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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2022.
OR
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   001-13643

oke-20220630_g1.jpg
ONEOK, Inc.
(Exact name of registrant as specified in its charter)

Oklahoma73-1520922
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
 
100 West Fifth Street,
Tulsa,OK74103
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code   (918) 588-7000

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value of $0.01OKENew York Stock Exchange
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   No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes   No

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

On August 1, 2022, the Company had 446,862,227 shares of common stock outstanding.




























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2

ONEOK, Inc.
TABLE OF CONTENTS
Page No.
 
 
 
 
 
 
 

As used in this Quarterly Report, references to “we,” “our” or “us” refer to ONEOK, Inc., an Oklahoma corporation, and its predecessors and 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,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “target,” “guidance,” “intend,” “may,” “might,” “outlook,” “plan,” “potential,” “project,” “scheduled,” “should,” “will,” “would” 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 or 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,” and Part II, Item 1A, “Risk Factors,” in this Quarterly Report and under Part I, Item 1A, “Risk Factors,” in our Annual Report.

INFORMATION AVAILABLE ON OUR WEBSITE

We make available, free of charge, on our website (www.oneok.com) copies of our Annual Reports, 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. Copies of our Code of Business Conduct and Ethics, Corporate Governance Guidelines, Director Independence Guidelines, Corporate Sustainability Report and the written charters of our Board Committees also are available on our website, and we will provide copies of these documents upon request.

In addition to our filings with the SEC and materials posted on our website, we also use social media platforms as additional channels of distribution to reach public investors. Information contained on our website, posted on our social media accounts, and any corresponding applications, are not incorporated by reference into this report.

3

GLOSSARY
The abbreviations, acronyms and industry terminology used in this Quarterly Report are defined as follows:
$2.5 Billion Credit AgreementONEOK’s $2.5 billion revolving credit agreement, as amended and restated
AFUDCAllowance for funds used during construction
Annual ReportAnnual Report on Form 10-K for the year ended December 31, 2021
ASUAccounting Standards Update
BblBarrels, 1 barrel is equivalent to 42 United States gallons
BBtu/dBillion British thermal units per day
BcfBillion cubic feet
BtuBritish thermal unit
CFTCU.S. Commodity Futures Trading Commission
Clean Air ActFederal Clean Air Act, as amended
COVID-19Coronavirus disease 2019, including variants thereof
DJDenver-Julesburg
EBITDAEarnings before interest expense, income taxes, depreciation and amortization
EPAUnited States Environmental Protection Agency
EPSEarnings per share of common stock
ESGEnvironmental, social and governance
Exchange ActSecurities Exchange Act of 1934, as amended
FERCFederal Energy Regulatory Commission
FitchFitch Ratings, Inc.
GAAPAccounting principles generally accepted in the United States of America
Guardian PipelineGuardian Pipeline, L.L.C., a wholly owned subsidiary of ONEOK, Inc.
Guardian Term Loan AgreementGuardian Pipeline’s senior unsecured three-year $120 million term loan agreement dated June 24, 2022
GHGGreenhouse gas
Homeland SecurityUnited States Department of Homeland Security
ICEIntercontinental Exchange
Intermediate PartnershipONEOK Partners Intermediate Limited Partnership, a wholly owned subsidiary of ONEOK Partners, L.P.
LIBORLondon Interbank Offered Rate
MBbl/dThousand barrels per day
MDth/dThousand dekatherms per day
MMBblMillion barrels
MMBbl/dMillion barrels per day
MMBtuMillion British thermal units
MMcf/dMillion cubic feet per day
Moody’sMoody’s Investors Service, Inc.
NGL(s)Natural gas liquid(s)
NGL productsMarketable natural gas liquid purity products, such as ethane, ethane/propane mix, propane, iso-butane, normal butane and natural gasoline
Northern Border PipelineNorthern Border Pipeline Company, a 50% owned joint venture
NYMEXNew York Mercantile Exchange
ONEOKONEOK, Inc.
ONEOK PartnersONEOK Partners, L.P., a wholly owned subsidiary of ONEOK, Inc.
OPISOil Price Information Service
Overland Pass PipelineOverland Pass Pipeline Company, LLC, a 50% owned joint venture
PHMSAUnited States Department of Transportation Pipeline and Hazardous Materials Safety Administration
POPPercent of Proceeds
Quarterly Report(s)Quarterly Report(s) on Form 10-Q
RoadrunnerRoadrunner Gas Transmission, LLC, a 50% owned joint venture
S&PS&P Global Ratings
SCOOPSouth Central Oklahoma Oil Province, an area in the Anadarko Basin in Oklahoma
SECSecurities and Exchange Commission
Series E Preferred StockSeries E Non-Voting, Perpetual Preferred Stock, par value $0.01 per share
4

SOFRSecured Overnight Financing Rate
STACKSooner Trend Anadarko Canadian Kingfisher, an area in the Anadarko Basin in Oklahoma
Term SOFRThe forward-looking term rate based on SOFR
WTIWest Texas Intermediate
XBRLeXtensible Business Reporting Language
5

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ONEOK, Inc. and Subsidiaries    
CONSOLIDATED STATEMENTS OF INCOME    
 Three Months EndedSix Months Ended
 June 30,June 30,
(Unaudited)
2022202120222021
 
(Thousands of dollars, except per share amounts)
Revenues
Commodity sales$5,650,803 $3,074,773 $10,756,014 $5,910,882 
Services345,918314,191 685,316 672,761 
Total revenues (Note J)5,996,7213,388,964 11,441,330 6,583,643 
Cost of sales and fuel (exclusive of items shown separately below)4,877,9992,366,979 9,243,947 4,488,489 
Operations and maintenance230,687212,319 445,093 419,477 
Depreciation and amortization157,757156,921 311,615 314,041 
General taxes46,77741,940 96,288 86,379 
Other operating (income) expense, net(5,449)(707)(7,019)(976)
Operating income688,950611,512 1,351,406 1,276,233 
Equity in net earnings from investments (Note H)35,63025,720 71,970 59,040 
Allowance for equity funds used during construction594426 965 1,238 
Other income (expense), net(9,324)(493)(22,846)(5,515)
Interest expense (net of capitalized interest of $13,519, $5,443, $25,239 and $10,538, respectively)
(170,751)(184,957)(342,805)(370,480)
Income before income taxes545,099452,208 1,058,690 960,516 
Income taxes(130,721)(110,069)(253,141)(232,201)
Net income414,378 342,139 805,549 728,315 
Less: Preferred stock dividends275 275 550 550 
Net income available to common shareholders$414,103 $341,864 $804,999 $727,765 
Basic EPS (Note G)$0.93 $0.77 $1.80 $1.63 
Diluted EPS (Note G)$0.92 $0.77 $1.80 $1.63 
Average shares (thousands)
Basic447,451 446,337 447,288 446,116 
Diluted448,182 446,903 448,293 446,894 
See accompanying Notes to Consolidated Financial Statements.
6

ONEOK, Inc. and Subsidiaries    
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
 Three Months EndedSix Months Ended
June 30,June 30,
(Unaudited)
2022202120222021
 
(Thousands of dollars)
Net income$414,378 $342,139 $805,549 $728,315 
Other comprehensive income (loss), net of tax
Change in fair value of derivatives, net of tax of $(6,639), $51,692, $14,798 and $41,835, respectively
22,226 (173,054)(49,542)(140,056)
Derivative amounts reclassified to net income, net of tax of $(21,036), $(10,516), $(40,760) and $(22,877), respectively
70,426 35,204 136,458 76,591 
Change in retirement and other postretirement benefit plan obligations, net of tax of $(873), $(1,567), $(1,778) and $(2,654), respectively
2,922 5,247 5,952 8,885 
Other comprehensive income (loss) of unconsolidated affiliates, net of tax of $(1,596), $970, $(3,503) and $(1,369), respectively
5,343 (3,244)11,728 4,586 
Total other comprehensive income (loss), net of tax100,917 (135,847)104,596 (49,994)
Comprehensive income$515,295 $206,292 $910,145 $678,321 
See accompanying Notes to Consolidated Financial Statements.
7

ONEOK, Inc. and Subsidiaries  
CONSOLIDATED BALANCE SHEETS  
June 30,December 31,
(Unaudited)
20222021
Assets
(Thousands of dollars)
Current assets  
Cash and cash equivalents$135,774 $146,391 
Accounts receivable, net1,778,687 1,441,786 
Materials and supplies154,024 153,019 
NGLs and natural gas in storage619,880 427,880 
Commodity imbalances49,251 39,609 
Other current assets288,883 165,689 
Total current assets3,026,499 2,374,374 
Property, plant and equipment
Property, plant and equipment24,394,512 23,820,539 
Accumulated depreciation and amortization4,793,293 4,500,665 
Net property, plant and equipment19,601,219 19,319,874 
Investments and other assets
Investments in unconsolidated affiliates801,315 797,613 
Goodwill and net intangible assets758,081 763,295 
Other assets339,690 366,457 
Total investments and other assets1,899,086 1,927,365 
Total assets$24,526,804 $23,621,613 

8

ONEOK, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(Continued)
June 30,December 31,
(Unaudited)
20222021
Liabilities and equity
(Thousands of dollars)
Current liabilities  
Current maturities of long-term debt (Note D)$895,814 $895,814 
Accounts payable1,923,761 1,332,391 
Commodity imbalances345,806 309,054 
Accrued interest235,068 235,602 
Operating lease liability12,305 13,783 
Other current liabilities242,079 397,975 
Total current liabilities3,654,833 3,184,619 
Long-term debt, excluding current maturities (Note D)
12,872,692 12,747,636 
Deferred credits and other liabilities
Deferred income taxes1,425,818 1,166,690 
Operating lease liability71,212 75,636 
Other deferred credits387,620 431,869 
Total deferred credits and other liabilities1,884,650 1,674,195 
Commitments and contingencies (Note I)
Equity (Note E)
 
ONEOK shareholders’ equity:
Preferred stock, $0.01 par value:
authorized and issued 20,000 shares at June 30, 2022, and December 31, 2021
  
Common stock, $0.01 par value:
authorized 1,200,000,000 shares; issued 474,916,234 shares and outstanding
446,856,499 shares at June 30, 2022; issued 474,916,234 shares and outstanding
446,138,177 shares at December 31, 2021
4,749 4,749 
Paid-in capital7,190,457 7,213,861 
Accumulated other comprehensive loss (Note F)(366,755)(471,351)
Retained earnings  
Treasury stock, at cost: 28,059,735 shares at June 30, 2022, and 28,778,057 shares at December 31, 2021
(713,822)(732,096)
Total equity6,114,629 6,015,163 
Total liabilities and equity$24,526,804 $23,621,613 
See accompanying Notes to Consolidated Financial Statements.

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10

ONEOK, Inc. and Subsidiaries  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
 Six Months Ended
 June 30,
(Unaudited)
20222021
 
(Thousands of dollars)
Operating activities  
Net income$805,549 $728,315 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization311,615 314,041 
Equity in net earnings from investments(71,970)(59,040)
Distributions received from unconsolidated affiliates71,488 58,486 
Deferred income taxes227,897 226,963 
Other, net44,584 39,837 
Changes in assets and liabilities: 
Accounts receivable(339,729)(268,541)
NGLs and natural gas in storage, net of commodity imbalances(164,890)(171,654)
Accounts payable568,705 363,694 
Risk-management assets and liabilities(130,873)(158,927)
Other assets and liabilities, net(72,792)4,809 
Cash provided by operating activities1,249,584 1,077,983 
Investing activities
 
Capital expenditures (less allowance for equity funds used during construction)(559,310)(324,122)
Distributions received from unconsolidated affiliates in excess of cumulative earnings13,375 11,695 
Other, net3,148 (12,138)
Cash used in investing activities(542,787)(324,565)
Financing activities
 
Dividends paid(835,309)(833,083)
Issuance of long-term debt120,000  
Repayment of long-term debt (68,787)
Other, net(2,105)(1,667)
Cash used in financing activities(717,414)(903,537)
Change in cash and cash equivalents(10,617)(150,119)
Cash and cash equivalents at beginning of period146,391 524,496 
Cash and cash equivalents at end of period$135,774 $374,377 
See accompanying Notes to Consolidated Financial Statements.
11

ONEOK, Inc. and Subsidiaries  
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY 
(Unaudited)
Preferred
Stock Issued
Common
Stock Issued
Preferred
Stock
Common
Stock
Paid-in
Capital
 
(Shares)
(Thousands of dollars)
January 1, 202220,000 474,916,234 $ $4,749 $7,213,861 
Net income     
Other comprehensive income (Note F)     
Preferred stock dividends - $13.75 per share (Note E)
    
Common stock issued    (5,325)
Common stock dividends - $0.935 per share (Note E)
    (26,264)
Other, net    (5,289)
March 31, 202220,000 474,916,234 $ $4,749 $7,176,983 
Net income     
Other comprehensive income (Note F)     
Preferred stock dividends - $13.75 per share (Note E)
    
Common stock issued    7,039 
Common stock dividends - $0.935 per share (Note E)
    (3,553)
Other, net    9,988 
June 30, 202220,000 474,916,234 $ $4,749 $7,190,457 

(Unaudited)
Preferred
Stock Issued
Common
Stock Issued
Preferred
Stock
Common
Stock
Paid-in
Capital
 
(Shares)
(Thousands of dollars)
January 1, 202120,000 474,916,234 $ $4,749 $7,353,396 
Net income— —    
Other comprehensive income— —    
Preferred stock dividends - $13.75 per share
— —    
Common stock issued—    (10,159)
Common stock dividends - $0.935 per share
— —   (30,234)
Other, net— —   (7,729)
March 31, 202120,000 474,916,234 $ $4,749 $7,305,274 
Net income— —    
Other comprehensive loss— —    
Preferred stock dividends - $13.75 per share
— —    
Common stock issued—    7,115 
Common stock dividends - $0.935 per share
— —   (74,765)
Other, net— —   9,710 
June 30, 202120,000 474,916,234 $ $4,749 $7,247,334 

12

ONEOK, Inc. and Subsidiaries  
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued) 
(Unaudited)
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Treasury
Stock
Total
Equity
 
(Thousands of dollars)
January 1, 2022$(471,351)$ $(732,096)$6,015,163 
Net income 391,171  391,171 
Other comprehensive income (Note F)3,679   3,679 
Preferred stock dividends - $13.75 per share (Note E)
 (275) (275)
Common stock issued  11,730 6,405 
Common stock dividends - $0.935 per share (Note E)
 (390,896) (417,160)
Other, net
   (5,289)
March 31, 2022$(467,672)$ $(720,366)$5,993,694 
Net income 414,378  414,378 
Other comprehensive income (Note F)100,917   100,917 
Preferred stock dividends - $13.75 per share (Note E)
 (275) (275)
Common stock issued  6,544 13,583 
Common stock dividends - $0.935 per share (Note E)
 (414,103) (417,656)
Other, net
   9,988 
June 30, 2022$(366,755)$ $(713,822)$6,114,629 

(Unaudited)
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Treasury
Stock
Total
Equity
 
(Thousands of dollars)
January 1, 2021$(551,449)$ $(764,298)$6,042,398 
Net income 386,176  386,176 
Other comprehensive income85,853   85,853 
Preferred stock dividends - $13.75 per share
 (275) (275)
Common stock issued  16,836 6,677 
Common stock dividends - $0.935 per share
 (385,901) (416,135)
Other, net
   (7,729)
March 31, 2021$(465,596)$ $(747,462)$6,096,965 
Net income 342,139  342,139 
Other comprehensive loss(135,847)  (135,847)
Preferred stock dividends - $13.75 per share
 (275) (275)
Common stock issued  7,208 14,323 
Common stock dividends - $0.935 per share
 (341,864) (416,629)
Other, net
   9,710 
June 30, 2021$(601,443)$ $(740,254)$5,910,386 
See accompanying Notes to Consolidated Financial Statements.
13

ONEOK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

A.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our accompanying unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the SEC. These statements have been prepared in accordance with GAAP and reflect all adjustments that, in our opinion, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The 2021 year-end Consolidated Balance Sheet data was derived from our audited Consolidated 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.

Subsequent Event - On July 9, 2022, a fire occurred at our 210 MBbl/d Medford, Oklahoma, natural gas liquids fractionation facility. All personnel are safe and accounted for with evacuations of local residents taken as a precautionary measure. While the facility is not currently operational, we are using our integrated NGL pipeline system between the Mid-Continent and Gulf Coast, along with our fractionation and storage assets and fractionation and storage arrangements with industry peers, to provide midstream services. We are working to reduce future impacts to our suppliers and customers. We are cooperating with government agencies, as applicable, and we continue our efforts to determine the cause of the event and expect the Medford facility to remain out of service for an extended period. Subject to the terms and conditions of the policies and any applicable sub-limits, we have property damage and business interruption insurance coverage with a combined per occurrence limit of $2 billion and deductibles of $5 million per occurrence for property damage and a 45-day waiting period per occurrence for business interruption coverage.

We are in the early stages of determining the full extent of property damage and developing information to support a claim for property damage and business interruption losses. We expect our insurance coverage to mitigate our financial loss, which cannot be reasonably estimated at this time. As a result of our insurance coverage, we do not currently anticipate that the Medford incident will have a material effect on our financial condition, results of operations or cash flows. However, the timing of insurance proceeds may impact our results in a given quarter or year.

Recently Issued Accounting Standards Update - Changes to GAAP are established by the Financial Accounting Standards Board (FASB) in the form of ASUs to the FASB Accounting Standards Codification. We consider the applicability and impact of all ASUs. ASUs not discussed herein or in our Annual Report were assessed and determined to be either not applicable or clarifications of ASUs previously issued. There have been no new accounting pronouncements that have become effective or have been issued that are of significance or potential significance to us.

B.    FAIR VALUE MEASUREMENTS

Determining Fair Value - For our fair value measurements, we utilize market prices, third-party pricing services, present value methods and standard option valuation models to determine the price we would receive from the sale of an asset or the transfer of a liability in an orderly transaction at the measurement date. We measure the fair value of a group of financial assets and liabilities consistent with how a market participant would price the net risk exposure at the measurement date.

Many of the contracts in our derivative portfolio are executed in liquid markets where price transparency exists. Our financial commodity derivatives are generally settled through a NYMEX or ICE clearing broker account with daily margin requirements. We validate our valuation inputs with third-party information and settlement prices from other sources, where available.

We compute the fair value of our derivative portfolio by discounting the projected future cash flows from our derivative assets and liabilities to present value using interest-rate yields to calculate present-value discount factors derived from the implied forward SOFR, LIBOR or other yield curve, as appropriate. The fair value of our forward-starting interest-rate swaps is determined using financial models that incorporate the implied forward LIBOR yield curve for the same period as the future interest-rate swap settlements. We consider current market data in evaluating counterparties’, as well as our own, nonperformance risk, net of collateral, by using counterparty-specific bond yields. Although we use our best estimates to determine the fair value of the derivative contracts we have executed, the ultimate market prices realized could differ materially from our estimates.

14

Fair Value Hierarchy - At each balance sheet date, we utilize a fair value hierarchy to classify fair value amounts recognized or disclosed in our financial statements based on the observability of inputs used to estimate such fair value. The levels of the hierarchy are described below:
Level 1 - fair value measurements are based on unadjusted quoted prices for identical securities in active markets. These balances are composed predominantly of exchange-traded derivative contracts for natural gas and crude oil.
Level 2 - fair value measurements are based on significant observable pricing inputs, including quoted prices for similar assets and liabilities in active markets and inputs from third-party pricing services supported with corroborative evidence. These balances are composed of exchange-cleared derivatives to hedge natural gas basis and NGL price risk at certain market locations and over-the-counter interest-rate derivatives.
Level 3 - fair value measurements are based on inputs that may include one or more unobservable inputs, including internally developed commodity price curves that incorporate market data from broker quotes and third-party pricing services. These balances are composed predominantly of exchange-cleared and over-the-counter derivatives to hedge NGL price risk at certain market locations. These commodity derivatives are generally valued using forward quotes provided by third-party pricing services that are validated with other market data. We believe any measurement uncertainty at June 30, 2022, is immaterial as our Level 3 fair value measurements are based on unadjusted pricing information from broker quotes and third-party pricing services.

Determining the appropriate classification of our fair value measurements within the fair value hierarchy requires management’s judgment regarding the degree to which market data is observable or corroborated by observable market data. We categorize derivatives based on the lowest level input that is significant to the fair value measurement in its entirety.

Recurring Fair Value Measurements - The following tables set forth our recurring fair value measurements for the periods indicated:
 June 30, 2022
 Level 1Level 2Level 3Total - GrossNetting (a)