Oneok, Inc. (NYSE:OKE) shares are trading higher during Monday’s premarket session. On Monday, the company disclosed a plan to acquire Brazos Midstream’s Permian Midland Basin assets for $4.425 billion.
The acquisition includes natural gas gathering and processing assets in the Permian Midland Basin.
Transaction Details
The deal values Brazos at approximately 7.5x estimated 2027 EBITDA, including $80 million in annual synergies, and 6.0x estimated 2028 EBITDA.
The acquisition will be financed through a $9 billion nonvoting minority equity investment from funds and affiliates managed by Apollo (NYSE:APO), with $5 billion of the proceeds earmarked to reduce ONEOK’s existing debt.
The investment carries a 7% IRR cap for the first nine years, below ONEOK’s cost of publicly traded equity, while distributions above the cap will gradually reduce the minority equity balance and increase the economic value attributable to ONEOK common shareholders.
ONEOK plans to retire approximately $5 billion of debt through repayments, make-whole calls and a tender offer for senior notes, most of which are currently trading below par.
The move is expected to immediately lower pro forma 2027 leverage to about 3.25x debt-to-EBITDA, accelerating deleveraging and exceeding the company’s previous leverage target without issuing common equity.
As of June 30, ONEOK had cash and cash equivalents totaling $161 million.
Brazos Midstream Permian Assets
Brazos brings approximately 600,000 dedicated acres under fixed-fee contracts with more than 12 years of average remaining term and 14 active rigs operated by producers including ExxonMobil, Diamondback Energy and Double Eagle.
After Cassidy II is completed in the third quarter of 2027, the system will have about 700 miles of gathering infrastructure and 1.2 Bcf/d of processing capacity across seven Midland Basin counties. ONEOK will also gain a basin-wide AMI with a key private producer.
The assets complement ONEOK’s existing Midland Basin infrastructure and will more than double its processing capacity to approximately 2.3 Bcf/d, creating one of the region’s largest integrated gathering and processing platforms.
Synergies & Benefits
The deal is expected to strengthen ONEOK’s Permian-to-Gulf Coast strategy by expanding Midland Basin scale, adding long-term fee-based contracts, improving natural gas and NGL connectivity, enhancing capital efficiency and generating immediate earnings accretion.
The acquisition is projected to move ONEOK toward the upper end of its mid- to high-single-digit adjusted EBITDA growth target over the next five to seven years while increasing its flexibility to return capital to shareholders through potential dividend increases and share repurchases.
The acquisition is expected to immediately boost ONEOK’s earnings and free cash flow per share, supported by contracted volume growth.
The combined system will support volume growth, better capital utilization and greater use of downstream assets, including the West Texas NGL Pipeline and Medford fractionation facility.
ONEOK expects recurring synergies to further reduce the effective acquisition multiple toward its historical organic-build levels.
What ONEOK Does And Why The Permian Matters
Oneok is a diversified midstream service provider specializing in natural gas gathering, processing, storage, and transportation, as well as natural gas liquids transportation and fractionation.
It also operates in refined products and crude oil, connecting producers, refiners, and end markets across key U.S. basins.
That business model tends to reward scale and basin density, which is why adding Brazos Midstream’s Permian Midland Basin assets can matter: it potentially deepens Oneok’s footprint in one of the most active U.S. production regions.
With operations spanning the midcontinent, Permian, and Rocky Mountain regions, the company’s growth narrative often comes down to how effectively it can expand volumes and optimize its network over multi-year cycles.
OKE Price Action: Oneok shares were up 1.31% at $96.00 during premarket trading on Monday. The stock is approaching its 52-week high of $97.90, according to Benzinga Pro data.
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