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Will ONEOK Partners Miss 3Q15 Consensus Revenue Estimates Again?

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ONEOK revenue estimates for 3Q15

The consensus revenue estimate for ONEOK Partners (OKS) for the third quarter of 2015 is $2.6 billion. OKS missed revenue estimates by 23% in the second quarter of 2015. Revenues for most energy MLPs, especially ones with greater exposure to commodity prices, have been hit by lower commodity prices since mid-2014.

Peers Enbridge Energy Partners (EEP) and Targa Resources (NGLS) missed 2Q15 consensus revenue estimates by 12.6% and 14.8%, respectively. Kinder Morgan (KMI) missed 3Q15 revenue estimates by 2%.

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Factors impacting ONEOK’s revenue estimates

As the above graph shows, ONEOK Partners’ consensus revenue estimate for 3Q15 is 24.5% higher than its adjusted revenues for 2Q15. But the estimate is 15.1% lower compared to its 3Q14 adjusted revenues. OKS forms ~4.5% of the Global X MLP ETF (MLPA). ONEOK Partners has missed revenue estimates in seven out of the last ten quarters.

The following factors contribute to the higher 3Q15 revenue estimates for ONEOK Partners compared to 2Q15 adjusted revenues:

  • The second quarter tends to be seasonally low for MLPs with operations in the natural gas segment. So adjusted revenues were relatively depressed in 2Q15.
  • The acquired West Texas LPG (liquid petroleum gas) pipeline system in the Permian Basin should continue to contribute to OKS’s NGL (natural gas liquid) transportation volumes in 3Q15.
  • Increased volumes from the natural gas processing plants in the Powder River Basin, the Williston Basin, and the mid-continent regions should contribute to OKS’s fee-based revenues from gathering, processing, fractionating, storing, and transporting NGLs.
  • OKS’s natural gas gathering and processing activities might continue to be impacted by low commodity prices in 3Q15, partially offsetting the above gains.

American Midstream Partners (AMID) and Boardwalk Pipeline Partners (BWP) are other MLPs involved in natural gas gathering and processing.

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