Credit Suisse Just Raised Their Price Target On 2 Natural Gas MLPs

Credit Suisse has upgraded Oneok Partners LP

to Neutral from Underperform while raising the target prices on the shares of OKS by $7 to $40 and ONEOK, Inc.

by $8 to $42. The brokerage maintained its Neutral rating on ONEOK, which is the general partner and as of March 31, 2016, owns 41.2 percent of ONEOK Partners (OKS). "We believe OKS is now in position to meet or beat 2016 EBITDA guidance of $1.88bn given higher ethane demand estimates, higher margins from re-contracting in the Williston Basin, and strong progress on well connects. Ample liquidity, flexible capex, improving leverage and positive volume momentum helps too," analyst John Edwards wrote in a note. The company expects $200 million earnings boost from ethane transportation and fractionation services without the need for additional capex. "We anticipate significant ethane recovery to begin in early 2017, as demand for exports increases and new petrochemical facilities begin to come online near market hubs where the partnership is well-positioned to serve this growing demand without additional infrastructure or capital investments required," CEO Terry Spencer said in a statement. http://www.benzinga.com/pressreleases/16/05/n7923949/oneok-announces-first-quarter-2016-financial-results If ethane recovery picks up, the company could transport an additional 140,000 barrels per day (bpd) of ethane from the U.S. Midwest, 35,000 bpd from the Williston, and 10,000 bpd from the Permian. The company expects processing plants will move into full ethane recovery in 1Q'17, bringing 175,000-200,000 Bbl/d of ethane rejection back on to the OKS system. OKS reported first quarter EBITDA of $445 million, beating the Street's $428 million and Credit Suisse's $427 million estimate. "OKS is well-positioned in the Williston basin going forward as ~38%-43% of total ND flared gas is on OKS systems; incremental processing capacity from Bear Creek in 2H'16 should drive further volume upside," Edwards noted. Edwards raised his 2016 EBITDA estimate to $1.89 billion following strong quarter and positive outlook for 2016. Shares of Oneok rose 3.25 percent to $39.41 and Oneok Partners gained 3.51 percent to $38.66.