ONEOK has entered into a definitive agreement to acquire Brazos Midstream’s Permian Midland Basin natural gas gathering and processing assets for $4.425 billion in cash. The deal, announced on 30 August 2026, is backed by a $9 billion nonvoting minority equity investment from funds and affiliates managed by Apollo. The apollo investment represents one of the largest structured capital commitments in the midstream sector this year, and the transaction’s financing structure carries significant implications for institutional investors and corporate finance professionals.
ONEOK plans to use approximately $5 billion of the apollo investment proceeds to reduce existing indebtedness, including repayments, make-whole calls and a cash tender offer for certain senior notes. The remaining capital funds the Brazos Midstream acquisition. Critically, the company expects to achieve this debt reduction without issuing common equity, preserving existing shareholder ownership.
ONEOK Secures $9 Billion Apollo Investment
Under the agreed terms, Apollo will receive a Class B interest in a newly formed holding company. This minority equity investment is structurally subordinate to all ONEOK senior debt and carries no board representation or liquidation preference. The Class B interest is nonvoting, and Apollo’s total return is capped at a 7.0 per cent internal rate of return for the first nine years. The target return steps to 7.35 per cent in year ten and reaches a final cap of 7.85 per cent in year fifteen.
Value creation above the capped return accrues to ONEOK common shareholders. Distributions exceeding the capped return will reduce the minority equity capital balance over time, and there are no penalties if a quarterly distribution falls below the target. Beginning on the eighth anniversary of closing, or earlier if certain conditions are met, ONEOK may acquire the remaining Class B interest at a price reflecting the capped return.
Pierce H. Norton II, ONEOK president and chief executive, said the transaction demonstrates the company’s strategy of expanding its integrated energy infrastructure. Apollo Partner Jamshid Ehsani noted that ONEOK has built one of the largest and most diversified midstream platforms in the country.
The apollo investment has been reviewed with ONEOK’s credit rating agencies, all of which consider the transaction credit-enhancing. Under accounting standards, the investment will be reported as a noncontrolling interest within permanent equity.
Debt Reduction Shapes Financing Structure
The debt reduction plan is central to the financial rationale behind this apollo investment. ONEOK intends to extinguish approximately $5 billion of existing debt, including repaying its $1.2 billion term loan at or shortly following the closing of the minority equity investment. The company expects these steps to reduce pro forma 2027 leverage to approximately 3.25 times debt-to-EBITDA.
The Brazos Midstream acquisition has been unanimously approved by ONEOK’s board of directors and is expected to close in the fourth quarter of 2026, subject to customary closing conditions including Hart-Scott-Rodino Act clearance. The apollo investment is expected to close in the first half of September, also subject to customary closing conditions.
Barclays served as sole financial adviser to ONEOK on the acquisition and lead financial adviser on the apollo investment, with Lazard also advising on the equity investment. Latham and Watkins served as legal adviser. RBC Capital Markets served as sole financial adviser to Apollo, with Milbank as legal counsel.
ONEOK is an S&P 500 company headquartered in Tulsa, Oklahoma. Apollo reported approximately $1.05 trillion of assets under management as of 30 June 2026. The transaction underscores growing institutional appetite for structured minority equity investment as a tool for acquisition financing and corporate deleveraging without diluting common shareholders.