A beaten-down midstream name just earned a high-conviction vote from one value investor.New York City-based Brave Warrior Advisors disclosed a new position in Kinetik Holdings Inc. (KNTK +0.68%), acquiring 1.6 million shares for an estimated $68.8 million in the third quarter, according to a November 14 SEC filing.What HappenedAccording to a filing with the Securities and Exchange Commission dated November 14, Brave Warrior Advisors established a new equity position in Kinetik Holdings Inc. (KNTK +0.68%). T ...

Kinetik Holdings Inc. (NYSE:KNTK) is included among the 11 Worst Performing Dividend Stocks Year-to-Date. Kinetik (KNTK) Seen as “Overly Discounted” by Jefferies After Weak 2025 Performance On December 2, Jefferies initiated its coverage on Kinetik Holdings Inc. (NYSE:KNTK) with a Buy rating and a $41 price target. The analyst noted that the company’s growth prospects are “overly discounted” after a “disappointing” fiscal 2025, some of which was driven by macro headwinds. Jefferies expects Kinetik to del ...

Core Insights - Kinetik Holdings Inc. (NYSE: KNTK) is recognized as one of the 15 Extreme Dividend Stocks to buy according to hedge funds [1] - Wells Fargo has lowered the price target for Kinetik Holdings from $48 to $40 due to concerns over reduced volume outlook, while maintaining an Equal Weight rating [2] - The company reported a downward revision in its 2025 EBITDA guidance, reflecting Q3 results and slowing producer activity [2] Financial Performance - In Q3 2025, Kinetik Holdings highlighted the successful startup of the Kings Landing processing plant in New Mexico, which is processing over 100 million cubic feet per day [3] - The company reported capital expenditures of $154 million and updated its full-year adjusted EBITDA guidance to a range of $965 million to $1.005 billion, citing volume-related challenges and fluctuations in commodity prices [4] - The timing of the Kings Landing plant startup also contributed to the revision in EBITDA guidance [4] Operational Developments - The Kings Landing facility is designed for future processing capacity expansions with fewer operational challenges, indicating a strategic investment in infrastructure [3] - Kinetik Holdings operates as a midstream energy firm in the Permian Basin, providing services to oil and gas producers [4]

Core Insights - Kinetik Holdings Inc. (NYSE:KNTK) experienced a significant share price decline of 10.66% from November 3 to November 10, 2025, ranking among the energy stocks that lost the most during that week [1] Financial Performance - The company reported mixed results for Q3 on November 5, with an EPS of $0.03, which fell short of expectations by $0.27, primarily due to increased costs of goods sold and operating expenses [3] - Kinetik's revenue for the quarter was $463.9 million, exceeding estimates by over $33 million and reflecting a year-over-year increase of 17.1% [3] - The company has lowered its adjusted EBITDA guidance by 5% for 2025 and 2% for 2026 [3] Analyst Ratings - Following the Q3 report, Clear Street analyst Tim Moore reduced the price target for Kinetik Holdings from $60 to $55 while maintaining a 'Buy' rating, indicating recognition of operational challenges and delays in the King's Landing project [4]

Financial Performance - Total operating revenues for Q3 2025 reached $463.97 million, a 17% increase from $396.36 million in Q3 2024[15] - Product revenue increased to $357.61 million in Q3 2025, up 23% from $290.42 million in Q3 2024[15] - Operating income for Q3 2025 was $19.79 million, a significant decrease of 73% compared to $72.87 million in Q3 2024[15] - Net income attributable to Class A Common Stock holders was $5.27 million in Q3 2025, down 80% from $25.76 million in Q3 2024[15] - The overall financial performance shows a robust growth trajectory, with net income doubling year-over-year[26] - For the three months ended September 30, 2025, the company recorded net income of $74.2 million, compared to $35.0 million for the same period in 2024, representing a 112% increase[28] - The company reported a net income of $15.55 million for the three months ended September 30, 2025, down 81% from $83.65 million in the prior year[154] Cash Flow and Liquidity - Cash flows from operating activities for the nine months ended September 30, 2025, were $494.03 million, slightly up from $493.36 million in the same period of 2024[21] - Cash at the end of the period for September 30, 2025, was $7,737,000, a decrease of 62.2% from $20,438,000 at the end of September 30, 2024[23] - The company reported a net cash used in investing activities of $562.93 million for the nine months ended September 30, 2025[21] - Total liquidity as of September 30, 2025, was $883.5 million, including cash and cash equivalents of $7.7 million[189] - Net cash provided by operating activities increased by $0.7 million to $494.0 million for the nine months ended September 30, 2025, compared to $493.4 million for the same period in 2024[198] - Net cash provided by financing activities was $73.0 million for the nine months ended September 30, 2025, primarily from long-term debt issuance, compared to a net cash outflow of $411.5 million for the same period in 2024[200] Assets and Liabilities - Total assets increased to $7.20 billion as of September 30, 2025, compared to $6.81 billion at the end of 2024[19] - Long-term debt rose to $3.96 billion as of September 30, 2025, up from $3.36 billion at the end of 2024[19] - The company’s accumulated deficit decreased to $1.99 billion as of September 30, 2025, from $2.98 billion at the end of 2024[19] - The balance at September 30, 2025, was $4,400,882 million, with a notable change in various asset categories[26] - The fair value of consolidated debt as of September 30, 2025, was $4.19 billion, up from $3.52 billion as of December 31, 2024[80] Equity and Dividends - Cash dividends paid to Class A Common Stock amounted to $133,868,000, with a dividend rate of $2.25 per share[27] - The Company declared a cash dividend of $0.78 per share on October 15, 2025, payable to stockholders of record as of October 27, 2025[136] - The Company made cash dividend payments of $373.8 million to holders of Class A Common Stock and Common Units during the nine months ended September 30, 2025[201] Acquisitions and Investments - The company completed the acquisition of Durango, resulting in a total consideration of $423,200,000[27] - The Company completed the Barilla Draw Acquisition for $175.5 million, which included natural gas and crude gathering pipelines valued at $165.0 million and intangible right-of-way assets of $10.5 million[41] - The Durango Acquisition was consummated for an adjusted purchase price of approximately $785.7 million, with a potential earn-out of up to $75.0 million contingent on the completion of the Kings Landing Project[42] Segment Performance - Midstream Logistics segment generated $458.6 million in revenue for Q3 2025, a 17.1% increase from $391.3 million in Q3 2024[125][126] - Total segment operating revenue for Q3 2025 was $463.9 million, compared to $396.4 million in Q3 2024, reflecting a growth of 17%[125][126] - Segment Adjusted EBITDA for Midstream Logistics was $151.4 million in Q3 2025, up from $173.6 million in Q3 2024, indicating a decrease of 12.8%[125][126] Operating Expenses - General and administrative expenses accounted for over 78% of the Company's total expenses, amounting to $30.1 million in Q3 2025[122][125] - Operating expenses increased by $20.3 million, or 36%, to $76.1 million, with significant contributions from Durango's operations and the Kings Landing plant start-up[160] - Total accrued expenses as of September 30, 2025, amounted to $228.4 million, an increase from $186.7 million as of December 31, 2024[81] Future Outlook - Future outlook remains positive, with expectations for continued revenue growth driven by market expansion strategies[26] - New product developments and technological advancements are anticipated to enhance competitive positioning in the market[26] - Strategic acquisitions are being considered to bolster market presence and operational capabilities[26] Tax and Regulatory Matters - The effective tax rate for the three months ended September 30, 2025, was 6.66%, lower than the 8.99% rate in 2024, primarily due to tax impacts related to noncontrolling interests[109] - The company plans to adopt ASU 2023-09 in its Annual Report for the year ended December 31, 2025, which will enhance income tax disclosures[37] Share Repurchase and Stock Activity - The Company repurchased 2.4 million shares for a total cost of $100.0 million in Q3 2025[87] - A share repurchase program was approved, allowing up to $500 million in total repurchases of Class A Common Stock, with $321.7 million available as of September 30, 2025[203][204]

Financial Data and Key Metrics Changes - In Q3 2025, the company reported a just-equity bid of $243 million, distributable cash flow of $158 million, and free cash flow of $51 million [14] - Adjusted EBITDA for the midstream logistics segment was $151 million, down 13% year-over-year, primarily due to lower commodity prices and higher operating expenses [15] - The updated full-year adjusted EBITDA guidance range is now $965 million to $1.005 billion, reflecting a decline from previous expectations due to commodity price volatility [16][21] Business Line Data and Key Metrics Changes - The midstream logistics segment faced challenges from lower commodity prices and increased costs, while the pipeline transportation segment generated an adjusted EBITDA of $95 million [15] - The startup of the King's Landing facility is expected to enhance processing capacity, with over 100 million cubic feet per day being consistently flowed [5][6] Market Data and Key Metrics Changes - Waha natural gas pricing has declined by over 50% since February, significantly impacting the company's earnings and operational decisions [17] - The Delaware Basin rig count has decreased by nearly 20% since the beginning of the year, indicating a cautious stance from producers [20] Company Strategy and Development Direction - The company is focused on executing a multi-year organic investment strategy, including projects like King's Landing and the ECCC pipeline, to enhance market access and deliver value [13][10] - A new agreement with Competitive Power Ventures to connect to a 1,350-megawatt energy center demonstrates the company's ability to unlock value through strategic partnerships [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in the past quarters and emphasized the need for improved forecasting and cost management [12] - Despite current headwinds, management remains confident in the long-term strategy and the potential for value creation through organic growth initiatives [21] Other Important Information - The company has secured a five-year European LNG pricing agreement, which will enhance its service offerings and provide customers with diversified pricing exposure [10] - The company is actively pursuing opportunities in the data center market, leveraging its infrastructure to connect gas supply to power generation sources [77] Q&A Session Summary Question: Impact of producer delays on future development - Management indicated that delays are primarily within the current quarter and are not significantly pushing development into 2026, with most benefits expected in 2026 [26][29] Question: Development expectations in the Yazo formation - Management noted that the northwest shelf is seeing good geology and continued activity, with robust EMP M&A activity indicating potential future development [32][34] Question: Hedging strategy for commodity exposure - The company is relatively well-hedged for 2025 and aims to maintain 40-80% of equity volumes hedged on a rolling 12-month basis for 2026 [45] Question: Timing for King's Landing 2 announcement - Management stated that planning for King's Landing 2 is contingent on the development activity and gas packages coming online, with a potential 24-month timeline for the project [46][48] Question: Managing Waha exposure until 2028 - The company is actively managing existing capacity and has secured additional capacity to the Gulf Coast to mitigate exposure [72] Question: Update on in-basin power project - Management confirmed ongoing discussions with upstream customers regarding the power project, which is seen as important for managing controllable costs [73]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $243 million, distributable cash flow of $158 million, and free cash flow of $51 million for the third quarter [19] - The updated full-year adjusted EBITDA guidance range is now $965 million to $1,005 million, reflecting a decrease due to various challenges [19][20] - The adjusted EBITDA for the Midstream Logistics segment decreased by 13% year-over-year to $151 million, primarily due to lower commodity prices and higher operating expenses [19] Business Line Data and Key Metrics Changes - The Midstream Logistics segment's adjusted EBITDA was impacted by lower Kinetic Marketing contributions and higher costs, despite increased volumes across Delaware North and South assets [19] - The Pipeline Transportation segment generated an adjusted EBITDA of $95 million [19] Market Data and Key Metrics Changes - Waha natural gas pricing has declined by over 50% since February, significantly impacting the company's earnings and operational decisions [20] - The Delaware Basin rig count has decreased by nearly 20% since the beginning of the year, indicating a more cautious stance from producers [22] Company Strategy and Development Direction - The company is focused on advancing strategic infrastructure projects like King's Landing and the ECCC pipeline, aiming to enhance market access and deliver value to customers [17][26] - Kinetic has finalized an agreement with Competitive Power Ventures to connect its pipeline network to a new power generation facility, showcasing its ability to unlock value through strategic partnerships [11][12] - The company is also pursuing an acid gas injection project to increase its total acid gas capacity, which is expected to strengthen its competitive position [8][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in integrating the Delaware North system and the impact of commodity price volatility on operations [15][20] - The company is committed to improving forecasting assumptions and reducing controllable costs to enhance operational performance [16] - Despite the current challenges, management remains confident in the long-term strategy and the potential for organic growth initiatives [24][26] Other Important Information - The company received over $500 million in cash proceeds from the sale of EPIC Crude, which has been used to pay down debt and reduce leverage [24] - The company has executed a five-year European LNG pricing agreement, enhancing its service offerings and market access [13] Q&A Session Summary Question: Impact of producer delays on future development - Management indicated that delays are primarily within the current quarter and not significantly pushing into 2026, with most benefits expected in 2026 [31][32] Question: Development expectations in the Lieso formation - Management noted that the Northwest Shelf is seeing good geology and continued activity, with capabilities to provide sour gas takeaway [35][36] Question: 2026 growth outlook - Management is currently assessing the level of activity for 2026, with expectations for Kings Landing and ECCC to contribute positively [41][44] Question: Hedging strategy for commodity exposure - The company is relatively well-hedged for 2025 and aims to maintain a hedging range of 40% to 80% for equity volumes in 2026 [54] Question: Managing Waha exposure until 2028 - The company is actively managing existing capacity and has secured additional capacity to the Gulf Coast for future needs [91] Question: Update on in-basin power project - Management is in discussions with upstream customers regarding a power project, which is seen as important for managing controllable costs [93] Question: Data center infrastructure investments - The company is positioned to connect its pipeline network to power generation sources for potential data center projects, indicating growth opportunities [100][102]

Financial Performance - The company reported $243 million in Adjusted EBITDA for the third quarter of 2025[8] - Free Cash Flow for the quarter was $51 million[8] - Capital Expenditures totaled $154 million[8] - The Leverage Ratio stood at 39x, but pro forma for the EPIC Crude Sale, it would be 37x[8] - $176 million of Class A common stock was repurchased year-to-date, with $100 million repurchased in 3Q25[10] Segment Performance - Midstream Logistics Adjusted EBITDA was $151 million, a 13% year-over-year decrease[13] - Pipeline Transportation Adjusted EBITDA was $95 million, a 1% year-over-year decrease[15] - Midstream Logistics contributed 61% and Pipeline Transportation 39% to the 3Q25 Adjusted EBITDA[16] Guidance and Assumptions - The company revised its FY 2025 Adjusted EBITDA Guidance to a range of $965 million to $1005 billion[10] - FY 2025 Capital Guidance was tightened to a range of $485 million to $515 million[10] - Fixed Fee contributes 85% and Commodity contributes 15% to the 2025E Gross Profit Sources[23]

Core Insights - Kinetik Holdings Inc. (KNTK) reported quarterly earnings of $0.23 per share, matching the Zacks Consensus Estimate, but down from $0.35 per share a year ago [1] - The company posted revenues of $463.97 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 23.26%, compared to $396.36 million in the same quarter last year [2] - Kinetik Holdings shares have declined approximately 34% year-to-date, while the S&P 500 has gained 15.1% [3] Earnings Performance - The company has surpassed consensus EPS estimates only once in the last four quarters [1] - The earnings outlook for Kinetik Holdings is uncertain, with current consensus EPS estimates at $0.41 for the upcoming quarter and $0.84 for the current fiscal year, with revenues expected to be $797.94 million and $2.27 billion respectively [7] Industry Context - Kinetik Holdings operates within the Zacks Oil and Gas - Field Services industry, which is currently ranked in the bottom 36% of over 250 Zacks industries [8] - The performance of Kinetik Holdings may be influenced by the overall outlook for the industry, as top-ranked industries tend to outperform lower-ranked ones significantly [8] Future Expectations - The trend of estimate revisions for Kinetik Holdings was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] - Investors are encouraged to monitor how estimates for the upcoming quarters and the current fiscal year may change following the recent earnings report [4][6]

Financial Performance - Kinetik reported net income of $15.5 million for Q3 2025 and $109.2 million for the first nine months of 2025[2]. - Adjusted EBITDA for Q3 2025 was $242.6 million, with a total of $735.6 million for the nine months ended September 30, 2025[2]. - Total operating revenues for Q3 2025 reached $463.97 million, a 17% increase from $396.36 million in Q3 2024[20]. - Product revenue for the nine months ended September 30, 2025, was $981.70 million, up 24.7% from $787.09 million in the same period of 2024[20]. - Operating income for Q3 2025 was $19.79 million, a decrease of 72.9% compared to $72.87 million in Q3 2024[20]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $735.58 million, slightly up from $733.64 million in the same period of 2024[22]. - Distributable cash flow for Q3 2025 was $158.49 million, down 13.9% from $184.16 million in Q3 2024[22]. - Net income attributable to holders of Class A Common Stock for Q3 2025 was $5.27 million, a decline of 79.5% from $25.76 million in Q3 2024[20]. - The company reported a basic net income per share of $0.03 for Q3 2025, down from $0.35 in Q3 2024[20]. - The company reported an income before income taxes of $16,658 thousand for Q3 2025, a significant decrease from $91,914 thousand in Q3 2024, indicating a decline of approximately 82%[30][31]. Operational Highlights - The company processed natural gas volumes of 1.84 Bcf/d in Q3 2025, an 8% increase year-over-year[6]. - Kinetik achieved full commercial in-service at the Kings Landing Complex, adding over 200 Mmcf/d of gas processing capacity[9]. - Kinetik reached final investment decision on the acid gas injection project at Kings Landing, expected to be in service by year-end 2026[10]. - The Midstream Logistics segment generated Adjusted EBITDA of $151 million, a 13% decrease year-over-year[6]. - Segment Adjusted EBITDA for the Midstream Logistics segment was $151,358 thousand for Q3 2025, compared to $173,623 thousand for Q3 2024, indicating a decrease of about 13%[30][31]. - The total segment operating revenue for the nine months ended September 30, 2025, was $1,333,970 thousand, up from $1,325,621 thousand in the same period of 2024, reflecting a slight increase of approximately 0.6%[32]. Financial Guidance and Capital Expenditures - The company revised its 2025 Adjusted EBITDA guidance to a range of $965 million to $1.005 billion[4]. - Capital expenditures for 2025 are now guided to be between $485 million and $515 million[7]. - Kinetik repurchased $176 million of Class A common stock year to date, with $100 million repurchased in Q3 2025[6]. Debt and Expenses - Net debt as of September 30, 2025, was $4.15 billion, an increase from $3.94 billion as of September 30, 2024[25]. - Interest expense for the nine months ended September 30, 2025, totaled $173.95 million, compared to $167.55 million in the same period of 2024[22]. - Total operating costs and expenses for Q3 2025 were $444.18 million, a 37.3% increase from $323.49 million in Q3 2024[20]. - General and administrative expenses for Q3 2025 totaled $30,096 thousand, compared to $29,619 thousand in Q3 2024, showing a slight increase of about 1.6%[30][31]. - The total costs of sales (excluding depreciation and amortization) for Q3 2025 were $235,391 thousand, up from $144,586 thousand in Q3 2024, reflecting a significant increase of approximately 63%[30][31]. Equity and Investments - The company closed the sale of its 27.5% equity interest in EPIC Crude, generating over $500 million in net cash proceeds[6]. - The company recognized equity in earnings of unconsolidated affiliates amounting to $58,289 thousand for Q3 2025, compared to $53,244 thousand in Q3 2024, representing an increase of approximately 9%[30][31]. - The company reported a gain on the sale of equity method investment of $89,837,000 and equity income from unconsolidated affiliates of $169,668,000[33]. Definitions and Accounting Practices - Adjusted EBITDA is defined as net income adjusted for interest, taxes, depreciation, and other non-recurring charges, providing a basis for operational performance comparison[35]. - Free Cash Flow is defined as Distributable Cash Flow adjusted for various expenditures, which is a useful measure for comparing cash generation performance over periods[27]. - Net Debt at the balance sheet date is defined as total short-term and long-term debt less cash and cash equivalents, providing insight into the company's leverage position[28]. - Intersegment revenue was eliminated at consolidation, with the company accounting for intersegment sales at market prices[34].