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ONEOK Partners: Overview of a Natural Gas Player

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Business operations

ONEOK Partners (OKS) is an energy MLP that gathers, processes, and transports natural gas and NGLs (natural gas liquids). It also stores and distributes NGLs. The company’s GP (general partner) is a subsidiary of ONEOK Inc. (OKE). OKE was founded in 1906 and owns 37.6% of OKS.

The above graph shows the geographical spread of the company’s assets in natural gas gathering and processing, NGLs, and natural gas pipelines.

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Competitors

The company competes with big oil companies, gathering and processing companies, and pipeline companies for natural gas supplies. These companies include Enbridge (ENB), Kinder Morgan (KMI), and Targa Resources Partners (NGLS), among others. It also competes with NGL fractionators, pipelines, and storage companies.

OKS forms ~4.5% of the Alerian MLP ETF (AMLP).

Three segments

ONEOK Partners has three segments:

  • Natural Gas Gathering and Processing
  • Natural Gas Liquids
  • Natural Gas Pipelines

The Natural Gas Liquids segment is the biggest, contributing ~76% of the company’s revenues and 60% of its operating income. The Natural Gas Gathering and Processing segment contributes ~21% of the revenues and 24% of the company’s operating income. The Natural Gas Pipelines segment contributes 3% of the revenues. It contributes 16% of the company’s total operating income. The above graph shows the contribution of each segment to the company’s operating income over the last five years.

In this series, we’ll take an in-depth look at the company’s three operating segments and their activities. We’ll also consider factors that affect the company’s performance, how the company’s yields compare to those of its peers, and other factors that will help you make informed decisions about your investments in the company.

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