Magellan unitholders received $25 in cash and 0.6670 shares of ONEOK common stock for each outstanding Magellan common unit, representing an implied value of $67.50 per Magellan unit. 

The analyst notes that OKE has been benefiting from the recent full integration of its wellhead-to-frac-hub strategy and historical returns on capital and projects it to generate around 50% of FY24 EBITDA from the more stable cash flow businesses, including refined product, gas pipeline, and long-haul crude transportation.

The analyst sees the integrated NGL business as a key growth driver and OKE's core business.

Richardson assumes mid-single-digit growth in Rockies gas volumes in FY24 and the Permian basin to boost the top of the funnel.

The analyst estimates an EBITDA of $5.97 billion for FY24 on legacy Magellan assets, mid-single-digit growth in Permian and Bakken feed volumes, and synergy from harvest. The analyst assumes a 6% dividend increase in FY24.

Richardson estimates EBITDA of $6.30 billion in FY25 and $6.55 billion in FY26, including synergy assumptions.

Price Action: OKE shares are trading lower by 2.14% at $62.08 on the last check Monday.