ONEOK (OKE) to Acquire Brazos Midland Gas Assets for $4.425 Billion

Oneok has agreed to acquire Brazos Midstream's natural gas gathering and processing assets in the Permian Basin's Midland sub-basin for 4.425 billion dollars in cash, a deal that pushes the pipeline operator deeper into one of the country's busiest drilling regions. News of the Oneok acquire Brazos deal comes as shares trade at 94.76 dollars, essentially flat on the day with a gain of 0.04%.

How Oneok Is Paying for the Brazos Deal

The purchase will be financed through a separate 9 billion dollar nonvoting minority equity investment from funds and affiliates tied to Apollo Global Management. Oneok intends to direct about 5 billion dollars of that Apollo money toward paying down existing debt, with the remaining sum covering the Brazos purchase. That structure lets the company avoid issuing new common shares. Management expects the combined effect of the Apollo capital and debt paydown to bring its pro forma 2027 debt to EBITDA ratio down to roughly 3.25 times.

Brazos' Midland Basin system rests on about 600,000 dedicated acres locked into fixed fee contracts averaging more than 12 years remaining. Producers working that acreage include ExxonMobil, Diamondback Energy and Double Eagle, and 14 drilling rigs are currently active on the system. Once the Cassidy II processing plant comes online, which Oneok anticipates in the third quarter of 2027, the acquired network should include roughly 700 miles of gathering lines and 1.2 billion cubic feet per day of processing capacity spread across seven Midland Basin counties.

Valuation, Momentum and Yield at Oneok

Oneok carries a market capitalization of 59.73 billion dollars and pays a dividend yield of 4.52%, a figure that has long drawn income focused investors to midstream names. Its 52 week range spans from 83.08 to 97.9 dollars, and at 94.76 dollars the stock sits closer to the upper end of that band. The relative strength index reads 57.28, suggesting momentum that is positive but not overheated.

The bull case centers on the Brazos assets more than doubling Oneok's Midland Basin processing capacity to about 2.3 billion cubic feet per day once construction projects finish, with the company planning to route those volumes into its West Texas NGL Pipeline and Medford fractionation project. Management pegs the purchase price at about 7.5 times projected 2027 EBITDA, including roughly 80 million dollars in expected annual synergies, a multiple that falls to around six times by 2028. Oneok also expects the deal to add to earnings and free cash flow per share right away.

The bear case rests on execution risk tied to a deal that still needs antitrust clearance, plus the debt load the company continues to carry even after the Apollo backed paydown. Rolling up multiple large acquisitions in quick succession, as Oneok has done since its 14.1 billion dollar purchase of Magellan Midstream in 2023, raises the stakes if commodity volumes or drilling activity in the Permian slow.

A Pattern of Consolidation in the Permian

This transaction extends a buying spree that has reshaped Oneok's footprint over the past three years. Beyond the Magellan purchase, the company spent about 2.6 billion dollars on Medallion Midstream in 2024 and 3.3 billion dollars for Global Infrastructure Partners' controlling stake in EnLink Midstream that same year, before buying out EnLink's remaining public shareholders in January 2025. The Brazos acquisition has cleared Oneok's board and is expected to close in the fourth quarter of 2026, pending customary regulatory conditions, while the Apollo investment is set to close separately in the first half of September.