) reported second-quarter profit of 29 cents per share, ahead of 25
cents per share in the year-ago quarter. The quarterly results
lagged the Zacks Consensus Estimate of 34 cents per share.
The year-over-year growth was attributable to higher margins at
, which stemmed from better natural gas gathering and processing
and natural gas liquids business.
Net revenues in the quarter dropped 26.6% to $2.53 billion from
$3.45 billion reported in the year-ago quarter. The top line also
missed the Zacks Consensus Estimate of $3.47 billion.
In the second quarter 2012, cost of sales and fuel was down
32.3% year over year. As a result, gross income rose 5.8% to $548.9
million in the reported quarter from the year-ago level of $518.9
Total operating expenses increased 4.5% year over year, mainly
due to higher operations and maintenance expenses of the
Operating income increased 8.3% to $234.1 million from $216.2
million in the year-ago quarter.
nterest expenses decreased 5.2% to $71.5 million from $75.5 million
in the year-ago period.
ONEOK Partners' operating income was $228.1 million compared with
$202.0 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 $21.7 million
in the second quarter compared with $20.2 million in the year-ago
quarter. The higher rates and surcharge recoveries in Texas and
Kansas benefited results.
The Energy Services segment reported an operating loss of $15.1
million, versus a loss of $5.8 million in the prior-year period.
The wider loss in the reported quarter stemmed from an $8.7
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.
Cash and cash equivalents as of June 30, 2012, were $114.9
million versus $66 million as of December 31, 2011.
Cash flow from operation during the quarter was $652.6 million
versus $875.6 million reported in the year-ago quarter. Capital
expenditure during the quarter was $780.7 million versus $523.8
million in the year-ago quarter.
Long-term debt of the company as of June 30, 2012 was $5.22
billion, higher than $4.53 billion as of December 31, 2011.
Post second quarter earnings results, ONEOK Inc. lowered its net
income guidance for 2012 to a range of $345 million to $375 million
from the prior range of $360 million to $410 million. The company
cut its full year expectation assuming low earnings from its Energy
Services and Natural Gas Distribution segments offset marginally by
higher expected earnings from ONEOK Partners.
ONEOK's capital expenditure for 2012 is expected to be $2.3
billion, comprised of approximately $2.0 billion for ONEOK Partners
and $304 million on a stand-alone basis.
OGE Energy Corp.
), which competes with ONEOK Inc. will announce its second quarter
earnings results on August 2, 2012. The Zacks Consensus
Estimates for the second quarter and full year 2012 are 90 cents
and $3.53 per share, respectively.
ONEOK's performance during the quarter was lower than our
projection. 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
prices and natural gas liquids prices.
A warmer-than-normal winter in its service territories in the
first half of 2012 also impacted the performance of the company. As
temperatures climb this summer, we will eagerly wait to see whether
the company can make up lost ground in the second half of the year,
even though the revised guidance suggests otherwise.
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
OGE ENERGY CORP (OGE): Free Stock Analysis
ONEOK INC (OKE): Free Stock Analysis Report
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