Tuesday, November 11, 2008

Oneok Profits Up with Natural Gas


Oneok Inc.'s (OKE) third-quarter net income more than quadrupled on continued strength of its 48%-owned Oneok Partners LP (OKS) unit, which benefited from increased volumes and higher pricing.

Oil and gas company Oneok reported net income of $58 million, or 55 cents a share, up from $13.9 million, or 13 cents a share, a year earlier.

Revenue rose 51% to $4.24 billion.

On average, analysts polled by Thomson Reuters were looking for per-share earnings of 24 cents on revenue of $2.82 billion.

Gross margin fell to 10.7% from 12.1% as the cost of sales and fuel products rose.

The distribution segment for Oneok reported its operating loss widened to $2.9 million from $1.6 million a year earlier. The energy-services segment also posted a wider loss of $3.5 million from a loss of $0.7 million.

Looking ahead, Oneok narrowed its 2008 earnings view to a range of $2.95 to $ 3.05 a share, compared with its August expectation of $2.90 to $3.10 a share.

Oneok Partners, Oneok's gas-gathering and transportation unit, reported net income of $203.9 million, or $1.97 a unit, up from $95.9 million, or 98 cents a unit, a year earlier.

Revenue jumped 59% to $2.24 billion.

Analysts were looking for earnings of $1.23 a unit on revenue of $1.94 billion.

Gross margin declined to 14.5% from 15.2%.

Oneok Partners also raised its 2008 full-year forecast to reflect the strong performance of natural gas liquids gathering and price fluctuations. It now expects earnings of $5.95 to $6.15 a unit, up from its August view of $5.20 to $ 5.60 a unit.

In 2006, Oneok sold its businesses in gathering and processing, natural gas liquids, pipelines and storage to Northern Border Partners for $3 billion and became that company's general partner and 48% owner. Northern Border was renamed Oneok Partners.

Oneok distributes natural gas through its regulated utilities in Oklahoma, Kansas and Texas. Through Oneok Partners, it operates 14,300 miles of gas- gathering pipeline and 6,920 miles of transportation pipeline as well as gas- processing plants and storage facilities.

Oneok's shares were unmoved in after-hours trading after closing $31 on Wednesday, while Oneok Partners shares rose 3.4% to $56.25.

-By John Kell, Dow Jones Newswires; 201-938-5285; John.Kell@dowjones.com;

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