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ONEOK Inc. Beats Q2 Earnings

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ONEOK Inc. (OKE) reported second-quarter 2013 earnings per share of 34 cents, surpassing the Zacks Consensus Estimate by 7 cents and year-ago figure by 5 cents.

The improvement in earnings was primarily driven by increase in natural gas volumes gathered and processed and natural gas liquids (NGL) volumes gathered as a result of the completion of several projects at the company's ONEOK Partners L.P. segment, and advantage of colder-than-normal weather in the Natural Gas Distribution segment. These positives were partially offset by weak performance at the Energy Services segment.

On a GAAP basis, ONEOK Inc. reported zero cents per share in second quarter compared with earnings of 29 cents per share a year ago. The difference between GAAP and pro forma earnings was due to a non-cash after-tax charge of 34 cents at the energy services segment.

Total Revenue

ONEOK Inc. reported revenues of $3.3 billion, up $0.2 billion from the Zacks Consensus Estimate. Quarterly revenues also increased 32.4% year over year.

Operating Statistics

ONEOK Inc.'s total operating expenses increased 3.1% year over year to $325.5 million due to a rise in depreciation expenses and general taxes.

Operating income was $128.2 million, down 45.2% year over year.

Increase in revenues was more than offset by higher total operating expenses. In the reported quarter, operating margin was 3.8% compared with 9.3% a year-ago.

Financial Condition

ONEOK Inc., on a stand-alone basis, ended the quarter with $405 million of commercial paper outstanding, $1.9 million in letters of credit and $793.1 million available under the $1.2 billion credit facility.

Cash and cash equivalents as of Jun 30, 2013 were $33.7 million compared with $583.6 million as of Dec 31, 2012.

As of Jun 30, 2013, long-term debt was $6,511.4 million versus $6,515.4 million as of Dec 31, 2012.

Cash provided by operating activities during the first six months of 2013 was $788.3 million, higher than $652.6 million in the year-ago comparable period.

During the first six months of 2013, ONEOK Inc. spent $1.1 billion under its capital investment plan. A 35.8% rise in capital expenditure was primarily due to investment in several projects at the company’s ONEOK Partners segment.


ONEOK Inc. provided its full-year 2013 net income guidance in the range of $235 million to $285 million.

In Jun 2013, the company announced its plan to terminate operations of its energy services segment. Prolonged weak market conditions with no hope of improvement in the near term and narrowed seasonal as well as location natural gas price differentials have led to the termination of this segment.

ONEOK Inc. intends to invest $2.7 billion under its full-year 2013 capital spending program and plans to allocate a major chunk for its ONEOK Partners segment.

Other Company Releases

Sempra Energy (SRE - Free Report) is slated to release its second quarter earnings on Aug 6. The Zacks Consensus Estimate is at 1.36.

Chesapeake Utilities Corporation (CPK - Free Report) is slated to release its second quarter earnings on Aug 9. The Zacks Consensus Estimate is at 57 cents.

South Jersey Industries Inc. (SJI - Free Report) is slated to release its second quarter earnings on Aug 8. The Zacks Consensus Estimate is at 41 cents.

Tulsa, Okla.-based ONEOK Inc. is a diversified energy company, operating as a natural gas distributor primarily in the United States. The company currently has a Zacks Rank #3 (Hold).

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