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$OKS General Update: ONEOK Partners, L.P. will present at the Credit Suisse MLP and Energy Logistics Conference on Wednesday, June 24, 2015, in New York City. Terry Spencer, President & Chief Executive Officer will present at 9:30AM Eastern Daylight Time.
$OKE and $OKS announced that proxy advisory firms Institutional Shareholder Services & Glass Lewis & Co., have recommended votes in favor of the proposed merger transaction between $OKE and $OKS. Under the proposed merger $OKE will acquire all of the outstanding common units of $OKS it does not already own. The merger is expected to close in 3Q17.
$OKE and $OKS announced organizational changes. Walter Hulse III, currently EVP, strategic planning and corporate affairs, becomes CFO and EVP, strategic planning and corporate affairs. Kevin Burdick, now EVP and chief commercial officer, becomes EVP and COO. Derek Reiners, currently SVP, CFO and treasurer, becomes SVP, finance, and treasurer.
$OKE anticipates closing of the acquisition of the remaining 60% of $OKS in 2Q17. The company expects the transaction to be immediately accretive and then double-digit accretive to $OKE's distributable cash flow from 2018 through 2021, providing for a 21% initial dividend increase followed by expected annual dividend growth of 9-11% through 2021.
$OKE's operating costs for 4Q16 increased to $204.1MM from $184.8MM last year. This was due to higher labor costs from the growth of $OKS' operations, higher employee-related costs from incentive and medical benefit plans and higher costs from non-cash mark-to-market of share-based deferred compensation plan.
$OKE and $OKS entered into a definitive agreement under which $OKE will acquire all of the outstanding common units of $OKS it does not already own for $9.3Bil in ONEOK common stock. The company plans to complete the transaction in 2Q17. Upon completion of the transaction, ONEOK does not expect to pay cash income taxes through at least 2021.
$OKE said its 3Q16 results benefited from higher natural gas volumes gathered and processed, higher NGL volumes fractionated and sustained higher average fee rates in the natural gas gathering and processing segment. All 3 $OKS' capital-growth projects continue to result in higher volumes and increased fee-based earnings.
$OKE's operating costs and depreciation and amortization expense increased by 3% and 20%, respectively, for 2015, compared with 2014. This rise was due primarily to the growth of $OKS' operations related to the completed capital projects, including acquisitions, in the Natural Gas Gathering and Processing and Natural Gas Liquids segments.
$OKE said that its partnership with $OKS grew adjusted EBITDA throughout the year by nearly 40% and ended the year with $450MM in adjusted EBITDA for 4Q15. These results were driven by a ramp in natural gas volumes gathered and processed across the company's system especially in the Williston Basin as it connects in more 820 additional wells.
Master limited partnership $OKS said its BoD has declared a quarterly distribution of $0.79 per unit, effective for 4Q15, payable Feb. 12, 2016 to unitholders of record at Feb. 1, 2016. The distribution is unchanged from 3Q15. BoD expects to report distribution coverage of greater than 1.0 times in 4Q15.