Kinetik (US:KNTK)2022-05-11 17:28Financial Data and Key Metrics Changes - The company reported pro forma EBITDA of $191 million for Q1 2022, representing a 17% increase year-over-year, normalized for winter storm Uri [7][11] - Adjusted pro forma distributable cash flow was $145 million, and free cash flow was $119 million [11] - The leverage ratio exited the quarter at four times, with a target of 3.5 times [12] Business Line Data and Key Metrics Changes - Midstream Logistics EBITDA was $124 million, up 22% year-over-year, driven by increased volumes across gas, oil, and water [15] - Pipeline Transportation EBITDA was $17 million, up 24% year-over-year, due to record volumes on Shin Oak and EPIC Crude [16] Market Data and Key Metrics Changes - Processed gas volumes increased 9% year-over-year, averaging 1.11 Bcf per day [9] - Shin Oak's throughput volumes reached nearly 500,000 barrels per day, a record for the pipeline [17] Company Strategy and Development Direction - The company is focused on capital allocation priorities, including redeeming Series A preferred shares and refinancing to improve capital structure [10][13] - Plans to expand processing capacity by 120 million cubic feet a day at Diamond Cryo, expected to cost approximately $12 million [29] - The company is pursuing pipeline expansions for the Permian Highway and Gulf Coast Express, which will provide over 1.2 Bcf a day of new incremental capacity [33][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving financial goals and capital allocation priorities to attain investment grade ratings in 2023 [12] - The company anticipates exceeding the high end of its 2022 guidance range, which includes an EBITDA range of $770 million to $810 million [18][19] - Management highlighted the importance of being prepared for increased customer demand and the need for additional processing capacity [41] Other Important Information - The company has made significant progress in integrating Altus and EagleClaw assets, with cost savings already realized [21][23] - A commitment to reducing greenhouse gas emissions, with a goal of achieving net zero emissions by 2050 [26] Q&A Session Summary Question: Expansion of Diamond Cryo - Management noted that the rapid sellout of latent processing capacity prompted the decision to expand quickly, with expectations to fill capacity within 12 to 18 months [41] Question: Funding for Growth - Management discussed various funding strategies for growth, including potential equity offerings and customer contributions for construction [44][46] Question: Guidance Raise Hesitation - Management indicated that they prefer to wait for more visibility on key projects and refinancing before raising guidance [50][52] Question: Capacity Agreements - Management confirmed that they will take up additional capacity with the expansion of PHP and are working to ensure egress capacity for customers [54][56] Question: Pipeline Capacity and Marketing Strategy - Management explained their strategy to allocate pipeline capacity to customers while also retaining some for their own equity gas [62]