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$OKE 1Q15 10-Q: Entered into a 50-50 JV in March 2015, named Roadrunner Gas Transmission, LLC with a subsidiary of Fermaca Infrastructure B.V, a Mexican natural gas infrastructure company to construct a pipeline to transport natural gas from Permian Basin in West Texas to Mexican border near El Paso. Est. total project cost is approx. $450-500MM.
$OKE plans to invest approx. $1.4Bil to construct a new pipeline to transport NGLs from the Rocky Mountain region to its existing Mid-Continent NGL facilities. The Elk Creek Pipeline is expected to cost approx. $1.2Bil, with related infrastructure costs expected to total approx. $200MM. It is expected to be completed by 2019-end.
$OKE said its Mont Belvieu, Texas, complex is operational and has not experienced significant damage from the impact of Hurricane Harvey. Some assets in the area are operating at reduced volumes primarily due to temporary refinery and petrochemical facility outages. Currently, upstream volumes from producer customers have not been hugely impacted.
$OKE has announced plans to expand its Canadian Valley natural gas processing facility in the STACK play of western Oklahoma to 400MM cubic feet per day (MMcf/d) from 200 MMcf/d. The project may be completed by 2018-end. The cost is approx. $155-165MM, and increase the capacity in Oklahoma to approx. 1.1Bil cubic feet per day by 2019.
The merger of $OKE and its partners has resulted in an increase in the company’s quarterly dividend by 13 cents per share, or 21%, to 74.5 cents per share, which counts to an annualized dividend of $2.98 per share. The dividend is payable on Aug 14, 2017, to shareholders of record as on Aug 7, 2017.
$OKE priced offering to sell $1.2Bil of senior notes, consisting of $500MM of 10-year senior notes at a coupon of 4% and $700MM of 30-year senior notes at a coupon of 4.95%. The net proceeds are expected to be $1.18Bil. $OKE expects to use proceeds for general corporate purposes, which may include repayment of existing debt and capex.
$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.
Natural gas company $OKE reported 5% rise in 1Q17 earnings driven by higher average fees rates in the natural gas gathering and processing segment. Net income rose to $87.4MM, or $0.41 per share, compared to $83.4MM, or $0.40 per share during 1Q16. Excluding items, $OKE reported 4% increase in net income.
$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.
Looking ahead to the remainder of 2017, $OKE is well-positioned to capture future increases in NGL transportation and fractionation volumes due to increased demand from the petrochemical industry and NGL export activity without significant capital spending.
$OKE reported a rise in 4Q16 earnings driven by higher NGL and natural gas volumes, new natural gas processing plant connections and higher average fee rates in natural gas gathering and processing. Net income rose to $90.5MM or $0.43 per share from $25.5MM or $0.12 per share last year. Revenue grew to $2.65Bil from $1.93Bil.