficiency in multiple tasks. In recent years, a shortage of workers trained in various skills associated with the midstream energy business has, at times, caused us to conduct certain operations without full staff, thus hiring outside resources, which may decrease productivity and increase costs. This shortage of trained workers is the result of experienced workers reaching retirement age and increased competm ition for workers in certain areas, combined with the challenges of attracting new, qualified workers to the midstream energy industry. This shortage of skilled labor a adversely our labor for our services and products, which could affecff flows. t continues or worsens, it could affecff productivity and costs and our ability to expand operations in the event there is an increase in the demand could continue over an extended period. If the shortage of experienced labor t adversely our business, results of operations, financial position and cash a a Our employees or directors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements. a m m e fraff ud or other misconduct. Our Board of Directors has adopted es to our directors, officers (including our principal executive and finaff es to adhere to our code of business conduct and ethics in addressing the legal and As with all companies, we are exposed to the risk of employe a code of business conduct and ethics that appli officers, principal accounting officer, controllers and other persons performing similar funct require all directors, officers and employe ethical issues encountered in conducting their work for our company. Our code of business conduct and ethics requires, among laws and other other things, that our directors, officers and employe legal requirements, conduct business in an honest and ethical manner and otherwise act with integrity and in our company’s best interest. All directors, officers and employe apparent violation of our code of business conduct and ethics. However, it is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could affecff financial position and cash flows. es are required to report any conduct that they believe to be an actual or t adversely our reputation, business, results of operations, es avoid conflicts of interest, complym with all applicablea ions) and all other employees. We ncial m m ff ff An impairment of goodwill, long-lived assets, including intangible assets, and equity-method investments could reduce our earnings. Goodwill is recorded when the purchase price of a business exceeds the fair market value of the tangible and separately measurablea intangible net assets. GAAP requires us to test goodwill for impairment on an annual basis or when events or circumstances occur indicating that goodwill might be impaired. Long-lived assets, including intangible assets with finite useful lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverablea value of the equity investment as a whole, not the underlying net assets, has declined and whether that decline is other than temporary. For examplem , if a low commodity price environment persisted for a prolonged period, it could result in lower volumes delivered to our systems and impairmm ents of our assets or equity-method investments. If we determine that an impairment is indicated, we would be required to take an immediate noncash charge to earnings with a correlative effecff equity and balance sheet leverage as measured by consolidated debt to total capita . For the investments we account for under the equity method, the impairment test considers whether the fair alization. t on For further discussion of impairmm respectively, of the Notes to Consolidated Financial Statements in this Annual Report. ents of goodwill, long-lived assets and equity-method investments, see Notes A, E, D and M, 33 Acquisitions that appear to be accretive may nevertheless reduce our cash from operations on a per-share basis. Any acquisition involves potential risks that may include, among other things: • • • • • • • • • • • • • ff the businesses we acquire; ity to integrate successfully inaccurate assumptions about volumes, revenues and costs, including potential synergies; an inabila decrease in our liquidity as a result of our using a significant portion of our available cash or borrowing capac finance the acquisition; a significant increase in our interest expense and/or financial leverage if we incur additional debt to finance the acquisition; the assumption of unknown liabila policies may exclude from coverage; an inabila limitations on rights to indemnity from the seller; inaccurate assumptim ons about the overall costs of equity or debt; the diversion of management’s and employees’ attention from other business concerns; unforeseen difficulties operating in new product areas or new geographic areas; increased regulatory burdens; customer or key employee losses at an acquired business; and increased regulatory requirements. ity to hire, train or retain qualified personnel to manage and operate the acquired business and assets; a ities forff which we are not indemnified, our indemnity is inadequate or our insurance ity to If we consummate any future acquisitions, our capita will not have the opportunit determining the application of our resources to futuret y to evaluate the economic, finaff t acquisitions. alization and results of operations may change significantly, and investors ncial and other relevant information that we will consider in The cost of providing pension and postretirement health care benefits to eligible employees and qualified retirees is subject to changes in pension fund values and changing demographics and may increase. d benefit pension plan for certain employees and former employees, which closed to new participants in 2005, We have a defineff and postretirement welfare plans that provide postretirement medical and life insurance benefits to certain employees hired prior to 2017 who retire with at least five years of full-time service. The cost of providing these benefits to eligible current and former employees is subject to changes in the market value of our pension and postretirement benefit plan assets, changing demographics, including longer life eff further discussion of our defined benefit pension plan and postretirement welfare plans, see Note K of the Notes to Consolidated Financial Statements in this Annual Report. xpectancy of plan participants and their beneficiaries and changes in health care costs. For Any sustained declines in equity markets and reductions in bond yields may affecff postretirement benefit plan assets. In these circumstances, additional cash contributions to our pension plans may be required, which could affecff t adversely our business, financial condition and liquidity. t adversely the value of our pension and If we fail to maintain an effective system of internal controls, we may not be able to report accurately our financial results or prevent fraud. As a result, current and potential holders of our equity and debt securities could lose confidence in our financial reporting. Effective internal controls are necessary for us to provide reliablea financial reports, prevent fraud and operate successfully as a public company. We cannot be certain that our efforts to maintain our internal controls will be successful, that we will be abla e to maintain adequate controls over our financial processes and reporting in the future or that we will be abla e to continue to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002. Any failure to maintain effective internal controls, or difficulties encountered in implementing or improving our internal controls, could harm our operating results or cause us to fail to meet our reporting obligations. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effecff t on the trading price of our equity, our access to capita al markets and the cost of capia tal. ITEM 1B. UNRESOLVED STAFF COMMENTS Not applicable. 34 ITEM 2. PROPERTIES A description of our properties is included in Item 1, Business. ITEM 3. LEGAL PROCEEDINGS Information about our legal proceedings is included in Note N of the Notes to Consolidated Financial Statements in this Annual Report. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the NYSE under the trading symbol “OKE.” The corporate name ONEOK is used in newspaper stock listings. At February 22, 2022, there were 13,198 holders of record of our 446,213,285 outstanding shares of common stock. For information regarding our Employee Stock Award Program and other equity compensation plans, see Note J of the Notes to Consolidated Financial Statements and “Equity Compensation Plan Information” included in Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, in this Annual Report. 35 PERFORMANCE GRAPH lowing performance grapha The folff Midstream Energy Select Index and a ONEOK Peer Group during the period beginning on December 31, 2016, and ending on December 31, 2021. compares the performance of our common stock with the S&P 500 Index, the Alerian Value of a $100 Investment, Assuming Reinvestment of Distributions/Dividends, at December 31, 2016, and at the End of Every Year Through December 31, 2021. $250 $200 $150 $100 $50 $0 2016 2017 2018 2019 2020 2021 ONEOK, Inc. ONEOK Peer Group S&P 500 Index Alerian Midstream Energy Select Index 2017 2018 Cumulative Total Return Years Ended December 31, 2019 2020 2021 ONEOK, Inc. S&P 500 Index ONEOK Peer Group (a) Alerian Midstream Energy Select Index (b) $ $ $ $ 97.92 121.83 93.45 100.76 $ $ $ $ 104.07 116.49 77.86 82.95 $ $ $ $ 153.80 153.17 87.11 101.49 $ $ $ $ 87.11 181.35 64.37 77.72 $ $ $ $ 143.59 233.41 91.97 109.39 (a) - The ONEOK Peer Group is composed of the following companies: DCP Midstream, LP; Energy Transfer LP; EnLink Midstream, LLC; Enterprise Products Partners L.P.; Kinder Morgan, Inc.; Magellan Midstream Partners, L.P.; MPLX LP; NuStar Energy L.P.; Plains All American Pipeline, L.P.; Targa Resources Corp.; and The Williams Companies, Inc. (b) - The Alerian Midstream Energy Select Index measures the composite performance of approximately 33 North American energy infrastructure companies who are engaged in midstream activities involving energy commodities. ITEM 6. [RESERVED] 36 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATRR IONS The following discussion and analysis should be read in conjunction with Part I, Item 1, Business, our audited Consolidated Financial Statements and the Notes to Consolidated Financial Statements in this Annual Report. RECENT DEVELOPMENTS Please refer to the “Financial Results and Operating Information” and “Liquidity and Capital Resources” sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report for additional information. Market Conditions - We experienced earnings growth from increased volumes in 2021, comparem increased producer activity and rising gas-to-oil ratios in the Rocky Mountain region, production curtailments in 2020, increased ethane production in the Rocky Mountain region and higher commodity prices in both our Natural Gas Gathering and Processing and Natural Gas Liquids segments, highlighting both the resiliency of our integrated assets and the economic recovery from the pandemic. d with 2020, due primarily to l gas stream, known as ethane rejection. As a result of these ethane economics, ethane volumes on our tuate period to period. Ethane volumes under long-term contracts delivered to our NGL system increased Ethane Production - Price differentials between ethane and natural leave it in the naturat system can flucff approximately 55 MBbl/d to an average of 430 MBbl/d in 2021, compared with 375 MBbl/d in 2020, due primarily to changes in ethane extraction economics. We estimate that there are more than 225 MBbl/d of discretionary ethane, consisting of more than 125 MBbl/d in the Rocky Mountain region and approxi recovered and transported on our system. Ethane recovery opportunit ethane economics. mately 100 MBbl/d in the Mid-Continent region, that can be gas processors to extract ethane or tuate based on regional naturat gas can cause natural ies will flucff l gas pricing and a t t t Growth Projects - We operate an integrated, reliable and diversified network of NGL and natural gas gathering, processing, fractionation, storage and transportation assets connecting supply in the Rocky Mountain, Mid-Continent and Permian regions with key market centers. Our publicly announced capital-growth projects are outlined in the tablea below: Demicks Lake III plant Natural Gas Liquids Arbuckle II pipeline expansion MB-5 fractionator Project Scope Natural Gas Gathering and Processing Bear Creek plant expansion and related infrastructure 200 MMcf/d processing plant expansion and related gathering infrastructure in the Williston Basin Supported by acreage dedications with long-term primarily fee- based contracts 200 MMcf/d processing plant in the core of the Williston Basin Supported by acreage dedications with primarily fee-based contracts Approximate Costs (a) (In(( millions) $405 Completion Completed $188 (b) First Quarter 2023 Increased mainline capacity with additional pump facilities Increased capacity to 500 MBbl/d 125 MBbl/d NGL fractionator in Mont Belvieu, Texas $60 Completed $750 (c) Third Quarter 2023 tt (a) - Excludes capitalized interest/AFUDC. (b) - In November 2021, we announced that we restarted construction of the Demicks Lake III natural gas processing plant. Upon announcement, the expected cost to complete was approximately $140 million. (c) - In November 2021, we announced that we restarted construction of the MB-5 NGL fractionator. Upon announcement, the expected cost to complete was approximately $250 million. Debt 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 accruedr borrowings. and unpaid interest, with cash on hand and short-term In June 2021, we repaid the remaining $11.7 million of Guardian Pipeline’s senior notes due December 2022 with cash on hand. 37 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. Dividends - During 2021, we paid common stock dividends totaling $3.74 per share, which is consistent with the prior year. In February 2022, we paid a quarterly common stock dividend of $0.935 per share ($3.74 per share on an annualized basis), which is consistent with the same quarter in the prior year. FINANCIAL RESULTS AND OPERATING INFORMATION How We Evaluate Our Operations p ncial and operating metrics to analyze our performance. Our consolidated financial metrics Management uses a variety of finaff include: (1) operating income; (2) net income; (3) diluted EPS; and (4) adjust results using adjusted EBITDA and our operating metrics, which include various volume and rate statistics that are relevant for the respective segment. These operating metrics allow investors to analyze the various components of segment financial results in terms of volumes and rate/pric key inputs for forecasting and budgeting segment financial results. For additional information on our operating metrics, see the respective segment subsections of this “Financial Results and Operating Information” section. e. Management uses these metrics to analyze historical segment financial results and as the ed EBITDA. We evaluate segment operating d / ff equity funds Non-GAAP Financial Measures - Adjusted EBITDA is a non-GAAP measure of our financial performance. Adjusted EBITDA is defined as net income adjusted for interest expense, depreciation and amortization, noncash impaim rment charges, income taxes, allowance forff ion expense and certain other noncash items. We believe this non-GAAP financial measure is useful to investors because it and similar measures are used by many companies in our industry as a measurement of financial performance and is commonly employed by financial analysts and others to evaluate our financial performance and to compare financial performance among companies in our industry. Adjusted EBITDA should not be considered an alternative to net income, EPS or any other measure of financial performance presented in accordance with GAAP. Additionally, this calculation may not be comparablea companies. used during construction, noncash compensat with similarly titled measures of other m Consolidated Operations p Selected Financial Results - The following tablea indicated: sets forth certain selected consolidated financial results forff the periods Financial Results Revenues Commodity sales Services Total revenues Cost of sales and fuel (exclusive of items shown separately below) Operating costs Depreciation and amortization Impairment charges (Gain) loss on sale of assets gg Operating income Equity in net earnings from investments Impairment of equity investments Interest expense, net of capitalized interest Net income Diluted EPS Adjusted EBITDA Capital expenditures Years Ended December 31, 2020 2021 2019 (Millions of dollars, except per share amounts) $ Increase (Decrease) 2021 vs. 2020 2020 vs. 2019 $ $ $ $ $ $ $ $ $ $ 15,180.3 1,360.0 16,540.3 12,256.7 1,067.0 621.7 — (1.4) 2,596.3 122.5 $ $ — $ (732.9) $ $ 1,499.7 $ 3.35 $ 3,379.7 $ 696.9 $ 7,255.2 1,287.0 8,542.2 5,110.1 886.1 578.7 607.2 (1.3) $ 1,361.4 143.2 $ (37.7) $ (712.9) $ $ 612.8 $ 1.42 $ 2,723.7 $ 2,195.4 8,916.1 1,248.3 10,164.4 6,788.0 982.9 476.5 — 2.6 1,914.4 154.5 — (491.8) 1,278.6 3.07 2,580.2 3,848.3 7,925.1 73.0 7,998.1 7,146.6 180.9 43.0 (607.2) 0.1 1,234.9 (20.7) (37.7) 20.0 886.9 1.93 656.0 (1,498.5) (1,660.9) 38.7 (1,622.2) (1,677.9) (96.8) 102.2 607.2 3.9 (553.0) (11.3) 37.7 221.1 (665.8) (1.65) 143.5 (1,652.9) See reconciliation of net income to adjusted d EBITDA in the “Non-GAAP Financial Measures” section. 38 Changes in commodity prices and sales volumes affect both revenues and cost of sales and fuel of Income, and, therefore, the impact is largely offset between these line items. ff in our Consolidated Statements 2021 vs. 2020 - Operating income increased $1.2 billion primarily as a result of the following: • • • • • • Gas Gathering and Processing - increases of $143.5 million dued to noncash impairment charges in our Natural Gas Gathering and Processing and an increase of $607.2 million dued Natural Gas Liquids segments in 2020; Natural Gas Liquids - increases of $421.4 million in exchange services related primarily to higher volumes in the Rocky Mountain region, the Mid-Continent region and Permian Basin and wider commodity price differe $98.3 million in optimization and marketing. These increases were offset partially by a decrease of $46.2 million fromff the impact of Winter Storm Uri in exchange services; Natural NN impacting our fee with POP contracts and $115.8 million from higher volumes due primarily to increased production and rising gas-to-oil ratios in the Rocky Mountain region in 2021 and production curtailments in 2020; and Natural Gas Pipei gas sales; offset an increase of $180.9 million in consolidated operating costs due primarily to higher employee costs related to short- term incentives, property t deferred compensation plan in 2021 compared with a benefit in 2020; and an increase of $43.0 million in depreciation expense due to capia tal projects placed in service. axes, outside services and the impact of a loss on the mark-to-market of our share-based primarily to lower realized prices in 2020 lines - an increase of $109.1 million dued to primarily to increased natural ntials, and by ff t t ff and noncash impaim rment charges related to Net income and diluted EPS increased due primarily to the items discussed above equity investments in our Natural Gas Gathering and Processing and Natural Gas Liquids segments in the prior year. These increases were offset partially by higher income taxes, higher interest expense related to lower capia talized interest and lower equity AFUDC due to completed projects, lower equity in net earnings from investments and a gain in 2020 on extinguishment of debt related to open market repurchases. a Capia tal expenditures decreased due primarily to our completed and paused capita al-growth projects. Additional information regarding our financial results and operating information is provided in the discussions for each of our segments. Selected Financial Results and Operating Information for the Year Ended December 31, 2020 vs. 2019 - The consolidated and segment financial results and operating information for the year ended December 31, 2020, compared with the year ended December 31, 2019, are included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2020 Annual Report on Form 10-K, which is availablea website at www.oneok.com. via the SEC’s website at www.sec.gov and our g Natural Gas Gathering and Processing g Growth Projects - Our Natural Gas Gathering and Processing segment has invested in growth projects in NGL-rich areas in the Williston Basin. See “Growth Projects” in the “Recent Developments” section for discussion of our capita projects. al-growth For a discussion of our capita section. al expendituret financing, see “Capita al Expenditures t ” in the “Liquidity and Capia tal Resources” 39 Selected Financial Results and Operating Information operating information for our Natural Gas Gathering and Processing segment forff - The following tabla es set fort ff ff the periods indicated: h certain selected financial results and Financial Results 2021 Years Ended December 31, 2020 2019 (Millions of dollars) 2021 vs. 2020 2020 vs. 2019 $ Increase (Decrease) NGL and condensate sales Residue natural gas sales Gathering, compression, dehydration and processing fees and other revenue Cost of sales and fuel (exclusive of depreciation and operating costs) Operating costs, excluding noncash compensation adjustments Equity in net earnings (loss) from investments Other jj Adjusted EBITDA Impairment charges Capital expenditures $ $ $ $ $ 2,821.2 1,483.9 156.4 $ 889.4 771.5 159.2 1,224.4 966.1 178.1 1,931.8 712.4 (2.8) (3,226.1) (844.0) (1,302.3) 2,382.1 (351.4) 3.8 1.3 889.1 $ — $ $ 275.2 (320.0) (1.1) (5.0) 650.0 566.1 446.1 $ $ $ (352.8) (6.3) (4.5) 702.7 — 926.5 31.4 4.9 6.3 239.1 (566.1) (170.9) (335.0) (194.6) (18.9) (458.3) (32.8) 5.2 (0.5) (52.7) 566.1 (480.4) See reconciliation of net income to adjusted d EBITDA in the “Non-GAAP Measures” section. Changes in commodity prices and sales volumes affect both revenue and cost of sales and fuel, and, therefore, the impact is largely offset between these line items. 2021 vs. 2020 - Adjusted EBITDA increased $239.1 million, primarily as a result of the following: • • • • an increase of $143.5 million due primarily to lower realized prices, net of hedging, in 2020 impacting our fee with POP contracts; and an increase of $115.8 million from higher volumes due primarily to increased production and rising gas-to-oil ratios in the Rocky Mountain region in 2021 and production curtailments in 2020, offset partially by natural production declines in the Mid-Continent region; and an increase of $7.3 million from a gain on the partial sale of an equity investment; offset an increase of $31.4 million in operating costs due primarily to higher employee costs related to short-term incentives. by ff Capital expenditures decreased due primarily to completed capital-growth projects in 2020. Operating Information (a) )dd Natural gas gathered (BBtu/d Natural gas processed (BBtu/d ) (dd b) Average fee rate ($/MMBtu) (( (( Years Ended December 31, 2020 2019 2021 2,736 2,515 1.04 $ 2,553 2,364 0.89 $ 2,753 2,555 0.92 $ (a) - Includes volumes for consolidated entities only. (b) - Includes volumes at company-owned and third-party facilities. 2021 vs. 2020 - Our natural gas gathered and natural activity and rising gas-to-oil ratios in the Rocky Mountain region and the impact of curtailed production in 2020, offset partially t by natural production declines in the Mid-Continent region. gas processed volumes increased dued primarily to increased producer t Our average fee rate increased due primarily to production curtailments in the second quarter 2020 on producer contracts with higher feeff and producer activity has continued to increase, the Rocky Mountain region’s contribution to our average fee rate increased in 2021. s and lower POP components in the Rocky Mountain region. As these curtailed volumes have returned to our system Commodity Price Risk - See discussion regarding our commodity price risk under “Commodity Price Risk” in Item 7A, Quantitative and Qualitative Disclosures about Market Risk. Impairments - The year ended December 31, 2020, includes $382.2 million of noncash impaim rment charges related primarily to certain long-lived asset groups in the Powder River Basin, western Oklahoma and Kansas that were not recoverablea , a 40 $153.4 million noncash impairment charge related to goodwill and a $30.5 million noncash impairment charge related to our 10.2% investment in Venice Energy Services Company. Natural Gas Liquids q Growth Projects - Our Natural Gas Liquids segment invests in projects to transport, fractionate, store and deliver to market centers NGL supply from shale and other resource development areas. Our growth strategy is focused around connecting diversified supply basins from the Rocky Mountain region through the Mid-Continent region and the Permian Basin with NGL product demand from the petrochemical and refining industries and NGL export demand in the Gulf Coast. See “Growth Projects” in the “Recent Developments” section for discussion of our capita al-growth projects. In 2021, we connected one third-party natural processing plant in the Rocky Mountain region to our NGL system. In addition, one affilff Rocky Mountain region connected to our system was expanded. t gas processing plant in the Permian Basin and one third-party natural gas iate natural t gas processing plant in the For a discussion of our capita section. al expendituret financing, see “Capita al Expenditures” t in the “Liquidity and Capia tal Resources” Selected Financial Results and Operating Information - The following tablea operating information for our Naturat l Gas Liquids segment for the periods indicated: s set forth certain selected finaff ncial results and Financial Results 2021 Years Ended December 31, 2020 2019 (Millions of dollars) 2021 vs. 2020 2020 vs. 2019 $ Increase (Decrease) NGL and condensate sales Exchange service revenues and other Transportation and storage revenues Cost of sales and fuel (exclusive of depreciation and operating costs) Operating costs, excluding noncash compensation adjustments Equity in net earnings from investments Other jj Adjusted EBITDA Impairment charges Capital expenditures $ $ $ $ $ 13,653.1 559.2 179.6 $ 6,409.3 497.8 182.9 7,910.8 424.2 197.5 7,243.8 61.4 (3.3) (1,501.5) 73.6 (14.6) (11,939.7) (5,108.6) (6,690.9) 6,831.1 (1,582.3) (499.4) 21.0 (10.2) 1,963.6 $ — $ $ 306.9 (396.4) 39.9 (7.7) 1,617.2 78.8 1,655.8 $ $ $ (434.4) 65.1 (6.5) 1,465.8 — 2,796.6 103.0 (18.9) (2.5) 346.4 (78.8) (1,348.9) (38.0) (25.2) (1.2) 151.4 78.8 (1,140.8) See reconciliation of net income to adjusted d EBITDA in the “Non-GAAP Measures” section. Changes in commodity prices and sales volumes affect both revenues and cost of sales and fuel largely offset between these line items. ff , and, therefore, the impact is 2021 vs. 2020 - Adjusted EBITDA increased $346.4 million primarily as a result of the following: • • • • • an increase of $421.4 million in exchange services (excluding the impact of Winter Storm Uri discussed below) due primarily to: ff ◦ ◦ ◦ ◦ ntials, $261.6 million in higher volumes primarily in the Rocky Mountain region, Mid-Continent region and Permian Basin, offset partially by lower volumes in the Barnett Shale, $98.9 million related to wider commodity price differe $63.8 million in lower transportation costs in the Rocky Mountain region, and $12.9 million related to recognition of proceeds previously considered a gain contingency; and an increase of $98.3 million in optimization and marketing due primarily to wider location and commodity price differentials, increased activities during the negative impact of Winter Storm Uri of $46.2 million in exchange services due primarily to decreased volumes across our operations and higher electricity costs; an increase of $103.0 million in operating costs due primarily to increased property taxes associated with our completed capital-growth projects, higher employee costs related to short-term incentives and higher outside services; and a decrease of $18.9 million from lower equity in net earnings from investments due primarily to lower volumes on Overland Pass Pipeline. Winter Storm Uri and higher optimization volumes; offset by d ff 41 Capital expenditures decreased due primarily to completed and paused capital-growth projects in 2020. Operating Information Raw feed throughput (MBbl/d) (dd a) Average Conway-to-Mont Belvieu OPIS price differential - ethane in ethane/propane mix ($/gallon) Years Ended December 31, 2020 2019 2021 1,198 1,084 1,079 $ (0.01) $ 0.01 $ 0.07 (a) - Represents physical raw feed volumes on which we charge a feeff for transportation and/or fractionation services. 2021 vs. 2020 - Volumes increased dued Continent region and Permian Basin, increased ethane production in the Rocky Mountain region, and the impact of curtailed production across our system in 2020, offset partially by the impact of Winter Storm Uri in 2021 and lower volumes in the Barnett Shale. primarily to increased production primarily in the Rocky Mountain region, Mid- Impairments - The year ended December 31, 2020, includes $71.6 million of noncash impairment charges related primarily to certain inactive assets and a $7.2 million noncash impairment charge related to our 50% investment in Chisholm Pipeline Company. Natural Gas Pipelines p Selected Financial Results and Operating Information operating information for our Natural Gas Pipelines segment forff - The following tabla es set fort ff the periods indicated: ff h certain selected financial results and Financial Results 2021 2020 2019 (Millions of dollars) $ Increase (Decrease) Years Ended December 31, 2021 vs. 2020 2020 vs. 2019 Transportation revenues Storage revenues Residue natural gas sales and other revenues Cost of sales and fuel (exclusive of depreciation and operating costs) Operating costs, excluding noncash compensation adjustments Equity in net earnings from investments Other jj Adjusted EBITDA Capital expenditures $ $ $ 412.9 77.6 116.4 (11.2) (162.1) 97.8 (3.6) 527.8 92.6 $ $ $ 401.7 68.4 9.9 (6.8) (137.2) 104.4 (3.0) 437.4 71.9 $ $ $ 393.7 72.6 5.7 (4.6) (150.8) 95.7 (3.5) 408.8 99.2 See reconciliation of net income to adjusted d EBITDA in the “Non-GAAP Measures” section. 2021 vs. 2020 - Adjusted EBITDA increased $90.4 million primarily as a result of the following: 11.2 9.2 106.5 4.4 24.9 (6.6) (0.6) 90.4 20.7 8.0 (4.2) 4.2 2.2 (13.6) 8.7 0.5 28.6 (27.3) • • • • • t storage services dued gas prices on 5.2 Bcf of natural an increase of $109.1 million due primarily to higher average natural first quarter 2021 of volumes previously held in inventory, compared with 1.2 Bcf in the first quarter 2020; and an increase of $8.9 million fromff an increase of $4.7 million in transportation services dued interruptible transportation revenue in the first quarter 2021, offset partially by a favora settlement in April 2020; offset an increase of $24.9 million in operating costs due primarily to higher employee costs related primarily to short-term incentives, higher outside services and supplies expenses; and a decrease of $6.6 million from lower equity in net earnings from investments due primarily to decreased firm transportation revenues on Northern Border Pipeline. primarily to higher park-and-loan revenue and higher primarily to higher storage rates; and $13.5 million contract gas sales in the blea by ff ff t Capital expenditures increased in 2021 due primarily to capital-growth projects. 42 Operating Information (a) Natural gas transportation capacity contracted (MDth/d)dd Transportation capacity contracted (a) - Includes volumes for consolidated entities only. Years Ended December 31, 2020 2021 7,395 95 % 7,461 96 % 2019 7,618 98 % Roadrunner, in which we have a 50% ownership interest, has contracted all of its westbound capac a ity through 2041. Northern Border Pipeline, in which we have a 50% ownership interest, has contracted substantially all of its long-haul transportation capaa city through the fourth quarter 2022. In February 2021, our subsidiary, Midwestern Gas Transmission Company (Midwestern), filed a proposed change in rates pursuant to Section 4 of the Natural Gas Act with the FERC. In February 2022, Midwestern filed a Stipulation and Offerff Settlement with the FERC forff materially our results of operations. of approval. Pending approval by the FERC, the proposed settlement is not expected to impact NON-GAAP FINANCIAL MEASURES The following tablea adjusted EBITDA forff the periods indicated: sets forth a reconciliation of net income, the nearest comparable GAAP financial performance measure, to (Unaudited)dd Reconciliation of net income to adjusted EBITDA Net income Add: Interest expense, net of capitalized interest Depreciation and amortization Income tax expense Impairment charges Noncash compensation expense (a) Equity AFUDC and other noncash items Adjusted EBITDA (b) Reconciliation of segment adjusted EBITDA to adjusted EBITDA Segment adjusted EBITDA: Natural Gas Gathering and Processing Natural Gas Liquids Natural Gas Pipelines Other (b) Adjusted EBITDA jj 2021 Years Ended December 31, 2020 (Thousands of dollars) 2019 $ 1,499,706 $ 612,809 $ 1,278,577 732,924 621,701 484,498 — 42,592 (1,681) $ 3,379,740 712,886 578,662 189,507 644,930 8,540 (23,661) $ 2,723,673 491,773 476,535 372,414 — 26,699 (65,811) $ 2,580,187 $ 889,127 1,963,639 527,810 (836) $ 3,379,740 $ 650,036 1,617,241 437,426 18,970 $ 2,723,673 $ 702,650 1,465,765 408,816 2,956 $ 2,580,187 (a) - Year ended December 31, 2021 and 2020, includes a loss of $7.4 million and a benefit of $11.2 million, respectively, related to the mark- to-market of our share-based deferred compensation (b) - Year ended December 31, 2020, includes corporate net gains of $22.3 million on extinguishment of debt related to open market repurchases. plan. mm CONTINGENCIES See Note N of the Notes to Consolidated Financial Statements in this Annual Report for a discussion of regulatory and environmental matters. Other Legal Proceedings - We are a party to various legal proceedings that have arisen in the normal course of our operations. While the results of these proceedings cannot be predicted with certainty, we believe the reasonably possible losses fromff such proceedings, individually and in the aggregate, are not material. Additionally, we believe the probable finff al outcome of such t on our consolidated results of operations, financial position or cash flows. proceedings will not have a material adverse effecff 43 LIQUIDITY AND CAPITAL RESOURCES General - Our primary srr $2.5 Billion Credit Agreement, debt issuances and the issuance of common stock forff requirements. ources of cash inflows are operating cash flows, proceeds from our commercial paper program and our our liquidity and capital resources al expenditures We expect our sources of cash inflows to provide sufficient resources to finaff capita Agreement, which expires in June 2024 and access to $1.0 billion available through our “at-the-market” equity program. As of the date of this report, no shares have been sold through our “at-the-market” equity program. and maturities of long-term debt. We believe we have sufficient liquidity due to our $2.5 Billion Credit nce our operations, quarterly cash dividends, t We may manage interest-rate risk through the use of fixed-rate debt, floating-rate debt and interest-rate swaps.a information on our interest-rate swaps,a see Note C of the Notes to Consolidated Financial Statements in this Annual Report. For additional 3-10 of Regulation S-X and created Rule 13-01 to Guarantees and Cash Management - In 2020, the SEC amended RuleRR simplify disclosure requirements related to certain registered securities. We and ONEOK Partners are issuers of certain public debt securities. We guarantee certain indebtedness of ONEOK Partners, and ONEOK Partners and the Intermediate Partnership guarantee certain of our indebtedness. The guarantees in place for our and ONEOK Partners’ indebtedness are full, irrevocable, unconditional and absolute joint and several guarantees to the holders of each series of outstanding securities. Liabilities under the guarantees rank equally in right of payment with all existing and future Partners and the Intermediate Partnership are consolidated subsidiaries of ONEOK, separate financial statements forff 13-01 is provided, which includes narrative guarantors are not required, as long as the alternative disclosure required by RuleRR disclosure and summarized finaff ncial information. The Intermediate Partnership holds all of ONEOK Partners’ interests and equity in its subsidiaries, which are non-guarantors, and substantially all the assets and operations reside with non-guarantor operating subsidiaries. Therefore, as allowed under Rule 13-01, we have excluded the summarized financial information for each issuer and guarantor as the combined finaff ncial information of the subsidiary issuer and parent guarantor, excluding our ownership of all the interests in ONEOK Partners, reflect no material assets, liabilities or results of operations, apart from the guaranteed indebtedness. For additional information on our and ONEOK Partners’ indebtedness, see Note F of the Notes to Consolidated Financial Statements in this Annual Report. senior unsecured indebtedness. As ONEOK the ff We use a centralized cash management program that concentrates the cash assets of our non-guarantor operating subsidiaries in joint accounts for the purposes of providing financial fleff xibility and lowering the cost of borrowing, transaction costs and bank in excess of the daily needs of our operating subsidiaries ff fees. Our centralized cash management program provides that funds are concentrated, consolidated or otherwise made availablea for use by other entities within our consolidated group. Our operating subsidiaries participate in this program to the extent they are permitted pursuant to FERC regulations or their operating agreements. Under the cash management program, depending on whether a participating subsidiary has short-term cash surpluses or cash requirements, we provide cash to the subsidiary or the subsidiary provides cash to us. Short-term Liquidity - Our principal sources of short-term liquidity consist of cash generated from operating activities, distributions received fromff Credit Agreement. As of December 31, 2021, we are in compliance with all covenants of our $2.5 Billion Credit Agreement. our equity-method investments, proceeds from our commercial paper program and our $2.5 Billion At December 31, 2021, we had no borrowings under our $2.5 Billion Credit Agreement and $146.4 million of cash and cash equivalents. al (defined as current assets less current liabilities) deficff We had a working capita surplus of $525.2 million as of December 31, 2021, and December 31, 2020, respectively. Although working capita influenced by several factors, including, among other things: (i) the timing of (a) debt and equity i payments, (c) the funding of capia tal expenditures, and (d) accounts receivablea inventory and commodity imbalances; our working capita maturities of long-term debt and our working capita may have working capita capita ff al deficit to have an adverse impacm t to our cash flows or operations. and payable; and (ii) the volume and cost of al deficit at December 31, 2021, was driven primarily by current al surplus at December 31, 2020, was driven primarily by cash on hand. We periods as we continue to repay long-term debt. We do not expect this working it of $810.2 million and a working capia tal ssuances, (b) scheduled debt al deficits in future al is t For additional information on our $2.5 Billion Credit Agreement, see Note F of the Notes to Consolidated Financial Statements in this Annual Report. Long-term Financing - In addition to our principal sources of short-term liquidity discussed above, we expect to fund our longer-term financing requirements by issuing long-term notes. Other options to obtain financing include, but are not limited 44 to, issuing common stock, loans from financial instituti asset securitization and the sale and lease-back of facilities. t ons, issuance of convertible debt securities or preferred equity securities, Debt 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. 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. al expenditures, Material Commitments - We have material cash commitments related to our capita corresponding interest payments, which we expect to fund through our sources of cash inflows discussed above. Our senior notes and interest payments are discussed in Note F of the Notes to Consolidated Financial Statements in this Annual Report. We also have cash commitments related to transportation, storage and other commercial contracts, as well as our financial and physical derivative obligations, which we expect to fund with cash from operations. senior notes and ff ff t al expenditures Capital Expenditures - We classify expenditures significant operating or environmental efficiencies as growth capital expenditures. capita Maintenance capita capac a flows and short- and long-term debt. t t t t are made to replace partially or fully depreciated assets, to maintain the existing operating ity of our assets and to extend their useful lives. Our capital expenditures are financed typically through operating cash al expenditures al expenditures required to maintain our existing assets and operations and do not generate additional revenues. Maintenance capita t are those that are expected to generate additional revenue, return on investment or The following tablea sets forth our growth and maintenance capita al expenditures, t excluding AFUDC, forff the periods indicated: Capital Expenditures Natural Gas Gathering and Processing Natural Gas Liquids Natural Gas Pipelines Other Total capital expenditures 2021 275.2 306.9 92.6 22.2 696.9 $ $ 2020 (Millions of dollars) $ $ 446.1 1,655.8 71.9 21.6 2,195.4 $ $ 2019 926.5 2,796.6 99.2 26.0 3,848.3 al expenditures Total capita the prior year. We expect our 2022 capia tal expenditures to increase relative to 2021 due to our publicly announced capia tal- growth projects. See discussion of our announced capia tal-growth projects in the “Recent Developments” section. decreased in 2021, compared with 2020, due primarily to our completed capia tal-growth projects in t We expect total capita al expenditures, t excluding AFUDC and capia talized interest, of $900-$1,050 million in 2022. Credit Ratings - Our long-term debt credit ratings as of February 22, 2022, are shown in the tablea below: Rating Agency Moody’s S&P Fitch Long-Term Rating Baa3 BBB BBB Short-Term Rating Prime-3 A-2 F2 Outlook Stable Stable Stable Our credit ratings, which are investment grade, may be affecff affecting our business and industry. The most common criteria for assessment of our credit ratings are the debt-to-EBITDA ratio, interest coverage, business risk profile and liquidity. If our credit ratings were downgraded, our cost to borrow funds under our $2.5 Billion Credit Agreement could increase and a potential loss of access to the commercial paper market could occur. In the event that we are unable to borrow funds under our commercial paper program and there has not been a material adverse change in our business, we would continue to have access to our $2.5 Billion Credit Agreement, which expires in 2024. An adverse credit rating change alone is not a default under our $2.5 Billion Credit Agreement. ted by a material change in our financial ratios or a material event 45 In the normal course of business, our counterparties provide us with secured and unsecured credit. In the event of a downgrade in our credit ratings or a significant change in our counterparties’ evaluation of our creditworthiness, we could be required to provide additional collateral in the formff of cash, letters of credit or other negotiablea conduct business with such counterparties. We may be required to fund letters of credit or other negotiablea instruments as a condition of continuing to margin requirements with our counterparties with cash, instruments. ff t to the rights of the holders of outstanding preferred stock. In 2021, we paid common stock dividends of $3.74 per share, Dividends - Holders of our common stock share equally in any common stock dividends declared by our Board of Directors, u subjec which is consistent with prior year. In February 2022, we paid a quarterly common stock dividend of $0.935 per share ($3.74 per share on an annualized basis), which is consistent with the same quarter in the prior year. Our Series E Preferred Stock pays quarterly dividends on each share of Series E Preferred Stock, when, as and if declared by our Board of Directors, at a rate of 5.5% per year. In 2021, we paid dividends of $1.1 million for the Series E Preferred Stock. In February 2022, we paid quarterly dividends totaling $0.3 million for the Series E Preferred Stock. For the year ended December 31, 2021, our cash flows fromff our cash flows from operations to continue to sufficiently fund sufficient to fund our dividends, we may utilize cash on hand from other sources of short- and long-term liquidity to fund portion of our dividends. operations exceeded dividends paid by $878.8 million. We expect our cash dividends. To the extent operating cash flows are not a ff ff CASH FLOW ANALYSIS We use the indirect method to prepare our Consolidated Statements of Cash Flows. Under this method, we reconcile net income to cash flows provided by operating activities by adjusting net income forff result in actual cash receipts or payments during the period and forff reconciling items can include depreciation and amortization, impairment charges, allowance forff construction, gain or loss on sale of assets, deferred income taxes, net undistributed earnings from equity-method investments, share-based compensat financing activities. those items that affect net income but do not operating cash items that do not impact net income. These ion expense, other amounts and changes in our assets and liabilities not classified as investing or ff equity funds used during m The following tablea indicated: sets forth the changes in cash flows ff by operating, investing and financing activities for the periods Total cash provided by (used in): Operating activities Investing activities Financing activities Change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 2021 Years Ended December 31, 2020 (Millions of dollars) 2019 $ $ 2,546.3 (665.3) (2,259.1) (378.1) 524.5 146.4 $ $ 1,899.0 (2,270.5) 875.0 503.5 21.0 524.5 $ $ 1,946.8 (3,768.8) 1,831.0 9.0 12.0 21.0 Operating Cash Flows - Operating cash flows are affecff operating assets and liabia lities. Changes in commodity prices and demand for our services or products, whether because of general economic conditions, changes in supply, changes in demand forff the end products that are made with our products or increased competition from other service providers, could affect our earnings and operating cash flows. Our operating cash flows can also be impacted by changes in our NGLs and natural commodity prices, supply, demand and the operation of our assets. ted by earnings from our business activities and changes in our gas inventory balances, which are driven primarily by t ff 2021 vs. 2020 - Cash flows from operating activities, before changes in operating assets and liabia lities, increased $628.5 million due primarily to higher net income resulting from higher exchange services in our Natural Gas Liquids segment, higher realized prices and increased volumes in our Natural Gas Gathering and Processing segment and natural Pipelines segment, as discussed in “Financial Results and Operating Information.” gas sales in our Natural Gas t The changes in operating assets and liabilities decreased operating cash flows $141.8 million for the year ended December 31, 2021, compared with a decrease of $160.5 million for the same period in 2020. The change is due primarily to changes in accounts payable resulting from the timing of payments to vendors, suppliers and other third parties and changes in commodity 46 prices, which vary from period to period; changes in risk-management assets and liabia lities, which include a loss in 2020 on the settlement of $750 million of our forward interest-rate swapsa related to our March 2020 issuances of senior unsecured notes and changes in the faiff commodity prices and interest rates; and changes in other assets and liabilities; offset partially by changes in accounts receivable resulting from the timing of receipt of cash from customers and NGLs and natural from period to period and with changes in commodity prices. r value of risk-management assets and liabia lities, which vary from period to period and with changes in gas in storage, both of which vary t Investing Cash Flows 2021 vs. 2020 - Cash used in investing activities decreased $1.6 billion due primarily to reduced capia tal expenditures related to our completed capital-growth projects. Financing Cash Flows 2021 vs. 2020 - Cash fromff term debt and issuance of common stock in 2020, offset partially by repayments of long-term debt of $0.6 billion in 2021 compared with repayments of $1.5 billion in 2020. financing activities decreased $3.1 billion due primarily to the issuances of $3.25 billion in long- Cash Flow Analysis for the Year Ended December 31, 2020 vs. 2019 - The cash flow analysis for the year ended December 31, 2020, compared with the year ended December 31, 2019, is included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2020 Annual Report on Form 10-K, which is available via the SEC’s website at www.sec.gov and our website at www.oneok.com. IMPACT OF NEW ACCOUNTING STANDARDS Information about the impact of new accounting standards is included in Note A of the Notes to Consolidated Financial Statements in this Annual Report. CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of our Consolidated Financial Statements and related disclosures in accordance with GAAP requires us to make estimates and assumptions with respect to values or conditions that cannot be known with certainty that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements. These estimates and assumptions also affect the reported amounts of revenue and expenses during the reporting period. Although we believe these estimates and assumptions are reasonable, actual results could differ from our estimates. The following is a summary of our most critical accounting policies and estimates, which are defineff policies most important to the portrayal of our financial condition and results of operations and requiring management’s most difficult, subjective or complex judgment, particularly because of the need to make estimates concerning the impact of inherently uncertain matters. We have discussed the development and selection of our estimates and critical accounting policies with the Audit Committee of our Board of Directors. See Note A of the Notes to Consolidated Financial Statements in this Annual Report for the description of our accounting policies and additional information about our critical accounting policies and estimates. d as those estimates and Derivatives and Risk-management Activities - We utilize derivatives to reduce our market-risk exposure to commodity price and interest-rate fluctuations and to achieve more predictable cash flows. Our commodity price risk includes basis risk, which is the difference in price between various locations where commodities are purchased and sold. We record all derivative instruments at faiff r value, except for normal purchases and normal sales transactions that are expected to result in physical delivery. Many of the contracts in our derivative portfolio are executed in liquid markets where price transparency exists. Our commodity derivatives are generally valued using quoted prices published by an exchange. Our fair value measurements classified as Level 3 are composed predominantly of exchange-cleared and over-the-counter derivatives to hedge NGL price risk at certain market locations. These measurements are based on inputs that may include one or more unobservable inputs, including internally developed commodity price curves, that incorporate market data fromff services. We believe any measurement uncertainty at December 31, 2021, is immaterial as our Level 3 faiff are based on unadjusted pricing information from broker quotes and third-party pricing services. broker quotes and third-party pricing r value measurements 47 r value of a derivative instrument depends on whether it qualifies and has been designated The accounting for changes in the faiff as part of a hedging relationship. When possible, we implement effecff instruments that qualify as hedges for accounting purposes. We have not used derivative instruments for trading purposes. For hedge, the gain or loss from a change in fair value of the derivative instrument is deferred a derivative designated as a cash flowff in accumulated other comprehensive loss until the forecasted transaction affecff derivative instrument is reclassified into earnings. tive hedging strategies using derivative financial ts earnings, at which time the faiff r value of the We assess hedging relationships at the inception of the hedge and on an ongoing basis to determine whether the hedging relationship is, and is expected to remain, highly effective. We do not believe that changes in our fair value estimates of our derivative instruments have a material impact on our results of operations, as the majori ty of our derivatives are accounted for as effective cash flow hedges. However, if a derivative instrument is ineligible for cash flow hedge accounting or if we fail to appropriately designate it as a cash flow hedge, changes in fair value of the derivative instrument would be recorded in earnings. Additionally, if a cash flow hedge ceases to qualify for hedge accounting treatment because it is no longer probablea that the forecasted transaction will occur, the change in fair value of the derivative instrument would be recognized in earnings. For more information on commodity price sensitivity and a discussion of the market risk of pricing changes, see Item 7A, Quantitative and Qualitative Disclosures about Market Risk. a See Notes A, B and C of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of fair value measurements and derivatives and risk-management activities. 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. As part of our goodwill impairment test, we may first assess qualitative factors (including macroeconomic conditions, industry and market considerations, cost facff not that the fair value of each of our reporting units is less than its carrying amount. If furthe quantitative test is elected, we perform a Step 1 analysis for goodwill impairment. tors and overall financial performance) to determine whether it is more likely than r testing is necessary or a ff ff In a Step 1 analysis, an assessment is made by comparing the faiff goodwill. If the carrying value of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. r value of a reporting unit with its carrying amount, including Our impairment tests require the use of assumptions and estimates, such as industry economic factors and the profitabila future business strategies. To estimate the fair value of these assets and investments, we use two generally accepted valuation approaches, an income approach and a market approac includes the following inputs that are not readily available: a discount rate reflective of industry cost of capital, our estimated contract rates, volumes, operating margins, operating and maintenance costs and capia tal expenditures. Under the market approach, our inputs include EBITDA multiples, which are estimated from recent peer acquisition transactions, and forecasted EBITDA, which incorporates inputs similar to those used under the income approac h. If actual results are not consistent with our assumptim ons and estimates or our assumptim ons and estimates change due to new information, we may be exposed to future impairment charges. h. Under the income approach, our discounted cash flowff analysis ity of a a See Notes A, D, E and M of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of goodwill, long-lived assets and investments in unconsolidated affilff iates. Depreciation Methods and Estimated Useful Lives of Property, Plant and Equipment - Our property, plant and equipment are depreciated using the straight-line method that incorporates management assumptim ons regarding useful economic lives and residual values. As we place additional assets in service, our estimates related to depreciation expense have become more significant and changes in estimated useful lives of our assets could have a material effect on our results of operations. At the time we place our assets in service, we believe such assumptions are reasonable; however, circumstances may develop that would cause us to change these assumptions, which would change our depreciation expense prospectively. Examples of such circumstances include changes in (i) competm ition, (ii) laws and regulations that limit the estimated economic life of an asset, (iii) technology that render an asset obsolete, (iv) expected salvage values and (v) forecasts of the remaining economic life for the resource basins where our assets are located, if any. For the fiscal years presented in this Form 10-K, no changes were made to the determinations of useful lives that would have a material effect on the timing of depreciation expense in future periods. See Note D of the Notes to Consolidated Financial Statements in this Annual Report for additional discussion of property, plant and equipment. 48 FORWARD-LOOKING STATEMENTS operations (including plans to construct additional gas and NGL pipelines, processing and fractionation facilities and related cost estimates), our business prospects, the Some of the statements contained and incorporated in this Annual Report are forwff federal securities laws. The forward-looking statements relate to our anticipated financial performance (including projected operating income, net income, capital expenditures and projected levels of dividends), liquidity, management’s plans and objectives forff natural t outcome of regulatory and legal proceedings, market conditions and other matters. We make these forward-looking statements laws. The following in reliance on the safe harbor protections provided under fede discussion is intended to identify important factors that could cause futuret in the forward-looking statements. our future capia tal-growth projects and other future outcomes to differ materially from those set forth ral securities legislation and other applicablea ard-looking statements as defined under ff , cash flows ff ff ff t the information concerning possible or results of our operations and other statements contained or incorporated in this Annual Report identified by Forward-looking statements include the items identified in the preceding paragraph, assumed futuret words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forec “intend,” “may,” “might,” “outlook,” “plan,” “potential,” “project,” “scheduled,” “should,” “will,” “would,” and other words and terms of similar meaning. ast,” “goal,” “target,” “guidance,” a ff One should not place undue reliance on forward-looking statements. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future achievements expressed or implim ed by forward-looking statements. Those facff services and prices. In addition to any assumptions and other facff looking statements, factors that could cause our actual results to differ materially from those contemplated in any forward- looking statement include, among others, the following: tors referred to specifically in connection with the forward- t our operations, markets, products, results, performance or tors may affecff ff • • • • • • • • • • • • • t t ff rr r rr u chain disruption; ents, performance oil, natural gas and NGLs fromff to mitigate the spread of the virus, including city constraints and/or shut downs on the pipelines that transport crude the length, severity and reemergence of a pandemic or other health crisis, such as the COVID-19 pandemic and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, which may (as with COVID-19) precipitate or exacerbate one or more of the factors herein, gas, NGLs and crude oil and significantly disrupt or prevent us and our customers and reduce the demand for natural counterparties from operating in the ordinary course for an extended period and increase the cost of operating our business; operational challenges relating to the COVID-19 pandemic and efforts logistical challenges, protecting the health and well-being of our employees, remote work arrangem of contracts and supply the impact on drilling and production by factors beyond our control, including the demand for natural gas and crude oil; producers’ desire and ability to drill and obtain necessary permits; regulatory compliance; reserve performance; and capaa producing areas and our facilities; risks associated with adequate supply to our gathering, processing, fractionation and pipeline facilities, including production declines that outpac e new drilling, the shutting-in of production by producers, actions taken by federal, state or local governments to require producers to prorate or to cut their production levels as a way to address any excess market supply demand forff economic climate and growth in the geographic areas in which we operate; the risk of a slowdown in growth or decline in the United States or international economies, including liquidity risks in United States or foreign credit markets; performa ff the effect ff other taxes, pipeline safety, environmental compliance, cybersecurity, climate change initiatives, emissions credits, carbon offsets, carbon transportation costs; changes in demand for the use of natural gas, NGLs and crude oil because of the development of new technologies or other market conditions caused by concerns about climate change; the transition to a lower-carbon economy, including the timing and extent of the transition, as well as the expected role of different energy sources in such a transition; the pace of technological advancements and industry innovation, including those focused on reducing GHG emissions and advancing other climate-related initiatives, and our ability to take advantage of those innovations and developments; the effectiveness of our risk-management strategies, including mitigating cyber- and climate-related risks; ons or extended periods of ethane rejection; our services and products in the proximity of our facilities; pricing, production limits and authorized rates of recovery of natural gas and natural gas ntal policies and regulatory actions, including changes with respect to income and obligations by our customers, service providers, contractors and shippers; nce of contractual s of changes in governme t situati u r r t 49 • • • • • • • • • • • • • • • • • • • • • • • • • • • r t natural a capture gas, carbon ts of weather and other natural f our operations (both Scope 1 and 2 emissions), including , use and storage, other renewable energy sources such as solar and our ability to identify and execute opportunities, and the economic viabia lity of those opportunities, including those relating to renewablea wind and alternative low carbon fuel sources such as hydrogen; the ability of our existing assets and our ability to apply and continue to develop our expertise to support the growth of, and transition to, various renewable and alternative energy opportunities, including through the positioning and optimization of our assets; our ability to efficiently reduce the carbon intensity ot through the use of lower carbon power alternatives, management practices and system optimizations; the necessity to direct our focus on maintaining and enhancing our existing assets instead of efforts emissions; the effecff services and energy prices; acts of nature, or shippers’ facff the possibility of future changes in the political conditions throughout the world; the risk of increased costs for insurance premiums, security or other items as a consequence of terrorist attacks; the timing and extent of changes in energy commodity prices, including changes due to production decisions by other countries, such as the failure of countries to abia de by agreements to reduce production volumes; competition from other United States and foreign energy suppliers and transporters, as well as alternative forms of energy, including, but not limited to, solar power, wind power, geothermal energy and biofuels such as ethanol and biodiesel; the ability to market pipeline capac sabotage, terrorism or other similar acts that cause damage to our facilities or our suppliers’, customers’ ilities; ff terrorist attacks or the possibility or occurrence of an outbreak of, or changes in, hostilities or phenomena, including climate change, on our operations, demand for our terms, including the effects of: to reduce our GHG ff t t ff ff ity on favora a demand for and prices of natural – future – competitive conditions in the overall energy market; – availability of supplies of United States natural – availability of additional storage capaa city; blea t t gas, NGLs and crude oil; gas and crude rr oil; and t t tionating NGLs; gas and extracting and fracff iency of our plants in processing natural gas and NGLs we gather and process in our plants and transport on our the efficff the composition and quality of the natural pipelines; risks of marketing, trading and hedging activities, including the risks of changes in energy prices or the financial condition of our counterparties; our ability to control operating costs and make cost-saving changes; the risk inherent in the use of information systems in our respective businesses and those of our counterparties and service providers, including cyber-attacks, which, according to experts, have increased in volume and sophistication since the beginning of the COVID-19 pandemic; implementation of new software and hardware; and the impact on the timeliness of information for financial reporting; the timely receipt of approval by applicable governmental entities for construction and operation of our pipeline and other projects and required regulatory clearances; the ability to recover operating costs and amounts equivalent to income taxes, costs of property,t plant and equipment and regulatory assets in our state and FERC-regulated rates; the results of governmental actions, administrative proceedings and litigation, regulatory actions, executive orders, rule changes and receipt of expected clearances involving any local, state or federal regulatory body, including the FERC, the National Transportation Safety Board, Homeland Security, the PHMSA, the EPA and the CFTC; the mechanical integrity of facff the capia tal-intensive nature of our businesses; the impact of unforeseen changes in interest rates, debt and equity markets, inflation rates, economic recession and other external facff funding resulting from changes in equity and bond market returns; actions by rating agencies concerning our credit; our indebtedness and guarantee obligations could make us vulnerablea conditions, limit our ability to borrow additional funds competitors that have less debt or have other adverse consequences; our ability to access capital at competitive rates or on terms acceptable to us; our ability to acquire all necessary permits, consents or other approva necessary materials and suppli fractionation and transportation facilities without labor a our ability to control construction costs and completion schedules of our pipelines and other projects; tors over which we have no control, including the effect on pension and postretirement expense and es required for construction, and to construct gathering, processing, storage, and/or place us at competitive disadvantages compared with our ls in a timely manner, to promptly obtain all to general adverse economic and industry ilities and pipelines operated; or contractor problems; u a ff t 50 • • • • • • • • • • ity of assets or businesses acquired or constructed by us; diffiff culties or delays experienced by trucks, railroads or pipelines in delivering products to or from our terminals or pipelines; the uncertainty of estimates, including accruals and costs of environmental remediation; the impact of uncontracted capacity in our assets being greater or less than expected; the impact of potential impairment charges; the profitabila risks associated with pending or possible acquisitions and dispositions, including our ability to finff ance or integrate any m such acquisitions and any regulatory delay or conditions imposed acquisitions and dispositions; the risk that material weaknesses or significant deficiencies in our internal controls over financial reporting could emerge or that minor problems could become significant; litigation; the impact and outcome of pending and future the impact of recently issued and futuret the risk factors listed in the reports we have filed and may file with the SEC, which are incorporated by reference. ff accounting updates and other changes in accounting policies; and by regulatory bodies in connection with any such These factors are not necessarily all of the important factors that could cause actual results to differ materially fromff expressed in any of our forward-looking statements. Other factors could also affect adversely our futuret other risks are described in greater detail in Part I, Item 1A, Risk Factors, in this Annual Report and in our other filff ings that we make with the SEC, which are availablea forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Any such forward-looki required under securities laws, we undertake no obligation to update publicly any forward-looki of new information, subsequent events or change in circumstances, expectations or otherwise. ng statement speaks only as of the date on which such statement is made, and other than as via the SEC’s website at www.sec.gov and our website at www.oneok.com. All ng statement whether as a result results. These and those ff ff ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our exposure to market risk discussed below includes forward-looking statements and represents an estimate of possible changes in futuret earnings that could occur assuming hypothetical future movements in interest rates or commodity prices. Our views on market risk are not necessarily indicative of actual results that may occur and do not represent the maximum possible gains and losses that may occur since actual gains and losses will differ fromff interest rates or commodity prices and the timing of transactions. those estimated based on actual fluctuations in We are exposed to market risk due to commodity price and interest-rate volatility. Market risk is the risk of loss arising from adverse changes in market rates and prices. We may use financial instruments, including forward sales, swaps,a futures, to manage the risks of certain identifiablea risk-management function follows policies and procedures establia monitor our natural gas, condensate and NGL marketing activities and interest rates to ensure our hedging activities mitigate market risks and comply with approved options and or anticipated transactions and achieve more predictable cash flows. Our thresholds or limits. We do not use financial instruments for trading purposes. shed by our Risk Oversight and Strategy Committee to a rr We utilize a sensitivity analysis model to assess the risk associated with our derivative portfolio. The sensitivity analysis measures the potential change in fair value of our derivative instruments based upon a hypothetical 10% movement in the underlying commodity prices or interest rates. In addition to these variablea influenced by fluctuations in the notional amounts of the instruments and the discount rates used to determine the present values. Because we enter into these derivative instruments for the purpose of mitigating the risks that accompany certain of our business activities, as described below, the change in the market value of our derivative portfoli largely by a corresponding gain or loss on the hedged item. s, the fair value of our derivative portfolio is o would typically be offset ff See Note A of the Notes to Consolidated Financial Statements in this Annual Report for discussion on our accounting policies for our derivative instruments and the impact on our Consolidated Financial Statements. COMMODITY PRICE RISK As part of our hedging strategy, we use commodity derivative financial instruments and physical-forward contracts described in Note C of the Notes to Consolidated Financial Statements in this Annual Report to reduce the impact of near-term price fluctuations of natural gas, NGLs and condensate. Although our businesses are primarily fee- commodity price risk as a result of retaining a portion of the commodity sales proceeds associated with our fee with POP contracts. Under certain fee with POP contracts, our contractual feeff based, in our Natural Gas Gathering and Processing segment, we are exposed to s and POP percentage may increase or decrease if ff 51 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 are exposed to basis risk between the various production and market locations where we buy and sell commodities. t The following tablea estimated faiff presents the effect a hypothetical 10% change in the underlying commodity prices would have on the r value of our commodity derivative instruments as of the dates indicated: Commodity Contracts Crude oil and NGLs Natural gas Total change in estimated fair value of commodity contracts y y g g December 31, December 31, 2021 2020 (Millions of dollars) $ $ 40.6 11.5 52.1 $ $ 20.0 10.6 30.6 Our sensitivity analysis represents an estimate of the reasonablya commodity derivative contracts assuming hypothetical movements in future market prices and is not necessarily indicative of actual results that may occur. Actual gains and losses may differ fromff to actual fluctuations in market prices, as well as changes in our commodity derivative portfolio during the year. possible gains and losses that would be recognized on our estimates dued The following tablea volumes for the periods indicated: s set forth hedging information for our Natural Gas Gathering and Processing segment’s forecasted equity Year Ending December 31, 2022 NGLs - excluding ethane (MBbl/d) - Cdd TI-NYMEX Condensate (MBbl/d) - Wdd YMEX and basis (( Natural gas (BBtu/d ) - Ndd onway/Mont Belvieu Volumes Hedged 11.7 1.6 109.5 Average Price 0.96 / gallon $ $ 63.10 / Bbl $ 3.27 / MMBtu Percentage Hedged 69% 72% 75% Year Ending December 31, 2023 NGLs - excluding ethane (MBbl/d) - Cdd TI-NYMEX Condensate (MBbl/d) - Wdd YMEX and basis (( Natural gas (BBtu/d ) - Ndd onway/Mont Belvieu Volumes Hedged 0.9 0.2 17.3 Average Price 1.11 / gallon $ $ 74.95 / Bbl $ 5.06 / MMBtu Percentage Hedged 5% 7% 11% Our Natural Gas Gathering and Processing segment’s commodity price sensitivity is estimated as a hypothetical change in the price of NGLs, crude gas at December 31, 2021. Condensate sales are typically based on the price of crude oil. Assuming normal operating conditions, we estimate the following for our forecasted equity volumes: oil and natural rr t • • • a $0.01 per gallon change in the composite price of NGLs, excluding ethane, would change adjusted EBITDA forff years ending December 31, 2022 and 2023, by $2.6 million and $2.7 million, respectively; a $1.00 per barrel change in the price of crude oil would change adjusted EBITDA forff 2022 and 2023, by $0.8 million and $0.9 million, respectively; and a $0.10 per MMBtu change in the price of residue natural December 31, 2022 and 2023, by $5.3 million and $5.5 million, respectively. gas would change adjuste d EBITDA for the years ending the years ending December 31, the d t These estimates do not include any effecff operations that might be caused by, or arise in conjunction with, commodity price fluff ctuat gross processing spread may cause a change in the amount of ethane extracted from the natural and processing financial results forff ts of hedging or effects on demand for our services or natural certain contracts. t t gas processing plant ions. For example, a change in the t gas stream, impacting gathering INTEREST-RATE RISK We are exposed to interest-rate risk through borrowings under our $2.5 Billion Credit Agreement, commercial paper program and long-term debt issuances. Future increases in commercial paper rates or bond rates could expose us to increased interest costs on future borrowings. We may manage interest-rate risk through the use of fixed-rate debt, floaff ting-rate debt and interest- 52 rate swaps.a amounts. Interest-rate swapsa are agreements to exchange interest payments at some futff uret point based on specified notional At December 31, 2021 and 2020, we had forwa hedge the variability of interest payments on a portion of our forecasted debt issuances. All of our interest-rate swapsa designated as cash flowff million, respectively, related to these interest-rate swaps.a hedges. At December 31, 2021 and 2020, we had derivative liabilities of $145.5 million and $203.4 rd-starting interest-rate swapsa with notional amounts totaling $1.1 billion to are ff The following tablea rate derivative instruments as of the dates indicated: presents the effect of a 10% hypothetical change in interest rates on the estimated faiff r value of our interest- Forward-starting interest-rate swaps December 31, December 31, 2020 2021 (Millions of dollars) $ 19.6 $ 12.9 Our sensitivity analysis represents an estimate of the reasonablya interest-rate derivative contracts assuming hypothetical movements in future interest rates and is not necessarily indicative of actual results that may occur. Actual gains and losses may differ fromff to actual fluctuations in interest rates, as well as changes in our interest-rate derivative portfolio during the year. possible gains and losses that would be recognized on our estimates dued See Note C of the Notes to Consolidated Financial Statements in this Annual Report for more information on our hedging activities. COUNTERPARTY CREDIT RISK We assess the creditworthiness of our counterparties on an ongoing basis and require security, including prepayments and other forms of collateral, when appropriate. Certain of our counterparties may be impacted by a relatively low commodity price environment and could experience financial problems, which could result in nonpayment and/or nonperformance, which could impact adversely our results of operations. tt and Processing - Our Natural Gas Gathering and Processing segment derives services revenue primarily Natural Gas Gathering from majoa r and independent crude oil and natural gas producers, which include both large integrated and independent exploration and production companies. In this segment, our downstream commodity sales customers are primarily utilities, large industrial companies, marketing companies and our NGL affiliate. We are not typically exposed to material credit risk with producers under fee with POP contracts as we sell the commodities and remit a portion of the sales proceeds back to the fees. In 2021 and 2020, approximately 90% of the downstream commodity sales in our Natural producer less our contractual Gas Gathering and Processing segment were made to customers rated investment-grade by S&P, approved through comparablea internal counterparty analysis, or were secured by letters of credit or other collateral. t Natural Gas Liquids - Our Natural Gas Liquids segment’s counterparties are primarily NGL and natural gas gathering and processing companies; majoa r and independent crude oil and natural gas production companies; utilities; large industrial companies; natural gasoline distributors; propane distributors; municipalities; and petrochemical, refining and marketing companies. We charge fees to NGL and natural gas gathering and processing counterparties and NGL pipeline transportation customers. We are not typically exposed to material credit risk on the majori , as we purchase NGLs fromff revenue on the downstream sales of NGL products. In 2021 and 2020, approximately 70% and 75%, respectively, of this segment’s commodity sales were made to customers rated investment-grade by S&P, approved counterparty analysis, or were secured by letters of credit or other collateral. In addition, the majority ot Liquids segment’s pipeline tariffs provide us the ability to require security fromff our gathering and processing counterparties and deduct our fee from the amounts we remit. We also earn sr through comparable internal f our Natural ty of our exchange services fees shippers. Gas ales a a ff t lines - Our Natural Gas Pipelines segment’s customers are primarily local natural gas distribution companies, Natural Gas Pipei electric-generation facilities, large industrial companies, municipalities, producers, processors and marketing companies. In 2021 and 2020, approximately 85% of our revenues in this segment were fromff approved through comparablea the majority of our Natural internal counterparty analysis, or were secured by letters of credit or other collateral. In addition, Gas Pipelines segment’s pipeline tariffs provide us the abila customers rated investment-grade by S&P, ity to require security fromff shippers. t 53 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of ONEOK, Inc. Opinions on thett Financ ii ial Statemtt rr ents and Inter nal II Control over Financ ii ial Reportingii We have audited the accompanying consolidated balance sheets of ONEOK, Inc. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, of comprehensive income, of changes in equity and of cash flows (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over work (2013) financial reporting as of December 31, 2021, based on criteria established in Internal Control - IntII egrated Frame issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). for each of the three years in the period ended December 31, 2021, including the related notes FF ff In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - IntII egrated Frame issued by the COSO. work (2013) FF Basis for Opinions ncial reporting, and forff The Company’s management is responsible for these consolidated financial statements, for maintaining effecff control over finaff in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated finaff ncial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rulr es and regulations of the Securities and Exchange Commission and the PCAOB. ncial statements and on the Company’s internal control over finaff its assessment of the effectiveness of internal control over finaff tive internal ncial reporting, included We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether dued to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. ncial statements included performing procedures to assess the risks of material misstatement Our audits of the consolidated finaff of the consolidated financial statements, whether dued Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated finaff ncial reporting, assessing the control over finaff risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. ncial reporting included obtaining an understanding of internal control over finaff to error or fraud, and performing procedures that respond to those risks. ncial statements. Our audit of internal Definitiontt and Limi taii ii tions of Internal Control tt over FinFF ancial Reportingii A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forff in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fair dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures company; 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. of the company are being made only in accordance with authorizations of management and directors of the ly reflect the transactions and external purposes ff rr t 54 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effecff t 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. tiveness to future periods are subjecb Criticatt l Auditdd Mattertt The critical audit matter communicated below is a matter arising from the current period audit of the consolidated finaff ncial 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 Commodi CC ty Derivative Assets and Liabilities As described in Notes A and B to the consolidated finaff ncial 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 faiff r 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 unobservablea incorporate market data fromff using forward quotes provided by third-party pricing services that are validated with other market data. broker quotes and third-party pricing services. The commodity derivatives are generally valued inputs, including internally developed commodity price curves, that 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 faiff r 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. ncial statements. These procedures included testing the effectiveness of controls relating to the Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated finaff 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 liabia lities 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 fromff broker quotes and third-party pricing services. /s/ PricewaterhouseCoopers LLP Tulsa, Oklahoma March 1, 2022 We have served as the Company’s auditor since 2007. 55 Years Ended December 31, 2020 2019 2021 (Thousands of dollars, except per share amounts) $ 15,180,264 1,360,045 16,540,309 12,256,655 900,420 621,701 — 166,668 (1,394) 2,596,259 122,520 — 1,682 (3,333) (732,924) 1,984,204 (484,498) 1,499,706 1,100 1,498,606 3.36 3.35 $ $ $ $ $ $ $ 7,255,259 1,286,983 8,542,242 5,110,146 761,176 578,662 607,200 125,028 (1,327) 1,361,357 143,241 (37,730) 23,662 24,672 (712,886) 802,316 (189,507) 612,809 1,100 611,709 1.42 1.42 $ $ $ $ 8,916,047 1,248,320 10,164,367 6,788,040 863,708 476,535 — 119,156 2,575 1,914,353 154,541 — 64,815 9,055 (491,773) 1,650,991 (372,414) 1,278,577 1,100 1,277,477 3.09 3.07 446,403 447,403 431,105 431,782 413,560 415,444 ONEOK, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME Revenues Commodity sales Services Total revenues (Note P) Cost of sales and fuel (exclusive of items shown separately below) Operations and maintenance Depreciation and amortization Impairment charges (Notes D and E) General taxes (Gain) loss on sale of assets Operating income Equity in net earnings from investments (Note M) Impairment of equity investments (Note M) Allowance for equity funds used during construction Other income (expense) Interest expense (net of capitalized respectively) Income before income taxes Income taxes (Note L) Net income Less: Preferred stock dividends Net income available to common shareholders a interest of $25,150, $75,436 and $107,275, Basic EPS (Note I) Diluted EPS (Note I) Average shares (thousands) Basic Diluted See accompanying Notes to Consolidated Financial Statements. 56 Years Ended December 31, 2020 (Thousands of dollars) $ 612,809 $ 2019 1,278,577 1,499,706 (203,868) (165,023) (147,803) 228,999 21,097 (21,057) 49,976 (26,154) (9,696) 4,991 80,098 1,579,804 $ (7,369) (177,449) 435,360 $ (7,205) (185,761) 1,092,816 ONEOK, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2021 Net income Other comprehensive income (loss), net of tax Change in fair value of derivatives, net of tax of $60,896, $49,292 and $44,149, respectively Derivative amounts reclassified to net income, net of tax of $(69,134), $(6,313) and $6,058, respectively Change in retirement and other postretirement benefit plan obligations, net of tax of $(14,929), $7,812 and $2,910, respectively Other comprehensive income (loss) of unconsolidated affiliates, net of tax of $(1,490), $2,201 and $2,152, respectively Total other comprehensive income (loss), net of tax Comprehensive income See accompanying Notes to Consolidated Financial Statements. $ $ 57 ONEOK, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS Assets Current assets Cash and cash equivalents Accounts receivable, net Materials and supplies NGLs and natural gas in storage Commodity imbalances Other current assets Total current assets Property, plant and equipment Property, plant and equipment Accumulated depreciation and amortization Net property, plant and equipment (Note D) Investments and other assets Investments in unconsolidated affiliates (Note M) Goodwill and net intangible assets (Note E) Other assets Total investments and other assets Total assets December 31, December 31, 2021 2020 (Thousands of dollars) $ $ 146,391 1,441,786 153,019 427,880 39,609 165,689 2,374,374 524,496 829,796 143,178 227,810 11,959 132,536 1,869,775 23,820,539 4,500,665 19,319,874 23,072,935 3,918,007 19,154,928 797,613 763,295 366,457 1,927,365 $ 23,621,613 805,032 773,723 475,296 2,054,051 $ 23,078,754 58 ONEOK, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (Continued) Liabilities and equity Current liabilities Current maturities of long-term debt (Note F) Accounts payable Commodity imbalances Accrued taxes Accrued interest Operating lease liability (Note O) Other current liabilities Total current liabilities December 31, December 31, 2021 2020 (Thousands of dollars) $ $ 895,814 1,332,391 309,054 97,537 235,602 13,783 300,438 3,184,619 7,650 719,302 186,372 89,428 245,153 13,610 83,032 1,344,547 Long-term debt, excluding current maturities (Note F) 12,747,636 14,228,421 Deferred credits and other liabilities Deferred income taxes (Note L) Operating lease liability (Note O) Other deferred credits Total deferred credits and other liabilities Commitments and contingencies (Note N) Equity (Note G) ONEOK shareholders’ equity: 1,166,690 75,636 431,869 1,674,195 669,697 87,610 706,081 1,463,388 Preferred stock, $0.01 par value: authorized and issued 20,000 shares at December 31, 2021, and at December 31, 2020 — — Common stock, $0.01 par value: authorized 1,200,000,000 shares; issued 474,916,234 shares and outstanding 446,138,177 shares at December 31, 2021; issued 474,916,234 shares and outstanding 444,872,383 shares at December 31, 2020 Paid-in capital Accumulated other comprehensive loss (Note H) Retained earnings Treasury stock, at cost: 28,778,057 shares at December 31, 2021, and 30,043,851 shares at December 31, 2020 Total equity Total liabilities and equity See accompanying Notes to Consolidated Financial Statements. 4,749 7,213,861 (471,351) — 4,749 7,353,396 (551,449) — (732,096) 6,015,163 $ 23,621,613 (764,298) 6,042,398 $ 23,078,754 59 This page intentionally left bff lank. 60 ONEOK, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Operating activities Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization Impairment charges Equity in net earnings from investments Distributions received froff m unconsolidated affiliates Deferred income tax expense Other, net Changes in assets and liabilities: Accounts receivable NGLs and natural gas in storage, net of commodity imbalances Accounts payable Risk-management assets and liabilities Other assets and liabilities, net Cash provided by operating activities Investing activities Capital expenditures (less allowance for equity funds used during construction) Distributions received from unconsolidated affiliates in excess of cumulative earnings Other, net Cash used in investing activities Financing activities Dividends paid Borrowing (repayment) of short-term borrowings, net Issuance of long-term debt, net of discounts Repayment of long-term debt Issuance of common stock Other Cash provided by (used in) financing activities Change in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental cash flow information: Cash paid for interest, net of amounts capitalized Cash paid for income taxes, net of refunds See accompanying Notes to Consolidated Financial Statements. 2021 Years Ended December 31, 2020 (Thousands of dollars) 2019 $ 1,499,706 $ 612,809 $ 1,278,577 621,701 — (122,520) 123,010 472,057 94,091 (610,531) (105,038) 622,425 (93,713) 45,084 2,546,272 (696,854) 19,363 12,199 (665,292) (1,667,431) — — (604,894) 32,791 (19,551) (2,259,085) (378,105) 524,496 146,391 691,897 8,864 $ $ $ $ $ $ 578,662 644,930 (143,241) 144,352 186,730 35,327 (1,297) 172,316 (80,257) (187,458) (63,805) 1,899,068 (2,195,381) 31,808 (106,956) (2,270,529) (1,605,366) (220,000) 3,244,777 (1,457,222) 969,759 (56,949) 874,999 503,538 20,958 524,496 760,984 342 $ $ $ 476,535 — (154,541) 163,476 372,729 (26,101) (19,688) (10,193) (62,946) (86,268) 15,199 1,946,779 (3,848,349) 94,168 (14,577) (3,768,758) (1,457,628) 220,000 4,185,435 (1,057,348) 29,040 (88,537) 1,830,962 8,983 11,975 20,958 435,165 2,690 61 ONEOK, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Preferred Stock Issued Common Stock Issued Preferred Stock for adoption of January 1, 2019 Cumulative effeff ct adjustment d ASU 2016-02, “Leases (Topic 842)” Net income Other comprehensive loss Preferred stock dividends - $55.00 per share (Note G) Common stock issued Common stock dividends - $3.53 per share (Note G) Other, net December 31, 2019 Net income Other comprehensive loss (Note H) Preferred stock dividends - $55.00 per share (Note G) Common stock issued Common stock dividends - $3.74 per share (Note G) Other, net December 31, 2020 Net income Other comprehensive income (Note H) Preferred stock dividends - $55.00 per share (Note G) Common stock issued Common stock dividends - $3.74 per share (Note G) Other, net December 31, 2021 (Shares) 20,000 445,016,234 $ — — — — — — — — — — — — 20,000 — — — — 445,016,234 — — — — — 29,900,000 — — 20,000 — — — — — — 474,916,234 — — — — Common Stock (Thousands of dollars) $ 4,450 — $ — — — — — — — — — — — — — — — — — — — — — — — — — — 4,450 — — — 299 — — 4,749 — — — — Paid-in Capital 7,615,138 — — — — (7,667) (180,421) (23,155) 7,403,895 — — (550) 934,473 (992,741) 8,319 7,353,396 — — — 6,680 — — 20,000 — — 474,916,234 $ — — — $ — — 4,749 $ (168,145) 21,930 7,213,861 62 ONEOK, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued) for adoption of January 1, 2019 Cumulative effeff ct adjustment d ASU 2016-02, “Leases (Topic 842)” Net income Other comprehensive loss Preferred stock dividends - $55.00 per share (Note G) Common stock issued Common stock dividends - $3.53 per share (Note G) Other, net December 31, 2019 Net income Other comprehensive loss (Note H) Preferred stock dividends - $55.00 per share (Note G) Common stock issued Common stock dividends - $3.74 per share (Note G) Other, net December 31, 2020 Net income Other comprehensive income (Note H) Preferred stock dividends - $55.00 per share (Note G) Common stock issued Common stock dividends - $3.74 per share (Note G) Other, net December 31, 2021 Accumulated Other Comprehensive Loss $ (188,239) $ Retained Earnings Treasury Stock Total Equity (Thousands of dollars) — $ (851,806) $ 6,579,543 — — (185,761) — — — — (374,000) — (177,449) — — — — (551,449) — 80,098 — — (67) 1,278,577 — (1,100) — (1,277,410) — — 612,809 — (550) — (612,259) — — 1,499,706 — (1,100) — — — — — 43,412 — — (808,394) — — — 44,096 — — (764,298) — — — 32,202 — — (471,351) $ (1,498,606) — — $ — — (732,096) $ $ (67) 1,278,577 (185,761) (1,100) 35,745 (1,457,831) (23,155) 6,225,951 612,809 (177,449) (1,100) 978,868 (1,605,000) 8,319 6,042,398 1,499,706 80,098 (1,100) 38,882 (1,666,751) 21,930 6,015,163 See accompanying Notes to Consolidated Financial Statements. 63 ONEOK, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Operations - We are a corporation incorporated under the laws of the state of Oklahoma. Our Natural Gas Gathering and Processing segment provides midstream services to producers in North Dakota, Montana, Wyoming, Kansas and Oklahoma. Raw natural gas is typically gathered at the wellhead, compressed and transported through pipelines to our processing facilities. Processed natural delivered to natural delivered through NGL pipelines to fractionation facilities forff t gas pipelines, storage facilities and end users. The NGLs separated fromff gas, usually referred to as residue natural the raw natural gas are sold and gas, is then recompressed and further processing. t t ff lities that gather, fractionate, treat and distribute NGLs and store NGL Our Natural Gas Liquids segment owns and operates faci products, 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 ty of the pipeline- interstate NGL pipeline originating in Wyoming and Colorado and terminating in Kansas. The majori connected natural gas processing plants in the Williston Basin, Oklahoma, Kansas and the Texas Panhandle are connected to our NGL gathering systems. We lease rail cars and own and operate truck- and rail-loading and -unloading facilities connected to our NGL fractionation, storage and pipeline assets. 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. a Our Natural Gas Pipelines segment, through its wholly owned assets, provides intrastate and interstate natural 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 gas pipeline and storage assets are located in Oklahoma, Kansas and Texas. Our assets connect majora intrastate natural gas producing basins and market hubs with end-use customers. t t gas transportation natural Consolidation - Our Consolidated Financial Statements include our accounts and the accounts of our subsidiaries over which we have control or are the primary beneficiary. All intercompany balances and transactions have been eliminated in consolidation. iates are accounted forff Investments in unconsolidated affilff influence over operating and financial policies of our investee. Under this method, an investment is carrier 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. Impairment of equity investments is recorded when the impairments are other than temporary. These amounts are recorded as investments in unconsolidated affili disclosures of our unconsolidated affiliates. Consolidated Balance Sheets. See Note M forff ity to exercise significff ant d at its acquisition using the equity method if we have the abila ates on our accompanying ff 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 fromff since the date of our initial investment. The amount of cumulative distributions paid to us that exceeds our cumulative proportionate share of income in each period represents a returnt Consolidated Statements of Cash Flows. of investment and is classified as an investing activity on our the unconsolidated affiliate 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 , expenses for services received but for which no invoice has been benefit plans, provisions for uncollectible accounts receivablea received, provision for income taxes, including any deferred tax valuation allowances, the results of litigation and various other 64 recorded or disclosed amounts. In addition, a portion of our revenues and cost of sales and fuel month prices and estimated volumes. The estimates are reversed in the following month when we record actual volumes. are recorded based on current ff We evaluate our estimates on an ongoing basis using historical experience, consultation with experts and other methods we consider reasonablea estimates. Any effects on our financial position or results of operations from revisions to these estimates are recorded in the period when the facts that give rise to the revision become known. based on the particular circumstances. Nevertheless, actual results may differ significantly fromff the Fair Value Measurements - For our fair value measurements, we utilize market prices, third-party pricing services, present value methods and standard option valuation models to determine the price we would receive from the sale of an asset or the transfer of a liabila and liabilities consistent with how a market participant would price the net risk exposure at the measurement date. ity in an orderly transaction at the measurement date. We measure the faiff r value of a group of financial assets Many 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 availablea We compute the fair value of our derivative portfolio by discounting the projected future 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 swapsa determined using financial models that incorporate the implied forward LIBOR yield curve for the same period as the futuret interest-rate swap sa nonperformance risk, net of collateral, by using counterparty-specific bond yields. Although we use our best estimates to determine the fair value of the derivative contracts we have executed, the ultimate market prices realized could differ materially from our estimates. ettlements. We consider current market data in evaluating counterparties’, as well as our own, cash flows from our derivative assets is ff Fair Value Hierarchyy - At each balance sheet date, we utilize a fair value hierarchy to classify fair value amounts recognized or disclosed in our financial statements based on the observability of inputs used to estimate such faiff hierarchy are described below: r value. The levels of the • • • r value measurements are based on significant observable pricing inputs, including quoted prices forff r value measurements are based on unadjusted quoted prices for identical securities in active markets. natural gas and crude oil. Level 1 - faiff These balances are composed predominantly of exchange-traded derivative contracts forff Level 2 - faiff 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 - faiff broker quotes and third-party pricing internally developed commodity price curves that incorporate market data fromff 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 r value measurements are based on unadjusted uncertainty at December 31, 2021, is immaterial as our Level 3 faiff pricing information from broker quotes and third-party pricing services. r value measurements are based on inputs that may include one or more unobservable inputs, including t a Determining the appropria management’s judgment regarding the degree to which market data is observable or corroborated by observablea market data. We categorize derivatives based on the lowest level input that is significant to the fair value measurement in its entirety. te classification of our fair value measurements within the fair value hierarchy requires See Note B forff 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 maturit ies of three months or less. t Revenue Recognition - Revenues are recognized when control of the promised goods or services is transferred to our customers in an amount that reflects the consideration we expect to be entitled to receive in exchange for those goods or services. Our payment terms vary by customer and contract type, including requiring payment before products or services are delivered to certain customers. However, the term between customer prepayments, complem tion of our performance obligations, invoicing and receipt of payment due is not significant. 65 Performance Obligations and Revenue Sources commodity sales and services revenues, as described below: g - Revenue sources are disaggregated in Note Q and are derived fromff Commodity Sales (all segments) - We contract to deliver residue natural products to customers at a specified delivery point. Our sales agreements may be daily or longer-term contracts forff 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 fromff 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. Revenue is recorded based on the contracted selling price, which is generally index-based and settled monthly. gas, condensate, unfractionated NGLs and/or NGL a specifieff d t (( ontractstt (Nat Services ) - Under this type of contract, we charge fees forff and Processing segment Gathering only cll providing midstream services, which include gathering and treating our customer’s natural gas. Our performance obligation begins with delivery of raw natural gas to our system. This service is treated as one performance obligation that is satisfied over time. We use the output performed simultaneously. t method based on delivery of product to our system as the measure of progress, as our services are ural Gas Gathering e tt ith producer take-ikk ural Gas Gathering Fee with Ptt OP contracts wtt n-kind rights (Nat of contract, we do not control the stream of unprocessed natural in-kind rights. We purchase a portion of the raw natural include gathering, treating, compressing and processing our customer’s natural primarily the residue natural gas to the producer, sell the remaining commodities and remit a portion of the commodity sales proceeds to the producer less our contractual fees. Our performance obligation begins with delivery of raw natural gas to our system. This service is treated as one performance obligation that is satisfied over time. We use the output method based on delivery of product to our system as the measure of progress, as our services are performed simultaneously. providing midstream services, which gas. After performing these services, we returnt ) - Under this type to the producer’s take- gas that we receive at the wellhead dued gas stream, charge fees forff and Processing segment (( t e t t tt t t (( (Nat ural Gas Liquids segment Transportation and exchange contracts e 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. These services represent a series of distinct services that are treated as one performance obligation that is satisfied over time. We use the output method based on delivery of product to our system as the measure of progress, as our services are performed simultaneously. For transportation services under a tariff on our NGL transportation pipelines, fees are recorded upon redelivery to our customer at the completion of the transportation services. ) - Under this type of contract, we charge fees forff (( e a our customer. The capac ural Gas Liquids and Natural Gas Pipelines segments Storage contractstt (Nat withdraw/store commodities forff considered a bundled service, as we integrate them into one stand-ready obligation provided on a daily basis over the life of the agreement and satisfied over time. Fixed capacity reservation fees are allocated and evenly recognized in revenue. Capaa reservation fees that vary based on a stated or implied economic index and correspond with the costs to provide our services are recognized in revenue as invoiced to our customers. For contracts that do not include a capacity reservation, transportation, injection and withdrawal fees are recognized in revenue as those services are provided and are dependent on the volume transported, injen cted or withdrawn by our customer, which is at our customer’s discretion. 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. ity reservation and injen ction/withdrawal/storage services are ) - We reserve a stated storage capac ity and injen ct/tt city a t tt a (( (Nat e lines segment ural Gas Pipei ation contracts ) - We reserve a stated transportation capac Firm service transport ity reservation and transportation services are considered a bundled service, transport commodities for our customer. The capac as we integrate them into one stand-ready obligation provided on a daily basis over the life of the agreement and satisfied over time. Fixed capacity reservation fees are allocated and evenly recognized in revenue. Capaa ased on a stated or implied economic index and correspond with the costs to provide our services are recognized in revenue based on a daily effective fee rate. If the capaci recorded for the differeff are recognized in revenue as those services are provided and are dependent on the volume transported by our customer, which is at our customer’s discretion. 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. nce between the amount recorded in revenue and the amount billed to the customer. Transportation fees ty reservation fees vary solely as a contract feature, contract assets or liabilities are city reservation fees that vary brr ity and a a Interruptible transportation contracts (Nat e lines segment between the customer’s 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 ) - We agree to transport natural gas on our pipelines ural Gas Pipei (( 66 based on delivery of product to the customer to measure satisfactio delivered volumes is recorded in revenue at the time of delivery, when the customer obtains control. n of the performance obligation. The total consideration for ff Many of the contract types described above contain additional feeff minimum volume commitments or product specifications), which are considered to be variablea charges are not recorded until it is probable that a significant reversal of the associated revenue will not occur. by customers for nonperformance (e.g., consideration. These fees and s or charges payablea See Note P forff 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. Our contract asset balances at the beginning and end of the period primarily relate to our firm service transportation contracts with tiered rates. Our contract liabilities primarily represent deferred revenue on NGL storage contracts for which revenue is recognized over a one-year term, and deferred revenue on contributions in aid of construction received fromff which revenue is recognized over the contract periods, which range from 5 to 10 years. customers for Cost of Sales and Fuel - Cost of sales and fuel primarily includes (i) the cost of purchased commodities, including NGLs, natural gas and condensate, (ii) fees incurred for third-party transportation, fractionation and storage of commodities, (iii) fuel t and power costs incurred to operate our own facilities that gather, process, transport and store commodities, and (iv) an offset from the contractual fees deducted from the cost of purchased commodities under the contract types below: t t ith no producer take-ikk Fee with Ptt OP contracts wtt raw natural and processing the producer’s natural gas. After performing these services, we sell the commodities and return a portion of the commodity sales proceeds to the producer less our contractual n-kind rights (Natural Gas Gathering providing midstream services, which include gathering, treating, compressing gas and charge contractual feeff and Processing segment ) - We purchase fees. s forff e tt t tt eeff Purchase with f 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. ) - Under this type of contract, we purchase raw, unfractionated NGLs at an tural Gas Liquids segment (Na(( e 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,t (iii) other business-related service costs. and represent valid claims against nonaffiliated customers for products sold or services Accounts Receivable - Accounts receivablea rendered. We present accounts receivable net of an allowance forff collected. We assess the creditworthiness of our counterparties on an ongoing basis and require security, including prepayments and other forms of collateral, when appropriate. Outstanding customer receivables are reviewed regularly for possible nonpayment indicators, and allowances forff collectability, current conditions and supporta for credit losses was not material. credit losses are recorded based upon management’s estimate of forecasts at each balance sheet date. At December 31, 2021, our allowance credit losses to reflect the net amount expected to be blea u gas in storage are determined using the lower of weighted-average cost or Inventory - The values of current net realizable value. Noncurrent NGLs and natural gas are classified as property and valued at cost. Materials and supplies are valued at average cost. Certain large equipment inventory, which will ultimately be included in property, plant and equipment when utilized, is included in other assets in our Consolidated Balance Sheets and is valued at weighted-average cost. NGLs and natural r t t gas pipeline imbalances and are valued at market prices. Under the majori Commodity Imbalances - Commodity imbalances represent amounts payablea natural a t 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. To the extent that the volumes we receive under such agreements differ from those we deliver, we record a net exchange receivablea settled with movements of NGL products 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. or receivable forff NGL exchange contracts and ty of our NGL exchange agreements, we position with the counterparties. These net exchange receivablea s and payables are generally or payablea ff 67 t ions and to achieve more predictable cash flows. We record all derivative instruments at faiff Derivatives and Risk Management - We utilize derivatives to reduce our market-risk exposure to commodity price and interest-rate fluff ctuat r value, with the exception of normal purchases and normal sales transactions that are expected to result in physical delivery. Commodity price and interest-rate volatility may have a significant impact on the fair value of derivative instruments as of a given date. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, the reason for holding it. The tablea below summarizes the various ways in which we account for our derivative instruments and the impact on our Consolidated Financial Statements: Accounting Treatment Normal purchases and normal sales Mark-to-market Cash flow hedge Recognition and Measurement Balance Sheet Income Statement - Fair value not recorded - Change in fair value not recognized in earnings - Recorded at fair value - Recorded at fair value. The gain or loss on the derivative instrument is reported initially as a component of accumulated other comprehensive income (loss) - Change in fair value recognized in earnings - The gain or loss on the derivative instrument is reclassified out of accumulated other comprehensive income (loss) into earnings when the forecasted transaction affects earnings - The gain or loss on the derivative instrument is recognized in earnings Fair value hedge - Recorded at fair value - Change in fair value of the hedged item is recorded as an adjustment to book value - Change in fair value of the hedged item is recognized in earnings are used from time to time to manage interest-rate risk. Under certain conditions, we designate ransactions in order to hedge anticipated purchases and sales of naturat To reduce our exposure to fluctuations in natural gas, NGLs and condensate prices, we periodically enter into future purchases and sales, options or swap ta condensate. Interest-rate swapsa our derivative instruments as a hedge of exposure to changes in fair values or cash flows. relationships between hedging instruments and hedged items, as well as risk-management objectives and strategies forff undertaking various hedge transactions, and methods for assessing and testing correlation and hedge effecff tiveness. We specifically identify the foreff We assess hedging relationships at the inception of the hedge and on an ongoing basis to determine whether the hedging relationship is, and is expected to remain, highly effective. We also document our normal purchases and normal sales transactions that we expect to result in physical delivery and that we elect to exempt from derivative accounting treatment. casted transaction that has been designated as the hedged item in a cash flow hedge relationship. We formally document all l gas, NGLs and s, forward ff ff The realized revenues and purchase costs of our derivative instruments not considered held forff that qualify as normal purchases or normal sales that are expected to result in physical delivery are reported on a gross basis. trading purposes and derivatives ff Cash flows cash flows from the related hedged items in our Consolidated Statements of Cash Flows. from futures, forwards, options and swapsa that are accounted for as hedges are included in the same category as the See Notes B and C forff 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 capia talized interest. In some cases, the cost of regulated property retired or sold, plus removal costs, less salvage, is charged to accumulated depreciation. Gains and losses from sales or transfers of nonregulated properties or an entire operating unit or system of our regulated properties are recognized in income. Maintenance and repairs are charged directly to expense. The interest portion of AFUDC and capia talized interest represent the cost of borrowed funds activities forff regulated and nonregulated projects, respectively. We capia talize interest costs during the construction or upgrade of qualifying assets. These costs are recorded as a reduction to interest expense. The equity portion of AFUDC represents the projects and is recorded in the cost capita of our regulated properties and as a credit to the allowance forff alization of the estimated average cost of equity used during the construction of majora used to finance construction used during construction. ff equity funds ff Our properties are depreciated using the straight-line method over their estimated useful lives. Generally, we apply depreciation rates to functional groups of property having similar economic lives. We periodically conduct depreciation studies to assess the economic lives of our assets. For our regulated assets, these depreciation studies are completed as a part of our rate proceedings or tariff filings, and the changes in economic lives, if applicable, are implemented prospectively when the new rates are approved. For our nonregulated assets, if it is determined that the estimated economic life cff made prospectively. 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. hanges, the changes are 68 Property, plant and equipment on our Consolidated Balance Sheets includes construct 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. ion work in process forff capital projects rr See Note D forff 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. If furthe quantitative test is elected, we perform a Step 1 analysis. In a Step 1 analysis, an assessment is made by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying value of a reporting unit exceeds its fair ff value, an impairment loss is recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. r testing is necessary or a ff To estimate the fair value of our reporting units, we use two generally accepted valuation approaches, an income approach and a market approac h, we use h, using assumptions consistent with a market participant’s perspective. Under the income approac a anticipated cash flows ff appropriate discount rates. Under the market approach, we apply EBITDA multiples to forecasted EBITDA. The multiples used are consistent with recent market transactions. The forecasted cash flows possible future cash flows for a reporting unit over a period of years. over a period of years plus a terminal value and discount these amounts to their present value using are based on probability weighted-average a ff Long-lived assets - We assess our long-lived assets for impaim rment whenever events or changes in circumstances indicate that an asset’s carrying amount may not be recoverablea exceeds the sum of the undiscounted future ff an impairment is indicated, we record an impairment loss equal to the differe of the long-lived asset. cash flows expected to result from the use and eventual ff disposition of the asset. If nce between the carrying value and the fair value . An impairment is indicated if the carrying amount of a long-lived asset t Investments in unconsolidated affiff liates - The impairment test for equity-method investments considers whether the fair value of the equity investment as a whole, not the underlying net assets, has declined and whether that decline is other than temporary. 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 forff assets and investments in unconsolidated affilff iates, respectively. our disclosures and related impairment charges related to long-lived assets, goodwill and intangible ff gas storage facilities are subjeu 980, Regulated Operations. During the rate-making process for certain of our assets, regulatory Regulation - Depending on the specific service provided, our natural gas transmission pipelines, NGL pipelines and certain natural ct to rate regulation and/or accounting requirements by one or more of the FERC, OCC, t 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 authorities set the fraff mework 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. Certain examples of types of regulatory guidance include costs forff fuel and losses, acquisition costs, contributions in aid of construction, charges forff depreciation, and gains or losses on disposition of assets. This allows us to stabilize rates over time rather than passing such costs on to the customer forff recovery. Actions by regulatory authorities could have an effect in the amount recoverablea 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) establia considering the demand and competition for our services. immediate on the amounts we may charge our customers. Any difference and the amount deferred is recorded as income or expense at the time of the regulatory action. A shed by independent, third-party regulators and (ii) set at levels that will recover our costs when ff 69 Retirement and Other Postretirement Employee Benefits - We have defined benefit retirement plans covering certain employees and former employees. We sponsor welfare plans that provide postretirement medical and life insurance benefits to certain employees hired prior to 2017 who retire with at least fiveff plans is calculated using statistical and other factors that attempt to anticipate futff uret about the discount rate, expected returnt In determining the projected benefit obligations and costs, assumptions can change from period to period and may result in changes in the costs and liabia lities we recognize. tors include assumptions compensation increases, mortality and employment length. years of service. The expense and liabia lity related to these on plan assets, rate of futff uret events. These facff See Note K forff our retirement and other postretirement employee benefits disclosures. ff d income taxes are provided forff Income Taxes - Deferre assets and liabilities and carryforward items based on income tax laws and rates existing at the time the temporary differences are expected to reverse. Generally, the effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date of the rate change. the difference between the financial statement and income tax basis of We utilize a more-likely-than-not recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position that is taken or expected to be taken in a tax return. We reflect penalties and interest as part of income tax expense as they become applicable forff threshold and measurement attribute. For all periods presented, we had no uncertain tax positions that required the establia tax provisions that do not meet the more-likely-than-not recognition shment of a material reserve. We utilize the “with-and-without” approach for intra-period tax allocation for purposes of allocating total tax expense (or benefit) forff the year among the various financial statement components. We file numerous consolidated and separate income tax returns tax authorities of several states. We are not under any United States federal audits or statutet t with federal tax authorities of the United States along with the waivers at this time. See Note L forff 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. Certain of our natural gas gathering and processing, NGL and natural gas pipeline facilities are subjeu ct to agreements or regulations that give rise to our asset retirement obligations for removal or other disposition costs associated with retiring the assets in place upon discontinued use of the assets. We recognize the fair value of a liabila is incurred if a reasonable estimate of the fair value can be made. We are not able to estimate reasonably the faiff asset retirement obligations for portions of our assets, primarily certain pipeline assets, because the settlement dates are indeterminable given our expected continued use of the assets with proper maintenance. We expect our pipeline assets, for which we are unable to estimate reasonably the fair value of the asset retirement obligation, will continue in operation as long as supply and demand for natural gas and NGLs exist. Based on the widespread use of natural activities for residential users and electric-power generation for commercial users, as well as use of NGLs by the petrochemical industry, we expect supply and demand to exist for the foreseeablea an asset retirement obligation in the period when it heating and cooking r value of the gas forff future. ity forff the u t t For our assets that we are able to make an estimate, the fair value of the liabila associated asset, and this additional carrying amount is depreciated over the life of the asset. The liabila of each period through charges to operating expense. If the obligation is settled forff of the liability, we will recognize a gain or loss on settlement. The depreciation and accretion expense are immaterial to our Consolidated Financial Statements. ity is added to the carrying amount of the an amount other than the carrying amount ity is accreted at the end these contingencies when our assessments indicate that it is probable that a liability has We expense legal fees as incurred Contingencies - Our accounting for contingencies covers a variety of business activities, including contingencies forff environmental exposures. We accruerr been incurred or an asset will not be recovered and an amount can be estimated reasonably. and base our legal liability estimates on currently available facts and our estimates of the ultimate outcome or resolution. Accruals for estimated losses fromff a remediation feasibility study. Recoveries of environmental remediation costs fromff their receipt is deemed probable. Our expenditures date have not been significant in relation to our financial position or results of operations, and our expenditures environmental matters had no significff ant effecff differ fromff environmental remediation obligations generally are recognized no later than completion of other parties are recorded as assets when for environmental evaluation, mitigation, remediation and compliance to our estimates resulting in an impact, positive or negative, on earnings. during 2021, 2020 and 2019. Actual results may t on earnings or cash flows related to legal and a ff t t 70 See Note N forff additional discussion of contingencies. Share-Based Payments - We expense the fair value of share-based payments net of estimated forfei forfeiture rates based on historical forfeitures under our share-based payment plans. ff tures. We estimate See Note J forff our share-based payments disclosures. ff 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 deferre d and share awards deferred under the compensation plan for non-employee directors. Diluted EPS is calculated by dividing net income availablea 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 forff arrive at the fisff cal year-to-date dilutive component. to common shareholders by the daily weighted-average number of shares of each quarter are averaged to See Note I forff our EPS disclosures. Segment Reporting - Our chief operating decision-maker reviews the finff ancial 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 finaff our financial performance and to compare financial performance among companies in our industry. Adjusted EBITDA forff segment is defined as net income adjusted for interest expense, depreciation and amortization, noncash impaim rment charges, income taxes, allowance forff This calculation may not be comparable with similarly titled measures of other companies. used during construction, noncash compensat ion expense, and other noncash items. ncial analysts and others to evaluate ff equity funds m each See Note Q forff our segments disclosures. of ASUs to the Recently Issued Accounting Standards Update - Changes to GAAP are established by the FASB in the formff 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): Simplim fying the Accounting for Income Taxes,” which simplifies certain concepts in Topic 740, Income Taxes. The impact of adopting this standard was not material. B. FAIR VALUE MEASUREMENTS Recurring Fair Value Measurements - The following tabla es set fort indicated: ff h our recurring r fair value measurements forff the periods Derivative assets Commodity contracts Financial contracts Total derivative assets Derivative liabilities Commodity contracts Financial contracts Interest-rate contracts Total derivative liabilities $ $ $ $ December 31, 2021 Level 1 Level 2 Level 3 Total - Gross Netting (a) Total - Net (Thousands of dollars) 22,019 22,019 $ $ 172,833 172,833 $ $ 9,309 9,309 $ $ 204,161 204,161 $ (204,161) $ $ (204,161) $ — — (67,226) $ (112,922) $ (123,592) $ — (145,524) — (67,226) $ (258,446) $ (123,592) $ (303,740) $ (145,524) (449,264) $ 303,740 — 303,740 $ $ — (145,524) (145,524) (a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheet on a net basis. 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 71 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. Derivative assets Commodity contracts Financial contracts Total derivative assets Derivative liabilities Commodity contracts Financial contracts Interest-rate contracts Total derivative liabilities $ $ $ $ December 31, 2020 Level 1 Level 2 Level 3 Total - Gross Netting (a) Total - Net (Thousands of dollars) 6,697 6,697 $ $ — $ — $ 103,801 103,801 $ $ 110,498 110,498 $ (110,498) $ $ (110,498) $ — — (10,489) $ — — $ (135,122) $ (203,407) — (10,489) $ (203,407) $ (135,122) $ (145,611) $ (203,407) (349,018) $ 145,611 — 145,611 $ $ — (203,407) (203,407) (a) - Derivative assets and liabilities are presented in our Consolidated Balance Sheet on a net basis. 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, 2020, we held no cash and posted $63.1 million of cash with various counterparties, including $35.1 million of cash collateral that is offsetting derivative net liability positions under master-netting arrangements in the table above. The remaining $28.0 million of cash collateral in excess of derivative net liability positions is included in other current assets in our Consolidated Balance Sheet. The following tablea sets forth a reconciliation of our Level 3 faiff r value measurements forff the periods indicated: Derivative Assets (Liabilities) Net assets (liabilities) at beginning of period Total changes in fair value: Settlements included in net income (a) Transfers out of Level 3 derivatives New Level 3 derivatives included in other comprehensive income (loss) (b) Unrealized change included in other comprehensive income (loss) (b) Net liabilities at end of period Years Ended December 31, 2021 2020 (Thousands of dollars) $ (31,321) $ 30,772 31,003 (59,911) (57,325) 3,271 (114,283) $ $ (31,660) — (36,568) 6,135 (31,321) (a) - Included in commodity sales revenues/cost of sales and fuel in our Consolidated Statements of Income. (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. We consider the valuation of these commodity derivatives transacted through a clearing broker and valued with an unadjusted published price fromff Our Level 3 faiff provided by third-party pricing services that are validated with other unobservablea market data. During the year ended December 31, 2020, there were no transfers in or out of Level 3 of the fair value hierarchy. r value measurements continue to include NGL derivatives in other markets valued using forward quotes an exchange as a Level 2 valuation. r value of cash and cash equivalents, accounts receivablea Other Financial Instruments - The approximate faiff , accounts payable and short-term borrowings is equal to book value due to the short-term nature of these items. Our cash and cash equivalents are composed of bank and money market accounts and are classified as Level 1. Our short-term borrowings are classified as Level 2 since the estimated faiff in the commercial paper market. We have investments at December 31, 2021, associated with our supple plan and nonqualified deferred compensation plan that are carried at fair value and primarily composed of exchange-traded t mutual r value of the short-term borrowings can be determined using information availablea mental executive retirement funds classified as Level 1. u r value of our consolidated long-term debt, including current maturities, was $15.6 billion and $16.3 billion at The estimated faiff December 31, 2021 and 2020, 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 72 senior notes outstanding was determined using quoted market prices forff estimated faiff r value of our consolidated long-term debt is classified as Level 2. similar issues with similar terms and maturities. The C. RISK-MANAGEMENT AND HEDGING ACTIVITIES USING DERIVATIVES t Risk-management Activities - We are sensitive to changes in naturat contractual terms under which these commodities are processed, purchased and sold. We are also subject to the risk of interest- rate fluff ctuat secure a certain price forff t price and interest-rate fluctuations; and to achieve more predictable cash flows. We foll ow establa ished policies and procedures to assess risk and approve, monitor and report our risk-management activities. We have not used these instruments for trading purposes. ion in the normal course of business. We use physical-forward purchases and sales and financial derivatives to gas, condensate and NGL products; to reduce our exposure to commodity ff l gas, crude oil and NGL prices, principally as a result of a portion of our natural y p Commodity price risk changes in the price of natural reduce the near-term commodity price risk associated with a portion of the forecasted sales of these commodities: - Commodity price risk refers to the risk of loss in cash flows and future earnings arising from adverse gas, NGLs and condensate. We may use the folff lowing commodity derivative instruments to t • • • • • t rr futuret oil forff gas and crude delivery or settlement future physical delivery. These contracts are typically nontransferablea Futures contracts - Standardized contracts to purchase or sell natural under the provisions of exchange regulations; Forward contracts - Nonstandardized commitments between two parties to purchase or sell natural gas, crude oil or and can only be canceled with the NGLs forff consent of both parties; Swapsp - Exchange of one or more payments based on the value of one or more commodities. These instruments transfer the financial risk associated with a future change in value between the counterparties of the transaction, without also conveying ownership interest in the asset or liabila Options a commodity at a fixed price within a specifiedff traded or customized and nonexchange-traded; and Collar - Combination of a purchased put option and a sold call option, which places a floff or and ceiling price forff commodity sales being hedged. ity; - Contractual agreements that give the holder the right, but not the obligation, to buy or sell a fixff ed quantity of period of time. Options may either be standardized and exchange- p ff We may also use other instruments to mitigate commodity price risk. In our Natural Gas Gathering and Processing segment, we are exposed to commodity price risk as a result of retaining a portion of the commodity sales proceeds associated with our fee with POP contracts. 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 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 l gas, NGLs and condensate. the impact of price fluctuations related to naturat fees on these feeff with POP contracts may t 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 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 fluff ctuat ions related to NGLs. gas. We are also t t t gas in operations and retain natural gas from our customers for operations or as part of our fee forff In our Natural Gas Pipelines segment, we are primarily exposed to commodity price risk on our intrastate pipelines because they consume natural provided. When the amount consumed in operations differs from the amount provided by our customers, our pipelines must buy or sell natural on the regulatory treatment for this activity. To the extent that commodity price risk in our Natural Gas Pipelines segment is not mitigated by fuel natural t t our natural cost-recovery mechanisms, we may use physical-forward sales or purchases to reduce the impact of t ions. At December 31, 2021 and 2020, there were no financial derivative instruments with respect to gas, or store or use natural gas inventory, which can expose this segment to commodity price risk depending gas pipeline operations. gas price fluff ctuat ff t services Interest-rate risk - We may manage interest-rate risk through the use of fixed-rate debt, floaff swaps.a Interest-rate swaps are agreements to exchange interest payments at some futff uret ting-rate debt and interest-rate point based on specified notional 73 amounts. In 2020, we settled $750 million of our forward-starting interest-rate swapsa 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 used to hedge our LIBOR-based interest payments in 2020 resulting in a loss of $1.3 billion of our interest-rate swapsa $48.3 million. related to our underwritten public At December 31, 2021, and December 31, 2020, we had forwa $1.1 billion to hedge the variabila swapsa are designated as cash flowff hedges. ff ity of interest payments on a portion of our forecasted debt issuances. All of our interest-rate rd-starting interest-rate swapsa with notional amounts totaling Fair Values of Derivative Instruments - See Note A forff measurements. The following tabla e sets forth periods indicated: ff a discussion of the inputs associated with our fair value the fair values of our derivative instruments presented on a gross basis for the Location in our Consolidated Balance Sheets December 31, 2021 December 31, 2020 Assets (Liabilities) Assets (Thousands of dollars) (Liabilities) Derivatives designated as hedging instruments Commodity contracts (a) Financial contracts (b) Interest-rate contracts Other current liabilities Other deferred credits Total derivatives designated as hedging instruments Derivatives not designated as hedging instruments Commodity contracts (a) Financial contracts (b) Total derivatives not designated as hedging instruments Total derivatives $ $ 204,161 — — 204,161 $ (303,740) $ (145,524) — (449,264) 107,461 — — 107,461 $ (142,573) — (203,407) (345,980) — — 204,161 — — $ (449,264) $ 3,037 3,037 110,498 (3,038) (3,038) $ (349,018) (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. Notional Quantities forff Derivative Instruments - The following tablea instruments held for the periods indicated: sets forth the notional quantities for derivative Derivatives designated as hedging instruments: (a) Cash flow hedges (( Fixed price ff -Natural gas (Bcf ) -Crude oil and NGLs (MMBbl) Basis ff -Natural gas (Bcf ) (( Interest-rate contracts (Billions (( of dollars) December 31, December 31, 2021 2020 Net Purchased/Payor (Sold/Receiver) Contract Type utures F Futures F utures Swaps (32.3) (10.0) (30.5) 1.1 $ $ (43.3) (4.6) (43.3) 1.1 (a) - Notional amounts for derivatives not designated as hedging instruments are excluded from the table above quantities of 0.8 MMBbl for NGLs fixed priced derivative instruments at December 31, 2020. a due to fully offsetting notional 74 Cash Flow Hedges - The following tabla e sets forth comprehensive income (loss) forff the periods indicated: ff the unrealized change in fair value of cash flow hedges in other Commodity contracts Interest-rate contracts Total unrealized change in fair value of cash flow hedges in other comprehensive income (loss) $ $ 2021 Years Ended December 31, 2020 (Thousands of dollars) (5,699) $ (322,648) $ 57,884 (208,616) 2019 38,819 (230,771) (264,764) $ (214,315) $ (191,952) The following tablea sets forth the effect of cash flowff hedges on net income forff the periods indicated: Derivatives in Cash Flow Hedging Relationships Commodity contracts Interest-rate contracts (a) Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Net Income 2021 Commodity sales revenues Cost of sales and fuel Interest expense $ (731,793) $ 473,612 (39,952) 85,436 (19,170) (93,676) Years Ended December 31, 2020 (Thousands of dollars) $ 2019 94,547 (44,202) (23,230) Total change in fair value of cash flow hedges reclassified from accumulated other comprehensive loss into net income on derivatives $ (298,133) $ (27,410) $ 27,115 (a) - The year ended December 31, 2020, includes a loss of $48.3 million on the settlement of $1.3 billion of interest-rate swaps used to hedge our LIBOR-based interest payments. Credit Risk - We monitor the creditworthiness of our counterparties and compliance with policies and limits established by our Risk Oversight and Strategy Committee. We maintain credit policies with regard to our counterparties that we believe minimize overall credit risk. These policies include an evaluation of potential counterparties’ financial condition (including ates), collateral requirements under certain circumstances and the use of credit ratings, bond yields and credit defaul standardized master-netting agreements that allow us to net the positive and negative exposures associated with a single counterparty. We use internally developed credit ratings for counterparties that do not have a credit rating. t swap ra ff Our financial commodity derivatives are generally settled through a NYMEX or ICE clearing broker account with daily margin requirements. However, we may enter into finaff an investment-grade credit rating from S&P, Fitch and/or Moody’s. If our credit ratings on our senior unsecured long-term debt were to decline below investment grade, the counterparties to the derivative instruments could request collateralization on derivative instruments in net liability positions. There were no financial derivative instruments with contingent features related to credit risk at December 31, 2021. ncial derivative instruments that contain provisions that require us to maintain The counterparties to our derivative contracts typically consist of majora commercial and industrial end users. This concentration of counterparties may affecff positively or negatively, in that the counterparties may be affected similarly by changes in economic, regulatory or other conditions. Based on our policies, exposures, credit and other reserves, we do not anticipate a material adverse effecff financial position or results of operations as a result of counterparty nonperformance. t t our overall exposure to credit risk, either energy companies, financial instituti t on our ons and At December 31, 2021, the credit exposure from our derivative assets is with investment-grade companies in the finff ancial services sector. 75 D. PROPERTY, PLANT AND EQUIPMENT The following tablea sets forth our property, plant and equipment by property type, forff the periods indicated: Nonregulated Gathering pipelines and related equipment Processing and fractionation and related equipment Storage and related equipment Transmission pipelines and related equipment General plant and other Construction work in process Regulated Storage and related equipment Natural gas transmission pipelines and related equipment NGL transmission pipelines and related equipment General plant and other Construction work in process Property, plant and equipment Accumulated depreciation and amortization - nonregulated Accumulated depreciation and amortization - regulated Net property, plant and equipment yy Estimated Useful Lives (Years) December 31, 2021 December 31, 2020 (Thousands of dollars) 5 to 40 3 to 40 3 to 54 5 to 54 2 to 60 — 5 to 25 5 to 77 5 to 88 2 to 50 — $ $ 4,371,936 5,356,508 874,522 886,343 695,117 1,132,961 9,197 1,660,034 8,595,968 73,449 164,504 23,820,539 (2,885,020) (1,615,645) 19,319,874 $ $ 4,143,752 5,084,802 798,785 810,434 647,675 1,265,736 9,180 1,569,268 8,423,544 72,535 247,224 23,072,935 (2,514,328) (1,403,679) 19,154,928 The average depreciation rates forff indicated: Natural Gas Liquids Natural Gas Pipelines our regulated property are set fort ff h, by segment, in the following tablea for the periods Years Ended December 31, 2020 2.2% 2.1% 2021 2.2% 2.1% 2019 2.0% 2.1% We incurred costs for construction work in process that had not been paid at December 31, 2021, 2020 and 2019, of $130.5 million, $151.7 million and $544.8 million, respectively. Such amounts are not included in capital expenditures (less AFUDC) on the Consolidated Statements of Cash Flows. 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 and exceeded their estimated fair value. As a result, we recorded noncash impaim rment charges of $362.3 million, recoverablea in the Powder River Basin and its related supply contracts and which includes a naturat natural t recorded noncash impaim rment charges of $71.6 million related primarily to certain inactive assets, as our expectation for futuret use of the assets changed. These charges are included within impairment charges in our Consolidated Statement of Income forff the year ended December 31, 2020. gas processing plants and infrastructure in western Oklahoma and Kansas. In our Natural Gas Liquids segment, we l gas processing plant and infrastructuret E. GOODWILL AND INTANGIBLE ASSETS Goodwill - The following tablea sets forth our goodwill, by segment, forff the periods indicated: Natural Gas Liquids Natural Gas Pipelines gg Total goodwill 76 December 31, 2021 December 31, 2020 (Thousands of dollars) $ $ 371,217 156,375 527,592 $ $ 371,217 156,375 527,592 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 forff Processing reporting unit exceeded its estimated fair value, resulting in a noncash impaim rment charge of $153.4 million, which is included within impairment charges in our Consolidated Statement of Income forff December 31, 2021 and 2020, we have no remaining goodwill in our Natural impairment and concluded that the carrying value of the Natural Gas Gathering and Gas Gathering and Processing segment. the year ended December 31, 2020. At t t 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 fivff e years is estimated to be $10.4 million. The folff carrying amount and accumulated amortization of intangible assets for the periods presented: lowing tabla e refleff cts the gross Gross intangible assets Accumulated amortization gg Net intangible assets December 31, December 31, 2021 2020 (Thousands of dollars) $ $ 381,435 (145,732) 235,703 $ $ 381,435 (135,304) 246,131 Impairment Charges - In 2020 in our Natural Gas Gathering and Processing segment, we recorded noncash impairment charges to intangible assets of $19.9 million related to supply contracts associated with our natural gas processing plant in the Powder River Basin, which was also impaim red. These charges are included within impairment charges in our Consolidated Statement of Income forff the year ended December 31, 2020. 77 F. DEBT The folff lowing tablea sets forth our consolidated debt for the periods indicated: Commercial paper outstanding Senior unsecured obligations: $700,000 at 4.25% due February 2022 $900,000 at 3.375% due October 2022 $425,000 at 5.0% due September 2023 $500,000 at 7.5% due September 2023 $500,000 at 2.75% due September 2024 $500,000 at 4.9% due March 2025 $400,000 at 2.2% due September 2025 $600,000 at 5.85% due January 2026 $500,000 at 4.0% due July 2027 $800,000 at 4.55% due July 2028 $100,000 at 6.875% due September 2028 $700,000 at 4.35% due March 2029 $750,000 at 3.4% due September 2029 $850,000 at 3.1% due March 2030 $600,000 at 6.35% due January 2031 $400,000 at 6.0% due June 2035 $600,000 at 6.65% due October 2036 $600,000 at 6.85% due October 2037 $650,000 at 6.125% due February 2041 $400,000 at 6.2% due September 2043 $700,000 at 4.95% due July 2047 $1,000,000 at 5.2% due July 2048 $750,000 at 4.45% due September 2049 $500,000 at 4.5% due March 2050 $300,000 at 7.15% due January 2051 Guardian Pipeline Weighted average 7.85% due December 2022 Total debt Unamortized portion of terminated swaps Unamortized debt issuance costs and discounts Current maturities of long-term debt Short-term borrowings (a) Long-term debt gg December 31, December 31, 2021 2020 (Thousands of dollars) — $ — $ — 895,814 425,000 500,000 500,000 500,000 387,000 600,000 500,000 800,000 100,000 700,000 714,251 780,093 600,000 400,000 600,000 600,000 650,000 400,000 689,006 1,000,000 672,530 443,015 300,000 541,877 895,814 425,000 500,000 500,000 500,000 387,000 600,000 500,000 800,000 100,000 700,000 714,251 780,093 600,000 400,000 600,000 600,000 650,000 400,000 689,006 1,000,000 713,676 451,270 300,000 — 13,756,709 11,596 (124,855) (895,814) — 12,747,636 $ 13,657 14,361,644 13,314 (138,887) (7,650) — 14,228,421 $ (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 facff and contains certain finaff ncial, 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, adjuste 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. d forff ility d swingline loans. Under the terms of our $2.5 Billion Credit Agreement, we may request an increase in the Our $2.5 Billion Credit Agreement includes a $100 million sublimit for the issuance of standby letters of credit and a $200 million sublimit forff 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 applicablea margin rate and an annual facff fee, both of which adjust with changes in our credit ratings. Based on our current credit ratings, borrowings, if any, will accruer at LIBOR, or alternate benchmark rate, plus 110 basis points, and the annual facff is 15 basis points. At December 31, ility feeff ility 78 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. Senior Unsecured Obligations - All notes are senior unsecured obligations, ranking equally in right of payment with all of our t existing and future other liabia lities of any non-guarantor subsidiaries. unsecured senior indebtedness, and are structural ly subordinate to any of the existing and future debt and ff ff 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 dued due 2051. The net proceeds, after deducting underwriting discounts, commissions and offering expenses, were $1.48 billion. A portion of the proceeds was used to repay the outstanding borrowings under our $1.5 Billion Term Loan Agreement. The remainder was used for general corporate purposes. 2026; $600 million, 6.35% senior notes due 2031; and $300 million, 7.15% senior notes In March 2020, we completed an underwritten public offering of $1.75 billion senior unsecured notes consisting of $400 million, 2.2% senior notes dued 2050. The net proceeds, after deducting underwriting discounts, commissions and offering expenses, were $1.73 billion. A portion of the proceeds was used to pay all outstanding amounts under our commercial paper program. The remainder was used for general corporate purposes, which included repayment of other existing indebtedness and funding capia tal expenditures. 2025; $850 million, 3.1% senior notes due 2030; and $500 million, 4.5% senior notes due In August 2019, we complem ted an underwritten public offering of $2.0 billion se inior unsec imilllliion, 2.75% senior notes due 2024; $750 million, 3.4% senior notes due 2029; dand $$750 2049. proceeds were used for ggene lral corporate purposes, iincl di . expe dinditures rwri iti gng didiscounts, commiissiions andd off hThe net proce deds, after ddedductinging ludi gng repayyment of exiistinging iind bdebt dedness dunde t i dured notes consiistinging of $$500 imilllliion, 4.45% senior notes due i fferi gng expenses, were $1.97 billion. The dand funding funding ca ipia tall 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 capia tal expenditures. p y Repayments February 2022 at 100% of the principal amount, plus accruedrr - In November 2021, we redeemed the remaining $536.1 million of our $700 million, 4.25% senior notes due 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. 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. In May 2020, we repaid the remaining $1.25 billion of our $1.5 Billion Term Loan Agreement with cash on hand from our May 2020 public offering of $1.5 billion senior unsecured notes. 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 forff 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. 79 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. t The aggregate maturit 2022 through 2026 are shown below: ies of long-term debt outstanding and interest obligations on debt as of December 31, 2021, for the years 2022 2023 2024 2025 2026 $ $ $ $ $ Senior Unsecured Obligations Interest Obligations on Debt (Millions of dollars) $ $ $ $ $ 670.5 629.3 584.6 553.6 508.8 $ $ $ $ $ 895.8 925.0 500.0 887.0 600.0 Total 1,566.3 1,554.3 1,084.6 1,440.6 1,108.8 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 u the indentures governing the remainder of our senior notes include an event of default upon the acceleration of other ff indebtedness of $100 million or more. Such events of defaul principal amount of the outstanding senior notes to declare those senior notes immediately due and payable in full indenture for the 7.5% notes dued 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. 2023 also contains a provision that allows the holders of the notes to require ONEOK to offer acceleration of other indebtedness of $15 million or more, and t would entitle the trustee or the holders of 25% in aggregate . The ff 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 dued 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 futuret 2022, 2023, 2024, 2025, 2026, 2027, 2028 (4.55%), 2029, 2030, 2031, 2041, 2043, 2047, 2048, 2049, 2050 and 2051 unsecured senior indebtedness. 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. G. EQUITY Series A and B Convertible Preferff red Stock - There are no shares of Series A or Series B Preferred Stock currently issued or outstanding. a shed an “at-the-market” equity program for the offer and sale from time to time of o an aggregate offering price of $1.0 billion. The program allows us to offer and sell common stock at Equity Issuances - In July 2020, we establia our common stock up tu prices we deem appropria more of the program’s managers acting as principals. Sales of our common stock may be made by means of ordinary brokers’ transactions on the NYSE, in block transactions or as otherwise agreed to between us and the sales agent. We are under no obligation to offer and sell common stock under the program. No shares have been sold through our “at-the-market” program as of the date of this report. sales transactions through a forward te through a sales agent, in forward seller or directly to one or ff ff In June 2020, we completed an underwritten public offering of 29.9 million shares of our common stock at a public offering price of $32.00 per share, generating net proceeds, after deducting underwriting discounts, commissions and offering expenses, of $937.0 million. The proceeds were used for general corporate purposes, including repayment of existing indebtedness and funding capia tal expenditures. 80 Dividends - Holders of our common stock share equally in any dividend declared by our Board of Directors, subju ect to the rights of the holders of outstanding Series E Preferred Stock. Dividends paid totaled $1.7 billion, $1.6 billion and $1.5 billion for 2021, 2020 and 2019, 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 tablea sets forth the quarterly dividends per share paid on our common stock in the periods indicated: First Quarter Second Quarter Third Quarter Fourth Quarter Total Years Ended December 31, 2020 2019 2021 $ $ 0.935 0.935 0.935 0.935 3.74 $ $ 0.935 0.935 0.935 0.935 3.74 $ $ 0.860 0.865 0.890 0.915 3.53 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. 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. We paid dividends for the Series E Preferred Stock of $1.1 million in 2021, 2020 and 2019. We paid quarterly dividends totaling $0.3 million forff the Series E Preferred Stock in February 2022. H. ACCUMULATED OTHER COMPREHENSIVE LOSS The following tablea sets forth the balance in accumulated other comprehensive loss for the periods indicated: Risk- Management Assets/Liabilities (a) Retirement and Other Postretirement Benefit Plan Obligations (a) (b) Risk- Management Assets/Liabilities of Unconsolidated Affiliates (a) (Thousands of dollars) Accumulated Other Comprehensive Loss (a) $ (233,520) $ (131,481) $ (8,999) $ (374,000) (165,023) 21,097 (143,926) (377,446) (203,868) 228,999 25,131 (352,315) $ (40,341) 14,187 (26,154) (157,635) 31,897 18,079 49,976 (107,659) $ (8,635) 1,266 (7,369) (16,368) 3,088 1,903 4,991 (11,377) $ (213,999) 36,550 (177,449) (551,449) (168,883) 248,981 80,098 (471,351) $ January 1, 2020 Other comprehensive loss before reclassifications Amounts reclassified to net income (c) Other comprehensive loss December 31, 2020 Other comprehensive income (loss) before reclassifications Amounts reclassified to net income (c) Other comprehensive income December 31, 2021 (a) - All amounts are presented net of tax. (b) - Includes amounts related to supplemental executive retirement plan. (c) - See Note C forff postretirement benefit plan obligations. details of amounts reclassified to net income forff risk-management assets/liabilities and Note K forff retirement and other 81 lowing tablea The folff representing unrealized losses related to risk-management assets and liabia lities: sets forth information about the balance of accumulated other comprehensive loss at December 31, 2021, Commodity derivative instruments expected to be realized within the next 36 months (b) Settled interest-rate swaps to be recognized over the life off Interest-rate swaps with future settlement dates expected to be amortized over the life off Accumulated other comprehensive loss at December 31, 2021 f the long-term, fixed-rate debt (c) f long-term debt Risk- Management Assets/Liabilities (a) (Thousands of dollars) $ (76,942) (163,320) (112,053) (352,315) $ (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. (c) - We expect net losses of $27.1 million, net of tax, will be reclassified into earnings during the next 12 months. 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. I. EARNINGS PER SHARE The following tablea s set forth the computation of basic and diluted EPS forff the periods indicated: Year Ended December 31, 2021 Income Shares (Thousands, except per share amounts) Per Share Amount Basic EPS Net income available for common stock Diluted EPS $ 1,498,606 446,403 $ 3.36 Effect of dilutive securities Net income available for common stock and common stock equivalents — 1,498,606 $ 1,000 447,403 $ 3.35 Year Ended December 31, 2020 Income Shares (Thousands, except per share amounts) Per Share Amount Basic EPS Net income available for common stock Diluted EPS Effect of dilutive securities Net income available for common stock and common stock equivalents Basic EPS Net income available for common stock Diluted EPS $ $ 611,709 431,105 $ 1.42 — 611,709 677 431,782 $ 1.42 Year Ended December 31, 2019 Income Shares Per Share Amount (Thousands, except per share amounts) $ 1,277,477 413,560 $ 3.09 Effect of dilutive securities Net income available for common stock and common stock equivalents — 1,277,477 $ 1,884 415,444 $ 3.07 J. SHARE-BASED PAYMENTS Our Equity Incentive Plan (EIP) provides forff and performance unit awards, to eligible employees and the granting of stock awards to non-employee directors. We have the granting of stock-based compensation, including restricted stock unit awards 82 reserved 8.5 million shares of common stock for issuance under the EIP and at December 31, 2021, we had 5.5 million shares shares issued and estimated shares expected available forff to be issued upon vesting of outstanding awards granted under the EIP, excluding estimated forfei tures expected to be returned to the plan. issuance under the plan. This calculation of availablea shares reflects ff ff t 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 unit awards are measured at fair value as if they were vested and issued on the grant date and adjusted forff equivalents in the form of additional restricted stock units prior to vesting. Compensation expense is recognized on a straight- line basis over the vesting period of the award. tures. Restricted stock unit awards accrue dividend estimated forfei ff Performance Unit Awards - We have granted performance unit awards to key employees that vest at the end of a three-year period. Upon vesting, a holder of outstanding performance units is entitled to receive a number of shares of our common stock equal to a percentage (0% to 200%) of the performance units granted, based on our total shareholder return over the vesting period, compared with the total shareholder returnt Performance unit awards are measured at fair value on the grant date based on a Monte Carlo model and adjusted for estimated forfeitures. Performance unit awards accrue dividend equivalents in the formff of additional performance units prior to vesting. Compensation expense is recognized on a straight-line basis over the vesting period of the award. of a peer group of other energy companies over the same period. Stock Compensation for Non-Employee Directors t the granting of nonstatutory The EIP provides forff performance unit awards and restricted stock unit awards. Under the EIP, awards may be granted by the Executive Compensation Committee at any time, until grants have been made forff number of shares of common stock and cash-based awards that can be issued to a participant under the EIP during any year is limited to $0.8 million in value as of the grant date. No performance unit awards or restricted stock unit awards have been made to non-employee directors, and there are no options outstanding. stock options and stock bonus awards to non-employee directors, including all shares authorized under the EIP. The maximum General For all awards outstanding, we used a 3% forfei We currently use treasury stock to satisfy our share-based payment obligations. ture rate based on historical forfe ff ff t itures under our share-based payment plans. Compensation expense for our share-based payment plans was $54.1 million, $29.4 million and $46.5 million during 2021, 2020 and 2019, respectively, before related tax benefits of $14.4 million, $14.1 million and $31.7 million, respectively. Restricted Stock Unit Activity As of December 31, 2021, we had $19.3 million of total unrecognized compensation cost related to our nonvested restricted stock unit awards, which is expected to be recognized over a weighted-average period of 1.8 years. The following tabla es set forth activity and various statistics for our restricted stock unit awards: Nonvested December 31, 2020 Granted Released to participants Forfeited Nonvested December 31, 2021 Number of Units Weighted Average Price 646,287 $ $ 417,212 (242,765) $ (40,797) $ $ 779,937 63.85 46.84 51.57 55.27 59.02 Weighted-average grant date faiff Fair value of units granted (thousands of dollars) Grant date fair value of units vested (thousands of dollars) r value (per share) 2021 2020 2019 $ $ $ 46.84 19,542 12,519 $ $ $ 76.49 16,552 11,204 $ $ $ 58.07 15,238 10,691 83 Performan ff ce 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. The following tabla es set forth activity and various statistics related to the performance unit awards and the assumptim ons used in the valuations at the respective grant dates: Nonvested December 31, 2020 Granted Released to participants Forfeited Nonvested December 31, 2021 Volatility (a) Dividend yield Risk-free interest rate Number of Units Weighted Average Price $ 834,246 542,183 $ (311,907) $ (87,937) $ $ 976,585 2020 21.70% 4.87% 1.39% 75.96 62.03 64.00 68.37 72.73 2019 27.10% 5.05% 2.47% 2021 60.30% 8.13% 0.21% (a) - Volatility was based on historical volatility over three years using daily stock price observations. Weighted-average grant date faiff Fair value of units granted (thousands of dollars) Grant date fair value of units vested (thousands of dollars) r value (per share) Employee Stock Purchase Plan 2021 2020 2019 $ $ $ 62.03 33,632 19,962 $ $ $ 88.43 25,028 17,722 $ $ $ 68.02 23,020 15,018 We have reserved a total of 11.6 million shares of common stock for issuance under our Employee Stock Purchase Plan (the ESPP). Subject to certain exclusions, all employees are eligible to participate in the ESPP. Employees can choose to have up to 10% of their base pay withheld from each paycheck during the offering period to purchase our common stock, subjeu terms and limitations of the plan. The purchase price of the stock is 85% of the lower of its grant date or exercise date market price. Approximately 69%, 68% and 62% of employees participated in the plan in 2021, 2020 and 2019, respectively. Under the plan, we sold 277,012 shares at a weighted average of $38.98 per share in 2021, 359,977 shares at a weighted average of $27.78 per share in 2020 and 171,590 shares at a weighted average of $51.24 per share in 2019. ct to Employee Stock Award Program m e Stock Award Program, we issue, for no monetary consideration, to all eligible employees one share of our Under our Employe common stock when the per-share closing price of our common stock on the NYSE is at or above each one-dollar increment above its previous high closing price. The total number of shares of our common stock available forff 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. As of the date of this report, the next award will be issued when our common stock closes at or above $78. issuance under this Deferred Compensation Plan for Non-Employee Directors Our Deferred Compensation Plan for Non-Employee Directors provides our non-employee directors the option to defer all or a portion of their compensation for their service on our Board of Directors. Under the plan, directors may elect either a cash deferral option or a phantom stock option. Under the cash deferral option, directors may elect to deferff the receipt of all or a portion of their annual retainer fees, which will be credited with interest during the deferra d basis in the formff option, directors may defer all or a portion of their annual retainer feeff shares of common stock under our EIP, which earn the equivalent of dividends declared on our common stock. Shares are distributed to non-employee directors at the faiff l period. Under the phantom stock of ff s and receive such fees on a deferre r market value of our common stock at the date of distribution. ff 84 K. EMPLOYEE BENEFIT PLANS Retirement and Other Postretirement Benefit Plans Retirement Plans - We have a defined benefit pension plan covering certain employees and former employees, which closed to new participants in 2005. In addition, we have a supplemental executive retirement plan forff the benefit of certain officers who participate in our defined benefit pension plan. Our supplemental executive retirement plan is closed to new participants. We fund our defined benefit pension plan at a level needed to maintain or exceed the minimum funding levels required by the Employee Retirement Income Security Act of 1974, as amended. All employees are eligible to make salary deferrals and receive company matching contributions under our 401(k) Plan, and employees that do not participate in our defined benefit pension plan are also eligible to receive quarterly and annual profit- sharing contributions under our 401(k) Plan. Other Postretirement Benefit Plans - We sponsor health and welfare plans that provide postretirement medical and life insurance benefits to employees hired prior to 2017 who retire with at least fiveff postretirement medical plan forff contains other cost-sharing features t eligible participants is an account-based plan under which participants may elect to purchase private insurance policies under a private exchange and/or seek reimbursement of other eligible medical expenses. pre-Medicare participants is contributory, with retiree contributions adjusted periodically, and such as deductibles and coinsurance. The postretirement medical plan forff Medicare- years of full-time consecutive service. The Obligations and Funded Status - The following tabla e sets forth obligations and fair value of plan assets for the periods indicated: ff our retirement and other postretirement benefit plans benefit Change in benefit obligation Benefit obligation, beginning of period Service cost Interest cost Plan participants’ contributions Actuarial loss (gain) Benefits paid Benefit obligation, end of period (b) Change in plan assets Fair value of plan assets, beginning of period Actual return on plan assets (a) Employer contributions Plan participants’ contributions Benefits paid Fair value of plan assets, end of period (c) Balance at December 31 Current liabilities Noncurrent liabilities Balance at December 31 Retirement Benefits December 31, Other Postretirement Benefits December 31, 2021 2020 2021 (Thousands of dollars) 2020 $ $ $ $ $ 583,072 8,314 16,900 — (22,792) (18,483) 567,011 $ 534,849 8,154 18,318 — 37,951 (16,200) 583,072 379,092 41,374 11,200 — (18,483) 413,183 (153,828) $ 346,792 36,400 12,100 — (16,200) 379,092 (203,980) $ (5,219) $ (4,679) $ (148,609) (153,828) $ (199,301) (203,980) $ $ 54,515 421 1,454 1,092 (2,496) (3,959) 51,027 20,874 5,919 — 1,092 (3,488) 24,397 (26,630) $ — $ (26,630) (26,630) $ 52,309 460 1,771 1,032 2,860 (3,917) 54,515 39,060 (15,699) — 1,032 (3,519) 20,874 (33,641) — (33,641) (33,641) (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. 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 $541.8 million and $548.2 million at December 31, 2021 and 2020, respectively. 85 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 “Actuat rial Assumptim ons” section below. Components of Net Periodic Benefit Cost - The following tabla e sets forth retirement and other postretirement benefit plans for the periods indicated: ff the components of net periodic benefit cost for our Retirement Benefits Years Ended December 31, 2020 2019 2021 Other Postretirement Benefits Years Ended December 31, 2020 2019 2021 Components of net periodic benefit cost Service cost Interest cost Expected return on plan assets Amortization of prior service cost (credit) Amortization of net loss Net periodic benefit cost (income) (Thousands of dollars) $ $ 8,314 16,900 (25,109) 114 19,673 19,892 $ $ 8,154 18,318 (24,964) 114 18,306 19,928 $ $ 7,825 20,528 (23,600) — 12,649 17,402 $ $ 421 1,454 (1,364) — 3,692 4,203 $ $ $ 460 1,771 (2,894) — 5 (658) $ 468 2,038 (2,285) (227) 297 291 Other Comprehensive Income (Loss) - The following tablea (loss) related to our retirement and other postretirement benefits forff the periods indicated: sets forth the amounts recognized in other comprehensive income Retirement Benefits Years Ended December 31, 2020 2019 2021 Other Postretirement Benefits Years Ended December 31, 2020 2021 2019 Net gain (loss) (a) Prior service cost Amortization of prior service cost (credit) (b) Amortization of net loss (b) Deferred income taxes $ Total recognized in other comprehensive income (loss) gg $ 34,529 — 114 19,673 (12,493) 41,823 $ (31,016) $ (25,389) $ (Thousands of dollars) 7,052 — — 3,692 (2,471) 8,273 — 114 18,306 2,897 (9,699) $ (10,273) $ (601) — 12,649 3,068 $ $ (21,453) $ — — 5 4,933 $ (16,515) $ 700 — (227) 297 (177) 593 (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 tablea components of net periodic benefit expense for the periods indicated: below sets forth the amounts in accumulated other comprehensive loss that had not yet been recognized as Prior service cost Accumulated loss (a) Accumulated other comprehensive loss Deferred income taxes Accumulated other comprehensive loss, net of tax Retirement Benefits December 31, Other Postretirement Benefits December 31, 2021 2020 2021 (Thousands of dollars) 2020 $ $ (374) $ (487) $ (131,460) (131,834) 36,759 (95,075) $ (185,662) (186,149) 49,251 (136,898) $ — $ (14,815) (14,815) 3,852 (10,963) $ — (25,558) (25,558) 6,322 (19,236) (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. 86 Actuarial Assumptions - The following tabla e sets forth obligations for retirement and other postretirement benefits for the periods indicated: ff the weighted-average assumptions used to determine benefit Discount rate Compensation increase rate Retirement Benefits December 31, Other Postretirement Benefits December 31, 2021 3.25% 3.60% 2020 3.00% 3.60% 2021 3.00% NA 2020 2.75% NA The following tablea indicated: sets forth the weighted-average assumptions used to determine net periodic benefit costs for the periods Discount rate - retirement plans Discount rate - other postretirement plans Expected long-term return on plan assets Compensation increase rate Years Ended December 31, 2020 3.50% 3.50% 7.50% 3.70% 2021 3.00% 2.75% 7.00% 3.60% 2019 4.50% 4.50% 7.50% 3.65% We determine our overall expected long-term rate of returnt economic growth models. on plan assets based on our review of historical returns t and We determine our discount rates annually utilizing portfolios of high-quality bonds matched to the estimated benefit cash flows of our retirement and other postretirement benefit plans. Bonds selected to be included in the portfolios are only those rated by S&P or Moody’s as an AA or Aa2 rating or better and exclude callable bonds, bonds with less than a minimum issue size, yield outliers and other filff tering criteria to remove unsuitable bonds. Health Care Cost Trend Rates - The following tabla e sets forth indicated: ff the assumed health care cost-trend rates forff the periods Health care cost-trend rate assumed for next year Rate to which the cost-trend rate is assumed to decline (the ultimate trend rate) Year that the rate reaches the ultimate trend rate 2021 6.50% 5.00% 2025 2020 6.50% 5.00% 2024 a Plan Assets - Our investment strategy is to invest plan assets in accordance with sound investment practices that emphasize long-term fundamentals. The goal of this strategy is to maximize investment returns plan’s current and projected finaff target a diversified mix of approxim defined benefit pension plan foll to fixed income as the plan’s funded statust increases. The purpose of liability-driven investing is to structuret to more closely resemble the pension liability and thereby more effectively hedge against changes in the liabila current investments include a diverse blend of various domestic and international equities, investments in various classes of debt securities, real estate and hedge funds. The target allocation for the assets of our retirement plan as of December 31, 2021, is as follows: ncial obligations. The investment allocation for our other postretirement benefit plans is to ately 30% fixed income and 70% equity securities. The investment allocation for our ows a glide path approach of liabia lity-driven investing that shifts a higher portfolio weighting while managing risk in order to meet the the asset portfolio ity. The plan’s ff t Domestic and international equities Long duration fixed income Return-seeking credit Hedge funds Real estate funds Total 42 % 30 % 11 % 10 % 7 % 100 % As part of our risk management for the plans, minimums and maximums have been set for each of the asset classes listed above. 87 lowing tablea The folff and other postretirement benefit plans: s set forth the plan assets by faiff r value category as of the measurement date forff our defined benefit pension Asset Category Level 1 Level 2 Level 3 Subtotal Measured at NAV (d) Total (Thousands of dollars) Pension Benefits December 31, 2021 $ 42 $ — $ — $ 42 $ — $ 42 Investments: Equity securities Common/collective trusts Equity securities (a) Real estate funds Government obligations Corporate obligations (b) Short-term investments Other investments (c) Fair value of plan assets $ — — — — — — 42 $ — — — — — — — $ — — — — — — — $ — — — — — — 42 $ 166,132 30,491 49,444 120,877 4,243 41,954 413,141 $ 166,132 30,491 49,444 120,877 4,243 41,954 413,183 (a) - This category represents securities of the respective market sector from diverse industries. (b) - This category represents bonds from diverse industries. (c) - This category repre restrictions. There are no unfunded capital commitments. These limited partnerships invest through multi-strategy programs in broadly diversified portfolios of private investment funds, hedge funds and/or separate accounts to seek equity-like returns with low market correlation, reduced volatility and limited risk. (d) - Plan asset investments measured at fair value using the net asset value per share. sen alternative investments in limited partnerships, which can be redeemed with a 30-day notice with no further ts Asset Category Level 1 Level 2 Level 3 Subtotal Measured at NAV (d) Total (Thousands of dollars) Pension Benefits December 31, 2020 Investments: Equity securities Common/collective trusts Equity securities (a) Real estate funds Government obligations Corporate obligations (b) Short-term investments (e) Other investments (c) Fair value of plan assets $ $ 43 $ — $ — $ 43 $ — $ 43 — — — — — — 43 $ — — — — — — — $ — — — — — — — $ — — — — — — 43 $ 164,099 24,134 45,237 101,626 4,890 39,063 379,049 $ 164,099 24,134 45,237 101,626 4,890 39,063 379,092 (a) - This category represents securities of the respective market sector from diverse industries. (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. There are no unfunded capital commitments. These limited partnerships invest through multi-strategy programs in broadly diversified portfolios of private investment funds, hedge funds and/or separate accounts to seek equity-like returns with low market correlation, reduced volatility and limited risk. (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. 88 Asset Category Investments: Equity securities (a) Money market funds Municipal obligations Fair value of plan assets Other Postretirement Benefits December 31, 2021 Level 1 Level 2 Level 3 Total (Thousands of dollars) $ $ 17,953 — 5,964 23,917 $ $ — $ 480 — 480 $ — $ — — — $ 17,953 480 5,964 24,397 (a) - This category represents securities of the respective market sector from diverse industries. Asset Category Investments: Equity securities (a)(b) Money market funds Municipal obligations (b) Fair value of plan assets Other Postretirement Benefits December 31, 2020 Level 1 Level 2 Level 3 Total (Thousands of dollars) $ $ 15,116 — 4,950 20,066 $ $ — $ 808 — 808 $ — $ — — — $ 15,116 808 4,950 20,874 (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. Pension and Other Postretirement Benefit Payments - Benefit payments forff postretirement benefit plans for the period ending December 31, 2021, were $18.5 million and $4.0 million, respectively. The following tablea through 2031: d benefit pension and other postretirement benefits payments expected to be paid in 2022 our defined benefit pension and other sets forth the defineff Benefits to be paid in: 2022 2023 2024 2025 2026 2027 through 2031 Pension Benefits Other Postretirement Benefits (Thousands of dollars) $ $ $ $ $ $ 25,962 26,756 27,769 28,759 29,651 156,041 $ $ $ $ $ $ 3,387 3,363 3,302 3,293 3,220 15,339 The expected benefits to be paid are based on the same assumptions used to measure our benefit obligation at December 31, 2021, and include estimated futuret employee service. Other Employee Benefit Plans 401(k) Plan - We have a 401(k) Plan covering all employees, and employee contributions are discretionary. We match 100% of employee 401(k) Plan contributions up to 6% of each participant’s eligible compensation each payroll period, subject to certain limits. We also make profit-sharing contributions under our 401(k) Plan for employees who do not participate in our defined benefit pension plan. We generally make a quarterly profit sharing contribution equal to 1% of each profit-sharing participant’s eligible compensation during the quarter and an annual discretionary profit-sharing contribution equal to a percentage of each profit-sharing participant’s eligible compensation. Our contributions made to the plan, including profit- sharing contributions, were $32.7 million, $27.1 million and $30.4 million in 2021, 2020 and 2019, respectively. 89 Nonqualified Deferred Compensation Plan - The 2020 Nonqualified Deferre 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 dued contributions to qualified defined contribution plans under federal tax laws. We have investments included in other assets on the Consolidated Balance Sheets related to the NQDC Plan, which totaled $36.1 million and $32.4 million at December 31, 2021 and 2020, respectively. These investments are maintained in a rabbi trust. Our contributions to the plan were not material in 2021, 2020 and 2019. d Compensation Plan and its predecessor to limitations on employe r and employee m ff L. INCOME TAXES The following tablea sets forth our provision for income taxes for the periods indicated: Current tax expense (benefit) Federal State Total current tax expense (benefit) Deferred tax expense Federal State Total deferred tax expense Total provision for income taxes 2021 Years Ended December 31, 2020 (Thousands of dollars) 2019 $ $ 2,897 9,544 12,441 433,469 38,588 472,057 484,498 $ $ 980 1,797 2,777 154,068 32,662 186,730 189,507 $ $ (1,278) 963 (315) 327,806 44,923 372,729 372,414 The following tablea is a reconciliation of our income tax provision for the periods indicated: Income before income taxes Federal statutory income tax rate Provision for federal income taxes State income taxes, net of federal benefit Deferred tax rate change, inclusive of valuation allowance Excess tax benefits from share-based compensation Other, net (a) Income tax provision 2021 Years Ended December 31, 2020 (Thousands of dollars) 802,316 $ 2019 $ 1,984,204 $ 1,650,991 21.0 % 21.0 % 21.0 % 416,683 40,092 6,350 (1,968) 23,341 484,498 $ 168,486 13,580 20,879 (7,380) (6,058) 189,507 346,708 34,545 11,340 (20,983) 804 372,414 $ $ (a) The year ended December 31, 2021, includes $19.4 million impact from previously recognized gains on certain benefit plan investments. 90 lowing tablea The folff assets and liabia lities for the periods indicated: sets forth the tax effecff ts of temporary differences that gave rise to significant portions of the deferred tax Deferred tax assets Employee benefits and other accrued liabilities Federal net operating loss State net operating loss and benefits Derivative instruments Other Total deferred tax assets Valuation allowance for state net operating loss and tax credits Carryforward expected to expire prior to utilization Net deferred tax assets Deferred tax liabilities Excess of tax over book depreciation Investment in partnerships (a) Total deferred tax liabilities Net deferred tax assets (liabilities) (a) Due primarily to excess of tax over book depreciation. December 31, December 31, 2021 2020 (Thousands of dollars) $ $ 95,952 1,337,050 216,181 118,063 4,863 1,772,109 96,741 1,473,093 258,929 134,499 12,894 1,976,156 (84,755) 1,687,354 (121,212) 1,854,944 84,692 2,769,352 2,854,044 (1,166,690) $ 87,021 2,437,620 2,524,641 (669,697) $ 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. 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 have deferred tax assets related to federal and state net operating loss and credit carryforwards of $1.6 billion and $1.7 billion in 2021 and 2020, 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, $$20.9 finefits iin 2021, 2020 and lvelyy. 2019, respec iti through ne it income r lelat ded to hthese tax bbe imilllliion through dand $$11.3 imilllliion M. UNCONSOLIDATED AFFILIATES Investments in Unconsolidated Affiliates - The following tablea periods indicated: sets forth our investments in unconsolidated affilff iates forff the Northern Border Pipeline Overland Pass Pipeline Roadrunner Other (a) Investments in unconsolidated affiliates (b) Net Ownership Interest 50% 50% 50% Various December 31, December 31, 2020 2021 (Thousands of dollars) $ $ 283,170 403,011 70,777 40,655 797,613 $ $ 291,987 409,573 66,794 36,678 805,032 (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. 91 Equity in Net Earnings from Investments and Impairments - The following tablea from investments forff the periods indicated: sets forth our equity in net earnings (loss) Northern Border Pipeline Overland Pass Pipeline Roadrunner Other g Equity in net earnings from investments g y y Impairment of equity investments $ $ $ 64,470 19,434 33,293 5,323 122,520 $ — $ 75,409 38,618 29,017 197 143,241 $ (37,730) $ 2021 Years Ended December 31, 2020 (Thousands of dollars) $ $ 2019 68,871 63,698 26,839 (4,867) 154,541 — Impairment Charges - In 2020, we incurred a noncash impairment charge of $30.5 million related to our 10.2% investment in Venice Energy Services Company in our Natural Gas Gathering and Processing segment, which includes $22.3 million related to equity-method goodwill, and a $7.2 million noncash impairment charge related to our 50% investment in Chisholm Pipeline Company in our Natural investments in our Consolidated Statement of Income forff Gas Liquids segment. These impairment charges are included within impairment of equity the year ended December 31, 2020. t We incurred expenses in transactions with unconsolidated affiliates of $62.8 million, $135.4 million and $164.7 million forff 2021, 2020 and 2019, respectively, primarily related to Overland Pass Pipeline and Northern Border Pipeline. Revenue earned and accounts receivable fromff to, our equity-method investees were not material. , and accounts payablea 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 Northern Pipeline Management Committee. Cash distributions are equal to 100% of distributable cash flow as determined fromff Border Pipeline’s financial statements based upon al expenditures. 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. EBITDA less interest expense and maintenance capita As u t 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 availablea liability company agreement. In all periods presented, our contributions to Overland Pass Pipeline were not material. cash as defined in the limited Roadrunner - The Roadrunner agreement provides that distributions to members are made on a pro rata basis according to each member’s ownership interest. As the operator, we have been delegated the authority to determine such distributions in accordance with, and on the frequency set forth in, the Roadrunner agreement. Cash distributions are equal to 100% of available cash, as defined in the limited liabia lity company agreement. In all periods presented, 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 fromff Statements of Income for all periods presented were not material. Roadrunner included in operating income in our Consolidated 92 N. COMMITMENTS AND CONTINGENCIES Commitments - Firm transportation and storage contracts are fixed-price contracts that provide us with firm transportation and sets forth our firm transportation and storage contract payments for the periods indicated: storage capaa city. The folff lowing tablea 2022 2023 2024 2025 2026 Thereafter Total Firm Transportation and Storage Contracts (Millions of dollars) $ $ 72.3 63.1 59.3 53.9 40.8 211.6 501.0 t - The operation of pipelines, plants and other facff Environmental Matters and Pipeline Safetyff processing, fractionation, transportation and storage of natural gas, NGLs, condensate and other products is subject to numerous and complex laws and regulations pertaining to health, safety at facilities, we must comply with laws and regulations that relate to air and water quality, hazardous and solid waste management and disposal, cultural constructing and operating pipelines, plants and other facff safety st tandards. Failure to comply with these laws and regulations may trigger a variety of administrative, civil and potentially criminal enforcement measures, including citizen suits, which can include the assessment of monetary penalties, the imposition of remedial requirements and the issuance of injunctions or restrictions on operation or construction. Management does not believe that, based on currently known information, a material risk of noncompliance with these laws and regulations exists that will affect adversely our consolidated results of operations, financial condition or cash flows. ilities must incorporate compliance with these laws, regulations and nd the environment. As an owner and/or operator of these resource protection and other environmental and safety mt atters. The cost of planning, designing, the gathering, ilities forff Legal Proceedings - We are a party to various legal proceedings that have arisen in the normal course of our operations. While the results of these proceedings cannot be predicted with certainty, we believe the reasonably possible losses fromff proceedings, individually and in the aggregate, are not material. Additionally, we believe the probable finff al outcome of such t on our consolidated results of operations, financial position or cash flows. proceedings will not have a material adverse effecff such O. LEASES We lease certain buildings, warehouses, office space, pipeline capac cars and information technology equipment. Our lease payments are generally straight-line and the exercise of lease renewal options, which vary in term, is at our sole discretion. We include renewal periods in a lease term if we are reasonably certain to exercise available renewal options. We apply the short-term policy election, which allows us to exclude from recognition leases with an initial term of 12 months or less. Our lease agreements do not include any residual value guarantees or material restrictive covenants. ity, land and equipment, including pipeline equipment, rail a Through ONEOK Leasing Company, L.L.C. and ONEOK Parking Company, L.L.C., we own an office building and a parking garage and lease excess space in these facilities to affilff iates and others. Our consolidated lease income is not material. 93 lowing tablea The folff the periods indicated: sets forth information about our lease assets and liabia lities included in our Consolidated Balance Sheet forff Leases Assets Operating leases Finance lease Finance lease Total leased assets Liabilities Current Operating leases Finance lease Noncurrent Operating leases Finance lease Total lease liabilities Location in our Consolidated Balance Sheet Other assets Property, plant and equipment Accumulated depreciation Operating lease liability Other current liabilities Operating lease liability Other deferred credits December 31, 2021 December 31, 2020 (Thousands of dollars) $ $ $ $ 89,558 29,962 (3,590) 115,930 13,783 2,584 75,636 21,082 113,085 $ $ $ $ 100,154 28,286 (2,451) 125,989 13,610 2,153 87,610 22,143 125,516 The following tablea sets forth supplemental cash flow information related to our leases: Cash paid for amounts included in the measurement of lease liabilities Operating cash flows for operating leases Financing cash flows for finance lease Right-of-use assets obtained in exchange for operating lease liabilities (noncash) (a) $ $ $ 15,690 2,307 1,150 $ $ $ 13,245 1,949 99,547 Years Ended December 31, 2020 2021 (Thousands of dollars) (a) - In December 2019, we entered into an operating lease for pipeline capacity 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. with a lease term of 10 years that commenced January 1, a The following tablea sets forth information about our lease costs for the periods indicated: Operating leases Finance lease Amortization of lease assets Interest on lease liabilities Total lease cost Location in our Consolidated Statement of Income Operations and maintenance Depreciation and amortization Interest expense Years Ended December 31, 2021 2020 (Thousands of dollars) 17,747 $ 17,162 1,139 2,338 21,224 $ 1,131 2,537 20,830 $ $ 94 The folff lowing tablea sets forth information about our leases for the periods indicated: Weighted average remaining lease term (years) Operating leases Finance lease Weighted average discount rate (a) Operating leases Finance lease December 31, 2021 December 31, 2020 7.8 6.6 3.40% 9.60% 8.3 7.8 3.20% 10.00% (a) - Our weighted-average discount rates represent the rate implicit in the lease or our incremental borrowing rate for a term equal to the remaining term of the lease. sets forth the maturit t y of our lease liabila ities as of December 31, 2021: The following tablea 2022 2023 2024 2025 2026 2027 and beyond Total lease payments Less: Interest Present value of lease liabilities P. REVENUES Finance Lease Operating Leases (Millions of dollars) 4.7 4.7 4.7 5.4 4.5 8.3 32.3 8.6 23.7 $ $ 16.4 13.9 12.6 11.2 11.4 36.9 102.4 13.0 89.4 $ $ Contract Assets and Contract Liabilities - Our contract asset balances at the beginning and end of the years ended December 31, 2021 and 2020, primarily relate to our firm service transportation contracts with tiered rates, which are not material. The folff the balances in contract liabilities for the periods indicated: lowing tabla e sets forth ff , 2020 Contract Liabilities Balance at January 1r Revenue recognized included in beginning balance (c) Net additions Balance at December 31, 2020 (a) Revenue recognized included in beginning balance Net additions Balance at December 31, 2021 (b) (Millions of dollars) 57.1 $ (36.1) 20.4 41.4 (23.7) 33.8 51.5 $ (a) - Contract liabilities of $23.7 million and $17.7 million are included in other current liabilities and other deferred credits, respectively, in our Consolidated Balance Sheet. (b) - Contract liabilities of $35.3 million and $16.2 million are included in other current liabilities and other deferred credits, respectively, in our Consolidated Balance Sheet. (c) - Includes a contract settlement of revenue previously deferred. s fromff Receivablea Consolidated Balance Sheets at December 31, 2021 and 2020, relate to customer receivablea disaggregated in Note Q. - Substantially all of the balances in accounts receivablea s. Revenues sources are Customers and Revenue Disaggregation gg g on our 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 forff services performed. 95 lowing tablea The folff presents aggregate value allocated to unsatisfied performance obligations as of December 31, 2021, 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: Expected Period of Recognition in Revenue 2022 2023 2024 2025 2026 and beyond Total estimated transaction price allocated to unsatisfied performance obligations gg (Millions of dollars) 339.1 $ 288.2 238.1 162.7 781.3 1,809.4 $ distinct goods or services that are part of a single performance obligation and consideration we above excludes variable consideration allocated entirely to wholly unsatisfied performance obligations, wholly The tablea unsatisfied promises to transferff determine to be fully constrained. Information on the naturet performance obligations to which the variable consideration relates can be found in the description of the major contract types discussed in Note A. The amounts we determined to be full sales obligations under long-term sales contracts where the transaction price is not known and minimum volume agreements, which we consider to be fully constrained until invoiced. consideration excluded and the naturet y constrained relate to future of the variablea of the ff ff Q. SEGMENTS Segment Descriptions - Our operations are divided into three reportable business segments, as follows: • • • 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; and our Natural Gas Pipelines segment transports and stores natural gas via regulated intrastate and interstate naturat transmission pipelines and natural gas storage facilities. l gas 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 reportablea segments to our Consolidated Financial Statements. For the year ended December 31, 2021, revenues fromff 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. Gas Liquids segment represents one customer in our Natural t 96 Operating Segment Information - The following tablea segments for the periods indicated: s set forth certain selected financial information for our operating Year Ended December 31, 2021 Natural Gas Gathering and Processing Natural Gas Liquids (a) Natural Gas Pipelines (b) Total Segments (Thousands of dollars) NGL and condensate sales Residue natural gas sales Gathering, processing and exchange services revenue Transportation and storage revenue Other Total revenues (c) Cost of sales and fuel (exclusive of depreciation and operating costs) Operating costs Equity in net earnings from investments Noncash compensation expense and other Segment adjusted EBITDA g g j j Depreciation and amortization Investments in unconsolidated affiliates Total assets Capital expenditures $ $ $ $ $ $ 2,821,175 1,483,898 135,501 — 20,965 4,461,539 (3,226,078) (367,390) 3,757 17,299 889,127 $ 13,653,120 — 517,758 179,619 41,376 14,391,873 (11,939,661) (528,084) 21,000 18,511 1,963,639 $ $ $ — $ 16,474,295 1,599,393 653,259 670,117 63,251 19,460,315 (15,176,975) (1,065,731) 122,520 40,447 3,380,576 115,495 — 490,498 910 606,903 (11,236) (170,257) 97,763 4,637 527,810 $ (298,937) $ (260,011) $ $ $ 27,018 416,648 $ $ 14,502,372 6,768,955 $ 306,949 $ 275,165 (617,650) (58,702) $ $ 353,947 797,613 $ 23,414,634 2,143,307 674,731 $ 92,617 (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. (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. Intersegment revenues for the Natural Gas Liquids and Natural Gas Pipelines segments were not material. Year Ended December 31, 2021 Reconciliations of total segments to consolidated NGL and condensate sales Residue natural gas sales Gathering, processing and exchange services revenue Transportation and storage revenue Other Total revenues (a) Total Segments Other and Eliminations (Thousands of dollars) Total $ 16,474,295 1,599,393 653,259 670,117 63,251 $ 19,460,315 $ (2,904,598) $ 13,569,697 1,599,393 653,259 656,996 60,964 $ (2,920,006) $ 16,540,309 — — (13,121) (2,287) Cost of sales and fuel (exclusive of depreciation and operating costs) Operating costs Depreciation and amortization Equity in net earnings from investments Investments in unconsolidated affiliates Total assets Capital expenditures $ (15,176,975) $ $ (1,065,731) $ (617,650) $ $ $ 122,520 $ $ $ 797,613 $ $ 23,414,634 $ 674,731 $ 2,920,320 $ (12,256,655) (1,357) $ (1,067,088) (621,701) (4,051) $ 122,520 — $ 797,613 — $ $ 23,621,613 696,854 $ 206,979 22,123 (a) - Noncustomer revenue for the year ended December 31, 2021, totaled $(565.0) million related primarily to losses from derivatives on commodity contracts. 97 Year Ended December 31, 2020 Natural Gas Gathering and Processing Natural Gas Liquids (a) Natural Gas Pipelines (b) Total Segments NGL and condensate sales Residue natural gas sales Gathering, processing and exchange services revenue Transportation and storage revenue Other Total revenues (c) Cost of sales and fuel (exclusive of depreciation and operating costs) Operating costs Equity in net earnings (loss) from investments Noncash compensation expense and other Segment adjusted EBITDA g g j j Depreciation and amortization Impairment charges Investments in unconsolidated affiliates Total assets Capital expenditures $ $ $ $ $ $ $ 889,388 771,486 141,943 — 17,304 1,820,121 (843,976) (326,938) (1,123) 1,952 650,036 $ $ — $ $ (Thousands of dollars) 6,409,332 — 488,574 182,915 9,192 7,090,013 (5,108,558) (412,900) 39,938 8,748 1,617,241 8,693 — 470,097 1,192 479,982 (6,809) (141,713) 104,426 1,540 437,426 $ 7,298,720 780,179 630,517 653,012 27,688 9,390,116 (5,959,343) (881,551) 143,241 12,240 2,704,703 $ (271,900) $ (247,010) $ (78,785) $ (566,145) $ $ 423,494 $ 22,757 $ $ 13,636,109 6,499,908 $ 1,655,759 $ 446,142 (574,649) (55,739) $ (644,930) — $ 805,032 $ $ 22,236,230 2,173,819 $ 358,781 2,100,213 71,918 (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. (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. (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. Year Ended December 31, 2020 Reconciliations of total segments to consolidated NGL and condensate sales Residue natural gas sales Gathering, processing and exchange services revenue Transportation and storage revenue Other Total revenues (a) Total Segments Other and Eliminations (Thousands of dollars) Total $ $ 7,298,720 780,179 630,517 653,012 27,688 9,390,116 $ $ (820,851) $ (10,860) — (14,599) (1,564) (847,874) $ 6,477,869 769,319 630,517 638,413 26,124 8,542,242 Cost of sales and fuel (exclusive of depreciation and operating costs) Operating costs Depreciation and amortization Impairment charges Equity in net earnings from investments Investments in unconsolidated affiliates Total assets Capital expenditures $ (5,959,343) $ (881,551) $ $ (574,649) $ $ (644,930) $ $ $ 143,241 $ $ $ 805,032 $ $ 22,236,230 $ 2,173,819 $ 849,197 (4,653) $ (4,013) $ — $ — $ — $ 842,524 21,562 $ (5,110,146) (886,204) (578,662) (644,930) 143,241 805,032 $ 23,078,754 2,195,381 $ (a) - Noncustomer revenue for the year ended December 31, 2020, totaled $65.8 million related primarily to gains from derivatives on commodity contracts. 98 Year Ended December 31, 2019 Natural Gas Gathering and Processing Natural Gas Liquids (a) Natural Gas Pipelines (b) Total Segments NGL and condensate sales Residue natural gas sales Gathering, processing and exchange services revenue Transportation and storage revenue Other Total revenues (c) Cost of sales and fuel (exclusive of depreciation and operating costs) Operating costs Equity in net earnings (loss) from investments Noncash compensation expense and other Segment adjusted EBITDA g g j j Depreciation and amortization Investments in unconsolidated affiliates Total assets Capital expenditures $ $ $ $ $ $ 1,224,378 966,149 164,299 — 13,813 2,368,639 (1,302,310) (368,352) (6,292) 10,965 702,650 $ $ — $ $ (Thousands of dollars) 7,910,833 — 414,238 197,483 9,962 8,532,516 (6,690,918) (456,892) 65,123 15,936 1,465,765 1,244 — 466,266 4,477 471,987 (4,628) (157,230) 95,710 2,977 408,816 $ 9,135,211 967,393 578,537 663,749 28,252 11,373,142 (7,997,856) (982,474) 154,541 29,878 2,577,231 $ (196,132) $ (219,519) $ $ $ 34,426 439,393 $ $ 12,551,476 6,795,744 $ 2,796,604 $ 926,489 (472,901) (57,250) $ $ 388,025 861,844 $ 21,441,292 2,094,072 3,822,314 $ 99,221 (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. (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. (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 $1.2 billion. Intersegment revenues for the Natural Gas Liquids and Natural Gas Pipelines segments were not material. Year Ended December 31, 2019 Reconciliations of total segments to consolidated NGL and condensate sales Residue natural gas sales Gathering, processing and exchange services revenue Transportation and storage revenue Other Total revenues (a) Total Segments Other and Eliminations (Thousands of dollars) Total $ 9,135,211 967,393 578,537 663,749 28,252 $ 11,373,142 $ (1,190,424) $ 7,944,787 965,975 578,537 648,103 26,965 $ (1,208,775) $ 10,164,367 (1,418) — (15,646) (1,287) Cost of sales and fuel (exclusive of depreciation and operating costs) Operating costs Depreciation and amortization Equity in net earnings from investments Investments in unconsolidated affiliates Total assets Capital expenditures $ (7,997,856) $ (982,474) $ $ (472,901) $ $ $ 154,541 $ $ $ 861,844 $ $ 21,441,292 $ 3,822,314 $ 1,209,816 (390) $ (3,634) $ — $ — $ 370,829 26,035 $ (6,788,040) (982,864) (476,535) 154,541 861,844 $ 21,812,121 3,848,349 $ (a) - Noncustomer revenue for the year ended December 31, 2019, totaled $139.6 million related primarily to gains from derivatives on commodity contracts. 99 Reconciliation of net income to total segment adjusted EBITDA Net income Add: Interest expense, net of capitalized interest Depreciation and amortization Income tax expense Impairment charges Noncash compensation expense Other corporate costs and equity AFUDC (a) j Total segment adjusted EBITDA j g g $ $ 2021 Years Ended December 31, 2020 (Thousands of dollars) $ 612,809 $ 1,499,706 2019 1,278,577 732,924 621,701 484,498 — 42,592 (845) 3,380,576 $ 712,886 578,662 189,507 644,930 8,540 (42,631) 2,704,703 $ 491,773 476,535 372,414 — 26,699 (68,767) 2,577,231 (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 FINANCIAL DISCLOSURE ITEM 9. None. ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures Our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) have concluded that our disclosure controls and procedures were effecff the evaluation of the controls and procedures required by RulRR es 13a-15(b) and 15d-15(b) of the Exchange Act. tive as of the end of the period covered by this report based on Management’s Report on Internal Control Over Financial Reporting establia shing and maintaining adequate internal control over financial reporting, as such term 13a-15(f). Under the supervision and with the participation of our management, including our ncial Our management is responsible forff is defined in Exchange Act RuleRR Principal Executive Officer and Principal Financial Officer, we evaluated the effecff reporting based on the framework in Internal Control-Integrated Frame Organizations of the Treadway Commission. Because of inherent limitations, internal control over financial reporting may not ct to the risk prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subjeu that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Based on our evaluation under that fraff mework, our management concluded that our internal control over finaff ncial reporting was effective as of December 31, 2021. work (2013) issued by the Committee of Sponsoring tiveness of our internal control over finaff FF The effectiveness of our internal control over finaff PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein (Item 8). ncial reporting as of December 31, 2021, has been audited by Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2021, that have materially affected, or are reasonably likely to materially affecff t, our internal control over finaff ncial reporting. ITEM 9B. OTHER INFORMATION Not applicable. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 100 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATRR E GOVERNANCE Directors of the Registrant PART III Information concerning our directors is set fort reference. ff h in our 2022 definitive Proxy Statement and is incorporated herein by this Executive Officff ers of the Registrant Information concerning our executive officers is included in Part I, Item 1, Business, of this Annual Report. Compliance with Section 16(a) of the Exchange Act Information on compliance with Section 16(a) of the Exchange Act is set forth in our 2022 definitive Proxy Statement and is incorporated herein by this reference. Code of Ethics Information concerning the code of ethics, or code of business conduct, is set forth in our 2022 definitive Proxy Statement and is incorporated herein by this reference. Nominating Committee Procedures Information concerning the Nominating Committee procedures is set forth in our 2022 definitive Proxy Statement and is incorporated herein by this reference. Audit Committee Information concerning the Audit Committee is set forth in our 2022 definitive Proxy Statement and is incorporated herein by this reference. Audit Committee Financial Experts Information concerning the Audit Committee Financial Experts is set forth in our 2022 definitive Proxy Statement and is incorporated herein by this reference. ITEM 11. EXECUTIVE COMPENSATION Information on executive compensation is set forth in our 2022 definitive Proxy Statement and is incorporated herein by this reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Security Ownership of Certain Beneficial Owners Information concerning the ownership of certain beneficial owners is set forth in our 2022 definitive Proxy Statement and is incorporated herein by this reference. Security Ownership of Management Information on security ownership of directors and officers is set fort incorporated herein by this reference. ff h in our 2022 definitive Proxy Statement and is 101 Equity Compensation Plan Information The following tablea sets forth certain information concerning our equity compensation plans as of December 31, 2021: Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) 3,237,097 330,901 3,567,998 Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) (3) — $ $ 58.76 58.76 Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities in Column (a)) (c) 6,077,029 — 6,077,029 Plan Category Equity compensation plans approved by security holders (1) Equity compensation plans not approved by security holders (2) Total (1) - Includes shares granted under our Employee Stock Purchase Plan, Employee Stock Award Program and restricted stock incentive unit awards and performance unit awards granted under our former Long-Term Incentive Plan, our former Equity Compensation Plan and our Equity Incentive Plan. For a brief description of the material features of these plans, see Note J of the Notes to Consolidated Financial Statements in this Annual Report. Column (c) includes 573,622, 130,204 and 5,373,203 shares available for future issuance under our Employee Stock Purchase Plan, Employee Stock Award Program and Equity Incentive Plan, respectively. (2) - Includes our NQDC Plan, Deferred Compensation Plan for Non-Employee Directors and our former Stock Compensation Plan for Non- Employee Directors. For a brief description of the material features of these plans, see Notes K and J of the Notes to Consolidated Financial Statements in this Annual Report. (3) - There is no exercise price associated with restrictive stock incentive unit awards and performance unit awards. Compensation deferred into our common stock under our Deferred Compensation Plan for Non-Employee Directors is distributed to participants at fair market value on the date of distribution. The price used for these plans to calculate the weighted-average exercise price in the table is $58.76, which represents the 2021 year-end closing price of our common stock on the NYSE. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Information on certain relationships and related transactions and director independence is set forth in our 2022 definitive Proxy Statement and is incorporated herein by this reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Information concerning the principal accountant’s fees and services is set forth in our 2022 definitive Proxy Statement and is incorporated herein by this refereff nce. 102 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES PART IV ( ) (1) Financial Statements Page No. g (a) (b) (c) (d) (e) (f) (g) Report of Independent Registered Public Accounting Firm (PCAOB ID: 238) 54-55 Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019 Consolidated Statements of Comprehensive Income forff December 31, 2021, 2020 and 2019 the years ended Consolidated Balance Sheets as of December 31, 2021 and 2020 Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019 Consolidated Statements of Changes in Equity forff December 31, 2021, 2020 and 2019 the years ended Notes to Consolidated Financial Statements 56 57 58-59 61 62-63 64-100 ( ) (2) Financial Statements Schedules All schedules have been omitted because of the absence of conditions under which they are required. ( ) (3) Exhibits 3 3.1 4 4.1 4.2 4.3 Amended and Restated Certificate of Incorporation of ONEOK, Inc., dated July 3, 2017, as amended (incorporated by reference from Exhibit 3.2 to ONEOK, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed November 1, 2017 (File No. 1-13643)). Amended and Restated Bylaws of ONEOK, Inc. (incorporated by reference from Exhibit 3.1 to ONEOK, Inc.’s Current Report on Form 8-K filed February 28, 2022 (File No. 1-13643)). of Designation for Convertible Preferred Stock of WAI, Inc. (now ONEOK, Inc.) filed ff Certificate November 21, 2008 (incorporated by reference from Exhibit 3.1 to ONEOK, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed August 1, 2012 (File No. 1-13643)). Certificate of Designation for Series C Participating Preferred Stock of ONEOK, Inc. filed November 21, 2008 (incorporated by reference from Exhibit No. 3.1 to ONEOK, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed August 1, 2012 (File No. 1-13643)). u mental Indenture, dated as of June 30, 2017, by and among ONEOK, Inc., ONEOK Partners, Fifth Supple L.P., ONEOK Partners Intermediate Limited Partnership and The Bank of New York Mellon Trust, as trustee (incorporated by reference fromff 3, 2017 (File No. 1-13643)). Exhibit 4.1 to ONEOK Inc.’s Current Report on Form 8-K filed July Form of Common Stock Certificate (incorporated by reference from Exhibit 1 to ONEOK, Inc.’s Registration Statement on Form 8-A filed November 21, 1997 (File No. 1-13643)). 103 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13 4.14 4.15 dated September 24, 1998, between ONEOK, Inc. and Chase Bank of Texas, as trustee Indenture, t (incorporated by reference from Exhibit 4.1 to ONEOK, Inc.’s Registration Statement on Form S-3 filed August 26, 1998 (File No. 333-62279)). Indenturet reference fromff December 28, 2001 (File No. 333-65392)). dated December 28, 2001, between ONEOK, Inc. and SunTrust Bank, as trustee (incorporated by Exhibit 4.1 to Amendment No. 1 to ONEOK, Inc.’s Registration Statement on Form S-3 filff ed u mental Indenture dated September 25, 1998, between ONEOK, Inc. and Chase Bank of Second Supple Texas, as trustee, with respect to the 6.875% Debentures 5(b) to ONEOK, Inc.’s Current Report on Form 8-K/A fileff d October 2, 1998 (File No. 1-13643)). due 2028 (incorporated by reference fromff t Exhibit t Third Supplemental Indenture, L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee (incorporated by reference from Exhibit 4.2 to ONEOK Inc.’s Current Report on Form 8-K filed July 3, 2017 (File No. 1-13643)). dated as of June 30, 2017, by and among ONEOK, Inc., ONEOK Partners, Thirteenth Supplemental Indenture, Intermediate Limited Partnership and Wells Fargo Bank, N.A., as trustee Notes due 2020 (incorporated by reference to Exhibit 4.2 to ONEOK Partners, L.P.’s Current Report on Form 8-K filed on March 20, 2015 (File No. 1-12202)). dated March 20, 2015, among ONEOK Partners, L.P., ONEOK Partners , with respect to the 3.80% Senior rr t Fourteenth Supplemental Indenture, dated March 20, 2015, among ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and Wells Fargo Bank, N.A., as trustee Notes due 2025 (incorporated by reference to Exhibit 4.3 to ONEOK Partners, L.P.’s Current Report on Form 8-K filed on March 20, 2015 (File No. 1-12202)). , with respect to the 4.90% Senior rr Fourth Supplemental Indenture, L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee, with respect to the 4.00% Senior Notes due 2027 (incorporated by reference fromff Exhibit 4.1 to ONEOK Inc.’s Current Report on Form 8-K filed July 13, 2017 (File No. 1-13643)). dated as of July 13, 2017, by and among ONEOK, Inc., ONEOK Partners, t u Fifth Supple mental Indenture, dated as of July 13, 2017, by and among ONEOK, Inc., ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee, Exhibit 4.2 to ONEOK with respect to the 4.95% Senior Notes due 2047 (incorporated by reference fromff Inc.’s Current Report on Form 8-K filed July 13, 2017 (File No. 1-13643)). Fifteenth Supplemental Indenture, ONEOK, Inc., ONEOK Partners Intermediate Limited Partnership and Wells Fargo Bank, N.A., as trustee (incorporated by reference from Exhibit 4.1 to ONEOK, Partners, L.P.’s Current Report on Form 8-K filed July 3, 2017 (File No. 1-12202)). dated as of June 30, 2017, by and among ONEOK Partners, L.P., rr t Certificate of Designation, Preferences and Rights of Series E Non-Voting Perpetual Preferred Stock of ONEOK, Inc. filed April 20, 2017 (incorporated by reference from Exhibit No. 3.1 to ONEOK, Inc.’s Current Report on Form 8-K filed April 20, 2017 (File No. 1-13643)). Third Supplemental Indenture, with respect to the 6.00% Senior Notes due 2035 (incorporated by reference fromff Inc.’s Current Report on Form 8-K filed June 17, 2005 (File No. 1-13643)). dated June 17, 2005, between ONEOK, Inc. and SunTrust Bank, as trustee, Exhibit 4.3 to ONEOK, t Eleventh Supplemental Indenture, dated September 12, 2013, among ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and Wells Fargo Bank, N.A., as trustee , with respect to the 5.000% Senior Notes dued Report on Form 8-K filed September 12, 2013 (File No. 1-12202)). 2023 (incorporated by reference to Exhibit 4.3 to ONEOK Partners, L.P.’s Current r 104 4.16 4.17 4.18 4.19 4.20 4.21 4.22 4.23 4.24 4.25 4.26 4.27 Twelfth Supplemental Indenture, dated September 12, 2013, among ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and Wells Fargo Bank, N.A., as trustee, with respect to the 6.200% Senior Notes dued Report on Form 8-K filed September 12, 2013 (File No. 1-12202)). 2043 (incorporated by reference to Exhibit 4.4 to ONEOK Partners, L.P.’s Current t t Indenture, dated September 25, 2006, between ONEOK Partners, L.P. and Wells Fargo Bank, N.A., as e (incorporated by reference to Exhibit 4.1 to ONEOK Partners, L.P.’s Current Report on Form 8-K r truste filed September 26, 2006 (File No. 1-12202)). Third Supplemental Indenture, dated September 25, 2006, among ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and Wells Fargo Bank, N.A., as trustee, with respect to the 6.65% Senior Notes due 2036 (incorporated by reference to Exhibit 4.4 to ONEOK Partners, L.P.’s Current Report on Form 8-K filed September 26, 2006 (File No. 1-12202)). Fourth Supplemental Indenture, dated September 28, 2007, among ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and Wells Fargo Bank, N.A., as trustee, with respect to the 6.85% Senior Notes due 2037 (incorporated by reference to Exhibit 4.2 to ONEOK Partners, L.P.’s Current Report on Form 8-K filed September 28, 2007 (File No. 1-12202)). Fifth Supplemental Indenture, dated March 3, 2009, among ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and Wells Fargo Bank, N.A., as trustee, with respect to the 8.625% Senior Notes due 2019 (incorporated by reference to Exhibit 4.2 to ONEOK Partners, L.P.’s Current Report on Form 8-K filed March 3, 2009 (File No. 1-12202)). t Ninth Supplemental Indenture, dated September 13, 2012, among ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and Wells Fargo Bank, N.A., as trustee, with respect to the 3.375% Senior 2022 (incorporated by reference from Exhibit 4.3 to ONEOK Partners, L.P.’s Current Report on Notes dued Form 8-K filed September 13, 2012 (File No. 1-12202)). Seventh Supplemental Indenture, dated January 26, 2011, among ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and Wells Fargo Bank, N.A., as trustee, with respect to the 6.125% Senior Notes dued 2041 (incorporated by reference from Exhibit 4.3 to ONEOK Partners, L.P.’s Current Report on Form 8-K filed January 26, 2011 (File No. 1-12202)). t dated January 26, 2012, among ONEOK, Inc. and U.S. Bank National Association, as trustee t Indenture, (incorporated by reference to Exhibit 4.1 to ONEOK, Inc.’s Current Report on Form 8-K filed January 26, 2012 (File No. 1-13643)). First Supplemental Indenture, Association, as trustee, with respect to the 4.25% Senior Notes due 2022 (incorporated by reference to Exhibit 4.2 to ONEOK, Inc.’s Current Report on Form 8-K filed January 26, 2012 (File No. 1-13643)). dated January 26, 2012, among ONEOK, Inc. and U.S. Bank National t u mental Indenture, dated August 21, 2015, between ONEOK, Inc. and U.S. Bank National Second Supple Association, as trustee, with respect to the 7.50% Notes due 2023 (incorporated by reference to Exhibit 4.1 to ONEOK, Inc.’s Current Report on Form 8-K filed August 21, 2015 (File No. 1-13643)). Fourth Supplemental Indenture, dated as of June 30, 2017, by and among ONEOK, Inc., ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee, with respect to the 6.00% Senior Notes due 2035 (incorporated by reference fromff Exhibit 4.3 to ONEOK Inc.’s Current Report on Form 8-K filed July 3, 2017 (File No. 1-13643)). u mental Indenture, dated as of July 2, 2018, among ONEOK, Inc., ONEOK Partners, L.P., Sixth Supple ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee, with 2028 (incorporated by reference from Exhibit No. 4.1 to ONEOK, respect to the 4.55% Senior Notes dued Inc.’s Current Report on Form 8-K filed July 2, 2018 (File No. 1-13643)). 105 4.28 4.29 4.30 4.31 4.32 4.33 4.34 4.35 4.36 4.37 4.38 Seventh Supplemental Indenture, dated as of July 2, 2018, among ONEOK, Inc., ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee, with 2048 (incorporated by reference from Exhibit No. 4.2 to ONEOK, respect to the 5.20% Senior Notes dued Inc.’s Current Report on Form 8-K filed July 2, 2018 (File No. 1-13643)). t Eighth Supplemental Indenture, ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee, with respect to the 4.35% Senior Notes dued 2029 (incorporated by reference from Exhibit No. 4.2 to ONEOK, Inc.’s Current Report on Form 8-K filed March 13, 2019 (File No. 1-13643)). dated as of March 13, 2019, among ONEOK, Inc., ONEOK Partners, L.P., t u mental Indenture, dated as of March 13, 2019, among ONEOK, Inc., ONEOK Partners, L.P., Ninth Supple ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee, with respect to the 5.20% Senior Notes dued 2048 (incorporated by reference from Exhibit No. 4.3 to ONEOK, Inc.’s Current Report on Form 8-K filed March 13, 2019 (File No. 1-13643)). Tenth Supplemental Indenture, dated as of August 15, 2019, among ONEOK, Inc., ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee, with respect to the 2.75% Senior Notes dued 2024 (incorporated by reference from Exhibit No. 4.1 to ONEOK, Inc.’s Current Report on Form 8-K filed August 15, 2019 (File No. 1-13643)). Eleventh Supplemental Indenture, dated as of August 15, 2019, among ONEOK, Inc., ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee, with respect to the 3.40% Senior Notes due 2029 (incorporated by reference fromff ONEOK, Inc.’s Current Report on Form 8-K filed August 15, 2019 (File No. 1-13643)). Exhibit No. 4.2 to Twelfth Supplemental Indenture, dated as of August 15, 2019, among ONEOK, Inc., ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee, with respect to the 4.45% Senior Notes dued 2049 (incorporated by reference from Exhibit No. 4.3 to ONEOK, Inc.’s Current Report on Form 8-K filed August 15, 2019 (File No. 1-13643)). dated as of March 10, 2020, among ONEOK, Inc., ONEOK Partners, Thirteenth Supplemental Indenture, L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee, with respect to the 2.200% Senior Notes due 2025 (incorporated by reference fromff ONEOK, Inc.’s Current Report on Form 8-K filed March 10, 2020 (File No. 1-13643)). Exhibit No. 4.1 to t Fourteenth Supplemental Indenture, dated as of March 10, 2020, among ONEOK, Inc., ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee, with respect to the 3.100% Senior Notes dued ONEOK, Inc.’s Current Report on Form 8-K filed March 10, 2020 (File No. 1-13643)). 2030 (incorporated by reference fromff Exhibit No. 4.2 to Fifteenth Indenture, dated as of March 10, 2020, among ONEOK, Inc., ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as truste 2050 (incorporated by reference fromff 4.500% Senior Notes dued Report on Form 8-K filed March 20, 2020 (File No. 1-13643)). Exhibit No. 4.3 to ONEOK, Inc.’s Current e, with respect to the rr Sixteenth Supplemental Indenture, dated as of May 7, 2020, among ONEOK, Inc., ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as truste respect to the 5.850% Senior Notes dued Inc.’s Current Report on Form 8-K filed May 7, 2020 (File No. 1-13643)). r Exhibit No. 4.1 to ONEOK, 2026 (incorporated by reference fromff e, with u mental Indenture, dated as of May 7, 2020, among ONEOK, Inc., ONEOK Partners, Seventeenth Supple L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as truste e, with respect to the 6.350% Senior Notes dued ONEOK, Inc.’s Current Report on Form 8-K filed May 7, 2020 (File No. 1-13643)). 2031 (incorporated by reference fromff Exhibit No. 4.2 to r 106 4.39 4.40 10 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.8 10.9 Eighteenth Supplemental Indenture, dated as of May 7, 2020, among ONEOK, Inc., ONEOK Partners, L.P., ONEOK Partners Intermediate Limited Partnership and U.S. Bank National Association, as trustee, with respect to the 7.150% Senior Notes dued Inc.’s Current Report on Form 8-K filed May 7, 2020 (File No. 1-13643)). 2051 (incorporated by reference from Exhibit No. 4.3 to ONEOK, Description of securities (incorporated by reference fromff Form 10-K for the fisff cal year ended December 31, 2020, filed February 23, 2021 (File No. 1-13643)). Exhibit 4.43 to ONEOK, Inc.'s Annual Report on ONEOK, Inc. Long-Term Incentive Plan (incorporated by reference from Exhibit 10(a) to ONEOK, Inc.’s Annual Report on Form 10-K for the fisff cal year ended December 31, 2001, filed March 14, 2002 (File No. 1-13643). ONEOK, Inc. Stock Compensation Plan for Non-Employee Directors (incorporated by reference fromff Exhibit 99 to ONEOK, Inc.’s Registration Statement on Form S-8 filff ed January 25, 2001 (File No. 333-54274)). ONEOK, Inc. Supplemental Executive Retirement Plan terminated and froze n December 31, 2004 (incorporated by reference from Exhibit 10.1 to ONEOK, Inc.’s Current Report on Form 8-K filed December 20, 2004 (File No. 1-13643)). ff ONEOK, Inc. 2005 Supplemental Executive Retirement Plan, as amended and restated, dated December 18, 2008 (incorporated by reference from Exhibit 10.3 to ONEOK, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed February 25, 2009 (File No. 1-13643)). Credit Agreement, dated as of April 18, 2017, among ONEOK, Inc., Citibank, N.A., as administrative agent, a swingline lender, a letter of credit issuer and a lender, and the other lenders, swingline lenders and letter of credit issuers parties thereto (incorporated by reference from Exhibit 10.1 to ONEOK, Inc.’s Current Report on Form 8-K filed April 19, 2017 (File No. 1-13643)). Form of Indemnification Agreement between ONEOK, Inc. and ONEOK, Inc. officers and directors, as amended (incorporated by reference from Exhibit 10.5 to ONEOK, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed February 25, 2015 (File No. 1-13643)). Amended and Restated ONEOK, Inc. Annual Officff 10.1 to ONEOK, Inc.’s Current Report on Form 8-K filed May 27, 2009 (File No. 1-13643)). er Incentive Plan (incorporated by reference fromff Exhibit ONEOK, Inc. Employee Nonqualified Deferred Compensation Plan, as amended and restated December 16, 2004 (incorporated by reference from Exhibit 10.3 to ONEOK, Inc.’s Current Report on Form 8-K filed December 20, 2004 (File No. 1-13643)). ONEOK, Inc. 2005 Nonqualified Deferred Compensation Plan, as amended and restated, dated December 18, 2008 (incorporated by reference from Exhibit 10.8 to ONEOK, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, filed February 25, 2009 (File No. 1-13643)). ONEOK, Inc. Deferred Compensation Plan for Non-Employee Directors, as amended and restated, dated December 18, 2008 (incorporated by reference from Exhibit 10.9 to ONEOK, Inc.’s Annual Report on Form 10-K for the fisff cal year ended December 31, 2008, filed February 25, 2009 (File No. 1-13643)). 10.10 greement, dated as of June 30, 2017, by and between ONEOK Partners, L.P. and ONEOK Guaranty At Partners Intermediate Limited Partnership, in favor of Citibank, N.A., as administrative agent, under the Credit Agreement, dated as of April 18, 2017, by and among ONEOK, Inc., Citibank, N.A. and the other lenders parties thereto (incorporated by reference fromff Exhibit 10.1 to ONEOK, Inc.’s Current Report on Form 8-K filed July 3, 2017 (File No. 1-13643)). 107 10.11 10.12 10.13 10.14 10.15 10.16 Extension Agreement, dated as of June 18, 2018, among ONEOK, Inc., Citibank, N.A., as administrative agent, a swingline lender, a letter of credit issuer and a lender, and the other lenders, swingline lenders and letter of credit issuers parties thereto (incorporated by reference from Exhibit No. 10.1 to ONEOK, Inc.’s Current Report on Form 8-K filed June 18, 2018 (File No. 1-13643)). First Amendment and Extension Agreement, dated as of May 24, 2019, among ONEOK, Inc., Citibank, N.A., as administrative agent, a swingline lender, a letter of credit issuer and a lender, and the other lenders, swingline lenders and letter of credit issuers parties thereto (incorporated by reference from Exhibit No. 10.1 to ONEOK, Inc.’s Current Report on Form 8-K filed May 29, 2019 (File No. 1-13643)). Amended and Restated Limited Liability Company Agreement of Overland Pass Pipeline Company LLC entered into between ONEOK Overland Pass Holdings, L.L.C. and Williams Field Services Company, LLC dated May 31, 2006 (incorporated by reference to Exhibit 10.6 to ONEOK Partners, L.P.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, filed August 4, 2006 (File No. 1-12202)). Form of ONEOK, Inc. Officer Change in Control Severance Plan (incorporated by reference fromff Exhibit 10.1 to ONEOK, Inc.’s Current Report on Form 8-K filed July 22, 2011 (File No. 1-13643)). Form of 2018 Restricted Unit Stock Award Agreement dated February 21, 2018 (incorporated by reference to Exhibit 10.17 to ONEOK, Inc.’s Annual Report on Form 10-K filed on February 27, 2018 (File No. 1-13643)). Form of 2018 Performance Unit Award Agreement dated February 21, 2018 (incorporated by reference to Exhibit 10.18 to ONEOK, Inc.’s Annual Report on Form 10-K filed on February 27, 2018 (File No. 1-13643)). 10.17 Form of 2022 Restricted Unit Stock Award Agreement dated February 23, 2022. 10.18 Form of 2022 Performance Unit Award Agreement dated February 23, 2022. 10.19 10.20 10.21 10.22 10.23 Term Loan Agreement, dated as of November 19, 2018, among ONEOK, Inc., Mizuho Bank, Ltd., as administrative agent and a lender, and the other lenders parties thereto (incorporated by reference from Exhibit No. 10.1 to ONEOK, Inc.’s Current Report on Form 8-K filed November 21, 2018 (File No. 1-13643)). greement, dated as of November 19, 2018, by ONEOK Partners Intermediate Limited Guaranty At Partnership and ONEOK Partners, L.P. in favor of Mizuho Bank, Ltd., as administrative agent, under the above-referenced Term Loan Agreement (incorporated by reference from Exhibit No. 10.2 to ONEOK, Inc.’s Current Report on Form 8-K filed November 21, 2018 (File No. 1-13643)). ONEOK, Inc. Equity Incentive Plan (incorporated by reference to Appendix A to ONEOK, Inc.’s definitive proxy statement on Schedule 14A filed on April 5, 2018 (File No. 1-13643)). ONEOK, Inc. Profit Sharing Plan, dated January 1, 2005 (incorporated by reference fromff Exhibit 99 to ONEOK, Inc.’s Registration Statement on Form S-8 filff ed December 30, 2004 (File No. 333-121769)). ONEOK, Inc. Equity Compensation Plan, as amended and restated, dated December 18, 2008 (incorporated by reference fromff December 31, 2008, filed February 25, 2009 (File No. 1-13643)). Exhibit 10.44 to ONEOK, Inc.’s Annual Report on Form 10-K for the fisff cal year ended 108 10.24 10.25 10.26 10.27 10.28 10.29 10.30 10.31 10.32 10.33 10.34 10.35 Equity Distribution Agreement, dated July 23, 2020, among ONEOK, Inc., and Credit Suisse Securities (USA) LLC, BofA Securities, Inc., Goldman Sachs & Co. LLC, Mizuho Securities USA LLC, Morgan Stanley & Co. LLC, RBC Capital Markets, LLC, Scotia Capital (USA) Inc., SMBC Nikko Securities Inc. and TD Securities (USA) LLC as sales agents, principals America, Inc., SunTrust Robinson Humphrey, and/or forward sellers, and Credit Suisse Capia tal LLC, Bank of America, N.A., Goldman Sachs & Co. LLC, Mizuho Markets Americas LLC, Morgan Stanley & Co. LLC, Royal Bank of Canada, The Bank of Nova Scotia and The Toronto-Dominion Bank as forward purchasers (incorporated by reference fromff to ONEOK, Inc.’s Current Report on Form 8-K with a filff ing date of July 24, 2020 (File No. 1-13643)). Exhibit 1.1 m Form of Master Forward Confirmation (incorporated by reference fromff Current Report on Form 8-K with a filff ing date of July 24, 2020 (File No. 1-13643)). Exhibit 1.2 to ONEOK Inc.’s Second Amendment to Credit Agreement, dated as of June 26, 2020, among ONEOK, Inc., Citibank, N.A., as administrative agent, a swingline lender, a letter of credit issuer and a lender, and the other lenders, swingline lenders and letter of credit issuers parties thereto (incorporated by reference from Exhibit 10.1 to ONEOK Inc.’s Current Report on Form 8-K, filed June 30, 2020 (File No. 1-13643). Form of 2019 Restricted Unit Award Agreement, dated February 20, 2019 (incorporated by reference to Exhibit 10.54 to ONEOK, Inc.’s Annual Report on Form 10-K for the fisff cal year ended December 31, 2018, filed February 26, 2019 (File No. 1-13643)). Form of 2019 Performance Unit Award Agreement, dated February 20, 2019 (incorporated by reference to Exhibit 10.55 to ONEOK Inc.’s Annual Report on Form 10-K for the fisff cal year ended December 31, 2018, filed February 26, 2019 (File No. 1-13643)). Form of 2021 Restricted Unit Award Agreement (incorporated by reference from Exhibit 10.33 to ONEOK, Inc's Annual Report on Form 10-K for the fisff cal year ended December 31, 2020, filed February 23, 2021 (File No. 1-13643)) Form of 2021 Performance Unit Award Agreement (incorporated by reference from Exhibit 10.34 to ONEOK, Inc's Annual Report on Form 10-K for the fisff cal year ended December 31, 2020, filed February 23, 2021 (File No. 1-13643)) Form of 2020 Restricted Unit Award Agreement (incorporated by reference to Exhibit 10.35 to ONEOK, Inc.’s Annual Report on Form 10-K for the fisff cal year ended December 31, 2019, filed February 25, 2020 (File No. 1-13643)). Form of 2020 Performance Unit Award Agreement (incorporated by reference to Exhibit 10.36 to ONEOK, Inc.’s Annual Report on Form 10-K for the fisff cal year ended December 31, 2019, filed February 25, 2020 (File No. 1-13643)). ONEOK, Inc. Employee Stock Purchase Plan as amended and restated effecff by reference to Exhibit 10.2 to ONEOK, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed August 1, 2012 (File No. 1-13643)). tive May 23, 2012 (incorporated Form of First Amendment to 2019 Performance Unit Award Agreement (incorporated by reference to Exhibit 10.38 to ONEOK, Inc.’s Annual Report on Form 10-K for the fisff cal year ended December 31, 2019, filed February 25, 2020 (File No. 1-13643)). Form of First Amendment to 2018 Performance Unit Award Agreement (incorporated by reference to Exhibit 10.39 to ONEOK, Inc.’s Annual Report on Form 10-K for the fisff cal year ended December 31, 2019, filed February 25, 2020 (File No. 1-13643)). 109 10.36 10.37 21 22 23 31.1 31.2 32.1 32.2 ONEOK, Inc. 2020 Nonqualified Deferre January 1, 2020 (incorporated by reference fromff 10-K for the fisff cal year ended December 31, 2020, filed February 23, 2021 (File No. 1-13643)) d Compensation Plan dated July 24, 2019, and effective as of Exhibit 10.40 to ONEOK, Inc’s Annual Report on Form ff Form of ONEOK, Inc. Equity Incentive Plan Restricted Unit Award Agreement (Make-Whole Award) between ONEOK, Inc. and Pierce H. Norton II (incorporated by reference to Exhibit 10.1 to ONEOK, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, filed August 4, 2021 (File No. 1-13643)). Required information concerning the registrant’s subsidiaries. List of subsidiary guarantors and issuers of guaranteed securities. Consent of Independent Registered Public Accounting Firm - PricewaterhouseCoopers LLP. Certification of Pierce H. Norton II pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Walter S. Hulse III pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Pierce H. Norton II pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished only pursuant to Rule 13a-14(b)). Certification of Walter S. Hulse III pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished only pursuant to Rule 13a-14(b)). 101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definitions Document. 101.LAB Inline XBRL Taxonomy Label Linkbase Document. 101.PRE Inline XBRL Taxonomy Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). Attached as Exhibit 101 to this Annual Report are the following Inline XBRL-related documents: (i) Document and Entity Information; (ii) Consolidated Statements of Income for the years ended December 31, 2021, 2020 and 2019; (iii) Consolidated Statements of Comprehensive Income forff Sheets at December 31, 2021 and 2020; (v) Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019; (vi) Consolidated Statements of Changes in Equity for the years ended December 31, 2021, 2020 and 2019; and (vii) Notes to Consolidated Financial Statements. the years ended December 31, 2021, 2020 and 2019; (iv) Consolidated Balance ITEM 16. FORM 10-K SUMMARY None. 110 Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto dulyd authorized. Signatures Date: March 1, 2022 ONEOK, Inc. Registrant By: /s/ Walter S. Hulse III Walter S. Hulse III Chief Financial Officer, Treasurer and Executive Vice President, Strategy and Corporate Affairs (Principal Financial Officer) Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capaa cities indicated on this 1st day of March 2022. /s/ Pierce H. Norton Pierce H. Norton President, Chief Executive Officer and Director . Spears /s/ Mary Mrr Mary M. Spears Vice President and Chief Accounting Officer /s/ Julie H. Edwards Julie H. Edwards Director /s/ Randall J. Larson Randall J. Larson Director /s/ Jim W. Mogg Jim W. Mogg Director A. Rodriguez /s/ Eduardo d Eduardo A. Rodriguez Director /s/ John W. Gibson John W. Gibson Chairman of the Board /s/ Walter S. Hulse III Walter S. Hulse III Chief Financial Offiff cer, Treasurer and Executive Vice President, Strategy and Corporate Affairs /s/ Brian L. Derksen Brian L. Derksen Director /s/ Mark W. Helderman Mark W. Helderman Director /s/ Steven J. Malcolm Steven J. Malcolm Director /s/ Pattye L. Moore Pattyet L. Moore Director /s/ Gerald B. Smith Gerald B. Smith Director 111 BOARD OF DIRECTORS Positions and ages as of February 25, 2022 Brian L. Derksen, 70 Retired Global Deputy Chief Executive Officer, Deloitte Touche Tohmatsu Limited Dallas, Texas Jim W. Mogg, 73 Retired Chairman, DCP Midstream GP, L.L.C. Hydro, Oklahoma Julie H. Edwards, 63 Former Chief Financial Officer, Southern Union Company; Former Chief Financial Officer, Frontier Oil Corporation Houston, Texas John W. Gibson, 69 Chairman of the Board and Retired Chief Executive Officer, ONEOK, Inc. Tulsa, Oklahoma Mark W. Helderman, 63 Retired Managing Director and Co-Portfolio Manager, Sasco Capital Inc. Westlake, Ohio Randall J. Larson, 64 Retired Chief Executive Officer, TransMontaigne Partners L.P. Tucson, Arizona Steven J. Malcolm, 73 Retired Chairman, President and Chief Executive Officer, The Williams Companies, Inc. Tulsa, Oklahoma OFFICERS Positions and ages as of February 25, 2022 Pattye L. Moore, 64 Retired Chair of the Board and interim Chief Executive Officer, Red Robin Gourmet Burgers; Former President, Sonic Corp. Broken Arrow, Oklahoma Eduardo A. Rodriguez, 66 President, Strategic Communications Consulting Group El Paso, Texas Gerald B. Smith, 71 Founder, Chairman and Chief Executive Officer, Smith Graham & Co. Investment Advisors Houston, Texas Pierce H. Norton II, 62 President and Chief Executive Officer, ONEOK, Inc. Tulsa, Oklahoma Pierce H. Norton II, 62 President and Chief Executive Officer Sheridan C. Swords, 52 Senior Vice President, Natural Gas Liquids Robert F. Martinovich, 64 Executive Vice President and Chief Administrative Officer Charles M. Kelley, 63 Senior Vice President, Natural Gas Walter S. Hulse III, 58 Chief Financial Officer, Treasurer and Executive Vice President, Strategy and Corporate Affairs Mary M. Spears, 42 Vice President and Chief Accounting Officer Kevin L. Burdick, 57 Executive Vice President and Chief Operating Officer Stephen B. Allen, 48 Senior Vice President, General Counsel and Assistant Corporate Secretary CORPORATE INFORMATION Pat Cipolla, 56 Vice President, Associate General Counsel - Compliance and Ethics and Corporate Secretary ANNUAL MEETING The 2022 annual meeting of shareholders will be held Wednesday, May 25, 2022, at 9 a.m. Central Daylight Time as a virtual meeting only. The meeting will be held online, accessible through a live webcast. INVESTOR RELATIONS oneokinvestorrelations@oneok.com 877-208-7318 AUDITORS PricewaterhouseCoopers LLP Two Warren Place 6120 South Yale Avenue, Suite 1850 Tulsa, OK 74136 DIRECT STOCK PURCHASE AND DIVIDEND REINVESTMENT PLAN ONEOK's Direct Stock Purchase and Dividend Reinvestment Plan provides investors the opportunity to purchase shares of common stock without payment of any brokerage fees or service charges and to reinvest dividends automatically. TRANSFER AGENT, REGISTRAR AND DIVIDEND DISBURSING AGENT EQ Shareowner Services P.O. Box 64854 St. Paul, MN 55164-0854 866-235-0232 www.shareowneronline.com CREDIT RATINGS S&P Global Ratings Fitch Ratings, Inc. Moody’s Investors Service OKE BBB (stable) BBB (stable) Baa3 (stable) CORPORATE WEBSITE www.oneok.com FORWARD-LOOKING STATEMENTS The statements in this annual report that are not historical information, including statements concerning plans and objectives of management for future operations, economic performance or related assumptions, are forward-looking statements. Forward-looking statements may include words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “target,” “guidance,” “intend,” “may,” “might,” “outlook,” “plan,” “potential,” “project,” “scheduled,” “should,” “will,” “would” and other words and terms of similar meaning. Although we believe that our expectations regarding future events are based on reasonable assumptions, we can give no assurance that such expectations or assumptions will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements are described under Part I, Item 1A, Risk Factors and Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and “Forward-Looking Statements” in the ONEOK, Inc. Annual Report on Form 10-K for the year ended Dec. 31, 2021, included in this annual report. 100 West Fifth Street Tulsa, Oklahoma 74103-4298 Post Office Box 871 Tulsa, Oklahoma 74102-0871 www.oneok.com