Kinetik (KNTK)2025-02-28 03:58Financial Data and Key Metrics Changes - In Q4 2024, adjusted EBITDA was reported at 155 million and free cash flow of 971 million, representing a 16% year-over-year increase, and capital expenditures totaled 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 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]