ONEOK Partners, L.P. (OKS) has unveiled its 2015 guidance for net income, operating income, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), and capital expenditure.
The partnership expects net income in the range of $1.12 billion to $1.28 billion in 2015, up from the 2014 guidance of $0.91 billion to $0.97 billion. Its operating income is projected to increase 11% to 25% to the range of $1.32 billion to $1.48 billion from 2014 estimates.
ONEOK Partners’ 2015 adjusted EBITDA is expected in the range of $1.77 billion to $1.99 billion versus the 2014 guidance of $1.55 billion to $1.61 billion. The partnership’s adjusted EBITDA will likely increase 20% per year between 2014 and 2017 compared with the 2014 projection.
ONEOK Partners also provided its 2015 distributable cash flow guidance in the range of $1.31 billion to $1.49 billion, up 18% from 2014 projection.
There are various catalysts, which led ONEOK Partners to increase its 2015 guidance. This includes higher-expected natural gas gathering and processing volumes and natural gas liquids volumes gathered and fractionated, and positive impacts from the numerous capital growth projects concluded in 2014 and 2015, and the recent acquisition of 80% interest in the West Texas LPG Pipeline Limited Partnership.
ONEOK Partners’ third-quarter 2014 results benefited primarily from several capital growth projects under the natural gas gathering and processing, and natural gas liquids segments. Going forward, the partnership’s strong project pipeline is expected to contribute to future growth.
ONEOK Partners expands its operations through systematic investments in organic projects and strategic acquisitions. Between 2010 and 2016, the partnership plans to invest $8.3 billion to $9.0 billion, including an unannounced project backlog of $4 billion to $5 billion. This constitutes of an expenditure of $2.6 billion to $3 billion in 2015 with around $2.6 billion allocated as growth capital.
ONEOK Partners intends to extend its presence in both the Permian and Williston basins. The partnership has several projects, worth around $3 billion, under construction. Upon completion, these projects will help the partnership to serve more upstream players and improve future cash inflow.
ONEOK Partners’ initiative to maximize unitholders’ value through payment of cash distribution at regular intervals is appreciable. The partnership expects to increase average annual distribution to the range of 6% to 8% annually between 2014 and 2017. The partnership also plans to increase cash distribution by 1.5 cent per unit per quarter, subject to the approval.
ONEOK Partners currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Atlas Pipeline Partners, L.P. (APL), Magellan Midstream Partners LP (MMP) and Regency Energy Partners LP (RGP), each carrying a Zacks Rank #2 (Buy).
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