) reported earnings of $1.08 per share in the fourth quarter of
2011, up from 77 cents per share in the year-ago quarter. The
quarterly results surpassed the Zacks Consensus Estimate by 2
The year-over-year growth was propelled by a solid performance
segment. The segment benefited from strong natural gas liquids
("NGL") price differentials and higher volumes of natural gas
liquids and natural gas.
Fiscal 2011 operating earnings of the company were $3.34 per
share versus $3.09 per share in the previous year. The results
surpassed the Zacks Consensus Estimate by 2 cents.
Net revenues in the quarter shot up 24.1% to $4.07 billion from
$3.28 billion reported in the year-ago quarter, but lagged the
Zacks Consensus Estimate of $5.32 billion.
Fiscal net revenue was $14.80 billion versus $12.68 billion
reported in the previous year. The top line failed to meet the
Zacks Consensus Estimate of $15.73 billion.
Cost of sales and fuel in the quarter and the fiscal year
increased a respective 23.2% and 17.0% year over year.
Total operating expenses in the quarter and the fiscal year
increased 10.1% and 7.2%, respectively, year over year. The
increase in expenses was mainly due to higher operation and
The growth in revenue in the quarter and in the fiscal year was
able to offset the rise in costs. Accordingly, operating income
grew 50.7% and 22.9% in the quarter and the fiscal year,
ONEOK Partners' fourth quarter operating income was $317.5 million
compared with $159.7 million in the year-ago quarter. For the
fiscal year operating income was $939.5 million versus $586.3
million in 2010.
The upside was primarily attributable to favorable NGL price
differentials and increased NGL fractionation and transportation
capacity available for optimization activities and higher marketing
Operating costs during the quarter and fiscal year increased due
to higher labor and employee-related costs associated with
incentive and benefit plans.
The Distribution segment reported operating income of $54.5 million
in the fourth quarter compared with $62.0 million a year ago.
Fiscal 2011 operating income of $197.6 million was lower than
$225.1 million reported in 2010.
The Energy Services segment reported an operating loss of $5.5
million versus an operating income of $19.8 million in the
prior-year period. Fiscal 2011 operating income of $23.8 million
was way short of $225.1 million reported in 2010.
The lackluster performance in both the quarter and the fiscal
year was owing to a decline in natural gas transportation margins
along with lower storage and marketing margins.
ONEOK, on a stand-alone basis, ended the year with $842.0
million of commercial paper outstanding, $2.0 million in letters of
credit and $347.7 million of natural gas in storage.
As of December 31, 2011, the company had $65.9 million of cash
and cash equivalents versus $30.34 million as of December 31,
Cash flow from operation during the fiscal year was $1.36
billion versus $0.83 billion reported in the previous year.
Long-term debt as of December 31, 2011, was $4.53 billion,
higher than $3.68 billion as of December 31, 2010.
ONEOK Inc. increased its net income expectation for 2012 to a
range of $360 million to $410 million from the earlier band of $355
million to $400 million, expecting higher earnings at the
segment, marginally offset by lower earnings expected from the
Capital expenditures for 2012 are expected to be approximately
$2.3 billion, with approximately $2.0 billion to be spent at ONEOK
Partners and $302 million at ONEOK on a stand-alone basis.
The company also guides that subject to its board's approval it
will increase the quarterly dividend rate by 5 cents from July
2012. Initially, the company expected to raise the dividend rate by
4 cents semiannually.
OGE Energy Corporation
), which competes with ONEOK Inc., reported pro forma earnings of
37 cents per share, a couple of cents ahead of the Zacks Consensus
In fiscal year 2011, the company reported pro forma earnings of
$3.45 per share compared with $3.10 in fiscal 2010.
The company surpassed our earnings estimates on the strength of
its natural gas liquids business. We expect this business to
continue to do well in 2012 and aid the company in achieving its
Based in Tulsa, Oklahoma, ONEOK Inc. is a diversified energy
company, operating as a natural gas distributor primarily in the
United States. The company presently retains a Zacks #3 Rank, which
translates into a short-term Hold rating.
OGE ENERGY CORP (
): Free Stock Analysis Report
ONEOK INC (
): Free Stock Analysis Report
To read this article on Zacks.com click here.