ONEOK to acquire Brazos Midstream assets for $4.4 billion

Brazos Midstream’s Permian Midland Basin natural gas gathering and processing assets.

ONEOK has agreed to acquire Brazos Midstream’s Permian Midland Basin natural gas gathering and processing assets for $4.425 billion, significantly expanding the company’s gas processing footprint in one of the most active U.S. producing regions.

The transaction will add a large gathering and processing system supported by approximately 600,000 dedicated acres under long-term, fixed-fee contracts. The acreage is currently supported by 14 active drilling rigs operated by producers including ExxonMobil, Diamondback Energy and Double Eagle.

Once the Cassidy II processing plant is completed, which is expected in the third quarter of 2027, the Brazos system will include approximately 700 miles of gathering infrastructure and 1.2 Bcf/d of processing capacity across seven core Midland Basin counties.

The acquisition will more than double ONEOK’s Midland Basin processing capacity to approximately 2.3 Bcf/d, including plants currently under construction. The company said the combined operations will create one of the largest integrated natural gas gathering and processing platforms in the Midland Basin.

“This transaction demonstrates ONEOK’s strategy of intentionally expanding and extending our integrated energy infrastructure,” ONEOK President and CEO Pierce H. Norton II said. “These assets add a premier Permian Midland Basin platform supported by long-term contracts and attractive growth opportunities.”

Norton said the assets will also strengthen ONEOK’s ability to connect Permian production with its downstream natural gas and natural gas liquids infrastructure.

“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,” he said.

Expanding Permian infrastructure

The transaction further builds ONEOK’s position across the Permian-to-Gulf Coast energy corridor at a time when increasing natural gas production is being supported by growing LNG exports, power generation and other sources of Gulf Coast demand.

The Brazos assets complement ONEOK’s existing Midland Basin natural gas gathering and processing operations as well as its NGL transportation and crude oil infrastructure.

ONEOK expects the combination to allow it to capture additional production volumes while making greater use of existing downstream infrastructure, including the West Texas NGL Pipeline and its soon-to-be-completed Medford NGL fractionation facility. The company also expects commercial, operational and capital synergies as the Brazos system is integrated into its existing footprint.

The acquired system’s dedicated acreage has a weighted average remaining contract term of more than 12 years, giving ONEOK visibility into future gathering and processing volumes. The company will also acquire a Midland Basin-wide area of mutual interest with a private producer, providing an opportunity to capture additional development.

Apollo to invest $9 billion

ONEOK plans to finance the acquisition through a $9 billion nonvoting minority equity investment from funds and affiliates managed by Apollo. Approximately $5 billion of the proceeds will also be used to reduce ONEOK’s existing debt.

The Apollo investment will take the form of a Class B interest in a newly created holding company and will carry a return capped at a 7% internal rate of return for its first nine years. ONEOK said the structure allows it to fund the acquisition and accelerate debt reduction without issuing common equity.

ONEOK expects the acquisition to be immediately accretive to earnings and free cash flow per share. The purchase price represents approximately 7.5 times estimated 2027 EBITDA, including about $80 million of expected full-year synergies, declining to approximately six times estimated 2028 EBITDA.

The Brazos acquisition is expected to close in the fourth quarter of 2026, subject to customary conditions and regulatory clearance. The Apollo investment is expected to close in the first half of September.