Master limited partner, ONEOK Partners L.P. (OKS) announced earnings of $1 per unit in the third quarter, beating the Zacks Consensus Estimate of 88 cents. This was below last year’s earnings of $1.97 per share. Results in the quarter were driven by volume growth in the natural gas and the natural gas liquids (NGL) businesses, which significantly offset the impact of lower commodity prices and narrower NGL product price differentials. Total revenues were $1.6 billion, compared to $2.2 billion a year ago.

Earnings before interest, taxes, depreciation and amortization (EBITDA), were $211.4 million in the quarter versus $252.6 million a year ago. Distributable cash flow (DCF) totaled $144.1 million ($1.24 per unit) form $191.0 million ($1.85 per unit) last year.

Operating income in the quarter declined 27% year over year to $144.7 million, due to lower realized commodity prices in the Natural Gas Gathering and Processing segment; narrower NGL product price differentials and prior-year operational measurement gains in the Natural Gas Liquids segment; and the impact of lower natural gas prices on retained fuel in the Natural Gas Pipelines segment.

Operating costs in the quarter increased to $105.1 million from $97.5 million last year, due to incremental costs associated with the operation of the Overland Pass Pipeline and the Arbuckle Pipeline, and higher operating expenses at fractionation facilities Incorporatedluding the expanded Bushton fractionator.

Equity earnings from investments decreased to $20.1 million in the quarter versus $29.4 million a year ago. Quarterly cash distribution increased to $1.09 per unit, payable Nov 13, 2009, to unitholders of record as of Oct 30, 2009. Capital expenditures were $169.4 million from $335.6 million in the third quarter 2008.

During the quarter, ONEOK Partners successfully completed its more than $2 billion capital investment program. These investments, coupled with additional opportunities identified for the next five years, establish a strong foundation for growth in both the fee-based earnings and distributions to unitholders.

ONEOK Partners raised its 2009 limited partners’ EPS guidance range to $3.40 to $3.60 from its previous range of $3.25 to $3.65. It now expects distributable cash flow to be in the range of $530-$550 million.

Zacks Investment Research
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