ONEOK Partners L.P. (OKS) announced that it will make fresh investments in the range of $300 million to $355 million in the Bakken Shale of the Williston Basin. This new investment is aimed to enhance the partnership’s natural gas processing capacity and improve its infrastructure, needed to cope up with increased natural gas and natural gas liquids production in the Bakken Shale. The partnership will invest in phases and will complete the same by the end of 2012.
 
The partnership will invest between $180 million and $205 million for the construction of a natural gas processing facility and related natural gas liquids (NGL) infrastructure in Williams County, North Dakota. The new processing facility – the Stateline I plant – will have a processing capacity of 100 million cubic feet per day (MMcf/d) and is expected to be operational from the third quarter of 2012.
 
ONEOK Partners also decided to expand and upgrade its existing gathering and compression business by infusing new investments in the range of $70 million to $90 million. The partnership expects to outlay additional funds for new well connections adjacent to the Stateline I facility. This investment will be stretched out over 2011 and 2012 and range between $50 million and $60 million.   
 
During the course of 2010, the partnership made other investment in the Bakken Shale region. In July 2010, the partnership decided to deploy around $700 million in this area in various projects. In April 2010, the partnership invested more than $400 million for the construction of the Garden Creek Plant and related infrastructure. The Garden Creek Plant will have a processing capacity of 100 MMcf/d.
 
This is not the end of the story of the partnership’s investment in the oil and natural gas rich Bakken Shale. ONEOK Partners is exploring the possibility of the construction of a new gas processing facility – Stateline II – with a processing capacity of 100 MMcf/d.
 
The adjusted earnings of ONEOK Partners at the end of second-quarter 2010 were 75 cents per unit compared with 81 cents per unit in the year-ago comparable period. The Zacks Consensus Estimates for third quarter fiscal 2010, fiscal year 2010 and fiscal year 2011 are 96 cents per unit, $3.36 per unit and $3.94 per unit, respectively.
 
ONEOK Partners currently retains a Zacks #3 Rank (short-term Hold rating). The partnership’s competitive advantage over its peers comes from its broad array of services, supply diversity, excellent market connectivity and low operating costs. However, factors on the flip side, such as volatile credit markets, utility regulations and the partnership’s overt dependence on weather and unpredictable commodity prices restrain us to maintain a Neutral rating.
 
Based in Tulsa, Oklahoma ONEOK Partners is one of the largest publicly traded master limited partnerships and is a leader in the gathering, processing, storage and transportation of natural gas in the United States.
 
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