ONEOK Stock Doubled in 2016: Can Its Momentum Be Sustained?



OKE’s year-to-date rise

ONEOK (OKE) has risen 102% so far in 2016. In comparison, Kinder Morgan (KMI) has gained 43% and Williams Companies (WMB) has risen 17% year-to-date. The Alerian MLP ETF (AMLP) has gained nearly 2% during the same timeframe.

Higher gas gathering and processing volumes, backed by some recovery in natural gas prices, contributed to ONEOK’s rise during the year. The below graph shows OKE’s stock price in comparison with its 50-day and 200-day moving averages.

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Performance drivers

ONEOK, which fell steeply in 2015, has recovered in 2016. This recovery could have been driven by strong guidance for 2016 and strong quarterly results.

ONEOK stock was trading below its 50-day and 200-day moving average in the beginning of 2016. It gained momentum in February with a recovery in commodity prices. It crossed its 50-day average in February and its 200-day average in March 2016. The stock has mostly traded above the two averages since then.

OKE temporarily crossed below its 50-day moving average in October and again in November, but it has recovered since then.

Drivers in 2017

In the company’s 3Q16 earnings release, Terry K. Spencer, president and CEO of ONEOK, noted, “The partnership’s competitive asset position in active shale plays, such as the STACK and SCOOP plays in Oklahoma, is expected to help drive NGL and natural gas volume growth into 2017 as producer drilling increases in these plays through the remainder of 2016.”

He added, “Through October, we’ve seen the completion of large multi-well pads in the Mid-Continent, specifically in the STACK play, supporting our expectation for a year-end volume ramp up and setting the stage for additional volume growth in 2017. We also continue to expect a favorable impact from ethane recovery across our system as new petrochemical facilities come online during 2017.”

Next, let’s take a look at the company’s operations and key assets.


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