ONEOK is a $12.7 billion energy company that is focused intently on natural gas. It gathers, stores, and transports natural gas, mostly through its huge network of natural gas pipelines. It also processes natural gas into natural gas liquids, or NGLs, which it then also stores, transports, and distributes. 2015 was rough for the company, but with the price of petroleum products rising, investment money is flowing again, allowing ONEOK to get back to expanding its own operations, which it does quite well. Shares of OKE rose 132% in 2016, yet they still trade well below their 2014 highs.
The key for ONEOK, as the company clearly figured out years ago, will be NGLs. Expect to see demand for NGLs, and NGL prices, of course, rising in 2017. Because of its focus in this area, ONEOK will soon be riding high, while most other midstream oil and gas companies will just keep puttering along.
A word on the company’s structure: ONEOK has only one operating unit, ONEOK Partners LP (OKS). ONEOK owns 40% of the shares in the limited partnership. The two companies are so closely linked that this is almost unimportant, but I mention it to point out that you can, if you prefer, perhaps for tax purposes, buy shares of OKS instead of OKE. I’m going with OKE. Perhaps it is a holdover from the bad old days, but I tend to think the general partner is always in a position to get more out of the deal than the limited partner.
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