Stock Analysis & Valuation ONEOK, Inc. (0KCI.L)

• Previous Close: £78.13
• Sector Valuation Confidence Level: Low

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	55.80	-29
Intrinsic value (DCF)	1134.28	1352
Graham-Dodd Method		n/a
Graham Formula	116.50	49

Strategic Investment Analysis

Company Overview

ONEOK, Inc. (NYSE: OKE) is a leading midstream energy company specializing in the gathering, processing, storage, and transportation of natural gas and natural gas liquids (NGLs) across the United States. Headquartered in Tulsa, Oklahoma, ONEOK operates through three key segments: Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines. The company boasts an extensive infrastructure network, including 17,500 miles of natural gas gathering pipelines, 6,600 miles of NGL pipelines, and multiple storage and terminal facilities. ONEOK serves a diverse customer base, including exploration and production companies, refineries, petrochemical firms, and utilities. With a history dating back to 1906, ONEOK has established itself as a critical player in the U.S. energy sector, particularly in the Mid-Continent and Rocky Mountain regions. The company's strategic assets and integrated operations position it well to capitalize on growing demand for natural gas and NGLs, driven by industrial, residential, and export markets.

Investment Summary

ONEOK presents a compelling investment opportunity due to its stable cash flows, strong dividend yield (currently ~5%), and strategic midstream infrastructure. The company benefits from long-term, fee-based contracts, providing revenue stability even in volatile energy markets. However, investors should be mindful of its high leverage (total debt ~$32.1B) and exposure to regulatory risks in pipeline operations. The stock's beta of 1.003 indicates market-average volatility. With $4.88B in operating cash flow and continued capital expenditures ($2.02B in 2024), ONEOK is well-positioned for growth but remains sensitive to natural gas price fluctuations and potential regulatory changes in the energy sector.

Competitive Analysis

ONEOK's competitive advantage stems from its extensive, strategically located infrastructure in key producing basins like the Williston, Powder River, and Mid-Continent regions. The company's vertically integrated operations - from gathering and processing to transportation and storage - create efficiency advantages and sticky customer relationships. ONEOK's large-scale NGL operations, including fractionation and logistics capabilities, differentiate it from pure-play pipeline operators. The company's competitive position is strengthened by its FERC-regulated pipelines which provide stable, regulated returns. However, ONEOK faces intense competition from larger diversified midstream players with greater scale and financial resources. The company's focus on natural gas and NGLs (versus crude oil) provides some insulation from oil price volatility but makes it more dependent on petrochemical demand and gas-to-NGL economics. ONEOK's regional concentration in certain basins could be both a strength (local expertise) and weakness (geographic risk) compared to nationally diversified competitors.

Major Competitors

• Kinder Morgan, Inc. (KMI): Kinder Morgan operates one of North America's largest energy infrastructure networks with extensive pipeline assets. While ONEOK focuses more on natural gas and NGLs, KMI has greater crude oil exposure and more diversified assets. KMI's larger scale provides cost advantages but with less NGL-focused infrastructure than ONEOK.
• The Williams Companies, Inc. (WMB): Williams operates similar natural gas gathering and processing assets but with greater exposure to Northeast markets (Marcellus/Utica). Williams has larger interstate pipeline operations (Transco) while ONEOK has stronger NGL fractionation and logistics capabilities. Both compete in natural gas processing but serve somewhat different geographic markets.
• Energy Transfer LP (ET): Energy Transfer is significantly larger with more diversified midstream assets including crude oil pipelines and terminals. ET has greater scale but more complex corporate structure (MLP). ONEOK maintains more focused operations in natural gas/NGLs with potentially better operational efficiency in its core regions.
• TC Energy Corporation (TRP): TC Energy is a major North American pipeline operator with significant assets in Canada and cross-border pipelines. While TRP has larger international exposure and oil pipeline operations, ONEOK has more concentrated US natural gas/NGL assets and greater processing capabilities.
• Enbridge Inc. (ENB): Enbridge is the largest North American midstream company with extensive crude oil and gas pipelines. ENB's main advantage is scale and diversification, while ONEOK offers more specialized NGL operations and greater exposure to growing US natural gas markets.