Business Strategy and Outlook| Stephen Ellis |
Oneok brings together high-quality assets, some of the strongest near- to medium-term growth prospects in our coverage as Rockies volumes continue their ongoing rebound, a C-Corporation structure, and a well-respected management team in a compelling package. About 90% of the firm's earnings are fee-based, 80%-90% of its customers are investment-grade, and the firm hedges its limited commodity price exposure. With the reduced capital program, Oneok does finally have material levels of excess cash flow in 2022, perhaps 18 months behind other U.S. midstream peers to buy back more stock. We estimate there could be up to $525 million in buybacks in 2022, though knowing Oneok's penchant for finding accretive growth projects, this is also equally likely to be plowed back into attractive growth assets.