Natural gas company Oneok, Inc. (OKE), Tuesday said it expects a rise in its earnings for the fiscal 2009, compared to its previous guidance, primarily due to improved performance from its 45% interest in Oneok Partners, L.P. (OKS), which also expects fiscal 2009 earnings at the higher end of its previous guidance. Both the companies provided their earnings outlook for the fiscal 2010 as well.
Oneok currently expects earnings in the range of $2.85 to $2.89 per share for the fiscal year 2009, slightly above the high end of the earnings guidance in the range of $2.65 to $2.85 per share provided on November 3, 2009.
On average, eight analysts polled by Thomson Reuters expected the company to report earnings of $2.79 per share. Analysts' estimates typically exclude special items.
The company attributed the improvement in earnings to additional optimization opportunities and premium service margins in the energy services segment and improved performance in the Oneok Partners segment.
Oneok Partners now expects its 2009 results to be at the high end of the net income guidance range of $3.40 to $3.60 per unit provided on November 3, 2009. Analysts expect Oneok Partners to report earnings of $3.55 per share for the fiscal 2009.
Distributable cash flow or DCF of Oneok Partners is expected to range from $556 million to $560 million, above the high end of the 2009 DCF guidance range of $530 million to $550 million provided on November 3, 2009, due to the selling of Lehman Brothers bankruptcy claim related to receivables owed to the partnership for $6.5 million.
For the fiscal 2010, Oneok expects net income in the range of $300 million to $335 million, with $318 million as midpoint, reflecting higher anticipated earnings in the Oneok Partners and distribution segments, partially offset by lower expected earnings in the energy services segment, compared to 2009.
Oneok's 2010 earnings guidance reflects moving Oneok's retail natural gas marketing business, which is forecasted to earn $8 million in operating income, to the distribution segment from the energy services segment.
The midpoint for Oneok's 2010 operating income guidance is $958 million, with Oneok Partners, distribution and energy services segments guiding operating income at about $625 million, $223 million and $107 million, respectively.
Oneok Partners' 2010 net income is expected to be in the range of $450 million to $490 million, with midpoint as $470 million, primarily reflecting higher anticipated earnings in the natural gas liquids segment following the completion of the more than $2 billion capital investment program.
The midpoint for Oneok Partners' 2010 operating income guidance is $625 million, with its natural gas gathering and processing, natural gas pipelines and natural gas liquids segments expecting operating income of about $172 million, $156 million and $297 million, respectively.
Preliminary estimates for the partnership's 2010 distributable cash flow are expected to be in the range of $580 million to $620 million.
2010 earnings guidance for both the companies include a 1 cent per quarter increase in unitholder distributions, while maintaining a minimum coverage ratio of 1.05 times distributable cash flow.
Oneok and Oneok Partners are scheduled to report their fiscal 2009 results on February 22, following the close of the market.
OKS closed Tuesday's regular trading at $65.56, up 1.30 or 2.02%, on a volume of 0.14 million shares on the NYSE. OKE closed trading at $45.97, up 1.05 or 2.34%, on a volume of 0.71 million shares on the NYSE. In after hours, the shares went down 0.39 or 0.85%, trading at $45.5773.
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