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Understanding ONEOK’s Natural Gas Liquids Segment’s Earnings Mix

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Apr. 25 2017, Updated 1:35 p.m. ET

Exchange services

ONEOK (OKE) expects to earn more than 80% of its Natural Gas Liquids segment’s 2017 estimated earnings from exchange services. These services include gathering, fractionating, and transporting raw NGLs (natural gas liquids) to storage and market hubs. The services are mainly fee-based.

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

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Transportation and storage services are expected to contribute the second-most to the segment’s earnings with a ~10% contribution in 2017 from fee-based activities. Marketing and optimization activities are differential-based and influenced by commodity prices. They’re collectively expected to contribute less than 10% to the segment’s 2017 estimated earnings.

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