ONEOK has agreed to acquire Brazos Midstream’s Permian Midland Basin natural gas gathering and processing assets for $4.425 billion in cash, while Apollo will make a separate $9 billion nonvoting minority equity investment designed to fund the acquisition and accelerate ONEOK’s deleveraging.
ONEOK plans to use approximately $5 billion of Apollo’s investment to extinguish existing debt, which is expected to reduce pro forma 2027 leverage to approximately 3.25 times debt-to-EBITDA.
The Apollo capital carries a capped 7% internal rate of return for the first nine years and will be structured as a Class B interest in a newly formed holding company. ONEOK expects the investment to receive full equity credit from ratings agencies.
The Brazos transaction is expected to be immediately accretive to earnings and free cash flow per share.
ONEOK estimates the acquisition price at approximately 7.5 times projected 2027 EBITDA, including about $80 million of full-year synergies, and approximately six times projected 2028 EBITDA.
The acquired platform includes approximately 600,000 dedicated acres under long-term fixed-fee contracts with a weighted average remaining term exceeding 12 years.
Following completion of the Cassidy II processing plant in the third quarter of 2027, Brazos is expected to have about 700 miles of gathering infrastructure and 1.2 Bcf/d of processing capacity.
The combination will more than double ONEOK’s Midland Basin processing capacity to approximately 2.3 Bcf/d, including facilities under construction.
The acquisition is expected to close during the fourth quarter of 2026, while Apollo’s minority investment is targeted to close in the first half of September.
KEY QUOTES:
“These assets add a premier Permian Midland Basin platform supported by long-term contracts and attractive growth opportunities.”
Pierce H. Norton II, President And CEO Of ONEOK
“This transaction reflects Apollo’s ability to deliver flexible, high-grade capital solutions at scale, structured around ONEOK’s long-term strategic objectives.”
Jamshid Ehsani, Partner At Apollo
