ONEOK Inc. (OKE) Update - Sept 6

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dan_s
Posts: 35073
Joined: Fri Apr 23, 2010 8:22 am

ONEOK Inc. (OKE) Update - Sept 6

Post by dan_s »

We will be publishing an updated profile on OKE tomorrow morning. It will be posted to the EPG website later this afternoon.

OKE is one of the large-cap midstream companies in our High Yield Income Portfolio. I give it an A+ rating for safety of the dividend.

On September 21st they are expecting to close the merger with Magellan Midstream Partners (MMP). I've followed both companies closely for several years, so it was easy for me to work up proforma forecasts for Q4 2023 and for the year 2024. It will be one of the largest midstream companies in the country with revenues over $25 billion next year.

Free cash flow should be over $3 billion next year and they have publicly said they want to increase dividends.

At the time of this post, OKE was trading at $63.33

OKE is a C-Corp. My updated current valuation is $75/share.

TipRanks on 8-14-2023: “Raymond James analyst J.R. Weston raised the firm’s price target on Oneok to $78 from $75 and keeps an Outperform rating on the shares. Oneok remains an investment grade C-Corp. with healthy financial flexibility, a solid yield, substantial integration, and respected management, and Raymond James likes the risk-reward, the analyst tells investors in a research note.”
Dan Steffens
Energy Prospectus Group
ChuckGeb
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Joined: Thu Nov 21, 2013 2:46 pm

Re: ONEOK Inc. (OKE) Update - Sept 6

Post by ChuckGeb »

Last I heard the MMP CEO was campaigning to get the retail investor to get their votes in favoring the deal. There was dissident who previously claimed the premium was not sufficient to offset the tax acceleration for long time holders of the stock who have substantially reduced basis with ordinary income recapture on the transaction. While the favorable vote is considered likely, the affirmative vote of MMP shareholders remains an open contingency. We will know for sure by 9/21.
ChuckGeb
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Joined: Thu Nov 21, 2013 2:46 pm

Re: ONEOK Inc. (OKE) Update - Sept 6

Post by ChuckGeb »

Magellan Midstream Partners' (NYSE:MMP) campaign to win approval from unitholders for its merger with Oneok (OKE) received a boost Tuesday when top shareholder SS&C ALPS Advisors, which runs the $7B Alerian MLP ETF (AMLP), told Barron's it will vote in favor of the deal.
The firm said it will follow the recommendation of proxy advisory service Institutional Shareholder Services, which recently backed the deal between the two energy pipeline companies.
Thursday's vote is not a sure thing, as many retail Magellan Midstream Partners (MMP) unitholders oppose the deal because of adverse tax consequences; the consensus view is that Magellan (MMP) would delay the vote if it lacks enough support and work to gain approval rather than accept defeat.
One of Magellan's (MMP) largest institutional investors, Energy Income Partners, came out early against the deal and has lobbied hard against it, arguing it creates a big tax hit for investors and that Magellan would be better off on its own.

Big vote tomorrow.
ChuckGeb
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Joined: Thu Nov 21, 2013 2:46 pm

Re: ONEOK Inc. (OKE) Update - Sept 6

Post by ChuckGeb »

Magellan Midsteam holders vote to approve $18.8B sale to Oneok
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