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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?

In the fourth quarter and full year of 2012, ONEOK Partners’ earnings per unit and revenues surpassed the Zacks Consensus Estimates. The outperformance was primarily attributed to strong results from natural gas gathering and processing, and natural gas pipelines segments.

We have recognized several catalysts including the partnership’s geographically diversified gas assets and capital structure rebalancing. All these are expected to boost the future performance of ONEOK Partners.

In addition, the partnership continues to pursue an organic growth strategy and plans to invest $4.7–$5.3 billion in several internal projects in the 2011 to 2015 time frame. The partnership owns and operates the majority of its gathering assets in the Williston Basin, Cana-Woodford Shale, Woodford Shale and Granite Wash areas, where it has several projects ongoing. Naturally, we expect ONEOK Partners’ future growth to come primarily from these territories.

However, fluctuating commodity prices, volatile equity and credit markets and stringent regulations are likely to weigh on the partnership’s forthcoming performance.

The Zacks Consensus Estimate for first-quarter 2013 currently stands at 62 cents per unit, down 31.87% year over year primarily due to low estimated natural gas and natural gas liquids (NGL) pricing, and lower-than-anticipated NGL exchange margins in the Rocky Mountain region.

Other Stocks to Consider

Other stocks in the sector that are presently performing well include Rose Rock Midstream L.P. (RRMS - Snapshot Report), Summit Midstream Partners, LP (SMLP - Snapshot Report) and Brookfield Infrastructure Partners L.P. (BIP - Snapshot Report). All three stocks carry a Zacks Rank #1 (Strong Buy).

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