The following is a summary of the Kinetik Holdings Inc. (KNTK) Q3 2024 Earnings Call Transcript:
Financial Performance:
Kinetik Holdings Inc. reported an impressive increase in adjusted EBITDA which grew 23% year-over-year.
Processed gas volumes were 1.71 billion cubic feet per day, representing a 15% growth year-over-year.
Adjusted EBITDA guidance for the full year 2024 was revised upward to $970 million to $1 billion, indicating a positive trajectory in financial performance.Third quarter adjusted EBITDA was $266 million, showing robust growth and operational success.
Business Progress:
Kinetik acquired an additional equity interest in EPIC Crude, increasing total ownership to 27.5%.
Initiated a long-term transport agreement with EPIC, following a multi-notch credit upgrade and refinancement of its Term Loan B.
Approved MRV Plan from the EPA for three acid gas injection wells, enhancing sustainability efforts and leveraging 45Q credits.
Announced investment in a new large diameter pipeline connecting Eddy County, New Mexico, and Culberson County, Texas, to optimize processing capacity and facilitate higher margin sour gas processing.
Opportunities:
Expanded ownership and strategic partnership in EPIC Crude, coupled with a refinanced Term Loan B, positions Kinetik for future distributions and financial stability.
The integration of sustainability measures such as the MRV Plan enhances Kinetik's environmental credentials and opens up new revenue streams through 45Q credits.
The construction of a new pipeline between Eddy and Culberson Counties will significantly boost the company's processing capabilities and operational flexibility.
Risks:
Persistent negative gas prices at the Waha Hub, with average daily prices as low as negative $1 per Mcf, led to curtailment of approximately 170 million cubic feet per day of wellhead gas volume. This pricing volatility presents an ongoing risk to operations and revenue stability.
Dependence on regulatory approval and market conditions for project developments and expansions.
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