ONEOK Partners Looks Undervalued, But There Are Reasons Why
Stephen Simpson, CFA • 10 Comments
Stephen Simpson, CFA • 10 Comments
ONEOK Partners: Pronounce It 'One Oak' Or 'Oh-Knee-Oak', It's Still A BUY
Michael Fitzsimmons • 22 Comments
Michael Fitzsimmons • 22 Comments
Oneok Partners Still Looking At Significant Growth Opportunities
Stephen Simpson, CFA
Stephen Simpson, CFA
Mon, May 9, 2:58 PM
- ONEOK (OKE -1.5%) is lower but by less than many of its peers after Barclays upgrades shares to Overweight from Equal Weight with a $49 price target, raised from $27, at Barclays, which says it has a line of sight into the company's growth because of its valuable asset footprint.
- The company has said it has $200M of extra earnings potential from reduced ethane rejection on its natural gas liquids segment that it can generate with minimal capital spending.
- The firm sees opportunity for OKE in the form of higher realizations for the ethane in the Mid-Continent where contracts are still primarily POP, volume growth in the Mid-Continent that will kick up due to rising prices for natural gas and natural gas liquids, the potential to raise bundled rates as capacity on the system gets tight, and the ability for low-cost expansions.
- Also: OKS -2.1%.
- Now read ONEOK Partners upgraded at Credit Suisse
Thu, Mar. 17, 3:27 PM
- Credit Suisse analyst John Edwards issues a dozen downgrades - and one upgrade - among MLPs following the group's recent rally, believing the severity of the oil downturn has called into question the entire MLP model.
- "The prolonged downturn has challenged the robustness assumption on account of counterparty risks and contract renegotiation risks," Edwards writes.
- Downgraded to Underperform from Neutral: Columbia Pipeline (CPGX +2.4%), Magellan Midstream Partners (MMP -0.6%), ONEOK Partners (OKS +0.8%).
- Downgraded to Neutral from Outperform: Antero Midstream Partners (AM +0.8%), Enterprise Products Partners (EPD +2.7%), Enbridge Energy Partners (EEP +3.8%), EnLink Midstream Partners (ENLC +1.7%), Kinder Morgan (KMI +0.3%), Spectra Energy LP (SEP -0.1%), VTTI Energy Partners (VTTI +1.9%), Western Gas Equity Partners (WGP -0.1%), Western Gas Partners (WES +5%).
- Upgraded to Outperform from Neutral: Enable Midstream Partners (ENBL +14.6%).
Mon, Feb. 8, 3:22 PM
- MLP sentiment is deteriorating, driven most recently by the unexpected and unexplained departure of Energy Transfer Equity's (ETE -39.1%) CFO, and the situation will remain bearish for the group until crude oil and high yield bottom, says Baird analyst Ethan Bellamy.
- In addition to ETE and Energy Transfer Partners (ETP -22.3%), Baird downgrades EnLink Midstream (ENLC -21.9%), ONEOK Partners (OKS -6%), Plains All American (PAA -11%) and Plains GP Holdings (PAGP -14%) to Underperform, and cuts Antero Midstream (AM +1.3%), ONEOK (OKE -9.4%) and Tallgrass Energy GP (TEGP -13.1%) to Neutral from Outperform.
- ETFs: AMLP, AMJ, KYN, MLPL, YMLP, TYG, SRV, KYE, CEM, MLPI, NML, FEN, NTG, MLPA, KMF, EMLP, FMO, FEI, JMF, MLPN, SRF, CBA, MLPG, MLPX, GMZ, EMO, MLPS, MLPY, TTP, CTR, AMZA, GER, ZMLP, CEN, YMLI, AMU, MLPJ, SMM, MIE, DSE, FPL, ENFR, ATMP, JMLP, MLPC, MLPW
Mon, Jan. 25, 12:21 PM
- ONEOK Partners (OKS -0.9%) is downgraded to Neutral from Outperform with a $25 price target, cut from $40, at Baird; the firm also lower its price target on ONEOK Inc. (OKE -3.3%) to $28 after incorporating a lower commodity outlook and the reduced 2016 capex budget announced last month.
- Baird says OKS should benefit from fundamental tailwinds such as increased flared gas capture in 2016, but the firm models conservatively given the ugly tape; with the still-deteriorating oilfield outlook, the firm sees units as efficiently priced but maintains a preference for OKE.
Mon, Jan. 11, 11:27 AM
- ONEOK (OKE -1.5%) is lower despite receiving an upgrade to Buy from Hold with a $27 price target at Argus, which says the company is benefiting from positive volume and contract trends.
- Argus says it had been concerned about debt levels and capital spending at ONEOK Partners (OKS -2%), which accounts for 100% of OKE's cash flow, but management allayed some of its concerns about potentially dilutive equity issuance at OKS after announcing that new stock would not be issued until late 2017.
- OKE also has been restructuring its contracts from percent of proceeds to fee-based, which makes it less sensitive to fluctuating volumes and energy prices -an advantage in an already volatile 2016.
Mon, Jan. 4, 3:48 PM
- Enterprise Products Partners (EPD +3%) maintains strong early gains after announcing that it raised its quarterly distribution by 1.3% while planning to recommend a 5.2% increase for FY 2016's annual distribution.
- EPD also said affiliates of Enterprise Products Company and its general partner plan to purchase $200M in EPD common units during Q1 through the partnership's distribution reinvestment plan and/or at-the-market equity issuance program.
- The news is providing support across the MLP sector, which is in the green in an otherwise dismal showing for stocks; the ALPS Alerian MLP ETF (AMLP +0.6%) - which includes EPD, Magellan Midstream (MMP +1.3%), Energy Transfer Partners (ETP +3.7%), Plains All American (PAA +4.9%), Williams Partners (WPZ +2.4%), Buckeye Partners (BPL -0.5%), ONEOK Partners (OKS +0.3%), Enbridge Energy Partners (EEP +3.4%), Sunoco Logistics (SXL +0.6%) and Targa Resources Partners (NGLS -3%) - edges higher for its best level since late November.
Dec. 31, 2015, 9:57 AM
- A week after Oppenheimer upgraded ONEOK (OKS +1.6%, OKE +1.2%) in response to its 2016 outlook (included plans to maintain ONEOK's current distribution), Credit Suisse's John Edwards has upgraded to Outperform, while hiking his targets for OKS and OKE by $4 apiece, to $38 and $40.
- Edwards has upped his 2016 estimates by 2% - he now respectively expects 2016 EBITDA and discounted cash flow of $1.81B and $1.34B. "We have revised estimates on the NatGas G&P segment higher offset by a lowered NGL segment ... We assume margins for fractionation to run ~$0.05/gal blended and about $0.055/gal blended for transportation. For 2016, OKS said it expects 800-870Mbbl/d of gathering volumes and 540-590MBbl/d of fractionation volumes,"
- He's also now assigning the natural gas firm a lower discount rate to reflect the G&P contract restructuring, lower sensitivity to commodity prices, and zero equity needs until mid-2017. "With these changes our valuation for OKS/OKE moves up by $4 each."
- ONEOK is up moderately in spite of a 0.6% S&P drop. It joined many other energy names in selling off on Monday and Wednesday.
Dec. 30, 2015, 12:46 PM
- Hit hard two days ago as oil fell below $37/barrel, oil/gas industry names are seeing more pain today after the EIA reported U.S. crude inventories rose by 2.6M barrels last week - expectations were for a decline. The report comes shortly after the API estimated U.S. crude inventories rose by 2.9M barrels during the most recent weekly period.
- After rising yesterday, WTI crude is down 3.1% to $36.71/barrel. Brent crude is down 2.9% to $36.69/barrel. Nymex natural gas is down 7.3% to $2.20/MMBtu.
- The biggest decliners include Chesapeake Energy (CHK -4.1%), Petrobras (PBR -4.1%), Linn Energy (LINE -7.5%), Gulfport Energy (GPOR -5.2%), SeaDrill (SDRL -5.5%), MV Oil Trust (MVO -4.5%), EV Energy Partners (EVEP -6.7%), and Southwestern Energy (SWN -5.7%).
- Other notable decliners include Hercules Offshore (HERO -5.2%), Marathon Oil (MRO -4%), Devon Energy (DVN -4.4%), Encana (ECA -4.1%), Range Resources (RRC -4.7%), Sandridge Mississippian Trust (SDR -4%), Newfield Exploration (NFX -3.8%), BP Prudhoe Bay Royalty Trust (BPT -3.1%), Enerplus (ERF -3.9%), and ONEOK Partners (OKS -2.5%).
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG, DRIP, GUSH
Dec. 23, 2015, 12:27 PM
- ONEOK (OKE +6.6%) is upgraded to Outperform from Perform with a $27 price target at Oppenheimer, which says management impressed investors with its solid 2016 outlook expecting growth in EBITDA and distributable cash flow despite the weak energy environment.
- Oppenheimer believes OKE’s distribution appears sustainable in 2016, citing distribution coverage of more than 1x and a manageable Q4 2016 debt/EBITDA ratio of 4.2x.
- The firm says it now prefers OKE to ONEOK Partners (OKS +3.9%) despite both being rated Outperform, and notes that OKE's current yield is now in parity with OKS, a discrepancy that is not likely to persist.
Dec. 22, 2015, 1:30 PM
- Energy sector MLPs are rallying, likely reacting to positive guidance given yesterday by Oneok (OKE +6.2%; OKS +9.7%).
- Baird analysts say ONEOK’s “robust” guidance slightly exceeded their expectations for “healthy coverage” on next year's payouts.
- Tudor Pickering says ONEOK's dividend outlook may have positive implications for Enable Midstream Partners (ENBL +26.6%), as investors have been skeptical that the MLP will be able to hold its distribution in 2016.
- Meanwhile, Morgan Stanley says it is still too early to buy the MLPs amid concerns about bankruptcies coming in the energy sector, noting that many yield-seeking investors are very overweight the group, which could mean substantial selling may await.
- So far today: KMI +2.9%, EPD +2.3%, WMB +2.8%, ETP +7.7%, ETE +4.4%, MMP +2.5%, SEP +1.1%, PAA +5.8%.
- ETFs: AMLP, AMJ, KYN, MLPL, YMLP, TYG, SRV, KYE, CEM, MLPI, NML, FEN, NTG, MLPA, KMF, EMLP, FMO, MLPN, SRF, FEI, JMF, CBA, MLPG, MLPX, GMZ, EMO, MLPS, MLPY, TTP, CTR, YMLI, AMU, CEN, ZMLP, GER, AMZA, SMM, MIE, DSE, ENFR, FPL, ATMP, JMLP, MLPC, MLPW, IMLP
Dec. 21, 2015, 8:55 AM
- ONEOK (OKE, OKS) +2.2% premarket after saying it expects to sustain its current distribution and achieve distribution coverage of 1x or better in 2016, and remains committed to maintaining its investment-grade credit ratings.
- OKE also says it does not expect to access public equity markets in 2016 and well into 2017.
- OKE foresees $675M in cash available for dividends at 1.3x coverage ratio, as well as FY 2016 adjusted EBITDA of $$1.88Bn, distributable cash flow of $1.39B, growth capex of $460M, and maintenance capex of $140M.
- "Our commodity price outlook remains cautious for 2016. However, we expect the partnership's 2016 earnings to increase compared with 2015 guidance, primarily from volume and fee-based margin increases, resulting in increased distributable cash flow," OKE says.
Dec. 9, 2015, 2:39 PM
- Janney analyst Nathan Judge says distribution cuts are not likely for most MLPs, but names Plains All American Pipeline (PAA +8.3%), Azure Midstream Partners (AZUR -0.3%), JP Energy Partners (JPEP +2.1%) and ONEOK Partners (OKS +5.2%) as MLPs with "high leverage and poor coverage" that could follow Kinder Morgan's footsteps.
- The analyst also includes Vanguard Natural Resources (VNR -3.6%), a different case, saying that "while its current coverage and debt position is better than Kinder Morgan’s, the partnership potentially faces much lower EBITDA and cash flow in 2017 as hedges roll off."
- Judge emphasizes that he is not actually predicting cuts, only naming companies that might be in the same sort of circumstances as KMI, as most of the midstream/downstream space is "seeing continued strong performance from assets and are able to comfortably cover distribution and likely grow them."
Sep. 14, 2015, 2:56 PM
- ONEOK (OKE -2.2%) is initiated with a Neutral rating at Credit Suisse, but 24/7's Jon Ogg thinks the call seems almost like a Buy rating in that the $41 price target implies a nearly 20% upside from today's price, plus a ~7% dividend yield.
- The firm says OKE's prospects are improving sequentially, with a modest but improving distribution coverage ratio, and contract renegotiations could provide an added boost by year-end; another positive is a $4B-$5B capex backlog, on top of the $3B-$4B in execution.
- OKE is the pure-play general partner of ONEOK Partners (OKS -2.1%), which Credit Suisse rates at Outperform with a $40 price target.
Aug. 12, 2015, 5:59 PM
- ONEOK Partners (NYSE:OKS) agrees to sell ~21.5M common units representing limited partner interests at a price of $30.17/unit in a private placement to parent company ONEOK (NYSE:OKE).
- OKS also will sell ~3.3M common units at the same price to funds managed by Kayne Anderson.
- To pay for its purchase, OKE plans to sell $500M of senior notes.
- OKS -3.1%, OKE -1.9% AH.
Aug. 10, 2015, 12:59 PM
- ONEOK Partners (OKS +1.9%) is upgraded to Outperform from Neutral with a $48 price target, raised from $45, at Credit Suisse, which believes that the worst is over for the company.
- OKS' Q2 EBITDA of $387M and distributed cash flow of $277M came in higher than estimates, and raised EBITDA and DCF estimates for 2015 by a respective 3% to $1.6B and by 4% to $1,15B; Credit Suisse expects coverage to stabilize at ~1.05x for the remainder of the year and distribution growth to resume in Q2 2016.
- The firm also upgrades Magellan Midstream Partners (MMP +6.7%)to Outperform from Neutral, with an $89 price target after MMP raised its 2015 distributable cash flow guidance by $10M to $880M and reiterated its distribution growth of 15% in 2015 and at least 10% in 2016.
Jun. 22, 2015, 3:30 PM
- Williams Cos. (WMB +23.8%) must either show its ability to stand on its own merit or accept a better takeout offer, analysts say after the company rejected a $48B buyout bid from Energy Transfer Equity (ETE -3.8%).
- Analysts suggest that given the limited number of potential buyers, ETE stands a good chance of eventual success, perhaps after raising its offer; Raymond James analyst Darren Horowitz, for one, expects a higher offer to come in, since pipelines remain a coveted, high-value infrastructure that is attractive to own even though oil and gas prices have plunged.
- Jefferies' Christopher Sighinolfi says disclosing the bid was a "defensive move" by WMB, and says he is waiting to learn of WMB's timetable for completing its strategic review.
- Argus says WMB management has demonstrated its ability to create shareholder value through both acquisitions and divestitures; the firm believes that the rejection of ETE's all-stock offer is prudent, and that ETE will need to raise its offer if it wishes to pursue the deal (Briefing.com).
- While WMB surges, Williams Partners (WPZ -6.9%) is sharply lower, since ETE's offer was contingent on the termination of WMB's pending absorption of WPZ.
- Analysts say other companies that run big pipelines may be merger candidates, including Oneok (OKE, OKS) and regional specialists such as Targa Resources (TRGP, NGLS).
ONEOK Partners LP is engaged in gathering, processing, storage and transportation of natural gas in the U.S. and owns the natural gas liquids systems, connecting natural gas liquids supply in the Mid-Continent and Rocky Mountain regions with key market centers. It operate through three segments:... More
Sector: Basic Materials
Industry: Oil & Gas Pipelines
Country: United States
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