ONEOK Partners LP (OKS)

[dan_s]

I HIGHLY RECOMMEND that you all go to the OKS website and listen to their most recent webcast. I want you to hear about the huge increase in demand for NGLs in the U.S. that will be coming on-line over the next 18 months. NGL prices have been hammered the last 18 months, but it definitely looks like that will change soon.

We have several companies that produce a lot of NGLs, including AR, RRC, SM and SN.

I have updated my forecast model for OKS and posted it to the EPG website. OKS should be positioned to increase distributions to their unit holders by Q3 or Q4. They put Phase One of the Road Runner pipeline on-line in March and they have several more facilities coming on-line in Q3 and Q4. These assets will be immediately accretive to cash flows.

My valuation of OKS has increased $9.50 since we profiled it back in March to $47.25/unit.

PAA is a crude oil pipeline and storage company. OKS is a natural gas and NGL pipeline, processing and storage company. Two totally different markets. While domestic oil production is declining, and therefore demand for PAA services is going down, the demand for ONEOK's services is ramping up. ONEOK also has the most exposure to rising production in SCOOP & STACK, which is why I raised the multiple that I am using to value it.

Listen to the webcast and I think you'll understand why I am a lot higher on OKS.

[dan_s]

July 7: UBS UPGRADES ONEOK PARTNERS TO BUY, RAISES PRICE TARGET TO $46.00

My valuation of OKS is $47.25/unit. You can download my forecast model for OKS from the EPG website.