ONEOK purchases assets from Global Infrastructure Partners (GIP) for a total of USD 5.9 billion.
This acquisition includes a 43% stake in EnLink Midstream, as well as all management shares in this company.
ONEOK also acquires GIP’s interest in Medallion Midstream, a crude oil gathering and transportation operator in the Midland Basin.
This move comes against a backdrop of consolidation in the midstream sector, where companies are looking to maximize the efficiency of their existing infrastructure rather than commit to new projects often hampered by complex regulations.
EnLink’s assets, well anchored in the Permian, offer ONEOK the opportunity to manage the transportation and processing of hydrocarbons in an integrated way.
With this acquisition, ONEOK is targeting the optimization of its network capacities in a region where demand for transportation and processing services remains high.
The integration of Medallion Midstream, meanwhile, strengthens ONEOK’s access to producers in the Midland Basin, a strategic area for crude oil flows.
Financial and operational synergies expected
ONEOK estimates that these acquisitions will generate significant synergies, valued at between 250 and 450 million USD over the next three years.
These gains stem mainly from the integration of the new assets into the existing network, enabling economies of scale and more efficient use of infrastructure.
The assets acquired include tariff floor clauses, guaranteeing a minimum income and protecting ONEOK against gas price fluctuations, while maintaining growth prospects for the transportation and processing of natural gas liquids.
The company expects to finalize these transactions early in the fourth quarter of 2024, which should immediately contribute to its earnings and free cash flow.
This approach enables us to capture a larger share of the market, particularly by responding to increased demand from producers for efficient logistics solutions in active basins such as the Permian.
A strategic repositioning in a changing sector
The recent acquisitions are part of a broader strategy to consolidate and optimize ONEOK’s asset portfolio.
At a time when regulatory obstacles to the development of new infrastructure persist, focusing on the purchase of existing assets appears to be a pragmatic choice.
This strategy not only ensures stable growth, but also minimizes the risks associated with environmental approvals and long construction lead times.
Industry analysts, such as Raymond James, believe that despite the surprising timing of this announcement, given the recent integrations of Magellan and Easton, the quality of EnLink’s assets within a wider network offers attractive prospects.
Moreover, the possibility of other companies expressing an interest in the remaining shares of EnLink underlines the strategic value of these assets in the Permian, a basin that continues to attract investment.
