ONEOK, Inc. announced a definitive agreement to acquire Brazos Midstream's Permian Midland Basin natural gas gathering and processing assets for $4.425 billion in cash. This acquisition is a strategic move to expand and integrate ONEOK's energy infrastructure, specifically in the rapidly growing Permian Midland Basin.
The acquisition will be funded by a $9 billion nonvoting minority equity investment from funds managed by Apollo. ONEOK plans to use $5 billion of these proceeds to reduce its existing debt, aiming to achieve a pro forma 2027 leverage of approximately 3.25 times debt-to-EBITDA. The investment from Apollo carries an internal rate of return capped at 7.0% for the first nine years.
The transaction is valued at approximately 7.5 times estimated 2027 EBITDA, including $80 million in full-year synergies, and approximately 6.0 times estimated 2028 EBITDA. The acquisition is expected to be immediately accretive to earnings and free cash flow per share. The acquired assets include about 600,000 dedicated acres under long-term fixed-fee contracts with a weighted average remaining term exceeding 12 years. Following the completion of the Cassidy II processing plant in Q3 2027, the system will have 700 miles of gathering infrastructure and 1.2 billion cubic feet per day of processing capacity, more than doubling ONEOK's Midland Basin processing capacity to approximately 2.3 billion cubic feet per day.
This deal positions ONEOK to capture significant volume growth and strengthens its connectivity across its natural gas and NGL value chain. The company expects the acquisition to accelerate its deleveraging goals and increase flexibility for capital returns to shareholders. The transaction, unanimously approved by ONEOK’s Board of Directors, is expected to close in the fourth quarter of 2026, subject to customary closing conditions.
