ONEOK: Benefitting From Recent Acquisitions

Summary

• Consolidation continues full steam in the US midstream space.
• ONEOK recently acquired Medallion Midstream and a 43% share of EnLink Midstream. The final 57% share in EnLink will be purchased in a tax-free exchange.
• The combined company will benefit from synergies, expanded services, and a stronger valuation.
• Risks include the long-term viability of shale, but innovation and consolidation could extend the industry’s runway, making me bullish on the combined entity.
• The acquisition is accretive for ONEOK shareholders but highly dilutive for EnLink unit holders, with EnLink’s strong cash flow diluted into a larger entity.