Oneok Partners LP (NYSE:OKS) surged 18.97% to $27.16 on Monday. The company is engaged in gathering, processing and transporting natural gas in the USA.
Oneok Partners announced 2016 financial and volume guidance early Morning morning. The company expects to sustain its current distribution and improve distribution coverage in 2016, and keep maintaining its investment-grade credit ratings. The company also said that it doesn’t expect to access public equity markets in 2016 and well into 2017. Oneok Partners forecast $675 million in cash available for dividends and financial year 2016 adjusted EBITDA of $1.88 billion, distributable cash flow of $1.39 billion, growth capex of $460 million, and maintenance capex of $140 million.
"We expect 2016 earnings to be driven by continued natural gas and natural gas liquids volume growth across our integrated pipeline system, with strong year-end performance providing us momentum into 2016. Our substantial backlog of well connects, flared gas inventory in the Williston Basin and uncompleted wells provides considerable visibility into our 2016 volumes," said Terry K. Spencer, president and chief executive officer of ONEOK and ONEOK Partners. "Our commodity price outlook remains cautious for 2016. However, we expect the partnership's 2016 earnings to increase compared with 2015 guidance, primarily from volume and fee-based margin increases, resulting in increased distributable cash flow.”
The current distribution from Oneok Partners requires some type of recovery in crude oil price next year, approximately $50 per barrel or more. Until now crude oil price is below $35, and there is nothing visible recovery sings. The only signs about crude oil price is keep falling. This consideration is likely why Oneok Partners' yield is in "red flag" territory right now.