ONEOK (OKE) To Gain From Assets In Prolific Oil & Gas Regions

ONEOK Inc. (NYSE:OKE) has gained 4.2% in the last year as against the industry’s decline of 0.6%. ONEOK stands to benefit from higher fee-based earnings and midstream assets located in higher productive regions.

ONEOK has a network of nearly 38,000 miles of natural gas liquids and pipelines that are strategically located in highly productive regions, thanks to $9 billion of its completed growth projects between 2006 and 2016. Another $3.6-billion new natural gas liquids growth project was announced in June 2017. All these projects are expected to come online by the first half of 2020 and further boost revenues of the company.

In 2017, ONEOK’s consolidated earnings were 90% fee based. In 2018, the company expects the same to be on par with the prior year. The company anticipates to benefit from increase in natural gas and natural gas liquids (NGL) production volume in the STACK and SCOOP areas, and Williston and Permian basins, and increased ethane recovery in the Mid-Continent, throughout 2018.

ONEOK is poised to benefit from the Sterling III Pipeline expansion, West Texas LPG Pipeline expansion and Canadian Valley natural gas processing facility expansion announced in June 2017. These projects are fully subscribed under long-term fee-based commitments.

However, ONEOK does not own all the land on which its pipelines are situated. The company runs the risks of cost increase and has the right to maintain the land as necessary. If the company fails to renew existing land rights and add new rights to lay down pipelines, it will impact operation and profitability of the company.

ONEOK has a Zacks Rank #3 (Hold). A few better-ranked stocks in the Zacks Utility Gas Distribution industry are Just Energy Group (TO:JE) , National Fuel Gas Company (NYSE:NFG) and NewJersey Resources Corporation ( (NYSE:NJR) . NewJersey Resources sports a Zacks Rank #1 (Strong Buy) and the other two stocks carry a Zacks Rank #2 (Buy), each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Just Energy Group reported an average positive earnings surprise of 173.1% in the last four quarters. Its 2018 earnings estimates moved up 205.4% to $1.13 per share in the last 60 days.

National Fuel Gas reported an average positive earnings surprise of 6.34% in the trailing four quarters. Its 2018 earnings estimates moved up 14.9% to $3.32 per share over the last 60 days

NewJersey Resources reported an average positive earnings surprise of 516.94% in the last four quarters. Its 2018 earnings estimates moved up 42.1% to $2.60 per share in the last 60 days.

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