ONEOK said it will buy Brazos Midstream’s Permian Midland Basin gathering and processing assets for $4.425 billion in cash, a deal it plans to fund with a $9 billion minority equity investment from Apollo and $5 billion of debt reduction.
The company said the acquisition will be immediately accretive to earnings and free cash flow per share and will push its leverage to about 3.25 times debt-to-EBITDA after the debt paydown. That is a step down from the company’s prior leverage profile, with the transaction expected to more than reach its previous deleveraging target without issuing common equity.
The Brazos assets bring about 600,000 dedicated acres under long-term fixed-fee contracts, a weighted average remaining contract term of more than 12 years, and support from 14 active drilling rigs. ONEOK said the system will include about 700 miles of gathering infrastructure and 1.2 billion cubic feet per day of processing capacity after the Cassidy II plant comes online in the third quarter of 2027.
ONEOK said the acquired assets will more than double its Midland Basin processing capacity to about 2.3 billion cubic feet per day, including plants under construction. The transaction also adds a Permian Midland Basin-wide area of mutual interest with a private producer.
On valuation, ONEOK said the deal implies about 7.5 times estimated 2027 EBITDA, including roughly $80 million of full-year synergies, and about 6.0 times estimated 2028 EBITDA. The company said the lower 2028 multiple reflects expected growth at the Brazos platform and additional commercial and operational synergies from integration with ONEOK’s existing Permian assets.
Apollo’s $9 billion investment comes with a capped 7.0% internal rate of return for the first nine years. ONEOK said distributions above that level will reduce the minority capital balance over time. The company said the investment structure is expected to give it full equity credit and that it has no liquidation preference.
ONEOK also plans to use the capital infusion to extinguish about $5 billion of debt, including repayments, make-whole calls and a tender offer for senior notes. It said it will repay a $1.2 billion term loan at or shortly after closing of the minority investment.
The company said the deal supports its mid* to high-single-digit adjusted EBITDA growth target over the next five to seven years and increases flexibility for dividend growth and share buybacks. Closing of the Brazos acquisition is expected in the fourth quarter of 2026, while the Apollo minority investment is expected to close in the first half of September. The market has reacted to these announcements by moving the company's shares -0.19% to a price of $95.83. For more information, read the company's full 8-K submission here.
