ONEOK Gains Momentum Through Acquisitions and Strategic Spending

ONEOK Inc. OKE continues to reap the rewards of rising fee-based earnings and systematic capital investments. The company's ongoing expansion efforts and pipeline additions are strategically aimed at reinforcing its foothold in key high-production regions. OKE's inorganic growth efforts play a vital role in broadening its operational footprint.

However, this Zacks Rank #3 (Hold) company encounters headwinds due to intense competition in its pipeline business.

Growth Catalysts for OKE

ONEOK is well-positioned to benefit from long-term fee-based commitments spanning all three of its core segments: Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines and Refined Products and Crude. In 2024, more than 88% of its earnings were fee-based. More than 90% of the company’s 2025 revenues are projected to come from fees. Over the past five years, natural gas liquid volumes from the Rocky Mountain region have surged, with an annual growth rate exceeding 20%, while natural gas processing volumes have grown at a steady 10% annual rate.

ONEOK remains committed to investing in organic growth initiatives aimed at deepening its presence in current operating areas and broadening its service offerings to crude oil and natural gas producers. The company projects its 2025 capital expenditures to fall within the range of $2.8-$3.2 billion.

The company is expanding its footprint through strategic inorganic initiatives. In January 2025, ONEOK finalized its acquisition of EnLink Midstream, LLC, strengthening its integrated midstream business and delivering added value to all stakeholders. In June 2025, ONEOK acquired the remaining 49.9% stake in Delaware G&P LLC for $940 million. These valuable acquisitions are anticipated to generate substantial cost efficiencies and synergies, contributing meaningfully to the company’s profitability.

OKE’s Hurdles

ONEOK does not hold full ownership of the land where its pipelines are situated, exposing it to potential increases in land-use costs. The inability to renew existing land rights or secure new ones for pipeline installation could adversely affect the company’s operational efficiency and overall profitability.

The natural gas and natural gas liquids pipeline industries are expected to remain highly competitive. Aside from established pipeline operators, the midstream space has witnessed a surge in energy companies creating master limited partnerships to enter pipeline services. The partnership's assets are well spread out, but its ability to withstand competitive forces will largely hinge on the efficiency, reliability and overall quality of its service offerings.

OKE Stock Price Movement

In the past month, OKE shares have dropped 1% compared with the industry’s decline of 0.2%.

Stocks to Consider

Some better-ranked stocks from the same sector are Delek Logistics Partners DKL, Kimbell Royalty Partners KRP and Oceaneering International OII, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DKL’s long-term (three to five years) earnings growth rate is 11.3%. The Zacks Consensus Estimate for its 2025 revenues stands at $1 billion, which indicates a year-over-year rise of 6.5%.

KRP’s long-term earnings growth rate is 3.7%. The Zacks Consensus Estimate for its 2025 revenues stands at $336.6 million, which calls for a year-over-year jump of 8.8%.

The Zacks Consensus Estimate for OII’s 2025 revenues is pegged at $2.74 billion, which suggests a year-over-year rally of 3.1%. The Zacks Consensus Estimate for its 2025 earnings per share stands at $1.79, which indicates a year-over-year jump of 57%.

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This article originally published on Zacks Investment Research (zacks.com).

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