Oneok to buy Brazos Midstream’s Midland Basin assets for $4.425bn

US midstream player Oneok announced on August 30 that it had agreed to acquire Brazos Midstream’s natural gas-gathering and processing assets in the Permian Basin’s Midland sub-basin for $4.425bn in cash.

According to the announcement, the acquisition will be funded through a $9bn non-voting minority equity investment from funds and affiliates managed by asset management firm Apollo. Oneok added that it would also use $5bn worth of proceeds from the equity investment to reduce its existing debt.

Brazos is currently building the Cassidy II processing plant. Once this facility has been completed, which is targeted for the third quarter of 2027, the Brazos Midland system will include roughly 700 miles (1,127 km) of gathering infrastructure and 1.2bn cubic feet (34.0mn cubic metres) per day of processing capacity across seven core Midland Basin counties. Through the acquisition, Oneok said it would also obtain a Midland Basin-wide area of mutual interest (AMI) with a what it described as a key private producer, which it expects to create additional opportunities for future growth.

The Brazos assets are underpinned by around 600,000 dedicated acres (2,428 square km) under long-term fixed-fee contracts with a weighted average remaining term of more than 12 years, Oneok said. It added that the system was supported by 14 active drilling rigs from leading Permian producers that include ExxonMobil, Diamondback Energy and Double Eagle Energy.

Oneok described the Brazos assets as being “highly complementary” to its existing Midland Basin gas-gathering and processing, natural gas liquids (NGL) transportation and oil infrastructure. The acquisition will more than double Oneok’s Midland Basin processing capacity to around 2.3 bcf (65.1 mcm) per day, including plants currently under construction, the company said. It is also expected to establish one of the Midland Basin's largest integrated gas-gathering and processing platforms, according to the announcement.

"This transaction demonstrates Oneok's strategy of intentionally expanding and extending our integrated energy infrastructure," stated Oneok’s president and CEO, Pierce Norton. "These assets add a premier Permian Midland Basin platform supported by long-term contracts and attractive growth opportunities.”

The acquisition is anticipated to close in the fourth quarter of 2026. The deal highlights how growing demand for natural gas among users including LNG exporters and data centres is bolstering the attractiveness of midstream infrastructure in the Permian Basin.

The announcement comes after Brazos also sold its assets in the Permian’s Delaware sub-basin to Western Midstream for about $1.6bn in cash and stock in June. Brazos has not disclosed its future plans.