ONEOK Inc. OKE recently announced that its 900-miles Elk Creek Pipeline project has been completed and is commissioned for commercial services. The pipeline extends from the Williston Basin to the company's existing Mid-Continent NGL facilities in Bushton, KS. Elk Creek will strengthen ONEOK’s position in the high production region.
ONEOK’s Pipeline Capacity Expansion
The company is focusing on capital growth projects and plans to invest $4.5 billion in capital growth projects that are expected to be completed through the first quarter of 2020.
The Elk Creek pipeline 240,000 barrels per day (bpd). The company expects that by adding pump facilities this capacity will be expanded to 400,000 bpd. ONEOK expects together the Elk Creek and Bakken NGL pipelines will be able to transport more than 240,000 bpd Rocky Mountain NGL volumes by the end of the first quarter.
Per U.S. Energy Information Administration (“EIA”) report, annual U.S. dry natural gas production will average 92.1 billion cubic feet per day (Bcf/d) in 2019, up 10% from 2018. EIA also forecasts that natural gas production in 2020 will average 95.1 Bcf/d.
No doubt the increase in natural gas and NGL production volumes will create more demand for pipeline and allied services. Hence, ONEOK’s new pipeline will continue to boost earnings over the long run with its capacity increasing gradually with rising demand.
In a year’s time, ONEOK’s shares have gained 18.2% compared with the industry’s rise of 9.9%.
Zacks Rank & Key Picks
ONEOK currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the same industry are Atmos Energy Corporation ATO, MDU Resources Group, Inc MDU and ONE Gas, Inc OGS. All the stocks hold a Zacks Rank #2 (Buy).
Long-term earnings growth of Atmos Energy, MDU Resources and ONE Gas is pegged at 7.15%, 7.10% and 6%, respectively.
Atmos Energy, MDU Resources and ONE Gas delivered an average positive earnings surprise of 3.18, 2.79% and 2.45% in the last four quarters, respectively.
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