Kinetik Reports First Quarter 2025 Financial and Operating Results

   -- Generated first quarter net income of $19.3 million and Adjusted EBITDA1 
      of $250.0 million 
 
   -- Achieved quarterly gas processed volumes of 1.80 Bcf/d, up 17% 
      year-over-year 
 
   -- Progressed construction on the 220 Mmcf/d Kings Landing Complex ("Kings 
      Landing") in New Mexico with commissioning expected to start in six weeks 
      and commencing operations in early third quarter of 2025 
 
   -- Affirming 2025 Adjusted EBITDA1 Guidance range of $1.09 billion to $1.15 
      billion and Capital Guidance range of $450 million to $540 million 
 
   -- Kinetik's Board of Directors authorized an increase to its existing share 
      repurchase program to $500 million 
HOUSTON & MIDLAND, Texas--(BUSINESS WIRE)--May 07, 2025-- 

Kinetik Holdings Inc. (NYSE: KNTK) ("Kinetik" or the "Company") today reported financial results for the quarter ended March 31, 2025.

First Quarter 2025 Results and Commentary

For the three months ended March 31, 2025, Kinetik reported net income including noncontrolling interest of $19.3 million.

Kinetik generated Adjusted EBITDA(1) of $250.0 million, Distributable Cash Flow(1) of $157.0 million, and Free Cash Flow(1) of $120.4 million for the three months ended March 31, 2025, respectively. For the three months ended March 31, 2025, Kinetik processed natural gas volumes of 1.80 Bcf/d.

"The start to 2025 has been marked with early successes, macroeconomic uncertainty, and the prospect of exciting potential opportunities," said Jamie Welch, Kinetik's President & Chief Executive Officer. "Despite winter weather and the recent, elevated volatility, Kinetik is pleased to report another solid quarter that slightly exceeded our internal estimates. Adjusted EBITDA(1) of $250 million represents a 7% increase year-over-year driven by growth in processed gas volumes and margin expansion in the Midstream Logistics segment. Processed gas volumes were up sequentially, largely driven by the return to production at Alpine High."

"Today, we are facing significant macroeconomic uncertainty, potentially increasing input costs related to tariffs and decreasing energy commodity prices. However, Kinetik is well positioned to navigate this uncertainty and is poised to capitalize in an opportunity-rich Permian Basin."

"First, our Operations team did a great job proactively procuring large purchase orders of steel pipe in advance of expected higher prices and tariffs. Our announced capital projects slated through 2026 are largely insulated from any changes to tariff rates. Second, management will continue to vigilantly focus on what is within our control to further strengthen our business, applying a high-level of scrutiny to operating, capital and G&A spending. Third, we are in a fortunate position with a high degree of flexibility with respect to capital allocation, as we have less than $50 million of committed growth capital in 2026 and thereafter. Lastly, while it is too early to make any determinations regarding medium- and long-term producer drilling activity, Kinetik's fee-based and take-or-pay contract structures, volumes currently curtailed across our Delaware North system, as well as previously stated contractual benefits over the next several years, provide strong visibility and de-risk our multi-year earnings growth and free cash flow generation outlook."

Welch continued, "As we look ahead to next quarter and the remainder of the year, we believe that Kinetik's 2025 earnings profile is a tale of two halves. We anticipate annualized first half 2025 Adjusted EBITDA(1,2) of approximately $1 billion. Accounting for the ramp in processed gas volumes following the commissioning of Kings Landing and our customers' current development plans, we expect to reach annualized fourth quarter 2025 Adjusted EBITDA(1,2) of approximately $1.2 billion. Current energy commodity price futures(3) are lower than the commodity price assumptions underlying our Guidance. If actual prices for the balance of the year are consistent with current commodity price futures, full year Adjusted EBITDA(1) would be negatively impacted by approximately $20 million(3) . Furthermore, as our customers plan for current crude oil prices, development schedules recently received reflect a measured slowdown in activity later this year. Several well pads that were previously expected to be connected to our system during the fourth quarter of 2025 are now expected in 2026. To the extent that the current environment persists for the remainder of the year, we expect to be within our 2025 Adjusted EBITDA(1) Guidance range of $1.09 billion to $1.15 billion."

"While the Permian Basin will not be immune to the impact of lower commodity prices, as seen during recent downcycles, it is the best and most resilient hydrocarbon basin in our industry due to our customers' low break-evens and healthy financial profiles. As a pure-play Permian midstream business, we recognize there will be opportunities in the face of potential uncertainty. Therefore, we are cautiously proceeding with the development of new, large-scale infrastructure projects, such as an expansion at Kings Landing or the behind-the-meter power generation opportunity in Reeves County, Texas. We remain focused on and committed to finding and maximizing value for our shareholders, while providing flow assurance and operational reliability for our customers' production and continued development in the Delaware Basin."

"Since the merger in early 2022, we have successfully prioritized our deleveraging efforts and focused on a limited, short-cycle committed project capital backlog, affording us with substantial financial flexibility. As such, Kinetik is pleased to announce that the Board of Directors has authorized an increase to our existing repurchase program of up to $500 million of Kinetik's common stock. With Management and the Board's conviction in the Company's earnings growth and strengthening free cash flow generation, we are confident that now is the time to increase capital returns to our shareholders via opportunistic common stock repurchases. Further demonstrating our team's belief in Kinetik's value proposition, senior management will receive a material percentage of this year's remaining salary in Kinetik common stock, including myself at 100%."

Financial

   1. Achieved quarterly net income of $19.3 million and Adjusted EBITDA1 of 
      $250.0 million. 
 
   2. Issued additional $250 million of 6.625% sustainability-linked senior 
      notes in March with net proceeds used for general corporate purposes and 
      repayment of a portion of the borrowings outstanding under the revolving 
      credit facility. 
 
   3. Renewed and amended the existing accounts receivable securitization 
      facility and increased the facility to $250 million. 
 
   4. Exited the quarter with a Leverage Ratio1,4 per the Company's Credit 
      Agreement of 3.4x and a Net Debt to Adjusted EBITDA1,5 Ratio of 3.8x. 

Selected Key Metrics

 
                                                   Three Months Ended 
                                                        March 31, 
                                             ------------------------------- 
                                                          2025 
                                             ------------------------------- 
                                              (In thousands, except ratios) 
Net income including noncontrolling 
 interest                                       $                     19,262 
Adjusted EBITDA(1)                              $                    250,017 
Distributable Cash Flow(1)                      $                    156,981 
Dividend Coverage Ratio(1,6)                                            1.3x 
Capital Expenditures(7)                         $                     78,074 
Free Cash Flow(1)                               $                    120,393 
Leverage Ratio(1,4)                                                     3.4x 
Net Debt to Adjusted EBITDA Ratio(1,5)                                  3.8x 
Common stock issued and outstanding(8)          $                    157,961 
 
 
                  March 31, 2025    December 31, 2024 
                 ----------------  ------------------- 
                            (In thousands) 
Net Debt(1,9)     $     3,734,955   $        3,526,594 
 

Operational and Commercial

   1. Substantial construction progress has been made at Kings Landing in Eddy 
      County, New Mexico in the first quarter. Planned start-up remains on 
      schedule with commissioning expected to begin in six weeks. 
 
   2. Right of way approval process continues for the ECCC Pipeline with 
      construction expected to begin in the third quarter of 2025 and 
      in-service in the first quarter of 2026. 
 
   3. Executed a new long-term gas gathering and processing agreement with an 
      existing large, private producer in Reeves County, Texas with production 
      expected to start later in 2025. 

Governance

   1. Kinetik's Annual Meeting will be held virtually on May 19, 2025 at 10:00 
      am Central Daylight Time (11:00 am Eastern Daylight Time). Proxy 
      materials can be found by visiting the Investors section of Kinetik's 
      website. 
 
   2. Anne Psencik, Chief Strategy Officer, will retire, effective June 30, 
      2025, and continue to consult for the Company. 

Upcoming Tour Dates

Kinetik plans to participate at the following upcoming conferences and events:

   1. 22nd Annual Energy Infrastructure CEO & Investor Conference in Miami on 
      May 20th - 22nd 
 
   2. RBC Capital Markets Global Energy, Power & Infrastructure Conference in 
      New York on June 4th 
 
   3. JP Morgan Energy, Power, Renewables & Mining Conference in New York on 
      June 24th - 25th 
 
   4. TD Securities Calgary Energy, Power & Utilities Conference in Calgary on 
      July 8th - 9th 

Investor Presentation

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May 07, 2025 16:30 ET (20:30 GMT)