ONEOK, Inc. (OKE) Cash Flow Statement

The OCF/NI ratio averaged above 1.5 over the past ten quarters, suggesting that reported earnings are well-backed by cash generation. The gap between net income and operating cash flow is primarily driven by non-cash D&A and working capital timing, not accrual red flags. Investors should monitor the working capital swings, particularly the -$605M change in 2026Q1, which temporarily depressed cash conversion.

The FCF trajectory shows a sharp recovery after the Magellan acquisition integration, with 2026Q2 FCF margin of 12.0% approaching pre-acquisition levels seen in 2024. However, the 2026Q1 dip highlights the lumpy nature of working capital and integration costs. The raised guidance suggests management expects sustained FCF improvement, but the inorganic growth from Magellan may not translate to proportional FCF growth in the long term.

The decline in capex/revenue suggests that the heavy investment phase associated with the Magellan integration is winding down, allowing more cash to flow to shareholders. However, the absolute capex of $613M in 2026Q2 remains substantial, reflecting ongoing maintenance needs of the expanded asset base. The mix between maintenance and growth capex is not disclosed, but the lower intensity implies a greater proportion of maintenance spending, which supports FCF stability.

The large negative working capital change in 2026Q1 likely reflects increased receivables or inventory buildup, possibly due to the expanded refined products business. The positive swing in 2026Q2 suggests collections normalized, but the pattern indicates that working capital is a major source of cash flow volatility. Investors should expect continued quarter-to-quarter noise, but the underlying fee-based business should provide stability over the long term.

The consistent dividend payout, which has grown over the past year, appears well-covered by operating cash flow, with a payout ratio of about 32% in 2026Q2. The lack of significant buybacks suggests management prioritizes dividend growth and debt reduction. The acquisition-related outflows, which peaked at $4.2B in 2024Q4, have tapered off, indicating that the Magellan integration is largely complete and capital deployment is shifting toward shareholder returns.

The cumulative OCF/NI ratio of approximately 1.63 suggests that ONEOK's earnings are of high quality, with cash generation consistently outpacing reported profits. This divergence is typical for asset-heavy midstream companies, where D&A is a significant non-cash charge. However, the recent acquisition-related working capital swings could distort this trend, so investors should monitor whether the gap narrows as integration effects fade.