ONEOK, Magellan Midstream merging in $18.8 billion deal

Pipeline giant ONEOK plans to buy Magellan Midstream which would create one of the biggest oil & gas infrastructure companies in the U.S.

The $18.8 billion cash and stock deal adds a leading, primarily fee-based, refined products and crude oil transportation business to ONEOK, a leading midstream service provider and owns one of the nation’s premier natural gas liquids (NGL) systems, connecting NGL supply in the Rocky Mountain, Permian and Mid-Continent regions with key market centers and owns an extensive network of gathering, processing, fractionation, transportation and storage assets.

ONEOK plans to acquire Magellan Midstream Partners in a transaction valued at $18.8 billion. Shown is ONEOK’s Demicks Lake natural gas processing facility in North Dakota. (Image: ONEOK)

The transaction is expected to close in the third quarter of 2023 and has been unanimously approved by the board of directors of both companies. ONEOK has secured $5.25 billion in fully committed bridge financing for the proposed cash consideration. The closing of the transaction is subject to customary closing conditions, including the approvals of both ONEOK shareholders and Magellan unitholders, as well as Hart Scott Rodino Act clearance.

The combined company will have a total enterprise value of $60 billion, according to a statement. 

“ONEOK has a long history and track record of being at the forefront of transformational transactions. The combination of ONEOK and Magellan will create a diversified North American midstream infrastructure company with predominately fee-based earnings, a strong balance sheet and significant financial flexibility focused on delivering essential energy products and services to our customers and continued strong returns to investors,” said Pierce H. Norton II, ONEOK president and chief executive officer. “Our expanded products platform will present further opportunities in our core businesses as well as enhance our ability to participate in the ongoing energy transformation with an increased presence in sustainable fuel and hydrogen corridors. We are excited about the future of our combined companies and look forward to welcoming Magellan’s well-respected employees to ONEOK.”

In 2004, Tulsa, OK-based Magellan purchased significant assets from Shell, including more than 3,000 miles of refined product pipelines as well as terminals and storage capacity. In 2009, we bought the Longhorn Pipeline running from Houston to El Paso. The reversal of this line has played a key part in Magellan’s move into the crude oil business. In 2010, Magellan purchased another 100 miles of pipeline and 7.8 million barrels of storage from BP. In 2013, Magellan acquired approximately 800 miles of refined petroleum products pipeline, four terminals and 1.7 million barrels of storage from Plains All American Pipeline. This purchase added assets in Colorado, New Mexico, South Dakota and Wyoming.

Today, Magellan has a 9,800-mile refined products pipeline system with 54 connected terminals and two marine storage terminals (one of which is owned through a joint venture). In addition, we own approximately 2,200 miles of crude oil pipelines, a condensate splitter and storage facilities with an aggregate storage capacity of about 39 million barrels, of which 29 million are used for contract storage. Approximately 1,000 miles of these pipelines, the condensate splitter and 31 million barrels of this storage capacity (including 25 million barrels used for contract storage) are wholly-owned, and the remainder is owned through joint ventures.