U.S. pipeline operator ONEOK said on Wednesday that it struck two deals worth $5.9 billion with infrastructure investor GIP to boost its presence in the Permian Basin as well as mid-continent, North Texas and Louisiana regions.

In the first, ONEOK will buy GIP’s 43% stake in EnLink Midstream for $14.90 per unit and GIP’s full interest in EnLink’s managing member for a total of about $3.3 billion in cash.

The price per unit is a 12.8% premium to EnLink’s closing market price on Aug. 27.

In the second deal, ONEOK will buy GIP’s equity interests in Medallion Midstream, a crude gathering and transportation system in the Permian’s Midland Basin, for $2.6 billion in cash.

“We are particularly excited to meaningfully increase our company’s presence in the Permian Basin, which is expected to continue driving the majority of U.S. oil and gas growth,” ONEOK CEO Pierce Norton II said.

The deals, coming a year after ONEOK bought rival Magellan Midstream Partners for $18.8 billion, will boost the Tulsa, Oklahoma-based company amid plunging U.S. natural gas prices due to mild weather and high storage levels. Higher volumes helped bolster its profit in the latest quarter.

ONEOK said it expects the two deals to immediately add to its earnings and free cash flow, bolstering its ability to execute its planned $2 billion share repurchase program.

The company also expects synergies between $250 million and $450 million over the next three years as a result of these acquisitions, it said in a statement.

ONEOK has secured financing commitments worth up to $6 billion from JPMorgan Chase and Goldman Sachs to fund the deals, which it expects to close early in the fourth quarter.

By: Reuters, August 29, 2024.