ONEOK to Acquire Permian Assets for $4.425 Billion, Closing in 2026

en.Wedoany.com Reported - ONEOK has signed a definitive agreement to acquire Brazos Midstream's natural gas gathering and processing assets in the Permian Midland Basin for $4.425 billion in cash. The transaction is expected to close in the fourth quarter of 2026, subject to regulatory approvals and customary conditions.

The acquisition will be funded by a $9 billion non-voting minority equity investment from funds managed by Apollo and its affiliates. ONEOK plans to use $5 billion of that amount to repay existing debt, targeting a pro forma leverage ratio of approximately 3.25x debt/EBITDA by 2027. The company stated that no common stock will be issued in connection with the acquisition.

The acquired assets include approximately 700 miles of gathering infrastructure and 1.2 billion cubic feet per day of processing capacity, covering seven counties in the Permian Midland Basin. These facilities are supported by approximately 600,000 acres of dedicated acreage, which is subject to long-term fixed-fee contracts with a weighted average remaining contract life of more than 12 years, and currently have 14 active rigs operating.

Upon completion of the Cassidy II processing plant, expected to come online in the third quarter of 2027, the combined operations will more than double ONEOK's processing capacity in the Midland Basin to nearly 2.3 billion cubic feet per day (including plants under construction). Additionally, the company has entered into an arrangement with a private producer covering a joint interest area spanning the entire Permian Midland Basin, providing further growth opportunities.

ONEOK expects the acquisition to be immediately accretive to earnings per share and free cash flow. Based on asset valuation, the transaction represents approximately 7.5x projected 2027 EBITDA, including approximately $80 million in annual synergies, and approximately 6x projected 2028 EBITDA.

Pierce Norton II, ONEOK President and Chief Executive Officer, stated: "This transaction demonstrates ONEOK's strategy to strategically expand and extend our integrated energy infrastructure. These assets add a premier Permian Midland Basin platform supported by long-term contracts and attractive growth opportunities." "This acquisition expands our scale in the Permian Midland Basin, advances our integrated wellhead-to-water strategy, and strengthens connectivity across our natural gas and NGL value chains, positioning ONEOK to capture significant production growth in one of the most economic and rapidly growing resource plays."

Apollo's minority equity investment includes Class B interests in a new holding company, with an internal rate of return cap of 7% for the first nine years. Both the acquisition and the minority equity investment were unanimously approved by ONEOK's Board of Directors, with the minority equity investment expected to close in the first half of September, subject to customary closing conditions.

Barclays is serving as ONEOK's sole financial advisor on the Brazos Midland transaction and lead advisor on the minority equity investment, with Lazard also providing advisory services. ONEOK's legal counsel is Latham & Watkins. Apollo is being advised by RBC Capital Markets and Milbank, while Brazos Midstream is being advised by Akin Gump Strauss Hauer & Feld.