EP EL Paso Corp. (Holding Co.)

ONEOK Partners L.P. (OKS) said that its Board of Directors approved a one-cent increase in the quarterly cash distribution rate.

The new distribution rate of $1.15 per unit will be effective from the first quarter of 2011 and is scheduled to be paid on May 13, 2011 to unitholders of record as of April 29, 2011.

The new annualized cash distribution rate of the partnership is $4.60 per unit, reflecting growth of 0.9% from the previous annualized dividend rate of $4.56 per unit. ONEOK Partners has consistently increased its distribution rate since April 2006; the present distribution rate represents a 44% increase from 2006 levels of $3.20 per unit.

The distribution hike is per the partnership’s long-term strategy announced in October 2010 to increase the cash distribution rate by one cent per quarter in 2011. The partnership has plans to increase distribution in the range of 5% to 10% annually in 2012 and 2013, subject to the approval of its board of directors and general partners.

ONEOK depends on its consistent cash generations from operations to pay regular cash distributions to its unitholders. In 2010, the partnership utilized $564.2 million of cash flows for cash distributions. In 2011 the partnership will need a higher amount for payment of distribution if the units remain unchanged from 2010 levels.

We are encouraged to see the partnership doing so well and sharing the benefits with its unitholders through a regular increase in the cash distribution rate.

ONEOK Partners currently retains a Zacks #3 Rank (short-term 'Hold' rating). The positive catalysts for the partnership are its supply diversity, market connectivity and low operating costs. However, we maintain a long-term Neutral rating on the stock due to our skepticism over the volatile credit markets, utility regulations, dependence on weather and unpredictable commodity prices. The company competes with El Paso Corp. (EP) and Kinder Morgan Energy Partners L.P. (KMP).

Tulsa, Oklahoma-based ONEOK Partners is a leader in the gathering, processing, storage and transportation of natural gas in the U.S. and owns one of the nation's premier natural gas liquids (NGL) systems, connecting NGL supply in the Mid-Continent and Rocky Mountain regions with key market centers.

 
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