Kinetik Holdings Reports Record 2025 Results and Unveils Bullish 2026 Guidance

Key Highlights from Q4 and Full Year 2025

• Record Full-Year Adjusted EBITDA: Kinetik Holdings Inc. (NYSE: KNTK) achieved a record Adjusted EBITDA of \$987.7 million for FY2025 despite a challenging operating environment and the divestiture of its equity interest in EPIC Crude Holdings, LP.
• Net Income Surge: Net income (including noncontrolling interest) was \$416.7 million for Q4 and \$525.9 million for the full year, reflecting significant gains from asset sales and operational resilience.
• Cash Flow Metrics: Distributable Cash Flow reached \$151.7 million for Q4 and \$620.5 million for the year. Free Cash Flow stood at \$(12.0) million for Q4 and \$167.2 million for the year, highlighting robust operational performance but also significant capital outlays in Q4.
• Segment Performance: The Midstream Logistics segment generated \$173.1 million Adjusted EBITDA in Q4 (up 15% YoY), and the Pipeline Transportation segment contributed \$84.0 million (down 9% YoY due to the EPIC Crude divestiture).
• Major Contract Amendments: Amended long-term gas gathering and processing agreements with two large customers from the legacy Durango Midstream business in New Mexico. These contracts, extending into the mid-2030s, feature fixed-fee structures, new treating fees, and enhanced control of residue gas and NGLs, all expected to increase Adjusted EBITDA beginning in 2026.
• Strategic Asset Sales: Completed the sale of its equity interest in EPIC Crude on October 31, 2025, yielding a significant gain and strengthening the balance sheet.
• Final Investment Decision on Power Generation: Greenlit a behind-the-meter, gas-fired 40MW power generation project at the Diamond Cryo facility in Texas, with a total expected capex under \$25 million and in-service targeted for late 2026.
• Share Repurchases: Repurchased \$176 million of Class A common stock in 2025, demonstrating management’s commitment to shareholder returns. Only \$3.5 million was repurchased in Q4, suggesting a more cautious pace late in the year.

2026 Financial Guidance: Growth, Investments, and Capital Discipline

• Adjusted EBITDA Guidance: Kinetik expects 2026 Adjusted EBITDA between \$950 million and \$1,050 million, representing a 7% year-over-year increase at the midpoint.
• Capital Expenditures: 2026 capex is projected at \$450–510 million (including maintenance), with approximately 70% allocated to growth projects in New Mexico and the remainder to Texas optimization and power generation initiatives.
• Volume and Price Assumptions: Guidance assumes high single-digit percentage growth in gas processed volumes, ECCC Pipeline in-service in Q2 2026, Kings Landing acid gas injection and sour gas conversion project in-service by year-end 2026, and commodity price assumptions of \$61.58/bbl WTI, \$3.34/MMBtu Houston Ship Channel gas, \$0.44/MMBtu Waha Hub gas, and \$0.52/gal for composite NGLs.
• Balance Sheet Strategy: Kinetik targets a Leverage Ratio of 3.5x–4.0x, preserving liquidity and flexibility for disciplined, value-accretive capital deployment.

Strategic Initiatives and Projects

• Delaware Basin Expansion: Ongoing construction of the ECCC Pipeline (connecting Eddy and Culberson counties) is on schedule for Q2 2026 in-service, enhancing system connectivity and capacity.
• Gas Processing Upgrades: The Kings Landing AGI and sour gas handling project will significantly boost the company’s ability to process sour gas, supporting customer growth as drilling shifts to these resource benches. This project is on track for year-end 2026 completion.
• Technology Initiatives: In February 2026, Kinetik launched a pilot with Palantir to improve real-time profitability analytics and planning, supporting a broader technology strategy to drive operational efficiency and reliability.

Shareholder-Relevant and Price-Sensitive Items

• Dividend and Shareholder Return Policy: Kinetik’s capital allocation framework now targets 3%–5% annual dividend increases until the dividend coverage ratio reaches 1.6x, after which dividends are expected to grow in line with earnings. Opportunistic share repurchases remain central to incremental capital returns.
• Guidance for FY2026 Indicates Growth and Earnings Acceleration: The company anticipates significant tailwinds from new Permian gas takeaway capacity by early 2027 (approximately 5 Bcf/d), contract renegotiations, cost optimizations, and improved commodity price fundamentals at the Waha Hub.
• Potential Risks and Volatility: Guidance is subject to variability from commodity price swings, production shut-ins, changes in project timing, and producer development activity.

Management Commentary

“2025 was a year of challenges and strategic progress as we navigated a difficult operating environment,” said CEO Jamie Welch. He emphasized the successful completion of core initiatives, the resilience of Kinetik’s asset base, and the positive impact of capital investments made in 2025. Welch anticipates continued volatility in 2026 but expects the company to benefit from operating leverage, improved gas fundamentals, and the full-year effects of new contracts and optimization efforts. He reiterated the company’s commitment to disciplined capital allocation and long-term shareholder value creation.

Financial Summary Table (FY2025)

Outlook and Investor Takeaways

• Kinetik’s strong 2025 performance, transformative contract amendments, and continued capital investment underpin a positive 2026 outlook with expected earnings and cash flow growth.
• The company’s updated capital allocation framework, including share repurchases and targeted dividend growth, signals a clear commitment to shareholder returns.
• Execution on strategic projects (notably the ECCC Pipeline and Kings Landing AGI) and effective cost management will be closely watched for their contribution to 2026 results and beyond.
• Macro factors such as natural gas price recovery and new takeaway capacity in the Permian could provide additional upside—or risk—depending on market dynamics.

Conference Call and Additional Resources

Kinetik will host its Q4 2025 results call on February 26, 2026, at 8:00 a.m. CT (9:00 a.m. ET). Live and archived webcasts, as well as an updated investor presentation, are available at www.ir.kinetik.com.

Disclaimer: This article includes forward-looking statements based on management’s current expectations, projections, and assumptions. Actual results may differ materially due to risks and uncertainties described in Kinetik’s SEC filings. This summary is for informational purposes only and does not constitute investment advice. Investors should review the full earnings release and consult their own advisors before making investment decisions.

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