TULSA, Okla. - ONEOK , Inc. (NYSE: NYSE:OKE) has revealed plans to expand its pipeline infrastructure, aiming to enhance the supply of refined products to the Denver region, including the Denver International Airport (DIA). The initiative will see the creation of a new 230-mile pipeline from Scott City, Kansas, to DIA, along with upgrades to existing pump stations. This expansion is set to increase the system's capacity by 35,000 barrels per day (bpd), with additional scalability for future growth. The project carries an estimated cost of $480 million and is slated for completion by mid-2026.
The expansion comes in response to escalating demand for refined products and renewable fuels in the Denver area, buoyed by the ongoing development of DIA. ONEOK's move to augment capacity aligns with its broader strategy to address energy requirements while upholding safety and reliability standards.
ONEOK President and CEO Pierce H. Norton II stated that the company is well-positioned to support the growing needs for transportation fuels, including aviation and sustainable aviation fuel, as DIA expands. He also highlighted the project as indicative of the attractive growth opportunities following ONEOK's acquisition of refined products and crude oil businesses.
The project has garnered full subscription under long-term contracts following the conclusion of an open season earlier this year. ONEOK, a prominent midstream service provider, operates an extensive pipeline network spanning over 50,000 miles, transporting natural gas, natural gas liquids (NGLs), refined products, and crude oil.
Investors and industry observers note that this development could have significant implications for regional energy supply chains and infrastructure. The company's commitment to expanding its service offerings and capacity is a strategic move to cater to the increasing energy demands within the U.S. and internationally.
This article is based on a press release statement from ONEOK, Inc.
In other recent news, Houston-based Easton Energy has agreed to sell its Gulf Coast Liquids Pipeline System to ONEOK, Inc. for $280 million. The system includes approximately 450 miles of pipelines crucial to the natural gas liquids (NGL) and hydrocarbon market in the Texas and Louisiana Gulf Coast region. Following the transaction, Easton plans to focus on its storage business. The sale is expected to be finalized by mid-2024, subject to standard conditions.
Meanwhile, ONEOK has announced plans to integrate the acquired pipelines into its existing infrastructure in Mont Belvieu and Houston, Texas. This move aims to enhance the company's network and commercial opportunities and contribute to future earnings growth. BofA Securities has maintained its Buy rating on ONEOK, reflecting confidence in the company's performance and increasing its stock price target to $88.00.
ONEOK has also reported a strong first quarter in 2024, with net income reaching $639 million and adjusted EBITDA at $1.44 billion. The company has raised its financial guidance for the full year, attributing the improved outlook to higher volumes in the Rocky Mountain region, contributions from the Refined Products and Crude segment, and anticipated synergies. These developments are part of recent news surrounding the company.
InvestingPro Insights
In light of ONEOK, Inc.'s (NYSE: OKE) announcement to expand its pipeline infrastructure, investors may find the company's financial health and market performance to be of particular interest. According to InvestingPro data, ONEOK boasts a market capitalization of $48.57 billion, reflecting its significant presence in the midstream sector. The company's Price to Earnings (P/E) ratio stands at 19.18, with a slight increase to 20.57 when adjusted for the last twelve months as of Q1 2024. This valuation metric can help investors gauge market expectations for growth and profitability.
The company's commitment to expansion is further supported by solid financials, with a reported revenue of $17.94 billion over the last twelve months leading up to Q1 2024. Despite a revenue decline of 16.43% during this period, the company has managed a quarterly revenue growth of 5.75% in Q1 2024. This resilience in revenue growth, coupled with a substantial gross profit margin of 36.0%, underscores ONEOK's ability to maintain profitability amidst challenging market conditions.
Investors looking to evaluate the company's dividend prospects will note the dividend yield of 4.64%, backed by a dividend growth of 3.66% over the last twelve months as of Q1 2024. For those considering adding ONEOK to their portfolio, InvestingPro offers additional insights and metrics. There are PRONEWS24 additional InvestingPro Tips available to help make more informed investment decisions. Use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription to access these valuable insights.
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