Newspaper article THE JOURNAL RECORD

Year-Ago Gains Shadow Earnings for Tulsa-Based Oneok, Oneok Partners

Newspaper article THE JOURNAL RECORD

Year-Ago Gains Shadow Earnings for Tulsa-Based Oneok, Oneok Partners

Article excerpt

Large year-ago gains cut second-quarter earnings for both Oneok Inc. and Oneok Partners LP by more than 50 percent despite double- digit revenue growth.

While officials said higher operating costs and lower natural gas prices also impacted results, Oneok Inc. restated its earnings guidance for the year, while Oneok Partners raised its estimates.

"There's no way to sugarcoat it," said M. Jake Dollarhide, owner of Longbow Asset Management Co. of Tulsa. "It's not a good report for the psychology of this market. It's very possible it could trade down 2 or 3 percent in the morning."

But the analyst said most investors should recognize the impact of both year-ago gains and the lower energy margins.

"The partnership's assets are performing well, and we continue to see increased NGL volumes and favorable market conditions in the natural gas liquids businesses," said John W. Gibson, chief executive of Oneok Inc. and president and CEO of Oneok Partners.

* Oneok Inc. posted a profit of $35.2 million, or 31 cents per diluted share, for the three months ended June 30. That was down 54.7 percent from second-quarter 2006 results of $77.8 million, or 65 cents a share, when the natural gas giant recorded an after-tax gain of $32.3 million, or 27 cents, from the sale of a 20-percent interest in Northern Border Pipeline Co.

Factoring out that 2006 gain still left the Tulsa-based company facing a 22.6-percent drop in profits despite an 18.09-percent rise in revenue to $2.87 billion from $2.4 billion. Analysts surveyed by Zacks Investment Research of Chicago had forecast a 36-cent profit for the second quarter.

* Oneok Partners earnings fell 51.7 percent to $94.6 million, or 97 cents per unit, from $196.2 million, or $2.22, the prior year. However, factoring out the $113.9 million one-time gain recorded in the 2006 second quarter gave OKS a 14.9-percent profit increase for the latest period.

In either case, Oneok Partners bested the 80-cent earnings estimate by Zacks Investment Research.

Operating revenues for the Tulsa-based firm rose 18.2 percent to $1.37 billion from $1.159 billion. The net margin inched 2.1 percent ahead to $216.38 million.

For the six months ended June 30, Oneok Inc. …

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