ONEOK, Inc. (NYSE: OKE), a major player in North American energy infrastructure, has entered into a definitive agreement with DT Midstream, Inc. (NYSE: DTM) for the sale of its three interstate natural gas pipelines . This transaction, worth a total of $1.2 billion in cash, aims to optimize ONEOK’s capital allocation priorities and fits into its overall asset portfolio strategy.
The pipelines affected by this sale include:
– Guardian Pipeline, LLC, which serves hubs in Chicago, Illinois, and supplies local gas distribution customers and power generators in Wisconsin.
– Midwestern Gas Transmission, a two-way system connecting Tennessee to several interstate pipelines, with access to the Utica and Marcellus basins, as well as the Chicago hub.
– Viking Gas Transmission, also bidirectional, connecting Canada to the United States via Wisconsin.
Strategic assets for DT Midstream
DT Midstream, a company specializing in the transportation and storage of natural gas, inherits strategic assets regulated by the Federal Energy Regulatory Commission (FERC). According to official statements, the purchase price represents 10.8 times the EBITDA for the twelve months preceding June 30, 2024.
This acquisition allows DT Midstream to strengthen its existing network, while relying on the human resources and know-how of the ONEOK teams, who will join DT Midstream’s offices in Tulsa.
A financial repositioning for ONEOK
ONEOK plans to use the net proceeds from this sale to strengthen its financial flexibility and reduce its debt. The company targets a financial leverage ratio of 3.5 by 2026, aligned with its strategic objectives.
Pierce H. Norton II, CEO of ONEOK, said the transaction is part of a portfolio rationalization effort, allowing the company to remain a major and diversified player in the energy infrastructure sector.
