ONEOK plans to use the proceeds from the sale of the Guardian Pipeline, Midwestern Gas Transmission and Viking Gas Transmission to focus on other operational priorities. (Source: Shutterstock, ONEOK)
ONEOK announced a pending sale of three pipeline networks to DT Midstream (DTM) for $1.2 billion on Nov. 19.
The three interstate networks, regulated by the Federal Energy Regulatory Commission (FERC), are located in the north-central and Midwest U.S. and have a total capacity of 3.7 Bcf/d.
The sale allows ONEOK to focus on growing its operations in other areas, such as Texas and Colorado, according to the company’s announcement.
"This transaction will align and enhance our capital allocation priorities within our integrated operating footprint," said Pierce H. Norton II, ONEOK president and CEO.
Under the agreement, DT Midstream acquires ownership of the Guardian Pipeline, Midwestern Gas Transmission and Viking Gas Transmission.
Guardian is a 260-mile interstate network currently connected to DT Midstream’s Vector Pipeline, as well as to the company’s Chicago Hub. The network also provides natural gas to Wisconsin utilities.
Midwestern Gas Transmission is a 400-mile bi-directional pipeline connecting the Utica and Marcellus shales to the Midwest via the Chicago Hub.
Viking Gas is an interstate and international line connecting utility customers in Minnesota, Wisconsin and North Dakota to suppliers in Manitoba, Canada.
“Expanding our scale through this bolt-on natural gas pipeline acquisition fully aligns with our pure play natural gas strategy. This transaction also increases the revenue contribution from our pipeline segment, supported by take-or-pay contracts with strong credit quality utility customers,” said David Slater, President and CEO of DT Midstream.
DTM will finance the transaction with $900 million in debt and about $300 million in equity, according to the announcement from DT Midstream. Upon closing, ONEOK will use the proceeds to enhance the company’s financial flexibility and deleveraging trend toward its announced target of 3.5 times during 2026.
The deal is expected to close before the end of the year.
Both companies’ boards of directors have approved the deal. Barclays is serving as financial adviser to DTM and has provided financing in support of the deal.
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