Kinetik Holdings Inc. (NYSE: KNTK ) Midstream sector company in the US Permian Basin. The company is collecting, processing, and transporting natural gas, oil, and NGL. Recent months have shown a stable financial situation, rapid cash flow growth, and dividends that indicate the company is matureI am a passionate investor and financial advisor with a strong focus on equity markets, particularly growth and small-cap stocks. With a background in finance and upcoming master’s degree in the field, I combine pra ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-38048 KINETIK HOLDINGS INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 2700 Post Oak Blvd, Suite 300 Houston, Texas, 77056 (Address of principal executive offices) (Zip Code) For the quarte ...

Financial Data and Key Metrics Changes - Kinetic reported first quarter adjusted EBITDA of $250 million, a 7% year-over-year increase driven by process gas volume growth and margin expansion in the Midstream Logistics segment [7][14] - Distributable cash flow was $157 million, and free cash flow reached $120 million [14] - The company affirmed full-year adjusted EBITDA guidance of $1.09 billion to $1.15 billion, expecting a meaningful acceleration in adjusted EBITDA growth during the second half of the year [16][17] Business Line Data and Key Metrics Changes - The Midstream Logistics segment generated adjusted EBITDA of $159 million, up 11% year-over-year due to increased process gas volumes and margin expansion from Northern Delaware assets [14] - The Pipeline Transportation segment reported adjusted EBITDA of $94 million, down 2% year-over-year, primarily due to the absence of contributions from Gulf Coast Express following the sale of equity interest [16] Market Data and Key Metrics Changes - Kinetic's operations are primarily focused on the Permian Basin, which is expected to remain resilient despite macroeconomic challenges [9][10] - The company anticipates over 1 billion cubic feet per day of gas growth per year, even if Permian crude production remains flat [10] Company Strategy and Development Direction - Kinetic is focused on providing flow assurance and operational reliability to producer customers, with a strong emphasis on organic and inorganic growth opportunities [10][12] - The company announced a $500 million share repurchase program, reflecting management's confidence in Kinetic's value proposition [13][21] - Future capital expenditures are expected to be discretionary and flexible, with less than $50 million of committed growth capital in 2026 [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged elevated volatility and macroeconomic uncertainty but expressed confidence in Kinetic's ability to navigate these challenges [7][20] - The company is seeing some indirect impacts of lower commodity prices, leading to adjustments in gas process volume growth assumptions from approximately 20% to high teens growth [18][19] - Management remains optimistic about the long-term growth outlook, projecting a 10% compound annual growth rate through 2029 [23][26] Other Important Information - Kinetic has made substantial progress on strategic projects, including the commissioning of the King's Landing complex [7][19] - The company has a strong hedging strategy, with approximately 83% of expected gross profit sourced from fixed fee agreements [17][18] Q&A Session Summary Question: Long-term growth drivers - Management highlighted that the 10% compound annual growth rate is supported by contractual resets and growth in New Mexico, with a focus on operational efficiency [23][26] Question: Capital allocation and buybacks - Management confirmed a flexible approach to capital allocation, emphasizing the value seen in the current share price and the potential for M&A opportunities [28][30] Question: Macro environment and CapEx adjustments - Management indicated that further production cuts could lead to adjustments in capital expenditures, but emphasized a customer-specific approach to decision-making [49][52] Question: Commodity exposure and hedging - Management stated that approximately 83% of gross profit is fee-based, with plans to continue hedging against commodity price fluctuations [61][63] Question: Performance of acquired assets - The Barilla Draw acquisition has exceeded expectations, with significant activity anticipated in the coming years [105][106]

Kinetik (KNTK) Q1 2025 Earnings Call May 08, 2025 09:00 AM ET Speaker0 Good morning. Thank you for attending today's Kinetic First Quarter twenty twenty five Results Conference Call. My name is Tamiya, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Alex Durkey with Kinetic. You may proceed. Speaker1 Thank you. Good morning, a ...

Kinetik Holdings Inc. (KNTK) came out with quarterly earnings of $0.05 per share, missing the Zacks Consensus Estimate of $0.23 per share. This compares to earnings of $0.12 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -78.26%. A quarter ago, it was expected that this company would post earnings of $0.37 per share when it actually produced earnings of $0.01, delivering a surprise of -97.30%.Over the last four quarters, the ...

First Quarter 2025 Results May 7, 2025 Forward looking statements This presentation includes certain statements that may constitute "forward-looking statements" for purposes of the federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "m ...

Kinetik Reports First Quarter 2025 Financial and Operating Results HOUSTON and MIDLAND, Texas, May 7, 2025 – Kinetik Holdings Inc. (NYSE: KNTK) ("Kinetik" or the "Company") today reported financial results for the quarter ended March 31, 2025. First Quarter 2025 Results and Commentary For the three months ended March 31, 2025, Kinetik reported net income including noncontrolling interest of $19.3 million. Kinetik generated Adjusted EBITDA of $250.0 million, Distributable Cash Flow of $157.0 million, and Fre ...

Group 1 - Kinetik Holdings' stock has decreased by 23% since mid-January, indicating a significant pullback from its previous high valuations [1] - The stock was rated a HOLD in January, suggesting a cautious approach to its investment potential [1] Group 2 - The author has a professional background in the Nuclear Power industry, which informs their analysis of potential equities for long-term investment [1]

Capacity and Acquisitions - The company has approximately 2.2 Bcf/d cryogenic natural gas processing capacity, which will increase to 2.4 Bcf/d upon completion of the Kings Landing Project in mid-2025[22]. - The company entered into a definitive agreement to acquire natural gas and crude oil gathering systems assets from Permian Resources for $178.4 million, closing in early January 2025[23]. - The company acquired a 12.5% equity interest in EPIC, increasing its total ownership to 27.5%, with EPIC having a pipeline capacity of 625 MBbl/d[24]. - The Company completed the acquisition of Durango Permian LLC for an adjusted purchase price of approximately $785.7 million, significantly expanding its footprint into New Mexico and the Northern Delaware Basin[25]. - The Durango Acquisition increased processing capacity by over 200 MMcf/d and doubled existing gathering pipeline mileage, with an additional 200 MMcf/d capacity expected from the Kings Landing Project[26]. - The Company sold its 16% equity interest in the Gulf Coast Express Pipeline for an adjusted purchase price of $524.4 million, including a $30 million earn-out contingent on capital project approvals[27]. Operations and Infrastructure - The company is the fourth largest natural gas processor in the Delaware Basin and across the entire Permian Basin by processing capacity[22]. - The company provides a multi-stream opportunity for natural gas gathering, compression, and processing, as well as crude gathering services[23]. - The Midstream Logistics segment operates over 3,900 miles of pipeline in the Delaware Basin, including over 2,300 miles acquired through the Durango Acquisition[34]. - The Company has a total cryogenic processing capacity of approximately 2.2 Bcf/d across seven processing complexes[34]. - The Pipeline Transportation segment includes three equity method investment pipelines with a total capacity of 2.65 Bcf/d for the Permian Highway Pipeline, 600 MBbl/d for Shin Oak, and 625 MBbl/d for EPIC[45]. - The Delaware Link Pipeline, which provides additional transportation capacity to Waha, reached commercial in-service in October 2023 with a capacity of approximately 1.0 Bcf/d[43]. Financial Performance and Risks - The company’s success depends on maintaining or increasing hydrocarbon throughput volumes on its midstream systems[18]. - The company’s ability to return capital to stockholders through dividends and stock repurchases depends on generating sufficient cash flows[20]. - The Company may face challenges in controlling cash flows from joint ventures, potentially impacting its financial condition and results of operations[103]. - The costs of producing crude oil, natural gas, and NGLs, as well as the availability of drilling rigs and transportation facilities, are critical factors affecting revenue[104]. - The Company relies on third-party pipelines for transportation, and any disruptions could materially affect its ability to operate efficiently and generate revenue[105]. - Customers may suspend or terminate agreements under certain circumstances, which could adversely impact the Company's financial condition and cash flows[107]. Regulatory and Compliance - The Company’s intrastate natural gas operations are regulated by the Railroad Commission of Texas (TRRC), ensuring that rates and services are just and reasonable[56]. - The Company is subject to the U.S. Department of Transportation's Pipeline and Hazardous Materials Safety Administration (PHMSA) regulations, which include mandatory inspections for pipelines in high consequence areas[61]. - The Company has incurred and will continue to incur significant operating and capital expenditures to comply with environmental and occupational health and safety laws[65]. - The Company’s operations are subject to various environmental laws, including the Clean Air Act and the Clean Water Act, which may result in increased compliance costs[67]. - The Company is committed to conducting business in accordance with high ethical standards, with oversight from the Audit Committee on business ethics issues[77]. Sustainability and Environmental Impact - The Company’s sustainability strategy ties 20% of all salaried employees' at-risk pay to the achievement of specific sustainability goals, including methane emissions reduction[74]. - 100% of the Company’s debt capital structure is linked to sustainability performance, including targets related to GHG and methane emission intensity[78]. - The company aims to reduce Scope 2 GHG emissions through energy efficiency measures and sourcing renewable energy[79]. - In 2023, the company converted 3,742 natural gas-driven pneumatics and pumps to instrument air, reducing annual methane emissions by approximately 50%[79]. - The company received approval from the US EPA for the Monitoring, Reporting and Verification Plan for three Class II Acid Gas Injection wells, enabling economic benefits from sequestered CO2 through 45Q tax credits[79]. - The company is in the process of gathering 2024 GHG emission data, indicating a commitment to transparency in environmental impact reporting[78]. Safety and Risk Management - As of December 31, 2024, the Company had approximately 460 employees, with a Total Recordable Incident Rate of 0.75 and a Motor Vehicle Incident Rate of 1.36 in 2024[49][50]. - The Company emphasizes a strong safety culture, with over 18,000 hours of EHS-related training completed by employees in 2024[52]. - The company underwent 13 pipeline integrity and safety audits and three process safety inspections in 2024, resulting in one immaterial regulatory penalty[83]. - The Company’s risk management processes are overseen by the Audit Committee, which reviews ongoing assessments of the company's risk management[76]. Market and Competitive Landscape - Increased competition from other midstream service providers and alternative energy sources could negatively affect demand for the Company's services[108]. - The Company has limited direct exposure to commodity price risk, but its customers are exposed, which could impact future service volumes[112]. - The influence of major shareholders, Blackstone and I Squared Capital, may not align with the interests of other stockholders, impacting corporate actions[146][147]. Economic and Operational Challenges - The Company faces risks from natural or human causes, including severe weather, geopolitical conflicts, and pandemics, which could disrupt operations[161]. - Cybersecurity breaches pose a significant risk, potentially leading to information theft, operational disruption, and financial loss, as the Company increasingly relies on digital technologies[164]. - Changes in tax laws and regulations could adversely affect the Company's operating results and cash flows[123]. - Rate regulation and challenges to the Company's pricing could lead to increased operating expenses and reduced cash flows[126]. - The Company may experience shortages of equipment and skilled labor, which could increase costs and reduce productivity[119].

Financial Data and Key Metrics Changes - In Q4 2024, adjusted EBITDA was reported at $237 million, with distributable cash flow of $155 million and free cash flow of $32 million [19] - For the full year 2024, adjusted EBITDA reached $971 million, representing a 16% year-over-year increase, and capital expenditures totaled $265 million, which was $15 million below the midpoint of guidance [12][24] - The company exited 2024 with a leverage ratio of 3.4 times, down 0.6 times year-over-year [25] Business Line Data and Key Metrics Changes - The Midstream Logistics segment generated adjusted EBITDA of $150 million in Q4, up 3% year-over-year but down 14% sequentially due to negative Waha gas prices impacting volumes [20] - The pipeline transportation segment reported adjusted EBITDA of $92 million, up nearly 9% year-over-year, driven by volume growth and contributions from recent expansions [23] Market Data and Key Metrics Changes - Average gas processed volumes for 2024 were 1.64 billion cubic feet per day, up 13% year-over-year [11] - The company anticipates a 20% growth in gas processed volumes across the system in 2025, outpacing broader Permian growth [26] Company Strategy and Development Direction - The company aims to become a market leader in the Northern Delaware Basin, with strategic M&A and organic growth as key components of its strategy [6] - Kinetik is exploring a large-scale gas-fired power generation facility to manage electricity costs and capitalize on natural gas price volatility [15][16] - The company has set an internal target of achieving $2 billion in EBITDA by 2030, with a focus on organic growth and disciplined capital deployment [54][56] Management's Comments on Operating Environment and Future Outlook - Management noted that 2024 was transformational, with significant milestones in capital allocation and operational performance rebounding by late December [5][11] - The company expects continued growth driven by the Permian supply and US Gulf Coast demand, with LNG exports projected to double by 2030 [13][14] - Management expressed confidence in executing growth strategies and maintaining financial flexibility to pursue both organic and inorganic opportunities [97][98] Other Important Information - The company increased its cash dividend by 4%, marking the first return of capital to shareholders [9] - Kinetik was placed on a positive outlook by S&P, reflecting confidence in its growth trajectory [9] Q&A Session Summary Question: What is the execution risk associated with achieving the 10% EBITDA CAGR target? - Management indicated that they have a strong market share performance and are confident in their ability to execute on growth opportunities, particularly with the King's Landing project [38][39] Question: Are there opportunities for M&A in 2025? - Management acknowledged that while there are opportunities, they maintain a high bar for attractiveness in potential transactions [45][46] Question: How does the company plan to achieve its long-term growth targets? - Management emphasized a focus on organic growth and internal capabilities, with King's Landing being a key project for future growth [56][57] Question: What is the outlook for producer customer activity in 2025? - Management noted robust activity levels among producers, particularly in New Mexico, and highlighted the potential for increased drilling activity if gas prices improve [64][66] Question: How does the company view the competitive landscape for sour gas opportunities? - Management sees significant opportunities in sour gas processing in Northern Delaware and is focused on capitalizing on existing capacity [119] Question: What is the relationship between EBITDA growth and dividend growth? - Management stated that they are prioritizing financial flexibility and retaining cash for growth opportunities, which may result in slower dividend growth [97][98]