Kinetik (US:KNTK)2024-05-09 19:49Financial Data and Key Metrics Changes - The company reported first quarter adjusted EBITDA of $234 million, a 25% increase year-over-year, driven by robust underlying volume growth and contributions from the Permian Highway Pipeline expansion and Delaware Link [36][43] - Processed gas volumes reached 1.53 billion cubic feet per day, reflecting a 13% growth year-over-year, although down less than 1% quarter-over-quarter due to planned maintenance and curtailments [36][43] - Adjusted distributable cash flow for the quarter was $155 million, with free cash flow at $108 million [43] Business Line Data and Key Metrics Changes - The Midstream Logistics segment generated an adjusted EBITDA of $143 million, up 20% year-over-year, primarily due to increased processed gas volumes [15] - The Pipeline Transportation segment reported an adjusted EBITDA of $96 million, a 32% increase year-over-year and a 12% increase quarter-over-quarter, attributed to contributions from Delaware Link and the PHP expansion [16] Market Data and Key Metrics Changes - Waha gas daily prices averaged negative $0.72 per MMBtu in March and April, impacting customer sales positively as they sold gas at Gulf Coast markets instead [39] - The company expects continued pressure on in-basin pricing until additional pipeline capacity is operational, but is well-positioned with egress from the Permian to Gulf Coast demand centers [40] Company Strategy and Development Direction - The company completed a system-wide front-end amine treating project, enhancing blending and treating services across its system [4] - A first-of-its-kind agreement with Infinium was established to dedicate the sale of captured carbon dioxide for the production of ultra-low carbon eFuels, indicating a focus on sustainability and new revenue streams [20][49] - The company is focused on expanding its market share in New Mexico through enhanced treating and blending capabilities [38] Management's Comments on Operating Environment and Future Outlook - Management anticipates volatile commodity prices in 2024, particularly for natural gas, but believes the company is well-positioned relative to peers [18] - There is an expectation of increased volumes in the second quarter, continuing through the year, driven by the completion of maintenance projects and customer development activities [19] - Management highlighted strong operational performance and recovery rates post-maintenance, which are expected to support growth [58][79] Other Important Information - The company has reduced greenhouse gas and methane emissions intensity by 12% and 34% respectively compared to 2021 levels, ahead of its 2030 targets [21][50] - The company executed an accounts receivable securitization facility for $150 million in April, which was used to pay down existing term loans [17][46] Q&A Session Summary Question: Full year guidance and Q1 performance - Management indicated that while it is early in the year, Q1 performance trends are positive and could lead to higher end guidance [52][53] Question: Updates on GCX expansion and greenfield projects - Management confirmed confidence in GCX expansion and emphasized the need for more egress capacity from the basin [55] Question: Growth opportunities and market share - Management noted ongoing discussions with customers for new gas packages and highlighted the importance of partnerships in capturing market share [30][60] Question: NGL solutions and third-party pipe expansions - Management discussed commitments to various NGL solutions and the potential for future barrels as contracts roll off [88] Question: Cadence of turn-in-line activity - Management expects a consistent volume ramp similar to previous years, with significant activity in the second and third quarters [90][121] Question: Alpine High curtailment and its impact - Management confirmed the return of volumes from Alpine High and its significance to overall G&P volumes [93] Question: M&A considerations - Management stated that while they evaluate various opportunities, they are currently focused on organic growth strategies [109][110]