ONEOK to Buy Brazos Midland Gas Assets for $4.425 Billion
$4.425 billion in cash will change hands as ONEOK acquires Brazos Midstream's natural gas gathering and processing assets in the Permian Basin's Midland sub-basin, the company disclosed. The deal has been approved by ONEOK's board and is expected to close in the fourth quarter of 2026, pending U.S. antitrust clearance.
Key takeaways
- ONEOK is acquiring Brazos Midstream's natural gas gathering and processing assets in the Permian Basin's Midland sub-basin for $4.425 billion in cash.
- The deal has been approved by ONEOK's board and is expected to close in the fourth quarter of 2026, pending U.S. antitrust clearance.
- ONEOK is funding the deal via a $9 billion nonvoting minority equity investment from funds managed by Apollo Global Management, with about $5 billion going to retire existing debt and no common equity issued.
- The acquired system spans roughly 600,000 dedicated acres and is expected to include about 700 miles of gathering infrastructure and 1.2 Bcf/d of processing capacity across seven Midland Basin counties once the Cassidy II plant comes online in Q3 2027.
- ONEOK values the purchase at about 7.5 times projected 2027 EBITDA, falling to roughly six times on a 2028 basis, and expects it to be immediately accretive to earnings and free cash flow per share.
$4.425 billion in cash will change hands as ONEOK acquires Brazos Midstream's natural gas gathering and processing assets in the Permian Basin's Midland sub-basin, the company disclosed. The deal has been approved by ONEOK's board and is expected to close in the fourth quarter of 2026, pending U.S. antitrust clearance.
ONEOK is funding the transaction through a separate $9 billion nonvoting minority equity investment from funds and affiliates managed by Apollo Global Management. The company said roughly $5 billion of those proceeds will go toward retiring existing debt, with the balance covering the Brazos purchase price. No common equity is being issued. ONEOK expects the combined effect to bring its pro forma 2027 debt-to-EBITDA ratio to about 3.25 times.
The Brazos system
Brazos' Midland Basin assets sit on roughly 600,000 dedicated acres under fixed-fee contracts, with a weighted average remaining term exceeding 12 years, according to ONEOK. ExxonMobil, Diamondback Energy, and Double Eagle are among the producers active on that acreage, with 14 active drilling rigs currently supporting the system.
After the Cassidy II processing plant comes online, which ONEOK expects in the third quarter of 2027, the acquired system is expected to include about 700 miles of gathering infrastructure and 1.2 billion cubic feet per day of processing capacity across seven Midland Basin counties. ONEOK said the addition would more than double its Midland Basin processing capacity to approximately 2.3 Bcf/d, counting facilities under construction. The company expects to tie those volumes into its West Texas NGL Pipeline and Medford fractionation project.
ONEOK values the purchase at about 7.5 times projected 2027 EBITDA, incorporating roughly $80 million in anticipated annual benefits, falling to approximately six times on a 2028 EBITDA basis, the company said. ONEOK also said the acquisition is expected to be immediately accretive to earnings and free cash flow per share.
Acquisitions since 2023
The Brazos deal extends a run of midstream purchases ONEOK has completed since 2023. The company paid $14.1 billion for Magellan Midstream Partners that year, adding crude oil and refined-products infrastructure. In 2024, ONEOK acquired Medallion Midstream for about $2.6 billion and paid $3.3 billion for Global Infrastructure Partners' controlling interest in EnLink Midstream, before acquiring EnLink's remaining publicly held interests in January 2025.
The Apollo investment is expected to close in the first half of September.