ONEOK Inc. is building up its midstream presence by agreeing toacquire all the Oklahoma midstream gas gathering and processingassets of Koch Midstream Enterprises for $285 million in cash.
The assets include eight gas processing plants and about 3,250miles of gathering pipeline connected to 1,460 gas wells inOklahoma. Total capacity of the plants is 515 MMcf/d. Thetransaction is subject to approval by regulators and the boards ofboth companies.
David Kyle, president of Tulsa, OK-based ONEOK, said, “Theseassets are located in an area where ONEOK owns significant naturalgas production and development acreage. This will enable thecompany to continue our strategic objective of maximizing values inall of our non-regulated natural gas operations. We have hadpartial ownership of some of these assets before, but recentnatural gas reserve acquisitions and, more importantly, theopportunity to own gathering systems upstream of the plants willprovide greater opportunity in a highly competitive marketplace. Wewill be focusing on improving the utilization of these assets tomaximize their future value.”
In February 1998, ONEOK Products Co. sold its interests in 11western Oklahoma gas processing plants to Koch Midstream ProcessingCo. At the time, Sam McVay, vice president of ONEOK products, saidthe reason for selling the 50% interest in the plants was a lack ofownership in the gathering systems upstream of the plants and theincreasing competitive pressures in the business. “ONEOK willcontinue to pursue gas processing opportunities that meet with ourstrategic objectives.”
Last November, ONEOK subsidiaries sold several non-regulatedassets including oil and gas reserves and a processing plant inNachitoches Parish, LA; a gas treating plant and gathering systemin Dewey County, OK; and a gas processing plant and gatheringsystem in Ford, Mead, and Clark Counties, KS. ONEOK ProducerServices also sold half its interest in a partnership that owns andoperates the Sycamore Gas Gathering system in Carter County, OK.Duke Energy Field Services was the purchaser in all thesetransactions. Last June ONEOK had bought an additional 55% of theSycamore gathering system.
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