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The Deal: Oneok Partners Buys Wyoming Investment Assets

NEW YORK ( The Deal) -- Tulsa, Okla., natural gas transporter Oneok Partners (OKS - Get Report) bought processing assets in Wyoming for $305 million as part of a planned $440 million investment in the natural gas liquids-rich area of the Powder River Basin.

Oneok Partners didn't reveal the name of the seller but a source said it was Merit Energy, which invests in oil and gas assets with money from limited partners.

The assets include a 50-million cubic feet per day natural gas processing facility, including the the Sage Creek plant and related natural gas gathering and natural gas liquids, or NGL, infrastructure, in western Converse and Campbell Counties. Oneok Partners plans to invest $135 million to upgrade and build natural gas gathering and processing related infrastructure, NGL gathering pipelines and well connections.

"The Sage Creek plant gives Oneok Partners additional natural gas gathering and processing capacity in a region where producers are actively drilling that has significant long-term growth potential," Oneok Partners president Terry Spencer said in a statement. "This acquisition will add assets located in and around our operating footprint that can be integrated into our system and used as a platform for future growth opportunities. The acquisition further positions the partnership as a full-service midstream provider for area producers."

The partnership expects to close the transaction in the third quarter and complete the related infrastructure projects in the second half of next year. It will finance the deal with available cash and short-term borrowings.

As part of the acquisition, Oneok Partners will receive long-term acreage dedications and fee-based and percent-of-proceeds agreements with producers. As natural gas volumes increase to the Sage Creek natural gas processing plant and NGL volumes are transported to the adjacent Oneok Partners-owned and operated Bakken NGL pipeline over the next several years, Oneok Partners expects partnership annual Ebitda from the acquisition and the investments to increase by $40 million to $60 million between 2015 and 2018.

Along with the Bakken NGL pipeline, Oneok Partners operates 1,000 miles of natural gas gathering pipelines in the Powder River and Wind River Basins in Wyoming. About 10 people operate the Sage Creek system.
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