Pipeline operator DT Midstream said on Tuesday it would acquire three natural gas transmission pipelines from ONEOK for $1.2 billion in cash, boosting its presence in the Midwest market amid rapid consolidation in the U.S. industry.
Increased consolidation among oil and gas producers and hurdles in getting new energy infrastructure approved and built have made the U.S. pipeline and storage sector attractive for deals.
Shares of DT Midstream were down nearly 3% at $100 in extended trading.
The company said it would finance the transaction, which is expected to close in late 2024 or early 2025, with about $900 million in debt and $300 million in common equity.
The target portfolio comprises Guardian Pipeline, Midwestern Gas Transmission and Viking Gas Transmission.
The pipelines have a total capacity of more than 3.7 billion cubic feet per day and are spread across seven states in the Midwest market region, which is expected to see continued growth in power demand, according to the company.
DT Midstream said the “acquisition directly aligns with its strategy of owning natural gas assets connecting premier supply basins with key demand centers and market regions”.
The transaction will immediately boost DT Midstream’s distributable cash flow and is expected to increase its pipeline segment to about 70% of adjusted core profit in 2025, it said.
ONEOK said the net proceeds from the sale are expected to enhance its financial flexibility and deleveraging.
In August, ONEOK said it would buy midstream assets in deals worth $5.9 billion from Global Infrastructure Partner, bolstering its position in the Permian and Mid-Continent basins.
Source: Reuters.com