On August 28, 2024, ONEOK, Inc. (NYSE: OKE) announced its plan to acquire Global Infrastructure Partners’ (GIP) entire interest in EnLink Midstream, LLC (NYSE: ENLC) and Medallion Midstream, LLC, significantly enhancing ONEOK’s presence in the Permian Basin and expanding its footprint in the Mid-Continent, North Texas, and Louisiana regions.
Key Highlights:
- Permian Basin Expansion: The acquisitions establish a fully integrated platform at scale, adding 1.7 billion cubic feet per day of Permian gas processing capacity and 1.6 million barrels per day of Permian crude gathering capacity.
- Footprint Extension: The EnLink transaction enhances ONEOK’s gas and NGL operations in Oklahoma, North Texas, and Louisiana, directly connecting to key demand centers.
- Financial Benefits: The transactions are immediately accretive to earnings per share (EPS) and free cash flow (FCF), supporting ONEOK’s capital allocation strategy.
- Synergies: ONEOK expects significant synergies through complementary asset positions, with potential annual synergies of $250 million to $450 million within three years.
- Credit Ratings: ONEOK aims to maintain its strong investment-grade credit ratings, with a pro forma 2025 year-end net debt-to-EBITDA ratio of approximately 3.9 times.
Strategic Rationale: ONEOK’s acquisition of GIP’s interests, including the 43% stake in EnLink and 100% of Medallion Midstream, is valued at approximately $5.9 billion. This strategic move is expected to bolster ONEOK’s operational capabilities, particularly in the Permian Basin, a key area for U.S. oil and gas growth. Additionally, the acquisition provides ONEOK with a stronger presence in the Mid-Continent, North Texas, and Louisiana, offering new service opportunities and enhancing its integrated energy infrastructure network.
Upon closing, ONEOK intends to pursue a tax-free acquisition of the remaining publicly held EnLink common units, further consolidating its position and enhancing shareholder value.
Financing and Advisors: ONEOK has secured financing commitments from JPMorgan Chase Bank, N.A., and Goldman Sachs Bank USA for up to $6.0 billion to fund the transactions. The deals are expected to close early in the fourth quarter of 2024, subject to customary conditions, including Hart-Scott-Rodino Act clearance.
This strategic acquisition underscores ONEOK’s commitment to expanding its energy infrastructure capabilities while maintaining financial discipline and delivering value to its stakeholders.
