ONEOK Benefits From Fee-Based Earnings & Expansion Efforts

Core Viewpoint - ONEOK Inc. (OKE) is positioned to benefit from higher fee-based earnings and midstream assets in productive regions, while facing competition and seasonal operational risks [1] Factors Acting in Favor of OKE - The company is expected to gain from long-term fee-based commitments, with over 88% of its 2024 earnings being fee-based and an expectation of over 90% for 2025 [2] - ONEOK has achieved over 16% growth in adjusted EBITDA over the past 11 years and anticipates similar growth moving forward, projecting adjusted EBITDA between $8 billion and$8.45 billion for 2025 [2] - Recent acquisitions, including Medallion Midstream and EnLink Midstream, are expected to generate significant cost savings and synergies, enhancing profitability [3] - Continued investment in organic growth projects aims to expand services for crude oil and natural gas producers and end-use markets [4] Headwinds for OKE - The natural gas and natural gas liquids pipeline sector remains highly competitive, with new energy companies forming master limited partnerships for pipeline services, which may challenge OKE's market position [5] - Seasonal fluctuations in operations may lead to revenue variability, particularly during peak demand periods when prices could rise [6] Stock Price Performance - In the past month, OKE shares have increased by 2%, contrasting with a 0.8% decline in the industry [7] Stocks to Consider - Other stocks in the industry with favorable rankings include Plains All American Pipeline (PAA) and Delek Logistics Partners (DKL), both rated Zacks Rank 1 (Strong Buy), and NextDecade (NEXT), rated Zacks Rank 2 (Buy) [8]