Oneok operates gas utilities in Kansas, Oklahoma, and Texas that serve over 2 million customers; it also has a 46% stake in a Master Limited Partnership involved in midstream natural gas operations like gathering and pipeline transportation. As General Partner of the MLP, Oneok's income will grow as the partnership's income does, while the company's 46% limited stake gives it a steady periodic cash flow. Furthermore, being part of an MLP allows Oneok to avoid taxes on its midstream income, giving it the ability to spend more on its pipelines business through acquisitions; for example, in October 2007 the MLP purchased a 1,627 mile pipeline from Kinder Morgan that spans from Kansas to Chicago.
Oneok's gas utilities are subject to stringent state regulation, designed to prevent them from taking advantage of the natural monopolies afforded to them by the high cost of gas distribution infrastructure. Furthermore, this guarantees the company a profit, though it also prevents the utilities segment from having much growth opportunity. For this reason, Oneok is relying on its membership in the midstream MLP to provide revenue and income growth in the future. With no real utilities competition, Oneok competes through its MLP with pipeline operators like Kinder Morgan and Atmos Energy.(Read more at Wikinvest )