Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2009

___ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________.

Commission file number 1-12202

ONEOK PARTNERS, L.P.

(Exact name of registrant as specified in its charter)

Delaware	93-1120873
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

100 West Fifth Street, Tulsa, OK	74103
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (918) 588-7000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes __ No __

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer X Accelerated filer __ Non-accelerated filer __ Smaller reporting company__

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes __ No X

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at July 31, 2009
Common units		59,912,777 units
Class B units		36,494,126 units

ONEOK PARTNERS, L.P.

QUARTERLY REPORT ON FORM 10-Q

Part I.	Financial Information	Page No.
Item 1.	Financial Statements (Unaudited)
	Consolidated Statements of Income - Three and Six Months Ended June 30, 2009 and 2008	5
	Consolidated Balance Sheets - June 30, 2009, and December 31, 2008	6
	Consolidated Statements of Cash Flows - Six Months Ended June 30, 2009 and 2008	7
	Consolidated Statement of Changes in Partners’ Equity - Six Months Ended June 30, 2009	8-9
	Consolidated Statements of Comprehensive Income - Three and Six Months Ended June 30, 2009 and 2008	10
	Notes to Consolidated Financial Statements	11-22
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23-43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
Part II.	Other Information
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Submission of Matters to a Vote of Security Holders	44
Item 5.	Other Information	44
Item 6.	Exhibits	44-45
Signature		46

As used in this Quarterly Report, references to “we,” “our,” “us” or the “Partnership” refer to ONEOK Partners, L.P., its subsidiary, ONEOK Partners Intermediate Limited Partnership, and its subsidiaries, unless the context indicates otherwise.

The statements in this Quarterly Report that are not historical information, including statements concerning plans and objectives of management for future operations, economic performance or related assumptions, are forward-looking statements. Forward-looking statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “should,” “goal,” “forecast,” “could,” “may,” “continue,” “might,” “potential,” “scheduled” and other words and terms of similar meaning. Although we believe that our expectations regarding future events are based on reasonable assumptions, we can give no assurance that such expectations and assumptions will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements are described under Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Forward-Looking Statements” in this Quarterly Report and under Part 1, Item 1A, Risk Factors, in our Annual Report.

INFORMATION AVAILABLE ON OUR WEB SITE

We make available on our Web site copies of our Annual Report, Quarterly Reports, Current Reports on Form 8-K, amendments to those reports filed or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act and reports of holdings of our securities filed by our officers and directors under Section 16 of the Exchange Act as soon as reasonably practicable after filing such material electronically or otherwise furnishing it to the SEC. Our Web site and any contents thereof are not incorporated by reference into this report.

We also make available on our Web site the Interactive Data Files voluntarily submitted as Exhibit 101 to this Quarterly Report. In accordance with Rule 402 of Regulation S-T, the Interactive Data Files shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

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GLOSSARY

The abbreviations, acronyms and industry terminology used in this Quarterly Report are defined as follows:

AFUDC

Allowance for funds used during construction

Annual Report

Annual Report on Form 10-K for the year ended December 31, 2008

ARB

Accounting Research Bulletin

Bbl

Barrels, 1 barrel is equivalent to 42 United States gallons

Bbl/d

Barrels per day

BBtu/d

Billion British thermal units per day

Bcf

Billion cubic feet

Btu(s)

British thermal units, a measure of the amount of heat required to raise the temperature of one pound of water one degree Fahrenheit

Bushton Plant

Bushton Gas Processing Plant

EBITDA

Earnings before interest, taxes, depreciation and amortization

EITF

Emerging Issues Task Force

Exchange Act

Securities Exchange Act of 1934, as amended

FASB

Financial Accounting Standards Board

FERC

Federal Energy Regulatory Commission

FSP

FASB Staff Position

GAAP

Accounting principles generally accepted in the United States of America

Guardian Pipeline

Guardian Pipeline, L.L.C.

KCC

Kansas Corporation Commission

MBbl

Thousand barrels

MBbl/d

Thousand barrels per day

Midwestern Gas Transmission

Midwestern Gas Transmission Company

MMBbl

Million barrels

MMBtu

Million British thermal units

MMBtu/d

Million British thermal units per day

MMcf/d

Million cubic feet per day

Moody’s

Moody’s Investors Service, Inc.

NBP Services

NBP Services, LLC, a wholly owned subsidiary of ONEOK

NGL products

Marketable natural gas liquid purity products, such as ethane, ethane/propane mix, propane, iso-butane, normal butane and natural gasoline

NGL(s)

Natural gas liquid(s)

Northern Border Pipeline

Northern Border Pipeline Company

NYMEX

New York Mercantile Exchange

OBPI

ONEOK Bushton Processing Inc.

OCC

Oklahoma Corporation Commission

OkTex Pipeline

OkTex Pipeline Company, L.L.C.

ONEOK

ONEOK, Inc.

ONEOK Partners GP

ONEOK Partners GP, L.L.C., a wholly owned subsidiary of ONEOK and our sole general partner

	OPIS	Oil Price Information Service
	Overland Pass Pipeline Company	Overland Pass Pipeline Company LLC

	Partnership Agreement	Third Amended and Restated Agreement of Limited Partnership of ONEOK Partners, L.P., as amended
	POP	Percent of Proceeds

Quarterly Report(s)

Quarterly Report(s) on Form 10-Q

S&P

Standard & Poor’s Rating Group

SEC

Securities and Exchange Commission

Statement

Statement of Financial Accounting Standards

XBRL

eXtensible Business Reporting Language

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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ONEOK Partners, L.P. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
	Three Months Ended						Six Months Ended
	June 30,						June 30,
(Unaudited)	2009			2008			2009			2008
	(Thousands of dollars, except per unit amounts)

Revenues	$	1,397,057		$	2,143,892		$	2,647,922		$	4,202,927
Cost of sales and fuel		1,135,075			1,862,959			2,132,399			3,653,469
Net margin		261,982			280,933			515,523			549,458
Operating expenses
Operations and maintenance		87,712			80,532			165,391			157,473
Depreciation and amortization		39,953			30,033			79,893			59,975
General taxes		12,795			6,626			24,562			17,767
Total operating expenses		140,460			117,191			269,846			235,215
Gain (loss) on sale of assets		3,276			(3	)		3,940			28
Operating income		124,798			163,739			249,617			314,271
Equity earnings from investments (Note K)		14,188			17,610			35,410			45,393
Allowance for equity funds used during construction		9,468			11,676			18,471			20,172
Other income		3,424			676			3,815			2,734
Other expense		(383	)		(36	)		(2,429	)		(2,167	)
Interest expense		(50,888	)		(34,705	)		(101,796	)		(73,234	)
Income before income taxes		100,607			158,960			203,088			307,169
Income taxes		(3,068	)		(4,305	)		(5,939	)		(7,373	)
Net income		97,539			154,655			197,149			299,796
Less: Net income attributable to noncontrolling interests		1			134			20			257
Net income attributable to ONEOK Partners, L.P.	$	97,538		$	154,521		$	197,129		$	299,539

Limited partners’ interest in net income:
Net income attributable to ONEOK Partners, L.P.	$	97,538		$	154,521		$	197,129		$	299,539
General partner’s interest in net income		(23,388	)		(21,688	)		(45,700	)		(41,393	)
Limited partners’ interest in net income	$	74,150		$	132,833		$	151,429		$	258,146

Limited partners’ net income per unit, basic and diluted (Note L)	$	0.81		$	1.46		$	1.66		$	2.94
Number of units used in computation ( thousands )		91,415			90,906			91,169			87,680
See accompanying Notes to Consolidated Financial Statements.

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ONEOK Partners, L.P. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
	June 30,		December 31,
(Unaudited)	2009		2008
Assets	(Thousands of dollars)
Current assets
Cash and cash equivalents	$	31,803	$	177,635
Accounts receivable, net		397,006		317,182
Affiliate receivables		25,831		25,776
Gas and natural gas liquids in storage		164,640		190,616
Commodity exchanges and imbalances		55,104		55,086
Derivative financial instruments (Notes B and C)		18,732		63,780
Other current assets		42,039		28,176
Total current assets		735,155		858,251

Property, plant and equipment
Property, plant and equipment		6,149,684		5,808,679
Accumulated depreciation and amortization		930,031		875,279
Net property, plant and equipment (Note I)		5,219,653		4,933,400

Investments and other assets
Investments in unconsolidated affiliates		735,394		755,492
Goodwill and intangible assets		672,703		676,536
Other assets		37,841		30,593
Total investments and other assets		1,445,938		1,462,621
Total assets	$	7,400,746	$	7,254,272

Liabilities and partners’ equity
Current liabilities
Current maturities of long-term debt	$	261,931	$	11,931
Notes payable (Note F)		360,000		870,000
Accounts payable		541,190		496,763
Affiliate payables		22,604		23,333
Commodity exchanges and imbalances		165,713		191,165
Other current liabilities		113,724		100,832
Total current liabilities		1,465,162		1,694,024

Long-term debt, excluding current maturities (Note G)		2,829,946		2,589,509

Deferred credits and other liabilities		58,231		54,773

Commitments and contingencies (Note H)

Partners’ equity
ONEOK Partners, L.P. partners’ equity:
General partner		82,443		77,546
Common units: 59,426,087 and 54,426,087 units issued and outstanding at June 30, 2009 and December 31, 2008, respectively		1,554,685		1,361,058
Class B units: 36,494,126 units issued and outstanding at June 30, 2009 and December 31, 2008		1,388,890		1,407,016
Accumulated other comprehensive income (Note D)		15,917		64,405
Total ONEOK Partners, L.P. partners’ equity		3,041,935		2,910,025

Noncontrolling interests in consolidated subsidiaries		5,472		5,941

Total partners’ equity		3,047,407		2,915,966
Total liabilities and partners’ equity	$	7,400,746	$	7,254,272
See accompanying Notes to Consolidated Financial Statements.

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ONEOK Partners, L.P. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS	Six Months Ended
	June 30,
(Unaudited)	2009			2008
	(Thousands of dollars)
Operating activities
Net income	$	197,149		$	299,796
Depreciation and amortization		79,893			59,975
Allowance for equity funds used during construction		(18,471	)		(20,172	)
Gain on sale of assets		(3,940	)		(28	)
Equity earnings from investments		(35,410	)		(45,393	)
Distributions received from unconsolidated affiliates		38,233			39,904
Changes in assets and liabilities:
Accounts receivable		(79,824	)		35,134
Affiliate receivables		(55	)		(14,815	)
Gas and natural gas liquids in storage		25,976			(104,557	)
Derivative financial instruments		(2,058	)		10,344
Accounts payable		16,410			39,225
Affiliate payables		(729	)		34,558
Commodity exchanges and imbalances, net		(25,470	)		55,202
Other assets and liabilities		(2,259	)		(59,230	)
Cash provided by operating activities		189,445			329,943

Investing activities
Changes in investments in unconsolidated affiliates		17,393			6,480
Acquisitions		-			2,450
Capital expenditures (less allowance for equity funds used during construction)		(321,860	)		(524,587	)
Proceeds from sale of assets		8,050			111
Cash used in investing activities		(296,417	)		(515,546	)

Financing activities
Cash distributions:
General and limited partners		(241,864	)		(214,794	)
Noncontrolling interests		(489	)		(148	)
Borrowing of notes payable, net		360,000			20,000
Repayment of notes payable with maturities over 90 days		(870,000	)		-
Issuance of long-term debt, net of discounts		498,325			-
Long-term debt financing costs		(4,000	)		-
Issuance of common units, net of discounts		220,458			450,198
Contributions from general partner		4,675			9,508
Payment of long-term debt		(5,965	)		(5,964	)
Cash provided by (used in) financing activities		(38,860	)		258,800
Change in cash and cash equivalents		(145,832	)		73,197
Cash and cash equivalents at beginning of period		177,635			3,213
Cash and cash equivalents at end of period	$	31,803		$	76,410
See accompanying Notes to Consolidated Financial Statements.

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ONEOK Partners, L.P. and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS’ EQUITY


	ONEOK Partners, L.P. Partners’ Equity


	Common Units		Class B Units		General Partner			Common Units
(Unaudited)	Common Units		Class B Units		General Partner			Common Units
	(Units)				(Thousands of dollars)

December 31, 2008		54,426,087		36,494,126	$	77,546		$	1,361,058
Net income		-		-		45,700			90,729
Other comprehensive income (loss) (Note D)		-		-		-			-
Issuance of equity units (Note E)		5,000,000		-		-			220,458
Contribution from general partner (Note E)		-		-		4,675			-
Distributions paid (Note E)		-		-		(45,478	)		(117,560	)
June 30, 2009		59,426,087		36,494,126	$	82,443		$	1,554,685
See accompanying Notes to Consolidated Financial Statements.

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ONEOK Partners, L.P. and Subsidiaries
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS’ EQUITY
(Continued)

	ONEOK Partners, L.P. Partners’ Equity
				Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interests in Consolidated Subsidiaries
										Total Partners’ Equity
	Class B Units
(Unaudited)	Class B Units
	(Thousands of dollars)

December 31, 2008	$	1,407,016		$	64,405		$	5,941		$	2,915,966
Net income		60,700			-			20			197,149
Other comprehensive income (loss) (Note D)		-			(48,488	)		-			(48,488	)
Issuance of equity units (Note E)		-			-			-			220,458
Contribution from general partner (Note E)		-			-			-			4,675
Distributions paid (Note E)		(78,826	)		-			(489	)		(242,353	)
June 30, 2009	$	1,388,890		$	15,917		$	5,472		$	3,047,407

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ONEOK Partners, L.P. and Subsidiaries
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

		Three Months Ended						Six Months Ended
		June 30,						June 30,
(Unaudited)		2009			2008			2009			2008
	(Thousands of dollars)

Net income		$	97,539		$	154,655		$	197,149		$	299,796
Other comprehensive income (loss) (Note D)			(29,289	)		(38,049	)		(48,488	)		(36,300	)
Comprehensive income			68,250			116,606			148,661			263,496
Less: Comprehensive income attributable to noncontrolling interests			1			134			20			257
Comprehensive Income Attributable to ONEOK Partners, L.P.		$	68,249		$	116,472		$	148,641		$	263,239
See accompanying Notes to Consolidated Financial Statements.

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ONEOK Partners, L.P. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

A. SUMMARY OF ACCOUNTING POLICIES

Our accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP and reflect all adjustments that, in our opinion, are necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The 2008 year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements in our Annual Report.

Our accounting policies are consistent with those disclosed in Note A of the Notes to Consolidated Financial Statements in our Annual Report. The following recently issued accounting pronouncements will affect our consolidated financial statements during 2009.

Noncontrolling Interests - Statement 160, “Noncontrolling Interests in Consolidated Financial Statements - an amendment of ARB No. 51,” requires noncontrolling interests (previously referred to as minority interests) to be reported as a component of equity. Statement 160 was effective for our year beginning January 1, 2009, and required retroactive adoption of the presentation and disclosure requirements for existing noncontrolling interests.

Derivative Instruments and Hedging Activities - Statement 161, “Disclosures about Derivative Instruments and Hedging Activities - an amendment to FASB Statement No. 133,” requires enhanced disclosures about how derivative and hedging activities affect our financial position, financial performance and cash flows. Statement 161 was effective for our year beginning January 1, 2009, and has been applied prospectively. See Note C for disclosures of our derivative instruments and hedging activities.

Fair Value Measurements - As of January 1, 2009, we have applied the provisions of Statement 157, “Fair Value Measurements,” to assets and liabilities that are measured at fair value on a nonrecurring basis subsequent to initial recognition, and the impact was not material. See Note B for disclosures of our fair value measurements.

Limited Partners’ Net Income Per Unit - EITF 07-4, “Application of the Two-Class Method under FASB Statement No. 128 to Master Limited Partnerships,” was effective for our year beginning January 1, 2009, and required retroactive application. Application of EITF 07-4 had no impact on our limited partners’ net income per unit for the three and six months ended June 30, 2009 and 2008. See Note L for a discussion of our calculation of basic and diluted limited partners’ net income per unit.

Interim Disclosures about Fair Value - FSP 107-1 and Accounting Principles Board (APB) Opinion No. 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” require disclosures of fair value of financial instruments for interim reporting periods, which were effective for our quarter ended June 30, 2009. These disclosures are included in Note B.

Subsequent Events - Statement 165, “Subsequent Events,” establishes standards of accounting for and disclosures of events that occur after the balance sheet date but before consolidated financial statements are issued. We have evaluated subsequent events through August 6, 2009, the date our consolidated financial statements were issued, and all required disclosures have been made.

FASB Accounting Standards Codification - Statement 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles,” establishes the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Statement 168 will change the manner in which we reference authoritative accounting principles in our consolidated financial statements and will be effective for our September 30, 2009, Quarterly Report.

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B. FAIR VALUE MEASUREMENTS

Refer to Notes A and C of the Notes to Consolidated Financial Statements in our Annual Report for a discussion of our fair value measurements and the fair value hierarchy.

Recurring Fair Value Measurements - The following tables set forth our recurring fair value measurements for the periods indicated.

	June 30, 2009
	Level 1		Level 2			Level 3			Netting (a)			Total
	(Thousands of dollars)
Derivatives
Assets (b)	$	-	$	10,550		$	15,062		$	(6,880	)	$	18,732
Liabilities (c)	$	-	$	(4,796	)	$	(3,465	)	$	6,880		$	(1,381	)
(a) - Our derivative assets and liabilities are presented in our Consolidated Balance Sheet on a net basis. We net derivative assets and liabilities when a legally enforceable master netting arrangement exists between us and the counterparty to a derivative contract.
(b) - Included in derivative financial instruments in our Consolidated Balance Sheet.
(c) - Included in deferred credits and other liabilities in our Consolidated Balance Sheet.

	December 31, 2008
	Level 1		Level 2			Level 3			Netting (a)			Total
	(Thousands of dollars)
Derivatives
Assets (b)	$	-	$	26,131		$	37,649		$	-		$	63,780
(a) - Our derivative assets and liabilities are presented in our Consolidated Balance Sheet on a net basis. We net derivative assets and liabilities when a legally enforceable master netting arrangement exists between us and the counterparty to a derivative contract.
(b) - Included in derivative financial instruments in our Consolidated Balance Sheet.

At June 30, 2009, and December 31, 2008, we had no cash collateral held or posted under our master netting arrangements.

In accordance with Statement 157, we categorize derivatives for which fair value is determined based on multiple inputs within a single level, based on the lowest level input that is significant to the fair value measurement in its entirety.

Our derivative instruments categorized as Level 2 include non-exchange traded fixed-price swaps for natural gas and crude oil that are valued based on NYMEX-settled prices. Our derivative instruments categorized as Level 3 include over-the-counter fixed-price swaps for purity NGL products and natural gas basis swaps. These swaps are valued based on information from a pricing service, the forward NYMEX curve for crude oil, correlations of specific NGL purity products to crude oil and internally developed basis curves incorporating observable and unobservable market data. We corroborate the data on which our fair value estimates are based using our market knowledge of recent transactions and day-to-day pricing fluctuations and analysis of historical relationships of data from the pricing service compared with actual settlements and correlations. We do not believe that our Level 3 fair value estimates have a material impact on our results of operations, as the majority of our derivatives are accounted for as cash flow hedges for which ineffectiveness is not material.

The following table sets forth a reconciliation of our Level 3 fair value measurements for the periods indicated.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
Derivative Assets (Liabilities)	2009			2008			2009			2008
	(Thousands of dollars)
Net assets (liabilities) at beginning of period	$	25,995		$	(10,386	)	$	37,649		$	(16,400	)
Total realized/unrealized gains (losses):
Included in earnings (a)		982			(7	)		2,086			973
Included in other comprehensive income (loss)		(15,380	)		(27,311	)		(28,138	)		(22,277	)
Net assets (liabilities) at end of period	$	11,597		$	(37,704	)	$	11,597		$	(37,704	)
(a) - Included in revenues in our Consolidated Statements of Income.

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There were no material gains (losses) for the three and six months ended June 30, 2009 and 2008, included in earnings attributable to the change in unrealized gains (losses) relating to assets and liabilities classified as Level 3 fair value measurements still held as of the end of the period.

Other Financial Instruments - The approximate fair value of cash and cash equivalents, accounts receivable and accounts payable is equal to book value, due to their short-term nature. The fair value of borrowings under our $1.0 billion amended and restated revolving credit agreement dated March 30, 2007 (Partnership Credit Agreement), approximates the carrying value since the interest rates are periodically adjusted to reflect current market conditions. The estimated fair value of the aggregate of our senior notes outstanding, including current maturities, approximates the book value of approximately $3.1 billion at June 30, 2009, based on quoted market prices for similar issues with similar terms and maturities.

C. RISK MANAGEMENT AND HEDGING ACTIVITIES USING DERIVATIVES

Risk Management Activities - We are sensitive to changes in natural gas, condensate and NGL prices, principally as a result of contractual terms under which these commodities are processed, purchased and sold. We use physical forward sales and financial derivatives to secure a certain price for a portion of our natural gas, condensate and NGL products. We follow established policies and procedures to assess risk and approve, monitor and report our risk management activities. We have not used these instruments for trading purposes. We are also subject to the risk of interest rate fluctuation in the normal course of business.

Commodity price risk - Commodity price risk refers to the risk of loss in cash flows and future earnings arising from adverse changes in the price of natural gas, NGLs and condensate. We use the following commodity derivative instruments to mitigate the commodity price risk associated with a portion of the forecasted sales of these commodities.

·	Futures contracts - Standardized exchange-traded contracts to purchase or sell natural gas and crude oil at a specified price, requiring delivery on or settlement through the sale or purchase of an offsetting contract by a specified future date under the provisions of exchange regulations.

·	Forward contracts - Commitments to purchase or sell natural gas, crude oil or NGLs for delivery at some specified time in the future. Forward contracts are different from futures in that forwards are customized and non-exchange traded.

Swaps - Financial trades involving the exchange of payments based on two different pricing structures for a commodity. In a typical commodity swap, parties exchange payments based on changes in the price of a commodity or a market index, while fixing the price they effectively pay or receive for the physical commodity. As a result, one party assumes the risks and benefits of the movements in market prices while the other party assumes the risks and benefits of a fixed price for the commodity.

In our Natural Gas Gathering and Processing segment, we are exposed to commodity price risk, primarily NGLs and natural gas, as a result of receiving commodities in exchange for services associated with our POP contracts. To a lesser extent, exposures arise from the relative price differential between NGLs and natural gas, or the gross processing spread, with respect to our keep-whole processing contracts. We are also exposed to basis risk between the various production and market locations where we buy and sell commodities. As part of our hedging strategy, we use the aforementioned commodity derivative instruments to minimize earnings volatility related to natural gas, NGL and condensate price fluctuations. We reduce our gross processing spread exposure through a combination of physical and financial hedges. We utilize a portion of our POP equity natural gas as an offset, or natural hedge, to an equivalent portion of our keep-whole shrink requirements. This has the effect of converting our gross processing spread risk to NGL commodity price risk. We hedge a portion of the forecasted sales of the commodities we retain, including NGLs, natural gas and condensate.

In our Natural Gas Liquids Gathering and Fractionation segment, we are exposed to basis risk primarily as a result of the relative value of NGL purchases at one location and sales at another location. To a lesser extent, we are exposed to commodity price risk resulting from the relative values of the various NGL products to each other, NGLs in storage and the relative value of NGLs to natural gas. We utilize fixed-price physical forward contracts to reduce earnings volatility related to NGL price fluctuations. At June 30, 2009, we were not using any financial derivative instruments with respect to our NGL gathering and fractionation activities.

In our Natural Gas Pipelines segment, we are exposed to commodity price risk because our intrastate and interstate natural gas pipelines collect natural gas from our customers for operations or as part of our fee for services provided. When the amount of natural gas consumed in operations by these pipelines differs from the amount provided by our customers, our pipelines must buy or sell natural gas, or store or use natural gas from inventory, which can expose us to commodity price risk depending on the regulatory treatment for this activity. We use physical forward sales to reduce earnings volatility related to natural gas price fluctuations. At June 30, 2009, we were not using any financial derivative instruments with respect to our intrastate and interstate pipeline operations.

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Interest rate risk - We manage interest rate risk through the use of fixed-rate debt, floating-rate debt and, at times, interest-rate swaps. Interest-rate swaps are agreements to exchange an interest payment at some future point based on the differential between two interest rates. Floating-rate swaps may be used to convert the fixed rates of long-term borrowings into short-term variable rates.

Accounting Treatment - We account for derivative instruments and hedging activities in accordance with Statement 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended. Under Statement 133, entities are required to record 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 cash flow hedging relationship and, if so, the reason for holding it.

The table below summarizes the various ways in which we account for our derivative instruments and the impact on our consolidated financial statements.

	Recognition and Measurement
Accounting Treatment	Balance Sheet	Income Statement
Normal purchases and normal sales	- Fair value not recorded	- Change in fair value not recognized in earnings
Mark-to-market	- Recorded at fair value	- Change in fair value recognized in earnings
Cash flow hedge	- Recorded at fair value	- Ineffective portion of the gain or loss on the derivative instrument is recognized in earnings
	- Effective portion of the gain or loss on the derivative instrument is reported initially as a component of accumulated other comprehensive income (loss)	- Effective portion of the gain or loss on the derivative instrument is reclassified out of accumulated other comprehensive income (loss) into earnings when the forecasted transaction affects earnings
Fair value hedge	- Recorded at fair value	- The gain or loss on the derivative instrument is recognized in earnings
	- Change in fair value of the hedged item is recorded as an adjustment to its book value	- Change in fair value of the hedged item is recognized in earnings

As required by Statement 133, we formally document all relationships between hedging instruments and hedged items, as well as risk management objectives, strategies for undertaking various hedge transactions and methods for assessing and testing correlation and hedge ineffectiveness. We specifically identify the forecasted transaction that has been designated as the hedged item with a cash flow hedge. We assess the effectiveness of hedging relationships quarterly by performing a regression analysis on our fair value and cash flow hedging relationships to determine whether the hedge relationships are highly effective on a retrospective and prospective basis. We also document our normal purchases and normal sales transactions that we expect to result in physical delivery and that we elect to exempt from derivative accounting treatment.

Cash flows from futures, forwards and swaps that are accounted for as hedges are included in the same cash flow statement category as the cash flows from the related hedged items.

Fair Values of Derivative Instruments - Statement 157 defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. See Note B for a discussion of the inputs associated with our fair value measurements and our fair value hierarchy disclosures.

As of June 30, 2009, we had $25.6 million of derivative assets and $8.3 million of derivative liabilities, excluding the impact of netting, all of which related to commodity contracts.

As of June 30, 2009, we had fixed-price natural gas swaps with a notional quantity of 4.5 Bcf and natural gas basis swaps with a notional quantity of 4.5 Bcf. Additionally, we had fixed-price crude oil and NGL swaps with a notional quantity of 2.0 MMBbl.

Cash Flow Hedges - At June 30, 2009, our Consolidated Balance Sheet reflected an unrealized gain of $20.5 million in accumulated other comprehensive income (loss), with a corresponding offset in derivative financial instrument assets and liabilities that will be realized within the next 18 months as the forecasted transactions affect earnings. If prices remain at

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current levels, we will recognize $21.8 million in gains over the next 12 months, and we will recognize losses of $1.3 million thereafter.

The following table sets forth the effect of cash flow hedges recognized in other comprehensive income (loss) for the periods indicated.

Derivatives in Cash Flow Hedging Relationships	Three Months Ended June 30, 2009			Six Months Ended June 30, 2009
	(Thousands of dollars)
Commodity contracts	$	(13,313	)	$	(13,644	)
Interest rate contracts		443			564
Total gain (loss) recognized in other comprehensive income (loss) (effective portion)	$	(12,870	)	$	(13,080	)

The following table sets forth the effect of cash flow hedges on our Consolidated Statements of Income for the periods indicated.

	Location of Gain (Loss) Reclassified from
Derivatives in Cash Flow	Accumulated Other Comprehensive Income	Three Months Ended		Six Months Ended
Hedging Relationships	(Loss) into Net Income (Effective Portion)	June 30, 2009		June 30, 2009
		(Thousands of dollars)
Commodity contracts	Revenues	$	15,983	$	34,748
Interest rate contracts	Interest expense		436		872
Total gain (loss) reclassified from accumulated other comprehensive income (loss) into net income (effective portion)		$	16,419	$	35,620

Ineffectiveness related to our cash flow hedges was not material for the three and six months ended June 30, 2009 and 2008. In the event that it becomes probable that a forecasted transaction will not occur, we would discontinue cash flow hedge treatment, which would affect earnings. There were no gains or losses due to the discontinuance of cash flow hedge treatment during the three and six months ended June 30, 2009 and 2008.

Fair Value Hedges - In prior years, we terminated various interest-rate swap agreements. The net savings from the termination of these swaps is being recognized in interest expense over the terms of the debt instruments originally hedged. Interest expense savings for the six months ended June 30, 2009, from amortization of terminated swaps was $1.9 million, and the remaining amortization of terminated swaps will be recognized over the following periods.


	(Millions of dollars)
Remainder of 2009		$	1.8
2010		$	3.7
2011		$	0.9

At June 30, 2009, none of the interest on our fixed-rate debt was swapped to floating using interest-rate swaps.

Credit Risk - All the commodity derivative contracts we enter into are with ONEOK Energy Services Company, L.P. (OES), a subsidiary of ONEOK. OES enters into similar commodity derivative contracts with third parties at our direction and on our behalf. We have an indemnification agreement with OES that indemnifies and holds OES harmless from any liability they may incur solely as a result of entering into commodity derivative contracts on our behalf. Derivative assets for which we would indemnify OES in the event of a default by the counterparty total $18.7 million at June 30, 2009, and are with investment grade counterparties that are primarily in the oil and gas sector.

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D. OTHER COMPREHENSIVE INCOME (LOSS)

The following table sets forth other comprehensive income (loss) for the periods indicated.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009			2008
	(Thousands of dollars)
Unrealized gains (losses) on derivatives	$	(12,870	)	$	(47,620	)	$	(13,080	)	$	(53,165	)
Less: Realized gains (losses) recognized in net income		16,419			(9,571	)		35,620			(16,865	)
Other		-			-			212			-
Other comprehensive income (loss)	$	(29,289	)	$	(38,049	)	$	(48,488	)	$	(36,300	)

The following table sets forth the balance in accumulated other comprehensive income (loss) for the period indicated.

	Unrealized Gains (Losses) on Derivatives
	(Thousands of dollars)
December 31, 2008	$	64,405
Other comprehensive income (loss)		(48,488)
June 30, 2009	$	15,917

E. PARTNERS’ EQUITY

Equity Issuance - In June 2009, we completed an underwritten public offering of 5,000,000 common units at $45.81 per common unit, generating net proceeds of approximately $219.9 million after deducting underwriting discounts but before offering expenses. In conjunction with the public offering of common units, ONEOK Partners GP contributed $4.7 million in order to maintain its 2 percent general partner interest in us.

In July 2009, we sold an additional 486,690 common units at $45.81 per common unit to the underwriters of the public offering upon the partial exercise of their option to purchase additional common units to cover over-allotments. We received net proceeds of approximately $21.4 million from the sale of the common units after deducting underwriting discounts but before offering expenses. In conjunction with the partial exercise by the underwriters, ONEOK Partners GP contributed $0.5 million in order to maintain its 2 percent general partner interest in us.

As a result of these transactions, ONEOK and its subsidiaries now hold an aggregate 45.1 percent interest in us.

We used the proceeds from the sale of common units and the general partner contributions to repay borrowings under our Partnership Credit Agreement and for general partnership purposes.

Cash Distributions - For the six months ended June 30, 2009, cash distributions included $45.5 million paid to our general partner, of which $40.6 million was related to incentive distributions. These distributions pertained to the fourth quarter of 2008 and first quarter of 2009. In July 2009, we declared a cash distribution of $1.08 per unit ($4.32 per unit on an annualized basis) for the second quarter of 2009. The distribution will be paid on August 14, 2009, to unitholders of record as of July 31, 2009.

For the six months ended June 30, 2008, cash distributions included $35.3 million paid to our general partner, of which $30.9 million was related to incentive distributions. These distributions pertained to the fourth quarter of 2007 and first quarter of 2008.

F. CREDIT FACILITIES

Our Partnership Credit Agreement, which expires in March 2012, contains certain financial and other typical covenants as discussed in Note H of the Notes to Consolidated Financial Statements in our Annual Report. Among other things, these covenants include maintaining a ratio of indebtedness to adjusted EBITDA (EBITDA, as adjusted for all non-cash charges and increased for projected EBITDA from certain lender-approved capital expansion projects) of no more than 5 to 1. At June 30, 2009, our ratio of indebtedness to adjusted EBITDA was 4.3 to 1, and we were in compliance with all covenants under our Partnership Credit Agreement.

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At June 30, 2009, we had $360 million of borrowings outstanding and $586.5 million of credit available under our Partnership Credit Agreement. At June 30, 2009, we had a total of $49.2 million issued in letters of credit outside of the Partnership Credit Agreement.

Borrowings under our Partnership Credit Agreement are short term in nature, ranging from one day to six months. Accordingly, these borrowings are classified as short-term notes payable.

G. LONG-TERM DEBT

Debt Issuance - In March 2009, we completed an underwritten public offering of $500 million aggregate principal amount of 8.625 percent Senior Notes due 2019 (2019 Notes). The 2019 Notes were issued under our existing shelf registration statement filed with the SEC.

We may redeem the 2019 Notes, in whole or in part, at any time prior to their maturity at a redemption price equal to the principal amount, plus accrued and unpaid interest and a make-whole premium. The redemption price will never be less than 100 percent of the principal amount of the 2019 Notes plus accrued and unpaid interest to the redemption date. The 2019 Notes are senior unsecured obligations, ranking equally in right of payment with all of our existing and future unsecured senior indebtedness, and effectively junior to all of the existing and future debt and other liabilities of our non-guarantor subsidiaries. The 2019 Notes are nonrecourse to our general partner.

The net proceeds from the 2019 Notes, after deducting underwriting discounts and commissions and expenses, of approximately $494.3 million were used to repay indebtedness outstanding under our Partnership Credit Agreement.

The 2019 Notes are fully and unconditionally guaranteed on a senior unsecured basis by ONEOK Partners Intermediate Limited Partnership (Intermediate Partnership). The guarantee ranks equally in right of payment to all of the Intermediate Partnership’s existing and future unsecured senior indebtedness.

The terms of the 2019 Notes are governed by an indenture, dated as of September 25, 2006, between us and Wells Fargo Bank, N.A., as trustee, as supplemented by the Fifth Supplemental Indenture, dated March 3, 2009 (Indenture). The Indenture does not limit the aggregate principal amount of debt securities that may be issued and provides that debt securities may be issued from time to time in one or more additional series. The Indenture contains covenants including, among other provisions, limitations on our ability to place liens on our property or assets and to sell and leaseback our property.

The 2019 Notes will mature on March 1, 2019. We will pay interest on the 2019 Notes on March 1 and September 1 of each year. The first payment of interest on the 2019 Notes will be made on September 1, 2009. Interest on the 2019 Notes accrues from March 3, 2009, which was the issuance date.

H. COMMITMENTS AND CONTINGENCIES

Investment in Northern Border Pipeline - In March 2009, we made an equity contribution of $4.3 million to Northern Border Pipeline. Northern Border Pipeline anticipates requiring an additional equity contribution of approximately $76 million from its partners in the third quarter of 2009, of which our share will be approximately $38 million based on our 50 percent equity interest.

Environmental Liabilities - We are subject to multiple environmental, historical and wildlife preservation laws and regulations affecting many aspects of our present and future operations. Regulated activities include those involving air emissions, stormwater and wastewater discharges, handling and disposal of solid and hazardous wastes, hazardous materials transportation, and pipeline and facility construction. These laws and regulations require us to obtain and comply with a wide variety of environmental clearances, registrations, licenses, permits and other approvals. Failure to comply with these laws, regulations, permits and licenses may expose us to fines, penalties and/or interruptions in our operations that could be material to our results of operations. If a leak or spill of hazardous substances or petroleum products occurs from lines or facilities that we own, operate or otherwise use, we could be held jointly and severally liable for all resulting liabilities, including response, investigation and clean-up costs, which could materially affect our results of operations and cash flows. In addition, emission controls required under the federal Clean Air Act and other similar federal and state laws could require unexpected capital expenditures at our facilities. We cannot assure that existing environmental regulations will not be revised or that new regulations will not be adopted or become applicable to us. Revised or additional regulations that result in increased compliance costs or additional operating restrictions could have a material adverse effect on our business, financial condition and results of operations.

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Our expenditures for environmental evaluation, mitigation and remediation to date have not been significant in relation to our financial position or results of operations, and there were no material effects upon earnings or cash flows during the three and six months ended June 30, 2009 and 2008 related to compliance with environmental regulations.

I. PROPERTY, PLANT AND EQUIPMENT

The following table sets forth our property, plant and equipment, by segment, for the periods indicated.

	June 30,		December 31,
	2009		2008
	(Thousands of dollars)
Non-Regulated
Natural Gas Gathering and Processing	$	1,409,985	$	1,368,223
Natural Gas Pipelines		168,191		167,625
Natural Gas Liquids Gathering and Fractionation		903,776		879,047
Other		40,132		50,474
Regulated
Natural Gas Pipelines		1,490,628		1,460,764
Natural Gas Liquids Pipelines		2,136,972		1,882,546
Property, plant and equipment		6,149,684		5,808,679
Accumulated depreciation and amortization		930,031		875,279
Net property, plant and equipment	$	5,219,653	$	4,933,400

Property, plant and equipment on our Consolidated Balance Sheets includes construction work in process for capital projects that have not yet been put in service and therefore are not being depreciated. The following table sets forth our construction work in process, by segment, for the periods indicated.

	June 30,		December 31,
	2009		2008
	(Thousands of dollars)
Natural Gas Gathering and Processing	$	71,917	$	135,252
Natural Gas Pipelines		30,024		107,686
Natural Gas Liquids Gathering and Fractionation		91,791		121,007
Natural Gas Liquids Pipelines		599,593		445,836
Other		560		197
Total construction work in process	$	793,885	$	809,978

J. SEGMENTS

Segment Descriptions - Our operations are divided into four business segments based on similarities in economic characteristics, products and services, types of customers, methods of distribution and regulatory environment, as follows:

·	our Natural Gas Gathering and Processing segment primarily gathers and processes unprocessed natural gas;

·	our Natural Gas Pipelines segment primarily operates regulated interstate and intrastate natural gas transmission pipelines and natural gas storage facilities;

·	our Natural Gas Liquids Gathering and Fractionation segment primarily gathers, treats and fractionates NGLs and stores and markets NGL products; and

·	our Natural Gas Liquids Pipelines segment primarily operates regulated interstate natural gas liquids gathering and distribution pipelines.

Accounting Policies - The accounting policies of the segments are the same as those described in Note A and Note L of the Notes to Consolidated Financial Statements in our Annual Report. Intersegment and affiliate sales are recorded on the same basis as sales to unaffiliated customers. Net margin is comprised of total revenues less cost of sales and fuel. Cost of sales and fuel includes commodity purchases, fuel and transportation costs.

Customers - For the six months ended June 30, 2009, we had no single unaffiliated customer from which we received 10 percent or more of our consolidated revenues. We had one unaffiliated customer from which we received $140.4 million, or approximately 10 percent, of our consolidated revenues, for the three months ended June 30, 2009. We had one unaffiliated

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customer from which we received $308 million and $476 million, or approximately 14 percent and 11 percent, of our consolidated revenues, for the three and six months ended June 30, 2008, respectively. All of these revenues pertain to our Natural Gas Liquids Gathering and Fractionation segment.

For the three and six months ended June 30, 2009 and 2008, sales to affiliated customers were less than 10 percent of our consolidated revenues. See Note M for additional information about our sales to affiliated customers.

Operating Segment Information - The following tables set forth certain selected financial information for our operating segments for the periods indicated.

Three Months Ended June 30, 2009	Natural Gas Gathering and Processing		Natural Gas Pipelines (a)			Natural Gas Liquids Gathering and Fractionation			Natural Gas Liquids Pipelines (b)		Other and Eliminations			Total
	(Thousands of dollars)
Sales to unaffiliated customers	$	73,667	$	51,493		$	1,144,980		$	19,348	$	(1	)	$	1,289,487
Sales to affiliated customers		84,713		22,857			-			-		-			107,570
Intersegment revenues		81,721		176			8,643			36,383		(126,923	)		-
Total revenues	$	240,101	$	74,526		$	1,153,623		$	55,731	$	(126,924	)	$	1,397,057

Net margin	$	86,292	$	66,861		$	67,714		$	44,102	$	(2,987	)	$	261,982
Operating costs		34,031		24,484			25,465			19,148		(2,621	)		100,507
Depreciation and amortization		14,465		10,629			7,729			7,118		12			39,953
Gain (loss) on sale of assets		3,093		(24	)		(5	)		1		211			3,276
Operating income (loss)	$	40,889	$	31,724		$	34,515		$	17,837	$	(167	)	$	124,798

Equity earnings from investments	$	7,721	$	5,555		$	-		$	912	$	-		$	14,188
Capital expenditures	$	23,509	$	16,840		$	10,126		$	78,420	$	471		$	129,366
(a) - Our Natural Gas Pipelines segment has regulated and non-regulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $60.8 million, net margin of $52.8 million and operating income of $22.7 million.
(b) - Our Natural Gas Liquids Pipelines segment’s operations are primarily regulated. Our Natural Gas Liquids Pipelines segment’s non-regulated operations were not material.

Three Months Ended June 30, 2008	Natural Gas Gathering and Processing			Natural Gas Pipelines (a)			Natural Gas Liquids Gathering and Fractionation		Natural Gas Liquids Pipelines (b)		Other and Eliminations			Total
	(Thousands of dollars)
Sales to unaffiliated customers	$	140,209		$	56,050		$	1,730,488	$	12,824	$	(1	)	$	1,939,570
Sales to affiliated customers		171,080			33,242			-		-		-			204,322
Intersegment revenues		227,444			504			8,616		21,952		(258,516	)		-
Total revenues	$	538,733		$	89,796		$	1,739,104	$	34,776	$	(258,517	)	$	2,143,892

Net margin	$	121,120		$	66,716		$	67,339	$	27,369	$	(1,611	)	$	280,933
Operating costs		32,790			20,468			19,990		13,782		128			87,158
Depreciation and amortization		12,141			8,522			5,668		3,697		5			30,033
Gain (loss) on sale of assets		(6	)		(35	)		6		-		32			(3	)
Operating income (loss)	$	76,183		$	37,691		$	41,687	$	9,890	$	(1,712	)	$	163,739

Equity earnings from investments	$	8,126		$	9,153		$	-	$	331	$	-		$	17,610
Capital expenditures	$	36,348		$	29,766		$	55,048	$	136,354	$	13		$	257,529
(a) - Our Natural Gas Pipelines segment has regulated and non-regulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $73.4 million, net margin of $51.6 million and operating income of $27.2 million.
(b) - Our Natural Gas Liquids Pipelines segment’s operations are primarily regulated. Our Natural Gas Liquids Pipelines segment’s non-regulated operations were not material.

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Six Months Ended June 30, 2009	Natural Gas Gathering and Processing		Natural Gas Pipelines (a)		Natural Gas Liquids Gathering and Fractionation			Natural Gas Liquids Pipelines (b)		Other and Eliminations			Total
	(Thousands of dollars)
Sales to unaffiliated customers	$	135,813	$	100,210	$	2,116,879		$	43,315	$	-		$	2,396,217
Sales to affiliated customers		202,920		48,785		-			-		-			251,705
Intersegment revenues		151,611		323		16,349			70,063		(238,346	)		-
Total revenues	$	490,344	$	149,318	$	2,133,228		$	113,378	$	(238,346	)	$	2,647,922

Net margin	$	172,344	$	132,429	$	126,936		$	88,246	$	(4,432	)	$	515,523
Operating costs		65,859		44,664		48,302			34,713		(3,585	)		189,953
Depreciation and amortization		28,913		23,422		14,142			13,402		14			79,893
Gain (loss) on sale of assets		3,074		3		(2	)		1		864			3,940
Operating income	$	80,646	$	64,346	$	64,490		$	40,132	$	3		$	249,617

Equity earnings from investments	$	12,187	$	21,763	$	-		$	1,460	$	-		$	35,410
Investments in unconsolidated affiliates	$	325,306	$	380,119	$	-		$	29,969	$	-		$	735,394
Total assets	$	1,590,343	$	1,494,282	$	1,798,616		$	2,153,551	$	363,954		$	7,400,746
Noncontrolling interests in consolidated subsidiaries	$	-	$	5,326	$	-		$	131	$	15		$	5,472
Capital expenditures	$	52,327	$	34,268	$	23,131		$	211,663	$	471		$	321,860
(a) - Our Natural Gas Pipelines segment has regulated and non-regulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $122.4 million, net margin of $104.5 million and operating income of $46.0 million.
(b) - Our Natural Gas Liquids Pipelines segment’s operations are primarily regulated. Our Natural Gas Liquids Pipelines segment’s non-regulated operations were not material.

Six Months Ended June 30, 2008	Natural Gas Gathering and Processing			Natural Gas Pipelines (a)			Natural Gas Liquids Gathering and Fractionation		Natural Gas Liquids Pipelines (b)		Other and Eliminations			Total
	(Thousands of dollars)
Sales to unaffiliated customers	$	236,790		$	117,915		$	3,430,558	$	30,007	$	-		$	3,815,270
Sales to affiliated customers		326,374			61,283			-		-		-			387,657
Intersegment revenues		412,139			770			15,066		43,452		(471,427	)		-
Total revenues	$	975,303		$	179,968		$	3,445,624	$	73,459	$	(471,427	)	$	4,202,927

Net margin	$	225,026		$	130,411		$	136,864	$	58,726	$	(1,569	)	$	549,458
Operating costs		65,887			44,048			38,621		27,185		(501	)		175,240
Depreciation and amortization		23,898			16,940			11,287		7,839		11			59,975
Gain (loss) on sale of assets		(5	)		(18	)		18		1		32			28
Operating income (loss)	$	135,236		$	69,405		$	86,974	$	23,703	$	(1,047	)	$	314,271

Equity earnings from investments	$	15,170		$	29,214		$	-	$	1,009	$	-		$	45,393
Investments in unconsolidated affiliates	$	317,061		$	405,939		$	-	$	29,952	$	-		$	752,952
Total assets	$	1,582,926		$	1,271,363		$	2,096,723	$	1,527,685	$	390,843		$	6,869,540
Noncontrolling interests in consolidated subsidiaries	$	-		$	5,809		$	-	$	88	$	14		$	5,911
Capital expenditures	$	62,835		$	51,988		$	84,619	$	325,080	$	65		$	524,587
(a) - Our Natural Gas Pipelines segment has regulated and non-regulated operations. Our Natural Gas Pipelines segment’s regulated operations had revenues of $150.5 million, net margin of $102.2 million and operating income of $51.0 million.
(b) - Our Natural Gas Liquids Pipelines segment’s operations are primarily regulated. Our Natural Gas Liquids Pipelines segment’s non-regulated operations were not material.

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K. UNCONSOLIDATED AFFILIATES

Equity Earnings from Investments - The following table sets forth our equity earnings from investments for the periods indicated.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2009		2008		2009		2008
	(Thousands of dollars)
Northern Border Pipeline	$	5,454	$	8,880	$	21,492	$	28,661
Fort Union Gas Gathering, L.L.C.		3,805		3,464		6,015		5,759
Bighorn Gas Gathering, L.L.C.		1,824		2,005		3,910		4,323
Lost Creek Gathering Company, L.L.C.		1,312		1,797		2,202		3,082
Other		1,793		1,464		1,791		3,568
Equity earnings from investments	$	14,188	$	17,610	$	35,410	$	45,393

Unconsolidated Affiliates Financial Information - The following table sets forth summarized combined financial information of our unconsolidated affiliates for the periods indicated.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2009		2008		2009		2008
	(Thousands of dollars)
Income Statement
Operating revenues	$	87,951	$	95,040	$	194,017	$	206,435
Operating expenses	$	44,429	$	45,201	$	89,232	$	88,545
Net income	$	32,129	$	33,927	$	82,645	$	89,748

Distributions paid to us	$	30,142	$	33,214	$	63,473	$