- ONEOK sold three interstate natural gas pipelines to DT Midstream for $1.2 billion, aiming to streamline its asset portfolio and reduce debt.
- DT Midstream acquired critical pipelines serving the Chicago hub, Utica and Marcellus shale regions, and a Canada-U.S. link, expanding its natural gas transportation network.
- ONEOK plans to use the sale proceeds to improve its financial flexibility and target a leverage ratio of 3.5 by 2026.
ONEOK, Inc., a key player in North American energy infrastructure, sold three interstate natural gas pipelines to DT Midstream, Inc. for $1.2 billion. This move supports ONEOK’s efforts to streamline its asset portfolio and boost financial flexibility.
The sale includes:
- Guardian Pipeline, L.L.C. serves the Chicago hubs and supplies natural gas to Wisconsin’s distribution companies and power plants.
- Midwestern Gas Transmission, a bidirectional pipeline connecting Tennessee with other interstate pipelines, provides access to the Utica and Marcellus shale regions and the Chicago hub.
- Viking Gas Transmission, another bidirectional pipeline linking Canada and the U.S. through Wisconsin.
DT Midstream, which specialises in natural gas transportation and storage, acquires these FERC-regulated assets. The transaction’s value represents 10.8 times the EBITDA for the twelve months ending June 30, 2024.
This acquisition strengthens DT Midstream’s network, adding vital infrastructure to its operations. The deal also integrates ONEOK’s workforce into DT Midstream’s Tulsa office.
ONEOK plans to use the proceeds to reduce debt and enhance financial strength. The company targets a leverage ratio of 3.5 by 2026. This step aligns with its goal of optimising capital allocation while maintaining its leadership in the energy infrastructure sector.
Pierce H. Norton II, CEO of ONEOK, emphasised that the sale aligns with the company’s strategy to streamline operations and focus on being a diversified energy provider. He highlighted the transaction as a way to improve financial flexibility while focusing on core strengths.
This sale allows ONEOK to sharpen its focus on future growth opportunities by reducing debt and strengthening its balance sheet. The company expects this move to position itself for success in the evolving energy infrastructure market.
DT Midstream expands its reach with these acquisitions, increasing its capacity in natural gas transportation and enhancing its overall infrastructure. The new assets will enable DT Midstream to serve more regions and strengthen its operational capabilities.
Both companies gain significant advantages from this deal. ONEOK improves its financial standing, while DT Midstream strengthens its network. The sale reflects how energy companies refine portfolios and pursue strategic growth in response to market conditions.
In summary, ONEOK’s $1.2 billion sale of three interstate pipelines to DT Midstream marks a strategic step in optimising its operations and achieving financial goals. DT Midstream benefits by expanding its transportation network and adding valuable assets to its portfolio. Both companies see this as a win as they work toward their future goals.