ONEOK Partners L.P. (OKS): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


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We have upgraded our recommendation on ONEOK Partners, L.P. to Neutral from Underperform, primarily on the back of the partnership's asset expansion through organic growth projects and strategic acquisitions. The partnership's systematic investments in growth projects and realization of positive synergies from past ventures continue to boost its results. Multiple ventures under the natural gas and natural gas liquids (NGL) segments will likely help to serve more customers and boost cash inflow. In addition, a wide array of project backlog will drive growth. However, volatility in natural gas prices and the possibility of lower natural gas and NGL consumption during this winter are concerning.


Tulsa, OK-based ONEOK Partners L.P., one of the largest publicly-traded master limited partnerships (MLPs), is a leader in the business of gathering, processing, storage and transportation of natural gas in the United States. In addition, the partnership operates major natural gas liquids (NGL) systems that connect NGL supplies in the Mid-Continent and Rocky Mountain regions with key market centers. The partnership also owns a 50% equity interest Overland Pass Pipeline, importing natural gas from Canada into the U.S.

ONEOK Partners' NGL system in the Mid-Continent and the Gulf Coast include fractionators and storage in Mont Belvieu, TX Bushton and Conway, KS and Medford, OK. The partnership also owns interstate NGL distribution pipelines between Conway and Mont Belvieu, and NGL and refined petroleum products distribution pipelines that connect its Mid-Continent NGL infrastructure to Midwest markets, including Tennessee and Chicago.

The partnership's businesses are primarily divided into three segments: Natural Gas Gathering and Processing segment, which gathers and processes natural gas Natural Gas Pipelines segment, which operates regulated interstate and intrastate natural gas transmission pipelines and natural gas storage facilities and Natural Gas Liquids segment, which gathers, treats, fractionates and transports NGL and stores, markets and distributes NGL products.

Through its wholly-owned subsidiary, ONEOK Partners GP, ONEOK Inc. (OKE) holds the entire 2% general partnership (GP) interest in ONEOK Partners L.P. In addition, ONEOK Inc. owns 43.3% of the overall partnership interest in ONEOK Partners L.P.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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