Summary
ONEOK, Inc. (OKE) announced on October 11, 2005, the signing of an agreement to sell its Texas natural gas gathering and processing assets to Eagle Rock Energy, a private company, for $528 million. This strategic divestiture includes significant infrastructure in the Texas Panhandle, comprising six processing plants with 150 million cubic feet per day capacity, approximately 3,700 miles of gathering lines, and substantial natural gas liquid production. The transaction, anticipated to close on December 1, 2005, is contingent upon receiving Hart-Scott-Rodino antitrust clearance. This sale represents a significant step in ONEOK's strategy to optimize its asset portfolio, with the company planning to utilize the proceeds, estimated at $356 million after-tax, for either further strategic asset acquisitions or debt reduction. The divestiture is also expected to generate a substantial after-tax book gain of approximately $162 million, which will be recognized in the fourth quarter of 2005. The majority of the approximately 95 employees associated with these assets are expected to transition to Eagle Rock Energy.
Key Highlights
- 1ONEOK to sell Texas natural gas gathering and processing assets for $528 million.
- 2Acquirer is Eagle Rock Energy, a privately held company.
- 3Transaction expected to close on December 1, 2005, subject to antitrust approval.
- 4Divested assets include six processing plants, 3,700 miles of gathering lines in the Texas Panhandle.
- 5ONEOK anticipates after-tax cash proceeds of $356 million.
- 6Sale is expected to result in an after-tax book gain of approximately $162 million in Q4 2005.
- 7Proceeds to be used for asset purchases or debt reduction.