Valuation method | Value, $ | Upside, % |
---|---|---|
Artificial intelligence (AI) | 89.35 | 10 |
Intrinsic value (DCF) | 72.80 | -11 |
Graham-Dodd Method | n/a | |
Graham Formula | 154.79 | 90 |
ONEOK, Inc. (NYSE: OKE) is a leading midstream energy company specializing in natural gas gathering, processing, storage, and transportation across the United States. With operations spanning the Mid-Continent and Rocky Mountain regions, ONEOK owns and operates an extensive network of pipelines, processing plants, and storage facilities, including 17,500 miles of natural gas gathering pipelines and 5,100 miles of intrastate transmission pipelines. The company’s diversified business model includes three core segments: Natural Gas Gathering and Processing, Natural Gas Liquids (NGL), and Natural Gas Pipelines. ONEOK serves a broad customer base, including exploration and production companies, propane distributors, petrochemical firms, and utilities. Founded in 1906 and headquartered in Tulsa, Oklahoma, ONEOK plays a critical role in North America’s energy infrastructure, ensuring reliable energy supply chains while capitalizing on growing demand for NGLs and natural gas. Its strategic asset footprint and vertically integrated operations position it as a key player in the midstream sector.
ONEOK presents a compelling investment opportunity due to its stable cash flows, strong dividend yield (currently ~5.5%), and strategic midstream infrastructure. The company benefits from long-term fee-based contracts, reducing exposure to commodity price volatility. However, risks include high leverage (total debt of ~$32.1B) and regulatory challenges in pipeline operations. Growth prospects are tied to NGL demand and natural gas exports, supported by ONEOK’s extensive asset base. Investors should weigh its reliable income profile against sector-specific risks like energy transition pressures.
ONEOK’s competitive advantage lies in its integrated midstream network, which provides critical connectivity between production basins and end markets. Its NGL segment is particularly strong, with fractionation and logistics assets serving key shale plays like the Permian and Bakken. The company’s scale and geographic diversification mitigate regional demand fluctuations. Compared to peers, ONEOK emphasizes fee-based revenue (over 90% of EBITDA), enhancing cash flow stability. However, it faces competition from larger midstream players with broader international exposure. Regulatory expertise and long-term customer contracts strengthen its moat, but rising capital costs and environmental scrutiny pose challenges. ONEOK’s recent merger with Magellan Midstream Partners expanded its refined products footprint, further differentiating its asset mix.