ONEOK to wind down gas marketing unit; cuts profit forecast again
June 10 (Reuters) - Natural gas processor ONEOK Inc said it would wind down its loss-making gas marketing business by next year to "remove earnings uncertainty," and the company lowered its full-year earnings forecast for the second time in three months.
Low natural gas prices have reduced marketing margins for the company, pushing the related energy services unit to report losses for the last five quarters.
"The energy services segment continues to face challenging industry conditions that show no signs of improving," Chief Executive John Gibson said in a statement.
Increased natural gas supply and lower price volatility have reduced opportunities for revenue to cover fixed costs of this contracted business, he said.
The company expects to take an after-tax charge of about $100 million related the discontinuation, which accounted for about 12 percent of ONEOK's total turnover in 2012.
About three-fourth of the charges will be recorded in the second quarter, ONEOK said.
The wind down will affect 49 people.
The company expects the unit to post a pre-tax operating loss of about $55 million in 2013 and $15 million in 2014 due to the accelerated wind-down process, scheduled to be "substantially" completed by April.
ONEOK, whose bigger businesses include natural gas processing and transportation, lowered its 2013 earnings forecast to between $235 million and $285 million from $350 million-$400 million.
Shares of the Tulsa, Oklahoma-based company fell 1 percent in extended trade after closing at $43.90 on the New York Stock Exchange on Monday.