Original source text
Declares Third Quarter Dividend
Analyst call and webcast scheduled tomorrow, Aug. 5 at 11 a.m. EDT
, /PRNewswire/ -- ONE Gas, Inc. (NYSE: OGS) today announced its second quarter financial results and raised its 2026 adjusted earnings expectations to the upper half of the previously announced financial guidance ranges. The Company also declared its quarterly dividend.
"Our strong second quarter and first-half results reflect the continued execution of our growth strategy and the benefits of operating in constructive jurisdictions. This performance gives us the confidence to raise our adjusted earnings expectations for the full year," said Robert S. McAnnally, chief executive officer. "We delivered these results while maintaining our focus on reliability and affordability for customers and creating long-term value for shareholders."
FINANCIAL RESULTS & HIGHLIGHTS
The Company raised its 2026 adjusted net income and earnings per diluted share expectations to the upper half of the respective $306 million to $314 million and $4.83 to $4.95 ranges; Second quarter 2026 adjusted net income was $52.1 million, or $0.82 per diluted share, compared with $32.7 million, or $0.54 per diluted share, in the same period last year; Year-to-date 2026 adjusted net income was $185.5 million, or $2.94 per diluted share, compared with $152.8 million, or $2.53 per diluted share, in 2025; Second quarter 2026 net income was $46.8 million, or $0.74 per diluted share, compared with $32.0 million, or $0.53 per diluted share, in the same period last year; Year-to-date 2026 net income was $175.5 million, or $2.78 per diluted share, compared with $151.5 million, or $2.51 per diluted share, in 2025; and The board of directors declared a quarterly dividend of $0.68 per share ($2.72 annualized), payable on August 31, 2026, to shareholders of record at the close of business on August 17, 2026. SECOND QUARTER 2026 FINANCIAL PERFORMANCE
ONE Gas reported operating income of $82.7 million in the second quarter, compared with $71.9 million in the second quarter 2025, which primarily reflects:
an increase of $16.4 million in revenue from new rates; an increase of $1.4 million in residential sales due primarily to net customer growth in Oklahoma and Texas; and an increase of $1.3 million in line extension revenue in Oklahoma. These increases were partially offset by:
an increase of $7.4 million in employee-related costs; an increase of $1.1 million in outside services; and an increase of $1.1 million in fleet expense. Weather was 42 percent warmer than normal and 28 percent warmer than the prior year for the three months ended June 30, 2026. The impact on operating income was mitigated by weather normalization mechanisms.
Excluding interest related to KGSS-I securitized bonds, net interest expense decreased $3.8 million for the three months ending June 30, 2026. The decrease in interest expense is due primarily to commercial paper borrowings at lower rates and the implementation of Texas House Bill 4384.
Income tax expense includes a credit for amortization of the regulatory liability associated with excess deferred income taxes (EDIT) of $3.3 million and $2.1 million for the three months ended June 30, 2026, and 2025, respectively.
Capital expenditures and asset removal costs were $188.3 million for the second quarter 2026 compared with $190.1 million in the same period last year, primarily representing expenditures for system integrity and extension of service to new areas.
YEAR-TO-DATE 2026 FINANCIAL PERFORMANCE
Operating income for the six months ended June 30, 2026, was $272.3 million, compared with $252.4 million in 2025, which primarily reflects:
an increase of $43.7 million from new rates; an increase of $3.2 million in residential sales due primarily to net customer growth in Oklahoma and Texas; and an increase of $1.8 million from released transportation capacity to other shippers in Kansas. These increases were partially offset by:
an increase of $13.2 million in employee-related costs; an increase of $3.4 million in outside services; an increase of $1.3 million in fleet expense; and a decrease of $10.6 million in revenue due to lower sales and transport volumes, net of the impact of weather normalization mechanisms. Weather was 23 percent warmer than normal and 25 percent warmer than the prior year for the six months ended June 30, 2026. The impact on operating income was mitigated by weather normalization mechanisms.
Excluding interest related to KGSS-I securitized bonds, net interest expense decreased $6.7 million for the six months ended June 30, 2026. The decrease in interest expense is due primarily to commercial paper borrowings at lower rates and the implementation of Texas House Bill 4384.
Income tax expense includes a credit for amortization of the regulatory liability associated with EDIT of $12.8 million and $10.2 million for the six months ended June 30, 2026, and 2025, respectively.
Capital expenditures and asset removal costs were $357.9 million for the six-month 2026 period compared with $367.8 million in the same period last year, primarily representing expenditures for system integrity and extension of service to new areas.
REGULATORY ACTIVITIES UPDATE
In July 2026, Kansas Gas Service submitted an application to the Kansas Corporation Commission requesting an increase of approximately $14.3 million related to its Gas System Reliability Surcharge to be effective October 2026. The filing includes expanded infrastructure investments as defined by Kansas House Bill 2435.
In March 2026, Texas Gas Service made a Gas Reliability Infrastructure Program filing for all customers requesting a $36.9 million revenue increase to be effective in July 2026. In June 2026, the Texas Railroad Commission approved an increase of $36.9 million, and new rates became effective in July 2026.
In February 2026, Oklahoma Natural Gas filed its annual Performance-Based Rate Change (PBRC) application for the test year ended December 2025. The filing includes a requested $28.7 million base rate revenue increase, $2.6 million energy efficiency incentive and $14.4 million of estimated EDIT to be credited to customers in 2027. At the hearing on June 11, 2026, the administrative law judge recommended approval of the application as filed. Subsequent to the hearing, exceptions to the administrative law judge's oral ruling were filed at the Oklahoma Corporation Commission as well as an appeal to the Oklahoma Supreme Court. Interim rates subject to refund were implemented on June 26, 2026, in compliance with the PBRC tariff.
2026 FINANCIAL GUIDANCE
Based on strong performance during the first half of 2026 and anticipated benefits associated with Texas House Bill 4384, the Company has raised its 2026 adjusted earnings expectations to the upper half of its previously issued 2026 financial guidance ranges, which called for adjusted net income of $306 million to $314 million and adjusted net income per diluted share of $4.83 to $4.95.
Capital investments, including asset removal costs, are expected to be approximately $800 million in 2026, primarily targeted for system integrity and replacement projects. Capital investments for extensions to new customers are expected to be approximately $230 million of the $800 million.
EARNINGS CONFERENCE CALL AND WEBCAST
The ONE Gas executive management team will host a conference call on Wednesday, August 5, 2026, at 11 a.m. Eastern Daylight Time (10 a.m. Central Daylight Time). The call also will be carried live on the ONE Gas website.
To participate in the telephone conference call, dial 800-715-9871, passcode 3280987, or log on to www.onegas.com/investors and select Events and Presentations.
If you are unable to participate in the conference call or the webcast, a replay will be available on the ONE Gas website, www.onegas.com, for 30 days. A recording will be available by phone for seven days. The playback call may be accessed at 1-800-770-2030, passcode 3280987.
NON-GAAP DISCLOSURE STATEMENT
This news release includes financial results and guidance for ONE Gas with respect to adjusted net income and adjusted net income per share, which are non-GAAP financial measures as defined by the Securities and Exchange Commission. Adjusted net income and adjusted net income per share are calculated as GAAP net income plus the deferral of an equity portion of a carrying cost attributable to shareholders' investment capitalized for regulatory purposes but not for financial reporting purposes. These carrying costs relate to property, plant and equipment that has been placed in service, but not yet reflected in rates. Adjusted net income and adjusted net income per share should not be considered in isolation or as a substitute for GAAP net income or GAAP earnings per share.
Management believes these non‑GAAP measures provide useful information because they offer a more complete view of our overall regulatory economics, reflect the period-specific effects of certain regulatory mechanisms designed to mitigate regulatory lag associated with property, plant and equipment placed in service prior to regulatory action, and reflect the impact of regulatory timing differences that arise under the Company's rate-setting framework. These adjustments, net of applicable tax effects, are expected to recur as a result of the Company's regulatory framework and are a consistent part of our earnings profile. A reconciliation of the Company's GAAP net income and GAAP earnings per share to adjusted net income and adjusted net income per share is provided in the Appendix.
ONE Gas, Inc. (NYSE: OGS) is a 100% regulated natural gas utility, and trades on the New York Stock Exchange and the NYSE Texas under the symbol "OGS." ONE Gas is included in the S&P MidCap 400 Index and is one of the largest natural gas utilities in the United States.
Headquartered in Tulsa, Oklahoma, ONE Gas provides a reliable and affordable energy choice to more than 2.3 million customers in Kansas, Oklahoma and Texas. Its divisions include Kansas Gas Service, the largest natural gas distributor in Kansas; Oklahoma Natural Gas, the largest in Oklahoma; and Texas Gas Service, the third largest in Texas, in terms of customers.
For more information and the latest news about ONE Gas, visit onegas.com and follow its social channels: @ONEGas, Facebook, LinkedIn and YouTube.
Some of the statements contained and incorporated in this news release are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The forward-looking statements relate to our anticipated financial performance, liquidity, management's plans and objectives for our future operations, our business prospects, the outcome of regulatory and legal proceedings, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under the Private Securities Litigation Reform Act of 1995. The following discussion is intended to identify important factors that could cause future outcomes to differ materially from those set forth in the forward-looking statements.
Forward-looking statements include the items identified in the preceding paragraph, the information concerning possible or assumed future results of our operations and other statements contained or incorporated in this news release identified by words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "should," "goal," "forecast," "guidance," "could," "may," "continue," "might," "potential," "scheduled," "likely," and other words and terms of similar meaning.
One should not place undue reliance on forward-looking statements, which are applicable only as of the date of this news release. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Those factors may affect our operations, costs, liquidity, markets, products, services and prices. In addition to any assumptions and other factors referred to specifically in connection with the forward-looking statements, factors that could cause our actual results to differ materially from those contemplated in any forward-looking statement include, among others, the following:
our ability to recover costs, income taxes and amounts equivalent to the cost of property, plant and equipment, regulatory assets and our allowed rate of return in our regulated rates or other recovery mechanisms; cyber-attacks, which, according to experts, continue to increase in volume and sophistication, or breaches of technology systems that could disrupt our operations or result in the loss or exposure of confidential or sensitive customer, employee, vendor, counterparty, or Company information; further, increased remote working arrangements have required enhancements and modifications to our information technology infrastructure (e.g. Internet, Virtual Private Network, remote collaboration systems, etc.), and any failures of the technologies, including third-party service providers, that facilitate working remotely could limit our ability to conduct ordinary operations or expose us to increased risk or effect of an attack; our ability to manage our operations and maintenance costs; changes in regulation of natural gas distribution services, particularly those in Oklahoma, Kansas and Texas; the economic climate and, particularly, its effect on the natural gas requirements of our residential and commercial customers; the length and severity of a pandemic or other health crisis which could significantly disrupt or prevent us from operating our business in the ordinary course for an extended period; competition from alternative forms of energy, including, but not limited to, electricity, solar power, wind power, geothermal energy and biofuels; adverse weather conditions and variations in weather, including seasonal effects on demand and/or supply, the occurrence of severe storms in the territories in which we operate, climate change, and the related effects on supply, demand, and costs; 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, storage, 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; our ability to complete necessary or desirable expansion or infrastructure development projects, which may delay or prevent us from serving our customers or expanding our business; operational and mechanical hazards or interruptions; adverse labor relations; the effectiveness of our strategies to reduce earnings lag, revenue protection strategies and risk mitigation strategies, which may be affected by risks beyond our control such as commodity price volatility, counterparty performance or creditworthiness and interest rate risk; the capital-intensive nature of our business, and the availability of and access to, in general, funds to meet our debt obligations prior to or when they become due and to fund our operations and capital expenditures, either through (i) cash on hand, (ii) operating cash flow, or (iii) access to the capital markets and other sources of liquidity; our ability to obtain capital on commercially reasonable terms, or on terms acceptable to us, or at all; limitations on our operating flexibility, earnings and cash flows due to restrictions in our financing arrangements; cross-default provisions in our borrowing arrangements, which may lead to our inability to satisfy all of our outstanding obligations in the event of a default on our part; 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 to execute our business strategy; 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 recover the costs of upstream transportation, storage, and natural gas purchased for our customers and any related financing required to support our purchase of natural gas supply; impact of potential impairment charges; volatility and changes in markets for natural gas and our ability to secure additional and sufficient liquidity on reasonable commercial terms to cover costs associated with such volatility; possible loss of local distribution company franchises or other adverse effects caused by the actions of municipalities; payment and performance by counterparties and customers as contracted and when due, including our counterparties maintaining ordinary course terms of supply and payments; changes in existing or the addition of new environmental, safety, tax, cybersecurity and other laws or regulations to which we and our subsidiaries are subject, including those that may require significant expenditures, significant increases in operating costs or, in the case of noncompliance, substantial fines or penalties; the effectiveness of our risk-management policies and procedures, and employees violating our risk-management policies; the uncertainty of estimates, including accruals and costs of environmental remediation; advances in technology, including technologies that increase efficiency or that improve electricity's competitive position relative to natural gas; population growth rates and changes in the demographic patterns of the markets we serve in Oklahoma, Kansas and Texas, and economic conditions in these areas; acts of nature and naturally occurring disasters; political unrest and the potential effects of threatened or actual terrorism and war; the sufficiency of insurance coverage to cover losses; the effects of our strategies to reduce tax payments; changes in accounting standards; changes in corporate governance standards; existence of material weaknesses in our internal controls; our ability to comply with all covenants in our indentures and the ONE Gas Credit Agreement, a violation of which, if not cured in a timely manner, could trigger a default of our obligations; our ability to attract and retain talented employees, management and directors, and shortage of skilled-labor; unexpected increases in the costs of providing health care benefits, along with pension and postemployment health care benefits, as well as 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; and our 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. These factors are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Other factors could also have material adverse effects on our future results. These and other risks are described in greater detail in Part 1, Item 1A, Risk Factors, in our Annual Report. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Other than as required under securities laws, we undertake no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.
APPENDIX
ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended
Six Months Ended
June 30,
June 30,
(Unaudited)
2026
2025
2026
2025
(Thousands of dollars, except per share amounts)
Total revenues
$ 411,639
$ 423,741
$ 1,243,350
$ 1,358,931
Cost of natural gas
90,287
117,942
483,863
630,404
Operating expenses
Operations and maintenance
139,628
130,987
286,575
266,282
Depreciation and amortization
76,240
79,314
153,025
161,018
General taxes
22,813
23,643
47,624
48,873
Total operating expenses
238,681
233,944
487,224
476,173
Operating income
82,671
71,855
272,263
252,354
Other income (expense), net
5,220
2,572
3,123
3,090
Interest expense, net
(31,101)
(35,279)
(63,459)
(70,976)
Income before income taxes
56,790
39,148
211,927
184,468
Income taxes
(9,982)
(7,115)
(36,446)
(33,016)
Net income
$ 46,808
$ 32,033
$ 175,481
$ 151,452
Earnings per share
Basic
$ 0.74
$ 0.53
$ 2.79
$ 2.52
Diluted
$ 0.74
$ 0.53
$ 2.78
$ 2.51
Average shares (thousands)
Basic
62,959
60,113
62,936
60,095
Diluted
63,153
60,455
63,178
60,361
Dividends declared per share of stock
$ 0.68
$ 0.67
$ 1.36
$ 1.34
APPENDIX
ONE Gas, Inc.
CONSOLIDATED BALANCE SHEETS
June 30,
December 31,
(Unaudited)
2026
2025
Assets
(Thousands of dollars)
Property, plant and equipment
Property, plant and equipment
$ 9,998,502
$ 9,734,150
Accumulated depreciation and amortization
2,678,316
2,611,952
Net property, plant and equipment
7,320,186
7,122,198
Current assets
Cash and cash equivalents
7,858
10,620
Restricted cash and cash equivalents
22,711
23,107
Total cash, cash equivalents and restricted cash and cash equivalents
30,569
33,727
Accounts receivable, net
250,861
461,631
Materials and supplies
96,672
97,595
Income tax receivable
—
55,552
Natural gas in storage
158,219
176,451
Regulatory assets
83,367
49,504
Prepaid expenses
33,823
34,224
Other current assets
8,326
7,200
Total current assets
661,837
915,884
Goodwill and other assets
Regulatory assets
250,704
256,225
Securitized intangible asset, net
218,991
233,786
Goodwill
157,953
157,953
Pension and other postemployment benefits
47,326
47,012
Other assets
155,206
120,026
Total goodwill and other assets
830,180
815,002
Total assets
$ 8,812,203
$ 8,853,084
APPENDIX
ONE Gas, Inc.
CONSOLIDATED BALANCE SHEETS
(Continued)
June 30,
December 31,
(Unaudited)
2026
2025
Equity and Liabilities
(Thousands of dollars)
Equity and long-term debt
Common stock, $0.01 par value: authorized 250,000,000 shares; issued and outstanding 62,797,154
shares at June 30, 2026; issued and outstanding 62,692,392 shares at December 31, 2025
$ 629
$ 627
Paid-in capital
2,539,068
2,530,137
Retained earnings
998,454
909,355
Accumulated other comprehensive income (loss)
(265)
4
Total equity
3,537,886
3,440,123
Other long-term debt, excluding current maturities, net of issuance costs
2,133,688
2,133,018
Securitized utility tariff bonds, excluding current maturities, net of issuance costs
207,115
223,020
Total long-term debt, excluding current maturities, net of issuance costs
2,340,803
2,356,038
Total equity and long-term debt
5,878,689
5,796,161
Current liabilities
Current maturities of other long-term debt, net of issuance costs
249,918
249,674
Current maturities of securitized utility tariff bonds, net of issuance costs
31,404
30,566
Notes payable
770,800
737,400
Accounts payable
110,952
222,102
Accrued taxes other than income
57,395
75,568
Regulatory liabilities
24,702
57,277
Customer deposits
53,373
52,871
Other current liabilities
77,911
106,400
Total current liabilities
1,376,455
1,531,858
Deferred credits and other liabilities
Deferred income taxes
1,012,944
963,874
Regulatory liabilities
433,135
451,620
Other deferred credits
110,980
109,571
Total deferred credits and other liabilities
1,557,059
1,525,065
Commitments and contingencies
Total liabilities and equity
$ 8,812,203
$ 8,853,084
APPENDIX
ONE Gas, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
(Unaudited)
2026
2025
(Thousands of dollars)
Operating activities
Net income
$ 175,481
$ 151,452
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
153,025
161,018
Deferred income taxes
32,478
23,684
Share-based compensation expense
8,174
7,524
Provision for doubtful accounts
5,026
4,085
Changes in assets and liabilities:
Accounts receivable
205,744
141,290
Materials and supplies
923
(3,886)
Income tax receivable
55,552
—
Natural gas in storage
18,232
26,736
Asset removal costs
(27,861)
(20,718)
Accounts payable
(108,977)
(121,593)
Accrued taxes other than income
(18,173)
(16,159)
Customer deposits
502
(2,235)
Regulatory assets and liabilities - current
(74,156)
78,329
Regulatory assets and liabilities - noncurrent
3,691
21,198
Other assets and liabilities - current
(28,437)
(12,271)
Other assets and liabilities - noncurrent
(13,893)
10,355
Cash provided by operating activities
387,331
448,809
Investing activities
Capital expenditures
(330,035)
(347,065)
Other investing expenditures
(6,691)
(4,075)
Other investing receipts
6,982
2,629
Cash used in investing activities
(329,744)
(348,511)
Financing activities
Borrowings (repayments) of notes payable, net
33,400
(42,200)
Issuance of common stock
3,894
3,561
Repayment of other long-term debt
(7)
(8)
Repayment of securitized utility tariff bonds
(15,356)
(14,547)
Dividends paid
(85,356)
(80,306)
Tax withholdings related to net share settlements of stock compensation
(4,161)
(2,614)
Construction advances
6,841
—
Cash used in financing activities
(60,745)
(136,114)
Change in cash, cash equivalents, restricted cash and restricted cash equivalents
(3,158)
(35,816)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
33,727
78,537
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
$ 30,569
$ 42,721
Supplemental cash flow information:
Cash paid for interest, net of amounts capitalized
$ 62,407
$ 69,972
Cash paid (received) for state income taxes
$ 1,150
$ 715
Cash paid (received) for federal income taxes
$ (50,302)
$ 7,013
APPENDIX
The following table reconciles the Company's GAAP net income and GAAP earnings per share to adjusted net income and adjusted net income per share:
ONE Gas, Inc.
Three Months Ended
Six Months Ended
June 30,
June 30,
2026
2025
2026
2025
(Thousands of dollars, except per share amounts)
Net income - GAAP
$ 46,808
$ 32,033
$ 175,481
$ 151,452
Other income - deferred carrying cost (a)
5,257
653
9,982
1,301
Income taxes (b)
—
—
—
—
Adjusted net income - non-GAAP
$ 52,065
$ 32,686
$ 185,463
$ 152,753
Earnings per share - GAAP
Basic
$ 0.74
$ 0.53
$ 2.79
$ 2.52
Diluted
$ 0.74
$ 0.53
$ 2.78
$ 2.51
Adjusted net income per share - non-GAAP
Basic
$ 0.83
$ 0.54
$ 2.95
$ 2.54
Diluted
$ 0.82
$ 0.54
$ 2.94
$ 2.53
Average shares (thousands)
Basic
62,959
60,113
62,936
60,095
Diluted
63,153
60,455
63,178
60,361
(a) The allowance for earnings on shareholders' investment capitalized for regulatory purposes but not for financial reporting purposes applied to property, plant and equipment placed in service, but not yet reflected in Texas rates, as authorized by our regulators or state law. Property, plant and equipment placed in service may vary by quarter based on the timing and complexity of projects, weather impacts, construction completion schedules, contractor activities, and other operational factors. During the three months ended June 30, 2026, we placed $53.8 million of property, plant and equipment in service eligible for this treatment, compared with $62.6 million in the same period last year. For the six months ended June 30, 2026, we placed $125.3 million of property, plant and equipment in service eligible for this treatment, compared with $125.5 million in the same period last year.
(b) This deferred carrying cost increases book income but is non-taxable, creating a permanent tax difference.
ONE Gas, Inc.
2026 Financial Guidance: Reconciliation of non-GAAP to GAAP:
Low
Mid
High
(Thousands of dollars, except per share amounts)
Net income - GAAP
$ 294,000
$ 298,000
$ 302,000
Other income - deferred carrying cost(a)
11,890
11,919
12,000
Income taxes(b)
—
—
—
Adjusted net income - non-GAAP
$ 305,890
$ 309,919
$ 314,000
Earnings per share - GAAP
Basic
$ 4.67
$ 4.73
$ 4.79
Diluted
$ 4.65
$ 4.71
$ 4.77
Adjusted net income per share - non-GAAP
Basic
$ 4.86
$ 4.92
$ 4.98
Diluted
$ 4.83
$ 4.89
$ 4.95
Average shares (thousands)
Basic
62,995
62,995
62,995
Diluted
63,350
63,350
63,350
(a) The allowance for earnings on shareholders' investment capitalized for regulatory purposes but not for financial reporting purposes applied to property, plant and equipment placed in service, but not yet reflected in Texas rates, as authorized by our regulators or state law. Property, plant and equipment placed in service may vary by quarter based on the timing and complexity of projects, weather impacts, construction completion schedules, contractor activities, and other operational factors.
(b) This deferred carrying cost increases book income but is non-taxable, creating a permanent tax difference.
APPENDIX
ONE Gas, Inc.
KGSS-I SECURITIZATION
In November 2022, Kansas Gas Service Securitization I, L.L.C. (KGSS-I) issued $336 million of securitized utility tariff bonds. KGSS-I used the proceeds from the issuance to purchase the Securitized Utility Tariff Property from Kansas Gas Service, pay for debt issuance costs, and reimburse Kansas Gas Service for upfront securitization costs paid on behalf of KGSS-I.
Revenues for the three months ended June 30, 2026, include $10.9 million associated with KGSS-I, which is offset by $7.5 million in operating and amortization expense and $3.4 million in interest expense, net. Compared to the same three month period last year, revenues decreased $2.3 million, interest expense, net, decreased $0.4 million, and operating and amortization expense decreased $1.9 million.
Revenues for the six months ended June 30, 2026, include $21.9 million associated with KGSS-I, which is offset by $15.0 million in operating and amortization expense and $6.8 million in interest expense, net. Compared to the same twelve month period last year, revenues decreased $3.0 million, interest expense, net, decreased $0.8 million, and amortization and operating expense decreased $2.2 million.
The following table summarizes the impact of KGSS-I on the consolidated balance sheets, for the periods indicated:
June 30,
December 31,
2026
2025
(Thousands of dollars)
Restricted cash and cash equivalents
$ 22,711
$ 23,107
Accounts receivable
4,317
4,463
Securitized intangible asset, net
218,991
233,786
Total assets
$ 246,019
$ 261,356
Current maturities of securitized utility tariff bonds, net of issuance costs
$ 31,404
$ 30,566
Accounts payable
217
136
Accrued interest
5,543
5,894
Securitized utility tariff bonds, excluding current maturities, net of discounts and issuance costs $4.0
million and $4.3 million, as of June 30, 2026, and June 30, 2025, respectively
207,115
223,020
Paid-in capital
1,680
1,680
Retained earnings
60
60
Total liabilities and equity
$ 246,019
$ 261,356
The following table summarizes the impact of KGSS-I on the consolidated statements of income, for the periods indicated:
Three Months Ended
Six Months Ended
June 30,
June 30,
2026
2025
2026
2025
(Thousands of dollars)
Operating revenues
$ 10,876
$ 13,205
$ 21,853
$ 24,842
Operating expense
(110)
(111)
(221)
(221)
Amortization expense
(7,368)
(9,292)
(14,795)
(16,986)
Interest income
109
112
246
260
Interest expense
(3,471)
(3,879)
(7,011)
(7,823)
Income before income taxes
36
35
72
72
Income taxes
—
(6)
—
—
Net income
$ 36
$ 29
$ 72
$ 72
APPENDIX
ONE Gas, Inc.
INFORMATION AT A GLANCE
Three Months Ended
Six Months Ended
June 30,
June 30,
(Unaudited)
2026
2025
2026
2025
(Millions of dollars)
Natural gas sales
$
357.8
$
369.5
$
1,127.7
$
1,239.9
Transportation revenues
31.8
31.0
71.9
74.8
Securitization customer charges
10.9
13.2
21.9
24.8
Other revenues
11.1
10.0
21.8
19.5
Total revenues
$
411.6
$
423.7
$
1,243.3
$
1,359.0
Cost of natural gas
90.4
117.9
483.9
630.4
Operating costs
162.4
154.6
334.2
315.2
Depreciation and amortization
76.2
79.3
153.0
161.0
Operating income
$
82.6
$
71.9
$
272.2
$
252.4
Net income
$
46.8
$
32.0
$
175.5
$
151.5
Capital expenditures and asset removal costs
$
188.3
$
190.1
$
357.9
$
367.8
Volumes (Bcf)
Natural gas sales
Residential
10.4
12.6
54.4
71.5
Commercial and industrial
5.0
5.8
20.0
25.0
Other
0.5
0.5
1.4
1.7
Total sales volumes delivered
15.9
18.9
75.8
98.2
Transportation
50.7
48.7
109.8
114.0
Total volumes delivered
66.6
67.6
185.6
212.2
Average number of customers (in thousands)
Residential
2,133
2,124
2,135
2,125
Commercial and industrial
161
164
162
164
Other
3
3
3
3
Transportation
11
11
11
11
Total customers
2,308
2,302
2,311
2,303
Heating Degree Days
Actual degree days
392
547
4,551
6,060
Normal degree days
678
673
5,910
5,904
Percent colder (warmer) than normal weather
(42) %
(19) %
(23) %
3 %
Statistics by State
Oklahoma
Average number of customers (in thousands)
936
933
937
934
Actual degree days
126
164
1,537
2,080
Normal degree days
230
230
2,028
2,027
Percent colder (warmer) than normal weather
(45) %
(29) %
(24) %
3 %
Kansas
Average number of customers (in thousands)
655
656
657
657
Actual degree days
234
319
2,304
2,929
Normal degree days
397
397
2,883
2,883
Percent colder (warmer) than normal weather
(41) %
(20) %
(20) %
2 %
Texas
Average number of customers (in thousands)
717
713
717
712
Actual degree days
32
64
710
1,051
Normal degree days
51
46
999
994
Percent colder (warmer) than normal weather
(37) %
39 %
(29) %
6 %
Analyst Contact:
Erin Dailey
918-947-7441
Media Contact:
Leah Harper
918-947-7123
SOURCE ONE Gas, Inc.
