Oneok Is Already Exceeding Expectations With Its Magellan Deal

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. The addition of Magellan's wide-moat refined product assets strengthens the business and opens up new investment opportunities by bundling different products across Oneok assets as well as batching, blending, and other storage opportunities. Early returns have been excellent, as Oneok is already exceeding its synergy targets.