US Pipeline Operator ONEOK Inks Two Deals for $5.9 Billion

(Bloomberg) -- US pipeline operator ONEOK Inc. agreed to buy a Permian Basin rival and a controlling stake in another company in two transactions valued at a combined $5.9 billion.

ONEOK will acquire Global Infrastructure Partners’ entire interest in EnLink Midstream LLC and also buy GIP’s equity interests in Medallion Midstream, the largest closely held crude gathering and transportation system in the Permian, it said in a statement late Wednesday.

The move expands ONEOK’s presence in the most prolific US oil and gas basin. It’s the latest in a spate of deals in the industry as private equity firms offload assets to corporate buyers. Operators of oil and gas assets are looking to scale up as cash-flush fossil fuel companies consolidate and look to refresh their drilling inventory.

New York-based Global Infrastructure Partners is a private equity firm specializing in energy, transportation, water and waste management.

ONEOK shares gained 0.8% in New York. EnLink surged 11%. 

The deals will give ONEOK an additional 1.7 billion cubic feet per day of gas processing capacity in the Permian and 1.6 million barrels per day of crude gathering capacity in the basin. They also expand the company’s presence in Oklahoma, North Texas and Louisiana. That positions ONEOK to take advantage of blossoming demand for liquefied natural gas out of the coast of Louisiana.

EnLink will also provide ONEOK with a new position in Louisiana that includes 220,000 barrels a day of NGL fractionation capacity and about 4 billion cubic feet per day of natural gas pipeline capacity, both of which are connected to key demand centers.

ONEOK expects the natural gas transmission assets to benefit from strong industrial demand growth related to power generation for data centers, LNG export terminals, and existing and permitted ammonia and hydrogen facilities. 

The company also sees value in expanding its presence in the Permian, Chief Executive Officer Pierce Norton said on a call with analysts Thursday.

“We provide a full suite of services, kind of a one-stop shop, and we think that’s going to give us a really strong competitive advantage in the Permian,” he said.

The transaction is expected to close in the fourth quarter of 2024, Tulsa, Oklahoma-based ONEOK said in the statement. ONEOK has financing commitments from JPMorgan Chase & Co. and Goldman Sachs Group Inc. to cover up to $6 billion of the cash portion of the deals.

Goldman was ONEOK’s lead financial adviser for both transactions. Greenhill and Scotiabank served as advisers to GIP for the Enlink deal, while RBC Capital Markets advised GIP on the Medallion takeover. 

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