ONEOK Beats, Reaffirms Guidance – Analyst Blog

ONEOK Inc. (OKE) reported second-quarter profit of 39 cents per share, in line with the results of the year-ago quarter and above the Zacks Consensus Estimate of 33 cents. The better-than-expected results are attributed to strong performance across all segments, barring Energy Services.

 

 

Net revenues in the quarter rose 26% to $2.8 billion, falling behind the Zacks Consensus Estimate of $3.9 billion. Operating income increased 15.4% to $178.7 million compared with $154.8 million in the year-ago quarter. The upside came from higher natural gas liquids (NGL) output, new NGL supply connections, higher net margin in the distribution segment due primarily to new rates in Oklahoma and higher contracted natural gas transportation capacity.

 

The above positives were partially offset by lower NGL optimization margins due to increasing NGL volumes from customers under fee-based contracts, lower transportation margins, lower realized seasonal storage differentials and lower marketing margins in the energy services segment.

 

In the reported quarter, operating costs were $203.6 million, compared with $210.1 million in the year-ago quarter. The decrease was due primarily to the timing of certain accruals for employee-related costs, offset partially by the recognition of previously deferred costs in the distribution segment.

 

Net income was $41.7 million in the second quarter of 2010, unchanged from the year-ago quarter.

 

 

ONEOK Partners: ONEOK Partners’ operating income was $146 million compared with $124.8 million in the year-ago quarter. Operating costs were $97.9 million, compared with $100.5 million in the second quarter of 2009. The decrease was due primarily to the timing of certain accruals for employee-related costs, offset partially by the operations of the capital projects completed last year.

 

Distribution: The Distribution segment reported operating income of $32.3 million compared with $15 million in the second quarter of 2009. Operating costs were $98.3 million, compared with $101.1 million in the year-ago quarter. This decrease was due primarily to lower employee-related costs.

 

Energy Services: The Energy Services segment reported operating income of $0.9 million, compared with $14.3 million in the year-ago period. In the reported quarter, operating costs were $6.5 million, compared with $8.9 million in the year-ago period, due to lower employee-related costs.

 

 

ONEOK reported cash and cash equivalents of approximately $103.3 million at the end of the period compared with $29.4 million at the end of fiscal 2009. The company reported $591.1 million in cash from operating activities at the end of the reported period, compared with approximately $1.1 billion at the end of the year-ago period. At the end of the first half of 2010, total debt stood at $3.7 billion compared with $4.3 billion at fiscal-end 2009.

 

 

ONEOK reaffirmed its earnings guidance range of $300 million – $335 million for fiscal 2010.