ONEOK Stock Rallies on $4.4B Permian Acquisition, Apollo-Backed Financing

Shares of ONEOK, Inc. (NYSE: OKE) rose 1.7% in morning trading, outperforming a declining broader market, after the company announced a major acquisition and a novel financing agreement. The energy infrastructure firm is set to acquire Brazos Midstream’s natural gas assets in the Permian's Midland Basin for $4.425 billion in cash.

Strategic Permian Expansion

The deal, announced Sunday evening, significantly expands ONEOK's presence in one of the most productive U.S. energy regions. The acquisition of Brazos Midstream's gathering and processing assets is expected to more than double ONEOK’s processing capacity in the Midland Basin to approximately 2.3 billion cubic feet per day, including plants currently under construction.

Innovative Financing and Deleveraging

A key aspect driving the positive market reaction is the deal's financing structure, which avoids diluting existing shareholders. The acquisition is funded through a $9 billion nonvoting minority equity investment from funds managed by Apollo.

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ONEOK plans to use the proceeds to strengthen its balance sheet. The company will apply $5 billion of the investment toward retiring existing debt, a move it projects will lower its pro forma 2027 leverage ratio to approximately 3.25 times debt-to-EBITDA. As part of this initiative, ONEOK also launched a $2 billion cash tender offer for 20 series of its senior notes.

Market Reaction and Context

ONEOK's stock advanced to $96.33 even as the S&P 500, Dow Jones Industrial Average, and Nasdaq all traded lower. The company-specific nature of the rally was highlighted by the fact that midstream peers like Williams Companies and Kinder Morgan did not see similar gains.

Analyst commentary was broadly supportive following a management call Monday morning. Morgan Stanley raised its price target on the stock and Freedom Broker upgraded its rating to Buy. UBS reiterated a Neutral stance but maintained a price target above the stock's current trading level, according to Investing.com.