Kinetik (US:KNTK)2025-02-27 15:00Financial 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 [16] - For the full year 2024, adjusted EBITDA reached $971 million, representing a 16% year-over-year increase, and an 18% increase when normalizing for November impacts [11][19] - Capital expenditures for 2024 totaled $265 million, which was approximately $15 million below the midpoint of the guidance range [11][19] 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 prices [16][17] - The Pipeline Transportation segment reported adjusted EBITDA of $92 million, up nearly 9% year-over-year, driven by volume growth and contributions from EPIC Crude [18] 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 [10] - The average gas daily price at Waha was negative $1.4 per MMBtu for the first half of November, impacting volumes and margins [16][17] Company Strategy and Development Direction - The company aims for a 10% compound annual growth rate (CAGR) in EBITDA over the next five years, focusing on both organic growth and strategic M&A opportunities [26][40] - Kinetic is positioned to capitalize on the growing demand for natural gas and liquids, with significant growth expected in the Permian Basin and Gulf Coast [12][13] - The company is exploring a large-scale gas-fired power generation facility to manage electricity costs and capitalize on natural gas price volatility [14][80] Management's Comments on Operating Environment and Future Outlook - Management noted that 2024 was transformational, with significant M&A activity and organic growth, particularly in the Delaware Basin [6][9] - The company has implemented new risk measures to prevent operational headwinds experienced in November and expects a strong rebound in operational performance [10][17] - Management expressed confidence in achieving a 15% growth in adjusted EBITDA for 2025, with key assumptions including a 20% growth in gas processed volumes [19][21] Other Important Information - The company increased its cash dividend by 4%, marking the first return of capital to shareholders since its merger [9] - Kinetic's leverage ratio improved to 3.4 times, down 0.6 times year-over-year, reflecting disciplined capital management [19][24] Q&A Session Summary Question: What infrastructure is needed to achieve the 10% EBITDA CAGR? - Management indicated that they are seeing outsized market share performance and have structural changes that will create incremental EBITDA opportunities [26][27] Question: Are there still M&A opportunities in 2025? - Management confirmed that opportunities remain, but they maintain a high bar for attractiveness in potential transactions [32][33] Question: What are the expectations for producer customer activity in 2025? - Management noted robust activity levels across both Northern and Southern Delaware, with significant drilling capital being allocated to New Mexico [45][46] Question: How does the company manage risks associated with pipeline maintenance? - Management acknowledged the regular seasonal maintenance and emphasized the importance of having incremental length for Gulf Coast capacity to mitigate risks [51][54] Question: Can you clarify the economic contribution of the Barilla Draw acquisition? - Management stated that the initial phase involves gas gathering services, with processing expected to ramp up later in the decade, contributing to margin expansion [98] Question: What is the timeline for the power generation project? - Management indicated that if the project reaches FID this year, it could be operational by the end of 2027, with potential for further projects in New Mexico [100][102]