ONEOK Partners, L.P.
) reported its third-quarter 2012 earnings of 78 cents per unit,
surpassing the Zacks Consensus Estimate of 71 cents. However,
quarterly earnings per unit missed the year-ago figure of 84
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Despite marginal rise in total third-quarter 2012 net income to
$172.5 million from $172.0 million in the year-ago quarter, ONEOK
Partners' year-over-year earnings per unit decreased due to an
increase in the number of units to 219.8 million from 203.8
million in the prior-year quarter.
Net revenues during the quarter decreased to $2,547.5 million
from $2,903.6 million in the year-ago quarter. However, the top
line surpassed the Zacks Consensus Estimate of $2,482.0 million.
Total operating expenses, in the third quarter of 2012, increased
to $170.9 million from $151.5 million in the comparable
prior-year period. The rise was mainly due to an increase in
operating and maintenance expenses, higher depreciation and
amortization charges and growth in general taxes.
Operating income in the quarter was $248.4 million versus $242.4
million in the year-ago period.
In the quarter under review, equity earnings from investments
decreased to $28.6 million from $32.0 million in third-quarter
Natural Gas Gathering and Processing:
In third-quarter 2012, this segment reported operating income of
$57.0 million compared with $51.8 million in the year-ago
quarter. The year-over-year improvement was driven by an increase
in volume from the Williston Basin; partially offset by lower
natural gas volumes gathered in the Powder River Basin and lower
realized prices for natural gas and natural gas liquids ("NGL")
Natural Gas Pipelines:
This segment reported operating income of $33.5 million in the
reported quarter compared with $34.0 million in the prior-year
quarter. The year-over-year decline in operating income was due
to higher employee costs and outside services costs related to
maintenance projects; partially offset by higher contracted
capacity with natural gas producers on ONEOK Partners' intrastate
pipelines to transport higher volume natural gas supply to the
Natural Gas Liquids:
This segment reported operating income of $158.8 million in the
quarter under review compared with $157.1 million a year ago. The
year-over-year improvement was driven by an increase in fees from
contract renegotiations for ONEOK Partners' NGL exchange-services
activities, higher NGL volumes gathered and fractionated, and
higher isomerization margins; partially offset by a decline in
optimization and marketing margins, and negative impact of
operational measurement losses.
As of September 30, 2012, ONEOK Partners had $963.6 million of
cash and cash equivalents versus $35.1 million as of December 31,
2011. Significant rise in cash balance was due to the issuance of
In the first nine months of 2012, the partnership's cash flow
from operations was $620.5 million compared with $655.3 million
in the prior-year comparable period.
Capital expenditure during the reported quarter was $375.3
million versus $252.2 million in the year-ago period.
Year-over-year rise was due to investments in several growth
projects in natural gas gathering and processing as well as
natural gas liquids segments.
ONEOK Partners affirmed its full-year 2012 net income guidance in
the range of $860.0 million - $910.0 million.
In addition, the partnership increased its full-year 2013 net
income guidance by 10% compared with its present full-year 2012
Apart from announcing full-year 2013 net income guidance, ONEOK
Partners also provided its full-year 2013 operating income,
earnings before interest, taxes, depreciation and amortization
("EBITDA"), and cash distribution guidance in its September 24,
2012 press release.
ONEOK Partners expects its midpoint of full-year 2013 operating
income to increase to $1.027 billion from $0.948 billion as per
The partnership's full-year 2013 EBITDA is expected to be in the
range of $1.36 billion - $1.48 billion.
ONEOK Partners announced that it will increase its annual
distribution to 10% - 15% between 2012 and 2015. In 2013, the
partnership's cash distribution is expected to increase by
The partnership competes with
Plains All American Pipeline, L.P.
), which is expected to report its third-quarter 2012 earnings
results on November 5, 2012. The Zacks Consensus Estimate for the
third quarter of 2012 is 47 cents per unit.
ONEOK Partners beat our third-quarter 2012 earnings and revenue
projections primarily owing to higher NGL volumes gathered and
fractionated, better performance from the Williston Basin, and
increase in contracted capacity with natural gas producers on the
partnership's intrastate pipelines to transport higher volume
ONEOK Partners strongly follows internal growth strategy. As per
its full-year 2013 capital investment guidance, the partnership
plans to invest $5.7 - $6.6 billion primarily in several internal
growth projects. ONEOK Partners expects its future growth to
primarily come from the Bakken Shale and the Mid-Continent
region. The partnership expects these facilities to provide a
reliable and cost-effective means of transportation compared to
other alternatives, which subsequently reduce ONEOK Partners'
future cost of operations.
However, we are cautious about uncertain weather condition,
chances of volatile equity and credit markets and unpredictable
commodity prices, which may significantly impact ONEOK Partners'
forthcoming financial results.
ONEOK Partners, L.P. currently has short-term Zacks #3 Rank (Hold
Tulsa, Oklahoma-based ONEOK Partners, L.P. is one of the largest
publicly traded master limited partnerships and a leader in
gathering, processing, storage and transportation of natural gas
in the U.S. Currently, the partnership has a market
capitalization of $13.28 billion.