If Oklahoma and There Will Be Blood had a baby… we’d get the EnLink Deal

So apparently ONEOK (pronounced “one-oak”, for you non-Oklahoma people), just went “Daniel Plainview” on the midstream energy world. How so? Well, the natural gas transmission company is shelling out $4.3 billion in an all-stock deal to buy the remaining publicly traded shares of EnLink Midstream. Fun fact: This comes after they’ve already snagged a 43% stake earlier this year. Savage. 

(Source: Giphy) 

In short, EnLink unitholders will get 0.1412 shares of ONEOK stock for every unit they own. Translation? A 4.7% premium on Friday’s closing price, which isn’t exactly a windfall but enough to make you glance twice at your brokerage account. The deal values EnLink at $7.6 billion, all in.

(Source: Reuters) 

What’s more is that this deal is a thicc and juicy tax-free transaction. Which means you can pretty much expect this deal to pass through with flying colors by Q1 of 2025 (that is assuming EnLink unitholders say yes at the altar—which let’s be real, they will, considering ONEOK’s 44% stake already screams, “We’ve got this in the bag”).

So yeah, this just adds to the list of “to-done” things ONEOK has hoarded up in 2024. For instance, the company recently sold three pipeline networks (Guardian, Midwestern Gas Transmission, and Viking Gas Transmission) to DT Midstream for $1.2 billion. Why? To free up cash and focus on its core operations in places like Texas and Colorado.

(Source: Hart Energy) 

And now with the company already forking over $3.3 billion to Global Infrastructure Partners for its 43% stake in EnLink earlier this year— the tip was so good, they are going for the whole damn thing. Simply put, consolidation is the name of the game in the U.S. energy sector. Midstream operators like ONEOK are snapping up assets faster than you can say "natural gas liquids"—and for good reason. Building new pipelines is a regulatory nightmare. So, instead of dealing with red tape, ONEOK is just buying what’s already built. Efficiency, baby.

(Source: Giphy) 

The best part? These pipelines are covered in the Permian Basin where all the cool kids (read: energy companies) are hanging out. So the fact that EnLink has a solid footprint there tells you all you need to know about the reason for this blank check. Especially since, according to ONEOK’s CEO, Pierce H. Norton II (a name that just screams "I wear sharp suits and know my EBITDA"), this deal is a win-win. 

(Source: Giphy) 

For ONEOK shareholders, the acquisition is expected to be accretive—aka, it’ll make them richer. For EnLink unitholders, they get to cash in on ONEOK’s liquidity and enjoy a “significantly greater dividend yield.” In other words, they’re trading up from a decent apartment to a mansion with a pool.

But, but, but… wait! There’s friggin ‘more. The EnLink Conflicts Committee gave the green light after bringing in independent advisors to make sure this deal didn’t smell fishy. They concluded it’s in the best interests of their own bank accounts EnLink’s public unitholders. Which again, means this deal is basically signed and sealed. 

(Source: ONEOK) 

In the end, ONEOK’s play here is simple: go big or go home. Sure, there are risks—like rising debt (building pipelines and buying companies isn’t cheap) and fluctuating energy prices—but ONEOK’s 50,000-mile pipeline network and strategic focus give it a solid foundation. So yeah, this $4.3 billion deal is bigly for shareholders and the company as a whole.

So if you’ve been overlooking ONEOK, now's the time to reassess, especially with the stock already being up 56.01% YTD. Of course, do what you will with this information, but you know the drill: Keep an eye out for ONEOK, and as always stay safe and stay frosty, friends! Until next time…

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Stocks.News does not hold positions in companies mentioned in the article.