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ONEOK's 2018 Guidance Reflects Gains From Well Placed Assets

ONEOK, Inc.OKE announced financial and volume guidance for 2018. The company expects full-year 2018 net income to be in the range of $955-$1,155million. It anticipates adjusted EBITDA $2,215-$2,415 million, an increase of 20% from the previous guidance of 2017. Further, it anticipates capital-growth expenditures to be in the range of $1,270 million-$1,530 million and maintenance capital expenditures in the range of $140-$180 million.

ONEOK reiterated the average annual dividend growth in the range of 9-11% through 2021. Distributable cash flow is anticipated in the range of $1,615 -$1,815 million. ONEOK successfully issued $1.6 billion of total equity in 2017 and early 2018 used for paying off liabilities and to fund capital-growth expenses. Notably, it does not expect to issue additional equity in 2018 and into 2019.

The company anticipates volume growth to be driven by expected increase in natural gas and natural gas liquids (NGL) volume in the STACK and SCOOP areas, and Williston and Permian basins, and increased ethane recovery in the Mid-Continent, throughout 2018.

Further, the Implementation of Tax Cuts and Jobs Act will lower the tax burden of the company going forward.

Segmental Financial Guidance

Segment wise, the company expects full-year 2018 adjusted EBITDA in the natural gas liquids segment to be in the range of $1.30-$1.43 billion, an increase of 15% compared with 2017 guidance.

The natural gas gathering and processing segment expects full-year 2018 adjusted EBITDA between $575 million and $625 million, an improvement of 25% compared with 2017 guidance.

The natural gas pipelines segment expects full-year 2018 adjusted EBITDA of $335-$355 million

Segmental Volumes Growth

In the natural gas liquids segment gathered volumes of natural gas liquids are expected to average 850,000-1 million barrels per day (bpd) and fractionated are projected to average 650,000-725,000 bpd in 2018. The segment expects to connect six to nine third-party natural gas processing plants online in 2018.

The natural gas gathering and processing segment expects natural gas processed level to range in between 1,750 million cubic feet per day (MMcf/d) and 1,900 MMcf/d, and natural gas gathered is expected to range in between 1,840 MMcf/d and 2,050 MMcf/d in 2018, both representing increase of 20% compared with 2017 guidance.

In the natural gas pipelines segment, the Transmission Pipeline expansion out of the STACK play in Oklahoma is expected to complete in second-quarter 2018.

Price Movement

In the last six months, shares of ONEOK have gained 12.2%, outperforming the industry 's loss of 1.8%.

Zacks Rank & Key Picks

ONEOK currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the sector include Algonquin Power & Utilities Corp. AQN , Telecom Italia S.P.A. TI and CenterPoint Energy, Inc. CNP , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Algonquin Power delivered an average surprise of 33.17% in the trailing four quarters. Its 2018 earnings growth estimates are pegged at 6.79% year over year.

Telecom Italia delivered an average surprise of 8.16% in the trailing four quarters. Its 2018 earnings growth estimates are pegged at 10.95% year over year.

CenterPoint Energy delivered positive average earnings surprise of 6.42% in the last four quarters. Its 2018 earnings growth estimates are pegged at 9.16% year over year.

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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.


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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