ONEOK, Inc. (NYSE:OKE) expects 2018 to be a big year. The pipeline giant anticipates that improvements in the oil and gas market will fuel higher volumes across its pipeline system, which should drive earnings and cash flow up 26% versus last year. That was certainly the case in the first quarter as a significant uptick in natural gas and natural gas liquids (NGLs) volumes drove a 24% improvement in earnings while cash flow surged 33% versus the same quarter in 2017. The company fully expects that strong showing to continue in Q2.

We'll find out whether that was the case tomorrow when the company announces its second-quarter results. Here are a couple of things to keep an eye on in that report.

Pipelines with a blue sky in the background.

Image source: Getty Images.

See if its ethane expectations are still on track

One of the big drivers of ONEOK's bullish forecast for 2018 was the expectation that it would recover more ethane within its NGL segment due to improving demand from petrochemical facilities. The company estimates that this recovery will get the amount of ethane it rejects down to 70,000 barrels per day (BPD), which is more than half the level at the beginning of 2017. By improving this number, ONEOK will make more money. Overall, it expects to haul in an additional $100 million of incremental adjusted EBITDA this year from ethane, which would provide a 4% boost to earnings.

The company noted in the first quarter that it cut its rejection down to 140,000 BPD and was on pace to achieve its year-end target because new petrochemical facilities continued coming online, as did NGL export capacity. Given the importance of hitting this goal, investors should keep an eye on ONEOK's progress during the second quarter.

Look for progress on its growth projects

While higher volumes across its existing systems will drive growth in early 2018, expansion projects will be a key fuel in the coming quarters. Overall, ONEOK has more than $4 billion of growth projects underway, including three sizable ones that it expects to finish by year-end.

ONEOK is investing about $200 million to expand the West Texas LPG pipeline, which it expects to finish in the third quarter. This project was part of an 80-20 joint venture with Martin Midstream Partners (NASDAQ:MMLP). However, the companies recently announced that ONEOK would buy out Martin Midstream Partners' 20% interest for $195 million. That deal provides a big financial boost to Martin Midstream. Not only will it get a meaningful cash infusion to help pay off debt and get its balance sheet on a stronger footing, but it will also save money since it will no longer need to fund its portion of the planned capital spending. Meanwhile, the transaction gives ONEOK full control over this asset and its growing cash flow stream while also putting it in a better position to capture "future expansion opportunities currently under development." 

In addition to that, ONEOK is investing $130 million to expand its Sterling III NGL pipeline as well as $160 million to boost the processing capacity of its Canadian Valley plant, both of which it expects to finish in the fourth quarter. Because these projects are important drivers of future earnings, investors should keep an eye on whether the company still expects to finish them on time.

Keep an eye out for a potential buying opportunity

ONEOK's stock has been red-hot this year due in part to expectations that its earnings and cash flow will surge thanks to improvements in the oil and gas market. We'll find out whether that's still the case when the company announces its second-quarter results tomorrow. However, if that report disappoints investors due to some unexpected short-term blip and shares give back some of their recent gains, it could be a good buying opportunity given all the growth ONEOK has coming down the pipeline.

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.