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ONEOK (NYSE:OKE) might be an independent company, but its future is entirely dependent on the success of its master limited partnership, ONEOK Partners (NYSE:OKS). That is because ONEOK derives all of its earnings from its ownership interest in the MLP. For that reason, investors need to monitor the results at the MLP carefully each quarter. Here's what to keep an eye on in the second quarter.

Are fees growing?

ONEOK Partners' natural gas gathering and processing segment was under tremendous pressure last year due to its direct exposure to commodity prices via percent-of-proceeds processing contracts. The impact of lower net realized natural gas liquids (NGL), natural gas, and condensate prices reduced that segment's operating income by $209.7 million and was the primary factor driving the steep decline from $280.6 million in 2014 to just $78.2 million last year despite a double-digit increase in volumes. To combat this problem, ONEOK Partners is renegotiating contracts with customers to switch them over to fee-based contracts. That change drove a noticeable improvement in its results last quarter, with those contracts fueling a $41.9 million increase in adjusted EBITDA, more than offsetting a $29.9 million impact from lower NGL and natural gas prices.

To further mute the impact of commodity prices, ONEOK Partners' goal is to increase its fee-based earnings to 85% this year, up from 75% last year. Given that stated goal, investors should look to see if the company remains on target.

Keep an eye on the coverage ratio

Last quarter ONEOK Partners' distribution coverage ratio was 1.06. In other words, it was able to cover its distribution with some room to spare. That was a vast improvement from the year-ago quarter, when the coverage ratio was a very troubling 0.60, meaning the company paid out nearly twice what it earned.

The company hopes to maintain a coverage ratio of at least a 1.0 this year, and should be able to do so as long as oil stays in the mid-$40s. Given that goal, investors should look to see if the coverage ratio remains on target.

Any changes to the outlook?

After a solid first-quarter showing, both ONEOK and ONEOK Partners chose to maintain their full-year guidance. For ONEOK, that guidance calls for cash flow available for dividends of $675 million and a coverage ratio of 1.3. Meanwhile, its MLP is forecasting distributable cash flow of $1.39 billion and a coverage ratio of about 1.0.

At a minimum, both companies need to reaffirm their full-year guidance. That said, with the oil market showing some signs of improvement, watch for any positive impact this is having on full-year guidance. In particular, an increase in distributable cash flow at ONEOK Partners would give the company a bit larger cushion to maintain the payout.

Investor takeaway

After struggling under the weight of weak commodity prices last year, ONEOK Partners seemed to turn the corner in the first quarter of this year. The hope is that the positive momentum has continued in the second quarter. That is essential because a stronger showing from the MLP would all but ensure that ONEOK's payout is also on solid ground in 2016.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.