Old Ironsides, EnCap Flatrock agree Brazos Midland sale to ONEOK for $4.4bn

• The Cassidy II plant expansion, due in the third quarter of 2027, will lift Brazos’ gathering network to about 700 miles and processing capacity to 1.2 Bcf/d
• ONEOK will fund the purchase through a $9 billion minority equity investment from funds managed by Apollo
• The deal implies a multiple of about 7.5x estimated 2027 EBITDA, falling to roughly 6.0x by 2028

Old Ironsides Energy and EnCap Flatrock Midstream have agreed to sell Brazos Midstream’s Permian Midland Basin natural gas gathering and processing assets to ONEOK for $4.425 billion in cash, according to a statement.

Brazos Midstream, headquartered in Fort Worth, Texas, describes itself as the largest privately held midstream platform in the Midland Basin. Its network is supported by about 600,000 dedicated acres under long-term fixed-fee contracts with a weighted average remaining term of more than 12 years, and is currently served by 14 active drilling rigs from producers including ExxonMobil, Diamondback Energy and Double Eagle. The Cassidy II processing plant expansion, expected in the third quarter of 2027, will bring the system to about 700 miles of gathering infrastructure and 1.2 billion cubic feet per day (Bcf/d) of processing capacity across seven Permian Midland Basin counties.

ONEOK will fund the acquisition through a $9 billion nonvoting minority equity investment from funds and affiliates managed by Apollo, with $5 billion of the proceeds earmarked to reduce ONEOK’s existing debt. ONEOK said the moves will accelerate its deleveraging to approximately 3.25x debt-to-EBITDA without issuing common equity.

The transaction implies a multiple of approximately 7.5x estimated 2027 EBITDA, inclusive of about $80 million of full-year synergies, narrowing to roughly 6.0x estimated 2028 EBITDA as the Brazos platform grows and integrates with ONEOK’s existing Permian Basin assets, according to the companies. The deal more than doubles ONEOK’s Midland Basin processing capacity to approximately 2.3 Bcf/d, including plants under construction.

“ONEOK has built one of the largest and most diversified midstream platforms in the country, providing essential services and infrastructure to help meet rapidly expanding domestic and international energy demand,” said Jamshid Ehsani, partner at Apollo. “This transaction reflects Apollo’s ability to deliver flexible, high-grade capital solutions at scale, structured around ONEOK’s long-term strategic objectives.”

Barclays served as ONEOK’s sole financial adviser on the Brazos acquisition, with Latham & Watkins as legal counsel. RBC Capital Markets advised Apollo, with Milbank as legal counsel. Akin Gump Strauss Hauer & Feld advised Brazos Midstream.

Editor’s note: This news brief was produced with the assistance of artificial intelligence.