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Comparing ONEOK and Targa Resources’ Earnings Growth

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Adjusted EBITDA growth

ONEOK (OKE) reported adjusted EBITDA growth of 30% YoY (year-over-year) in the second quarter. The company’s EBITDA growth in the last four quarters averaged 20%. Similarly, Targa Resources’ adjusted EBITDA grew 26% YoY in the second quarter. The company’s EBITDA growth averaged 15% in the last four quarters.

The above graph shows the adjusted EBITDA growth YoY for ONEOK and Targa Resources in the last four quarters.

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ONEOK’s earnings growth

The growth in ONEOK’s earnings in the first half of 2018 was driven by growth in natural gas and NGL (natural gas liquids) volumes in the STACK and SCOOP areas, the Williston Basin, and the Permian Basin. Higher NGL prices, wider location price differentials, and the sale of NGL inventory previously held also contributed to the earnings growth.

Targa Resources’ earnings growth

Targa Resources’ earnings growth in the first half of 2018 was driven by higher Permian, Central, and Badlands volumes and higher NGL and condensate prices. The higher fractionation margin, higher marketing gains, and higher throughput contributed to Targa Resources’ Logistics and Marketing segment’s earnings growth. Targa Resources forms ~1.0% of the iShares Global Infrastructure ETF (IGF).

Next, we’ll discuss what institutional investors did with their Targa Resources and ONEOK holdings in the second quarter.

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