HOUSTON & MIDLAND, Texas--(BUSINESS WIRE)--May 06, 2026--
Kinetik Holdings Inc. (NYSE: KNTK) ("Kinetik" or the "Company") today reported financial results for the quarter ended March 31, 2026.
For the three months ended March 31, 2026, Kinetik reported net loss including noncontrolling interest of $5.1 million, Adjusted EBITDA(1) of $251.2 million, Distributable Cash Flow(1) of $180.8 million, and Free Cash Flow(1) of $101.4 million.
Highlights
-- Delivered record first quarter 2026 financial results, driven by strong
execution across the Company
-- Amended multiple Durango gas gathering and processing agreements with a
large existing customer, extending contract terms to 2039 and increasing
the original dedicated acreage position in New Mexico
-- Executed several new agreements with customers in Texas and New Mexico
for gas, water, and crude midstream services
-- Received approvals from the Bureau of Land Management and the New
Mexico Oil Conservation Division to fully proceed with the acid gas
injection and sour conversion project at Kings Landing with expected
in-service by year-end 2026
-- Secured additional Gulf Coast pricing for 2028 through 2030 that
further mitigates Waha natural gas exposure
-- Affirming full year 2026 Financial Guidance:
-- Adjusted EBITDA1 guidance of $950 million to $1,050 million
-- Capital Expenditures2 guidance of $450 million to $510 million
(including maintenance)
CEO Commentary
"Kinetik delivered a strong start to 2026, reflecting the strategic positioning of the business, as well as successful commercial and operational execution," said Jamie Welch, Kinetik's President & Chief Executive Officer. "Accounting for the divestiture of our stake in EPIC Crude Holdings LP ("EPIC Crude"), first quarter 2026 Adjusted EBITDA(1) of $251 million represents a new quarterly record for the Company. Our financial performance was above internal expectations and reinforces our confidence in our 2026 guidance."
"While geopolitical tensions in the Middle East have introduced near-term commodity price volatility, Kinetik's fee-based, domestic midstream business model provides meaningful insulation. Elevated crude prices continue to support our oil-weighted customers' well economics, while gas price-sensitive customers have deferred some 2026 activity in response to negative Waha pricing; so on balance, we have not observed a material impact to producer activity levels for 2026 across our footprint. However, when looking ahead, we have seen and are continuing to see customers pull forward activity to early 2027, setting up for a strong year that coincides with new Permian egress capacity coming online."
Welch added, "Year to date through April, the Waha Hub is even more oversupplied and volatile than our original expectations with Waha gas daily averaging negative $2.37 per Mmbtu. We continue to experience price-related volume curtailments from our gas price-sensitive customers. While we are revising our 2026 processed gas volume growth assumptions to reflect these dynamics, our Gulf Coast transportation position more than offsets this impact by capitalizing on wider Permian to Gulf Coast price differentials. The scale and pace of incremental residue gas takeaway capacity from the Permian Basin continues to reshape the long--term outlook with more than 5 Bcf/d of new capacity expected to be in service by early 2027 and an additional approximately 6 Bcf/d anticipated in 2028 and 2029."
"Against this backdrop, Kinetik is well positioned to capture the value of this structural Permian gas growth. The Durango amendments executed over the last four months, which extend roughly 75% of legacy volumes into the mid and late 2030s, the new agreements across Texas and New Mexico, and the incremental Gulf Coast natural gas pricing exposure through 2030 demonstrate our commercial strategy translating into multi-year earnings visibility."
Financial Highlights
Three months ended March 31, 2026
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(In thousands, except ratios)
Net loss including noncontrolling
interest $ (5,125)
Adjusted EBITDA(1) $ 251,200
Midstream Logistics Adjusted
EBITDA(1) $ 178,921
Pipeline Transportation
Adjusted EBITDA(1) $ 77,977
Corporate and Other Adjusted
EBITDA(1) $ (5,698)
Distributable Cash Flow(1) $ 180,831
Dividend Coverage Ratio(1,3) 1.4x
Capital Expenditures(2) $ 91,333
Free Cash Flow(1) $ 101,381
Net Debt(1,4) $ 3,854,380
Liquidity (Cash and Revolver
Availability)(5) $ 1,120,120
Leverage Ratio(1,6) 3.9x
Net Debt to Adjusted EBITDA
Ratio(1,7) 3.9x
Common stock issued and
outstanding(8) 162,360
Dividend per share of issued and
outstanding common stock $ 0.81
Segment Insights
The Midstream Logistics segment generated Adjusted EBITDA(1) of $178.9 million, a 12% increase year-over-year. For the three months ended March 31, 2026, Kinetik processed natural gas volumes of 1.81 Bcf/d, a 1% increase year-over-year despite an estimated 170 Mmcf/d of Waha price-related processed gas volume shut-ins. First quarter 2026 results benefited from stronger than expected system operating performance, higher fee and commodity margins, lower unit operating costs, and wider Waha to Houston Ship Channel basis spreads, partially offset by Waha price-related production shut-ins.
The Pipeline Transportation segment generated Adjusted EBITDA(1) of $78.0 million, a nearly 17% decrease year-over-year driven by the Company's divestiture of its equity interest in EPIC Crude. Permian Highway Pipeline and Kinetik NGL Adjusted EBITDA(1) grew modestly year-over-year on lower fuel costs and higher fee gross margin.
2026 Guidance Affirmed
Kinetik affirms full year 2026 Adjusted EBITDA(1) guidance to be between $950 million and $1,050 million. Year-over-year processed gas volume is now estimated to grow low- to mid-single-digit percentage points. Original processed gas volume assumptions contemplated approximately 100 Mmcf/d of Waha price-related production shut-ins on average for the full year. The Company now estimates approximately 220 Mmcf/d of curtailments and additional 2026 timing adjustments to certain producer developments.
Kinetik is also maintaining its 2026 Capital Expenditures(2) guidance (including maintenance) of $450 million to $510 million for the full year.
Strategic Projects & Commercial Activity
Kinetik received all approvals from the Bureau of Land Management to proceed with acid gas compression at the surface facilities and drilling of the acid gas injection well at Kings Landing, as well as the underground injection control permit from the New Mexico Oil Conservation Division for the full 20 Mmcf/d of requested total acid gas capacity. The project will enable Kings Landing to handle elevated levels of H S and CO and remains on schedule for in-service by year-end 2026.
The ECCC Pipeline is nearing construction completion, which will connect the western portion of Kinetik's system North to South between Eddy and Culberson counties. The project will commence in-service during the second quarter of 2026.
Kinetik continues to advance its strategy of pursuing scalable power solutions across its Delaware South position. The 40 MW behind-the-meter power generation project at Diamond Cryo is progressing with engineering, procurement, and permitting work well underway.
The Company executed an agreement with Pecos Power to connect its owned and operated intrabasin residue gas pipeline to the new 452 MW gas-fired Pecos Power Plant in Reeves County, Texas. This interconnection will be used as one of the primary sources of residue natural gas supply for the project. Pecos Power reached FID in March with commercial operations expected to commence in 2027, and the capital for the Kinetik pipeline connection will be fully reimbursed by Pecos Power.
Kinetik recently executed a series of commercial agreements that further enhance long--term visibility across the system in Texas and New Mexico, several of which are for multi-stream services.
The Company also amended multiple legacy Durango gas gathering and processing ("G&P") agreements with a large existing customer in New Mexico. This amendment increases acreage under the existing agreement by 12,000 gross acres, up approximately 25% versus the original dedicated acreage in Eddy County from May 2024 and extends contract terms to 2039.
In total, agreements covering approximately 75% of legacy Durango gas processed volumes have been amended in the last four months, extending terms to the mid and late 2030s, providing downstream control of plant products, increasing margin and dedicated acreage, and adding sour gas-related services. These agreements are expected to increase annual Adjusted EBITDA(1) starting in 2026, which is reflected in guidance.
Kinetik secured additional Gulf Coast natural gas pricing exposure at attractive rates for the 2028 through 2030 period, building upon its downstream residue position and the continued successful execution of its commercial G&P strategy.
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