Higher Volumes Drive ONEOK’s 1Q16 EBITDA Growth
ONEOK Reports Strong 1Q16 Results, Earnings Up 40%
OKE’s EBITDA grows by 38%
ONEOK Inc. (OKE) reported its 1Q16 results on May 3, 2016, after the Market closed. ONEOK’s 1Q16 adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew by 37.8% from $320.4 million in 1Q15 to $441.6 million.
Analysts expected an EBITDA of $414.5 million for the quarter. The analyst-adjusted EBITDA stood at $405.9 million. ONEOK missed its EBITDA estimates for the quarter by 2.1%. ONEOK forms ~2% of the PowerShares High Yield Equity Dividend Achievers ETF (PEY).
The above chart compares OKE’s EBITDA estimates with its adjusted EBITDA. Enbridge Energy Partners (EEP) and EQT Midstream Partners (EQM) beat their 1Q16 EBITDA estimates by 4.4% and 8.1%, respectively.
ONEOK’s cash flow available for dividends increased from $152.1 million in 1Q15 to $169.3 million in 1Q16.
Higher volumes drive EBITDA growth
ONEOK operates as a pure-play general partner of ONEOK Partners (OKS). The company’s EBITDA growth in 1Q16 was driven by:
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increased NGL (natural gas liquids) gathering and fractionating volumes
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increased natural gas volumes gathered and processed
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increased average fee rate for natural gas gathering and processing segment
Strong dividend coverage
ONEOK reported 1Q16 dividend coverage of 1.3x. On April 21, 2016, OKE declared quarterly dividends of 61.5 cents per share for 1Q16. The dividend remained unchanged from the previous quarter. OKE’s dividends had remained flat in 4Q15 as well.
“ONEOK’s first-quarter financial results benefited from ONEOK Partners’ uniquely positioned, integrated network of natural gas and NGL assets,” said Terry K. Spencer, president and chief executive officer of ONEOK. “Distributions declared from the partnership to ONEOK increased nearly 17 percent in the first quarter 2016, compared with 2015, driven by ONEOK’s increased ownership in ONEOK Partners.”
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