US pipeline operator ONEOK completes two bids for $5.9 billion

(Bloomberg) — U.S. pipeline operator ONEOK Inc. agreed to buy a Permian Basin rival and a controlling stake in another company in two deals valued at a total of $5.9 billion.

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ONEOK will acquire Global Infrastructure Partners’ entire interest in EnLink Midstream LLC and will also buy GIP’s stake in Medallion Midstream, the largest Permian crude oil gathering and transportation system, a statement said late Wednesday.

The move expands ONEOK’s presence in the most prolific oil and gas basin in the US. It is the latest in a series of industry deals as private equity firms offload assets to corporate buyers. Operators of oil and gas assets are looking to expand as cash-strapped fossil fuel companies consolidate and look to refresh their drilling inventory.

New York-based Global Infrastructure Partners is a private equity firm specializing in energy, transportation, water and waste management.

ONEOK shares gained 0.8% in New York. EnLink rose 11%.

The agreements will provide ONEOK with an additional 1.7 billion cubic meters per day of gas processing capacity in the Permian and 1.6 million barrels per day of crude oil gathering capacity in the basin. They are also expanding the company’s presence in Oklahoma, North Texas and Louisiana. This positions ONEOK to take advantage of the booming demand for liquefied natural gas off the Louisiana coast.

EnLink will also provide ONEOK with a new position in Louisiana, which includes 220,000 barrels per day of NGL fracturing capacity and approximately 4 billion cubic meters per day of natural gas pipeline capacity, both of which are connected to key hubs of request.

ONEOK expects natural gas transmission assets to benefit from strong growth in industrial demand related to power generation for data centers, LNG export terminals and existing and permitted ammonia and hydrogen facilities.

The company also sees value in expanding its presence in the Permian, Chief Executive Pierce Norton said on a call with analysts on Thursday.

“We offer a full suite of services, kind of a one-stop shop, and we think that will give us a very strong competitive advantage in the Permian,” he said.

The transaction is expected to close in the fourth quarter of 2024, Tulsa, Oklahoma-based ONEOK said in a statement. ONEOK has financing commitments from JPMorgan Chase & Co. and Goldman Sachs Group Inc. to cover up to $6 billion of the cash portion of the transactions.

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Goldman was the lead financial advisor to ONEOK on both transactions. Greenhill and Scotiabank advised GIP on the Enlink transaction, while RBC Capital Markets advised GIP on the Medallion takeover.

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