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February 25, 2013
16:24 EDTOKEONEOK lowers FY13 net income view to $350M-$400M from $405M-$455M
ONEOK (OKE) reduced its 2013 net income guidance range to $350M-$400M, compared with the previous guidance range of $405M-$455M announced on Sept. 24, 2012. The updated guidance reflects lower expected earnings in the ONEOK Partners (OKS) segment. Half of the reduction in 2013 operating income and equity earnings guidance is due to lower expected natural gas liquids volumes as a result of widespread and prolonged ethane rejection. Narrower expected NGL location price differentials and lower expected NGL prices, particularly ethane and propane, also are expected to affect the partnership's 2013 earnings. "We do not expect prolonged ethane rejection to continue into 2014, although there may be intermittent periods when ethane will be left in the natural gas stream," said Gibson. ONEOK now expects net income guidance to increase by an average of 15%-20% annually over a three-year period, comparing 2012 results with 2015. Previously, ONEOK estimated a three-year average annual growth rate of 20%-25%, comparing 2012 guidance provided on Sept. 24, 2012, with 2015. The revision to the three-year growth forecast is due primarily to lower than expected NGL exchange margins in the Rocky Mountain region and lower expected NGL and natural gas prices in the ONEOK Partners segment in 2014 and 2015. The projected dividend increase for July 2013 has been revised to 2c per share, subject to ONEOK board approval, compared with its previous guidance announced on Sept. 24, 2012, of a 3c-per-share dividend increase. In January 2013, ONEOK increased its dividend by 3c per share to 36c per share, a 9% increase. "If industry conditions improve, we will re-evaluate our 2013 earnings guidance and dividend increase," said Gibson. "Although our 2013 earnings guidance has decreased, we remain confident in our ability to increase dividends over the next three years," said Gibson. ONEOK also revised its expectation to increase dividends by approximately 55%-65% between 2012 and 2015, subject to ONEOK board approval, compared with its previous guidance of a 65%-70% dividend increase. The company affirmed its long-term dividend target payout of 60%-70% of recurring earnings. The reduced 2013 earnings guidance and three-year growth forecast are not expected to affect current or projected timelines, or project costs in ONEOK Partners' announced $4.7B-$5.3B capital-growth program. Capital expenditures for 2013 are expected to be approximately $3B, comprised of approximately $2.64B at ONEOK Partners and $316M on a stand-alone basis. These estimates have been updated to reflect the January 2013 announcement of new growth projects in the ONEOK Partners segment.
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