ONEOK's Permian Pivot: A 30% Re-rate Catalyst?

The specific event driving the narrative shift is ONEOK's newly announced 25.5% stake in the Eiger Express Pipeline joint venture. This is not a minor expansion; it is a major new growth project designed to transport up to 2.5 billion cubic feet per day (Bcf/d) of natural gas from the Permian Basin to Gulf Coast markets. The pipeline, a 450-mile, 42-inch line expected to be completed by mid-2028, provides a direct, high-capacity solution for growing Permian production. For ONEOK, this is a material catalyst because it locks in long-term, firm transportation agreements and significantly expands its integrated Permian platform.

Yet the market still views ONEOK as a Bakken-focused NGL company, overlooking this fundamental shift. The Eiger Express JV is a key piece of a larger puzzle. As noted, ONEOK has built a fully integrated Permian presence through major acquisitions, with Permian NGL volumes now surpassing Bakken volumes for the first time. The Eiger pipeline directly supports that growth story by ensuring the gas from its Permian processing assets can reach high-demand Gulf Coast and LNG export markets. This project is a tangible, high-visibility signal of the company's strategic pivot.

The Mispricing Opportunity: Permian Volumes vs. Stock Price

The disconnect is stark. ONEOK's stock has fallen 30% during the past year, battered by near-term worries about natural gas volumes and ethane recoveries. Yet the company's underlying business mix has fundamentally shifted. For the first time in its history, Permian NGL volumes reached nearly 570,000 barrels per day (bpd), surpassing Bakken volumes of around 490,000 bpd. This is not a temporary blip; it's a structural pivot to the growth engine of the Permian Basin.

The market's reaction is a classic case of mispricing. Investors are still pricing ONEOK as a Bakken-focused NGL company, ignoring the reality of its fully integrated Permian presence built through transformative acquisitions. The stock's current valuation doesn't reflect this new, higher-growth profile. ONEOK trades at a P/E ratio of 13.51. That's a discount to peers like Energy Transfer (13.19) and Plains All American (11.51), despite ONEOK's own growth trajectory being fueled by major projects coming online through 2027.

This sets up a clear event-driven opportunity. The market is discounting the Permian story, focusing instead on cyclical headwinds. But the Permian volumes are rising, and the company is executing on its integrated platform. The recent Eiger Express JV announcement is a tangible catalyst that validates this pivot. If the market begins to recognize that the Permian is now the core growth story, the current valuation multiple may not be sustainable. The 30% stock decline over the past year, driven by these near-term concerns, may have created a temporary mispricing that a fundamental shift in the business mix could quickly correct.

Immediate Catalysts vs. Near-Term Risks

The thesis hinges on a clear timeline of events. The immediate catalyst is the sequential ramp-up of Permian volumes and the completion of major projects through 2027. The next major data point is the Q4 earnings report, which will provide a volume growth update and potentially reaffirm guidance for new pipeline projects. This is the setup: the market needs to see the Permian story materialize in the numbers.

The near-term risks are the persistent concerns that have kept the stock depressed. The company's third-quarter results showed a 3% increase in Rocky Mountain natural gas volumes processed, but the broader worry about declining U.S. natural gas volumes and ethane recoveries remains. If these near-term headwinds persist, they could continue to overshadow the long-term Permian growth narrative, keeping the stock under pressure despite the strategic pivot.

Execution risk is the other side of the coin. The Eiger Express Pipeline is a major project with a mid-2028 completion target. Any delays in construction, regulatory approvals, or securing firm transportation agreements would directly threaten the timeline for realizing the value of this new growth platform. The project's success is not guaranteed; it requires flawless execution over the next three years.

The watchpoints are straightforward. First, look for confirmation of guidance for new pipeline projects like Eiger Express in the upcoming earnings call. Second, monitor quarterly updates on Permian volume growth. The market needs to see the volumes from the company's fully integrated Permian platform-now surpassing Bakken volumes-actually climb. Until then, the thesis remains a story waiting to be proven in the numbers.