While OKE originally wanted to avoid this, the deal does create a taxable event for OKS shareholders. – Richard S. December 2, 2018. However, that is just one major benefit of many from this highly shareholder friendly deal.Sources: Fastgraphs, MorningstarFurthermore, not being an MLP will mean that former ONEOK Partners investors will now be able to hold the stock in a tax-deferred account such as an IRA or 401K.The larger, more profitable ONEOK Inc will see a boost to DCF, which will likely result in a credit upgrade and thus help it maintain access to cheap credit in the years to come.That’s in large part due to the oil crash causing shale energy producers to become incredibly more efficient through the use of state-of-the-art fracking techniques that vastly lowered their breakeven prices.In view of “ahimsaka’s” comments on SA are you still certain the impact on OKS shareholders is a non-taxable “in kind” transfer?
Please accept my compliment for the clarity of the OKE/OKS analysis.
sell) the assets to its MLP in exchange for cash, taking on debt or additional units of ONEOK Partners.However, due to the beneficial effects of “step up” accounting, in which ONEOK Inc will be able to reset the value of OKS’s assets to the purchase price, it will be able to take much larger depreciation charges that should allow the new C-corp to avoid paying corporate income taxes through at least 2021.While management has done a great job of shifting the business model away from commodity-sensitive forms of cash flow in recent years, ONEOK Partners’ 15% exposure to commodity prices resulted in its sales and DCF taking a major hit over the past few years.However, thanks to the worst oil crash in over 50 years, many MLPs have disappointed investors by proving to be less safe than initially thought.In other words, dividend safety should improve as a result of the merger.COPYRIGHT © 2017 Simply Safe Dividends LLCPart of the reason that U.S. shale activity has increased so quickly is because, prior to the recovery in energy prices, shale producers had continued to drill with already contracted rigs.While oil and gas prices have bounced back nicely in the past year, there is no way to tell whether, or how high, they might recover.This is largely why ONEOK Inc plans to raise its dividend 21% as soon as the deal closes.However, while the IDRs give ONEOK Inc 32% of ONEOK Partners’ marginal DCF, ONEOK Inc’s beneficial financial arrangement with its MLP also results in some major negative effects for unitholders.That in turn will make it easier to continue growing into the future. When complete, these two systems will transport 900 million cubic feet per day of natural gas from the Permian Basin to Mexico under fixed-fee 25 year contracts.Due to a 14% increase in unit counts over the past year, that would put -- assuming no new equity issuances this year -- 2015's DCR at 0.96 , and should prevent the need for a distribution cut this year; assuming management can hit its DCF target.Falling commodity prices resulted in ONEOK's first six months of distributable cash flow or DCF falling by 13.4%.Stock Advisor launched in February of 2002. Hi Brian, As a potential new retiree in 2019 who is very concerned about dividend safety, this month's newsletter hits the mark. More importantly, find out if this merger means that ONEOK is now a dividend stock that deserves a spot in your diversified dividend portfolio. The previous Oneok Inc. dividend was 93.5c and it went ex 3 months ago and it was paid 2 months ago. ONEOK Inc. and its MLP are trading at yields signifying that a dividend cut may be imminent. However, because it’s an “in kind” transfer of shares, investors in OKS won’t have to pay any additional taxes from this buyout.”So, would one buy ‘oks’ or ‘oke’ and, since they are going to be combined – what will the new dividend be?