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What changed in Kinetik Holdings Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Kinetik Holdings Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+208 added−264 removedSource: 10-K (2025-03-03) vs 10-K (2024-03-05)

Top changes in Kinetik Holdings Inc.'s 2024 10-K

208 paragraphs added · 264 removed · 137 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

42 edited+13 added−63 removed143 unchanged
Biggest changeIn addition, certain cyber incidents, such as surveillance, may remain undetected for an extended period. 25 Table of Contents Index to Financial Statements A cyber incident involving the Company’s information systems and related infrastructure, or that of its business service providers, could disrupt its business plans and negatively impact its operations in the following ways, among others: • a cyber-attack on a vendor or other service provider could result in supply chain disruptions, which could delay or halt development of additional infrastructure, effectively delaying the start of cash flows from the project; • a cyber-attack on downstream pipelines could prevent the Company from delivering product at the tailgate of its facilities, resulting in a loss of revenues; • a cyber-attack on a communications network or power grid could cause operational disruption resulting in loss of revenues; • a deliberate corruption of its financial or operational data could result in events of non-compliance which could lead to regulatory fines or penalties; and • business interruptions could result in expensive remediation efforts, distraction of management, damage to its reputation or a negative impact on cash flows.
Biggest changeIn addition, certain cyber incidents, such as surveillance, may remain undetected for an extended period. A cyber incident involving the Company’s information systems and related infrastructure, or that of its business service providers, could disrupt its business plans and negatively impact its operations.
We and each of Blackstone and I Squared Capital are party to the amended and restated stockholders agreement, dated as of October 21, 2021 and effective as of February 22, 2022, which entitles each of Blackstone and I Squared Capital to, among other things, certain director designation rights for so long as each holder continues beneficially own at least 10% of our Common Stock.
We and each of Blackstone and I Squared Capital are party to the amended and restated stockholders agreement, dated October 21, 2021 and effective as of February 22, 2022, which entitles each of Blackstone and I Squared Capital to, among other things, certain director designation rights for so long as each holder continues beneficially own at least 10% of our Common Stock.
We may experience difficulties completing acquisitions or divestitures or integrating new businesses and properties, and we may be unable to achieve the benefits we expect from any future acquisitions or divestitures. Part of the Company’s business strategy includes acquiring additional businesses and assets and/or divesting certain assets or portions of our business.
We may experience difficulties completing acquisitions or divestitures or integrating new businesses and properties, and we may be unable to achieve the benefits we expect from the completed and any future acquisitions or divestitures. Part of the Company’s business strategy includes acquiring additional businesses and assets and/or divesting certain assets or portions of our business.
Because of the natural decline in hydrocarbon production from existing wells, the Company’s success depends, in part, on its ability to maintain or increase hydrocarbon throughput volumes on its midstream systems, which depends on its customers’ levels of development and completion activity on its dedicated acreage.
Because of the natural decline in production from existing wells, the Company’s success depends, in part, on its ability to maintain or increase throughput volumes on its midstream systems, which depends on its customers’ levels of development and completion activity on its dedicated acreage.
Environmental and Regulatory Risk Factors Related to the Company The Company operates in a highly regulated environment and its business and profitability could be adversely affected by actions by governmental entities, changes to current laws or regulations, or a failure to comply with laws or regulations.
Environmental and Regulatory Risk Related to the Company The Company operates in a highly regulated environment and its business and profitability could be adversely affected by actions by governmental entities, changes to current laws or regulations, or a failure to comply with laws or regulations.
The Company has ownership interests in several joint ventures, including the PHP, GCX, Breviloba and EPIC joint ventures, which were accounted for using the equity interest method, and it may enter into other joint venture arrangements in the future.
The Company has ownership interests in several joint ventures, including the PHP, Breviloba and EPIC joint ventures, which were accounted for using the equity interest method, and it may enter into other joint venture arrangements in the future.
Finally, it should be noted that there are increasing risks to the Company’s operations resulting from the potential physical impacts of climate change, such as drought, wildfires, damage to infrastructure and resources from flooding, storms and other natural disasters, chronic shifts in temperature and precipitation patterns and other physical disruptions.
In addition, it should be noted that there are increasing risks to the Company’s operations resulting from the potential physical impacts of climate change, such as drought, wildfires, damage to infrastructure and resources from flooding, storms and other natural disasters, chronic shifts in temperature and precipitation patterns and other physical disruptions.
Risks Related to Ownership of Our Common Stock Entities controlled by Blackstone and I Squared Capital are parties to the amended and restated stockholders agreement granting certain director designation rights and own a majority of the Company’s outstanding voting shares and thus strongly influence all of the Company’s corporate actions.
Risks Related to Ownership of Our Common Stock Entities controlled by Blackstone and I Squared Capital are parties to the amended and restated stockholders agreement granting certain director designation rights and owning a majority of the Company’s outstanding voting shares and thus strongly influence all of the Company’s corporate actions.
Increasing attention to climate change, societal expectations on companies to address climate change, investor and societal expectations regarding voluntary ESG disclosures and consumer demand for alternative forms of energy may result in increased costs, reduced demand for the Company’s products, reduced profits, increased investigations and litigation and negative impacts on the Company’s access to capital markets.
Increasing attention to climate change, societal expectations on companies to address climate change, investor and societal expectations regarding voluntary sustainability disclosures and consumer demand for alternative forms of energy may result in increased costs, reduced demand for the Company’s products, reduced profits, increased investigations and litigation and negative impacts on the Company’s access to capital markets.
Reductions in development activity, coupled with the natural decline in production from its current dedicated acreage, could materially and adversely affect its business, financial condition, results of operations, and cash flows. The acquisition or divestiture of businesses and assets is part of our strategy.
Reductions in development activity, coupled with the natural decline in production from its current dedicated acreage, could materially reduce our revenue and affect adversely our business, financial condition, results of operations, and cash flows. The acquisition or divestiture of businesses and assets is part of our strategy.
While the Company may participate in various voluntary frameworks and certification programs to improve the ESG profile of its operations and services, the Company cannot guarantee that such participation or certification will have the intended results on its ESG profile.
While the Company may participate in various voluntary frameworks and certification programs to improve the sustainability profile of its operations and services, the Company cannot guarantee that such participation or certification will have the intended results on its sustainability profile.
See additional information related to cybersecurity risks and how the Company manages such risk in Part I — Item 1 C. Cybersecurity of this Annual Report . Changes in management’s estimates and assumptions may have a material impact on the company’s consolidated financial statements and financial or operational performance in any given period.
See additional information related to cybersecurity risks and how the Company manages such risk in Part I—Item 1C. Cybersecurity of this Annual Report . Changes in management’s estimates and assumptions may have a material impact on the Company’s Consolidated Financial Statements and financial or operational performance in any given period.
We may evaluate potential divestiture opportunities with respect to portions of our business from time to time that support our growth initiatives and may determine to proceed with a divestiture opportunity if and when we believe such opportunity is consistent with our business strategy. We may not realize the anticipated operating advantages and cost savings.
We may evaluate potential divestiture opportunities with respect to portions of our business from time to time that support our growth initiatives and may determine to proceed with a divestiture opportunity if and when we believe such opportunity is consistent with our business strategy. We may not realize the anticipated operating advantages and cost savings associated with any acquisition.
Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single, uniformed approach to identifying, measuring, and reporting on many ESG matters. The standards for tracking and reporting on ESG matters are continuously evolving.
Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single, uniformed approach to identifying, measuring, and reporting on many sustainability-related matters. The standards for tracking and reporting on sustainability-related matters are continuously evolving.
The Company’s operations are therefore subject to disruption from natural or human causes beyond its control, including risks from hurricanes, severe storms, floods, heat waves, other forms of severe weather, wildfires, sea level rise, ambient temperature increases, war or other military conflicts such as the ongoing conflicts in Ukraine, Israel and the Gaza Strip, accidents, civil unrest, global political events, fires, earthquakes, and epidemic or pandemic diseases such as the COVID-19 pandemic, some of which may be impacted by climate change and any of which could result in suspension of operations or harm to people or the natural environment.
The Company’s operations are therefore subject to disruption from natural or human causes beyond its control, including risks from hurricanes, severe storms, floods, heat waves, other forms of severe weather, wildfires, sea level rise, ambient temperature increases, war or other military conflicts such as the ongoing conflicts in Ukraine, Israel and the Gaza Strip, accidents, civil unrest, global political events, fires, earthquakes, and epidemic or 23 Table of Contents Index to Financial Statements pandemic diseases such as the COVID-19 pandemic, some of which may be impacted by climate change and any of which could result in suspension of operations or harm to people or the natural environment.
The Company’s charter designates the Court of Chancery of the State of Delaware (the “Court of Chancery”) as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by its stockholders, which could limit its stockholders’ ability to obtain a favorable judicial forum for disputes with the Company or its directors, officers, employees or agents.
The Company’s charter designates the “Court of Chancery” as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by its stockholders, which could limit its stockholders’ ability to obtain a favorable judicial forum for disputes with the Company or its directors, officers, employees or agents.
If any downstream pipeline were to become unavailable for current or future volumes due to 13 Table of Contents Index to Financial Statements repairs, damage to the facility, force majeure, lack of capacity, shut in by regulators, failure to meet quality requirements or any other reason, the Company’s ability to operate efficiently and continue shipping crude oil, natural gas and refined products to major demand centers could be restricted, thereby reducing revenue.
If any downstream pipeline were to become unavailable for current or future volumes due to repairs, damage to the facility, force majeure, lack of capacity, shut in by regulators, failure to meet quality requirements or any other reason, the Company’s ability to operate efficiently and continue shipping crude oil, natural gas and refined products to major demand centers could be restricted, thereby reducing revenue.
Ineffective internal controls could also cause investors to lose confidence in the Company’s reported financial information, which would likely have a negative effect on the trading price of its equity interests. If the performance of the Company does not meet the expectations of investors, stockholders or financial analysts, the market price of the Company’s securities may decline.
Ineffective internal controls could also cause investors to lose confidence in the Company’s reported financial information, which would likely have a negative effect on the trading price of its equity interests. 22 Table of Contents Index to Financial Statements If the performance of the Company does not meet the expectations of investors, stockholders or financial analysts, the market price of the Company’s securities may decline.
In addition, the Company has no control over producers or their exploration and development decisions, which may be affected by, among other things: • the availability and cost of capital; • the prevailing and projected prices of crude oil, natural gas and NGLs; fewer project opportunities or assumption of risk that results in weaker or more volatile financial performance than expected; • assets that vary in age and were constructed over many decades which may cause our inspection, maintenance or repair costs to increase in the future; • political and economic conditions and events in foreign oil, natural gas and NGL producing countries, including embargoes, disrupted global supply chains, continued hostilities in the Middle East and other sustained military campaigns, the armed conflict in Ukraine and associated economic sanctions on Russia; • increase in interest rates and rising or sustained inflation; • levels of crude oil and natural gas reserves; • contractor or supplier non-performance, weather, geological or other factors; • Consolidation in the upstream sector and the resulting changes in the strategic importance customers assign to development in certain acreage or locations in the Delaware Basin as opposed to other areas, which could adversely affect the financial and operational resources devoted to development of their acreage dedicated to the Company; • increased levels of taxation related to the exploration and production of crude oil, natural gas and NGLs; • environmental or other governmental regulations, including those related to the prorationing of oil and gas production, the availability of permits, the regulation of hydraulic fracturing, and a governmental determination that multiple facilities are to be treated as a single source for air permitting purposes; and • the costs of producing and ability to produce crude oil, natural gas and NGLs and the availability and costs of drilling rigs, pipeline transportation facilities and other equipment. 12 Table of Contents Index to Financial Statements Due to these and other factors, even if reserves are known to exist in areas served by the Company’s midstream assets, producers may choose not to develop those reserves.
In addition, the Company has no control over producers or their exploration and development decisions, which may be affected by, among other things: • the availability and cost of capital; • the prevailing and projected prices of crude oil, natural gas and NGLs; fewer project opportunities or assumption of risk that results in weaker or more volatile financial performance than expected; • assets that vary in age and were constructed over many decades which may cause our inspection, maintenance or repair costs to increase in the future; • political and economic conditions and events in foreign oil, natural gas and NGL producing countries, including embargoes, disrupted global supply chains, continued hostilities in the Middle East and other sustained military campaigns, the armed conflict in Ukraine and associated economic sanctions on Russia; • increase in interest rates and rising or sustained inflation; • levels of crude oil and natural gas reserves; • contractor or supplier non-performance, weather, geological or other factors; • Consolidation in the upstream and midstream sector and the resulting changes in the strategic importance customers assign to development in certain acreage or locations in the Delaware Basin as opposed to other areas, which could adversely affect the financial and operational resources devoted to development of their acreage dedicated to the Company; • increased levels of taxation related to the exploration and production of crude oil, natural gas and NGLs; • environmental or other governmental regulations, including those related to the prorationing of oil and gas production, the availability of permits, the regulation of hydraulic fracturing, and a governmental determination that multiple facilities are to be treated as a single source for air permitting purposes; 13 Table of Contents Index to Financial Statements • the costs of producing and ability to produce crude oil, natural gas and NGLs and the availability and costs of drilling rigs, pipeline transportation facilities and other equipment; and • potential tariff to be imposed by the Trump Administration on crude oil, natural gas and NGLs and other imported supplies and equipment.
The Company currently generates revenues pursuant to a variety of different contractual arrangements, including fee-based agreements based on volumetric fees and percent-of-proceeds arrangements based on a percent of the proceeds from the sale of gathering and processing outputs on behalf of a producer and percent-of-products arrangements in which the Company 14 Table of Contents Index to Financial Statements is assigned a portion of the natural gas it gathers and processes as partial compensation.
The Company currently generates revenues pursuant to a variety of different contractual arrangements, including fee-based agreements based on volumetric fees and percent-of-proceeds arrangements based on a percent of the proceeds from the sale of gathering and processing outputs on behalf of a producer and percent-of-products arrangements in which the Company is assigned a portion of the natural gas it gathers and processes as partial compensation.
These developments could 18 Table of Contents Index to Financial Statements result in additional regulation and restrictions on the Company’s use of injection wells to dispose of produced water, including a possible shut down of wells, which could materially and adversely affect its business, financial condition, and results of operations.
These developments could result in additional regulation and restrictions on the Company’s use of injection wells to dispose of produced water, including a possible shut down of wells, which could materially and adversely affect its business, financial condition, and results of operations.
The Company has granted a number of its stockholders, including Blackstone, I Squared Capital and Apache Midstream LLC (“Apache Midstream”), registration rights with respect to their shares of Class A Common Stock, including shares of Class A Common Stock issuable upon redemption of Common Units.
The Company has granted a number of its stockholders, including Blackstone and I Squared Capital, registration rights with respect to their shares of Class A Common Stock, including shares of Class A Common Stock issuable upon redemption of Common Units.
The regulations require operators, including the Company, to: • perform ongoing assessments of pipeline integrity; • identify and characterize applicable threats to pipeline segments that could impact an HCA; • improve data collection, integration and analysis; • repair and remediate pipelines as necessary; and • implement preventive and mitigating actions. PHMSA may revise these standards from time-to-time.
The regulations require operators, including the Company, to: • perform ongoing assessments of pipeline integrity; • identify and characterize applicable threats to pipeline segments that could impact an HCA; • improve data collection, integration and analysis; • repair and remediate pipelines as necessary; and • implement preventive and mitigating actions.
In addition, under Rule 144 under the Securities Act, a person who has satisfied a minimum holding period of between six months and one year and any other applicable requirements of Rule 144, may thereafter sell such shares in transactions exempt from registration.
In addition, under Rule 144 under the Securities Act, a person who has satisfied a minimum holding period of between six months and one year and any other applicable requirements of Rule 144, may thereafter sell such shares in 21 Table of Contents Index to Financial Statements transactions exempt from registration.
Changes in estimates or assumptions or the information underlying the assumptions, such as changes in the Company’s business plans, general market conditions, or changes in the Company’s outlook on commodity prices, could affect reported amounts of assets, liabilities or expenses.
Changes in estimates or assumptions or the information underlying the assumptions, such as changes in the Company’s business plans, 24 Table of Contents Index to Financial Statements general market conditions, or changes in the Company’s outlook on commodity prices, could affect reported amounts of assets, liabilities or expenses.
Our choice of disclosure frameworks, designed to align with various voluntary reporting standards, may change from time to time, potentially resulting in a lack of comparative data from period to period. Furthermore, our interpretation of reporting standards may differ from that of others. Although the Company may announce various voluntary ESG targets, such targets are aspirational.
Our choice of disclosure frameworks, designed to align with various voluntary reporting standards, may change from time to time, potentially resulting in a lack of comparative data from period to period. Furthermore, our interpretation of reporting standards may differ from that of others.
One or more of these developments could materially and adversely affect the Company’s business, financial condition and results of operation. Increasing attention to ESG matters and conservation measures may adversely impact the Company’s business.
One or more 20 Table of Contents Index to Financial Statements of these developments could materially and adversely affect the Company’s business, financial condition and results of operation. Increasing attention to sustainability-related matters and conservation measures may adversely impact the Company’s business.
A significant number of our currently issued and outstanding shares of Class A Common Stock held by existing stockholders, including officers and directors and other principal stockholders are currently eligible for resale pursuant to and in accordance with the provisions of Rule 144. During 2023, Apache Midstream sold 7,475,000 shares of Class A Common Stock through a Secondary Offering.
A significant number of our currently issued and outstanding shares of Class A Common Stock held by existing stockholders, including officers and directors and other principal stockholders are currently eligible for resale pursuant to and in accordance with the provisions of Rule 144.
In addition, pollution and environmental risks generally are not fully insurable. The occurrence of an event that is not fully covered by insurance could materially and adversely affect the Company’s business, financial condition, results of operations and cash flows.
The occurrence of an event that is not fully covered by insurance could materially and adversely affect the Company’s business, financial condition, results of operations and cash flows.
The Company’s operations are subject to all the hazards inherent in the gathering and transportation of crude oil, natural gas and produced water, including: • damage to pipelines, compressor stations, centralized gathering facilities, pump stations, storage terminals, related equipment, and surrounding properties caused by design, installation, construction materials or operational flaws, natural disasters, acts of terrorism, acts of third parties or other unforeseen circumstances. • leaks of crude oil, natural gas or NGLs or losses of crude oil, natural gas or NGLs as a result of the malfunction of, or other disruptions associated with, equipment, facilities or pipelines; • fires, ruptures and explosions; and • other hazards that could also result in personal injury and loss of life, pollution and suspension of operations. 15 Table of Contents Index to Financial Statements The Company may elect to not obtain insurance, maintain a self-insured retention or increase deductibles for any or all of these risks if it believes that the cost of available insurance is excessive relative to the risks presented.
The Company’s operations are subject to all the hazards inherent in the gathering and transportation of crude oil, natural gas and produced water, including: • damage to pipelines, compressor stations, centralized gathering facilities, pump stations, storage terminals, related equipment, and surrounding properties caused by design, installation, construction materials or operational flaws, natural disasters, acts of terrorism, acts of third parties or other unforeseen circumstances. 16 Table of Contents Index to Financial Statements • leaks of crude oil, natural gas or NGLs or losses of crude oil, natural gas or NGLs as a result of the malfunction of, or other disruptions associated with, equipment, facilities or pipelines; • fires, ruptures and explosions; and • other hazards that could also result in personal injury and loss of life, pollution and suspension of operations.
Alternatively, if a court were to find these provisions of the Company’s charter inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, the Company may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect its business, financial condition or results of operations. 23 Table of Contents Index to Financial Statements The Company’s charter provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law.
Alternatively, if a court were to find these provisions of the Company’s charter inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, the Company may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect its business, financial condition or results of operations.
Potential future sales pursuant to registration rights granted by the Company and under Rule 144 may depress the market price for our shares of Class A Common Stock.
The interests of Blackstone or I Squared Capital may not align with the interests of the Company’s other stockholders. Potential future sales pursuant to registration rights granted by the Company and under Rule 144 may depress the market price for our shares of Class A Common Stock.
While the Company may create and publish voluntary disclosures regarding these goals and other ESG matters from time to time, many of the statements in those voluntary disclosures will be based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs 21 Table of Contents Index to Financial Statements associated therewith.
While the Company may create and publish voluntary disclosures regarding goals, sustainability targets and other sustainability-related matters from time to time, many of the statements will be aspirational, based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith, and there is no guarantee that these goals or targets will be met within anticipated timelines.
Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
The Company’s charter provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder.
Any significant variance in our interpretation of current tax laws or a successful challenge of one or more of our tax positions by the IRS or other tax authorities could increase our future tax liabilities and adversely affect our operating results and cash flows. 16 Table of Contents Index to Financial Statements Rate regulation, challenges by shippers to the rates the Company charges on its pipelines or changes in the jurisdictional characterization of some of the Company’s assets by federal, state or local regulatory agencies or a change in policy by those agencies may result in increased regulation of its assets, which may cause its operating expenses to increase, limit the rates it charges for certain services and decrease the amount of cash flows.
Rate regulation, challenges by shippers to the rates the Company charges on its pipelines or changes in the jurisdictional characterization of some of the Company’s assets by federal, state or local regulatory agencies or a change in policy by those agencies may result in increased regulation of its assets, which may cause its operating expenses to increase, limit the rates it charges for certain services and decrease the amount of cash flows.
In addition, competition could intensify the negative impact of factors that decrease demand for crude oil, natural gas and produced water services in the markets served by its systems, such as adverse economic conditions, weather, higher fuel costs and taxes or other governmental or regulatory actions that directly or indirectly increase the cost or reduce demand for its services.
In addition, competition could intensify the negative impact of factors that decrease demand for crude oil, natural gas and produced water services in the markets served by its systems, such as adverse economic conditions, weather, higher fuel costs and taxes or other governmental or regulatory actions that directly or indirectly increase the cost or reduce demand for its services. 15 Table of Contents Index to Financial Statements The Company’s exposure to commodity price risk may change over time and the Company cannot guarantee the terms of any existing or future agreements for its midstream services with its customers.
If the third-party pipelines interconnected, or at some future point expected to be interconnected, to the Company’s pipelines become unavailable to transport or store crude oil, NGLs or natural gas, or if our cost of transporting on such third-party pipelines changes, the Company’s revenue and available cash could be adversely affected.
Joint venture arrangements may also restrict the Company’s operational and organizational flexibility and its ability to manage risk, which could materially and adversely affect the Company’s financial condition, results of operations and cash flows. 14 Table of Contents Index to Financial Statements If the third-party pipelines interconnected, or at some future point expected to be interconnected, to the Company’s pipelines become unavailable to transport or store crude oil, NGLs or natural gas, or if our cost of transporting on such third-party pipelines changes, the Company’s revenue and available cash could be adversely affected.
Increased regulation of hydraulic fracturing could result in reductions or delays in crude oil and natural gas production by the Company’s customers, which could reduce the throughput on its gathering and other midstream systems, which could adversely impact its revenues.
Further, should the Company fail to comply with PHMSA or comparable state regulations, it could be subject to substantial fines and penalties. 18 Table of Contents Index to Financial Statements Increased regulation of hydraulic fracturing could result in reductions or delays in crude oil and natural gas production by the Company’s customers, which could reduce the throughput on its gathering and other midstream systems, which could adversely impact its revenues.
Furthermore, additional regulations and restrictions on the use of injection wells could indirectly result in reduced gas gathering and processing volumes and / or crude gathering volumes from the Company’s customers, which could materially and adversely affect its business, financial condition, and results of operations.
Furthermore, additional regulations and restrictions on the use of injection wells could indirectly result in reduced gas gathering and processing volumes and / or crude gathering volumes from the Company’s customers, which could materially and adversely affect its business, financial condition, and results of operations. 19 Table of Contents Index to Financial Statements The Company may incur significant liability under, or costs and expenditures to comply with, health, safety and environmental laws and regulations, which are complex and subject to frequent change.
Although inflation has moderated in 2023, inflationary pressures have resulted in and may result in additional increases to the costs of the Company’s services and personnel, which in turn cause the Company’s capital expenditures and operating costs to rise. Sustained levels of high inflation have likewise caused the U.S.
General Risks C ontinuing or worsening inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of the Company’s services and personnel, which in turn cause the Company’s capital expenditures and operating costs to rise.
The impact of this changing demand could materially and adversely affect the Company’s business, operations and cash flows. 19 Table of Contents Index to Financial Statements Climate change laws and regulations restricting emissions of GHGs could result in increased operating costs and reduced demand for the crude oil and natural gas the Company gathers, while potential physical effects of climate change could disrupt the Company’s operations, cause damage to its pipelines and other facilities and cause it to incur significant costs in preparing for or responding to those effects.
Legislation, executive orders and regulatory initiatives relating to climate change could have a material adverse effect on our business, demand for our services, financial condition, results of operations and cash flows, while potential physical effects of climate change could disrupt the Company’s operations, cause damage to its pipelines and other facilities and cause it to incur significant costs in preparing for or responding to those effects.
For example, in October 2019, PHMSA published three final rules that create or expand reporting, inspection, maintenance and other pipeline safety obligations. Additional future regulatory action expanding PHMSA’s jurisdiction and imposing stricter integrity management requirements is possible.
PHMSA may revise these standards from time-to-time and additional future regulatory action expanding PHMSA’s jurisdiction and imposing stricter integrity management requirements is possible.
Removed
Joint venture arrangements may also restrict the Company’s operational and organizational flexibility and its ability to manage risk, which could materially and adversely affect the Company’s financial condition, results of operations and cash flows.
Added
Due to these and other factors, even if reserves are known to exist in areas served by the Company’s midstream assets, producers may choose not to develop those reserves.
Removed
The Company’s exposure to commodity price risk may change over time and the Company cannot guarantee the terms of any existing or future agreements for its midstream services with its customers.
Added
The Company may elect to not obtain insurance, maintain a self-insured retention or increase deductibles for any or all of these risks if it believes that the cost of available insurance is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable.
Removed
For instance, following the passage of Protecting Our Infrastructure of Pipelines and Enhancing Safety Act of 2020, operators of jurisdictional pipelines were required to update their inspection and maintenance plans to identify procedures to prevent and mitigate both vented and fugitive pipeline methane emission by the end of 2021. Separately, the U.S.
Added
Any significant variance in our interpretation of current tax laws or a successful 17 Table of Contents Index to Financial Statements challenge of one or more of our tax positions by the IRS or other tax authorities could increase our future tax liabilities and adversely affect our operating results and cash flows.
Removed
Congress reauthorized PHMSA through 2023 as part of the Consolidated Appropriations Act of 2021 and directed the agency to move forward with several regulatory actions. In November 2021, PHMSA released a final rule expanding the definition of regulated gathering pipelines and imposing safety measures on certain previously unrelated gathering pipelines, to include criteria for inspection and repair of fugitive emissions.
Added
The impact of this changing demand could materially and adversely affect the Company’s business, operations and cash flows.
Removed
The final rule also imposes reporting requirements on all gathering pipelines, and specifically requires operators to report safety information to PHMSA.
Added
The adoption and implementation of any federal, regional or state legislation, executive actions, regulations or other regulatory and policy initiatives that impose more stringent standards for GHG emissions, restrict the areas in which the oil and gas industry may produce crude oil and natural gas or generate GHG emissions, increase scrutiny of environmental permitting or delay such permitting reviews, or require enhanced disclosure of such GHG emission and other climate-related information, could result in reduced demand for crude oil and natural gas, and thus our services, as well as increase our compliance costs.
Removed
In August 2022, PHMSA published a final rule expanding the 17 Table of Contents Index to Financial Statements Management of Change process, extending corrosion requirements for gas transmission pipelines, adding requirements that operators ensure no conditions exist following an extreme weather event that could adversely affect the safe operation of the pipeline and adopting repair criteria for non-HCAs similar to those applicable to HCAs.
Added
Although it is not possible at this time to predict how legislation or new regulations that may be adopted to address GHG emissions and climate change could impact our business, any such future laws and regulations could have a material adverse effect on our business, demand for our services, financial condition, results of operations and cash flows.
Removed
Additionally, in May 2023, PHMSA published a proposed rule that would enhance requirements for detecting and repairing leaks on new and existing natural gas distribution, gas transmission and gas gathering pipelines and, separately, in September 2023, published a proposed rule that would enhance the safety requirements for gas distribution pipelines and would require updates to distribution integrity management programs, emergency response plans, operations and maintenance manuals, and other safety practices.
Added
In addition, sustainability efforts related to employment practices and social initiatives are the subject of scrutiny by stakeholders, regulators and other third parties. In light of the sustainability-linked features governing certain of our debt agreements, among other factors, we cannot be certain of the impact of such regulatory, legal and other developments on our business.
Removed
Further, should the Company fail to comply with PHMSA or comparable state regulations, it could be subject to substantial fines and penalties.
Added
Further, recent executive orders by the Trump Administration have indicated that the U.S. government intends to encourage the private sector to terminate previously adopted diversity, equity and inclusion ("DEI") initiatives. In light of the sustainability-linked features governing certain of our indebtedness, among other factors, we cannot be certain of the impact of such orders on our business.
Removed
The Company may incur significant liability under, or costs and expenditures to comply with, health, safety and environmental laws and regulations, which are complex and subject to frequent change.
Added
Although inflation has moderated in 2024 with an annual average consumer price index (“CPI”) of 2.9% compared to that of 4.1% in 2023, the inflation rate has risen slightly during the fourth quarter in 2024. In addition, potential policy shifts in tariff, immigration, and fiscal policy with the Trump Administration might cause additional inflationary pressures to the economy.
Removed
For example, in March 2023, the EPA finalized its Plan which imposes further emissions controls on, among others, new and existing reciprocating internal combustion engines of a certain size used in pipeline transportation of natural gas.
Added
Moderated inflation has led to multiple interest rates cut by the U.S. Federal Reserve starting in September 2024; however, the slight rise in inflation during fourth quarter of 2024, consumer perception of potential tariffs to be imposed on imports and potential policy shifts by the Trump Administration continue to cast uncertainty to monetary policy.
Removed
The Plan aims to reduce nitrogen oxide pollution, an indirect GHG, from certain upwind states determined by the EPA to be impacting certain downwind states. The requirements of the EPA’s Plan could result in increased compliance costs and operational disruptions, adversely impacting our natural gas business segment.
Added
The U.S Federal Reserve decided to hold interest rates steady during its January 2025 Federal Open Market Committee (“FOMC”) meeting and gave little indication of what will come next for interest rates.
Removed
Climate change continues to attract considerable public and scientific attention. There is a broad consensus of scientific opinion that human-caused emissions of GHGs are linked to climate change.
Added
Inflation pressure has resulted in and may result in additional increases to the costs of the Company’s services and personnel, which in turn cause the Company’s capital expenditures and operating costs to rise and impact the Company’s financial and operating results adversely. The Company’s operations could be disrupted by natural or human causes beyond its control.
Removed
Climate change and the costs that may be associated with its impacts and the regulation of GHGs have the potential to materially affect the Company’s business in many ways, to include negatively impacting the costs the Company incurs in providing its products and the demand for and consumption of its products.
Added
Kinetik operates in both urban areas and remote areas.
Removed
The EPA adopted regulations requiring the reporting of GHG emissions from specific categories of higher GHG emitting sources in the United States, including certain oil and natural gas facilities, which include certain of the Company’s operations. Information in such reporting may form the basis for further GHG regulation.
Removed
The EPA has also continued with its comprehensive strategy for further reducing methane and volatile organic compound emissions from oil and gas operations.
Removed
In response to President Biden’s executive order calling on the EPA to revisit federal regulations regarding methane, the EPA finalized more stringent methane rules for new, modified, and reconstructed facilities, known as OOOOb, as well as standards for existing sources for the first time ever, known as OOOOc, in December 2023.
Removed
Under the final rules, states have two years to prepare and submit their plans to impose methane emissions controls on existing sources.
Removed
The presumptive standards established under the final rule are generally the same for both new and existing sources and include enhanced leak detection survey requirements using optical gas imaging and other advanced monitoring to encourage the deployment of innovative technologies to detect and reduce methane emissions, reduction of emissions by 95% through capture and control systems, zero-emission requirements for certain devices, and the establishment of a “super emitter” response program that would allow third parties to make reports to EPA of large methane emission events, triggering certain investigation and repair requirements.
Removed
Fines and penalties for violations of these rules can be substantial. It is likely, however, that the final rule and its requirements will be subject to legal challenges.
Removed
Moreover, compliance with the new rules may affect the amount we owe under the Inflation Reduction Act’s (“IRA”) methane emissions fee, as compliance with EPA’s methane rules would exempt an otherwise covered facility from the requirement to pay the fee.
Removed
The methane emissions charge imposes a fee on excess methane emissions from certain oil facilities starting at $900 per metric ton of leaked methane in 2024 and rising to $1,200 in 2025 and $1,500 in 2026 and thereafter.
Removed
The requirements of the EPA’s final methane rules and, as applicable, the IRA’s methane emissions fee could increase the Company’s operating costs and accelerate the transition away from fossil fuels, which could in turn reduce the demand for its services, thereby adversely affecting its operations and potentially restricting or delaying the Company’s ability to obtain applicable permits, approvals, or certificates for new or modified facilities.
Removed
Moreover, failure to comply with these requirements could result in the imposition of substantial fines and penalties, as well as costly injunctive relief. Climate change remains a priority for the current administration, which could lead to additional regulations or restrictions on oil and gas development.
Removed
In February 2021, the administration recommitted the United States to the Paris Agreement, a framework for parties to the agreement to cooperate and report actions to reduce GHG emissions. The Paris Agreement calls for parties to undertake “ambitious efforts” to limit the average global temperature, and to conserve and enhance sinks and reservoirs of GHGs.
Removed
The current administration, in April 2021, announced a target for the United States to achieve a 50% – 52% reduction from 2005 levels in economy-wide net GHG pollution in 2030. This target builds upon the President’s goals to create a carbon pollution-free power sector by 2035 and a net zero emissions economy by 2050.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+0 added−0 removed18 unchanged
Biggest changeOur Senior IT Director, who reports to our Executive Vice President, Chief Administrative and Accounting Officer, leads the Information Technology team, is a member of our management-level. Cybersecurity Governance Committee and management-level Cybersecurity Risk Committee manage our information technology and cybersecurity function. Through the Company’s ERM program, our Cybersecurity Governance Committee and Cybersecurity Risk Committee oversee the Company’s cybersecurity initiatives.
Biggest changeOur Audit Committee oversees management’s assessment and management of cybersecurity risk. Our Senior IT Director, who reports to our Executive Vice President, Chief Administrative and Accounting Officer, leads the Information Technology team, is a member of our management-level Cybersecurity Governance Committee and management-level Cybersecurity Risk Committee and manages our information technology and cybersecurity function.
However, we acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remain. Despite the implementation of our cybersecurity processes, our security measures cannot guarantee that a significant cyberattack will not occur. No security measure is infallible.
However, we acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents remain. Despite the implementation of our cybersecurity processes, our security measures cannot guarantee that a significant cyberattack will not occur.
Cybersecurity Training and Awareness: At Kinetik, we believe that the recognition and reporting of cybersecurity threats by every employee and contractor plays a key role in protecting and securing our network. We have mandatory annual training for our employees and contractors on security awareness annually, using a library of cybersecurity training modules.
Cybersecurity Training and Awareness: At Kinetik, we believe that the recognition and reporting of cybersecurity threats by every employee and contractor plays a key role in protecting and securing our network. We have mandatory annual training for our employees and contractors on 25 Table of Contents Index to Financial Statements security awareness annually, using a library of cybersecurity training modules.
See “Risk Factors” in Part I —Item 1A of this Annual Report for additional information about the risks to our business associated with a breach or other compromise to our information and operational technology systems.
See “Risk Factors” in Part I—Item 1A of this Annual 26 Table of Contents Index to Financial Statements Report for additional information about the risks to our business associated with a breach or other compromise to our information and operational technology systems.
The Cybersecurity Governance Committee is responsible for monitoring, reviewing and reporting to the Audit Committee on cyber incident response. The Cybersecurity Risk Committee is responsible for communication of security incidents to organizational stakeholders.
Through the Company’s ERM program, our Cybersecurity Governance Committee and Cybersecurity Risk Committee oversee the Company’s cybersecurity initiatives. The Cybersecurity Governance Committee is responsible for monitoring, reviewing and reporting to the Audit Committee on cyber incident response. The Cybersecurity Risk Committee is responsible for communication of security incidents to organizational stakeholders.
In an effort to mitigate these risks, we have established a third-party risk management policy that requires third-party service providers to maintain security requirements and levels of services as part of their service delivery. Before engaging with any third-party service provider, we aim to conduct due diligence to evaluate their cybersecurity capabilities.
We recognize that third-party service providers may introduce cybersecurity risks. In an effort to mitigate these risks, we have established a third-party risk management policy that requires third-party service providers to maintain security requirements and levels of services as part of their service delivery.
To keep our network secure, we have multifactor authentication (MFA) for all users, a password change policy, separation of duties in accounting systems, controlled access to network drives, endpoint protection, email security, mobile device management, device encryption, and ongoing active monitoring of threats. 27 Table of Contents Index to Financial Statements We have implemented devices designed to control third-party access to our plant systems and also provide 24/7 monitoring of our infrastructure.
To keep our network secure, we have multifactor authentication (MFA) for all users, a password change policy, separation of duties in accounting systems, controlled access to network drives, endpoint protection, email security, mobile device management, device encryption, and ongoing active monitoring of threats.
Additionally, we endeavor to include cybersecurity requirements in our contracts with these providers and endeavor to require them to adhere to specific security standards and protocols. The Board’s Oversight and Management’s Role Our Board has delegated the responsibility for overseeing cybersecurity risk. Our Audit Committee oversees management’s assessment and management of cybersecurity risk.
Before engaging with any third-party service provider, we aim to conduct due diligence to evaluate their cybersecurity capabilities. Additionally, we endeavor to include cybersecurity requirements in our contracts with these providers and endeavor to require them to adhere to specific security standards and protocols. The Board’s Oversight and Management’s Role Our Board has delegated the responsibility for overseeing cybersecurity risk.
As part of our strategy, we continue to work with industry leading vendors to conduct our internal network, cloud environment, and external pen testing, all of which are critical as we work to protect our hybrid environment. We recognize that third-party service providers may introduce cybersecurity risks.
We have implemented devices designed to control third-party access to our plant systems and also provide 24/7 monitoring of our infrastructure. As part of our strategy, we continue to work with industry leading vendors to conduct our internal network, cloud environment, and external pen testing, all of which are critical as we work to protect our hybrid environment.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS For further information regarding legal proceedings, see Note 17—Commitments and Contingencies in the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of this Annual Report. 28 Table of Contents Index to Financial Statements PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS For further information regarding legal proceedings, see Note 17—Commitments and Contingencies in the Notes to Consolidated Financial Statements set forth in Part IV, Item 15 of this Annual Report. 27 Table of Contents Index to Financial Statements PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−2 removed6 unchanged
Biggest changeRepurchases may be made at management’s discretion from time-to-time throughout the year, in accordance with applicable securities laws on the open market, a trading plan, or through privately negotiated transactions. There was no unregistered sale of equity securities or repurchase activities during the three months ended December 31, 2023.
Biggest changeThe Repurchase Program allowed us to reduce dilution and potentially acquire shares at levels that we believe do not reflect the fundamental earnings power of the Company. Repurchases may be made at management’s discretion from time-to-time throughout the year, in accordance with applicable securities laws on the open market, a trading plan, or through privately negotiated transactions.
For more information regarding the non-deductible 1% U.S. federal excise tax imposed on certain repurchases of stock by publicly traded U.S. corporations, please refer to Part I—Item 1A Risk Factors—Risks Related to Ownership of our Common Stock . 29 Table of Contents Index to Financial Statements Performance Graph The graph and table below compares the Company’s cumulative return to holders of its common stock, the NASDAQ Composite Index, the NYSE Composite Index and the Alerian U.S.
For more information regarding the non-deductible 1% U.S. federal excise tax imposed on certain repurchases of stock by publicly traded U.S. corporations, please refer to Part I—Item 1A Risk Factors—Risks Related to Ownership of our Common Stock . 28 Table of Contents Index to Financial Statements Performance Graph The graph and table below compares the Company’s cumulative return to holders of its common stock, the NASDAQ Composite Index, the NYSE Composite Index and the Alerian U.S.
Midstream Energy Index during the period beginning on December 31, 2018 and ending on December 31, 2023. The NASDAQ Composite Index was included here as the Company’s Class A Common Stock was traded on NASDAQ prior to switching to NYSE in October 2022.
Midstream Energy Index during the period beginning on December 31, 2019 and ending on December 31, 2024. The NASDAQ Composite Index was included here as the Company’s Class A Common Stock was traded on NASDAQ prior to switching to NYSE in October 2022.
(2) $100 invested on 12/31/2018 in index, including reinvestment of dividends.
(2) $100 invested on 12/31/2019 in index, including reinvestment of dividends.
On February 29, 2024, the Class A Common Stock had a closing price of $35.32. Holders On February 29, 2024, there were 200 holders of record of the Company’s Class A Common Stock and nine holders of record of the Company’s Class C Common Stock, par value $0.0001 per share (“Class C Common Stock”).
Holders On February 21, 2025, there were 191 holders of record of the Company’s Class A Common Stock and eight holders of record of the Company’s Class C Common Stock, par value $0.0001 per share (“Class C Common Stock”).
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s Class A Common Stock is traded on the NYSE under the symbol “KNTK”. The Company’s public and private warrants expired as of November 9, 2023.
ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s Class A Common Stock is traded on the NYSE under the symbol “KNTK”. On February 21, 2025, the Class A Common Stock had a closing price of $59.03.
December 31, 2018 2019 2020 2021 2022 2023 Kinetik Holdings Inc $ 100.00 $ 37.00 $ 30.70 $ 43.78 $ 50.29 $ 50.78 NYSE Composite Index 100.00 135.23 194.24 235.78 157.74 226.24 Nasdaq Composite Index 100.00 122.32 127.70 150.90 133.50 148.17 Alerian US Midstream Energy Index 100.00 97.96 62.27 80.29 97.65 114.16 30 Table of Contents Index to Financial Statements
December 31, 2019 2020 2021 2022 2023 2024 Kinetik Holdings Inc $ 100.00 $ 82.95 $ 118.28 $ 135.91 $ 137.22 $ 251.27 NYSE Composite Index 100.00 144.92 177.06 119.45 172.77 223.87 Nasdaq Composite Index 100.00 106.99 129.11 117.04 133.16 154.19 Alerian US Midstream Energy Index 100.00 75.04 108.82 140.99 168.00 253.24 29 Table of Contents Index to Financial Statements
Removed
The Repurchase Program allowed us to reduce dilution and potentially acquire shares at levels that we believe do not reflect the fundamental earnings power of the Company during 2023, 2024 and thereafter.
Added
Except as already disclosed in the Company’s Current Report on From 8-K dated May 13, 2024, there were no repurchase activities during the three and twelve months ended December 31, 2024.
Removed
During 2023, the Company repurchased and retired 194,174 shares at a total cost of $5.8 million.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

70 edited+53 added−60 removed28 unchanged
Biggest changeIncreased interest rates beyond the term of our hedges will increase our financing costs and have a negative impact on the Company’s ability to meet its contractual debt obligations and to fund its operating expenses, capital expenditures, dividends and distributions. 35 Table of Contents Index to Financial Statements Results of Operations The following table presents the Company’s results of operations for the periods presented: Year Ended December 31, 2023 2022 * % Change (In thousands, except percentages) Revenues: Service revenue $ 417,751 $ 393,954 6 % Product revenue 822,410 806,353 2 % Other revenue 16,251 13,183 23 % Total revenues 1,256,412 1,213,490 4 % Operating costs and expenses: Cost of sales (exclusive of depreciation and amortization expenses) ** 515,721 541,518 (5) % Operating expense 161,520 137,289 18 % Ad valorem taxes 21,622 16,970 27 % General and administrative 97,906 94,268 4 % Depreciation and amortization expenses 280,986 260,345 8 % Loss on disposal of assets 19,402 12,611 54 % Total operating costs and expenses 1,097,157 1,063,001 3 % Operating income 159,255 150,489 6 % Other income (expense): Interest and other income 2,004 489 NM Gain on Preferred Units redemption — 9,580 (100) % Loss on debt extinguishment (1,876) (27,975) (93) % Gain on embedded derivative — 89,050 (100) % Interest expense (205,854) (149,252) 38 % Equity in earnings of unconsolidated affiliates 200,015 180,956 11 % Total other (expense) income, net (5,711) 102,848 (106) % Income before income tax 153,544 253,337 (39) % Income tax (benefit) expense (232,908) 2,616 NM Net income including noncontrolling interests $ 386,452 $ 250,721 54 % *The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022.
Biggest changeRefer to Note 13—Derivatives and Hedging Activities in the Notes to Consolidated Financial Statements in this Annual Report for additional discussion regarding our hedging strategies and objectives for interest rate risk. 34 Table of Contents Index to Financial Statements Results of Operations The following table presents the Company’s results of operations for the periods presented: Year Ended December 31, 2024 2023 % Change (In thousands, except percentages) Operating revenues: Service revenue $ 408,000 $ 417,751 (2) % Product revenue 1,062,986 822,410 29 % Other revenue 11,943 16,251 (27) % Total operating revenues 1,482,929 1,256,412 18 % Operating costs and expenses: Cost of sales (exclusive of depreciation and amortization expenses) * 620,618 515,721 20 % Operating expenses 195,970 161,520 21 % Ad valorem taxes 24,714 21,622 14 % General and administrative expenses 134,157 97,906 37 % Depreciation and amortization expenses 324,197 280,986 15 % Loss on disposal of assets, net 4,040 19,402 (79) % Total operating costs and expenses 1,303,696 1,097,157 19 % Operating income 179,233 159,255 13 % Other income (expense): Interest and other income 2,802 2,004 40 % Loss on debt extinguishment (525) (1,876) (72) % Gain on sale of equity method investment 89,802 — 100 % Interest expense (217,235) (205,854) 6 % Equity in earnings of unconsolidated affiliates 213,191 200,015 7 % Total other income (expense), net 88,035 (5,711) NM Income before income taxes 267,268 153,544 74 % Income tax expense (benefit) 23,035 (232,908) (110) % Net income including noncontrolling interests $ 244,233 $ 386,452 (37) % *Cost of sales (exclusive of depreciation and amortization) is net of gas service revenues totaling $219.7 million and $148.3 million for the years ended December 31, 2024 and 2023, respectively, for certain volumes where we act as principal.
Delaware Link Pipeline. The Delaware Link Pipeline consists of approximately 40 miles of 30-inch diameter pipeline with a capacity of approximately 1.0 Bcf/d that provides additional transportation capacity to Waha. The project reached commercial in-service in October 2023.
The Delaware Link Pipeline consists of approximately 40 miles of 30-inch diameter pipeline with a capacity of approximately 1.0 Bcf/d that provides additional transportation capacity to Waha. The project reached commercial in-service in October 2023.
In particular, there are numerous and complex judgments and assumptions inherent in determining a valuation allowance, including factors such as future operating conditions and profitability. For more information, see Note 15—Income Taxes in our Notes to the Consolidated Financial Statements in this Annual Report. 45 Table of Contents Index to Financial Statements
In particular, there are numerous and complex judgments and assumptions inherent in determining a valuation allowance, including factors such as future operating conditions and profitability. For more information, see Note 15—Income Taxes in our Notes to the Consolidated Financial Statements in this Annual Report. 43 Table of Contents Index to Financial Statements
The Pipeline Transportation segment consists of four EMI pipelines originating in the Permian Basin with various access points to the U.S. Gulf Coast, Kinetik NGL Pipelines and Delaware Link Pipeline. The pipelines transport crude oil, natural gas and NGLs within the Permian Basin and to the U.S. Gulf Coast. Midstream Logistics Gas Gathering and Processing.
The Pipeline Transportation segment consists of three EMI pipelines originating in the Permian Basin with various access points to the U.S. Gulf Coast, Kinetik NGL Pipelines and Delaware Link Pipeline. The pipelines transport crude oil, natural gas and NGLs within the Permian Basin and to the U.S. Gulf Coast. Midstream Logistics Gas Gathering and Processing.
As the Company achieved a three-year cumulative level of profitability as of December 31, 2023, the Company has concluded that it is more likely than not that its deferred tax assets will be realized and as such, no valuation allowance was recorded.
As the Company achieved a three-year cumulative level of profitability as of December 31, 2024 and 2023, the Company concluded that it is more likely than not that its deferred tax assets will be realized and as such, no valuation allowance was recorded.
Under the Reinvestment Agreement, each Reinvestment Holder is obligated to reinvest at least 20% of all distributions on common units representing limited partner interests in the Partnership (“Common Units”) or dividends on shares of Class A Common Stock in the Company’s Class A Common Stock.
Under the Reinvestment Agreement, each Reinvestment Holder was obligated to reinvest at least 20% of all distributions on common units representing limited partner interests in the Partnership (“Common Units”) or dividends on shares of Class A Common Stock in the Company’s Class A Common Stock.
The transactions contemplated by the Contribution Agreement are referred to herein as the “Transaction.” In connection with the closing of the Transaction (the “Closing”), the Company changed its name from “Altus Midstream Company” to “Kinetik Holdings Inc.” Upon closing of the business combination, BCP and its subsidiaries became wholly owned subsidiaries of the Partnership.
The transactions contemplated by the Contribution Agreement are referred to herein as the “Altus Acquisition.” In connection with the closing of the transaction, the Company changed its name from “Altus Midstream Company” to “Kinetik Holdings Inc.” Upon closing of the business combination, BCP and its subsidiaries became wholly owned subsidiaries of the Partnership.
For the calendar year 2023, the Audit Committee resolved 100% of all distributions or dividends received by each Reinvestment Holder would be reinvested in shares of Class A Common Stock. The Reinvestment Agreement will terminate automatically on March 8, 2024.
For the calendar year 2023, the Audit Committee resolved 100% of all distributions or dividends received by each Reinvestment Holder would be reinvested in shares of Class A Common Stock. The Reinvestment Agreement terminated automatically on March 8, 2024.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are omitted in this Annual Report are incorporated by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 7, 2023.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are omitted in this Annual Report are incorporated by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 , filed on March 5, 2024.
Kinetik NGL Pipelines. The Kinetik NGL Pipelines consist of approximately 96 miles of NGL pipelines connecting our East Toyah and Pecos complexes to Waha, including our 20-inch Dewpoint pipeline that spans 40 miles, and our 30 mile, 16-inch Brandywine Pipeline connecting to our Diamond Cryogenic complex. The Kinetik NGL pipeline system has a capacity of approximately 580 MBbl/d.
The Kinetik NGL Pipelines consist of approximately 96 miles of NGL pipelines connecting our East Toyah and Pecos complexes to Waha, including our 20-inch Dewpoint pipeline that spans 40 miles, and our 30 mile, 20-inch Brandywine Pipeline connecting to our Diamond Cryogenic complex. The Kinetik NGL pipeline system has a capacity approximate 580 MBbl/d. Delaware Link Pipeline.
Capital Resources and Liquidity The Company’s primary use of capital since inception has been for the initial construction of gathering and processing assets, as well as the acquisition of the EMI pipelines and associated subsequent construction costs.
Liquidity and Capital Resources The Company’s primary use of capital since inception has been for the initial construction of gathering and processing assets, as well as the acquisitions of businesses and EMI pipelines and associated subsequent construction costs.
Management believes that investors benefit from having access to the same financial measure that the Company uses in evaluating operating results. The following table presents a reconciliation of the GAAP financial measure of net income including noncontrolling interests to the non-GAAP financial measure of Adjusted EBITDA.
Management believes that investors benefit from having access to the same financial measure that the Company uses in evaluating operating results. 37 Table of Contents Index to Financial Statements The following table presents a reconciliation of the GAAP financial measure of net income including noncontrolling interests to the non-GAAP financial measure of Adjusted EBITDA.
An estimate of the sensitivity to changes in underlying assumptions of a fair value calculation is not practicable, given the numerous assumptions that can materially affect our estimates. 44 Table of Contents Index to Financial Statements Equity Method Investment We evaluate our EMIs for impairment when events or circumstances indicate that the carrying value of the EMI may be impaired and that impairment is other than temporary.
An estimate of the sensitivity to changes in underlying assumptions of a fair value calculation is not practicable, given the numerous assumptions that can materially affect our estimates. Equity Method Investment We evaluate our EMIs for impairment when events or circumstances indicate that the carrying value of the EMI may be impaired and that impairment is other than temporary.
This section of this Annual Report generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
This section of this Annual Report generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
Business Combination On February 22, 2022, (“the Closing Date”), Kinetik Holdings Inc., a Delaware corporation (formerly known as Altus Midstream Company), consummated the business combination transactions contemplated by the Contribution Agreement, dated as of October 21, 2021 (the “Contribution Agreement”), by and among the Company, Altus Midstream LP (now known as Kinetik Holdings LP), a Delaware limited partnership and subsidiary of Altus Midstream Company (the “Partnership”), New BCP Raptor Holdco, LLC, a Delaware limited liability company, and BCP.
Significant Business Combinations On February 22, 2022, (“the Altus Closing Date”), Kinetik Holdings Inc., a Delaware corporation (formerly known as Altus Midstream Company), consummated the business combination transactions contemplated by the Contribution Agreement, dated as of October 21, 2021 (the “Contribution Agreement”), by and among the Company, Altus Midstream LP (now known as Kinetik Holdings LP, the “Partnership”), a Delaware limited partnership and subsidiary of Altus Midstream Company.
Although ongoing armed conflicts might generate commodity price upward pressure, and our operations could benefit in an environment of higher natural gas, NGLs and condensate prices, the instability of the international political environment and human and economic hardship resulting from the conflicts would have a highly uncertain impact on the U.S. economy, which in turn, might affect our business and operations adv ersely.
Although ongoing armed conflicts might generate commodity price upward pressure, and our operations 33 Table of Contents Index to Financial Statements could benefit in an environment of higher natural gas, NGLs and condensate prices, the instability of the international political environment and human and economic hardship resulting from the conflicts would have a highly uncertain impact on the U.S. economy, which in turn, might affect our business and operations adversely.
Dividend and Distribution Reinvestment Agreement On February 22, 2022, the Company entered into a Dividend and Distribution Reinvestment Agreement (the “Reinvestment Agreement”) with certain stockholders including BCP Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC, APA Corporation, Apache Midstream LLC and certain individuals (each, a 42 Table of Contents Index to Financial Statements “Reinvestment Holder”).
Dividend and Distribution Reinvestment Agreement On February 22, 2022, the Company entered into a Dividend and Distribution Reinvestment Agreement (the “Reinvestment Agreement”) with certain stockholders including BCP Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC, APA Corporation, Apache Midstream LLC and certain individuals (each, a “Reinvestment Holder”).
Morgan Securities LLC, as representative of the several underwriters named therein (collectively, the “Underwriters”), pursuant to which the Selling Stockholder agreed to sell to the Underwriters, and the Underwriters agreed to purchase from the Selling Stockholder, subject to and upon the terms and conditions set forth therein, 7,475,000 shares of Class A Common Stock.
LLC, as representative of the several underwriters named therein (collectively, the “Underwriters”), pursuant to which the Selling Stockholder agreed to sell to the Underwriters, and the Underwriters agreed to purchase from the Selling Stockholder, subject to and upon the terms and conditions set forth therein, 13,079,871 shares of Class A Common Stock.
If, upon review, the sum of the undiscounted pre-tax cash flows is less than the carrying value of the asset group, the carrying value is written down to an estimated fair value.
If, upon review, the sum of the undiscounted pre-tax cash flows is less than the carrying value of the asset 42 Table of Contents Index to Financial Statements group, the carrying value is written down to an estimated fair value.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Annual Report, $36.2 million of the increase was due to an increase in operating revenues of $42.9 million and lower cost of sales (exclusive of depreciation and amortization) of $25.8 million, partially offset by an increase in operating expenses, ad valorem taxes and general and administrative expenses totaling of $32.5 million.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Annual Report, $226.5 million of the increase was due to increased total operating revenues, partially offset by increased cost of sales (exclusive of depreciation and amortization) of $104.9 million and an increase in operating expenses, ad valorem taxes and general and administrative expenses totaling of $73.8 million.
NM - Not meaningful Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenues For the year ended December 31, 2023, revenue increased $42.9 million, or 4%, to $1,256.4 million, compared to $1,213.5 million for the same period in 2022.
NM - Not meaningful Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenues For the year ended December 31, 2024, revenue increased $226.5 million, or 18%, to $1,482.9 million, compared to $1,256.4 million for the same period in 2023.
More than 99% of the cost of sales (exclusive of depreciation and amortization) are included in the Midstream Logistics segment. Operating expenses Operating expenses increased by $24.2 million, or 18%, to $161.5 million for the year ended December 31, 2023, compared to $137.3 million for the same period in 2022.
More than 99% of the cost of sales (exclusive of depreciation and amortization) are included in the Midstream Logistics segment. Operating expenses Operating expenses increased by $34.5 million, or 21%, to $196.0 million for the year ended December 31, 2024, compared to $161.5 million for the same period in 2023.
The Transaction was accounted for as a reverse merger pursuant to ASC 805, Business Combination (“ASC 805”). Refer to Note 3—Business Combination in the Notes to the Consolidated Financial Statements for further information regarding the Transaction. Overview We are an integrated midstream energy company in the Permian Basin providing comprehensive gathering, transportation, compression, processing and treating services.
The Durango Acquisition was accounted for as a business combination in accordance with ASC 805. Refer to Note 3—Business Combination in the Notes to the Consolidated Financial Statements in this Annual Report for further information regarding the Durango Acquisition. Overview We are an integrated midstream energy company in the Permian Basin providing comprehensive gathering, transportation, compression, processing and treating services.
During the year ended December 31, 2023, the Company’s primary sources of cash were distributions from the EMI pipelines, borrowings under the Revolving Credit Facility, proceeds from debt offerings and cash generated from operations.
During the year ended December 31, 2024, the Company’s primary sources of cash were distributions from the EMI pipelines, borrowings under the Revolving Credit Facility and the A/R Facility, proceeds from the GCX Sale and cash generated from operations.
During 2023, the Company made cash dividend payments of $82.0 million to holders of Class A Common Stock and Common Units and $352.1 million was reinvested in shares of Class A Common Stock by the Reinvestment Holders.
During 2024, the Company made cash dividend payments of $396.0 million to holders of Class A Common Stock and Common Units and $75.6 million was reinvested in shares of Class A Common Stock by the Reinvestment Holders.
Privately negotiated repurchases from affiliates are also authorized under the Repurchase Program, subject to such affiliates’ interest and other limitations. The repurchases will depend on market conditions and may be discontinued at any time without prior notice. During the year ended December 31, 2023, the Company repurchased 194,174 shares at a total cost of $5.8 million.
Privately negotiated repurchases from affiliates are also authorized under the Repurchase Program, subject to such affiliates’ interest and other limitations. The repurchases will depend on market conditions and may be discontinued at any time without prior notice. During the year ended December 31, 2024, the Company did not repurchase any of its outstanding shares.
Based on the Company’s current financial plan, the Company believes that cash from operations and distributions from the EMI pipelines, and remaining borrowing capacity on our Revolving Credit Facility will generate cash flows in excess of capital expenditures and the amount required to fund the Company’s planned quarterly dividend over the next 12 months.
Based on the Company’s current financial plan, the Company believes that cash from operations and distributions from the EMI pipelines, and remaining borrowing capacity on our credit facilities will generate cash flows in excess of capital expenditures and the amount required to fund the Company’s planned quarterly dividend over the next 12 months. 39 Table of Contents Index to Financial Statements Long-term Financing From time to time, we issue long-term debt.
Adjusted EBITDA is useful to an investor in evaluating our performance because this measure: • Is widely used by analysts, investors and competitors to measure a company’s operating performance; • Is a financial measurement that is used by rating agencies, lenders, and other parties to evaluate our credit worthiness; and • Is used by our management for various purposes, including as a measure of performance and as a basis for strategic planning and forecasting. 38 Table of Contents Index to Financial Statements Adjusted EBITDA is not defined in GAAP The GAAP measure used by the Company that is most directly comparable to Adjusted EBITDA is net income including noncontrolling interests.
Adjusted EBITDA is useful to an investor in evaluating our performance because this measure: • Is widely used by analysts, investors and competitors to measure a company’s operating performance; • Is a financial measurement that is used by rating agencies, lenders, and other parties to evaluate our credit worthiness; and • Is used by our management for various purposes, including as a measure of performance and as a basis for strategic planning and forecasting.
Net cash provided by operating activities decreased by $28.5 million for the year ended December 31, 2023 compared with the same period in 2022.
Net cash provided by operating activities increased by $52.9 million for the year ended December 31, 2024 compared with the same period in 2023.
In addition, the Company acquired midstream infrastructure assets totaling $125.0 million through a business combination that closed in the first quarter 2023, see additional information in Note—3. Business Combinations in the Notes to the Consolidated Financial Statements in this Annual Report.
In addition, the Company paid net cash of $341.2 million associated with the Durango Acquisition and net cash of $125.0 million to acquire midstream infrastructure assets through a business combination that closed in the first quarter 2023, see additional information in Note—3. Business Combinations in the Notes to the Consolidated Financial Statements in this Annual Report.
Factors Affecting Our Business Commodity Price Volatility There has been, and we believe there will continue to be, volatility in commodity prices and in the relationships among NGLs, crude oil and natural gas prices.
The Company did not receive any proceeds from the sale of shares of Common Stock in the offering. Factors Affecting Our Business Commodity Price Volatility There has been, and we believe there will continue to be, volatility in commodity prices and in the relationships among NGLs, crude oil and natural gas prices.
The change in the operating cash flows reflected an increase in net income including noncontrolling interests of $135.7 million, and decreases in adjustments related to non-cash items of $135.5 million and cash provided by changes in working capital of $28.7 million.
The change in the operating cash flows reflected a decrease in net income including noncontrolling interests of $142.2 million, an increase in adjustments related to non-cash items of $234.4 million and a decrease in cash provided by changes in working capital of $39.3 million.
The reasons for the fluctuations are discussed in the Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Annual Report. Pipeline Transportation segment adjusted EBITDA increased by $41.9 million, or 16%, to $311.1 million for the year ended December 31, 2023, compared to $269.2 million for the same period in 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Annual Report. Pipeline Transportation segment adjusted EBITDA increased by $66.4 million, or 21%, to $377.6 million for the year ended December 31, 2024, compared to $311.1 million for the same period in 2023.
Key Performance Metrics Adjusted EBITDA Adjusted EBITDA is defined as net income including noncontrolling interests adjusted for interest, taxes, depreciation and amortization, impairment charges, asset write-offs, the proportionate EBITDA from our EMI pipelines, equity in earnings from investments recorded using the equity method, share-based compensation expense, noncash increases and decreases related to trading and hedging agreements, extraordinary losses and unusual or non-recurring charges.
Key Performance Metrics Adjusted EBITDA Adjusted EBITDA is defined as net income including noncontrolling interests adjusted for interest, taxes, depreciation and amortization, gain or loss on disposal of assets and debt extinguishment, the proportionate EBITDA from our EMI pipelines, equity income and gain from sale of investments recorded using the equity method, share-based compensation expense, noncash increases and decreases related to hedging activities, fair value adjustments for contingent liabilities, integration and transaction costs and extraordinary losses and unusual or non-recurring charges.
Our product sales revenue is exposed to commodity price fluctuations. Therefore, commodity price decline and sustained periods of low natural gas and NGL prices could have an adverse effect on our product revenue stream.
Our product sales revenue is exposed to commodity price fluctuations. Therefore, commodity price decline and sustained periods of low natural gas and NGL prices could have an adverse effect on our product revenue stream. The Company continues to monitor commodity prices closely and may enter into commodity price hedges from time to time as necessary to mitigate the volatility risk.
Adjusted EBITDA should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. The Company’s definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies in the industry, thereby diminishing its utility.
The Company’s definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies in the industry, thereby diminishing its utility.
Adjusted EBITDA should not be considered as an alternative to the GAAP measure of net income including noncontrolling interests or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income including noncontrolling interests.
Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income including noncontrolling interests. Adjusted EBITDA should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.
Product revenue Product revenue consists of commodity sales (including condensate, natural gas residue and NGLs). Product revenue for the year ended December 31, 2023, increased by $16.1 million, or 2%, to $822.4 million, compared to $806.4 million for the same period in 2022, primarily due to a period-over-period increase in NGL and condensate sales volumes.
Product revenue for the year ended December 31, 2024, increased by $240.6 million, or 29%, to $1,063.0 million, compared to $822.4 million for the same period in 2023, primarily due to period-over-period increases in natural gas residue sales volumes of 51.7 million MMBtu, or over 200% and NGL and condensate volumes sold of 2.0 million barrels, or 6%.
The additional shares of Common Stock were issued on June 8, 2022 to holders of record at the close of business on May 31, 2022. Stock Repurchase Program In February 2023, the Board approved the Repurchase Program, authorizing discretionary purchases of the Company’s Class A Common Stock up to $100.0 million in the aggregate.
Stock Repurchase Program In February 2023, the Board approved the Repurchase Program, authorizing discretionary purchases of the Company’s Class A Common Stock up to $100.0 million in the aggregate.
In addition, the Company, when economically appropriate, enters into fee-based arrangements that insulate the Company from commodity price volatility. 34 Table of Contents Index to Financial Statements Inflation and Interest Rates The annual rate of inflation in the United States was 3.10% for the 12 months ending January 2024 compared to 6.4% for the 12 months ending in January 2023, as measured by the Consumer Price Index.
In addition, the Company, when economically appropriate, enters into fee-based arrangements that insulate the Company from commodity price volatility. Inflation and Interest Rates The annual rate of inflation in the U.S. was 3.00% in January 2025 as measured by the Consumer Price Index.
Net cash provided by financing activities totaled $100.0 million for the year ended December 31, 2023 compared with net cash used in financing activities totaling $339.2 million in the same period in 2022.
The decrease was partially offset by the payment of net cash consideration of $341.2 million related to Durango Acquisition. Financing Activities . Net cash used in financing activities totaled $461.4 million for the year ended December 31, 2024 compared with net cash provided by financing activities totaling $100.0 million in the same period in 2023.
Under certain clauses of our transportation services agreements with third party pipelines to transport natural gas and NGLs, if we fail to ship a minimum throughput volume, then we will pay certain deficiency payments for transportation based on the volume shortfall up to the MVC amount. 40 Table of Contents Index to Financial Statements For additional information regarding the Company’s obligations, please see Note 8—Debt and Financing Costs and Note 17—Commitments and Contingencies in the Notes to the Consolidated Financial Statements in this Annual Report.
Under certain clauses of our transportation services agreements with third party pipelines to transport natural gas and NGLs, if we fail to ship a minimum throughput volume, then we will pay certain deficiency payments for transportation based on the volume shortfall up to the MVC amount.
Contractual Obligations We have contractual obligations for principal and interest payments on our 2028 Notes, 2030 Notes and Term Loan. See Note 8—Debt and Financing Costs in the Notes to our Consolidated Financial Statements in this Annual Report.
See Note 8—Debt and Financing Costs in the Notes to our Consolidated Financial Statements in this Annual Report.
Income taxes (benefit) expense The Company recorded income tax benefit of $232.9 million for the year ended December 31, 2023, compared to income tax expense of $2.6 million for the same period in 2022. The current year tax benefit was primarily due to the release of the valuation allowance on federal deferred tax assets during the fourth quarter of 2023.
The increase was primarily due to the release of the valuation allowance on federal deferred tax assets during the fourth quarter of 2023 compared to the recognition of deferred federal income tax of $19.5 million for year ended December 31, 2024.
The increase was primarily driven by increases in gathered and disposed of produced water volumes, as well as similar increases in condensate and NGL volumes sold. 36 Table of Contents Index to Financial Statements Service revenue Service revenue consists of service fees paid to the Company by its customers for providing comprehensive gathering, treating, processing and water disposal services necessary to bring natural gas, NGLs and crude oil to market.
Service revenue Service revenue consists of service fees paid to the Company by its customers for providing comprehensive gathering, treating, processing and water disposal services necessary to bring natural gas, NGLs and crude oil to market.
Crude gathering assets are centralized at the Caprock Stampede Terminal and the Pinnacle Sierra Grande Terminal. The system includes approximately 220 miles of gathering pipeline and 90,000 barrels of crude storage. 32 Table of Contents Index to Financial Statements Water Gathering and Disposal.
Crude gathering assets are centralized at the Caprock Stampede Terminal and the Pinnacle Sierra Grande Terminal. The system includes approximately 220 miles of gathering pipeline and 90,000 barrels of crude storage. An additional 75 miles of gathering pipeline was added to our crude gathering assets through the Permian Resources Midstream Acquisition closed during January 2025. Water Gathering and Disposal.
Cash Flows The following tables present cash flows from operating, investing, and financing activities: For The Year Ended December 31, 2023 2022 (In thousands) Cash provided by operating activities $ 584,480 $ 613,006 Cash used in investing activities $ (686,320) $ (286,130) Cash provided by (used in) financing activities $ 99,956 $ (339,211) Operating Activities .
Cash Flows The following tables present cash flows from operating, investing, and financing activities: For The Year Ended December 31, 2024 2023 (In thousands) Cash provided by operating activities $ 637,346 $ 584,480 Cash used in investing activities $ (176,887) $ (686,320) Cash (used in) provided by financing activities $ (461,363) $ 99,956 40 Table of Contents Index to Financial Statements Operating Activities .
The system includes over 360 miles of gathering pipeline and approximately 580,000 barrels per day of permitted disposal capacity. Pipeline Transportation EMI pipelines.
The system includes over 360 miles of gathering pipeline and approximately 580,000 barrels per day of permitted disposal capacity. Pipeline Transportation EMI pipelines. The Company owns the following equity interests in three EMI pipelines in the Permian Basin with access to various points along the U.S.
Recent Developments Secondary Offering of Common Stock On December 11, 2023, the Company and Apache Midstream (the “Selling Stockholder”) entered into an Underwriting Agreement with J.P.
Secondary Offering of Common Stock On March 13, 2024, the Company and Apache (the “Selling Stockholder”) entered into an Underwriting Agreement with Goldman Sachs & Co.
The increase of equity interest in PHP was related to the completion of PHP’s expansion project in December 2023; 2) 16.0% equity interest in Gulf Coast Express Pipeline LLC (“ GCX”), which is also owned and operated by Kinder Morgan; 3) 33.0% equity interest in Shin Oak, which is owned by Breviloba, LLC, and operated by Enterprise Products Operating LLC; and 4) 15.0% equity interest in Epic Crude Holdings, LP (“EPIC”), which is operated by EPIC Consolidated Operations, LLC.
Gulf Coast: 1) an approximate 55.5% equity interest in Permian Highway Pipeline LLC (“ PHP”), which is also owned and operated by Kinder Morgan; 2) 33.0% equity interest in Shin Oak, which is owned by Breviloba, LLC, and operated by Enterprise Products Operating LLC; and 3) 27.5% equity interest in Epic Crude Holdings, LP (“EPIC”), which is operated by EPIC Consolidated Operations, LLC.
See Note 19 —Segments in the Notes to the Consolidated Financial Statements in this Annual Report for capital expenditure for each operating segment.
Management believes its existing gathering, processing, and transmission infrastructure capacity is capable of fulfilling its contracts to service its customers. See Note 19—Segments in the Notes to the Consolidated Financial Statements in this Annual Report for capital expenditure for each operating segment.
As a result of uncertainty around global commodity supply and demand, the current armed conflict in Israel and the Gaza Strip, the ongoing armed conflict in Ukraine, and uncertainty from failures of two U.S. banks and the resulting effects on financial markets, global oil and natural gas commodity prices continue to remain volatile.
As a result of uncertainty around global commodity supply and demand, global geopolitical conflicts, foreign and trade policies with the new U.S. presidential administration, as well as the ongoing armed conflict in Ukraine, global oil and natural gas commodity prices continue to remain volatile.
The Company retired all treasury stock as of December 31, 2023. For more information regarding the non-deductible 1% U.S. federal excise tax imposed on certain repurchases of stock by publicly traded U.S. corporations, please refer to Part I—Item 1A Risk Factors—Risks Related to Ownership of our Common Stock .
For more information regarding the non-deductible 1% U.S. federal excise tax imposed on certain repurchases of stock by publicly traded U.S. corporations, please refer to Part I—Item 1A Risk Factors—Risks Related to Ownership of our Common Stock . 41 Table of Contents Index to Financial Statements Dividend On January 22, 2025, the Company declared a cash dividend of $0.78 per share on the Company’s Class A Common Stock and a distribution of $0.78 per Common Unit from the Partnership to the holders of Common Units.
During the year ended December 31, 2023 and 2022, capital spending for property, plant and equipment totaled $312.9 million and $206.2 million in 2022, and intangible asset purchases of $16.7 million in 2023 and $15.4 million in 2022.
During the year ended December 31, 2024 and 2023, capital spending for property, plant and equipment totaled $263.5 million and $312.9 million, respectively, intangible asset purchases of $12.3 million and $16.7 million, respectively, contributions to EMI totaled $3.3 million and $238.8 million, respectively, and paid net cash of $85.4 million to acquire additional equity interests in EPIC in second quarter 2024.
For the year ended December 31, 2023, cost of sales decreased $25.8 million, or 5%, to $515.7 million, compared to $541.5 million for the same period in 2022. The decrease was primarily driven by the period-to-period decreases in the aforementioned commodity prices.
Service revenue for the year ended December 31, 2024, decreased by $9.8 million, or 2%, to $408.0 million, compared to $417.8 million for the same period in 2023. The decrease was primarily driven by lower period-over-period gas gathering fees of $9.5 million.
The Company recognized a gain of $9.6 million on redemption of the mandatory redeemable Preferred Units and excess of carrying amount over redemption price of $109.5 million on redemption of the redeemable noncontrolling interest Preferred Units during 2022. 43 Table of Contents Index to Financial Statements Liquidity The following table presents a summary of the Company’s key financial indicators: December 31, 2023 2022 (In thousands) Cash and cash equivalents $ 4,510 $ 6,394 Total debt, net of unamortized deferred financing cost $ 3,562,809 $ 3,368,510 Available committed borrowing capacity $ 643,400 $ 855,000 Off-Balance Sheet Arrangements As of December 31, 2023, there were no off-balance sheet arrangements.
As the context requires, dividends paid to holders of Class A Common Stock and distributions paid to holders of Common Units may be referred to collectively as “dividends.” Liquidity The following table presents a summary of the Company’s key financial indicators: December 31, 2024 2023 (In thousands) Cash and cash equivalents $ 3,606 $ 4,510 Total debt, net of unamortized deferred financing cost $ 3,504,196 $ 3,562,809 Available committed borrowing capacity $ 657,200 $ 643,400 Off-Balance Sheet Arrangements As of December 31, 2024, there were no off-balance sheet arrangements.
For The Year Ended December 31, 2023 2022 * % Change (In thousands, except percentage) Reconciliation of net income including noncontrolling interests to Adjusted EBITDA Net income including noncontrolling interests $ 386,452 $ 250,721 54 % Add back: Interest expense 205,854 149,252 38 % Income tax (benefit) expense (232,908) 2,616 NM Depreciation and amortization 280,986 260,345 8 % Amortization of contract costs 6,620 1,807 NM Proportionate EMI EBITDA 306,072 268,826 14 % Share-based compensation 55,983 42,780 31 % Loss on disposal of assets 19,402 12,611 54 % Loss on debt extinguishment 1,876 27,975 (93) % Integration Costs 1,015 12,208 (92) % Transaction Costs 648 6,412 (90) % Other one-time cost or amortization 11,901 16,355 (27) % Deduct: Interest income 677 — 100 % Warrant valuation adjustment 88 133 (34) % Gain on redemption of mandatorily redeemable Preferred Units — 9,580 (100) % Unrealized gain on derivatives 4,291 — 100 % Gain on embedded derivative — 89,050 (100) % Equity income from unconsolidated affiliates 200,015 180,956 11 % Adjusted EBITDA $ 838,830 $ 772,189 9 % *The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022.
For The Year Ended December 31, 2024 2023 % Change (In thousands, except percentage) Reconciliation of net income including noncontrolling interests to Adjusted EBITDA Net income including noncontrolling interests $ 244,233 $ 386,452 (37) % Add back: Interest expense 217,235 205,854 6 % Income tax (benefit) expense 23,035 (232,908) (110) % Depreciation and amortization expenses 324,197 280,986 15 % Amortization of contract costs 6,621 6,620 — % Proportionate EMI EBITDA 346,666 306,072 13 % Share-based compensation 76,536 55,983 37 % Loss on disposal of assets, net 4,040 19,402 (79) % Loss on debt extinguishment 525 1,876 (72) % Commodity hedging unrealized loss 10,788 — 100 % Contingent liabilities fair value adjustment 200 — 100 % Integration costs 5,826 1,015 NM Acquisition transaction costs 4,096 648 NM Other one-time cost and amortization 12,101 11,901 2 % Deduct: Interest income 1,988 677 194 % Warrant valuation adjustment — 88 (100) % Commodity hedging unrealized gain — 4,291 (100) % Gain on sale of equity method investment 89,802 — 100 % Equity income from unconsolidated affiliates 213,191 200,015 7 % Adjusted EBITDA $ 971,118 $ 838,830 16 % NM - Not meaningful Adjusted EBITDA increased by $132.3 million, or 16% to $971.1 million for the year ended December 31, 2024, compared to $838.8 million for the same period in 2023.
Refer to Note 1—Description of Business and Basis of Presentation in the Notes to the Consolidated Financial Statements of this Annual Report for further information on the Company’s financial statement consolidation. ** Corporate and Other represents those results that: (i) are not specifically attributable to a reportable segment; (ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense Midstream Logistics segment adjusted EBITDA increased by $27.1 million, or 5%, to $543.2 million for the year ended December 31, 2023, compared to $516.0 million for the same period in 2022.
Also refer to Note 19—Segments in the Notes to our Consolidated Financial Statements in this Annual Report for reconciliation of segment adjusted EBITDA to Income before income taxes. 38 Table of Contents Index to Financial Statements For The Year Ended December 31, 2024 2023 % Change (In thousands, except percentage) Midstream Logistics $ 614,883 $ 543,190 13 % Pipeline Transportation 377,550 311,106 21 % Corporate and Other* (21,315) (15,466) 38 % Total segment adjusted EBITDA $ 971,118 $ 838,830 16 % * Corporate and Other represents those results that: (i) are not specifically attributable to a reportable segment; (ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense.
Refer to the Annual Report basis of presentation in Note 1—Description of Business and Basis of Presentation in the Notes to Consolidated Financial Statements in this Annual Report, for further information.
This transaction was accounted for as a business combination pursuant to ASC 805. Refer to Note 3—Business Combinations in the Notes to our Consolidated Financial Statements in this Annual Report for further information.
For 2023, the Company’s primary capital spending were related to the PHP expansion project, the midstream infrastructure acquisition and other budgeted capital expenditures for construction of gathering and processing assets, the Company’s contractual debt obligations and quarterly cash dividends and distributions.
For 2024, the Company’s primary spending requirements were related to the business acquisitions and other budgeted capital expenditures for construction and maintenance of gathering and processing assets, the Company’s contractual debt obligations and quarterly cash dividends. In addition, the Company may repurchase its Class A Common Stock pursuant to the Share Repurchase Program from time to time.
NM - Not meaningful 39 Table of Contents Index to Financial Statements Adjusted EBITDA increased by $66.6 million, or 9% to $838.8 million for the year ended December 31, 2023, compared to $772.2 million for the same period in 2022. As discussed in the Item 7.
Midstream Logistics segment adjusted EBITDA increased by $71.7 million, or 13%, to $614.9 million for the year ended December 31, 2024, compared to $543.2 million for the same period in 2023.
Over 99% of operating expenses are included in the Midstream Logistics segment. Loss on disposal of assets For the year ended December 31, 2023, the Company recognized a loss on disposal of assets of $19.4 million compared with $12.6 million for the same period in 2022.
Loss on disposal of assets, net Loss on disposal of asset, net decreased by $15.4 million, or 79% to $4.0 million for the year ended December 31, 2024, compared to $19.4 million for the same period in 2023.
Period over period gathered and processed gas volumes increased 307.4 Mcf per day and 271.5 Mcf per day, respectively. However, the total gathered and processed gas volumes where we function as the agent decreased period over period, which lead to a $3.1 million decrease in service fees. Over 99% of service revenues are included in the Midstream Logistics segment.
However, the total gathered and processed gas volumes where we function as the agent decreased period-over-period causing the change in net gas gathering fees presented as revenues to be down 3%.
In addition, natural gas residue sales volumes increased 0.5 million MMBtu, or 2%, but fully offsetting this increase in residue volumes, natural gas prices decreased period-over-period $3.84 per MMBtu, or 69%. Product revenues are included entirely in the Midstream Logistics segment.
The increase was also driven by a period-over-period increase in NGL prices of $0.62 per barrel, or 3% and condensate prices of $2.10 per barrel, or 3%. The overall increase was partially offset by a decrease in natural gas prices of $0.42 per MMBtu, or 24%. Product revenues are included entirely in the Midstream Logistics segment.
The Midstream Logistics segment provides gas gathering and processing services with over 1,600 miles of low and high-pressure steel pipeline located throughout the Delaware Basin. Gas processing assets are centralized at five processing complexes with total cryogenic processing capacity of approximately 2.0 Bcf/d. Crude Oil Gathering, Stabilization and Storage Services.
The Midstream Logistics segment provides gas gathering and processing services with over 3,900 miles of low and high-pressure steel pipeline located throughout the Delaware Basin, including over 2,300 miles of gas 31 Table of Contents Index to Financial Statements pipeline acquired through the Durango Acquisition, and over 570,000 horsepower of compression capacity.
The 2028 Notes are fully and unconditionally guaranteed by the Company and issued under our Sustainability-Linked Financing Framework. Proceeds from the 2028 Notes together with cash on hand and borrowings under the Partnership’s Revolving Credit Facility were used to repay a portion of the outstanding borrowings under the Partnership’s existing Term Loan.
The net proceeds of the A/R Facility were used, together with cash on hand, to repay a portion of the outstanding borrowings under the existing term loan credit facility (the “Term Loan Credit Facility”), lowering the remaining balance to $1.0 billion. As a result, the maturity of the Term Loan Credit Facility extended to December 8, 2026.
Net cash used in investing activities increased by $400.2 million for the year ended December 31, 2023 compared with the same period in 2022. The increase was primarily driven by increases in property, plant and equipment expenditures, contributions made to the PHP expansion project and cash paid for the acquisition of certain midstream assets. Financing Activities .
Investing Activities . Net cash used in investing activities decreased by $509.4 million for the year ended December 31, 2024 compared with the same period in 2023.
Other Income (Expense) Loss on debt extinguishment For the year ended December 31, 2023, the Company recognized a loss on debt extinguishment of $1.9 million, compared with a loss of $28.0 million for the same period in 2022.
Other Income (Expense) Gain on sale of equity method investment For the year ended December 31, 2024, we had gain on sale of equity method investment of $89.8 million compared to the same period in 2023 related to the GCX Sale consummated in the second quarter of 2024.
The decrease was partially offset by increases in derivative fair value adjustments of $61.8 million and depreciation and amortization expense of $20.6 million. Period-to-period changes in working capital was primarily related to a decrease in accrued liabilities and fluctuations in trade receivables and payables due to timing of collections and payments. Investing Activities .
The increase was partially offset by gain from sale of all equity interest in GCX of $89.8 million, and a decrease in loss on disposal of assets of $15.4 million. Period-over-period changes in working capital were related to fluctuations in trade receivable and payable balances due to timing of collection and payments and fluctuations in accrued revenue and accrued purchases.
Proceeds from the 2030 Notes and the Term Loan were used to repay all outstanding borrowings under our then existing credit facilities and to pay fees and expenses related to the offering. Refer to Note 8 — Debt and Financing Costs in the Notes to our Consolidated Financial Statements in this Annual Report for further information.
For additional information regarding the Company’s obligations, please see Note 8—Debt and Financing Costs and Note 17—Commitments and Contingencies in the Notes to the Consolidated Financial Statements in this Annual Report.
Removed
The Company owns the following equity interests in four EMI pipelines in the Permian Basin with access to various points along the Texas Gulf Coast: 1) an approximate 55.5% equity interest in Permian Highway Pipeline LLC (“ PHP”), which is also owned and operated by Kinder Morgan.
Added
New BCP Raptor Holdco, LLC, a Delaware limited liability company, and BCP.
Removed
The Company did not receive any proceeds from the sale of shares of Common Stock in the offering.
Added
The Altus Acquisition was accounted for as a reverse merger pursuant to ASC 805.
Removed
Sustainability-Linked Senior Notes Offerings On December 6, 2023, the Partnership completed a private placement of $500.0 million aggregate principal amount of 6.625% Sustainability-Linked Senior Notes due 2028 (the “Original 2028 Notes”) at par; further, on December 19, 2023, the Company completed an additional private placement of $300.0 million aggregate principal amount of 6.625% Sustainability-Linked Senior Notes due 2028 (the “Additional 2028 Notes”) at 100.50% of face amount (collectively, the “2028 Notes”).
Added
On June 24, 2024 (the “Durango Closing Date”), the Company consummated the previously announced transaction contemplated by the Membership Interest Purchase Agreement (the “Durango MIPA”), dated May 9, 2024, by and between the Company, the Partnership, and Durango Midstream LLC, an affiliate of Morgan Stanley Equity Partners (the “Durango Seller”), pursuant to which the Partnership purchased all of the membership interests of Durango Permian LLC and its wholly owned subsidiaries (“Durango”) from Durango Seller (“Durango Acquisition”).
Removed
The Original 2028 Notes and Additional 2028 Notes are treated as a single series of securities under the indenture governing the 2028 Notes, vote together as a single class, and have substantially identical terms, other than the issue date and issue price. The 2028 Notes are fully and unconditionally guaranteed by the Company and issued under our Sustainability-Linked Financing Framework.
Added
An additional 214 miles of gathering pipeline was added to our system through the Permian Resources Midstream Acquisition closed during January 2025.
Removed
The Sustainability Performance Targets (“SPT”) as defined in the indenture governing the 2028 Notes related to three key performance indicators: (1) Reduction of Scope 1 and Scope 2 greenhouse gas emissions intensity, (2) Reduction of Scope 1 and Scope 2 methane gas emissions intensity and (3) female representation in corporate officer positions.
Added
Gas processing assets are centralized at seven processing complexes with system-wide front-end amine treating capability, 6.5 MMcf/d AGI capacity and total cryogenic processing capacity of approximately 2.2 Bcf/d as of today and over 2.4 BCF/d once the Kings Landing Project is complete in mid-2025. Crude Oil Gathering, Stabilization and Storage Services.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe interest rates for the Revolving Credit Facility and the Term Loan are variable, which exposes the Company to the risk of increased interest expense in the event of increases to short-term interest rates. Accordingly, results of operations, cash flows, financial condition and the ability to make cash distributions could be adversely affected by significant increases in interest rates.
Biggest changeAccordingly, results of operations, cash flows, financial condition and the ability to make cash distributions could be adversely affected by significant increases in interest rates.
For example, commodity prices directly impact costs such as power and fuel, which are expenses that increase or decrease in line with changes in commodity prices. Commodity prices also affect industry activity and demand, thus indirectly impacting the cost of items such as labor and equipment rentals.
Fluctuations in commodity prices also impact operating cost elements both directly and indirectly. For example, commodity prices directly impact costs such as power and fuel, which are expenses that increase or decrease in line with changes in commodity prices. Commodity prices also affect industry activity and demand, thus indirectly impacting the cost of items such as labor and equipment rentals.
Interest Rate Risk The market risk inherent in our financial instruments and our financial position represents the potential loss arising from adverse changes in interest rates. As of December 31, 2023, the Company had interest bearing debt, net of deferred financing costs, with a principal amount of $3.56 billion.
Interest Rate Risk The market risk inherent in our financial instruments and our financial position represents the potential loss arising from adverse changes in interest rates. As of December 31, 2024, the Company had interest bearing debt, net of deferred financing costs, with a principal amount of $3.50 billion.
Management regularly reviews the Company’s potential exposure to commodity price risk and may periodically enter into financial or physical arrangements intended to mitigate potential volatility. Refer to Note 13—Derivative and Hedging Activities in the Notes to our Consolidated Financial Statements in this Annual Report for additional discussion regarding our hedging strategies and objectives.
Management regularly reviews the Company’s potential exposure to commodity price risk and uses financial or physical arrangements to mitigate potential volatility. Refer to Note 13—Derivative and Hedging Activities in the Notes to our Consolidated Financial Statements in this Annual Report for additional discussion regarding our hedging strategies and objectives.
Commodity Price Risk The results of the Company’s operations may be affected by the market prices of oil, NGLs and natural gas. A portion of the Company’s revenue is directly tied to local crude, natural gas, NGLs and condensate prices in the Permian Basin. Fluctuations in commodity prices also impact operating cost elements both directly and indirectly.
Commodity Price Risk The results of the Company’s operations may be affected by the market prices of oil, natural gas and NGLs. A portion of the Company’s revenue is directly tied to local crude, natural gas, NGLs and condensate prices in the Permian Basin and the U.S. Gulf Coast.
As of December 31, 2023, the Company had two interest rate swap contracts with total notional amounts of $1.70 billion maturing on May 31, 2025 and paying a fixed rate ranging from 4.38% to 4.48% for the respective notional amounts.
As of December 31, 2024, the Company had two interest rate swap contracts with total notional amounts of $1.70 billion maturing on May 31, 2025 that pay a fixed rate ranging from 4.38% to 4.48% and four interest rate swap contracts with total notional amount of $0.30 billion maturing on December 31, 2025 that pays a fixed rate ranging from 3.02% to 4.06%.
Refer to Note 13—Derivative and Hedging Activities in the Notes to our Consolidated Financial Statements in this Annual Report for additional discussion regarding our hedging strategies and objectives.
Refer to Note 13—Derivative and Hedging Activities in the Notes to our Consolidated Financial Statements in this Annual Report for additional discussion regarding our hedging strategies and objectives. Credit Risk The Company is subject to credit risk resulting from nonpayment or nonperformance by, or the insolvency or liquidation of, third-party customers.
The Company continually monitors its market risk exposure, including the impact and developments related to the armed conflicts in Ukraine and Israel, increase in interest rate and inflation trends, which continued to have significant impact on volatility and uncertainties in the financial markets during 2023.
The Company continually monitors its market risk exposure, including the impact of regional and international political instability, new U.S. presidential administration policies on various foreign and domestic issues and monetary policy addressing the interest rate and inflation trend, which continued to have significant impact on volatility and uncertainties in the financial markets.
Removed
Upon closing of the First Amendment in December 2023, the Company terminated one existing interest rate swap contract and partially terminated another.
Added
We are not exposed to changes in interest rates with respect to our senior unsecured notes due in 2028 and 2030 as these are fixed-rate obligations.
Removed
The Company also expects to maintain a 0.05% reduction to the effective interest rates of both the Revolving Credit Facility and the Term Loan during 2024 in relation to achieving sustainability adjustment features embedded in these facilities. Credit Risk The Company is subject to credit risk resulting from nonpayment or nonperformance by, or the insolvency or liquidation of, third-party customers.
Added
The interest rates for the Revolving Credit Facility, the Term Loan Credit Facility and the A/R Facility are variable, which exposes the Company to the risk of increased interest expense in the event of increases to interest rates.
Added
A 1.0% increase or decrease in interest rates would change our annualized interest expense by approximately $17.0 million for the Revolving Credit Facility, the Term Loan Credit Facility and the A/R Facility, based on our outstanding borrowings at December 31, 2024.
Added
To mitigate interest rate risk exposure, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy.

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