ONEOK, Inc. is pursuing a plan to separate the company’s natural gas distribution business into a standalone publicly traded company, resulting in two independent, highly focused energy companies.
The move comes after a unanimous decision by the ONEOK board of directors.
ONEOK does not expect the transaction will result in any job reductions among its current workforce of approximately 5,000 employees. They also do not anticipate any significant changes to the benefits it offers employees and retirees.
The new public company, to be called ONE Gas, Inc., will consist of Oklahoma Natural Gas Company, Kansas Gas Service and Texas Gas Service, and will be headquartered in Tulsa, Okla.
ONEOK officials said ONE Gas will be one of the largest natural gas utilities in the United States, serving more than 2 million customers in three states, and will be the only publicly traded, 100 percent regulated, pure-play natural gas distribution utility in the United States. ONE Gas is expected to be well positioned for earnings growth and will be listed on the New York Stock Exchange (NYSE: OGS).
The transaction is expected to result in more tailored growth strategies, more efficient capital allocation, improved investor understanding and better shareholder alignment of the separate businesses, and is expected to lead to higher combined valuations of both companies.
“This transaction should unlock the value of the assets currently in the ONEOK structure and is consistent with the board of directors’ commitment to create long-term, sustainable shareholder value,” said John W. Gibson, ONEOK chairman and chief executive officer. “Creating two well-capitalized entities will help ensure that each has the financial strength and flexibility to pursue its own independent strategic priorities,” he added.
The transaction is subject to customary conditions, including, among others, the company receiving a favorable private letter ruling on the tax-free nature of the transaction from the Internal Revenue Service; customary regulatory approvals, including approval by the Kansas Corporation Commission; and final ONEOK board approval.