Untangling the pipes

1 February 2017 By Tom Buerkle

Oneok is paying a 22 pct premium for the rest of an eponymous partnership it doesn’t own. Dividend hikes and a tax break sweeten the pot. But it’s also a sign of a recovering sector. With prices and deregulation hopes rising, it won’t be the last deal for either Oneok or rivals.

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Oneok said on Feb. 1 that it has agreed to acquire the 60 percent of Oneok Partners it doesn't already own in a $9.3 billion share swap. Tulsa-based Oneok will exchange 0.985 shares of its common stock for every outstanding unit of the master limited partnership, representing an effective premium of 22.4 percent.

The transaction will lower Oneok's cost of capital and enable it to take advantage of growth opportunities, it said. The company, which operates a 37,000-mile pipeline network connecting many of the country's leading shale-gas fields, also announced plans to boost its quarterly dividend by 21 percent after the deal closes, which is expected to occur in the second quarter. It also intends to subsequently increase the dividend by 9 to 11 percent a year through 2021.

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