ONEOK (NYSE:OKE) has been having an excellent year. The pipeline company's earnings and cash flow have rocketed by roughly 30% through the first half of 2018 compared with the same period of last year, thanks to higher oil prices and recently completed expansion projects, both of which have boosted the volumes of natural gas and natural gas liquids (NGLs) flowing through its system. That trend should have continued in the third quarter, which is one of several things investors need to keep an eye on when the company reports those results later this week.

Look for continued volume growth

Volumes in ONEOK's natural gas liquids segments rose 12% during the second quarter from the year-ago period, in large part because of drilling activities in the STACK and SCOOP shale plays of Oklahoma and the Permian Basin. Volumes in this segment should have continued expanding during the third quarter, not only because of continued drilling activities but also because ONEOK connected two third-party natural gas processing plants to its system during the second quarter.

Pipelines going over a blue sea and with a blue sky ahead.

Image source: Getty Images.

In addition, ONEOK should see an additional boost from another of its expansion initiatives. The company recently acquired full control of the West Texas LPG system from its former partner, Martin Midstream Partners (NASDAQ:MMLP). That deal will provide an immediate boost, since ONEOK will not only benefit from the additional 20% of volumes that used to flow to Martin Midstream, but the company also expected to complete an expansion project on that system during the third quarter.

Check if it's on track to hit its full-year guidance

The continued volume growth is what's driving ONEOK's earnings higher this year. Currently, the company expects its adjusted EBITDA to rise to a range of $2.3 billion-$2.4 billion, an 18% increase from 2017 at the midpoint, while distributable cash flow should be between $1.7 billion and $1.8 billion, up 26% at the midpoint. The midpoint of those ranges is slightly higher than the company's initial forecast, because of its strong showing through the first half as well as the acquisition of Martin Midstream's interest in the West Texas LPG system.

Ideally, ONEOK will remain on track to meet or exceed its recently boosted outlook. If that's not the case, investors should look for the culprit. One area to check is ethane volumes. The company estimates that it should generate an incremental $100 million of adjusted EBITDA this year by recovering more ethane because of increased demand among petrochemical plants for the NGL. If petrochemical demand for ethane didn't materialize as quickly as expected, it could cause the company's results to fall short.

A stack of pipes.

Image source: Getty Images.

See if ONEOK has any new project announcements

ONEOK has unveiled several new expansion projects over the past year. As a result, the company now expects to invest roughly $6 billion in expanding its system through 2021. These projects include two major NGL pipelines, as well as several new natural gas processing plants that should drive continued volume and cash flow growth.

However, with oil prices at their best level in years, producers have incentive to boost capital spending, which should drive volumes even higher in the future. ONEOK should therefore be able to continue locking up new projects, especially given the forecast that the industry needs to build roughly $800 billion of new oil and gas-related infrastructure over the next 18 years.

One area to watch is the Powder River Basin, which is emerging as a major growth area for the industry. ONEOK currently has a solid footprint in that area, which gives it a good base for future expansion as producers ramp up their drilling activities in the region.

Look for the momentum to continue

ONEOK has been on fire this year, not only growing earnings and cash flow at a fast pace but also locking up several needle-moving expansion projects. Shares of the pipeline giant have risen nearly 20% so far this year as a result. That fast-paced growth should continue during the third quarter.

However, given the current optimism surrounding the company, if it unexpectedly hits a speed bump during the third quarter, shares could give back some of their gains. If that were to happen, it would probably be a great opportunity to buy this one-of-a-kind company.

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