Summary
ONEOK, Inc. (OKE) announced on July 23, 2010, a significant development regarding its subsidiary, ONEOK Partners, L.P., and its joint venture, Overland Pass Pipeline Company, LLC. Williams Partners L.P. has elected to exercise its option to increase its ownership in the Overland Pass Pipeline to 50%, up from its initial 1%. This joint venture operates a crucial 760-mile natural gas liquids (NGL) pipeline connecting Opal, Wyoming, to Conway, Kansas, a key NGL market center. The pipeline, operational since November 2008, currently has a capacity of 140,000 barrels per day with expansion potential. The exercise of this option by Williams Partners will result in ONEOK Partners receiving approximately $425 million at closing. These funds are earmarked for the repayment of short-term debt and to finance recently announced capital projects. The transaction is anticipated to close in August 2010, pending regulatory approvals. Notably, Williams Partners will also gain the option to become the operator of the pipeline upon closing, provided they maintain at least a 50% ownership stake and give adequate notice to ONEOK Partners.
Key Highlights
- 1Williams Partners L.P. is increasing its ownership in the Overland Pass Pipeline Company, LLC from 1% to 50%.
- 2ONEOK Partners, L.P. will receive approximately $425 million upon the closing of this transaction.
- 3Proceeds from the transaction will be used to repay short-term debt and fund capital projects for ONEOK Partners.
- 4The Overland Pass Pipeline is a 760-mile NGL pipeline from Wyoming to Kansas with a capacity of 140,000 barrels per day.
- 5Williams Partners has the option to become the operator of the pipeline if they maintain at least 50% ownership.
- 6The transaction is expected to close in August 2010, subject to regulatory approvals.