ONEOK to Acquire Brazos Midstream Midland Basin Assets for $4.425 Billion

ONEOK, Inc. (OKE ) announced on August 30, 2026, 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, and ONEOK intends to use $5 billion of the proceeds to reduce its existing indebtedness, according to the companies’ joint announcement.

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. ONEOK said the acquisition is expected to be immediately accretive to earnings and free cash flow per share and increases momentum toward the high end of its mid- to high-single-digit adjusted EBITDA growth target over the next five to seven years.

“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 Acquired Assets

The Brazos Midland system is 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 is currently supported by 14 active drilling rigs from Permian producers including ExxonMobil (XOM ), Diamondback Energy (FANG ) and Double Eagle.

Following completion of the Cassidy II processing plant, expected in the third quarter of 2027, the system will include approximately 700 miles of gathering infrastructure and 1.2 billion cubic feet per day of processing capacity across seven core Permian Midland Basin counties. ONEOK also obtains a Permian Midland Basin-wide area of mutual interest with a key private producer.

ONEOK said the acquisition more than doubles its Midland Basin processing capacity to approximately 2.3 billion cubic feet per day, including plants currently under construction. The company said the assets are complementary to its existing Permian Midland Basin natural gas gathering and processing, NGL transportation and crude oil infrastructure, including its West Texas NGL Pipeline and soon-to-be-completed Medford NGL fractionation facility. ONEOK said it expects to achieve significant recurring synergies over the long term through integrating commercial, operational and capital activities across the combined footprint.

Brazos Midstream, headquartered in Fort Worth, Texas, is described in the announcement as the largest privately held midstream platform in the Midland Basin, backed by Old Ironsides Energy, LLC and EnCap Flatrock Midstream, L.P.

Minority Equity Investment Terms

Under 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., 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. operations, and ONEOK has the option each quarter to distribute up to 20% of quarterly cash flow to the Class B interest, subject to certain conditions.

The investor’s total return is capped at a 7.0% internal rate of return for the first nine years of the investment, a rate the announcement states is lower than ONEOK’s cost of publicly traded equity. The target IRR steps to 7.35% in year 10 and increases to a final cap of 7.85% in year 15. Distributions in excess of the capped IRR will reduce the minority equity capital balance over time, and there are no penalties if a quarterly distribution falls below the capped return. Value creation above the capped IRR accrues to ONEOK common shareholders.

The Class B interest carries limited consent rights related to the holding company, has no board representation or liquidation preference, and is subordinate to all ONEOK senior debt. Beginning on the eighth anniversary of closing, or earlier if the Class B capital account balance reaches $200 million, ONEOK may acquire the remaining Class B interest at a price reflecting the 7.0% IRR, fixed until the ninth anniversary of closing. In years 10 through 15, the interest may be acquired at a value achieving the then-current target IRR applied to the remaining capital balance.

ONEOK said the investment has been reviewed with its credit rating agencies, all of which consider the transaction credit-enhancing, and the company expects to receive full equity credit. Under Generally Accepted Accounting Principles, the investment will be reported as a noncontrolling interest within permanent equity, and approximately 7.0% of the investment’s remaining capital balance, or 1.75% quarterly, will be subtracted from net income to arrive at net income attributed to ONEOK.

“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.

Debt Reduction and Closing Timeline

ONEOK intends to extinguish approximately $5 billion of existing indebtedness through repayments, make-whole calls and a cash tender offer for certain senior notes, most of which the announcement states are currently trading below par. The company will repay its $1.2 billion term loan at or shortly following the closing of the minority equity investment. The steps are expected to immediately reduce pro forma 2027 leverage to approximately 3.25 times debt-to-EBITDA without issuing common equity.

The Brazos Midland acquisition has been unanimously approved by ONEOK’s Board of Directors and is expected to close in the fourth quarter of 2026, subject to customary closing conditions including Hart-Scott-Rodino Act clearance. The minority equity investment, also unanimously approved by the board, is expected to close in the first half of September, subject to customary closing conditions.

ONEOK management will hold a conference call at 9 a.m. Eastern on August 31, 2026. Barclays served as sole financial advisor to ONEOK on the acquisition and lead financial advisor on the minority equity investment, with Lazard also advising on the equity investment and Latham & Watkins LLP serving as legal advisor. RBC Capital Markets served as sole financial advisor to Apollo with Milbank LLP as legal counsel, and Akin Gump Strauss Hauer & Feld LLP served as legal advisor to Brazos Midstream.

ONEOK, an S&P 500 company headquartered in Tulsa, Oklahoma, operates an approximately 60,000-mile pipeline network providing gathering, processing, fractionation, transportation, storage and marine export services. Apollo reported approximately $1.05 trillion of assets under management as of June 30, 2026.