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Analyzing ONEOK’s Natural Gas Liquids Segment’s Earnings

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Nov. 21 2016, Updated 10:04 a.m. ET

Exchange services

ONEOK (OKE) expects nearly 78% of its Natural Gas Liquids segment’s 2016 earnings to come from exchange services. These services include gathering, fractionating, and transporting raw NGLs (natural gas liquids) to storage and market hubs. The services are primarily fee-based.

ONEOK is focused on increasing fee-based exchange services earnings. The above chart shows the growth in the contribution of exchange services earnings to the segment’s total earnings.

Transportation and storage services make the second-highest contribution to the Natural Gas Liquids segment’s earnings. These are also fee-based activities.

Marketing and optimization activities are differential-based and are influenced by commodity prices. These collectively contribute nearly 10% to the segment’s earnings.

Next, let’s analyze ONEOK’s total earnings composition.

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