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We have maintained our Neutral recommendation on ONEOK Partners LP (OKS - Analyst Report). The partnership currently has a Zacks Rank #3 (Hold).

Why the Reiteration?

ONEOK Partners has a collection of geographically-diversified assets and its gathering and processing businesses operate in five different basins. The partnership’s future organic growth is expected to come from the Williston Basin, Cana-Woodford Shale, Woodford Shale, Granite Wash areas where it owns and operates the vast majority of its gathering assets. In addition, ONEOK Partners continues to focus on adding new supplies, which will subsequently enable it to serve a large customer base.

In Apr 2013, ONEOK Partners completed three of its important projects - Bakken natural gas liquids (NGL) pipeline, Stateline II plant and an ethane header pipeline. To reap benefits of the vast resources of the Bakken Shale, the operators are making strategic investments in the infrastructure projects to cater to the rising demand from natural gas operators. We believe that continuous investment in the Bakken Shale and its adjacent locations will play a crucial role in meeting the ever increasing demand for fossil fuel. Additionally, these initiatives will likely improve ONEOK Partners’ forthcoming performance.

On the flip side, ONEOK Partners earns a significant part of its revenues as payment for gathering and processing, and transportation and storage services. A decline in commodity prices, particularly natural gas, crude oil and NGL, may result in lesser payments for these services, thus significantly impacting its cash flow.

Other Stocks to Consider

The other stocks in the industry that are presently performing well include Delek Logistics Partners LP (DKL - Snapshot Report) and Summit Midstream Partners, LP (SMLP - Snapshot Report) with a Zacks Rank #1 (Strong Buy), and Enbridge Energy Management LLC (EEQ - Snapshot Report) with a Zacks Rank #2 (Buy).

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