) has entered into a share buyback agreement worth $150 million
with Goldman, Sachs & Co., a unit of
The Goldman Sachs Group, Inc.
). Per the agreement, ONEOK has instantly purchased approximately
3.6 million shares from Goldman, Sachs & Co. at Monday's
closing stock price of $41.19 per share. Of the shares repurchased,
80% will be received immediately.
This is the company's second accelerated share repurchase based
on the company's previously announced three-year stock repurchase
program in which the company had received approval to buy back up
to $750 million of the company's issued and outstanding common
stock. However, the company was not allowed to make purchases of
more than $300 million in any one calendar year. This buyback
program will be over on the completion of the repurchase of $750
million of common stock or on December 31, 2013, whatever is
earlier. Under this program, the company had previously completed a
repurchase of $300 million of common stock in August 2011.
Both the share repurchases were financed by the company's cash
and short-term borrowings. At the end of March 31, 2012, cash and
cash equivalents were $781.2 million versus $66 million as of
December 31, 2011.
The company is continuously making efforts to increase
shareholder value and deliver attractive returns on their
investment. The company has only recently completed its two-for-one
stock split of the company's common stock. At its annual
shareholders' meeting, in May this year, the company announced that
it expects net income to increase by approximately 18% annually
between 2012 and 2014. It plans to increase its dividend by 40%
between 2012 and 2014. These increases will be driven by volume
growth of natural gas and natural gas liquids and not by higher
commodity prices or wider price differentials.
The stock split and a bullish projection for the next couple of
years offer investors a solid investment thesis. We believe that
the company remains focused on maximizing profit by leveraging and
enhancing existing assets. Also, its wide array of services, supply
diversity, excellent market connectivity and low operating costs
provide distinct competitive advantages.
However, the volatile credit markets, utility regulations,
dependence on weather and unpredictable commodity prices keep us on
the sidelines. The company presently retains a short-term Zacks #3
Rank (Hold) that corresponds with our long-term Neutral
recommendation on the stock.
ONEOK, Inc. is a diversified energy company. It is the
general partner and own 43.4% of
ONEOK Partners, L.P.
), one of the largest publicly traded master limited partnerships
and a leader in the gathering, processing, storage and
transportation of natural gas in the U.S. The partnership owns one
of the nation's premier natural gas liquids systems, connecting NGL
supply in the Mid-Continent and Rocky Mountain regions with key
GOLDMAN SACHS (GS): Free Stock Analysis Report
ONEOK INC (OKE): Free Stock Analysis Report
ONEOK PARTNERS (OKS): Free Stock Analysis
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