Busy bee ONEOK (OKE) remains on the hunt for midstream assets. After closing two multi-billion-dollar deals early in 2025, OKE is acquiring the remaining 49.9% interest in its Delaware Basin joint venture from NGP XI Midstream Holdings, LLC for $940MM.
OKE announced the deal June 3. The company will pay $530MM in cash and $410MM in common stock. The Delaware Basin JV owns G&P assets in West Texas and New Mexico with 785 MMcf/d of gas processing capacity.
Increased NGL Ownership: We believe the acquisition is mainly driven by OKE’s desire to own more NGLs in the Permian Basin. In February ’25, the OKE - Delaware system (inherited from OKE’s purchase of EnLink Midstream earlier this year) produced almost 90 Mb/d of NGLs (blue area in the chart), or 43% of OKE’s total Permian NGL production. Acquiring the remaining JV interest gives OKE full control of these NGL volumes.
ONEOK seeks to join an elite group of companies that control NGLs from the field to downstream fractionators and export docks. OKE in February announced a JV with MPLX to construct an LPG export terminal in Texas City, plus an LPG pipeline connecting its Mont Belvieu operations to the Texas City export terminal. OKE also recently completed the 375 Mb/d expansion of its West Texas NGL Pipeline, allowing the company to move more NGLs directly from the Permian to Mont Belvieu. These moves provide a clear path for OKE to transport large quantities of NGLs to Mont Belvieu and its Texas City terminal, expected online in 2028.
Tapered Growth Expectations: EDA view the purchase as a sound move by ONEOK. The acquisition allows OKE to more fully benefit from moving NGLs from the Permian to the Gulf Coast to feed growing domestic and international demand for ethane and LPGs. There are potential headwinds, however. The Permian growth outlook is less rosy given lower WTI prices and E&P guidance cuts. Two of the largest producers on the system (CTRA, EOG) have significant acreage in the Marcellus and Utica they can pivot to, which may defer NGL growth behind OKE’s Permian plants. – Rob Wilson, CFA and London Spivey, CFA Tickers: CTRA, EOG, OKE, MPLX.
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