ONEOK, Inc. (OKE) BCG Matrix Analysis

Are you interested in learning more about ONEOK, Inc. and its products/brands? In this blog, we will be discussing ONEOK's position in the Boston Consulting Group Matrix Analysis, specifically focusing on its Stars, Cash Cows, Dogs, and Question Marks products/brands. We will analyze the market share, growth potential, and revenue contribution of each product/brand and provide insights on how ONEOK can strategically invest in each category.

As of 2023, ONEOK has several products that fall into the Stars quadrant of the BCG Matrix Analysis. These products have a high market share in a growing market, making them leaders in their respective businesses. These Stars products include ONEOK Gas Storage, Natural Gas Gathering & Processing, and NGLs & Natural Gas Pipelines.

ONEOK also has several products/brands that can be considered as Cash Cows. These products/brands have a high market share but low growth prospects and provide the cash required to cover the administrative costs of the company and fund research and development, service the corporate debt, and pay dividends to shareholders. Some of these Cash Cows products/brands include NGL Frac Spread, Gathering and Processing, and Pipeline and Storage.

In contrast, ONEOK has several products/brands that fall into the Dogs quadrant of the BCG Matrix Analysis. These products/brands have low growth rates and a low market share, and examples include Lone Star NGL, ONEOK Partners, and West Texas LPG Pipeline.

Finally, ONEOK has a few products that fall under the Question Marks quadrant of the BCG Matrix Analysis. These are high growth products with low market share in their respective markets. Some of these Question Marks products/brands include ONEOK Energy Transportation, ONE Gas, and ONEOK Partners.

By understanding the market position of each of its products/brands, ONEOK can make informed decisions on how to allocate resources to maximize profitability and growth potential.

Background of ONEOK, Inc. (OKE)

ONEOK, Inc. (OKE) is a leading energy company based in Tulsa, Oklahoma, with operations in the United States and Canada. The company was founded in 1906 as Oklahoma Natural Gas Company and has since expanded its operations to include natural gas gathering, processing, storage, and transportation, as well as the storage and transportation of natural gas liquids (NGLs). As of 2023, ONEOK has a market capitalization of approximately $35 billion, and its stock is traded on the New York Stock Exchange under the ticker symbol OKE. In 2021, the company reported a revenue of $9.98 billion and a net income of $1.36 billion. ONEOK has also been consistently increasing its quarterly dividend payments since 2002, reaching a dividend yield of 6.7% in 2022. ONEOK's core business involves the gathering, processing, and transportation of natural gas and NGLs in the midcontinent and Rocky Mountain regions of the United States. The company operates approximately 40,000 miles of natural gas and NGL pipelines, as well as several processing plants and storage facilities. In addition, ONEOK has recently invested in renewable natural gas projects, which align with the company's commitment to sustainability and reducing its carbon footprint.

• Founded in 1906 as Oklahoma Natural Gas Company
• Headquartered in Tulsa, Oklahoma
• Market capitalization of approximately $35 billion as of 2023
• Stock traded on the New York Stock Exchange under the ticker symbol OKE
• Reported a revenue of $9.98 billion and a net income of $1.36 billion in 2021
• Operates approximately 40,000 miles of natural gas and NGL pipelines
• Committed to sustainability and renewable natural gas projects

Overall, ONEOK is a well-established energy company with a strong track record of financial performance and a commitment to sustainability. Its operations in natural gas and NGL gathering, processing, storage, and transportation make it a critical player in the energy industry, and its recent investments in renewable natural gas highlight its forward-thinking approach.

Stars	Question Marks
ONEOK Gas Storage ONEOK Natural Gas Gathering & Processing ONEOK NGLs & Natural Gas Pipelines	ONEOK Energy Transportation, LLC (OET) ONE Gas, Inc. (OGS) ONEOK Partners, L.P. (OKS)
Cash Cow	Dogs
NGL Frac Spread Gathering and Processing Pipeline and Storage	Lone Star NGL ONEOK Partners West Texas LPG Pipeline

ONEOK, Inc. (OKE) Stars

As of 2023, ONEOK, Inc. (OKE) has several products that fall into the Stars quadrant of the Boston Consulting Group Matrix Analysis. These products have a high market share in a growing market, making them leaders in their respective businesses. Let's take a look at some of OKE's Stars products:

• ONEOK Gas Storage: As of 2021, ONEOK Gas Storage has a market share of 57.7% in the natural gas storage industry, making it a clear leader. With the growing demand for natural gas, the market for gas storage is expected to continue to expand in the coming years. ONEOK Gas Storage's position as a leader in this market makes it a strong candidate for the Stars quadrant.
• ONEOK Natural Gas Gathering & Processing: This segment of OKE's business has seen rapid growth in recent years, due in part to the shale revolution in the United States. As of 2022, ONEOK's natural gas gathering and processing assets span over 14,000 miles across multiple states. This widespread infrastructure gives ONEOK a significant advantage over competitors and places it in the Stars quadrant.
• ONEOK NGLs & Natural Gas Pipelines: In 2022, ONEOK's NGLs & Natural Gas Pipelines segment generated $3.3 billion in revenue, representing a significant share of the company's overall earnings. With the continued growth of the natural gas industry, demand for NGLs and pipelines is only expected to increase, making ONEOK's position in this market a promising one.

As you can see, each of these products/brands has demonstrated strong market share and growth potential, making them ideal candidates for the Stars quadrant of the BCG Matrix Analysis. By investing in these Stars, ONEOK can continue to see growth and expand its portfolio of high-performing products.

ONEOK, Inc. (OKE) Cash Cows

As of 2023, ONEOK, Inc. (OKE) has several products and/or brands that can be considered as Cash Cows according to the Boston Consulting Group Matrix Analysis. These products/brands have a high market share but low growth prospects and provide the cash required to cover the administrative costs of the company and fund research and development, service the corporate debt, and pay dividends to shareholders.

• NGL Frac Spread - This product of OKE provides natural gas liquids fractionation and transportation services. As of 2022, the NGL Frac Spread generated a revenue of $2.5 billion and contributed to more than 40% of OKE's total operating income.
• Gathering and Processing - OKE's Gathering and Processing segment provides gathering and processing services to natural gas producers. This segment generated a revenue of $1.3 billion in 2021 and has been a significant contributor to OKE's overall profitability.
• Pipeline and Storage - The Pipeline and Storage segment of OKE owns and operates pipelines and storage facilities for natural gas liquids and natural gas. This segment generated a revenue of $1.8 billion in 2022 and contributed to more than 30% of OKE's total operating income.

These cash cows products/brands of OKE have already achieved competitive advantage and have high profit margins. Therefore, promotion and placement investments are low while investments into supporting infrastructure can improve efficiency and increase cash flow more. Companies are advised to invest in cash cows to maintain the current level of productivity or to 'milk' the gains passively. OKE should continue to focus and strategically invest in these cash cows to ensure continued success and profitability.

ONEOK, Inc. (OKE) Dogs

As of 2023, ONEOK, Inc. (OKE) has several products/brands that can be categorized as Dogs in the BCG Matrix Analysis. These products/brands have low growth rates and a low market share. Here are some of them:

• Lone Star NGL: In 2022, Lone Star NGL contributed to only 1.3% of ONEOK's total revenue. Despite the company's efforts to expand its operation and capacity, the low demand and market growth rate in the Natural Gas Liquid (NGL) industry have kept this product in the Dogs quadrant.
• ONEOK Partners: This segment of ONEOK's business focuses on gathering, processing, and transporting natural gas. However, the market for natural gas has been stagnant in the past few years, and ONEOK Partners' growth rate is expected to remain low. In 2022, the segment only contributed to 5% of ONEOK's total revenue.
• West Texas LPG Pipeline: Although the Liquefied Petroleum Gas (LPG) industry has experienced some growth in the past few years, ONEOK's West Texas LPG Pipeline has not benefited from it. The pipeline, which transports LPG from the Permian Basin to Mont Belvieu, only contributed to less than 2% of ONEOK's total revenue in 2022.

These Dogs products/brands are not generating a significant amount of revenue for ONEOK, and they are unlikely to do so in the future due to the low growth rate of their respective industries. As such, ONEOK should consider minimizing their investment in these products and look for alternative revenue sources.

However, ONEOK should also be cautious when implementing divestiture plans for these Dogs products/brands. The company needs to evaluate the potential impact on their overall portfolio and ensure that their divestiture plan does not harm the other products/brands in their portfolio.

ONEOK, Inc. (OKE) Question Marks

As of 2023, ONEOK, Inc. has a few products that fall under the Question Marks quadrant of the BCG Matrix Analysis. These are high growth products with low market share in their respective markets.

• ONEOK Energy Transportation, LLC (OET) - OET is a subsidiary of ONEOK, Inc. which provides pipeline transportation services. As of 2022, OET had a market share of 3% in the oil and gas pipeline transportation market in the United States. However, due to increasing demand for natural gas and other petroleum products, the market is expected to grow by at least 6% in the next five years. This presents a growth opportunity for OET, but it needs to increase market share quickly to avoid becoming a dog.
• ONE Gas, Inc. (OGS) - OGS is another subsidiary of ONEOK, Inc. which distributes natural gas to residential, commercial, and industrial customers in the United States. As of 2021, OGS had a market share of 2.5% in the natural gas distribution market. However, due to increasing demand for natural gas in the country, the market is expected to grow by 4% in the next five years. This presents a growth opportunity for OGS, but it needs to increase market share quickly to avoid becoming a dog.
• ONEOK Partners, L.P. (OKS) - OKS is a subsidiary of ONEOK, Inc. which operates natural gas pipelines and processing plants in the United States. As of 2022, OKS had a market share of 3% in the natural gas pipeline transportation market. However, due to increasing demand for natural gas in the country, the market is expected to grow by 5% in the next five years. This presents a growth opportunity for OKS, but it needs to increase market share quickly to avoid becoming a dog.

Due to the high growth prospects of these businesses, ONEOK, Inc. is advised to invest in these Question Marks if they have potential to increase their market share quickly. Otherwise, it is better to sell them.

In conclusion, the Boston Consulting Group Matrix Analysis provides a useful framework for assessing the growth potential and market share of a company's products/brands. For ONEOK, Inc. (OKE), the BCG Matrix Analysis has enabled us to classify its products into four categories: Stars, Cash Cows, Dogs, and Question Marks.

• Stars: ONEOK's Stars products/brands have high market share and growth potential, making them ideal candidates for investment and expansion.
• Cash Cows: OKE's Cash Cows products/brands are already profitable and generate high revenue, making them ideal for maintaining high productivity levels.
• Dogs: ONEOK's Dogs products/brands are not generating significant revenue for the company, and it is advisable to minimize investment in them.
• Question Marks: ONEOK's Question Marks products/brands have high growth potential but low market share, necessitating investment to increase their market share.

Overall, the BCG Matrix Analysis provides a comprehensive understanding of the performance of OKE's products/brands, allowing the company to make informed investment decisions, minimize risks, and maximize returns. As ONEOK, Inc. continues to expand its presence in the energy sector, it is vital to continue leveraging the BCG Matrix Analysis to optimize its product portfolio and ensure continued growth and success in the years to come.