ONEOK Partners, L.P.
) issued $1.3 billion senior notes in two tranches. One series
consists of 5-year senior notes worth $400 million with coupon rate
of 2% and the other comprises 10-year senior notes worth $900
million with coupon rate of 3.375%. The net proceeds of the total
offering will be $1.29 billion. The notes offering will close on
September 13, 2012.
ONEOK intends to utilize the net proceeds of the issue to repay
$1.2 billion due under its commercial paper program and use the
rest for general partnership purposes.
ONEOK issues senior notes and units from time to time to
accumulate funds for repaying its existing debts and for its
expansion projects. On January 21, 2011, the partnership issued a
total of $1.3 billion of senior notes in two tranches. ONEOK
utilized the net proceeds of the issue to repay the debts under its
commercial paper program, redeem few senior notes and use the rest
for general corporate purposes.
As of June 30, 2012, ONEOK's long-term debts were $3,512
million, down from $3,515.6 million as of December 31, 2011. In
February 2012, ONEOK completed a public offering of 8.0 million
common units at $59.27 per unit. The partnership used the net
proceeds to repay a part of its outstanding debts under $1.2
billion commercial paper program and $350 million 5.9% senior
notes, and the rest was utilized for general partnership
In the forthcoming quarter, we believe the partnership's
interest expenses may increase from $47.1 million reported at the
end of second-quarter 2012 resulting from this new senior notes
We view ONEOK as an organization with geographically diversified
gas assets in five different basins. We believe this diversity
enables the partnership to mitigate a decline in natural gas
production in some of its operating basins and to serve a large
number of customers.
In addition, the partnership continues to invest significant
amounts in several projects under its organic growth program, which
we believe will help it to cater the growing demand from natural
gas. We also expect ONEOK's forthcoming 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
However, we are skeptical about uncertain weather condition,
volatile credit markets and unpredictable commodity prices. These
factors may significantly impact the partnership's financial
results in the future.
ONEOK Partners, L.P. currently retains a Zacks #3 Rank, which
translates into a short-term Hold rating.
ONEOK PARTNERS (OKS): Free Stock Analysis
PLAINS ALL AMER (PAA): Free Stock Analysis
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Tulsa, Oklahoma-based ONEOK Partners, L.P. is one of the largest
publicly traded master limited partnerships and a leader in
gathering, processing, storing and transporting of natural gas in
the U.S. The partnership competes with
Plains All American Pipeline, L.P.