Increased contribution from fee-based contracts
ONEOK (OKE) had been making focused efforts to increase its fee-based earnings through contract restructuring in its natural gas gathering and processing segment. It expects more than 75% of the segment’s 2017 estimated earnings to be fee-based.
As the graph above shows, the contribution of fee-based earnings to ONEOK’s natural gas gathering and processing segment’s earnings has risen significantly over the years. At the same time, the average fee rate rose more than 50% in 4Q16 compared to 4Q15. OKE expects the average fee rate in 2017 to be approximately 80 cents.
Contract restructuring efforts have positively impacted OKE’s natural gas gathering and processing segment’s earnings over the last couple of quarters.