) reported third-quarter profit of 31 cents per share, ahead of
28 cents in the year-ago quarter. The quarterly results nominally
lagged the Zacks Consensus Estimate of 32 cents per share.
The year-over-year growth was attributable to higher margins
at ONEOK Partners, which stemmed from better natural gas
gathering and processing and natural gas liquids business.
Besides, the timely completion of growth projects also
contributed to the upside.
Net revenues in the quarter dropped 14.2% to $3.03 billion
from $3.53 billion reported in the year-ago quarter. The top line
also missed the Zacks Consensus Estimate of $3.24 billion.
In the third quarter 2012, cost of sales and fuel was down
17.4% year over year. As a result, gross income rose 4.0% to
$553.9 million in the reported quarter from the year-ago level of
Total operating expenses increased 9.7% year over year, mainly
due to higher operations and maintenance expenses.
Operating income decreased 2.6% to $242.9 million from $249.3
million in the year-ago quarter.
Interest expenses decreased 3.4% to $71.3 million from $73.8
million in the year-ago period.
: ONEOK Partners' operating income was $248.4 million compared
with $242.4 million in the year-ago quarter. Strength at natural
gas gathering and processing and the natural gas liquids business
boosted the results of the segment.
Natural Gas Distribution
: The Distribution segment reported operating income of $15.7
million in the third quarter compared with $19.8 million in the
year-ago quarter. The year-over-year decline was primarily due to
higher share-based compensation costs offset partially by higher
: The Energy Services segment reported an operating loss of $21.8
million versus a loss of $12.7 million in the prior-year
period. The wider loss in the reported quarter stemmed from
a $9.8 million decline in transportation margins due to lower
hedge settlements in 2012 and a $2.1 million dip in
premium-services margins due to lower demand fees.
The company strengthened its financial position in the first
nine months of 2012. Cash and cash equivalents as of September
30, 2012, were $978.8 million versus $66 million as of December
Cash flow from operation during the first nine months of 2012
was $762.9 million versus $1,029.7 million reported in the
year-ago quarter. Capital expenditure during the quarter was
$1,238.9 million versus $862.3 million in the year-ago
Long-term debt of the company as of September 30, 2012 was
$6.52 billion, higher than $4.53 billion as of December 31,
ONEOK Inc. reaffirmed its 2012 net income guidance in a range
of $345 million to $375 million.
OGE Energy Corp.
), which competes with ONEOK Inc., will announce its third
quarter earnings results on November 7, 2012. The Zacks
Consensus Estimates for the third quarter and full year 2012 are
$1.83 and $3.55 per share, respectively.
ONEOK's string of lackluster results continued into the third
quarter. Despite gathering and processing higher volumes of
natural gas than the prior-year comparable period, the shortfall
was primarily due to the continuous decline in realized natural
gas and natural gas liquids prices.
We maintain our long-term Neutral recommendation on ONEOK
shares, supported by the company's short-term Zacks #3 Rank
Based in Tulsa, Oklahoma, ONEOK Inc. is a diversified energy
company, operating as a natural gas distributor primarily in the
United States. With a market capitalization of $9.67 billion, the
company has 4,795 full time employees.
OGE ENERGY CORP (OGE): Free Stock Analysis
ONEOK INC (OKE): Free Stock Analysis Report
To read this article on Zacks.com click here.