ONEOK to Acquire Brazos Midstream's Permian Midland Basin Assets for $4.425 Billion
Rhea-AI Summary
ONEOK (NYSE: OKE) agreed to acquire Brazos Midstream's Permian Midland Basin natural gas gathering and processing assets for $4.425 billion in cash. The deal will be funded by a $9 billion nonvoting minority equity investment in ONEOK from funds managed by Apollo (NYSE: APO).
According to ONEOK, about $5 billion of the Apollo proceeds will be used to extinguish existing debt, targeting pro forma 2027 leverage of roughly 3.25x debt-to-EBITDA with no common equity issuance. The transaction is expected to be immediately accretive to earnings and free cash flow per share and support the high end of ONEOK's mid- to high-single-digit adjusted EBITDA growth target over the next five to seven years.
The Brazos Midland system adds roughly 600,000 dedicated acres under long-term fixed-fee contracts, is expected to reach 1.2 Bcf/d of processing capacity after the Cassidy II plant startup, and will more than double ONEOK's Midland Basin processing capacity to about 2.3 Bcf/d, including plants under construction.
Positive
- Cash acquisition of Brazos Midland assets for $4.425 billion
- $9 billion Apollo minority equity investment funds deal and deleveraging
- Planned $5 billion debt extinguishment, targeting ~3.25x 2027 debt-to-EBITDA
- Acquisition expected to be immediately accretive to earnings and free cash flow per share
- Implied multiple ~7.5x 2027 EBITDA including $80 million synergies; ~6.0x 2028 EBITDA
- Dedicated acreage of ~600,000 acres with >12-year weighted average remaining term
- Midland Basin processing capacity more than doubles to about 2.3 Bcf/d
- Credit rating agencies viewed Apollo investment as credit-enhancing with expected full equity credit
Negative
- Apollo Class B interest expected to receive 15% of quarterly OpCo cash flow
- Approximately 7.0% of remaining Class B capital balance subtracted from net income as noncontrolling interest
- Capped IRR on Class B steps up from 7.0% to as high as 7.85% by year 15
- ONEOK may need to allocate up to 20% of quarterly OpCo cash flow to accelerate Class B paydown, subject to conditions
News Explained
Apollo's nine-billion-dollar investment avoids common-share issuance but creates a capped-return minority claim on operating cash flows until its capital account is paid down.
ONEOK has executed a definitive agreement to acquire Brazos Midstream's assets for
The announced financing uses a
Apollo's Class B interest is structurally subordinate to senior debt, has no liquidation preference or board representation, and is expected to receive
For accounting purposes, approximately
Key Figures
Previous Acquisition Reports
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| Aug 03 | Water platform acquisition | Positive | +2.9% | Apollo-managed funds acquired Maverick Water Group to expand water infrastructure operations. |
| Jul 23 | Distribution facility acquisition | Positive | -0.0% | Bridge Logistics Properties acquired a fully leased Washington distribution facility. |
| Jul 14 | Events platform acquisition | Positive | +1.6% | Apollo completed acquisitions creating a combined B2B events and media platform. |
| Jun 22 | Texas facility acquisition | Positive | -1.7% | Bridge Logistics Properties acquired a fully leased Texas distribution center. |
| May 12 | Environmental platform acquisition | Positive | +1.1% | Apollo-managed funds acquired a majority stake in Noble Environmental. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Apollo's acquisition-tagged events produced mostly positive reactions, but two of five events diverged from the announcement's positive direction.
Key Terms
internal rate of return financial
debt-to-EBITDA financial
noncontrolling interest financial
Bcf/d technical
AI-generated analysis. How Rhea-AI works. Not financial advice.
Acquisition Increases Momentum Toward the High End of ONEOK's Mid- to High-
Single-Digit Adjusted EBITDA Growth Target Over the Next Five to Seven Years
Expected to Be Immediately Accretive to Earnings and Free Cash Flow Per Share
Funds Acquisition and
Accelerates Deleveraging to 3.25x Debt-to-EBITDA with
No Issuance of Common Equity
Accelerates ONEOK's Flexibility for Capital Allocation Including Organic Growth,
Potential Dividend Increases and Share Buybacks
"This transaction demonstrates ONEOK's strategy of intentionally expanding and extending our integrated energy infrastructure," said Pierce H. Norton II, ONEOK president and CEO. "These assets add a premier Permian Midland Basin platform supported by long-term contracts and attractive growth opportunities.
"The 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 chain, positioning ONEOK to capture significant volume growth in one of the most economic and rapidly growing resource plays," added Norton. "The combination of this acquisition with the minority equity investment demonstrates our commitment to creating shareholder value while accelerating our deleveraging to 3.25 times debt-to-EBITDA, further enhancing our balance sheet."
"ONEOK has built one of the largest and most diversified midstream platforms in the country, providing essential services and infrastructure to help meet rapidly expanding domestic and international energy demand," said Apollo Partner Jamshid Ehsani. "This transaction reflects Apollo's ability to deliver flexible, high-grade capital solutions at scale, structured around ONEOK's long-term strategic objectives."
STRATEGIC OVERVIEW
The acquisition will be funded through a
In addition to funding the acquisition, ONEOK intends to extinguish approximately
These steps will accelerate ONEOK's deleveraging timeline and will more than achieve the company's previous target leverage without issuing common equity while supporting a growing backlog of organic growth opportunities, particularly in the Permian Basin, as well as other business segments.
The acquisition increases momentum toward the high end of ONEOK's mid- to high-single-digit adjusted EBITDA growth target over the next five to seven years and accelerates ONEOK's flexibility to increase capital returns to shareholders, including through potential dividend increases and share buybacks.
PREMIER PERMIAN MIDLAND BASIN PLATFORM
The transaction implies a multiple of approximately 7.5 times estimated 2027 EBITDA, inclusive of approximately
The acquisition strengthens ONEOK's integrated Permian-to-Gulf Coast strategy by:
- Expanding scale in the rapidly growing Permian Midland Basin.
- Adding long-term, fee-based contracted growth with leading Permian producers.
- Enhancing connectivity across the natural gas and NGL value chain.
- Optimizing commercial and capital savings opportunities.
- Delivering immediate accretion to earnings and free cash flow per share.
The acquired Brazos Midland assets create a scaled, integrated Permian Midland Basin platform that strengthens ONEOK's position in one of the most active and economic producing regions in
Following completion of the Cassidy II processing plant expected in the third quarter of 2027, the Brazos Midland system will include approximately 700 miles of gathering infrastructure and 1.2 billion cubic feet per day (Bcf/d) of processing capacity across seven core Permian Midland Basin counties. Through the acquisition, ONEOK also obtains a Permian Midland Basin-wide area of mutual interest (AMI) with a key private producer, creating additional opportunities to capture future growth.
The Brazos Midland assets are highly complementary to ONEOK's existing Permian Midland Basin natural gas gathering and processing, NGL transportation and crude oil infrastructure. The acquisition more than doubles ONEOK's Midland Basin processing capacity to approximately 2.3 Bcf/d, including plants currently under construction, and establishes one of the Permian Midland Basin's largest integrated natural gas gathering and processing platforms.
The combination expands ONEOK's ability to capture volume growth across the value chain while optimizing capital deployment and utilizing existing downstream infrastructure, including the company's West Texas NGL Pipeline and soon-to-be-completed Medford NGL fractionation facility. By integrating commercial, operational and capital activities across the combined footprint, ONEOK expects to achieve significant recurring synergies over the long term, further reducing the effective acquisition multiple over time to be in line with ONEOK's historical organic build multiples.
MINORITY EQUITY INVESTMENT
Further strengthening its financial position, ONEOK has entered into an agreement with Apollo and affiliates for a
Minority equity investment highlights:
- Return capped at a
7.0% IRR for the first nine years of the investment with value creation above the capped return rate accruing to ONEOK common shareholders. - Investor's capital account balance is expected to substantially decline over time through cash distributions that vary with cash flow from operations.
- Income attributable to the noncontrolling interest (NCI) is expected to tie closely to the
7.0% capped IRR multiplied by the investor's then outstanding capital account balance. - No liquidation preference and is structurally subordinate to all existing ONEOK senior debt.
- Provides ONEOK the option to acquire any remaining minority interest beginning eight years after closing or earlier if investor capital account balance declines to
$200 million - No Hypothetical Liquidation at Book Value (HLBV) accounting treatment necessary for this structure.
Under the terms of the agreement, Apollo will invest
The total minority equity investor return is capped at a
Beginning on the eighth anniversary of closing, or earlier if the Class B capital account balance reaches
The investment has been reviewed with ONEOK's credit rating agencies, all of which consider the transaction as credit-enhancing, and ONEOK expects to receive full equity credit. Under Generally Accepted Accounting Principles (GAAP), the investment will be reported on the balance sheet as a noncontrolling interest (NCI) within permanent equity. On the income statement, approximately
TRANSACTION TIMING
The Brazos Midland acquisition is expected to close in the fourth quarter of 2026 and has been unanimously approved by ONEOK's Board of Directors. The closing of the transaction is subject to customary closing conditions, including Hart-Scott-Rodino Act clearance.
The minority equity investment has been unanimously approved by ONEOK's Board of Directors and is expected to close in the first half of September, subject to customary closing conditions.
As part of these strategic transactions, ONEOK intends to extinguish
This press release shall not constitute an offer to sell or a solicitation of an offer to buy the securities described above, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state or jurisdiction.
CONFERENCE CALL INFORMATION
Members of ONEOK's management team will participate in a conference call at 9 a.m. Eastern (8 a.m. Central) on Aug. 31, 2026. The call will also be webcast.
To participate in the conference call, dial 800-330-6710, confirmation code: 8307680, or log on to the webcast at www.oneok.com.
If you are unable to participate in the conference call or webcast, a recording will be available at www.oneok.com for one year.
TRANSACTION PRESENTATION
https://ir.oneok.com/news-and-events/events-and-presentations
ADVISORS
Barclays served as sole financial advisor to ONEOK on the Brazos Midland acquisition and lead financial advisor to ONEOK on the minority equity investment. Lazard also served as financial advisor to ONEOK on the minority equity investment.
Latham & Watkins LLP served as legal advisor to ONEOK on the acquisition and minority equity investment.
RBC Capital Markets served as sole financial advisor and Milbank LLP served as legal counsel to Apollo.
Akin Gump Strauss Hauer & Feld LLP served as legal advisor to Brazos Midstream.
NON-GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) FINANCIAL MEASURES:
This news release references certain non-GAAP financial measures, including forward-looking transaction-related adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) multiples and targets, and free cash flow. These measures may not be comparable to similarly titled measures of other companies, are not measurements of financial performance under GAAP, and should not be considered alternatives to amounts presented in accordance with GAAP. Because these measures are provided on a forward-looking basis, ONEOK is unable to present a quantitative reconciliation to the most directly comparable forward-looking GAAP measures without unreasonable effort.
ABOUT ONEOK:
At ONEOK (NYSE: OKE), we deliver energy products and services vital to an advancing world. We are a leading midstream operator that provides gathering, processing, fractionation, transportation, storage and marine export services. Through our approximately 60,000-mile pipeline network, we transport the natural gas, natural gas liquids (NGLs), refined products and crude oil that help meet domestic and international energy demand, contribute to energy security and provide safe, reliable and responsible energy solutions needed today and into the future. As one of the largest integrated energy infrastructure companies in
ONEOK is an S&P 500 company headquartered in
For information about ONEOK, visit www.oneok.com. For the latest news, visit the ONEOK newsroom or find us on LinkedIn, Facebook, X and Instagram.
ABOUT APOLLO:
Apollo is a high-growth, global alternative asset manager. In our asset management business, we seek to provide our clients excess return at every point along the risk-reward spectrum from investment grade credit to private equity. For more than three decades, our investing expertise across our fully integrated platform has served the financial return needs of our clients and provided businesses with innovative capital solutions for growth. Through Athene, our retirement services business, we specialize in helping clients achieve financial security by providing a suite of retirement savings products and acting as a solutions provider to institutions. Our patient, creative, and knowledgeable approach to investing aligns our clients, businesses we invest in, our employees, and the communities we impact, to expand opportunity and achieve positive outcomes. As of June 30, 2026, Apollo had approximately
ABOUT BRAZOS MIDSTREAM:
Headquartered in Fort Worth, Texas, Brazos Midstream represents the largest privately held midstream platform in the Midland Basin. Brazos Midstream's critical hydrocarbon infrastructure of natural-gas gathering pipelines spans the most prolific producing counties in the Midland Basin. Brazos has expansion projects underway to expand its current processing capacity to approximately 1.2 billion cubic feet per day (Bcf/d) in 2027. Brazos Midstream's Midland platform is backed by Old Ironsides Energy, LLC and EnCap Flatrock Midstream, L.P.
FORWARD-LOOKING STATEMENTS:
Some of the statements contained and incorporated in this news release are forward-looking statements as defined under federal securities laws. The forward-looking statements relate to our anticipated financial performance (including projected levels of quarterly and annual dividends and adjusted EBITDA), growth, leverage, synergies, liquidity, market conditions and other matters. We make these forward-looking statements in reliance on the safe harbor protections provided under federal securities laws and other applicable laws.
Forward-looking statements include the items identified in the preceding paragraph, the information concerning possible or assumed future results of our operations and other statements contained or incorporated in this news release identified by words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "goal," "guidance," "intend," "may," "might," "outlook," "plan," "potential," "project," "scheduled," "should," "will," "would" and other words and terms of similar meaning.
One should not place undue reliance on forward-looking statements. Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements, including, without limitation, conditions to the completion of the acquisition, such as required regulatory clearance, not being satisfied; closing of the acquisition or minority equity investment being delayed or not occurring at all; the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the acquisition agreement; and ONEOK being unable to achieve the anticipated benefits of the acquisition or minority equity investment, including failure to achieve anticipated growth levels or operational synergies. Those factors may affect our operations, markets, products, services and prices. These and other risks are described in greater detail in Item 1A, Risk Factors, in our most recent Annual Report on Form 10-K and in the other filings that we make with the Securities and Exchange Commission (SEC), which are available on the SEC's website at www.sec.gov. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these factors. Any such forward-looking statement speaks only as of the date on which such statement is made, and, other than as required under securities laws, we undertake no obligation to update publicly any forward-looking statement whether as a result of new information, subsequent events or change in circumstances, expectations or otherwise.
Contacts:
Investor Relations:
Megan Patterson
918-561-5325
ONEOKInvestorRelations@oneok.com
Media Relations:
Alicia Keenom
918-861-3749
Media@oneok.com
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SOURCE Oneok, Inc.