Kinetik (KNTK) Q2 2024 earnings summary

Executive summary

• Closed Durango Permian acquisition and divested 16% equity in GCX, expanding the Delaware Basin footprint and customer base, with integration of Durango assets and personnel progressing smoothly.

• Revenue for Q2 2024 increased 21% year-over-year to $359.5 million, driven by higher commodity prices and increased natural gas residue volumes.

• Net income for Q2 2024 was $108.9 million, up 52% year-over-year; Adjusted EBITDA reached $234.4 million, a 13% increase year-over-year.

• Strategic investments of approximately $1 billion at attractive EBITDA multiples and organic gathering expansion in Lea and Eddy Counties are enhancing the company’s position.

• Nearly 20% of processed volumes now sourced from New Mexico, up from zero a year ago.

Financial highlights

• Q2 2024 Adjusted EBITDA was $234.4 million (up 13% YoY); net income was $108.9 million; distributable cash flow was $162.9 million; free cash flow was $105.4 million.

• Processed gas volumes reached 1.58 Bcf/d, a 7% year-over-year increase, despite wellhead curtailments.

• Midstream logistics segment Adjusted EBITDA was $148 million (up 7% YoY); pipeline transportation segment Adjusted EBITDA was $94 million (up 25% YoY).

• Operating revenues for Q2 2024 were $359.5 million, up from $296.2 million in Q2 2023.

• Total capital expenditures for the quarter were $38 million.

Outlook and guidance

• 2024 Adjusted EBITDA guidance raised to $940–$980 million, up 3% at midpoint, implying over 14% year-over-year growth.

• 2024 capital expenditures guidance increased to $260–$300 million, reflecting growth projects and Durango integration.

• Processed gas volume growth in the high teens expected for midstream logistics segment.

• Kings Landing I expected in service April 2025; Kings Landing II pre-FID work underway, with potential in-service by Q3 2026.

• Projects expected to be over 10% accretive to free cash flow per share starting H2 2025.