Analyst Note| Stephen Ellis |
Oneok’s third-quarter results were healthy, as its EBITDA increased 4% year over year. Its early 2023 outlook calls for a 10%-plus increase in adjusted EBITDA over 2022 levels of a bit more than $3.6 billion, or above $4 billion. We see the upside as both volume and fee driven, as Rockies volumes continue to be healthy while gathering fees are tracking to a 10% increase in 2023. The completion of the MB-5 fractionator plant in mid-2023 should also contribute. The fee increase is expected to be primarily due to inflationary trends. After updating our model, we are increasing our Oneok fair value estimate to $58 per share from $56 while maintaining our narrow moat rating.