ONEOK Partners, L.P.
) a publicly traded master limited partnership ("MLP"), is
scheduled to report its second quarter 2012 financial results after
the market closes on July 31, 2012.
ONEOK PARTNERS (OKS): Free Stock Analysis
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First Quarter Recap
ONEOK's first quarter 2012 earnings came in at 91 cents per unit
compared with prior-year earnings of 58 cents per unit. The
year-over-year growth was driven by positive natural gas liquids
("NGL") price differentials and higher NGL volumes gathered and
fractionated. Quarterly earnings were higher than the Zacks
Consensus Estimate of 79 cents per unit.
Net revenue during the quarter increased 3.8% to $2.59 billion from
$2.50 billion reported in the year-ago quarter. However, the top
line fell short of the Zacks Consensus Estimate of $3.06 billion.
Guidance for 2012
ONEOK reaffirmed its 2012 net income guidance in the range of $810
million - $870 million. The partnership's distributable cash flow
("DCF") is expected to be in a band of $925 million - $985 million.
The partnership plans to deploy $4.7 billion - $5.6 billion in
growth projects during the 2011 to 2015 timeframe. The investment
will be used to build new pipelines and natural gas processing
facilities and further develop its existing bases in its service
The Zacks Consensus Estimate for the second quarter 2012 is 70
cents per unit, higher than 67 cents recorded in the prior-year
quarter. Currently, the Zacks Consensus Estimate for earnings
ranges between 60 cents and 77 cents a unit.
For full year 2012, the Zacks Consensus Estimate stands at $2.91
per unit, lower than its full year 2011 earnings of $3.35 per unit.
The current Zacks Consensus Estimate for full year earnings ranges
between $2.72 and $3.25 per unit.
Estimate Revisions Trend
We have observed a few estimate revisions at this point. Of the 11
estimates, none of the estimates for the second quarter were
revised upward while 8 moved in the opposite direction in the last
30 days. In the last 7 days, none of the estimates moved upward
whereas one moved in the opposite direction.
For full year 2012, out of the 13 estimates, 2 were revised upward
while 8 were lowered in the last 30 days. In the last 7 days, there
were no estimate revisions.
The Zacks Consensus Estimate for the upcoming quarter inched down
by 3 cents over the last 30 days. The last 7 days saw no revision
to the estimates.
For full year 2012, the Zacks Consensus Estimate decreased by 9
cents over the last 30 days. In the last 7 days, the Zacks
Consensus Estimates for full year 2012 remained unchanged.
Some of the analysts believe that the continuous decline in natural
gas prices and the slow pace of economic recovery may mar the
financial performance of the partnership in the second quarter and
full year 2012.
With respect to earnings surprises, ONEOK Partners L.P. has topped
the Zacks Consensus Estimate in the last four quarters in the range
of 15.2% to 31.3%. The average surprise over the last four quarters
remained a positive 24.4%.
We view ONEOK as an organization with geographically diversified
gas assets in five distinctly different basins. This diversity
enables the partnership to offset a decline in natural gas
production in some of its operating basins and to serve a large
number of customers. In addition, ONEOK strongly believes in
organic growth. We expect the partnership's organic growth to
primarily come from the Bakken Shale and Three Forks in the
Mid-Continent region, where it owns and operates a vast majority of
its gathering assets.
On the flip side, ONEOK's performance depends on natural gas, crude
oil and NGL price fluctuations. The partnership generates a major
part of its revenues from the payment of gathering, processing,
transportation and storage services and from the sale of purified
NGL products. Downward movement of commodity prices may result in
lesser payments for ONEOK's products and services. This will
significantly impact the partnership's financial results in the
Currently, we are maintaining a long-term 'Neutral' recommendation
on ONEOK Partners L.P. The partnership retains a Zacks #3 Rank,
which translates into a short-term Hold rating.
Tulsa, Oklahoma-based ONEOK Partners L.P. is one of the largest
publicly traded MLPs and a leader in the business of gathering,
processing, storage and transportation of natural gas in the U.S.
In addition, the partnership operates major NGL systems that
connect NGL supplies in the Mid-Continent and Rocky Mountain
regions with key market centers. The partnership competes with
Plains All American Pipeline, L.P.