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NGLs to drive ONEOK's 2017 earnings as SCOOP/STACK, Permian drilling grows

ONEOK Inc. expects its NGLs segment to make the biggest contribution to its expected adjusted EBITDA for 2017, which the company forecast at between $1.87 billion and $2.13 billion.

"The natural gas gathering and processing segment is expected to benefit as producer activity continues ramping up on the more than 3.4 million acres we have dedicated across our footprint," said Terry Spencer, president and CEO of ONEOK, in a Feb. 1 news release. "The segment has 300 [MMcf/d] of natural gas processing capacity available to accommodate increased activity in the core of the Williston Basin and STACK play."

2017 adjusted EBITDA for the NGLs segment is projected at $1.11 billion to $1.31 billion, with gathered volumes expected to average 800,000 to 900,000 barrels per day and NGLs fractionated to average 575,000 to 635,000 bbl/d.

The growth would come mostly from ONEOK's six new natural gas processing plants connected in 2016, as well as from its Bear Creek plant in the Williston Basin and five third-party plants. Drilling activity in NGL-rich shale plays, especially Oklahoma's STACK and SCOOP plays and the Permian Basin, is expected to increase, ONEOK said in the release.

The natural gas pipelines segment is expected to post adjusted EBITDA of $320 million to $340 million in 2017, while the natural gas gathering and processing segment would post $445 million to $485 million in 2017 adjusted EBITDA.

Natural gas pipelines' earnings would be over 95% fee-based in 2017. Under the gathering and processing segment, ONEOK expects gas processed to average 1,400 MMcf/d to 1,550 MMcf/d, while gas gathered would average 1,500 MMcf/d to 1,650 MMcf/d in 2017. Both segments would also benefit from increased drilling activity in the STACK and SCOOP plays and the Permian.

Net income for 2017 is anticipated to fall between $575 million and $755 million. 2017 distributable cash flow is forecast at $1.25 billion to $1.51 billion. CapEx guidance is $380 million to $480 million for 2017.

On the same day, ONEOK announced that it has agreed to acquire all of ONEOK Partners LP's outstanding common units it does not already own for in a deal worth $9.3 billion.