ONEOK finalizes $2.6 billion Medallion Midstream buyout

TULSA, Okla. - ONEOK , Inc. (NYSE: NYSE:OKE), a prominent energy infrastructure company, has completed its acquisition of Medallion Midstream from Global Infrastructure Partners. The transaction, valued at approximately $2.6 billion, was finalized today, marking a significant expansion of ONEOK's assets in the Permian Basin's Midland region.

The deal includes over 1,200 miles of crude oil gathering pipelines with a capacity of around 1.3 million barrels per day and about 1.5 million barrels of crude oil storage facilities. According to Pierce H. Norton II, ONEOK president and CEO, this acquisition is expected to yield substantial commercial synergies, as the Medallion assets are already connected with ONEOK's long-haul crude oil pipelines.

ONEOK's strategic growth is further emphasized by this acquisition, which enhances its asset portfolio with a major crude oil gathering system in a key oil-producing region. The company, headquartered in Tulsa, Oklahoma, operates a vast network of more than 50,000 miles of pipelines, offering services such as gathering, processing, fractionation, transportation, and storage of natural gas, natural gas liquids, refined products, and crude oil.

The acquisition also complements ONEOK's existing operations, as the company is a managing member of EnLink Midstream, LLC (NYSE: NYSE:ENLC) and holds a 43% stake in EnLink's outstanding common units. EnLink provides integrated midstream services for natural gas, crude oil, and NGLs.

ONEOK's growth through acquisitions like Medallion is part of its strategy to reinforce its position as a diversified energy infrastructure provider. The company aims to deliver energy products and services that are crucial to the advancement of global energy markets.

The information in this article is based on a press release statement. It should be noted that forward-looking statements in the release involve risks and uncertainties that could cause actual results to differ materially from those projected. Factors such as the integration of ONEOK's and Medallion's businesses, economic conditions, commodity prices, regulatory changes, and other variables could impact the anticipated benefits and performance following the acquisition.

In other recent news, EnLink Midstream is set to release its third quarter 2024 earnings. Analysts at Mizuho Securities and Citi project a Q3 EBITDA of $325 million, slightly below the average estimate of $330 million. The company has been the subject of significant attention due to its potential acquisition by ONEOK, Inc., which already owns a 43% stake in EnLink Midstream.

Mizuho Securities and Citi have both set a price target for EnLink Midstream at $15.00 per unit. On the other hand, Morgan Stanley and Wells Fargo have downgraded EnLink Midstream's stock from Overweight to Equalweight following the announcement of ONEOK's acquisition.

In addition to these developments, EnLink Midstream has been involved in the inauguration of the Matterhorn Express pipeline, a joint venture with WhiteWater Midstream, Devon Energy (NYSE:DVN), and MPLX (NYSE:MPLX). This pipeline is expected to boost U.S. oil production by easing local natural gas prices in west Texas.

ONEOK, Inc. has maintained its quarterly dividend at 99 cents per share, leading to an annualized dividend rate of $3.96 per share. The company has been instrumental in EnLink Midstream's recent changes in control and leadership, with Pierce H. Norton II from ONEOK assuming the role of Board Chairman. These are the recent developments in the companies' operations.

InvestingPro Insights

As ONEOK expands its footprint in the Permian Basin with the Medallion Midstream acquisition, it's worth examining the financial health of its affiliate, EnLink Midstream (ENLC), in which ONEOK holds a significant stake. According to InvestingPro data, EnLink boasts a market capitalization of $6.81 billion and has demonstrated strong financial performance with a revenue of $6.83 billion over the last twelve months as of Q2 2024.

EnLink's strategic importance to ONEOK is underscored by two key InvestingPro Tips. Firstly, EnLink has raised its dividend for 3 consecutive years, indicating a commitment to shareholder returns that aligns with ONEOK's investment strategy. Secondly, EnLink is trading near its 52-week high, suggesting market confidence in its business model and growth prospects, which could positively reflect on ONEOK's investment.

The energy sector's dynamics are further highlighted by EnLink's price-to-earnings ratio of 46.11, which is relatively high and may indicate investor optimism about future growth potential in the midstream segment. This valuation metric could be particularly relevant as ONEOK integrates the Medallion assets and seeks to capitalize on synergies within its expanded portfolio.

For investors seeking a deeper understanding of EnLink's financials and potential, InvestingPro offers 8 additional tips that could provide valuable insights into the company's performance and outlook.

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