Kinetik (US:KNTK)2025-11-06 15:00Financial 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]