Kinetik Reports Fourth Quarter and Record Full Year 2024 Financial and Operating Results and Provides 2025 Guidance

   -- 
 Generated fourth quarter 2024 net income of $16.2 million and Adjusted 
      EBITDA1 of $237.5 million 
 
 
   -- 
 Reported full year 2024 net income of $244.2 million, Adjusted EBITDA1 
      of $971.1 million, and Capital Expenditures2 of $264.5 million 
 
 
   -- 
 Announced bolt-on acquisition of natural gas and crude oil gathering 
      systems primarily located in Reeves County, Texas, which closed in 
      January 2025 ("Barilla Draw") 
 
 
   -- 
 Issuing full year 2025 Guidance ("2025 Guidance"): 
 
          -- 
 Adjusted EBITDA1 guidance of $1.09 billion to $1.15 billion 
 
 
          -- 
 Capital guidance of $450 million to $540 million, including 
             growth and maintenance Capital Expenditures2 and the previously 
             communicated $75 million of contingent consideration tied to the 
             final cost of the Kings Landing Complex ("Kings Landing") 
 
 
 
HOUSTON & MIDLAND, Texas--(BUSINESS WIRE)--February 26, 2025-- 

Kinetik Holdings Inc. (NYSE: KNTK) ("Kinetik" or the "Company") today reported financial results for the quarter and year ended December 31, 2024.

2024 Results and Commentary

For the three and twelve months ended December 31, 2024, Kinetik reported net income including non-controlling interest of $16.2 million and $244.2 million, respectively.

Kinetik generated Adjusted EBITDA(1) of $237.5 million and $971.1 million, Distributable Cash Flow(1) of $155.4 million and $657.0 million, and Free Cash Flow(1) of $32.5 million and $410.1 million for the three and twelve months ended December 31, 2024, respectively. For the three and twelve months ended December 31, 2024, Kinetik processed natural gas volumes of 1.74 Bcf/d and 1.64 Bcf/d, respectively.

"2024 was another transformational year for Kinetik," said Jamie Welch, President & Chief Executive Officer.

"We substantially expanded our footprint and capabilities across the Delaware Basin and enhanced our growth profile through highly strategic and accretive transactions and commercial agreements. This included our acquisition of Durango Permian, LLC ("Durango Permian"), a 15-year gas gathering and processing agreement in Eddy County, and the strategic connector pipeline ("ECCC pipeline") between Kinetik's Delaware North and Delaware South positions which all support significant future growth in New Mexico. We also acquired the compelling bolt-on Barilla Draw assets from Permian Resources and increased our equity interest in EPIC Crude Holdings, LP ("EPIC Crude") to 27.5% ownership in a series of transactions that would support its continued growth and strengthen its financial profile."

"We achieved significant milestones across our finance-related objectives. Apache exited its remaining ownership stake in the Company, nearly doubling Kinetik's public float. And, we divested our 16% stake in the Gulf Coast Express pipeline to primarily fund the previously announced $1 billion of transactions that furthered our expansion into New Mexico. Upon closing, we reduced Leverage(1,3) below our Leverage Target to 3.4x. With the backdrop of strength and visibility in our business in 2025 and beyond, we increased our cash dividend by 4%, accelerating our return of capital to shareholders for the first time as a company."

"We reported record full year 2024 Adjusted EBITDA(1) growth of 16% year-over-year to $971.1 million, while continuing our cost discipline with 2024 Capital Expenditures(2) of $264.5 million, below the low end of the full year guidance range. In the fourth quarter, results were temporarily impacted by unexpected events in November that resulted in a $15 million headwind. In November, the average gas daily price at Waha was negative $1.40/Mmbtu for the first 15 days due to scheduled maintenance on several intrastate gas pipelines, including Permian Highway Pipeline. Negative prices led Apache to curtail Alpine High existing volumes in November before fully reinstating those volumes in the beginning of December. Unlike prior months in 2024, Kinetik was fully exposed to lost Gross Margin from production curtailments since we did not have marketing gains from our now balanced Gulf Coast transport capacity position which was previously a net long position. Additionally, several of our Texas processing plants were operating in ethane rejection for maintenance work and commissioning activities. This created equity residue gas exposure at Waha, further negatively impacting Gross Margin. We have since implemented additional new processes and measures to manage this risk going forward."

Welch continued, "I am incredibly proud of what our team has accomplished. Since closing the merger in February 2022, we have a demonstrated track record of compound annual double-digit Adjusted EBITDA(1) growth and expect to continue such growth levels in 2025."

2025 Guidance

Kinetik estimates full year 2025 Adjusted EBITDA(1) between $1.09 billion and $1.15 billion. The midpoint of the 2025 Guidance implies Adjusted EBITDA(1) growth of 15% year-over-year.

Adjusted EBITDA(1) Guidance assumptions include:

   -- 
 Approximately 20% growth year-over-year in gas processed volumes across 
      the system and the start-up of Kings Landing at the end of June 2025; 
 
 
   -- 
 Approximately 83% of gross profit from fixed-fee contracts; 
 
 
   -- 
 2025 average annual commodity prices of approximately $71 per barrel 
      for WTI, $3.77 per Mmbtu for Houston Ship Channel natural gas, and $0.65 
      per gallon for natural gas liquids (market forward prices as of February 
      20, 2025); and 
 
 
   -- 
 Gross profit directly sourced from unhedged commodity prices represents 
      approximately 4% of total gross profit. 
 

The Company also expects that its fourth quarter 2025 annualized Adjusted EBITDA(1,4) will exceed $1.2 billion. That expected financial performance will position the Company well in 2026.

Kinetik estimates aggregate 2025 Capital to be between $450 million and $540 million, including up to $75 million of contingent consideration to Morgan Stanley Energy Partners, the previous owner of Durango Permian.

Capital guidance assumptions include:

   -- 
 Remaining Capital Expenditures2 to complete Kings Landing, construction 
      of the ECCC pipeline, continued build out of the low- and high-pressure 
      gathering system in Eddy County, New Mexico, integration of the Barilla 
      Draw assets, pre-FID work for Kings Landing Cryo II, and all other 
      planned growth and maintenance capital across the existing Texas and New 
      Mexico systems; and 
 
 
   -- 
 Reflects current market steel prices. 
 

Financial

 
a.    Achieved 2024 annual net income of $244.2 million and record Adjusted 
      EBITDA(1) of $971.1 million. 
b.    Reported full year and fourth quarter 2024 Capital Expenditures(2) of 
      $264.5 million and $107.2 million, respectively. 
c.    Exited the fourth quarter with a Leverage Ratio(1,3) per the Company's 
      Revolving Credit Agreement of 3.4x and a Net Debt to Adjusted EBITDA 
      Ratio(1,5) of 3.6x. 
 

Selected Key 2024 Metrics:

 
                          Three Months Ended        Twelve Months Ended 
                             December 31,               December 31, 
                      --------------------------  ------------------------ 
                                    2024                      2024 
                      -----  -------------------  ---  ------------------- 
 
                          (In thousands, except ratios and share data) 
 Net income 
  including 
  non-controlling 
  interest(6)             $               16,224    $              244,233 
 Adjusted EBITDA(1)       $              237,474    $              971,118 
 Distributable Cash 
  Flow(1)                 $              155,440    $              657,014 
 Dividend Coverage 
 Ratio(1,7)                                 1.3x                      1.4x 
 Capital 
  Expenditures(2)         $              107,185    $              264,535 
 Free Cash Flow(1)        $               32,479    $              410,133 
 Leverage 
 Ratio(1,3)                                                           3.4x 
 Net Debt to 
 Adjusted EBITDA 
 Ratio(1,5)                                                           3.6x 
 Common stock issued 
  and 
  outstanding(8)                                               157,712,645 
 
 
               December    September    June 30,     March 31, 
               31, 2024    30, 2024       2024          2024 
              ----------   ---------   ----------   ------------ 
 
                                (In thousands) 
 Net 
  Debt(1,9)  $ 3,526,594  $3,436,562  $ 3,423,251  $   3,537,244 
 

Operational and Construction

 
a.    Integration of the Barilla Draw assets is underway following the close 
      of the acquisition. 
b.    Construction on the 220 Mmcf/d Kings Landing Complex in Eddy County, New 
      Mexico continues. 
c.    Gathering services commenced in December 2024 on the low- and 
      high-pressure gas gathering and processing project in Eddy County, New 
      Mexico. Processing services will begin with the start-up of Kings 
      Landing. 
d.    Pipeline procurement and the right of way approval process commenced for 
      the ECCC pipeline with construction expected to begin in the second half 
      of 2025 and in-service in the first quarter of 2026. 
 

New Developments

 
a.    Continuing regulatory and development work on Kings Landing Cryo II 
      while also advancing commercial arrangements with producer customers. 
b.    Exploring a joint venture for a behind-the-meter greenfield large-scale 
      gas-fired power generation facility and distribution network in Reeves 
      County, Texas to reduce ongoing electricity costs and capitalize on 
      persistent, expected Waha natural gas price volatility. This project 
      could reach a Final Investment Decision in 2025. 
 

(MORE TO FOLLOW) Dow Jones Newswires

February 26, 2025 16:47 ET (21:47 GMT)