Kinetik (KNTK)2023-11-09 17:29Financial Data and Key Metrics - Average gas processing volumes reached 1.49 billion cubic feet per day, representing a 23% year-over-year growth [6] - Adjusted EBITDA increased by 4% quarter-over-quarter, in line with forecasts and street expectations [9] - The company updated its 2023 adjusted EBITDA guidance range to 860 million, with a midpoint implying a fourth-quarter annualized EBITDA exit rate over 150 million [11] Business Line Data and Key Metrics - Midstream Logistics segment generated 79 million in adjusted EBITDA, up 5% quarter-over-quarter, driven by lower realized costs at PHP and higher margins at Epic Crude [24] - Midstream Logistics CapEx is tracking towards the midpoint of the range of 265 million, while Pipeline Transportation CapEx is tracking above the guidance range of 275 million due to cost increases related to PHP [26][27] Market Data and Key Metrics - Permian production is expected to grow to 30 billion cubic feet per day by 2030, representing a 4% annual growth rate from today [20] - The Corpus Christi market is expected to grow from 6.5 to 10 billion cubic feet per day, driven by NGL capacity expansions and pipeline export growth [40] - The company sees a structurally short gas market in Corpus Christi, with potential for further pipeline expansions along the Texas-Louisiana state line [42] Company Strategy and Industry Competition - The company is focused on expanding its gathering footprint in the Delaware Basin, with significant progress on projects like Delaware Link and PHP expansion [19][22] - The company is actively pursuing gathering and processing opportunities in New Mexico and Texas, with updates expected as these opportunities develop [14] - The company sees no compelling reason for significant additional NGL investment in its Pipeline Transportation segment and is working on monetizing its stake in GCX [15] Management Commentary on Operating Environment and Future Outlook - The company remains confident in achieving its exit rate guidance of 1.6 billion cubic feet per day by year-end [8] - Management expects sequential adjusted EBITDA growth in the fourth quarter, driven by the Midstream Logistics segment [9] - The company anticipates a significant increase in free cash flow in 2024, supported by adjusted EBITDA growth and reduced capital expenditures [11] Other Important Information - The company declared a 5.8 million, leaving $94 million of remaining authorized capacity for opportunistic share repurchases [30] Q&A Session Summary Question: Progress on GCX monetization - The company is actively working on monetizing its stake in GCX and remains confident in a positive conclusion, though timing remains uncertain [32][33] Question: NGL takeaway options and flexibility - The company has multiple NGL takeaway options, including Brandywine and TNF contracts, with flexibility to choose among lines based on market conditions [37] Question: Corpus Christi market outlook - The Corpus Christi market is expected to grow significantly, with the company viewing it as structurally short gas, warranting further investment [40][42] Question: Volume trajectory and growth in 2024 - The company expects continued growth in volumes, with a significant step-up expected when New Mexico contracts kick in April 2024 [74][102] Question: Industry consolidation and Kinetik’s role - The company views itself as a smaller player in the midstream industry, focusing on organic growth and value creation rather than large-scale acquisitions [75][76] Question: GCX sale process and dividend reinvestment plan (DRIP) - The DRIP will end with the February 2024 dividend payment, regardless of the GCX sale outcome [96] Question: Capital recycling and portfolio review - The company is not actively working on any other capital recycling initiatives beyond GCX but remains open to opportunities that create value for stakeholders [103]