Financial Performance - Total operating revenues for Q3 2024 were $396.4 million, a 20% increase from $330.3 million in Q3 2023[7] - Product revenue increased by 31.3% to $290.4 million in Q3 2024, compared to $221.3 million in Q3 2023[7] - Operating income for Q3 2024 was $72.9 million, up 89.5% from $38.4 million in Q3 2023[7] - Net income attributable to Class A Common Stock Shareholders was $25.8 million in Q3 2024, compared to $15.6 million in Q3 2023, representing a 65.5% increase[7] - Basic earnings per share for Q3 2024 was $0.35, up from $0.21 in Q3 2023, reflecting a 66.7% increase[7] - Net income for the nine months ended September 30, 2024, was $228,009 thousand, compared to $119,098 thousand for the same period in 2023, reflecting an increase of 91.6%[11] - Net income for the quarter ended September 30, 2024, was $25,763, a significant increase compared to the previous period[14] - For the nine months ended September 30, 2024, net income was $74,505, indicating strong performance year-to-date[15] - The company reported net income including noncontrolling interest of $83.6 million for the three months ended September 30, 2024, compared to $46.6 million for the same period in 2023, reflecting an increase of 79.5%[41] Operating Costs and Expenses - Total operating costs and expenses for Q3 2024 were $323.5 million, an increase of 10.8% from $291.9 million in Q3 2023[7] - Interest expense increased to $66.0 million in Q3 2024 from $45.0 million in Q3 2023[7] - General and administrative expenses increased by $21.7 million, or 30%, to $94.8 million for the nine months ended September 30, 2024, compared to $73.1 million for the same period in 2023[178] - Depreciation and amortization expense increased by $28.0 million, or 13%, to $236.3 million for the nine months ended September 30, 2024, compared to $208.3 million for the same period in 2023[179] - Cost of sales increased by $70.7 million, or 19%, to $444.8 million for the nine months ended September 30, 2024, compared to $374.1 million for the same period in 2023[175] - Operating expenses increased by $24.5 million, or 21%, to $143.3 million for the nine months ended September 30, 2024, compared to $118.8 million for the same period in 2023[176] Assets and Liabilities - Total assets increased to $6,860,461 thousand as of September 30, 2024, up from $6,496,873 thousand at December 31, 2023, representing a growth of 5.6%[8] - Total liabilities decreased to $3,797,986 thousand from $3,869,889 thousand, a decrease of 1.9%[8] - Long-term debt decreased to $3,279,689 thousand from $3,562,809 thousand, a reduction of 7.9%[8] - The company reported a significant increase in accounts receivable, net of allowance for credit losses, which decreased to $65,615 thousand from $215,721 thousand, a decline of 69.6%[8] - Cash and cash equivalents rose significantly to $20,438 thousand from $4,510 thousand, marking a substantial increase of 353.5%[8] Equity and Dividends - Cash dividends paid to Class A Common Stock shareholders increased to $128,428 thousand from $58,030 thousand, an increase of 121%[11] - The company declared a cash dividend of $0.78 per share on Class A Common Stock, payable on November 7, 2024[142] Acquisitions and Investments - The company completed the acquisition of Durango Permian LLC for an adjusted purchase price of approximately $845.2 million, which included $358.0 million in cash and approximately 3.8 million shares valued at $148.2 million[32] - The company made a net cash payment of $341,183 thousand for acquisitions during the nine months ended September 30, 2024[11] - The company has engaged in strategic acquisitions, including the Durango Acquisition valued at $423,200[15] - The company acquired an additional 12.5% equity interest in EPIC, increasing its total ownership to 27.5% as of September 30, 2024[153] Segment Performance - The Midstream Logistics segment accounted for over 97% of the Company's operating revenues for the three months ended September 30, 2024[131] - Midstream Logistics revenue for the three months ended September 30, 2024, was $391,331, up from $324,863 in the same period of 2023, marking an increase of approximately 20.5%[138] - For the nine months ended September 30, 2024, total segment operating revenue reached $1,097,213, an increase from $907,544 in the same period of 2023, representing a growth of approximately 21%[140] - For the nine months ended September 30, 2024, the Company reported total revenues of $380.4 million and net income of $245.0 million for the Permian Highway Pipeline LLC[64] Adjusted EBITDA - Adjusted EBITDA increased by $50.4 million, or 23%, to $265.7 million for the three months ended September 30, 2024, compared to $215.3 million for the same period in 2023[191] - For the nine months ended September 30, 2024, Adjusted EBITDA increased by $122.8 million, or 20%, to $733.6 million compared to $610.8 million for the same period in 2023[192] - The increase in nine-month Adjusted EBITDA was driven by a $189.7 million increase in total operating revenue, partially offset by increased costs of sales and operating expenses of $120.3 million[192] Tax and Legal Matters - The effective tax rate for the three months ended September 30, 2024, was 8.99%, significantly lower than the 2.93% rate for the same period in 2023[13] - The income tax expense for the nine months ended September 30, 2024, was $21,261,000, compared to $2,030,000 for the same period in 2023[13] - The Company has no accruals for loss contingencies as of September 30, 2024, indicating a stable legal and financial position[120] - The Company is awaiting settlement of $8.0 million in outstanding vendor credits related to prior litigation, with no allowance established due to the counterparties' creditworthiness[122]

Financial Performance & Guidance - Kinetik increased its 2024E Adjusted EBITDA guidance to between $970 million and $1 billion[5] - The company tightened its 2024E Capital Expenditures Guidance to $270 million to $290 million[5] - Kinetik increased its quarterly dividend to $0.78, up 4% versus the prior quarterly dividend[5] - The company's Q3 2024 Adjusted EBITDA was $266 million[5] - Free Cash Flow for Q3 2024 was $165 million[5] - Kinetik's leverage ratio is 3.2x[6] Strategic & Operational Highlights - Kinetik increased its equity interest in EPIC Crude to 27.5%[4] - The company is constructing a 200 Mmcfpd Kings Landing Cryo I, expected to commence operations in 2Q25[4] - A new large diameter rich gas pipeline will connect the Delaware North and Delaware South systems[4] - 3Q24 Segment Adjusted EBITDA for Midstream Logistics was $174 million, up 24% year-over-year[9] - 3Q24 Segment Adjusted EBITDA for Pipeline Transportation was $96 million, up 22% year-over-year[10]

Financial Data and Key Metrics Changes - Kinetik reported its best quarter as a public company with adjusted EBITDA of $266 million, a 23% increase year-over-year [6][23] - Distributable cash flow reached $184 million, and free cash flow was $165 million, increasing more than three-fold year-over-year [23] - The company raised its 2024 adjusted EBITDA guidance to a range of $970 million to $1 billion, reflecting a 3% increase at the midpoint compared to previous guidance [28][20] Business Line Data and Key Metrics Changes - The Midstream Logistics segment generated adjusted EBITDA of $174 million, up 24% year-over-year, driven by contributions from New Mexico and strong performance in Texas [24] - The Pipeline Transportation segment reported adjusted EBITDA of $96 million, a 22% increase year-over-year, attributed to PHP expansion and increased ownership in Epic Crude [26] Market Data and Key Metrics Changes - Gas volumes processed were 1.71 billion cubic feet per day, representing a 15% growth year-over-year [7] - Negative gas prices persisted at the Waha Hub, averaging negative $1 per Mcf for the quarter, impacting wellhead gas volume curtailments [7] Company Strategy and Development Direction - Kinetik is focusing on connecting its north and south systems to optimize processing capacity and enhance operational flexibility [14][17] - The company is committed to a balanced capital allocation approach, emphasizing organic and inorganic growth opportunities while accelerating returns to shareholders [22][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the revised EBITDA target, citing strong execution and cost discipline [20][21] - The company anticipates a return of curtailed volumes from Alpine High and expects pricing relief at Waha, indicating a tight basin with ongoing demand for gas egress [72][73] Other Important Information - Kinetik received MRV Plan approval from the EPA for CO2 capturing and sequestration, which is expected to provide economic benefits starting in 2025 [10][11] - The company is finalizing a long-term transport agreement with EPIC, which has received a credit rating upgrade [9] Q&A Session Summary Question: How should we think about GMP fees and their impact on upcoming acreage dedications? - Management explained the distinction in average gross fees between different segments and emphasized the incremental margin capture from sour gas services [34][36] Question: What would be needed to open an expansion for Epic? - Management indicated that the decision to expand would depend on the commercial success of replacing shorter-term contracts with longer-term agreements [39][40] Question: What factors drove the outperformance this quarter? - Management attributed the outperformance to maintenance capital investments, operational efficiencies, and favorable market conditions [44][46] Question: What is the expected trajectory of CapEx for next year? - Management suggested a CapEx range of $250 million to $400 million for 2025, with a focus on growth projects [56] Question: What are the implications of potential setback rules in New Mexico? - Management clarified that the current discussions are part of an economic study and emphasized the importance of the oil and gas sector to the state's economy [78][79] Question: How should we think about further dividend growth? - Management reiterated a commitment to annual ratable dividend growth while balancing capital needs for growth [81]

Core Insights - Kinetik Holdings Inc. (KNTK) reported quarterly earnings of $0.35 per share, missing the Zacks Consensus Estimate of $0.52 per share, but showing an increase from $0.21 per share a year ago, resulting in an earnings surprise of -32.69% [1] - The company achieved revenues of $396.36 million for the quarter ended September 2024, exceeding the Zacks Consensus Estimate by 10.08% and up from $330.3 million year-over-year [2] - Kinetik Holdings has outperformed the S&P 500 with a stock price increase of approximately 49.7% since the beginning of the year, compared to the S&P 500's gain of 21.2% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.45 on revenues of $541.63 million, and for the current fiscal year, it is $1.44 on revenues of $1.6 billion [7] - The estimate revisions trend for Kinetik Holdings is favorable, leading to a Zacks Rank 1 (Strong Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Oil and Gas - Field Services industry, to which Kinetik Holdings belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, suggesting potential challenges in overall industry performance [8] - Another company in the same industry, Archrock Inc. (AROC), is expected to report quarterly earnings of $0.28 per share, reflecting a year-over-year increase of 40%, with revenues projected at $292.95 million, up 15.6% from the previous year [9][10]

Core Viewpoint - Kinetik Holdings Inc. (KNTK) is identified as a strong momentum stock with a Momentum Style Score of B and a Zacks Rank of 1 (Strong Buy), indicating potential for significant near-term gains [1][2][4]. Company Performance - KNTK shares have increased by 1.91% over the past week, while the Zacks Oil and Gas - Field Services industry has declined by 3.89% during the same period [3]. - Over the past month, KNTK's price change is 15.19%, significantly outperforming the industry's 0.07% [3]. - In the last quarter, KNTK shares rose by 23.37%, and over the past year, they have increased by 43.36%, compared to the S&P 500's gains of 7.36% and 38.52%, respectively [3]. Trading Volume - KNTK's average 20-day trading volume is 423,176 shares, which is a useful indicator for assessing price movements and market interest [3]. Earnings Outlook - In the past two months, one earnings estimate for KNTK has been revised upward, while none have been lowered, leading to an increase in the consensus estimate from $1.39 to $1.44 [4]. - For the next fiscal year, one estimate has also moved upwards with no downward revisions [4].

Company Overview - Kinetik Holdings Inc. (KNTK) is part of the Oils-Energy group, which consists of 242 companies and currently ranks 16 within the Zacks Sector Rank [1] - KNTK has a Zacks Rank of 1 (Strong Buy), indicating strong potential for outperforming the market [1] Performance Metrics - Kinetik Holdings Inc. has seen a year-to-date performance increase of approximately 50.5%, significantly outperforming the average gain of 4.8% in the Oils-Energy sector [2] - The Zacks Consensus Estimate for KNTK's full-year earnings has risen by 20.9% over the past quarter, reflecting improved analyst sentiment [2] Industry Context - Kinetik Holdings Inc. operates within the Oil and Gas - Field Services industry, which includes 23 companies and currently ranks 168 in the Zacks Industry Rank [3] - The Oil and Gas - Field Services industry has experienced an average loss of about 8.1% year-to-date, highlighting KNTK's superior performance relative to its peers [3]

Core Insights - Diamondback Energy, Inc. (FANG) and Kinetik Holdings Inc. (KNTK) have entered into transactions with EPIC Midstream Holdings LP to strengthen the financial and operational aspects of EPIC Crude Holdings, LP, enhancing growth prospects and strategic alignment [1][2] Group 1: Transaction Details - FANG and KNTK acquired a 30% equity interest in the EPIC Crude pipeline system, with each now owning 27.5%, while EPIC Midstream retains a 45% stake [2] - The collaboration aims to enhance crude oil transportation capacity from the Permian Basin, a key oil-producing region [2] Group 2: Volume Commitments - FANG has increased its volume commitment to transport 200,000 barrels per day through EPIC Crude's pipeline, following its merger with Endeavor Energy Resources [3] - Long-term volume commitments from FANG and KNTK will extend from 2025 to 2035, representing over 33% of EPIC Crude's volume capacity, supported by minimum volume commitments (MVCs) [6][7] Group 3: Strategic Importance - EPIC Crude is positioned as a critical player in the Permian Basin, capable of transporting over 600,000 barrels per day, with contracts or MVCs secured for approximately 90% of its total volumes by 2025 [8] - The pipeline offers access to multiple markets, including Corpus Christi and the Dated Brent market, optimizing pricing for producers [9] Group 4: Financial Strength and Expansion - EPIC Crude's financial profile is improving, supported by increasing credit ratings and long-term contracts with investment-grade customers [10] - Potential expansion projects could enhance transport capacity with minimal capital investment, underwritten by contracts with FANG, KNTK, and other partners [11] Group 5: Governance and Future Outlook - FANG and KNTK's increased governance roles in the joint venture provide them with greater influence over EPIC Crude's strategic direction [13] - The series of transactions reinforces EPIC Crude's importance as a transportation link for crude oil producers in the Permian Basin, positioning it for long-term success [14][15]

Core Viewpoint - Kinetik Holdings Inc. (KNTK) has shown potential for growth following its acquisition of Durango Midstream, with an earnings beat and increased EBITDA guidance, presenting a strong investment opportunity [2][3][5]. Financial Performance - KNTK reported an adjusted EBITDA of $234.3 million for Q2, reflecting a 13% year-over-year increase and flat performance compared to Q1 [4]. - The company’s earnings profile remains consistent with a 60/40 split between gathering/processing and long-haul pipeline transportation [4]. - Full-year adjusted EBITDA guidance has been raised to a midpoint of $960 million, up from $932.5 million, indicating a 3% increase [5]. Growth Initiatives - KNTK has announced new service agreements and increased minimum volume commitments in Eddy and Lea Counties, expected to enhance cash flows and earnings growth in 2025 [6][7]. - The company is addressing natural gas processing capacity issues in the northern Delaware basin through the construction of Kings Landing I, projected to generate $70-$75 million in annual EBITDA starting Q1 2025 [8]. - Plans for a second processing plant, Kings Landing II, are underway, with a target in-service date of Q3 2026 [8]. Capital Expenditure - KNTK has doubled its capital expenditure budget to $260-$300 million, primarily to support the Kings Landing Complex and existing Durango assets [9][10]. - Approximately $100 million of the increased budget is allocated to the Durango acquisition, with additional funds directed towards new projects in New Mexico [10]. Valuation and Market Outlook - The revised earnings profile suggests a valuation of KNTK at 9.3x EV to EBITDA based on 2025 earnings estimates, which is considered attractive for a midstream company [14]. - A potential share price upside of 25% is projected, alongside a 7.3% dividend yield based on the anticipated growth trajectory [14][18].

Kinetik Holdings Inc. (KNTK) came out with a quarterly earnings of $0.54 per share versus the Zacks Consensus Estimate of $0.43. This compares to earnings of $0.41 per share a year ago. This quarterly report represents an earnings surprise of 25.58%. A quarter ago, it was expected that this company would post earnings of $0.44 per share when it actually produced earnings of $0.12, delivering a surprise of -72.73%. Over the last four quarters, the company has surpassed consensus EPS estimates twice. Kinetik ...

Monty Rakusen Thesis Kinetik Holdings (NYSE:KNTK) is a natural gas focused midstream company that operates in the Delaware basin of the Permian. The company recently announced Q1 earnings results, as well as a strategic acquisition of Durango Midstream to bolster its footprint in the Delaware Basin. Q1 earnings were reported at a 12% increase over Q4 2023 as a result of two new pipeline assets entering service. This earnings momentum is positioned to continue through 2026 through the roll up of Durango, the ...