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
$9 Billion Minority Equity Investment from Apollo
Funds Acquisition and $5 Billion Debt Extinguishment
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
TULSA, Okla., Aug. 30, 2026 /PRNewswire/ -- ONEOK, Inc. $(OKE)$ today announced that it has executed a definitive agreement to acquire Brazos Midstream's Permian Midland Basin natural gas gathering and processing assets for total cash consideration of $4.425 billion. The acquisition will be funded through a $9 billion nonvoting minority equity investment from funds and affiliates managed by Apollo $(APO)$ (Apollo). ONEOK intends to use $5 billion of proceeds from the equity investment to reduce ONEOK's existing indebtedness.
"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 $9 billion nonvoting minority equity investment in ONEOK's existing business. The investment carries an internal rate of return $(IRR)$ that is capped at 7.0% for the first nine years of the investment, which is lower than ONEOK's cost of publicly traded equity. Distributions in excess of the capped IRR will reduce the minority equity capital balance over time, which increases the economic value attributable to ONEOK common shareholders.
In addition to funding the acquisition, ONEOK intends to extinguish approximately $5 billion of existing indebtedness, immediately reducing expected pro forma 2027 leverage to approximately 3.25 times debt-to-EBITDA. The debt extinguishment plan will include repayments, make-whole calls and a tender offer for senior notes (most of the targeted senior notes are currently trading below par).
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 $80 million of full-year synergies, and approximately 6.0 times estimated 2028 EBITDA, reflecting the expected significant growth of the Brazos platform, as well as additional commercial and operational synergies expected to be realized through further integration with ONEOK's existing Permian Basin assets. The combined ONEOK and Brazos systems are also expected to generate additional capital efficiencies as capacity is optimized across the platform. The acquisition is expected to be immediately accretive to earnings and free cash flow per share, supported by substantial contracted growth across Brazos' dedicated acreage.
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 North America. Supported by approximately 600,000 dedicated acres under long-term fixed-fee contracts with a weighted average remaining term of more than 12 years, the system provides substantial visibility to future volume growth and is currently supported by 14 active drilling rigs from leading Permian producers including ExxonMobil, Diamondback Energy and Double Eagle.
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 $9 billion minority equity investment.
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 prior to that date.
-- No Hypothetical Liquidation at Book Value (HLBV) accounting treatment
necessary for this structure.
Under the terms of the agreement, Apollo will invest $9 billion in exchange for a Class B interest in a newly formed holding company, ONEOK Holdings, L.L.C. (HoldCo), which is structurally subordinate to the company's debt. The Class B interest is expected to receive 15% of quarterly cash flow from ONEOK, L.L.C. (OpCo) operations. Because those distributions are expected to exceed the Class B capped return of 7.0% IRR, the Class B capital account balance is expected to substantially decline over time. There are no penalties if the quarterly distribution is below the capped return. ONEOK has the option each quarter to accelerate the Class B investor capital paydown by electing to distribute up to 20% of quarterly cash flow from OpCo's operations to the Class B interest, subject to certain conditions. The Class B interest carries limited consent rights related to HoldCo, has no board representation or liquidation preference, and is subordinate to all ONEOK senior debt. All distributions paid to HoldCo are at the discretion of the OpCo board.
The total minority equity investor return is capped at a 7.0% IRR for the first nine years of the investment. The target IRR on the then-current capital account balance steps to 7.35% in year 10 and increases to a final cap of 7.85% in year 15. All value creation above the capped IRR, including growth from the Brazos Midland acquisition, ONEOK's existing portfolio and future initiatives, accrues to ONEOK common shareholders.
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