ONEOK Partners LP (NYSE: OKS) is adding Permian Basin NGL pipelines and associated assets in Texas and southeastern New Mexico from affiliates of Chevron Corp. (NYSE: CVX) for $800 million.

The transaction includes an 80% interest in the West Texas LPG Pipeline Ltd. Partnership and 100% interest in the Mesquite Pipeline, collectively encompassing 2,600 miles of NGL gathering pipelines from the Permian in southeastern New Mexico to East Texas and Mont Belvieu, Texas.

After the deal closes, ONEOK Partners, based in Tulsa, Okla., will be the operator of both pipelines.

The remaining 20% of West Texas LPG is owned by Martin Midstream Partners LP (NASDAQ: MMLP). Martin closed ownership of West Texas LPG in May for $135 million.

ONEOK’s acquisition and capital-growth projects in North Dakota, Oklahoma and Wyoming have added $3 billion to the MLP’s investment in the last year, said Terry K. Spencer, president and CEO.

"Acquiring these NGL pipelines allows us to continue to serve producers in the Permian Basin and other multiple high producing NGL-rich basins, including the Williston Basin, the Powder River Basin, and the Cana-Woodford and SCOOP plays in Oklahoma,” Spencer said. “The partnership's presence in the Permian Basin now is significantly stronger, and this acquisition establishes a new geographic region for NGL volume growth.”

The assets are expected to generate about $40 million in annual adjusted EBITDA in 2014, with significant growth potential, ONEOK said. The company anticipates its share in EBITDA from these assets to more than double by 2017 through capacity-expansion opportunities, capacity upgrades, bundled services and integration into the partnership's existing systems.

"These assets will provide fee-based earnings to the partnership and further expand our NGL segment's portfolio of assets while positioning us for additional growth opportunities," Spencer added.

ONEOK has planned investments of $4.5 billion for natural gas gathering and processing projects and about $4.1 billion for NGL projects between 2010 and 2016.

Overall, the acquired assets increase the partnership's NGL gathering system by more than 60% to nearly 6,900 miles of NGL gathering pipelines. Chevron’s pipelines are expected to increase gathered NGL volumes nearly 40% to about 800,000 barrels per day (bbl/d) system wide, providing the partnership's NGL infrastructure with access to a new supply basin.

ONEOK ownership interest in the pipelines will also add about 230,000 bbl/d of unfractionated NGL supply to its expanding NGL systems. The West Texas LPG and Mesquite pipelines access NGL supply from producers actively developing the Delaware, Midland and Central basins in the Permian, in addition to the Barnett Shale, East Texas and North Louisiana regions.

ONEOK Partners' unfractionated NGL capacity in the acquired system is expected to reach 310,000 bbl/d through expansions based on expected producer commitments.

"This strategic acquisition immediately establishes ONEOK as a significant NGL service provider in the Permian Basin," Spencer said. "We are adding another rapidly growing producing region to our operating footprint, which will create integration and expansion opportunities for the partnership by connecting these assets to our existing NGL fractionation and storage facilities in Mont Belvieu."

ONEOK said it will offer jobs to 75 or so employees working for West Texas LPG and Mesquite.

ONEOK Partners expects to close the transaction in the fourth quarter of 2014. Closing is subject to customary conditions including antitrust clearance from the Federal Trade Commission under the Hart-Scott-Rodino Act.

Financing for this transaction is expected to come from available cash on hand or borrowing under ONEOK’s $1.7 billion commercial paper program or existing $1.7 billion credit facility.

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