ONEOK, Inc. has announced definitive agreements to acquire Global Infrastructure Partners’ interests in EnLink Midstream, LLC and Medallion Midstream, LLC, in deals valued at approximately $5.9 billion. Under the first agreement, ONEOK will acquire GIP’s 43 percent stake in EnLink’s outstanding common units at $14.90 per unit and 100 percent of the interests in the managing member for $300 million, totalling around $3.3 billion. In a separate agreement, ONEOK will purchase all equity interests in Medallion Midstream, the largest privately held crude gathering and transportation system in the Permian’s Midland Basin, for $2.6 billion in cash.
CEO Perspective:
Pierce H. Norton II, ONEOK’s president and CEO, highlighted that the acquisitions align with ONEOK’s strategy to build a premier energy infrastructure company. He expressed excitement about expanding the company’s presence in the Permian Basin, a key growth area for U.S. oil and gas. Norton noted that these transactions would enhance value for stakeholders by integrating complementary assets and capturing synergies across ONEOK’s platforms.
Strategic Rationale:
- Expansion in the Permian Basin: The acquisitions will establish a fully integrated platform in the Permian Basin, adding 1.7 billion cubic feet per day of gas processing capacity and 1.6 million barrels per day of crude gathering capacity.
- Footprint Expansion in Key Regions: The EnLink acquisition enhances ONEOK’s presence in the Mid-Continent, North Texas, and Louisiana, adding significant gas and NGL infrastructure that connects to key demand centres.
- Immediate Financial Benefits: The transactions are expected to be immediately accretive to ONEOK’s earnings per share and free cash flow per share, supporting the company’s capital allocation strategy and share repurchase programme.
- Significant Synergies: ONEOK anticipates achieving annual synergies of approximately $250 million to $450 million within three years by integrating Medallion’s crude gathering business and EnLink’s Mid-Continent and Gulf Coast assets.
- Maintaining Strong Credit Ratings: ONEOK expects to maintain its investment-grade credit ratings, with a projected pro forma net debt-to-EBITDA ratio of approximately 3.9 times by the end of 2025, trending towards the company’s target of 3.5 times during 2026.
Details of the Transactions:
The $3.3 billion purchase price for EnLink includes $300 million for GIP’s interest in the managing member, with the remainder for the common units, representing a 12.8 percent premium to EnLink’s recent market price. Post-acquisition, ONEOK intends to pursue the acquisition of publicly held EnLink common units in a tax-free transaction, which is expected to enhance synergies and financial benefits for ONEOK shareholders.
ONEOK has secured financing commitments of up to $6.0 billion from JPMorgan Chase Bank, N.A. and Goldman Sachs Bank USA to fund the transactions. Both transactions, which are not cross-conditional, have received unanimous approval from ONEOK’s board and are expected to close in early Q4 2024, subject to customary conditions, including regulatory approvals.
Following the completion of the EnLink acquisition, ONEOK will gain control of EnLink’s managing member and intends to appoint new board members. ONEOK will continue to operate from its headquarters in Tulsa, Oklahoma, while maintaining a significant employee presence in Dallas and Houston.
For more information visit www.oneok.com
