) announced that it has completed repurchase of its shares worth
$150 million from Goldman, Sachs & Co., a unit of
The Goldman Sachs Group, Inc.
). The company has repurchased 3.4 million shares from Goldman,
Sachs & Co. at an average price of $44.11 per share.
In October 2010, the board of directors of ONEOK authorized a
3-year stock repurchase program, worth $750 million, subject to the
limitation that share repurchases will not exceed $300 million in
any calendar year. This buyback program will either end on
December, 31, 2013 or when shares worth $750 million will be
repurchased, whichever is earlier. Under this program, the company
completed repurchase of $300 million of common stock in August
The repurchase of shares worth $150 million fulfills the quota
allotted in a calendar year. In June, 2012, ONEOK repurchased 3.6
million shares for $150 million from Goldman, Sachs & Co.
In both 2011 and 2012 stock repurchase transactions, ONEOK has
utilized its available cash and short-term borrowings. We know that
the company ended the second quarter of 2012 with cash balance of
In addition, the company also plans to strengthen its liquidity
portfolio by increasing its credit facility level to $1.7 billion
from $1.2 billion. Strong liquidity position enables ONEOK to
follow continuous stock repurchase strategy.
GOLDMAN SACHS (GS): Free Stock Analysis Report
ONEOK INC (OKE): Free Stock Analysis Report
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We also know that ONEOK continues to create shareholder value
through share repurchase and payment of dividends to its
shareholders. The company plans to raise its dividend by 40%
between 2012 and 2014. On July 25, 2012, the company increased its
quarterly dividend to 33 cents per share from 30.5 cents per share.
Apart from stock repurchase and dividend hike, we believe ONEOK's
future financial results will be boosted from steady progress at
its growth projects and deployment of $1 billion in additional
projects. In addition, the company will be able to make
acquisitions that complement and strengthen its existing
businesses, given its strong balance sheet and liquidity position.
During second-quarter 2012 earnings call, ONEOK 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. As per the
Zacks Consensus Estimate, ONEOK's third-quarter and full-year 2012
earnings are expected to be 32 cents and $1.69, respectively.
However, we are skeptical about volatile credit markets, strict
utility regulations, dependence on weather patterns and
unpredictable commodity prices.
Tulsa, Oklahoma-based ONEOK Inc. is a diversified energy company,
operating as a natural gas distributor, primarily in the U.S. ONEOK
Inc. currently retains a Zacks #3 Rank (short-term Hold