Oil and gas pipeline operator ONEOK Partners, L.P. OKS reported second-quarter 2016 earnings of 54 cents per unit, beating the Zacks Consensus Estimate of 53 cents by 1.9%. Quarterly earnings also surged 22.7% year over year.
The bottom-line improvement was driven by fee-based earnings growth due to contract restructuring in the natural gas gathering and processing segment, as well as volume growth at the natural gas pipeline due to the completion of wells in the Mid-Continent region.
Total Revenue
In the quarter under review, ONEOK Partners reported total revenue of $2,133.6 million, marginally ahead of the Zacks Consensus Estimate of $2,105 million. Quarterly revenues were up from $2,127.5 million in the year-ago quarter.
Operational Results
ONEOK Partners' adjusted earnings before interest, tax, depreciation and amortization (EBITDA) stood at $455.8 million, up 17.7%.
Cost of sales and fuel was $1,527.3 million, down 4.7% from $1,603.1 million a year ago.
The partnership reported operating income of $325.6 million, up 19.8%.
ONEOK Partners' interest expenses were $93.3 million, up 7.9% from $86.5 million a year ago.
Segment Results
In the second quarter of 2016, Natural Gas Liquids reported operating income of $222.4 million, up 13.2% from the prior-year level of $196.5 million.
Natural Gas Pipelines' operating income climbed 9.2% to $41.6 million in the second quarter of 2016 from $38.1 million recorded a year ago.
Natural Gas Gathering and Processing generated operating income of $61.3 million in the second quarter of 2016, up a significant 62.2% from $37.8 million in the prior-year period.
Financial Condition
As of Jun 30, 2016, ONEOK Partners had cash and cash equivalents of $3.7 million, down from $5.1 million as of Dec 31, 2015. Long-term debt (excluding current maturities) as of Jun 30, 2016 was $6,692 million, almost flat with $6,695.3 million as of Dec 31, 2015.
The partnership's cash flow from operating activities was $593.2 million in the first six months of 2016, up substantially from $380.3 million in the year-ago period. Capital expenditure in the first six months of 2016 was $332.3 million, down 47.1% from the prior-year level of $628.4 million.
Distributable cash flow ("DCF") was $367.2 million in the second quarter, compared with $276.9 million a year ago.
Guidance
The company reaffirmed its adjusted EBITDA guidance of approximately $1.88 billion, DCF guidance of approximately $1.39 billion and net income guidance of $1.12 billion for 2016.
Upcoming Peer Releases
Rose Rock Midstream, L.P. RRMS is slated to report second-quarter results on Aug 4.The Zacks Consensus Estimate stands at 35 cents.
Summit Midstream Partners, LP SMLP is slated to report second-quarter results on Aug 4. The Zacks Consensus Estimate stands at a loss of 2 cents.
Buckeye Partners, L.P. BPL is scheduled to report second-quarter results on Aug 5. The Zacks Consensus Estimate stands at 96 cents.
Zacks Rank
ONEOK Partners currently carries a Zacks Rank #2 (Buy).
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