The general partner of ONEOK Partners L.P. (OKS), yesterday, announced a two-for-one split of the partnership's common units and Class B units. As part of the spilt, the partnership will distribute one unit for each outstanding unit held by unitholders of record as on June 30, 2011. The partnership expects to complete the split by July 12, 2011.
We note that this is the first split ever announced for ONEOK Partner’s units. Management expects this split to provide greater liquidity to the unitholders and make ONEOK Partners' units more accessible to a broader base of potential investors.
On completion of the unit split, the partnership will have 130,827,354 common units and 72,988,252 Class B units outstanding. ONEOK Partners’ units outstanding at the end of first quarter 2011 were 101.9 million compared with 99.7 million in the year-ago period.
The partnership also said minimum quarterly distribution and target distribution levels will be adjusted in proportion to the split. For instance, had the unit split been completed prior to the partnership's quarterly cash distribution of $1.15 per unit on May 13, 2011, the amount of that distribution would have come to $0.575 per unit.
Additionally, ONEOK Partners has a solid balance sheet, with plenty of liquidity and investment-grade credit ratings. The partnership continues to strengthen its already solid distribution growth profile adopting its strategy to grow distribution by a cent every quarter. The partnership targets to improve its distribution growth rate by 5%–10% annually in 2012 and 2013.
Based in Tulsa, Oklahoma, ONEOK Partners is one of the largest publicly traded master limited partnership and is a leader in gathering, processing, storage and transportation of natural gas in the United States.
ONEOK Partners’ general partner is a wholly owned subsidiary of ONEOK Inc. (OKE), a diversified energy company, which owns 42.8% of the overall partnership interest. ONEOK is one of the largest natural gas distributors in the United States, and its energy services operation focuses primarily on marketing natural gas and related services throughout the U.S.
ONEOK Partners currently retains a Zacks #3 Rank (short-term Hold rating)). We maintain our long-term Neutral rating on the stock. The major peers of the partnership are El Paso Corp. (EP) and Kinder Morgan Energy Partners L.P. (KMP).
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