Oklahoma | 46-3561936 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
15 East Fifth Street, Tulsa, OK | 74103 |
(Address of principal executive offices) | (Zip Code) |
Financial Information | Page No. | |
Statements of Income - Three and Six Months Ended June 30, 2016 and 2015 | ||
Statements of Comprehensive Income - Three and Six Months Ended June 30, 2016 and 2015 | ||
Balance Sheets - June 30, 2016 and December 31, 2015 | ||
Statements of Cash Flows - Six Months Ended June 30, 2016 and 2015 | ||
Statement of Equity - Six Months Ended June 30, 2016 | ||
Notes to the Financial Statements | ||
Annual Report | Annual Report on Form 10-K for the year ended December 31, 2015 |
ASU | Accounting Standards Update |
Bcf | Billion cubic feet |
CERCLA | Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended |
Clean Air Act | Federal Clean Air Act, as amended |
Clean Water Act | Federal Water Pollution Control Amendments of 1972, as amended |
DOT | United States Department of Transportation |
EPA | United States Environmental Protection Agency |
EPARR | El Paso Annual Rate Review |
EPS | Earnings per share |
EPSA | El Paso Service Area |
Exchange Act | Securities Exchange Act of 1934, as amended |
FASB | Financial Accounting Standards Board |
GAAP | Accounting principles generally accepted in the United States of America |
GRIP | Texas Gas Reliability Infrastructure Program |
GSRS | Kansas Gas System Reliability Surcharge |
Heating Degree Day or HDD | A measure designed to reflect the demand for energy needed for heating based on the extent to which the daily average temperature falls below a reference temperature for which no heating is required, usually 65 degrees Fahrenheit |
KCC | Kansas Corporation Commission |
KDHE | Kansas Department of Health and Environment |
LDCs | Local distribution companies |
MMcf | Million cubic feet |
Moody’s | Moody’s Investors Service, Inc. |
NYMEX | New York Mercantile Exchange |
OCC | Oklahoma Corporation Commission |
ONE Gas | ONE Gas, Inc. |
ONE Gas Credit Agreement | ONE Gas’ $700 million revolving credit agreement, which expires January, 2019 |
ONEOK | ONEOK, Inc. and its subsidiaries |
PHMSA | United States Department of Transportation Pipeline and Hazardous Materials Safety Administration |
Pipeline Safety, Regulatory Certainty and Job Creation Act | Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011, as amended |
Quarterly Report(s) | Quarterly Report(s) on Form 10-Q |
RRC | Railroad Commission of Texas |
S&P | S&P Global Ratings |
SEC | Securities and Exchange Commission |
Securities Act | Securities Act of 1933, as amended |
Separation and Distribution Agreement | Separation and Distribution Agreement dated January 14, 2014, between ONEOK and ONE Gas |
XBRL | eXtensible Business Reporting Language |
ONE Gas, Inc. | ||||||||||||||||
STATEMENTS OF INCOME | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
(Unaudited) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
(Thousands of dollars, except per share amounts) | ||||||||||||||||
Revenues | $ | 245,923 | $ | 256,786 | $ | 754,288 | $ | 933,317 | ||||||||
Cost of natural gas | 56,457 | 79,949 | 292,186 | 493,502 | ||||||||||||
Net margin | 189,466 | 176,837 | 462,102 | 439,815 | ||||||||||||
Operating expenses | ||||||||||||||||
Operations and maintenance | 97,119 | 99,422 | 203,250 | 205,983 | ||||||||||||
Depreciation and amortization | 35,565 | 33,006 | 70,249 | 64,636 | ||||||||||||
General taxes | 13,161 | 13,139 | 28,908 | 28,921 | ||||||||||||
Total operating expenses | 145,845 | 145,567 | 302,407 | 299,540 | ||||||||||||
Operating income | 43,621 | 31,270 | 159,695 | 140,275 | ||||||||||||
Other income | 416 | 72 | 434 | 885 | ||||||||||||
Other expense | (314 | ) | (502 | ) | (769 | ) | (956 | ) | ||||||||
Interest expense, net | (10,848 | ) | (11,190 | ) | (21,695 | ) | (22,359 | ) | ||||||||
Income before income taxes | 32,875 | 19,650 | 137,665 | 117,845 | ||||||||||||
Income taxes | (12,575 | ) | (7,574 | ) | (52,621 | ) | (45,388 | ) | ||||||||
Net income | $ | 20,300 | $ | 12,076 | $ | 85,044 | $ | 72,457 | ||||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.39 | $ | 0.23 | $ | 1.62 | $ | 1.37 | ||||||||
Diluted | $ | 0.38 | $ | 0.23 | $ | 1.61 | $ | 1.36 | ||||||||
Average shares (thousands) | ||||||||||||||||
Basic | 52,386 | 52,767 | 52,452 | 52,737 | ||||||||||||
Diluted | 52,836 | 53,438 | 52,972 | 53,437 | ||||||||||||
Dividends declared per share of stock | $ | 0.35 | $ | 0.30 | $ | 0.70 | $ | 0.60 |
ONE Gas, Inc. | |||||||||||||||
STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(Unaudited) | 2016 | 2015 | 2016 | 2015 | |||||||||||
(Thousands of dollars) | |||||||||||||||
Net income | $ | 20,300 | $ | 12,076 | $ | 85,044 | $ | 72,457 | |||||||
Other comprehensive income (loss), net of tax | |||||||||||||||
Change in pension and other postemployment benefit plan liability, net of tax of $(73), $(88), $(145) and $(176), respectively | 115 | 142 | 231 | 282 | |||||||||||
Total other comprehensive income (loss), net of tax | 115 | 142 | 231 | 282 | |||||||||||
Comprehensive income | $ | 20,415 | $ | 12,218 | $ | 85,275 | $ | 72,739 |
ONE Gas, Inc. | ||||||||
BALANCE SHEETS | ||||||||
June 30, | December 31, | |||||||
(Unaudited) | 2016 | 2015 | ||||||
Assets | (Thousands of dollars) | |||||||
Property, plant and equipment | ||||||||
Property, plant and equipment | $ | 5,259,066 | $ | 5,132,682 | ||||
Accumulated depreciation and amortization | 1,647,585 | 1,620,771 | ||||||
Net property, plant and equipment | 3,611,481 | 3,511,911 | ||||||
Current assets | ||||||||
Cash and cash equivalents | 54,257 | 2,433 | ||||||
Accounts receivable, net | 115,265 | 216,343 | ||||||
Materials and supplies | 32,618 | 33,325 | ||||||
Income tax receivable | 708 | 38,877 | ||||||
Natural gas in storage | 103,741 | 142,153 | ||||||
Regulatory assets | 54,645 | 32,925 | ||||||
Other current assets | 20,222 | 16,789 | ||||||
Total current assets | 381,456 | 482,845 | ||||||
Goodwill and other assets | ||||||||
Regulatory assets | 410,648 | 435,863 | ||||||
Goodwill | 157,953 | 157,953 | ||||||
Other assets | 49,294 | 46,193 | ||||||
Total goodwill and other assets | 617,895 | 640,009 | ||||||
Total assets | $ | 4,610,832 | $ | 4,634,765 |
ONE Gas, Inc. | ||||||||
BALANCE SHEETS | ||||||||
(Continued) | ||||||||
June 30, | December 31, | |||||||
(Unaudited) | 2016 | 2015 | ||||||
Equity and Liabilities | (Thousands of dollars) | |||||||
Equity and long-term debt | ||||||||
Common stock, $0.01 par value: authorized 250,000,000 shares; issued 52,598,005 shares and outstanding 52,240,948 shares at June 30, 2016; issued 52,598,005 and outstanding 52,259,224 shares at December 31, 2015 | $ | 526 | $ | 526 | ||||
Paid-in capital | 1,756,799 | 1,764,875 | ||||||
Retained earnings | 142,996 | 95,046 | ||||||
Accumulated other comprehensive income (loss) | (4,170 | ) | (4,401 | ) | ||||
Treasury stock, at cost: 357,057 shares at June 30, 2016 and 338,781 shares at December 31, 2015 | (20,563 | ) | (14,491 | ) | ||||
Total equity | 1,875,588 | 1,841,555 | ||||||
Long-term debt, excluding current maturities and net of issuance costs of $9,251 and $9,645, respectively | 1,192,050 | 1,191,660 | ||||||
Total equity and long-term debt | 3,067,638 | 3,033,215 | ||||||
Current liabilities | ||||||||
Current maturities of long-term debt | 7 | 7 | ||||||
Notes payable | — | 12,500 | ||||||
Accounts payable | 59,983 | 107,482 | ||||||
Accrued interest | 18,926 | 18,873 | ||||||
Accrued taxes other than income | 31,676 | 37,249 | ||||||
Accrued liabilities | 15,314 | 31,470 | ||||||
Customer deposits | 61,438 | 60,325 | ||||||
Regulatory liabilities | 19,675 | 24,615 | ||||||
Other current liabilities | 10,965 | 11,700 | ||||||
Total current liabilities | 217,984 | 304,221 | ||||||
Deferred credits and other liabilities | ||||||||
Deferred income taxes | 987,906 | 951,785 | ||||||
Employee benefit obligations | 263,869 | 272,309 | ||||||
Other deferred credits | 73,435 | 73,235 | ||||||
Total deferred credits and other liabilities | 1,325,210 | 1,297,329 | ||||||
Commitments and contingencies | ||||||||
Total liabilities and equity | $ | 4,610,832 | $ | 4,634,765 |
ONE Gas, Inc. | ||||||||
STATEMENTS OF CASH FLOWS | ||||||||
Six Months Ended | ||||||||
June 30, | ||||||||
(Unaudited) | 2016 | 2015 | ||||||
(Thousands of dollars) | ||||||||
Operating activities | ||||||||
Net income | $ | 85,044 | $ | 72,457 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 70,249 | 64,636 | ||||||
Deferred income taxes | 36,031 | 13,152 | ||||||
Share-based compensation expense | 7,451 | 3,684 | ||||||
Provision for doubtful accounts | 2,757 | 2,099 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 98,321 | 181,949 | ||||||
Materials and supplies | 707 | (4,171 | ) | |||||
Income tax receivable | 38,169 | 31,644 | ||||||
Natural gas in storage | 38,412 | 65,409 | ||||||
Asset removal costs | (27,672 | ) | (20,902 | ) | ||||
Accounts payable | (42,897 | ) | (92,371 | ) | ||||
Accrued interest | 53 | 16 | ||||||
Accrued taxes other than income | (5,573 | ) | (10,543 | ) | ||||
Accrued liabilities | (16,156 | ) | (11,368 | ) | ||||
Customer deposits | 1,113 | (824 | ) | |||||
Regulatory assets and liabilities | (2,966 | ) | 58,991 | |||||
Other assets and liabilities | (15,730 | ) | (11,306 | ) | ||||
Cash provided by operating activities | 267,313 | 342,552 | ||||||
Investing activities | ||||||||
Capital expenditures | (144,760 | ) | (125,425 | ) | ||||
Other | 492 | — | ||||||
Cash used in investing activities | (144,268 | ) | (125,425 | ) | ||||
Financing activities | ||||||||
Repayments of notes payable, net | (12,500 | ) | (42,000 | ) | ||||
Repurchase of common stock | (24,066 | ) | (24,122 | ) | ||||
Issuance of common stock | 1,983 | 4,471 | ||||||
Dividends paid | (36,638 | ) | (31,533 | ) | ||||
Cash used in financing activities | (71,221 | ) | (93,184 | ) | ||||
Change in cash and cash equivalents | 51,824 | 123,943 | ||||||
Cash and cash equivalents at beginning of period | 2,433 | 11,943 | ||||||
Cash and cash equivalents at end of period | $ | 54,257 | $ | 135,886 |
ONE Gas, Inc. | |||||||||
STATEMENT OF EQUITY | |||||||||
(Unaudited) | Common Stock Issued | Common Stock | Paid-in Capital | ||||||
(Shares) | (Thousands of dollars) | ||||||||
January 1, 2016 | 52,598,005 | $ | 526 | $ | 1,764,875 | ||||
Net income | — | — | — | ||||||
Other comprehensive income | — | — | — | ||||||
Repurchase of common stock | — | — | — | ||||||
Common stock issued and other | — | — | (8,532 | ) | |||||
Common stock dividends - $0.70 per share | — | — | 456 | ||||||
June 30, 2016 | 52,598,005 | $ | 526 | $ | 1,756,799 |
ONE Gas, Inc. | |||||||||||||
STATEMENT OF EQUITY | |||||||||||||
(Continued) | |||||||||||||
(Unaudited) | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Total Equity | |||||||||
(Thousands of dollars) | |||||||||||||
January 1, 2016 | $ | 95,046 | $ | (14,491 | ) | $ | (4,401 | ) | $ | 1,841,555 | |||
Net income | 85,044 | — | — | 85,044 | |||||||||
Other comprehensive income | — | — | 231 | 231 | |||||||||
Repurchase of common stock | — | (24,066 | ) | — | (24,066 | ) | |||||||
Common stock issued and other | — | 17,994 | — | 9,462 | |||||||||
Common stock dividends - $0.70 per share | (37,094 | ) | — | — | (36,638 | ) | |||||||
June 30, 2016 | $ | 142,996 | $ | (20,563 | ) | $ | (4,170 | ) | $ | 1,875,588 |
1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
2. | REGULATORY ASSETS AND LIABILITIES |
June 30, 2016 | ||||||||||||||
Current | Noncurrent | Total | ||||||||||||
(Thousands of dollars) | ||||||||||||||
Under-recovered purchased-gas costs | $ | 10,635 | $ | — | $ | 10,635 | ||||||||
Pension and postemployment benefit costs | 22,988 | 397,068 | 420,056 | |||||||||||
Weather normalization | 18,154 | — | 18,154 | |||||||||||
Reacquired debt costs | 812 | 8,514 | 9,326 | |||||||||||
Other | 2,056 | 5,066 | 7,122 | |||||||||||
Total regulatory assets, net of amortization | 54,645 | 410,648 | 465,293 | |||||||||||
Accumulated removal costs (a) | — | (6,123 | ) | (6,123 | ) | |||||||||
Over-recovered purchased-gas costs | (18,186 | ) | — | (18,186 | ) | |||||||||
Ad valorem tax | (1,489 | ) | — | (1,489 | ) | |||||||||
Total regulatory liabilities | (19,675 | ) | (6,123 | ) | (25,798 | ) | ||||||||
Net regulatory assets (liabilities) | $ | 34,970 | $ | 404,525 | $ | 439,495 |
December 31, 2015 | ||||||||||||||
Current | Noncurrent | Total | ||||||||||||
(Thousands of dollars) | ||||||||||||||
Under-recovered purchased-gas costs | $ | 13,336 | $ | — | $ | 13,336 | ||||||||
Pension and postemployment benefit costs | 15,670 | 425,175 | 440,845 | |||||||||||
Weather normalization | 2,198 | — | 2,198 | |||||||||||
Reacquired debt costs | 812 | 8,919 | 9,731 | |||||||||||
Other | 909 | 1,769 | 2,678 | |||||||||||
Total regulatory assets, net of amortization | 32,925 | 435,863 | 468,788 | |||||||||||
Accumulated removal costs (a) | — | (9,032 | ) | (9,032 | ) | |||||||||
Over-recovered purchased-gas costs | (22,884 | ) | — | (22,884 | ) | |||||||||
Ad valorem tax | (1,731 | ) | — | (1,731 | ) | |||||||||
Total regulatory liabilities | (24,615 | ) | (9,032 | ) | (33,647 | ) | ||||||||
Net regulatory assets (liabilities) | $ | 8,310 | $ | 426,831 | $ | 435,141 |
3. | CREDIT FACILITY AND SHORT-TERM NOTES PAYABLE |
4. | LONG-TERM DEBT |
5. | EQUITY |
6. | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
Three Months Ended | Six Months Ended | |||||||||||||||
Details about Accumulated Other Comprehensive | June 30, | June 30, | Affected Line Item in the | |||||||||||||
Income (Loss) Components | 2016 | 2015 | 2016 | 2015 | Statements of Income | |||||||||||
(Thousands of dollars) | ||||||||||||||||
Pension and other postemployment benefit plan obligations (a) | ||||||||||||||||
Amortization of net loss | $ | 10,036 | $ | 12,565 | $ | 20,073 | $ | 25,130 | ||||||||
Amortization of unrecognized prior service cost | (908 | ) | (373 | ) | (1,816 | ) | (746 | ) | ||||||||
9,128 | 12,192 | 18,257 | 24,384 | |||||||||||||
Regulatory adjustments (b) | (8,940 | ) | (11,962 | ) | (17,881 | ) | (23,926 | ) | ||||||||
188 | 230 | 376 | 458 | Income before income taxes | ||||||||||||
(73 | ) | (88 | ) | (145 | ) | (176 | ) | Income tax expense | ||||||||
Total reclassifications for the period | $ | 115 | $ | 142 | $ | 231 | $ | 282 | Net income |
7. | EARNINGS PER SHARE |
Three Months Ended June 30, 2016 | ||||||||||
Income | Shares | Per Share Amount | ||||||||
(Thousands, except per share amounts) | ||||||||||
Basic EPS Calculation | ||||||||||
Net income available for common stock | $ | 20,300 | 52,386 | $ | 0.39 | |||||
Diluted EPS Calculation | ||||||||||
Effect of dilutive securities | — | 450 | ||||||||
Net income available for common stock and common stock equivalents | $ | 20,300 | 52,836 | $ | 0.38 |
Three Months Ended June 30, 2015 | ||||||||||
Income | Shares | Per Share Amount | ||||||||
(Thousands, except per share amounts) | ||||||||||
Basic EPS Calculation | ||||||||||
Net income available for common stock | $ | 12,076 | 52,767 | $ | 0.23 | |||||
Diluted EPS Calculation | ||||||||||
Effect of dilutive securities | — | 671 | ||||||||
Net income available for common stock and common stock equivalents | $ | 12,076 | 53,438 | $ | 0.23 |
Six Months Ended June 30, 2016 | ||||||||||
Income | Shares | Per Share Amount | ||||||||
(Thousands, except per share amounts) | ||||||||||
Basic EPS Calculation | ||||||||||
Net income available for common stock | $ | 85,044 | 52,452 | $ | 1.62 | |||||
Diluted EPS Calculation | ||||||||||
Effect of dilutive securities | — | 520 | ||||||||
Net income available for common stock and common stock equivalents | $ | 85,044 | 52,972 | $ | 1.61 |
Six Months Ended June 30, 2015 | ||||||||||
Income | Shares | Per Share Amount | ||||||||
(Thousands, except per share amounts) | ||||||||||
Basic EPS Calculation | ||||||||||
Net income available for common stock | $ | 72,457 | 52,737 | $ | 1.37 | |||||
Diluted EPS Calculation | ||||||||||
Effect of dilutive securities | — | 700 | ||||||||
Net income available for common stock and common stock equivalents | $ | 72,457 | 53,437 | $ | 1.36 |
8. | EMPLOYEE BENEFIT PLANS |
Pension Benefits | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
(Thousands of dollars) | |||||||||||||
Components of net periodic benefit cost | |||||||||||||
Service cost | $ | 3,014 | $ | 3,497 | $ | 6,028 | $ | 7,021 | |||||
Interest cost | 11,388 | 10,652 | 22,775 | 21,304 | |||||||||
Expected return on assets | (15,296 | ) | (15,362 | ) | (30,592 | ) | (30,724 | ) | |||||
Amortization of unrecognized prior service cost | — | 67 | — | 134 | |||||||||
Amortization of net loss | 8,885 | 11,055 | 17,771 | 22,110 | |||||||||
Net periodic benefit cost | $ | 7,991 | $ | 9,909 | $ | 15,982 | $ | 19,845 |
Other Postemployment Benefits | |||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||
June 30, | June 30, | ||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
(Thousands of dollars) | |||||||||||||
Components of net periodic benefit cost | |||||||||||||
Service cost | $ | 638 | $ | 849 | $ | 1,276 | $ | 1,698 | |||||
Interest cost | 2,627 | 2,666 | 5,254 | 5,332 | |||||||||
Expected return on assets | (3,071 | ) | (2,908 | ) | (6,142 | ) | (5,816 | ) | |||||
Amortization of unrecognized prior service cost | (908 | ) | (440 | ) | (1,816 | ) | (880 | ) | |||||
Amortization of net loss | 1,151 | 1,510 | 2,302 | 3,020 | |||||||||
Net periodic benefit cost | $ | 437 | $ | 1,677 | $ | 874 | $ | 3,354 |
9. | COMMITMENTS AND CONTINGENCIES |
• | an evaluation of whether natural gas pipeline integrity-management requirements should be expanded beyond current high-consequence areas; |
• | a verification of records for pipelines in class 3 and 4 locations and high-consequence areas to confirm maximum allowable operating pressures; and |
• | a requirement to test previously untested pipelines operating above 30 percent yield strength in high-consequence areas. |
10. | DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS |
Recognition and Measurement | ||||
Accounting Treatment | Balance Sheet | Income Statement | ||
Normal purchases and normal sales | - | Recorded at historical cost | - | Change in fair value not recognized in earnings |
Mark-to-market | - | Recorded at fair value | - | Change in fair value recognized in, and recoverable through, the purchased-gas cost adjustment mechanisms |
• | Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities; |
• | Level 2 - Significant observable pricing inputs other than quoted prices included within Level 1 that are, either directly or indirectly, observable as of the reporting date. Essentially, this represents inputs that are derived principally from or corroborated by observable market data; and |
• | Level 3 - May include one or more unobservable inputs that are significant in establishing a fair value estimate. These unobservable inputs are developed based on the best information available and may include our own internal data. |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended | Six Months Ended | Three Months | Six Months | ||||||||||||||||||||||||||
June 30, | June 30, | 2016 vs. 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||
Financial Results | 2016 | 2015 | 2016 | 2015 | Increase (Decrease) | Increase (Decrease) | |||||||||||||||||||||||
(Millions of dollars, except percentages) | |||||||||||||||||||||||||||||
Natural gas sales | $ | 217.2 | $ | 229.0 | $ | 688.6 | $ | 865.8 | $ | (11.8 | ) | (5 | )% | $ | (177.2 | ) | (20 | )% | |||||||||||
Transportation revenues | 21.2 | 20.6 | 51.0 | 52.0 | 0.6 | 3 | % | (1.0 | ) | (2 | )% | ||||||||||||||||||
Cost of natural gas | 56.5 | 79.9 | 292.2 | 493.5 | (23.4 | ) | (29 | )% | (201.3 | ) | (41 | )% | |||||||||||||||||
Net margin, excluding other revenues | 181.9 | 169.7 | 447.4 | 424.3 | 12.2 | 7 | % | 23.1 | 5 | % | |||||||||||||||||||
Other revenues | 7.6 | 7.1 | 14.7 | 15.5 | 0.5 | 7 | % | (0.8 | ) | (5 | )% | ||||||||||||||||||
Net margin | 189.5 | 176.8 | 462.1 | 439.8 | 12.7 | 7 | % | 22.3 | 5 | % | |||||||||||||||||||
Operating costs | 110.4 | 112.5 | 232.2 | 234.9 | (2.1 | ) | (2 | )% | (2.7 | ) | (1 | )% | |||||||||||||||||
Depreciation and amortization | 35.5 | 33.0 | 70.2 | 64.6 | 2.5 | 8 | % | 5.6 | 9 | % | |||||||||||||||||||
Operating income | $ | 43.6 | $ | 31.3 | $ | 159.7 | $ | 140.3 | $ | 12.3 | 39 | % | $ | 19.4 | 14 | % | |||||||||||||
Capital expenditures | $ | 69.5 | $ | 70.5 | $ | 144.8 | $ | 125.4 | $ | (1.0 | ) | (1 | )% | $ | 19.4 | 15 | % |
Three Months Ended | Six Months Ended | Three Months | Six Months | ||||||||||||||||||||||||||
Net Margin, Excluding Other | June 30, | June 30, | 2016 vs. 2015 | 2016 vs. 2015 | |||||||||||||||||||||||||
Revenues | 2016 | 2015 | 2016 | 2015 | Increase (Decrease) | Increase (Decrease) | |||||||||||||||||||||||
Natural gas sales | (Millions of dollars, except percentages) | ||||||||||||||||||||||||||||
Residential | $ | 132.8 | $ | 122.8 | $ | 327.5 | $ | 306.9 | $ | 10.0 | 8 | % | $ | 20.6 | 7 | % | |||||||||||||
Commercial and industrial | 26.7 | 25.1 | 65.5 | 62.1 | 1.6 | 6 | % | 3.4 | 5 | % | |||||||||||||||||||
Wholesale and public authority | 1.2 | 1.2 | 3.4 | 3.3 | — | — | % | 0.1 | 3 | % | |||||||||||||||||||
Net margin on natural gas sales | 160.7 | 149.1 | 396.4 | 372.3 | 11.6 | 8 | % | 24.1 | 6 | % | |||||||||||||||||||
Transportation revenues | 21.2 | 20.6 | 51.0 | 52.0 | 0.6 | 3 | % | (1.0 | ) | (2 | )% | ||||||||||||||||||
Net margin, excluding other revenues | $ | 181.9 | $ | 169.7 | $ | 447.4 | $ | 424.3 | $ | 12.2 | 7 | % | $ | 23.1 | 5 | % |
Three Months Ended | Six Months Ended | Three Months | Six Months | ||||||||||||||||||||||||||
June 30, | June 30, | 2016 vs. 2015 | 2016 vs. 2015 | ||||||||||||||||||||||||||
Net Margin on Natural Gas Sales | 2016 | 2015 | 2016 | 2015 | Increase (Decrease) | Increase (Decrease) | |||||||||||||||||||||||
Net margin on natural gas sales | (Millions of dollars, except percentages) | ||||||||||||||||||||||||||||
Fixed margin | $ | 139.9 | $ | 129.5 | $ | 281.8 | $ | 259.8 | $ | 10.4 | 8 | % | $ | 22.0 | 8 | % | |||||||||||||
Variable margin | 20.8 | 19.6 | 114.6 | 112.5 | 1.2 | 6 | % | 2.1 | 2 | % | |||||||||||||||||||
Net margin on natural gas sales | $ | 160.7 | $ | 149.1 | $ | 396.4 | $ | 372.3 | $ | 11.6 | 8 | % | $ | 24.1 | 6 | % |
• | an increase of $10.5 million from new rates in Oklahoma and Texas; |
• | an increase of $0.9 million in residential sales due primarily to net customer growth in Oklahoma and Texas; and |
• | an increase of $0.8 million due to higher line extension revenue in Oklahoma from commercial and industrial customers. |
• | an increase of $24.3 million from new rates in Oklahoma and Texas; and |
• | an increase of $1.8 million in residential sales due primarily to net customer growth in Oklahoma and Texas; offset partially by |
• | a decrease of $2.6 million due to lower sales volumes, net of weather normalization, primarily from warmer weather in the first quarter of 2016 compared with first quarter of 2015; and |
• | a decrease of $1.5 million due primarily to lower transportation volumes from weather-sensitive customers in Kansas and Oklahoma. |
• | a decrease of $2.0 million in outside services, fleet and other costs; and |
• | a decrease of $1.0 million in information technology costs; offset partially by |
• | an increase of $1.5 million in employee-related costs. |
• | a decrease of $4.6 million in outside services, fleet and other costs; |
• | a decrease of $2.4 million from the deferral of certain information technology costs incurred as a result of our separation from ONEOK in 2014, which was approved in Oklahoma as a regulatory asset in the recent rate proceeding; and |
• | a decrease of $2.4 million in information technology costs in addition to those referred to above; offset partially by |
• | an increase of $5.1 million in employee-related costs; and |
• | an increase of $2.3 million in legal-related costs. |
Three Months Ended | Variances | ||||||||||||||||||||||||
June 30, | 2016 vs. 2015 | ||||||||||||||||||||||||
(in thousands) | 2016 | 2015 | Increase (Decrease) | ||||||||||||||||||||||
Average Number of Customers | OK | KS | TX | Total | OK | KS | TX | Total | OK | KS | TX | Total | |||||||||||||
Residential | 789 | 583 | 612 | 1,984 | 784 | 581 | 608 | 1,973 | 5 | 2 | 4 | 11 | |||||||||||||
Commercial and industrial | 73 | 50 | 35 | 158 | 73 | 50 | 34 | 157 | — | — | 1 | 1 | |||||||||||||
Wholesale and public authority | — | — | 3 | 3 | — | — | 3 | 3 | — | — | — | — | |||||||||||||
Transportation | 5 | 6 | 1 | 12 | 6 | 6 | 1 | 13 | (1 | ) | — | — | (1 | ) | |||||||||||
Total customers | 867 | 639 | 651 | 2,157 | 863 | 637 | 646 | 2,146 | 4 | 2 | 5 | 11 |
Six Months Ended | Variances | ||||||||||||||||||||||||
June 30, | 2016 vs. 2015 | ||||||||||||||||||||||||
(in thousands) | 2016 | 2015 | Increase (Decrease) | ||||||||||||||||||||||
Average Number of Customers | OK | KS | TX | Total | OK | KS | TX | Total | OK | KS | TX | Total | |||||||||||||
Residential | 791 | 584 | 612 | 1,987 | 786 | 584 | 607 | 1,977 | 5 | — | 5 | 10 | |||||||||||||
Commercial and industrial | 74 | 50 | 35 | 159 | 73 | 50 | 35 | 158 | 1 | — | — | 1 | |||||||||||||
Wholesale and public authority | — | — | 3 | 3 | — | — | 3 | 3 | — | — | — | — | |||||||||||||
Transportation | 5 | 6 | 1 | 12 | 6 | 6 | 1 | 13 | (1 | ) | — | — | (1 | ) | |||||||||||
Total customers | 870 | 640 | 651 | 2,161 | 865 | 640 | 646 | 2,151 | 5 | — | 5 | 10 |
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
Volumes (MMcf) | 2016 | 2015 | 2016 | 2015 | ||||||||
Natural gas sales | ||||||||||||
Residential | 10,576 | 11,399 | 62,262 | 71,511 | ||||||||
Commercial and industrial | 4,330 | 4,640 | 18,818 | 21,784 | ||||||||
Wholesale and public authority | 338 | 363 | 1,281 | 1,472 | ||||||||
Total volumes sold | 15,244 | 16,402 | 82,361 | 94,767 | ||||||||
Transportation | 49,601 | 46,783 | 108,821 | 107,555 | ||||||||
Total volumes delivered | 64,845 | 63,185 | 191,182 | 202,322 |
Three Months Ended | |||||||||||||||||||||
June 30, | |||||||||||||||||||||
2016 | 2015 | 2016 vs 2015 | 2016 | 2015 | |||||||||||||||||
Heating Degree Days | Actual | Normal | Actual | Normal | Actual Variance | Actual as a percent of Normal | |||||||||||||||
Oklahoma | 162 | 191 | 156 | 195 | 4 | % | 85 | % | 80 | % | |||||||||||
Kansas | 320 | 411 | 300 | 411 | 7 | % | 78 | % | 73 | % | |||||||||||
Texas | 45 | 51 | 31 | 51 | 45 | % | 88 | % | 61 | % |
Six Months Ended | |||||||||||||||||||||
June 30, | |||||||||||||||||||||
2016 | 2015 | 2016 vs 2015 | 2016 | 2015 | |||||||||||||||||
Heating Degree Days | Actual | Normal | Actual | Normal | Actual Variance | Actual as a percent of Normal | |||||||||||||||
Oklahoma | 1,727 | 1,966 | 2,067 | 1,998 | (16 | )% | 88 | % | 103 | % | |||||||||||
Kansas | 2,440 | 2,913 | 2,815 | 2,913 | (13 | )% | 84 | % | 97 | % | |||||||||||
Texas | 899 | 1,034 | 1,125 | 1,033 | (20 | )% | 87 | % | 109 | % |
• | 10-year weighted average HDDs as of December 31, 2014, for years 2005-2014, as calculated using 11 weather stations across Oklahoma and weighted on average customer count for Oklahoma; |
• | 30-year average for years 1981-2010 published by the National Oceanic and Atmospheric Administration, as calculated using 13 weather stations across Kansas and weighted on HDDs by weather station and customers for Kansas; and |
• | a rolling 10-year average of actual natural gas distribution sales volumes by service area for Texas. |
• | 11 weather stations and customers by month for Oklahoma; |
• | 13 weather stations and customers by month for Kansas; and |
• | 9 weather stations and natural gas distribution sales volumes by service area for Texas. |
Rating Agency | Rating | Outlook |
Moody’s | A2 | Stable |
S&P | A- | Positive |
Six Months Ended | Variances | ||||||||||
June 30, | 2016 vs. 2015 | ||||||||||
2016 | 2015 | Increase (Decrease) | |||||||||
(Millions of dollars) | |||||||||||
Total cash provided by (used in): | |||||||||||
Operating activities | $ | 267.3 | $ | 342.6 | $ | (75.3 | ) | ||||
Investing activities | (144.2 | ) | (125.4 | ) | (18.8 | ) | |||||
Financing activities | (71.2 | ) | (93.2 | ) | 22.0 | ||||||
Change in cash and cash equivalents | 51.9 | 124.0 | (72.1 | ) | |||||||
Cash and cash equivalents at beginning of period | 2.4 | 11.9 | (9.5 | ) | |||||||
Cash and cash equivalents at end of period | $ | 54.3 | $ | 135.9 | $ | (81.6 | ) |
• | an evaluation of whether natural gas pipeline integrity-management requirements should be expanded beyond current high-consequence areas; |
• | a verification of records for pipelines in class 3 and 4 locations and high-consequence areas to confirm maximum allowable operating pressures; and |
• | a requirement to test previously untested pipelines operating above 30 percent yield strength in high-consequence areas. |
• | our ability to recover operating costs and amounts equivalent to income taxes, costs of property, plant and equipment and regulatory assets in our regulated rates; |
• | our ability to manage our operations and maintenance costs; |
• | changes in regulation, including the application of market rates by state and local agencies; |
• | the economic climate and, particularly, its effect on the natural gas requirements of our residential and |
• | competition from alternative forms of energy, including, but not limited to, electricity, solar power, wind power, geothermal energy and biofuels; |
• | conservation efforts of our customers; |
• | variations in weather, including seasonal effects on demand, the occurrence of storms and disasters, and climate change; |
• | indebtedness could make us more vulnerable to general adverse economic and industry conditions, limit our ability to borrow additional funds and/or place us at competitive disadvantage compared with competitors; |
• | our ability to secure reliable, competitively priced and flexible natural gas transportation and supply, including decisions by natural gas producers to reduce production or shut-in producing natural gas wells and expiration of existing supply, and transportation and storage arrangements that are not replaced with contracts with similar terms and pricing; |
• | the mechanical integrity of facilities operated; |
• | operational hazards and unforeseen operational interruptions; |
• | adverse labor relations; |
• | the effectiveness of our strategies to reduce earnings lag, margin protection strategies and risk mitigation strategies; |
• | our ability to generate sufficient cash flows to meet all our cash needs; |
• | changes in the financial markets during the periods covered by the forward-looking statements, particularly those affecting the availability of capital and our ability to refinance existing debt and fund investments and acquisitions; |
• | actions of rating agencies, including the ratings of debt, general corporate ratings and changes in the rating agencies’ ratings criteria; |
• | changes in inflation and interest rates; |
• | our ability to purchase and sell assets at reasonable prices and on other reasonable terms; |
• | our ability to recover the costs of natural gas purchased for our customers; |
• | impact of potential impairment charges; |
• | volatility and changes in markets for natural gas; |
• | possible loss of LDC franchises or other adverse effects caused by the actions of municipalities; |
• | payment and performance by counterparties and customers as contracted and when due; |
• | changes in regulation of natural gas distribution services, particularly those in Oklahoma, Kansas and Texas; |
• | changes in law resulting from new federal or state legislation; |
• | changes in environmental, safety, tax and other laws to which we and our subsidiaries are subject; |
• | advances in technology; |
• | population growth rates and changes in the demographic patterns of the markets we serve; |
• | acts of nature and the potential effects of threatened or actual terrorism, including cyber attacks or breaches of technology systems and war; |
• | the sufficiency of insurance coverage to cover losses; |
• | the effects of our strategies to reduce tax payments; |
• | the effects of litigation and regulatory investigations, proceedings, including our rate cases, or inquiries; |
• | changes in accounting standards; |
• | changes in corporate governance standards; |
• | discovery of material weaknesses in our internal controls; |
• | our ability to attract and retain talented management and directors; |
• | the results of financing efforts, including our ability to obtain financing on favorable terms, which can be affected by various factors, including our credit ratings and general economic conditions; |
• | declines in the discount rates on, declines in the market value of the debt and equity securities of, and increases in funding requirements for, our defined benefit plans; |
• | the ability to successfully complete merger, acquisition or divestiture plans, regulatory or other limitations imposed as a result of a merger, acquisition or divestiture, and the success of the business following a merger, acquisition or divestiture; |
• | the final resolutions or outcomes with respect to our contingent and other corporate liabilities related to the natural gas distribution business and any related actions for indemnification made pursuant to the Separation and Distribution Agreement with ONEOK; and |
• | the costs associated with increased regulation and enhanced disclosure and corporate governance requirements pursuant to the Dodd-Frank Wall Street Reform and the Consumer Protection Act of 2010. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
Exhibit No. | Exhibit Description | |
31.1 | Certification of Pierce H. Norton II pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2 | Certification of Curtis L. Dinan pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1 | 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)). | |
32.2 | Certification of Curtis L. Dinan 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 | XBRL Instance Document. | |
101.SCH | XBRL Schema Document. | |
101.CAL | XBRL Calculation Linkbase Document. | |
101.LAB | XBRL Label Linkbase Document. | |
101. PRE | XBRL Presentation Linkbase Document. | |
101.DEF | XBRL Extension Definition Linkbase Document. |
Date: August 2, 2016 | ONE Gas, Inc. | |
Registrant | ||
By: | /s/ Curtis L. Dinan | |
Curtis L. Dinan | ||
Senior Vice President, | ||
Chief Financial Officer and Treasurer | ||
(Principal Financial Officer) |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Pierce H. Norton II | |
Pierce H. Norton II | |
Chief Executive Officer |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Curtis L. Dinan | |
Curtis L. Dinan | |
Chief Financial Officer |
(1) | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
(1) | the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
Document And Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jul. 25, 2016 |
|
Document Information [Line Items] | ||
Entity Registrant Name | ONE Gas, Inc. | |
Entity Central Index Key | 0001587732 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 52,241,448 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2016 |
STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Gross Margin | ||||
Revenues | $ 245,923 | $ 256,786 | $ 754,288 | $ 933,317 |
Cost of natural gas | 56,457 | 79,949 | 292,186 | 493,502 |
Net margin | 189,466 | 176,837 | 462,102 | 439,815 |
Operating expenses | ||||
Operations and maintenance | 97,119 | 99,422 | 203,250 | 205,983 |
Depreciation and amortization | 35,565 | 33,006 | 70,249 | 64,636 |
General taxes | 13,161 | 13,139 | 28,908 | 28,921 |
Total operating expenses | 145,845 | 145,567 | 302,407 | 299,540 |
Operating income | 43,621 | 31,270 | 159,695 | 140,275 |
Other income | 416 | 72 | 434 | 885 |
Other expense | (314) | (502) | (769) | (956) |
Interest expense, net | (10,848) | (11,190) | (21,695) | (22,359) |
Income before income taxes | 32,875 | 19,650 | 137,665 | 117,845 |
Income taxes | (12,575) | (7,574) | (52,621) | (45,388) |
Net income | $ 20,300 | $ 12,076 | $ 85,044 | $ 72,457 |
Earnings per share | ||||
Basic | $ 0.39 | $ 0.23 | $ 1.62 | $ 1.37 |
Diluted | $ 0.38 | $ 0.23 | $ 1.61 | $ 1.36 |
Average shares (thousands) | ||||
Basic | 52,386 | 52,767 | 52,452 | 52,737 |
Diluted | 52,836 | 53,438 | 52,972 | 53,437 |
Dividends declared per share of stock | $ 0.35 | $ 0.30 | $ 0.70 | $ 0.60 |
STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF COMPREHENSIVE INCOME Parenthetical - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
STATEMENTS OF COMPREHENSIVE INCOME Parenthetical [Abstract] | ||||
Pension and other postemployment benefit plans, tax | $ (73) | $ (88) | $ (145) | $ (176) |
STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Net income | $ 20,300 | $ 12,076 | $ 85,044 | $ 72,457 |
Other comprehensive income (loss), net of tax | ||||
Change in pension and postemployment benefit plan liability, net of tax of $(73), $(88), $(145), and $(176), respectively | 115 | 142 | 231 | 282 |
Other comprehensive income (loss), net of tax | 115 | 142 | 231 | 282 |
Comprehensive income | $ 20,415 | $ 12,218 | $ 85,275 | $ 72,739 |
BALANCE SHEETS BALANCE SHEETS Parenthetical - USD ($) $ in Thousands |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2016 |
Dec. 31, 2015 |
|
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 250,000,000 | 250,000,000 |
Common stock, shares issued | 52,598,005 | 52,598,005 |
Common stock, shares outstanding | 52,240,948 | 52,259,224 |
Treasury stock, shares | 357,057 | 338,781 |
Debt issuance costs | $ 9,251 | $ 9,645 |
STATEMENT OF CHANGES IN EQUITY - 6 months ended Jun. 30, 2016 - USD ($) $ in Thousands |
Total |
Common Stock [Member] |
Paid-in Capital [Member] |
Retained Earnings [Member] |
Treasury Stock [Member] |
Accumulated Other Comprehensive Income (Loss) [Member] |
---|---|---|---|---|---|---|
Shares issued, beginning balance at Dec. 31, 2015 | 52,598,005 | 52,598,005 | ||||
Equity, beginning balance at Dec. 31, 2015 | $ 1,841,555 | $ 526 | $ 1,764,875 | $ 95,046 | $ (14,491) | $ (4,401) |
Net income | 85,044 | 0 | 0 | 85,044 | 0 | 0 |
Other comprehensive income | 231 | 0 | 0 | 0 | 231 | |
Repurchase of common stock | (24,066) | $ 0 | 0 | 0 | (24,066) | 0 |
Common stock issued, shares | 0 | |||||
Common stock issued, value | 9,462 | $ 0 | (8,532) | 0 | 17,994 | 0 |
Common stock dividends - $0.70 per share | $ (36,638) | $ 0 | 456 | (37,094) | 0 | 0 |
Shares issued, ending balance at Jun. 30, 2016 | 52,598,005 | 52,598,005 | ||||
Equity, ending balance at Jun. 30, 2016 | $ 1,875,588 | $ 526 | $ 1,756,799 | $ 142,996 | $ (20,563) | $ (4,170) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Notes) |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 30, 2016 | |||||
Significant Accounting Policies [Line Items] | |||||
SIGNIFICANT ACCOUNTING POLICIES |
Our accompanying unaudited financial statements have been prepared pursuant to the rules and regulations of the SEC. These statements also have been prepared in accordance with GAAP and reflect all adjustments that, in our opinion, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The 2015 year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. These unaudited financial statements should be read in conjunction with the audited financial statements and footnotes in our Annual Report. Due to the seasonal nature of our business, the results of operations for the three and six months ended June 30, 2016, are not necessarily indicative of the results that may be expected for a 12-month period. We provide natural gas distribution services to more than 2 million customers in Oklahoma, Kansas and Texas through Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service, respectively. We serve residential, commercial, industrial and transportation customers in all three states. In addition, we also provide natural gas distribution services to wholesale and public authority customers. Use of Estimates - The preparation of our 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 financial statements. These estimates and assumptions also affect the reported amounts of revenue and expenses during the reporting period. Items that may be estimated include, but are not limited to, the economic useful life of assets, fair value of assets and liabilities, provision for doubtful accounts, unbilled revenues for natural gas delivered but for which meters have not been read, natural gas purchased but for which no invoice has been received, provision for income taxes, including any deferred tax valuation allowances, the results of litigation and various other recorded or disclosed amounts. We evaluate these estimates on an ongoing basis using historical experience and other methods we consider reasonable based on the particular circumstances. Nevertheless, actual results may differ significantly from the 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. Segments - We operate in one reportable business segment: regulated public utilities that deliver natural gas to residential, commercial, industrial, wholesale, public authority and transportation customers. The accounting policies for our segment are the same as described in Note 1 of our Notes to the Financial Statements in our Annual Report. We evaluate our financial performance principally on operating income. For the three and six months ended June 30, 2016, and 2015, we had no single external customer from which we received 10 percent or more of our gross revenues. Recently Issued Accounting Standards Update - In March 2016, the FASB issued ASU 2016-12, “Improvements to Employee Share-Based Payment Accounting,” which includes various new aspects to simplify how share-based payments are accounted for and presented in the financial statements. The new standard will modify several aspects of the accounting and reporting for employee share-based payments and related tax accounting impacts, including the presentation in the statements of operations and cash flows. This new guidance is required to be adopted for our interim and annual reports for periods beginning after December 15, 2016, but may be adopted early. We are evaluating the impact of this guidance and the timing of adoption. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which prescribes recognizing lease assets and liabilities on the balance sheet and includes disclosure of key information about leasing arrangements. We are evaluating the impact of this issued guidance, as well as the timing of adoption, which is required for our interim and annual reports for periods beginning after December 15, 2018. In August 2015, the FASB issued ASU 2015-15, “Interest-Imputation of Interest (Subtopic 835-30),” which addresses the presentation and subsequent measurement of debt issuance costs associated with line of credit arrangements. We adopted this guidance in the first quarter 2016, and it did not have an impact on our financial position or results of operations. In April 2015, the FASB issued ASU 2015-03, “Interest-Imputation of Interest,” which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. We adopted this guidance in the first quarter of 2016, and have applied the changes retrospectively to all periods presented. We have presented such amounts as a direct deduction from the face amount of our long-term debt, rather than in other assets as a deferred charge in our Balance Sheets. Amortization of the debt issuance costs continues to be reported as interest expense in our Statements of Income. In April 2015, the FASB issued ASU 2015-05, “Intangibles-Goodwill and Other-Internal-Use Software,” which helps entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement. We adopted this guidance prospectively in the first quarter of 2016, and it did not have a material impact on our financial position or results of operations. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which clarifies and converges the revenue recognition principles under GAAP and International Financial Reporting Standards. In July 2015, FASB delayed the effective date for one year. We are evaluating the impact of this issued guidance, as well as the timing of adoption, which is required for our interim and annual reports beginning with the first quarter 2018. |
REGULATORY ASSETS AND LIABILITIES (Notes) |
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SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Regulatory Assets and Liabilities |
The tables below present a summary of regulatory assets, net of amortization, and liabilities for the periods indicated:
(a) Included in other deferred credits in our Balance Sheets.
(a) Included in other deferred credits in our Balance Sheets. Regulatory assets on our Balance Sheets, as authorized by various regulatory authorities, are probable of recovery. Base rates are designed to provide a recovery of costs during the period rates are in effect, but do not generally provide for a return on investment for amounts we have deferred as regulatory assets. All of our regulatory assets are subject to review by the respective regulatory authorities during future regulatory proceedings. We are not aware of any evidence that these costs will not be recoverable through either riders or base rates, and we believe that we will be able to recover such costs, consistent with our historical recoveries. In January 2016, as a result of the OCC’s approval of our rate case in Oklahoma, we recorded a regulatory asset of $2.4 million to recover certain information technology costs incurred as a result of our separation from ONEOK in 2014, which will be recovered over four years. |
CREDIT FACILITIES (Notes) |
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Short-term Debt [Line Items] | |||||
Short-term Debt [Text Block] |
The ONE Gas Credit Agreement contains certain financial, operational and legal covenants. Among other things, these covenants include maintaining ONE Gas’ debt-to-capital ratio of no more than 70 percent at the end of any calendar quarter. At June 30, 2016, our debt-to-capital ratio was 39 percent and we were in compliance with all covenants under the ONE Gas Credit Agreement. We have a commercial paper program under which we may issue unsecured commercial paper up to a maximum amount of $700 million to fund short-term borrowing needs. The maturities of the commercial paper notes may vary but may not exceed 270 days from the date of issue. The commercial paper notes are generally sold at par less a discount representing an interest factor. The ONE Gas Credit Agreement is available to repay the commercial paper notes, if necessary. Amounts outstanding under the commercial paper program reduce the borrowing capacity under the ONE Gas Credit Agreement. At June 30, 2016, we had no short-term borrowings, $1.0 million in letters of credit issued under the ONE Gas Credit Agreement and $699.0 million of remaining credit available under the ONE Gas Credit Agreement. |
LONG-TERM DEBT (Notes) |
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Long-term Debt [Text Block] |
We have senior notes, consisting of $300 million of 2.07 percent senior notes due in 2019, $300 million of 3.61 percent senior notes due in 2024 and $600 million of 4.658 percent senior notes due in 2044 (collectively, our “Senior Notes”). The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding Senior Notes to declare those Senior Notes immediately due and payable in full. |
EQUITY (Notes) |
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Stockholders' Equity Note Disclosure [Text Block] |
Treasury Shares - In the first quarter of 2016, we repurchased approximately 407 thousand shares of our common stock for approximately $24.1 million. Dividends - In July 2016, a dividend of $0.35 per share ($1.40 per share on an annualized basis) was declared for shareholders of record on August 15, 2016, payable September 1, 2016. |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Notes) |
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Comprehensive Income (Loss) Note [Text Block] |
The following table sets forth the effect of reclassifications from accumulated other comprehensive income (loss) in our Statements of Income for the periods indicated:
(a) These components of accumulated other comprehensive income (loss) are included in the computation of net periodic benefit cost. See Note 8 for additional detail of our net periodic benefit cost. (b) Regulatory adjustments represent pension and other postemployment benefit costs expected to be recovered through rates and are deferred as part of our regulatory assets. See Note 2 for additional disclosures of regulatory assets and liabilities. |
EARNINGS PER SHARE (Notes) |
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Earnings Per Share [Text Block] |
Basic EPS is based on net income and is calculated based upon the daily weighted-average number of common shares outstanding during the periods presented. Also, this calculation includes fully vested stock awards that have not yet been issued as common stock. Diluted EPS includes basic EPS, plus unvested stock awards granted under our compensation plans, but only to the extent these instruments dilute earnings per share. The following tables set forth the computation of basic and diluted EPS from continuing operations for the periods indicated:
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EMPLOYEE BENEFIT PLANS (Notes) |
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EMPLOYEE BENEFIT PLANS |
The following tables set forth the components of net periodic benefit cost for our pension and other postemployment benefit plans for the periods indicated:
We recover qualified pension benefit plan and other postemployment benefit plan costs through rates charged to our customers. Certain utility commissions require that the recovery of these costs be based on specific guidelines. The difference between these regulatory-based amounts and the periodic benefit cost calculated pursuant to GAAP is deferred as a regulatory asset or liability and amortized to expense over periods in which this difference will be recovered in rates, as authorized by the applicable utility commission. Regulatory deferrals related to net periodic benefit cost were not material for the three and six months ended June 30, 2016. |
COMMITMENTS AND CONTINGENCIES (Notes) |
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COMMITMENTS AND CONTINGENCIES |
Environmental Matters - We are subject to multiple historical, wildlife preservation and environmental laws and/or regulations that affect many aspects of our present and future operations. Regulated activities include, but are not limited to, those involving air emissions, storm water and wastewater discharges, handling and disposal of solid and hazardous wastes, wetland preservation, 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 and/or interruptions in our operations that could be material to our results of operations. In addition, emission controls and/or other regulatory or permitting mandates under the Clean Air Act and other similar federal and state laws could require unexpected capital 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 applicable to us. Revised or additional statutes or regulations that result in increased compliance costs or additional operating restrictions could have a material adverse effect on our business, financial condition, results of operations and cash flows. We own or retain legal responsibility for the environmental conditions at 12 former manufactured natural gas sites in Kansas. These sites contain potentially harmful materials that are subject to control or remediation under various environmental laws and regulations. A consent agreement with the KDHE governs all work at these sites. The terms of the consent agreement allow us to investigate these sites and set remediation activities based upon the results of the investigations and risk analysis. Remediation typically involves the management of contaminated soils and may involve removal of structures and monitoring and/or remediation of groundwater. We have completed or addressed removal of the source of soil contamination at 11 of the 12 sites according to plans approved by the KDHE. Regulatory closure has been achieved at three of the sites. We have begun site assessment at the remaining site where no active remediation has occurred. Our expenditures for environmental evaluation, mitigation, remediation and compliance to date have not been significant in relation to our financial position, results of operations or cash flows, and our expenditures related to environmental matters had no material effects on earnings or cash flows during the three and six months ended June 30, 2016 and 2015. We do not expect expenditures for these matters to have a material adverse effect on our financial condition, results of operations or cash flows. Pipeline Safety - We are subject to PHMSA regulations, including integrity-management regulations. PHMSA regulations require pipeline companies operating high-pressure transmission pipelines to perform integrity assessments on pipeline segments that pass through densely populated areas or near specifically designated high-consequence areas. In January 2012, the Pipeline Safety, Regulatory Certainty and Job Creation Act was signed into law. The law increased maximum penalties for violating federal pipeline safety regulations and directs the DOT and the Secretary of Transportation to conduct further review or studies on issues that may or may not be material to us. These issues include, but are not limited to, the following:
In April 2016, PHMSA published a notice of proposed rulemaking (NPRM) in the Federal Register to revise pipeline safety regulations applicable to the safety of onshore natural gas transmission and gathering pipelines. Proposals include changes to pipeline integrity management requirements and other safety-related requirements. The NPRM comment period ended July 7, 2016. The potential capital and operating expenditures associated with the NPRM are currently being evaluated, but could be significant depending on the final regulations. Legal Proceedings - We are a party to various litigation matters and claims that have arisen in the normal course of our operations. While the results of litigation and claims cannot be predicted with certainty, we believe the reasonably possible losses from such matters, individually and in the aggregate, are not material. Additionally, we believe the probable final outcome of such matters will not have a material adverse effect on our results of operations, financial position or cash flows. |
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Notes) |
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Fair Value Disclosures |
Accounting Treatment - We record all derivative instruments at fair value, with the exception of normal purchases and normal sales that are expected to result in physical delivery. 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, or if regulatory rulings require a different accounting treatment. If certain conditions are met, we may elect to designate a derivative instrument as a hedge to mitigate the risk of exposure to changes in fair values or cash flows. The table below summarizes the various ways in which we account for our derivative instruments and the impact on our financial statements:
We have not elected to designate any of our derivative instruments as hedges. Premiums paid and any cash settlements received associated with the commodity derivative instruments entered into by us are included in, and recoverable through, the purchased-gas cost adjustment mechanisms. Determining Fair Value - We define fair value as the price that would be received from the sale of an asset or the transfer of a liability in an orderly transaction between market participants at the measurement date. We use the market and income approaches to determine the fair value of our assets and liabilities and consider the markets in which the transactions are executed. We measure the fair value of a group of financial assets and liabilities consistent with how a market participant would price the net risk exposure at the measurement date. Fair Value Hierarchy - 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 fair value. The levels of the hierarchy are described below:
We recognize transfers into and out of the levels as of the end of each reporting period. Determining the appropriate classification of our fair value measurements within the fair value hierarchy requires management’s judgment regarding the degree to which market data is observable or corroborated by observable market data. We categorize derivatives for which fair value is determined using multiple inputs within a single level, based on the lowest level input that is significant to the fair value measurement in its entirety. Derivative Instruments - At June 30, 2016, we held purchased natural gas call options for the heating season ending March 2017, with total notional amounts of 12.4 Bcf, for which we paid premiums of $4.1 million, and had a fair value of $6.4 million. At December 31, 2015, we held purchased natural gas call options for the heating season ended March 2016, with total notional amounts of 17.0 Bcf, for which we paid premiums of $5.8 million, and had a fair value of $0.4 million. The premiums paid and any cash settlements received are recorded as part of our unrecovered purchased-gas costs in current regulatory assets as these contracts are included in, and recoverable through, the purchased-gas cost adjustment mechanisms. Additionally, changes in fair value associated with these contracts are deferred as part of our unrecovered purchased-gas costs in our Balance Sheets. Our natural gas call options are classified as Level 1 as fair value amounts are based on unadjusted quoted prices in active markets including NYMEX-settled prices. There were no transfers between levels for the three and six months ended June 30, 2016 and 2015. Other Financial Instruments - The approximate fair value of cash and cash equivalents, accounts receivable and accounts payable is equal to book value, due to the short-term nature of these items. Our cash and cash equivalents of $54.3 million includes $26.0 million of commercial paper that is classified as held-to-maturity, with the remaining comprised of bank and money market accounts. Our bank and money market accounts are classified as Level 1 fair value measurements in our fair value hierarchy, and our investments in commercial paper are classified as Level 2 in our fair value hierarchy. Short-term notes payable and commercial paper are due upon demand and, therefore, the carrying amounts approximate fair value and are classified as Level 1. The book value of our long-term debt, including current maturities, was $1.2 billion at both June 30, 2016 and December 31, 2015. The estimated fair value of our long-term debt, including current maturities, was $1.3 billion and $1.2 billion at June 30, 2016 and December 31, 2015, respectively. The estimated fair value of our Senior Notes at June 30, 2016 and December 31, 2015, was determined using quoted market prices, and are classified as Level 2 in our fair value hierarchy. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Significant Accounting Policies [Line Items] | |
Use of Estimates | Use of Estimates - The preparation of our 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 financial statements. These estimates and assumptions also affect the reported amounts of revenue and expenses during the reporting period. Items that may be estimated include, but are not limited to, the economic useful life of assets, fair value of assets and liabilities, provision for doubtful accounts, unbilled revenues for natural gas delivered but for which meters have not been read, natural gas purchased but for which no invoice has been received, provision for income taxes, including any deferred tax valuation allowances, the results of litigation and various other recorded or disclosed amounts. We evaluate these estimates on an ongoing basis using historical experience and other methods we consider reasonable based on the particular circumstances. Nevertheless, actual results may differ significantly from the 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. |
Segments | Segments - We operate in one reportable business segment: regulated public utilities that deliver natural gas to residential, commercial, industrial, wholesale, public authority and transportation customers. The accounting policies for our segment are the same as described in Note 1 of our Notes to the Financial Statements in our Annual Report. We evaluate our financial performance principally on operating income. For the three and six months ended June 30, 2016, and 2015, we had no single external customer from which we received 10 percent or more of our gross revenues. |
Recently Issued Accounting Standards Update | Recently Issued Accounting Standards Update - In March 2016, the FASB issued ASU 2016-12, “Improvements to Employee Share-Based Payment Accounting,” which includes various new aspects to simplify how share-based payments are accounted for and presented in the financial statements. The new standard will modify several aspects of the accounting and reporting for employee share-based payments and related tax accounting impacts, including the presentation in the statements of operations and cash flows. This new guidance is required to be adopted for our interim and annual reports for periods beginning after December 15, 2016, but may be adopted early. We are evaluating the impact of this guidance and the timing of adoption. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” which prescribes recognizing lease assets and liabilities on the balance sheet and includes disclosure of key information about leasing arrangements. We are evaluating the impact of this issued guidance, as well as the timing of adoption, which is required for our interim and annual reports for periods beginning after December 15, 2018. In August 2015, the FASB issued ASU 2015-15, “Interest-Imputation of Interest (Subtopic 835-30),” which addresses the presentation and subsequent measurement of debt issuance costs associated with line of credit arrangements. We adopted this guidance in the first quarter 2016, and it did not have an impact on our financial position or results of operations. In April 2015, the FASB issued ASU 2015-03, “Interest-Imputation of Interest,” which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. We adopted this guidance in the first quarter of 2016, and have applied the changes retrospectively to all periods presented. We have presented such amounts as a direct deduction from the face amount of our long-term debt, rather than in other assets as a deferred charge in our Balance Sheets. Amortization of the debt issuance costs continues to be reported as interest expense in our Statements of Income. In April 2015, the FASB issued ASU 2015-05, “Intangibles-Goodwill and Other-Internal-Use Software,” which helps entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement. We adopted this guidance prospectively in the first quarter of 2016, and it did not have a material impact on our financial position or results of operations. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which clarifies and converges the revenue recognition principles under GAAP and International Financial Reporting Standards. In July 2015, FASB delayed the effective date for one year. We are evaluating the impact of this issued guidance, as well as the timing of adoption, which is required for our interim and annual reports beginning with the first quarter 2018. |
DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS (Policies) |
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Derivatives | Accounting Treatment - We record all derivative instruments at fair value, with the exception of normal purchases and normal sales that are expected to result in physical delivery. 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, or if regulatory rulings require a different accounting treatment. If certain conditions are met, we may elect to designate a derivative instrument as a hedge to mitigate the risk of exposure to changes in fair values or cash flows. The table below summarizes the various ways in which we account for our derivative instruments and the impact on our financial statements:
We have not elected to designate any of our derivative instruments as hedges. Premiums paid and any cash settlements received associated with the commodity derivative instruments entered into by us are included in, and recoverable through, the purchased-gas cost adjustment mechanisms. |
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Fair Value Measurement | Determining Fair Value - We define fair value as the price that would be received from the sale of an asset or the transfer of a liability in an orderly transaction between market participants at the measurement date. We use the market and income approaches to determine the fair value of our assets and liabilities and consider the markets in which the transactions are executed. We measure the fair value of a group of financial assets and liabilities consistent with how a market participant would price the net risk exposure at the measurement date. Fair Value Hierarchy - 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 fair value. The levels of the hierarchy are described below:
We recognize transfers into and out of the levels as of the end of each reporting period. Determining the appropriate classification of our fair value measurements within the fair value hierarchy requires management’s judgment regarding the degree to which market data is observable or corroborated by observable market data. We categorize derivatives for which fair value is determined using multiple inputs within a single level, based on the lowest level input that is significant to the fair value measurement in its entirety. |
REGULATORY ASSETS AND LIABILITIES (Tables) |
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SCHEDULE OF REGULATED ASSETS AND LIABILITIES [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SCHEDULE OF REGULATED ASSETS AND LIABILITIES | The tables below present a summary of regulatory assets, net of amortization, and liabilities for the periods indicated:
(a) Included in other deferred credits in our Balance Sheets.
(a) Included in other deferred credits in our Balance Sheets. |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) |
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Reclassification out of Accumulated Other Comprehensive Income [Table Text Block] | The following table sets forth the effect of reclassifications from accumulated other comprehensive income (loss) in our Statements of Income for the periods indicated:
(a) These components of accumulated other comprehensive income (loss) are included in the computation of net periodic benefit cost. See Note 8 for additional detail of our net periodic benefit cost. (b) Regulatory adjustments represent pension and other postemployment benefit costs expected to be recovered through rates and are deferred as part of our regulatory assets. See Note 2 for additional disclosures of regulatory assets and liabilities. |
EARNINGS PER SHARE (Tables) |
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Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following tables set forth the computation of basic and diluted EPS from continuing operations for the periods indicated:
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EMPLOYEE BENEFIT PLANS (Tables) |
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Schedule of Net Benefit Costs [Table Text Block] | The following tables set forth the components of net periodic benefit cost for our pension and other postemployment benefit plans for the periods indicated:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) number in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Significant Accounting Policies [Line Items] | ||||
Number of natural gas distribution services customers | 2 | 2 | ||
Segment Reporting, Disclosure of Major Customers | 0 | 0 | 0 | 0 |
CREDIT FACILITIES (Details) |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Short-term Debt [Line Items] | |
Ratio of Indebtedness to Net Capital | 0.39 |
Debt Instrument, Covenant Description | The ONE Gas Credit Agreement contains certain financial, operational and legal covenants. Among other things, these covenants include maintaining ONE Gas’ debt-to-capital ratio of no more than 70 percent at the end of any calendar quarter. |
Commercial paper maximum borrowing capacity | $ 700,000,000 |
Short-term Debt | 0 |
Letters of Credit Outstanding, Amount | 1,000,000 |
Line of Credit Facility, Remaining Borrowing Capacity | $ 699,000,000 |
LONG-TERM DEBT (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2016
USD ($)
| |
Debt Instrument [Line Items] | |
Debt Instrument, Covenant Description | The ONE Gas Credit Agreement contains certain financial, operational and legal covenants. Among other things, these covenants include maintaining ONE Gas’ debt-to-capital ratio of no more than 70 percent at the end of any calendar quarter. |
Note Payable Due 2019 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Covenant Description | The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding Senior Notes to declare those Senior Notes immediately due and payable in full. |
Long-term Debt, Gross | $ 300 |
Debt Instrument, Interest Rate, Stated Percentage | 2.07% |
Note Payable Due 2024 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Covenant Description | The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding Senior Notes to declare those Senior Notes immediately due and payable in full. |
Long-term Debt, Gross | $ 300 |
Debt Instrument, Interest Rate, Stated Percentage | 3.61% |
Notes Payable Due 2044 [Member] | |
Debt Instrument [Line Items] | |
Debt Instrument, Covenant Description | The indenture governing our Senior Notes includes an event of default upon the acceleration of other indebtedness of $100 million or more. Such events of default would entitle the trustee or the holders of 25 percent in aggregate principal amount of the outstanding Senior Notes to declare those Senior Notes immediately due and payable in full. |
Long-term Debt, Gross | $ 600 |
Debt Instrument, Interest Rate, Stated Percentage | 4.658% |
EQUITY (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Sep. 30, 2016 |
Mar. 31, 2016 |
Jun. 30, 2016 |
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Treasury stock acquired, shares | 407 | ||
Treasury stock acquired, value | $ 24,100 | $ 24,066 | |
Subsequent Event [Member] | |||
Common Stock, Dividends, Per Share, Declared | $ 0.35 | ||
Common Stock, Dividends, Declared, Annualized Basis | $ 1.40 |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Amortization of net loss | $ 10,036 | $ 12,565 | $ 20,073 | $ 25,130 |
Amortization of unrecognized prior service cost | (908) | (373) | (1,816) | (746) |
Reclassification adjustment, before tax and regulatory adjustments | 9,128 | 12,192 | 18,257 | 24,384 |
Regulatory adjustments | (8,940) | (11,962) | (17,881) | (23,926) |
Reclassification adjustment, before tax | 188 | 230 | 376 | 458 |
Reclassification adjustment, Tax | (73) | (88) | (145) | (176) |
Reclassification adjustment, net of tax | $ 115 | $ 142 | $ 231 | $ 282 |
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Basic EPS Calculation | ||||
Net income available for common stock | $ 20,300 | $ 12,076 | $ 85,044 | $ 72,457 |
Weighted Average Number of Shares Outstanding, Basic | 52,386 | 52,767 | 52,452 | 52,737 |
Earnings Per Share, Basic | $ 0.39 | $ 0.23 | $ 1.62 | $ 1.37 |
Diluted EPS Calculation | ||||
Net income available for common stock | $ 20,300 | $ 12,076 | $ 85,044 | $ 72,457 |
Effect of dilutive securities on income | $ 0 | $ 0 | $ 0 | $ 0 |
Effect of dilutive securities on shares | 450 | 671 | 520 | 700 |
Weighted Average Number of Shares Outstanding, Diluted | 52,836 | 53,438 | 52,972 | 53,437 |
Earnings Per Share, Diluted | $ 0.38 | $ 0.23 | $ 1.61 | $ 1.36 |
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