Down 27% in 2025, This Worst-Performing Oil Stock Is Set to Go Parabolic in 2026

Core Viewpoint - Oneok experienced a significant decline in stock value in 2025, losing 26.8%, despite a strong increase in net income and a robust fee-based earnings model [1][2]. Group 1: Company Overview - Oneok is one of the largest midstream energy companies in the U.S., operating a pipeline network of nearly 60,000 miles, focusing on connecting energy producers with end users [2]. - Approximately 90% of Oneok's earnings are fee-based, which are on the rise, with net income increasing by 14% to $2.4 billion in the nine months ending September 30, 2025 [2]. Group 2: Stock Performance and Challenges - The stock underperformed in 2025 due to a series of large acquisitions that, while expanding the company's footprint, also increased costs and debt, leading to investor concerns [3][5]. - Oneok's long-term debt rose to $32 billion by September 30, 2025, up from $12.7 billion in June 2023, contributing to the stock's pressure throughout the year [6]. Group 3: Future Outlook - Three key catalysts are expected to enhance Oneok's cash flows in 2026: 1. Cost synergies from recent acquisitions, particularly projected at $500 million from Magellan by the end of 2025 [7]. 2. Anticipated reduction in cash tax expenses by nearly $1.5 billion over the next five years due to tax deductions [9]. 3. A decline in capital expenditures post-acquisitions, allowing for increased free cash flow for debt repayment, dividends, and share buybacks, with plans to raise annual dividend payouts by 3% to 4% [9].