) reported fourth-quarter 2012 earnings per share of 53 cents,
beating the Zacks Consensus Estimate by 8 cents. However,
quarterly earnings were 3.6% lower than the prior-year results of
55 cents (on a split-adjusted basis) primarily due to the weak
performance of the Energy Services segment.
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The company's earnings of $1.71 per share in 2012 surpassed the
Zacks Consensus Estimate by 5%. Full-year earnings per share were
1.8% higher than the prior-year results, mainly due to the
increase in natural gas and natural gas liquids (NGL) volumes,
improved rates in natural gas distribution segment, and lower
ONEOK's quarterly revenue of $3.66 billion was 13.7% above the
Zacks Consensus Estimate. However, quarterly revenue decreased
10.1% from $4.07 billion in the year-ago quarter.
Full-year 2012 revenue was $12.6 billion, $0.35 billion above the
Zacks Consensus Estimate. However, revenue was 14.7% lower than
the prior-year results.
Cost of sales and fuel in the quarter decreased 9.4% year over
year to $3.06 billion.
Quarterly total operating expenses was $310.9 million, down 6.88%
year over year due to lower operations and maintenance costs.
ONEOK Partners' fourth-quarter operating income was $230.5
million, down 27.4% year over year due to the decrease in the
natural gas liquids business, unfavorable NGL price differentials
and lower isomerization margins, and the decrease in the natural
gas liquids business related to operational measurement losses
and lower realized natural gas and NGL prices.
Natural Gas Distribution:
Segmental operating income improved 46% year over year to $79.5
million due to higher rates in Oklahoma, Kansas and Texas;
partially offset by lower transportation margins in Kansas.
In the quarter under review, the segment reported an operating
loss of $10.3 million compared with a loss of $5.5 million in the
prior-year quarter. The lackluster performance was due to a
decline in premium-services margins along with lower storage and
ONEOK, on a stand-alone basis, ended fourth quarter with $817.2
million of commercial paper outstanding, $1.9 million in letters
of credit and $380.9 million available under the $1.2 billion
Cash and cash equivalents as of Dec 31, 2012 were $583.6 million
compared with $65.9 million as of Dec 31, 2011.
As of Dec 31, 2012, long-term debt was $6.5 billion versus $4.5
billion as of Dec 31, 2011.
Cash provided by operating activities for the twelve months ended
Dec 31, 2012 was $1 billion, lower than $1.4 billion in the
year-ago comparable period.
Capital expenditure for year increased to $1.9 billion from $1.3
billion in 2011 due to the rise in expenditures at the company's
subsidiary ONEOK Partners.
ONEOK Inc. trimmed its net income and operating income guidance
for full year 2013, primarily due to weak performance from ONEOK
Partners segment, lower anticipated volumes and prices of NGL,
and a decline in the NGL location price differentials.
ONEOK's full-year 2013 net income guidance will be in the range
of $350 million to $400 million, down from prior estimate of
Midpoint of ONEOK's full-year 2013 operating income guidance
decreased to $1.14 billion from previous guidance of $1.2
Capital expenditures for 2013 are expected to be approximately $3
billion, with roughly $2.64 billion to be spent at ONEOK Partners
for new growth projects and $0.31 billion on a stand-alone basis.
The company also guides that subject to its board's approval it
will increase the quarterly dividend rate by 2 cents for Jul
2013. Initially, the company expected to raise the dividend rate
by 3 cents.
ONEOK also modified its anticipation to increase dividends by
roughly 55%-65% within 2012 to 2015, subject to the board's
approval, compared with its earlier guidance of 65% to 70%. The
company affirmed its long-term dividend payout target of 60% to
70% of recurring earnings.
Other Energy Company Releases
The Laclede Group, Inc.
) reported fourth-quarter 2012 earnings per share of $1.25, 16
cents above the Zacks Consensus Estimate.
) fourth-quarter 2012 earnings of 52 cents were 23.8% higher than
the Zacks Consensus Estimate.
Atmos Energy Corporation
) posted fourth-quarter 2012 earnings per share of 74 cents,
missing the Zacks Consensus Estimate by 4 cents.
Despite a favorable performance in the fourth quarter of 2012, we
are skeptical about weak NGL pricing, stringent utility
regulations and volatile commodity prices. We believe these
negatives may to some extent challenge the company's future
ONEOK Inc. currently has a Zacks Rank #4 (Sell).
Tulsa, Oklahoma-based ONEOK Inc. is a diversified energy company,
operating as a natural gas distributor primarily in the United