Oneok acquires Brazos Midstream assets for $4.4B, secures $9B Apollo investment

Matt DiLallo, The Motley Fool Published: September 1, 2026 at 8:44 AM PDT | 5 min read

Tickers: NVDA | APO | OKE

Oneok (NYSE: OKE) is acquiring Brazos Midstream's Permian Midland Basin assets for over $4.4 billion. The company is funding the deal through a $9 billion minority equity investment from funds managed by Apollo (NYSE: APO). These transactions carry significant implications for the pipeline giant's approximately 4.5%-yielding dividend in the years ahead.

Drilling Down into the Deal

Oneok is purchasing Brazos Midstream's Permian Midland natural gas gathering and processing assets for over $4.4 billion in cash. The acquired assets include:

• 700 miles of gathering infrastructure
• 1.2 billion cubic feet per day of processing capacity (following completion of the Cassidy II plant in Q3 2027)
• 600,000 dedicated acres secured by long-term, fixed-fee contracts with an average of 12 years remaining

Key producers under contract include ExxonMobil and Diamondback Energy.

The assets are highly complementary to Oneok's existing position and will double its processing capacity in the Midland Basin. The deal strengthens Oneok's integrated Permian-to-Gulf Coast strategy by expanding its scale in the rapidly growing Permian Midland Basin while adding long-term, fee-based contracted growth with leading producers.

Unique Financing Structure

The pipeline company is funding the acquisition through an innovative arrangement. Private equity giant Apollo and its affiliates are making a $9 billion minority equity investment in Oneok through a Class B interest.

Oneok will use the additional funds to retire $5 billion in debt, enabling it to reduce its leverage ratio to approximately 3.25 times next year.

Key terms of the Apollo investment:

• Capped IRR of 7% for the first nine years
• All value created above the cap flows to Oneok shareholders
• Lower cost of capital than Oneok's stock
• Option to redeem the investment in the future

Precedent for the Structure

This deal structure, while unique, is not unprecedented. Real estate giant Realty Income (NYSE: O) agreed to a similar arrangement with Apollo earlier this year:

• Apollo made a $1 billion investment for a 49% stake in a joint venture holding 500 existing retail properties
• The investment carries a capped IRR of 6.875%
• Realty Income can redeem the investment in the future

This provided Realty Income with low-cost capital to make new investments supporting its growing high-yielding monthly dividend, and it establishes a repeatable framework for future investments.

Why This Matters for Oneok's Dividend

The acquisition of Brazos Midland assets and the financing arrangement with Apollo are expected to enhance Oneok's financial profile and growth trajectory. The pipeline company anticipates the acquisition will be immediately accretive to its earnings and free cash flow, supporting the sustainability and growth of its dividend.