Tickers in this Article: OKS, OKE, XTEX, XTXI
ONEOK Partners, L.P. (NYSE:OKS) is continuing to ride the growth of domestic oil and gas drilling, as the company invests billions to build midstream assets to handle increased production from these basins.

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Summary
ONEOK Partners owns a network of midstream assets in the United States that are involved with the gathering, processing, storage and transportation of natural gas and natural gas liquids. These facilities serve many of the most active domestic oil and gas basins.

Parent Company
ONEOK, Inc.
(NYSE:OKE) owns 43% of ONEOK Partners, L.P. and also serves as the general partner of the company.

2012 Guidance
ONEOK Partners recently raised guidance on earnings for 2012, because the company anticipates higher volumes in its natural gas and natural gas liquids businesses as several growth projects start to come on line. They now expect net income for that year to be in a range of $740 million to $800 million. This is 20% higher than the $630 million to $660 million the company expects to report in 2011. ONEOK Partners also expects to generate between $1.13 billion and $1.22 billion of EBITDA in 2012. (Discover how to keep score of companies to increase your chances of choosing a winner, read 12 Things You Need To Know About Financial Statements.)

Natural Gas Gathering and Processing
ONEOK Partners estimates that natural gas gathering volumes in 2012 will increase by 15% over 2011 guidance, as the company anticipates connecting more than 800 wells to its system. Natural gas processing volumes will grow even faster, with a 28% increase in 2012 over 2011 guidance. The company attributes this growth mainly to increased development by the exploration and production industry of the Bakken, Woodford Shale and Granite Wash plays.

Natural Gas Liquids
ONEOK Partners is also seeing above average growth in the Natural Gas Liquids segment in 2012, where the company expects gathering and fractionation volumes to increase by 26% and 14%, respectively, over 2011. Fractionation is the process by which various natural gas liquids are separated from each other after being extracted from the natural gas stream.

Growth Program
ONEOK Partners has an ambitious growth program planned from 2011 and 2014, with planned capital spending between $2.7 billion and $3.3 billion. The majority of these investments will be directed towards the development of the Bakken formation in the Williston Basin. Although this formation produces mostly crude oil, the average Bakken well contains 6% natural gas liquids and 3% natural gas. (Learn more in Natural Gas Industry: An Investment Guide.)

ONEOK Partners is building facilities to gather and process natural gas, pipelines to transport natural gas liquids and fractionation plants to handle these liquids. The development of the Bakken is growing so quickly, most of the capacity on these new facilities is already under contract.

Other Players
ONEOK Partners is not the only company looking to grow from the increase in domestic drilling activity. In July 2011, Crosstex Energy, L.P. (Nasdaq:XTEX) and Crosstex Energy (Nasdaq:XTXI) announced that they would build a 130 mile natural gas liquids pipeline in the Gulf Coast area.

The Bottom Line
ONEOK Partners is building midstream infrastructure that is vital to exploration and production companies that are developing domestic oil and gas basins. This might make companies in this space a better bet than the operators themselves.

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