Kinetik Holdings Q2 2025 Earnings: Strong Adjusted EBITDA, Progress in Capital Growth Projects, and Revised Guidance

Kinetik Holdings Inc reported strong adjusted EBITDA of $243 million in Q2, with commissioning of King's Landing complex set to reach full service by late September. However, the company revised its 2025 adjusted EBITDA guidance range to $1.03 billion to $1.09 billion, down approximately 5%, due to delays in the King's Landing startup and modest delays in producer development activity.

Kinetik Holdings Inc. (NASDAQ: KNTK) reported a mixed performance in its second quarter (Q2) 2025, with strong adjusted EBITDA but a downward revision in its full-year 2025 guidance. The midstream energy company reported adjusted EBITDA of $243 million for Q2 2025, with free cash flow of $8 million and capital expenditures of $126 million [2].

The company's stock declined 1.42% on the day of the announcement, reflecting investor concerns about the revised guidance. Kinetik's Q2 performance highlights balanced growth across its business segments, with midstream logistics delivering $151 million in adjusted EBITDA, a 3% year-over-year increase, and pipeline transportation generating $97 million, also up 3% year-over-year [2].

However, Kinetik lowered its full-year 2025 adjusted EBITDA guidance to $1.03 billion to $1.09 billion, down approximately 5% from its previous range of $1.09 billion to $1.15 billion. The downward revision is primarily attributed to delays in the Kings Landing complex completion and postponed producer development plans [2].

The Kings Landing complex, a 220 Mmcf/d facility in New Mexico, is expected to reach full commercial service by late September 2025, doubling Delaware North's processing capacity [2]. Despite these delays, Kinetik projects annualized fourth-quarter 2025 adjusted EBITDA of approximately $1.2 billion, suggesting stronger performance toward year-end [2].

Kinetik's commodity price assumptions for 2025 include WTI at approximately $68/Bbl, natural gas at $3.04/Mmbtu, and NGLs at $0.60/Gal. The company noted that its existing hedges partially offset negative impacts from lower commodity prices and elevated operating cost inflation [2].

The company's high percentage of fixed-fee revenue (84% of 2025 estimated gross profit) provides stability in a volatile commodity environment, potentially supporting the stock as delayed projects come online later this year and into 2026 [2].

Kinetik's strategic capital investments for 2025 are primarily allocated to Delaware North (71%), Delaware South (22%), and maintenance (7%). The company aims to reach approximately 10% compound annual adjusted EBITDA growth over the next five years, targeting $2 billion in adjusted EBITDA by year-end 2030 [2].

Kinetik has been active in returning capital to shareholders, repurchasing $173 million of Class A common stock year-to-date, including $73 million in the second quarter alone. The company also plans annual 3-5% increases to its current $3.12 cash dividend [2].

Kinetik's Q2 results and guidance revision come after a mixed first quarter. In Q1 2025, the company reported adjusted EBITDA of $250 million, suggesting a sequential decline in Q2. Despite missing earnings expectations in Q1, with EPS of $0.05 versus a forecast of $0.36, the stock had risen 3.99% following that announcement [2].

The company's current trading price of $41.54 remains closer to its 52-week low of $39.33 than its high of $67.60, reflecting ongoing investor concerns about project delays and reduced guidance. However, Kinetik's exclusive focus on the Permian Basin, one of North America's most productive oil and gas regions, positions it well to capitalize on continued growth in the region [2].

References:
[1] https://www.ainvest.com/news/kinetik-holdings-navigating-revenue-volatile-energy-landscape-2508/
[2] https://www.investing.com/news/company-news/kinetik-q2-2025-slides-steady-growth-amid-project-delays-guidance-lowered-93CH-4175327