What: Shares of pipeline company Oneok Partners (NYSE:OKS) saw shares drop 14% in June on general weakness in the oil market as well as growing concerns of the oversupply of natural gas liquids in the United States

So What: It's not exactly easy to have a good month when the broader market in which you operate declines more than 9%. This is what we saw last June the Alerian MLP Index -- of which Oneok is a pretty large component.

^AMZ data by YCharts

What is also probably weighing on shares are continued weakness in natural gas liquids -- NGL --  prices, which like oil have been on a rather sharp decline as of late. For the most part, pipeline companies don't normally see the ups and downs that other parts of the oil and gas do when commodity prices do move. However, Oneok has a little bit more of its pipeline and processing contracts exposed to commodity prices than some of its peers. Today, Oneok generates about 75% of its gross margin from fee based services, whereas many other natural gas and natural gas liquid pipeline companies shoot for 85% or more of their gross margin from fees rather than commodity price based. 

This slightly higher exposure is also weighing down on the company's distribution outlook for the year. According to a recent presentation from the parent company Oneok (NYSE:OKE) earlier in the month, Oneok Partners does not expect to generate enough distributable cash from its operations to completely cover its distribution to shareholders -- although the parent company will thanks to its rather large cut from incentive distribution rights. If this budgeting blip isn't corrected, investors in the partnership will start to question the sustainability of the company's payout.

Now What: There are two trains of thought when it comes to Oneok. Either this is a temporary blip for a pipeline company that has an investment grade that will be corrected in time as either new projects come online or prices improve on some of those non-fee based services. If you fall into that category then Oneok Partners, with its 9.6% distribution yield, looks pretty tempting.

If you are of the less optimistic camp, then the lack of distributable cash is throwing up some red flags that perhaps the company has been stretching itself a little too thin with its expansion plans and perhaps those commodity price based services are not as attractive as they once were. If NGL prices continue to remain weak, then perhaps it may be worth waiting on the sideline in the event that management decides to make any changes to its distribution.