Diversified energy company ONEOK Inc. (OKE) announced that it has entered into a new credit facility with a bank syndicate group replacing the existing credit facility.
The new five-year senior unsecured revolving credit facility of $1.2 billion will be supported by a consortium of 18 banks. The existing $1.2 billion credit facility of the company will expire on June 2011 and the new facility replacing it will be valid till April 2016.
The new credit agreement has an option which will allow ONEOK to increase the facility by another $500 million if required and also has an alternative for a $100 million sublimit for the issuance of standby letters of credit.
ONEOK intends to use this new credit facility to support its commercial paper program, meet its working capital requirements and for other general corporate purposes.
The credit facility of ONEOK, now in force, was formed with a syndicate of 15 banks. The five-year credit agreement was initially for $1.0 billion and was later increased to $1.2 billion by exercising the accordion feature in the credit agreement.
ONEOK’s 2010 earnings per share of $3.10 exceeded the Zacks Consensus Estimate. The company projects an earnings growth of 8%–10% over the period 2011 through 2013.
The Zacks Consensus Estimates for first-quarter 2011, fiscal year 2011 and fiscal year 2012 are, respectively, $1.28 per share, $3.24 per share and $3.55 per share.
ONEOK Inc. currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-term neutral rating on the stock given the volatile credit markets, utility regulations, dependence on weather and unpredictable commodity prices. The company competes with OGE Energy Corp. (OGE).
Tulsa, Oklahoma-based ONEOK Inc. is engaged in all aspects of the natural gas business. The company owns a 42.8% aggregate equity interest in ONEOK Partners (OKS). The company is one of the largest natural gas distributors in the U.S., serving more than 2 million customers in Oklahoma, Kansas and Texas.
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