ONEOK Partners, L.P. (OKS) announced third-quarter 2014 adjusted earnings of 63 cents per unit, surpassing the Zacks Consensus Estimate of 62 cents by 1.6%. However, on a year-over-year basis, the bottom line decreased 1.6% primarily due to an increase in total operating expenses and the unit count, and lower total revenues.
Including a non-cash impairment charge of 31 cents per unit that resulted from ONEOK Partners’ equity investment in the Bighorn gas gathering system in Wyoming, the partnership reported earnings of 32 cents per unit versus 64 cents per unit a year ago.
Total Revenue
In the third quarter, ONEOK Partners’ total revenues were $3.12 billion, missing the Zacks Consensus Estimate by 15.9%. Reported revenues decreased 0.5% year over year primarily due to lower commodity sales.
Operational Results
In the quarter under review, ONEOK Partners’ cost of sales and fuel was $2,583.2 million, down 4.7% from $2,711.2 million a year ago.
Total operating expenses increased 33.3% year over year to $244.7 million due to higher operations, maintenance and depreciation expenses, and general taxes.
The partnership reported operating income of $293 million, up 22.1% year over year.
ONEOK Partners’ adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the third quarter surged 17.1% year over year to $388.6 million.
In the reported quarter, the partnership’s interest expense was $70.1 million compared with $57.7 million a year ago.
Segment Results
In the reported quarter, operating income at ONEOK Partners’ natural gas liquids and natural gas pipelines segments increased 18.9% and 2.8% year over year, respectively. This was partially offset by lower contribution from the natural gas gathering and processing segment (down 41.7% year over year).
Business Update
ONEOK Partners issued around 1.4 million common units during the third quarter, through the at-the-market equity program.
Financial Condition
As of Sep 30, 2014, ONEOK Partners had cash and cash equivalents of $54 million versus $134.5 million as of Dec 31, 2013.
Long-term debt (excluding current maturities) as of Sep 30, 2014 was $6,040 million versus $6,044.9 million as of Dec 31, 2013.
In the first nine months of 2014, the partnership’s cash flow from operating activities was $887.1 million, higher than $654.1 million in the year-ago period.
ONEOK Partners’ capital expenditure in the first nine months of 2014 was $1,173 million, including $380.5 million in the third quarter.
In the quarter, the partnership’s distributable cash flow (DCF) was $293.3 million versus $259.1 million a year ago.
Guidance
ONEOK Partners decreased its guidance for 2014 net income to the range of $910–$970 million from previous projection in the band of $975–$1,075 million.
For 2014, the partnership updated its DCF to the range of $1,155–$1,215 million from the earlier estimate in the band of $1,150–$1,250 million and adjusted the EBITDA guidance to the range of $1,550–$1,610 million from the previous guidance in the band of $1,565–$1,665 million.
The partnership decreased its guidance for 2014 capital expenditures to around $1.7 billion from previous projection of roughly $2.1 billion.
ONEOK Partners increased its unannounced project backlog in the range of $4–$5 billion from its previous projection in the band of $3–$4 billion, considering announcement of around $2.5 billion in capital investments in 2014.
At the Peers
Access Midstream Partners, L.P. (ACMP) reported third-quarter 2014 earnings of 36 cents per unit, beating the Zacks Consensus Estimate of 31 cents by 16.1%.
Enterprise Products Partners L.P. (EPD) posted third-quarter 2014 earnings of 37 cents per unit, in line with the Zacks Consensus Estimate.
Magellan Midstream Partners LP (MMP) announced third-quarter 2014 earnings of 71 cents per unit, surpassing the Zacks Consensus Estimate of 66 cents by 7.6%.
Zacks Rank
ONEOK Partners currently holds a Zacks Rank #5 (Strong Sell).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment