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ONEOK’s 1Q18 Earnings Rose 24% Due to Higher Volumes

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Nov. 20 2020, Updated 12:49 p.m. ET

ONEOK’s EBITDA rose 24%

ONEOK (OKE) reported its 1Q18 results on May 1. The company’s adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew 24% YoY (year-over-year) in 1Q18. ONEOK’s 1Q18 EBITDA exceeded analysts’ expectations for the quarter. The growth was driven by higher volumes in the STACK and SCOOP plays and the Williston and Permian basins. Optimization and marketing activities in ONEOK’s Natural Gas Liquids segment also contributed to the earnings growth.

ONEOK’s distributable cash flow for the quarter grew 33% compared to 1Q17. ONEOK generated $116 million of excess distributable cash flow for the quarter compared to what it paid in dividends.

ONEOK announced a dividend per share of $0.80 for 1Q18—3.2% higher than the previous quarter. ONEOK had a strong coverage ratio of 1.37x in 1Q18.

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Segmental performance

All three of ONEOK’s business segments reported strong earnings growth YoY. The Natural Gas Liquids segment’s earnings rose 23% in 1Q18 compared to 1Q17. The earnings were driven by increased volumes in the STACK and SCOOP plays and the Williston and Permian basins and higher optimization and marketing earnings.

Higher volumes resulting from increased drilling activity and improved efficiencies drove ONEOK’s Natural Gas Gathering and Processing segment’s 26% EBITDA growth.

The Natural Gas Pipelines segment’s earnings rose 13% due to increased transportation and storage services.

2018 outlook

ONEOK reaffirmed its outlook for 2018 in its 1Q18 earnings release. The company plans to spend ~$2.0 billion–$2.3 billion on capital projects in 2018. ONEOK expects its EBITDA for fiscal 2018 to rise ~17% compared to 2017.

ONEOK expects to pay $3.25–$3.31 per share in dividends in 2018. The mid-point of ONEOK’s expected 2018 dividend range implies 21% growth in the dividends compared to 2017. The positive outlook should be reflected in ONEOK’s stock price in the future.

Enterprise Products Partners (EPD) and MPLX (MPLX) reported strong 1Q18 results on April 30. To learn more, read Enterprise Products’ Distributable Cash Flow Rose 23% in 1Q18 and Dropdown Assets Drive MPLX’s 1Q18 Earnings Growth.

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