Kinetik's Q4 2024 Earnings Call: Navigating Contradictions in Customer Expectations, Cost Management, and Growth Strategies

These are the key contradictions discussed in Kinetik's latest 2024Q4 earnings call, specifically including: Producer Customer Expectations, Compression Cost Impact, and Market Share Gains and Growth Opportunities:



Financial Performance and Growth:
- Kinetik reported adjusted EBITDA of $971 million for 2024, up 16% year-on-year, and gas processed volumes increased by 13% year-over-year to 1.64 billion cubic feet per day.
- The growth was attributed to strategic M&A transactions, expansion into New Mexico, and increased equity interest in EPIC Crude.

Capital Allocation and Debt Reduction:
- Kinetik completed $1 billion in strategic transactions, reducing leverage by nearly half a turn to 3.4 times, below the communicated leverage target.
- This was achieved through the acquisition of Durango Permian and the sale of a non-core stake in GCX.

Operational Challenges and Recovery:
- The fourth quarter was impacted by $15 million headwind due to negative Waha gas prices and operational curtailments, causing a temporary reduction in earnings.
- However, Alpine High volumes rebounded by late December, with adjusted EBITDA averaging well above $1.05 billion annually.

Future Growth Outlook:
- Kinetik looks to grow adjusted EBITDA by 15% year-on-year in 2025, with a key driver being the 20% growth in gas processed volumes across the system.
- Growth is expected from new projects like Kings Landing Complex and acquisitions like Barilla Draw, along with expansions in Eddy County.