Apollo backs deal with $9 billion minority equity investment
ONEOK announced Sunday that it has agreed to acquire Brazos Midstream’s natural gas gathering and processing assets in the Permian Midland Basin for $4.43 billion, expanding the midstream company’s footprint in the prolific American oil field.
The deal is backed by a $9 billion nonvoting minority equity investment from funds and affiliates managed by Apollo Global Management, ONEOK said. The company said it will use the remaining Apollo funds to reduce its debt by $5 billion.
The acquisition more than doubles ONEOK’s Midland Basin processing capacity to about 2.3 billion cubic feet a day, including plants currently under construction. The Brazos Midland platform covers 600,000 dedicated acres supported by long-term, fixed-fee contracts with an average remaining term of more than 12 years, according to ONEOK.
Fourteen drilling rigs operated by producers including ExxonMobil, Diamondback Energy and Double Eagle are actively drilling within the platform, ONEOK said.
“The acquisition expands our scale in the Permian Midland Basin, advances our integrated wellhead-to-water strategy and strengthens connectivity across our natural gas and NGL value chain,” ONEOK Chief Executive Pierce Norton II said in the company’s announcement.
ONEOK said Apollo’s investment carries an internal rate of return capped at 7% for the first nine years of the investment, with any distributions above that rate applied to reduce the minority equity capital balance over time.