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We reiterated our Neutral recommendation on ONEOK Partners, L.P. (OKS - Analyst Report) primarily due to fluctuating commodity prices, volatile equity and credit markets, stringent regulations, and unpredictable weather condition. We believe these negatives may impact the partnership’s forthcoming financial performance.   

In the third quarter of 2012, ONEOK’s earnings per unit and revenue surpassed the Zacks Consensus Estimates. This was mainly driven by rise in natural gas liquids (“NGL”) volumes gathered and fractionated, and strong performance from natural gas gathering and processing segments; partially offset by narrower NGL price differentials.

ONEOK earns a significant portion of its revenues from the payment of fees related to gathering, processing, transportation and storage of natural gas and NGL, and the sale of NGL products. A decline in prices of these commodities may result in lesser payments for the partnership’s products and services, which will, in turn, negatively impact its future cash flow.

We know that ONEOK strongly pursues internal growth strategy and plans to invest $5.7 - $6.6 billion in several internal growth projects within a time span of 2011 to 2015. The partnership expects its future growth to primarily driven by the Bakken Shale and Three Forks in the Mid-Continent region. It expects these facilities to provide a reliable and cost-effective ways of transportation compared with other alternatives.

Tulsa, Oklahoma-based ONEOK Partners, L.P. is one of the largest publicly traded master limited partnerships and a leader in gathering, processing, storing and transporting of natural gas in the U.S. The partnership has a market capitalization of $11.83 billion. Both, ONEOK and its competitor Plains All American Pipeline, L.P. (PAA - Analyst Report) currently has a short term Zacks #3 Rank (Hold Rating).

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