Apollo has backed ONEOK's Permian expansion with a $9bn structured equity investment through a Class B interest in a newly formed holding company. The proceeds will fund ONEOK's $4.425bn acquisition of Brazos Midstream's Permian Midland Basin gas gathering and processing assets and extinguish approximately $5bn of debt. Apollo's nonvoting interest carries no board representation or liquidation preference, with returns capped at 7.0% for the first nine years, stepping up to 7.35% in year 10 and 7.85% in year 15. The instrument is designed to shrink over time, with Apollo receiving 15% of quarterly cash flow from operations, which ONEOK can increase to 20%. Since distributions are expected to exceed the capped return, Apollo's capital balance amortizes down, with value above the cap accruing to ONEOK's common shareholders.

ONEOK can buy out the remaining interest from the eighth anniversary, or earlier if the balance falls to $200m. No common stock is being issued, and rating agencies view the investment as credit-enhancing, expecting full equity credit. The package cuts pro forma 2027 leverage to about 3.25 times debt-to-EBITDA, enabling organic growth, dividend increases, and buybacks.

The Brazos Midland system spans 600,000 dedicated acres under long-term fixed-fee contracts with a weighted average remaining term of over 12 years, served by 14 active rigs operated by Exxon Mobil, Diamondback Energy, and Double Eagle. Upon completion of the Cassidy II plant in Q3 2027, the system will cover 700 miles of gathering pipe and 1.2 billion cubic feet per day of processing across seven core Midland counties. The acquisition more than doubles ONEOK's Midland Basin processing capacity to approximately 2.3 Bcf/d, valued at 7.5 times estimated 2027 EBITDA, including $80m in annual synergies.