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ONEOK's Q2 profit slips, but management touts post-merger structure

ONEOK Inc. on Aug. 1 reported $71.5 million of net income available to common shareholders for the second quarter, or 33 cents per share, compared to $85.9 million, or 40 cents per share, during the prior-year period.

The S&P Capital IQ consensus normalized earnings estimate for the second quarter was 43 cents per share.

The company recently completed its merger with its master limited partnership, ONEOK Partners LP. "Following the recently completed merger transaction, ONEOK is in an even stronger position to execute on our ongoing organic growth strategy," Terry Spencer, ONEOK's president and CEO, said in the company's earnings release. "We are confident that ONEOK will continue growing as one of the nation's largest midstream service providers while enhancing value for our customers and investors.

Operating income was $316.7 million, compared to $315.3 million during the same period in 2016. Adjusted EBITDA was $462.3 million in the second quarter of 2017, up from $460.2 million in the prior-year quarter.

"Solid second-quarter financial results were led by strong volume growth in our natural gas gathering and processing segment in both the Williston Basin and the STACK and SCOOP areas," Spencer said. "Producer activity remains strong in the STACK and SCOOP and in the core areas of the Permian and Williston basins." Spencer also expects continued benefits "from ethane recovery in the second half of 2017 and into 2018 as large petrochemical facilities are completed and increase the demand for ethane."

Distributable cash flow for the quarter was $330.1 million, compared to $345.4 million in the same quarter of 2016. The dividend coverage ratio was at 1.50x in the second quarter, down from 1.62x in the prior-year period.

ONEOK's full-year net income is expected to be in the range of $635 million to $795 million, compared with its previously announced range of $575 million to $755 million, which reflects the completed merger with the MLP and nonrecurring and transaction-related charges that were not included in ONEOK's Feb. 1 financial guidance.

ONEOK narrowed its adjusted EBITDA guidance to a range of $1.89 billion to $2.06 billion, compared with its previously announced range of $1.87 billion to $2.13 billion.