ONEOK, Inc. (NYSE: OKE), a leading player in North American energy infrastructure, has finalized a definitive agreement with DT Midstream, Inc. (NYSE: DTM) for the sale of its three interstate natural gas pipelines. This transaction, valued at a total of $1.2 billion in cash, is designed to optimize ONEOK’s capital allocation priorities and aligns with its overall asset portfolio strategy.
The pipelines included in this sale are:
– Guardian Pipeline, L.L.C., serving the Chicago hubs in Illinois and providing natural gas to local distribution companies and power generation facilities in Wisconsin.
– Midwestern Gas Transmission, a bidirectional system connecting Tennessee with multiple interstate pipelines, granting access to the Utica and Marcellus shale regions, as well as the Chicago hub.
– Viking Gas Transmission, another bidirectional system linking Canada to the U.S. through Wisconsin.
Strategic assets for DT Midstream
DT Midstream, a company specializing in natural gas transportation and storage, gains strategic FERC-regulated assets through this acquisition. According to official statements, the purchase price reflects 10.8 times the EBITDA for the twelve months ending June 30, 2024.
This acquisition enhances DT Midstream’s existing network while integrating the expertise of ONEOK’s workforce, who will join DT Midstream’s Tulsa office.
Financial repositioning for ONEOK
ONEOK plans to use the net proceeds from this sale to enhance its financial flexibility and reduce debt. The company aims to achieve a leverage ratio of 3.5 by 2026, consistent with its strategic objectives.
Pierce H. Norton II, CEO of ONEOK, stated that this transaction aligns with the company’s portfolio streamlining approach, enabling it to remain a leading and diversified energy infrastructure provider.
