Upcoming AWS Coverage on CenterPoint Energy Post-Earnings Results

LONDON, UK / ACCESSWIRE / February 2, 2017 / Active Wall St. blog coverage looks at the headline from ONEOK, Inc. (NYSE: OKE) and ONEOK Partners, L.P. (NYSE: OKS). ONEOK, Inc. announced on February 01, 2017, that it would acquire all the outstanding common units of ONEOK Partners, L.P. that it does not own. The all-stock transaction is valued at $9.3 billion. The transaction is being carried out with a view to simplify the organization's structure and to increase returns to its shareholders. Register with us now for your free membership and blog access at:

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One of ONEOK's competitors within the Oil & Gas Pipelines space, CenterPoint Energy, Inc. (NYSE: CNP), announced on January 18, 2017, that it will release its Q4 and full year 2016 earnings results on February 28, 2017, at 11:00 AM ET. AWS will be initiating a research report on CenterPoint Energy in the coming days.

Today, AWS is promoting its blog coverage on OKE and OKS; touching on CNP. Get all of our free blog coverage and more by clicking on the links below:

http://www.activewallst.com/registration-3/?symbol=OKS

http://www.activewallst.com/registration-3/?symbol=CNP

ONEOK is a general partner and owns 41.2% stake in ONEOK Partners, a publicly traded master limited partnership. Tulsa, Oklahoma-based ONEOK is a Fortune 500 diversified energy Company that is engaged in the business of marketing natural gas and related services throughout the US. ONEOK Partners is a leader in the gathering, processing, storage, and transportation of natural gas in the US. Its natural gas liquids (NGL) systems connect NGL supply in the Mid-Continent, Permian, and Rocky Mountain regions with key market centers.

Sharing his views on the current transaction, Terry K. Spencer, President and CEO of ONEOK and ONEOK Partners said:

"A broad asset footprint, stable cash flows and attractive growth prospects remain core to our long-term growth strategy. Through the acquisition of the 60 percent of the limited partner interests in ONEOK Partners that ONEOK does not already own, ONEOK becomes a standalone operating Company with a lower cost of funding and stronger cash flow generation."

Terms of the deal

As per the agreed terms, ONEOK will acquire approximately 171.5 million outstanding units of ONEOK Partners that are not owned by it. Accordingly, for each unit of ONEOK Partners it will receive 0.985 ONEOK's share. The offer price represents a 22.4% premium to the ONEOK Partners' stock closing price of $44.20 per unit on January 27, 2017. ONEOK plans to issue approximately 168.9 million shares to finance this transaction. Once the transaction is complete, ONEOK will own approximately 44.5% stake in the combined entity. On completion of the transaction ONEOK Partners will be wholly owned by ONEOK and all ONEOK Partners units will no longer be publicly traded. Post the completion of the transaction, all the senior notes issued by ONEOK and ONEOK Partners will remain outstanding. ONEOK will issue cross-guarantees to the various entities so as to eliminate the structural subordination. Post the deal, the enterprise value of the combined entity is expected to be more than $30 billion.

The transaction is expected to close before end of 2Q 2017, subject to completion of closing conditions and approvals from the shareholders and unit-holders of both Companies.

Merits of the deal

The acquisition will result in an entity that is a leading diversified midstream service provider with an integrated 37,000-mile network of natural gas liquids and natural gas pipelines, processing plants, fractionators, and storage facilities located in the Williston Basin, Mid-Continent, Permian Basin, Midwest, and Gulf Coast.

ONEOK expects that as a result of the transaction its annual distributable cash flow will more than double. ONEOK plans to recommend ONEOK Partners' Board to increase the first quarterly dividend by 21% post the completion of the transaction. ONEOK expects that the annual dividend growth rate will be around 9% - 11% through the year 2021.

The transaction will result in a huge tax savings, as ONEOK does not expect to pay cash income taxes at least till 2021.

The merger of the companies will boost future opportunities and allow it to grow into one of North America's largest midstream service providers. The larger size of the combined entity will significantly enhance the financial strength and result in a lower cost of funding for future growth.

Financial Guidance for 2017

In a separate announcement on the same day, i.e. February 01, 2017, ONEOK also shared its financial guidance for 2017, which are as follows:

  • Net income to be in the range of $575 million - $755 million;
  • Adjusted EBITDA to be in the range of $1.875 billion - $2.130 billion;
  • Distributable cash flow to be in the range of $1.245 billion - $1.505 billion;
  • Capital Growth expenses to be in the range of $380 million - $480 million.

Stock Performance

On Wednesday, February 01, 2017, the stock closed the trading session at $54.00, declining 2.01% from its previous closing price of $55.11. A total volume of 20.72 million shares have exchanged hands, which was higher than the 3-month average volume of 1.85 million shares. ONEOK, Inc.'s stock price advanced 12.75% in the last three months, 27.55% in the past six months, and 146.51% in the previous twelve months. The stock is trading at a PE ratio of 39.39 and has a dividend yield of 4.56%.

ONEOK Partners' share price finished yesterday's trading session at $51.70, surging 19.84%. A total volume of 19.11 million shares exchanged hands, which was higher than the 3 months average volume of 669.75 thousand shares. The stock has rallied 32.45% and 36.42% in the last three months and past six months, respectively. Furthermore, in the previous twelve months, shares of the Company have surged 107.47%. The stock is trading at a PE ratio of 39.05 and has a dividend yield of 6.11%.

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SOURCE: Active Wall Street