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Will ONEOK’s 2Q16 Results Contribute to Its Outperformance?

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ONEOK’s year-to-date returns

ONEOK (OKE) has generated total returns of 86% so far in 2016. In comparison, Kinder Morgan (KMI), ONEOK Partners (OKS), and Williams Companies (WMB) have generated total returns of 35%, 40%, and -0.2%, respectively.

The Alerian MLP ETF (AMLP) has generated total returns of 10% year-to-date.

The above graph compares ONEOK’s year-to-date returns with KMI, OKS, WMB, and AMLP. ONEOK, which fell steeply in 2015, has recovered in 2016. This was most likely driven by a strong guidance for 2016 and the announcement of its completion of the first phase of the Roadrunner Gas Transmission pipeline project in March 2016. Its strong 1Q16 results further supported the stock’s performance.

OKS, however, underperformed OKE during this recovery. Read more about it at Why Is ONEOK Partners Underperforming ONEOK in 2016?

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Capital expenditure

OKE’s capital expenditure in 2Q16 was lower compared to the year-ago quarter. According to the company, the decline was “due to projects placed in service in 2015, proactive spending reductions to align with customer needs and lower well connect activities in the natural gas gathering and processing segment.”

Most midstream companies have reduced or delayed their capital expenditure plans in light of the challenging environment.

ONEOK Partners announced early expected completion of the second phase of the Roadrunner Gas Transmission pipeline project and the WesTex Transmission Pipeline expansion. These projects are expected to be completed in 4Q16. They were originally expected to be completed in 1Q17. Both projects are backed by long-term, firm fee-based contracts.

Next, we’ll take a look at Wall Street analysts’ price targets for ONEOK. We’ll also look at its future prospects.

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