ONEOK (OKE) To Offer $1.2B Senior Notes In Two Tranches
Zacks Investment Research | Jul 10, 2017 11:07PM ET
ONEOK, Inc. (NYSE:OKE) announced its decision to issue $1.2 billion senior notes. The company stated that it will offer $500 million of 10-year senior notes and $700 million of 30-year senior notes at a coupon of 4% and 4.95%, respectively.
ONEOK will issue these notes under the existing shelf registration statement with the Securities and Exchange Commission. The company expects the notes offering to close on Jul 13.
Proceeds From the Offering
After the deduction of the underwriting discounts and commissions, the company estimates remaining net proceeds at $1.18 billion. This amount will be used for general corporate purposes like repayment of existing indebtedness and capital expenditures.
Factors in Favour of ONEOK
ONEOK recently completed the acquisition of its primary growth vehicle, ONEOK Partners. This acquisition is expected to be accretive to the company due to the latter’s financial strength, diversified operations, excellent market connectivity and systematic investments in organic projects.
ONEOK will also benefit from the Roadrunner Gas Transmission Pipeline, ONEOK West Tex Pipeline expansion and the Midwestern Gas Transmission expansion in 2017. The company has a huge network of nearly 37,000 miles of natural gas liquids and natural gas pipelines, which are strategically located in highly productive regions.
Increase in drilling activities can be expected due to lower breakeven costs and improved well productivity in the STACK and SCOOP plays and Williston and Permian basins. As a result, the company will gain from the aforementioned factor in the second half of the year.
Owing to the recent drilling in the Permian region, Plains All American Pipeline, L.P. (NYSE:PAA) and Magellan Midstream Partners, L.P. (NYSE:MMP) launched an open season at Midland, TX, through their jointly-owned BridgeTex Pipeline Company, LLC. (Read more: Zacks Investment Research
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