ONEOK, Inc. is engaged in several aspects of the energy business. The company purchases, gathers, compresses, transports, stores, and distributes natural gas. It also leases pipeline capacity to others. The company drills for and produces oil and gas, extracts and sells natural gas liquids, and is engaged in the gas marketing business.
Industry:UTIL-GAS DISTR Sector: Utilities Fiscal Year End:December Last Reported Quarter:12/31/11 Next EPS Date:02/20/12
Capital Structure Solvency and Cash Flow
On a stand-alone basis, OKE had $550.0 million outstanding on its $1.2 billion revolver that does not expire until 2011, $75.0 million in cash and cash equivalents, and almost $300.0 million worth of natural gas in storage based on current pricing, which would be converted to cash in the winter withdrawal season.
OKE reduced total debt by $950.0 million during 1Q09 from cash on hand, cash from operations, and lower working capital levels as natural gas was sold from storage during this past heating season. Included in this reduction is the repayment of the $400.0 million 364-day revolving credit agreement, OKE does not anticipate securing a similar revolver in 2009 given lower anticipated commodity prices, and the reduced storage capacity at energy services segment and more-than-adequate liquidity to handle working capital needs. OKE also repaid $100.0 million of long-term debt in February 2009. Its next scheduled debt maturity is not until 2011 when $400.0 million comes due. As a result of these actions during 1Q09, standalone total debt to equity was reduced to 49% from 59% at the end of 2008.
OKE continues to produce positive stand-alone cash flow from continuing operation before changes in working capital, of $191.6 million, which exceeded the stand-alone capital expenditures and dividends of $92.6 million by $99.0 million. OKE’s 1Q09 stand alone free cash flow before changes in working capital exceeded capital expenditures and dividend payments by almost $100.0 million. OKE forecasts that stand-alone free cash flow would be in the range of $185-235 million for 2009. This free cash flow provides significant financial flexibility and liquidity with opportunities to increase future dividends, increase its investment in ONEOK Partners, or for acquisitions.
Last edited Tue Jun 09, 2009 05:02 PM by RJha (Zacks Investment Research)
Governance Social Responsibility and Employee Relations
Volatile Prices: Oil and gas prices are prone to fluctuations, thereby affecting earnings.
Other risks: Other key risks for natural gas stocks include commodity price risk, adverse weather conditions, regulatory risk (especially when it involves construction cost recovery and rate relief), the possibility of a decline in oil and gas production, and potential environmental and safety-related liabilities.
Macro Economy: An overall economic slowdown could reduce the demand for natural gas or NGL feed stocks.
Last edited Wed Jan 07, 2009 02:12 PM by RJha (Zacks Investment Research)
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