(Oil Price) – Pipeline owner and operator DT Midstream will buy three interstate natural gas pipeline systems from ONEOK for $1.2 billion in cash as the consolidation in the industry has extended to midstream operations.
Detroit-based DT Midstream, which owns and operates natural gas pipelines in the Southern, Northeastern, and Midwestern United States, as well as Canada – reached an agreement to buy 100% operating ownership in the three FERC-regulated natural gas transmission pipelines from ONEOK.
These pipeline systems, Guardian Pipeline, Midwestern Gas Transmission, and Viking Gas Transmission, have a total capacity of more than 3.7 Bcf/d with approximately 1,300 miles across seven states in the attractive Midwest market region which is expected to experience continued growth in power demand, DT Midstream said.
The company will finance the transaction with about $900 million in debt and $300 million in common equity.DT
The deal, already approved by DT Midstream’s board of directors, is expected to close in late 2024 or early 2025, subject to regulatory approvals, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Act.
“Expanding our scale through this bolt-on natural gas pipeline acquisition fully aligns with our pure play natural gas strategy,” the company’s president and CEO, David Slater, said.
“This transaction also increases the revenue contribution from our pipeline segment, supported by take-or-pay contracts with strong credit quality utility customers,” Slater added.
For ONEOK, the deal is a strategic move to optimize its asset portfolio to reinforce its standing as one of the largest diversified energy infrastructure companies, it said.
Last year, ONEOK bought Magellan Midstream Partners, creating a combined U.S. oil and gas pipeline giant with a total enterprise value of $60 billion.
The midstream merger frenzy in North America continued into 2024, with gas station owner Sunoco LP announcing in January that it would buy pipeline and liquids terminal operator NuStar Energy in an all-equity transaction valued at around $7.3 billion, including debt.
None of the midstream deals came as a surprise to analysts, who have been expecting consolidation in the pipeline space for some time.
By Tsvetana Paraskova for Oilprice.com
