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ONEOK Inc. (OKE) Focuses on the Partnership, Oil a Drag

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On Nov 23, 2015, we have issued an updated research report on ONEOK Inc.OKE . The company's increased ownership in ONEOK Partners OKS will result in higher annual distributions for the company. Soft commodity prices and asset integration risks are headwinds.

ONEOK recently reported third-quarter 2015 adjusted earnings of 41 cents per share, beating the Zacks Consensus Estimate of 39 cents by 5.1%. Total revenues of $1,899 million fell short of the Zacks Consensus Estimate of $2,460 million by 22.8% and also tumbled 39.1% year over year mainly due to a decline in commodity prices.

ONEOK Inc. is the sole general partner and owner of 41.2% of ONEOK Partners, which is the primary growth vehicle for the company given rising distribution from the partnership. ONEOK Inc. continues to develop new projects in mineral-rich areas through ONEOK Partners, thereby expanding opportunities to grow its long-term fee-based earnings.

ONEOK Partners' financial strength, diversified operations, excellent market connectivity and systematic investments in organic projects and strategic acquisitions provide ONEOK Inc. a distinct competitive advantage. Additionally, ONEOK Inc. aims to increase its earnings through asset optimization and expansion.

The ongoing softness in commodity prices has slowed down drilling plans of ONEOK's producer customers. As a result, demand for midstream services is not going to improve as much as expected. Also, if ONEOK Inc. is unable to successfully integrate the new assets it acquires with its existing operations, it may incur higher costs and lose on investments.

ONEOK Inc. faces intense competition from Atmos Energy Corporation ATO and Northwest Natural Gas Company NWN .

Zacks Rank

ONEOK Inc. carries a Zacks Rank #3 (Hold).

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ONEOK PARTNERS (OKS): Free Stock Analysis Report

ONEOK INC (OKE): Free Stock Analysis Report

ATMOS ENERGY CP (ATO): Free Stock Analysis Report

NORTHWEST NAT G (NWN): Free Stock Analysis Report

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Zacks Investment Research

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


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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