Higher than previously anticipated earnings in its natural gas distribution and ONEOK Partners segments will help generate $355-400 million of net income in 2012, a significant increase compared with ONEOK Inc.’s 2011 guidance of $325-345 million, the Tulsa-based company said.

“Significantly higher” earnings are expected from the ONEOK Partners segment in 2012 as projects from a $2.7-3.3 billion four-year growth program are placed into service, according to ONEOK CEO John W. Gibson.

The ONEOK Partners projects, announced in 2006, included the Arbuckle Pipeline, the Piceance Lateral Pipeline and the Denver-Julesburg Basin Lateral Pipeline in the company’s natural gas liquids (NGL) business, and the Guardian Pipeline expansion and extension, the Grasslands natural gas processing facility and expansion of Viking Gas Transmission in the natural gas business.

ONEOK anticipates higher earnings from increased natural gas gathering and processing volumes, and higher NGL volumes gathered and fractionated and higher margins from rates activity in the gas distribution segment. The increases are expected to be partially offset by lower NGL optimization margins resulting from lower optimization volumes and narrower NGL price differentials in ONEOK Partners’ NGL business.

For 2012, financial hedges are in place on about 42% of the ONEOK Partners segment’s expected equity gas production at an average price of $5.09/MMBtu; 43% of its expected equity NGL production at an average price of $1.61/gal; and 73% of its expected equity condensate production at an average price of $2.43/gal.

ONEOK said it expects its 2012 capital expenditures to be approximately $306 million.

ONEOK Partners has said it plans to spend $910 million to $1.2 billion by late 2013 in order to develop NGL infrastructure to serve the Gulf Coast market (see Daily GPI, May 4). The projects planned are the Sterling III Pipeline, which would transport either unfractionated NGLs or NGL purity products from the Midcontinent region to the Texas Gulf Coast; reconfiguration of the existing Sterling I and II NGL distribution pipelines; and construction of a 75,000 b/d NGL fractionator at Mont Belvieu, TX.

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