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ACQUISITIONS | 9 Months Ended
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Sep. 30, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
ACQUISITIONS | ACQUISITIONS EnLink Controlling Interest Acquisition - On Aug. 28, 2024, we entered into the EnLink Purchase Agreement with GIP to acquire GIP’s interest in EnLink consisting of 43% of the outstanding EnLink Units for $14.90 in cash per unit and 100% of the outstanding limited liability company interests in the managing member of EnLink for $300 million, for total cash consideration of approximately $3.3 billion. Subsequent event - On Oct. 15, 2024, we completed the EnLink Controlling Interest Acquisition, and through our 100% ownership of the managing member of EnLink, we have obtained control of EnLink. We funded this acquisition with an underwritten public offering of senior notes. For additional information on our long-term debt, see Note F. EnLink’s operations are principally composed of providing midstream services relating to natural gas, NGLs and crude oil. The assets of EnLink include approximately 13,600 miles of pipeline, 25 natural gas processing plants, with approximately 5.9 Bcf/d of processing capacity, seven fractionators with approximately 316 MBbl/d of fractionation capacity, barge and rail terminals, product storage facilities, including natural gas storage, purchasing and marketing capabilities and equity investments in certain joint ventures. This acquisition meaningfully increases our scale and integrated value chain within the growing Permian Basin while expanding and extending our asset bases in the Mid-Continent, North Texas and Louisiana regions. We expect to achieve significant synergies by combining our complementary asset positions. In addition, we intend to pursue the acquisition of the publicly held EnLink Units in a tax-free transaction. The EnLink Controlling Interest Acquisition will be accounted for using the acquisition method of accounting for business combinations pursuant to Accounting Standards Codification 805, “Business Combinations,” which requires, among other things, assets acquired and liabilities assumed to be recorded at their fair value on the acquisition date. Any excess of consideration to be transferred over the estimated fair value of assets acquired and liabilities assumed will be recorded as goodwill. Determining the fair value of acquired assets and liabilities assumed requires management’s judgment and the use of independent valuation specialists. At the time of this filing, it is impracticable to disclose all the information required by ASC 805, “Business Combinations,” as we are in the process of evaluating the purchase accounting and pro forma implications of this transaction. See Part 2, Item 1A “Risk Factors” for further discussion of risks related to the EnLink Controlling Interest Acquisition and the Potential EnLink Transaction. Medallion Acquisition - On Aug. 28, 2024, we also entered into the Medallion Purchase and Sale Agreement with GIP to acquire all of the equity interests in Medallion for a purchase price of $2.6 billion, subject to upward and downward adjustments specified in the Medallion Purchase and Sale Agreement, and inclusive of the purchase of additional interests in a Medallion joint venture owned by a separate third party. Medallion operations are principally composed of providing midstream services for crude oil and condensate in West Texas, specifically the Midland Basin. The assets of Medallion include crude oil gathering and transportation pipelines and crude oil storage facilities. Following the completion of the Medallion Acquisition, we expect Medallion to be a wholly owned subsidiary. The closing of this transaction is expected to occur during the fourth quarter of 2024, subject to the satisfaction of customary closing conditions, including the expiration or termination of all applicable waiting periods imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. We intend to fund this acquisition with a portion of the proceeds from the September 2024 underwritten public offering of senior notes. For additional information on our long-term debt, see Note F. We expect to account for this acquisition using the acquisition method of accounting for business combinations pursuant to Accounting Standards Codification 805, “Business Combinations,” which requires, among other things, assets acquired and liabilities assumed to be recorded at their fair value on the acquisition date. Any excess of consideration to be transferred over the estimated fair value of assets acquired and liabilities assumed will be recorded as goodwill. See Part 2, Item 1A “Risk Factors” for further discussion of risks related to this acquisition. Gulf Coast NGL Pipelines Acquisition - In June 2024, we completed the acquisition of a system of NGL pipelines from Easton Energy, a Houston-based midstream company, for approximately $280 million. This acquisition in our Natural Gas Liquids segment includes approximately 450 miles of liquids products pipelines located in the strategic Gulf Coast market centers for NGLs, Refined Products and crude oil. A portion of the Easton assets are already connected to our Mont Belvieu assets. We expect to add connections to our Houston-based assets beginning in mid-2025 through the end of 2025. Magellan Acquisition - On Sept. 25, 2023, we completed the Magellan Acquisition. This acquisition strategically diversifies our complementary asset base and allows for significant expected synergies as a combined entity. Each common unit of Magellan was exchanged for a fixed ratio of 0.667 shares of ONEOK common stock and $25.00 of cash, for a total consideration of $14.1 billion. A total of approximately 135 million shares of common stock were issued, with a fair value of approximately $9.0 billion as of the closing date of the Magellan Acquisition. We funded the cash portion of this acquisition with an underwritten public offering of $5.25 billion senior unsecured notes. For additional information on our long-term debt, please see Note H in our Annual Report. The Magellan Acquisition was accounted for using the acquisition method of accounting for business combinations pursuant to Accounting Standards Codification 805, “Business Combinations,” which requires, among other things, assets acquired and liabilities assumed to be recorded at their fair value on the acquisition date. Determining the fair value of acquired assets and liabilities assumed requires management’s judgment and the use of independent valuation specialists. The following tables set forth the acquisition consideration and final purchase price allocation of assets acquired and liabilities assumed:
| At Sept. 25, 2023
| (Millions of dollars and shares/units, except per share/unit data)
Magellan public common units outstanding | 202.1 |
Cash consideration per Magellan unit | $25.00
Cash consideration | $ | 5,052 |
Magellan public common units outstanding | 202.1 |
ONEOK exchange ratio per Magellan unit | 0.667 |
Shares of ONEOK common stock issued | 134.8 |
ONEOK common stock closing price on Sept. 25, 2023 | $66.54
Fair value of common stock issued | $ | 8,969 |
Fair value of Magellan replacement equity awards | 93 |
Equity consideration | $ | 9,062 |
Total consideration | $ | 14,114 |
| At Sept. 25, 2023
Assets acquired: | (Millions of dollars)
Cash and cash equivalents | $ | 37 |
Accounts receivables, net | 333 |
Inventories | 352 |
Other current assets | 140 |
Property, plant and equipment | 11,644 |
Investments in unconsolidated affiliates | 922 |
Intangible assets | 1,124 |
Other assets | 121 |
Total assets acquired | 14,673 |
Liabilities assumed: |
Accounts payable | 213 |
Other current liabilities (a) | 721 |
Long-term debt, excluding current maturities | 4,013 |
Other deferred credits and liabilities | 201
Total liabilities assumed | 5,148
Total identifiable net assets | 9,525
Goodwill | 4,589 |
Total purchase price | $ | 14,114 |
(a) - Includes contingent liabilities, primarily related to the amounts accrued for the Corpus Christi matter described in Note J. During the nine months ended Sept. 30, 2024, we recorded adjustments to the preliminary purchase price allocation that resulted in an increase to goodwill of $165 million due to additional information received during the measurement period. The adjustment is due primarily to a decrease in property, plant and equipment of approximately $100 million, and an increase to certain contingencies that existed as of the acquisition date. Pro Forma Financial Information The following table sets forth the unaudited supplemental pro forma financial information for the three and nine months ended Sept. 30, 2023, as if we had completed the Magellan Acquisition on Jan. 1, 2022:
| Three Months Ended |  | Nine Months Ended
| Sept. 30, |  | Sept. 30,
| 2023 |  | 2023
| (Millions of dollars)
Revenue | $ | 4,850 |  |  | $ | 14,764 |
Net income | $ | 572 |  |  | $ | 2,364 |
The unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of our operating results that would have occurred had the transaction been completed on Jan. 1, 2022, nor is it necessarily indicative of future results. For more information on the basis of our pro forma adjustments, please see our Annual Report. Transaction Costs - For the three and nine months ended Sept. 30, 2024, transaction costs relate primarily to our recent acquisitions, including the Magellan Acquisition, the EnLink Controlling Interest Acquisition and the Medallion Acquisition. For the nine months ended Sept. 30, 2023, we recognized approximately $154 million of transaction costs associated with the Magellan Acquisition. These non-recurring costs are primarily related to advisory fees, severance and settlement of share-based awards for certain Magellan employees and integration costs, as well as bridge facility commitment fees. The following table sets forth the impact of acquisition related transaction costs in our Consolidated Statements of Income as of the periods indicated:
| Three Months Ended | Nine Months Ended
| Sept. 30, | Sept. 30,
| 2024 | 2023 | 2024 | 2023
| (Millions of dollars)
Transaction costs | $ | 10 |  | $ | 123 |  | $ | 17 |  | $ | 133 |
Interest expense | 23 |  | 13 |  | 23 |  | 21 |
Total | $ | 33 |  | $ | 136 |  | $ | 40 |  | $ | 154 |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent + Details
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