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Item 9A. Controls and Procedures

2023-03-07 compared with 2022-02-22 · 1334 added, 994 removed, 237 unchanged (91% of the section changed)

1 unchanged sentence

Disclosure Controls and Procedures

The Company’s Chief Executive Officer and President, in his capacity as principal executive officer, and the Company’s Chief Financial Officer and Treasurer, in his capacity as principal financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2021, the end of the period covered by this Annual Report on Form 10-K.

The Company’s Chief Executive Officer, President, Chief Financial Officer and Director, in his capacity as principal executive officer, and the Company’s Executive Vice President, Chief Accounting and Chief Administrative Officer, in his capacity as principal financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) or 15d-15(e)) as of December 31, 2022, the end of the period covered by this Annual Report on Form 10-K.

Based on that evaluation and as of the date of that evaluation, these officers concluded that the Company’s disclosure controls and procedures were effective, providing effective means to ensure that the information the Company is required to disclose under applicable laws and regulations is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms and accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

2 unchanged sentences

Management’s Annual Report on Internal Control Over Financial Reporting

The management report called for by Item 308(a) of Regulation S-K is incorporated herein by reference to the “Report of Management on Internal Control Over Financial Reporting,” included on page F-1 in Part IV, Item 15 of this Annual Report on Form 10-K.

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act and is not required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act.

As such, this Annual Report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting.

The Management’s Report on Internal Control Over Financial Reporting is included on page F-1 in Part IV, Item 15 of this Annual Report on Form 10-K and is incorporated herein by reference.

Management concluded that our internal control over financial reporting was effective as of December 31, 2022.

The effectiveness of our internal control over financial reporting as of December 31, 2022 has been audited by KPMG LLP, an independent registered public accounting firm.

See Attestation Report of Independent Registered Public Accounting Firm under Part II, Item 8 of this Form 10-K.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal controls over financial reporting during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

There were no changes in the Company’s internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting, except as described in this Item 9A.

As of December 31, 2022, the company is required to file a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.

7262(b)) by the registered public accounting firm that prepared or issued our audit report.

See the Report of Management on Internal Control of Financial Reporting and the Report of Independent Registered Public Accounting Firm beginning on page F-1 of this Annual Report on Form 10-K.

OTHER INFORMATION

Disclosure pursuant to Section 13(r) of the Securities Exchange Act of 1934

Pursuant to Section 13(r) of the Exchange Act, we may be required to disclose in our annual and quarterly reports to the SEC whether we or any of our “affiliates” knowingly engaged in certain activities, transactions or dealings relating to Iran or with certain individuals or entities targeted by US economic sanctions.

Disclosure is generally required even where the activities, transactions or dealings were conducted in compliance with applicable law.

Because the SEC defines the term “affiliate” broadly, it includes any entity under common “control” with us (and the term “control” is also construed broadly by the SEC).

The description of the activities below has been provided to us by Blackstone Inc.

(“BX”), affiliates of which:

(i) beneficially own more than 10% of our outstanding common stock and are members of our board of directors, and (ii) hold a minority non-controlling interest in Atlantia S.p.A.

Atlantia S.p.A.

may therefore be deemed to be under common “control” with us;

however, this statement is not meant to be an admission that common control exists.

The disclosure below relates solely to activities conducted by Atlantia S.p.A.

The disclosure does not relate to any activities conducted by us or by BX and does not involve our or BX’s management.

Neither we nor BX has had any involvement in or control over the disclosed activities, and neither we nor BX has independently verified or participated in the preparation of the disclosure.

Neither we nor BX is representing as to the accuracy or completeness of the disclosure nor do we or BX undertake any obligation to correct or update it.

We understand that BX disclosed the following in its annual report on Form 10-K, filed with the SEC on February 24, 2023:

Disclosure pursuant to Section 13(r) of the Securities Exchange Act of 1934.

Funds affiliated with BX first invested in Atlantia S.p.A.

on November 18, 2022 in connection with the voluntary public tender offer by Schema Alfa S.p.A.

for all of the shares of Atlantia S.p.A., pursuant to which such funds obtained a minority non-controlling interest in Atlantia S.p.A.

Atlantia S.p.A.

owns and controls Aeroporti di Roma S.p.A.

(“ADR”), an operator of airports in Italy including Leonardo da Vinci-Fiumicino Airport.

Iran Air has historically operated periodic flights to and from Leonardo da Vinci-Fiumicino Airport as authorized, from time to time, by an aviation-related bilateral agreement between Italy and Iran, scheduled in compliance with European Regulation 95/93, and approved by the Italian Civil Aviation Authority.

ADR, as airport operator, is under a mandatory obligation to provide airport services to all air carriers (including Iran Air) authorized by the applicable Italian authority.

The relevant turnover attributable to these activities (whose consideration is calculated on the basis of general tariffs determined by such independent Italian authority) in the quarter ended December 31, 2022 was less than €30,000.

Atlantia S.p.A.

does not track profits specifically attributable to these activities.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information set forth under the captions “Election of Directors” and “Information About Our Executive Officers” in the proxy statement relating to the Company’s 2022 Annual Meeting of Stockholders, which will be filed no later than 120 days after December 31, 2021 (the Proxy Statement), is incorporated herein by reference.

The information set forth under the captions “Election of Directors” and “Information About Our Executive Officers” in the proxy statement relating to the Company’s 2023 Annual Meeting of Stockholders (the “Proxy Statement”), which will be filed no later than 120 days after December 31, 2022, is incorporated herein by reference.

Code of Ethics

Pursuant to Rule 5610 of the Nasdaq Listing Rules, the Company is required to adopt a code of conduct for its directors, officers, and employees.

The Company’s board of directors has adopted the Code of Business Conduct (Code of Conduct), which was most recently revised in December 2020.

The Code of Conduct also meets the requirements of a code of ethics under Item 406 of Regulation S-K.

You can access the Company’s Code of Conduct on the About - Governance page of the Company’s website at www.altusmidstream.com.

Any stockholder who so requests may obtain a printed copy of the Code of Conduct without charge by submitting a request to the Company’s corporate secretary at the address on the cover of this Annual Report on Form 10-K.

Changes in and waivers to the Code of Conduct for the Company’s directors, chief executive officer, and certain senior financial officers will be posted on the Company’s website within four business days and maintained for at least 12 months.

The Company is required to adopt a code of conduct for its directors, officers, and employees.

The Board has adopted the Code of Business Conduct and Ethics (the “Code of Ethics”), which was recently revised in November 2022.

The Code of Ethics also meets the requirements of a code of ethics under Item 406 of Regulation S-K.

One can access the Company’s Code of Ethics on the Investor - Governance page of the Company’s website at www.kinetik.com.

Any stockholder who so requests may obtain a printed copy of the Code of Ethics without charge by submitting a request to the Company’s corporate secretary at the address on the cover of this Annual Report on Form 10-K.

Changes in and waivers to the Code of Ethics for the Company’s directors, chief executive officer, and certain senior financial officers will be posted on the Company’s website within four business days and maintained for at least 12 months.

Information on the Company’s website or any other website is not incorporated by reference into, and does not constitute a part of, this Annual Report on Form 10-K.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

See Note 2—Transactions with Affiliates of the Company’s financial statements, under Item 8 above, for information regarding payments to or from Apache Corporation.

See Note 19—Related Party Transactions of the Company’s consolidated financial statements, under Item 8 above, for information regarding related party transactions.

The information set forth under the captions “Certain Business Relationships and Transactions” and “Director Independence” in the Proxy Statement is incorporated herein by reference.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The information set forth under the caption “Ratification of Appointment of Independent Auditor” in the Proxy Statement is incorporated herein by reference.

The information set forth under the caption “Ratification of the Appointment of Independent Auditor” in the Proxy Statement is incorporated herein by reference.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

2 unchanged sentences

Report of Management on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Reports of Independent Registered Public Accounting Firm (PCAOB ID :

Consolidated Statements of Operations for the Years Ended December 31, 2022, 202 1 , and 2020

Statement of Consolidated Comprehensive Income (Loss) for the Years Ended December 31, 2021, 2020, and 2019

Consolidated Balance Sheet at December 31, 2021 and December 31, 2020

Consolidated Balance Sheets at December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, 2021, and 2020

1 unchanged sentence

Notes to Consolidated Financial Statements

Description of Business and Basis of Presentation

Summary of Significant Accounting Policies

Business Combination

Revenue Recognition

Property, Plant, and Equipment

Goodwill and Intangible Assets, Net

Equity Method Investments

Debt and Financing Costs

Other Current Liabilities

Equity and Warrants

Series A Cumulative Redeemable Preferred Units

Fair Value Measurements

Derivatives and Hedging Activities

Share-Based Compensation

Net Income Per Share

C ommitments and Contingencies

Related Party Transactions

Segment I nformation

S ub sequent Events

Financial Statement Schedules

Financial statement schedules have been omitted because they are either not required, not applicable or the information required to be presented is included in the Company’s financial statements and related notes.

Pursuant to Rule 3-09 of Regulation S-X, the audited financial statements of Gulf Coast Express Pipeline LLC, Breviloba, LLC, Permian Highway Pipeline LLC, and EPIC Crude Holdings, LP, which are equity method interests of the Company, are included in the Annual Report on Form 10-K as Exhibits 99.1, 99.2, 99.3, and 99.4, respectively.

INDEX TO EXHIBITS

2.1*** – Contribution Agreement, dated as of August 8, 2018, by and among Kayne Anderson Acquisition Corp., Altus Midstream LP, Apache Midstream LLC, Altus Midstream Gathering LP, Altus Midstream Pipeline LP, Altus Midstream Processing LP, Altus Midstream NGL Pipeline LP and Altus Midstream Subsidiary GP LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on August 8, 2018, SEC File No.

2.2*** – Contribution Agreement, dated as of October 21, 2021, by and among Altus Midstream Company, Altus Midstream LP, New BCP Raptor Holdco, LLC and BCP Raptor Holdco, LP (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on October 21, 2021, SEC File No.

3.1 – Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 13, 2018, SEC File No.

3.2 – First Amendment to Second Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on July 1, 2020, SEC File No.

3.3 – Bylaws (incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form S-1 filed on March 7, 2017, SEC File No.

4.1 – Description of Securities of the Registrant (incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, SEC File No.

4.2 – Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Company’s Amendment No.

1 to Registration Statement on Form S-1/A filed on March 16, 2017, SEC File No.

4.3 – Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Company’s Amendment No.

1 to Registration Statement on Form S-1/A filed on March 16, 2017, SEC File No.

4.4 – Warrant Agreement, dated March 29, 2017, by and between American Stock Transfer & Trust Company, LLC and the Company (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on April 4, 2017, SEC File No.

4.5 – Warrant Agreement, dated as of November 9, 2018, by and between American Stock Transfer & Trust Company, LLC and the Company (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on November 13, 2018, SEC File No.

4.6 – Stockholders Agreement, dated as of November 9, 2018, by and among Altus Midstream Company, Kayne Anderson Sponsor, LLC and Apache Midstream LLC (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 13, 2018, SEC File No.

4.7 – Amended and Restated Registration Rights Agreement, dated as of November 9, 2018, by and among Altus Midstream Company, Kayne Anderson Sponsor, LLC, the other holders party thereto and Apache Midstream LLC (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on November 13, 2018, SEC File No.

4.8 – Registration Rights Agreement, dated as of June 12, 2019, by and among Altus Midstream Company and the security holders party thereto (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 14, 2019, SEC File No.

10.1 – Credit Agreement, dated as of November 9, 2018, among Altus Midstream, LP, the lenders party thereto, the issuing banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, Wells Fargo Bank, National Association, as Syndication Agent, Citibank, N.A., Bank of America, N.A., The Toronto-Dominion Bank, New York Branch, MUFG Bank Ltd., and The Bank of Nova Scotia, Houston Branch, as Co-Documentation Agents (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 13, 2018, SEC File No.

10.2 – First Amendment to Credit Agreement, dated as of April 17, 2019 but effective May 8, 2019, among Altus Midstream LP, the lenders party thereto, the swingline lender party thereto, the issuing banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents party thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 13, 2019, SEC File No.

10.3 – Second Amendment to Credit Agreement, dated as of February 7, 2020, among Altus Midstream LP, the lenders party thereto, the swingline lender party thereto, the issuing banks party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 11, 2020, SEC File No.

10.4 – Construction, Operations and Maintenance Agreement, dated as of November 9, 2018, by and between Altus Midstream Company and Apache Corporation (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 13, 2018, SEC File No.

10.5 – Side Letter re:

Waiver of Direct G&A Costs, dated as of April 23, 2019, by and between Altus Midstream Company and Apache Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed May 2, 2019, SEC File No.

10.6 – Purchase Rights and Restrictive Covenants Agreement, dated as of November 9, 2018, by and between Altus Midstream Company and Apache Corporation (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on November 13, 2018, SEC File No.

10.7 – Lease Agreement, dated as of November 9, 2018, by and between Apache Corporation and Altus Midstream LP (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on November 13, 2018, SEC File No.

10.8 – First Amendment to Lease Agreement, dated effective July 27, 2020, by and between Apache Corporation and Altus Midstream LP (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020, SEC File No.

10.9 – Trademark License Agreement, dated as of November 9, 2018, by and between Apache Corporation and Altus Midstream LP (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on November 13, 2018, SEC File No.

10.10 – Trademark License Agreement, dated as of November 9, 2018, by and between Apache Corporation and Kayne Anderson Acquisition Corp.

(n/k/a Altus Midstream Company) (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on November 13, 2018, SEC File No.

10.11‡ – Intrastate Firm Natural Gas Transportation Service Agreement, dated April 1, 2017, by and between Apache Corporation and Altus Midstream Pipeline LP (incorporated by reference to Exhibit 10.15 of the Company’s Annual Report on Form 10-K for year ended December 31, 2018, SEC File No.

10.12‡ – Gas Gathering Agreement, dated July 1, 2018, by and between Apache Corporation and Altus Midstream Gathering LP (incorporated by reference to Exhibit 10.17 of the Company’s Annual Report on Form 10-K for year ended December 31, 2018, SEC File No.

10.13‡ – Transportation Services Agreement, dated July 1, 2018, by and between Apache Corporation and Altus Midstream NGL Pipeline LP (incorporated by reference to Exhibit 10.18 of the Company’s Annual Report on Form 10-K for year ended December 31, 2018, SEC File No.

10.14‡ – Gas Processing Agreement, dated effective September 1, 2021, by and between Apache Corporation and Altus Midstream Processing LP (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 14, 2021, SEC File No.

Pursuant to Rule 3-09 of Regulation S-X, the audited financial statements of Permian Highway Pipeline LLC, which is an equity method investment of the Company, is included in this Annual Report on Form 10-K as Exhibits 99.1

2.1*** – Contribution Agreement, dated October 21, 2021, by and among Altus Midstream Company, Altus Midstream LP, New BCP Raptor Holdco, LLC, and BCP Raptor Holdco, LP (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on October 21, 2021).

3.1 – Third Amended and Restated Certificate of Incorporation of Kinetik Holdings Inc.

(incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on February 22, 2022).

3.2 – Amended and Restated Bylaws of Kinetik Holdings Inc.

(incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on February 22, 2022).

4.1 – Amended and Restated Stockholders Agreement, dated October 21, 2021, by and among APA Corporation, Apache Midstream LLC, Altus Midstream Company, New BCP Raptor Holdco, LLC, Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC, and BCP Raptor Holdco, LP.

(incorporated by reference to Exhibit 4 .1 to the Registrant’s Current Report on Form 8-K filed on February 22, 2022).

4.2 – Second Amended and Restated Registration Rights Agreement, dated February 22, 2022, by and among Altus Midstream Company, Apache Midstream LLC, Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC and the other holders party thereto.

(incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on February 22, 2022).

4.3 – Indenture, dated June 8, 2022, by and among Kinetik Holdings Inc., Kinetik Holdings LP, as issuer.

Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on June 14, 2022).

4.4 – Form of 5.875% Sustainability-Linked Senior Notes (included in Exhibit 4.3) (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on June 14, 2022).

10.1 – Third Amended and Restated Agreement of Limited Partnership of Altus Midstream LP, dated as of October 22, 2021 .

(incorporated by reference to Exhibit 10 .1 to the Registrant’s Current Report on Form 8-K filed on February 22, 2022).

10.2† – Altus Midstream Company Restricted Stock Units Plan, dated December 31, 2018 (incorporated by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K for year ended December 31, 2018, SEC File No.

10.16† – Form of Director Grant Agreement, dated December 17, 2018 (incorporated by reference to Exhibit 10.20 of the Company’s Annual Report on Form 10-K for year ended December 31, 2018, SEC File No.

10.3† – Form of Director Grant Agreement, dated December 17, 2018 (incorporated by reference to Exhibit 10.20 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, SEC File No.

10.4† – Altus Midstream Company 2019 Omnibus Compensation Plan, dated February 12, 2019, effective May 30, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed May 31, 2019, SEC File No.

10.5† – Altus Midstream Company Deferred Delivery Plan, dated May 30, 2019 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 31, 2019, SEC File No.

10.19 – Second Amended and Restated Agreement of Limited Partnership of Altus Midstream LP, dated as of June 12, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 14, 2019, SEC File No.

10.20 – First Amendment to Second Amended and Restated Agreement of Limited Partnership of Altus Midstream LP, dated as of June 30, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020, SEC File No.

10.21 – Voting Agreement, dated as of June 12, 2019, by and among Apache Corporation, Altus Midstream Company, and the purchasers party thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on June 14, 2019, SEC File No.

10.6† – Kinetik Holdings Inc.

2019 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, SEC File No.

10.7† – Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.5 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, SEC File No.

10.8† – Form of Stock Award Grant Letter (incorporated by reference to Exhibit 10.6 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, SEC File No.

10.9† – Form of Restricted Stock Unit Agreement (Directors) (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, SEC File No.

10.10† – Form of Deferred Stock Unit Agreement (Directors) (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report for the quarter ended June 30, 2022, SEC File No.

10.11 – Dividend and Distribution Reinvestment Agreement, dated February 22, 2022, by and among Altus Midstream Company, Altus Midstream LP, APA Corporation, Apache Midstream LLC, Buzzard Midstream LLC, Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP and each of the other parties set forth on the signature pages thereto.

(incorporated by reference to Exhibit 10 .

2 to the Registrant’s Current Report on Form 8-K filed on February 22, 2022).

21.1* – Subsidiaries of the Company.

23.1* – Consent of Ernst & Young LLP.

23.2* – Consent of Ernst & Young LLP.

23.3* – Consent of BDO USA, LLP relating to the financial statements of Gulf Coast Express Pipeline LLC.

23.4* – Consent of BDO USA, LLP relating to the financial statements of Permian Highway Pipeline LLC.

23.1* – Consent of KPMG LLP.

24.1* – Power of Attorney (included on signature page hereto).

23.2* – Consent of BDO USA, LLP relating to the financial statements of Permian Highway Pipeline LLC.

31.1* – Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).

31.2* – Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).

32.1** – Certification of the Principal Executive Officer and Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(b) and 18 U.S.C.

99.1* – Gulf Coast Express Pipeline LLC audited financial statements as of December 31, 202 1 .

99.2* – Breviloba, LLC audited financial statements as of December 31, 202 1 .

32.1** – Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(b) and 18 U.S.C.

32.2** – Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(b) and 18 U.S.C.

99.1* – Permian Highway Pipeline LLC audited financial statements as of December 31, 2022.

99.4* – EPIC Crude Holdings, LP audited financial statements as of December 31, 20 2 0 .

101.INS* – Inline XBRL Instance Document.

(the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101* – The following financial statements from the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2022, formatted in Inline XBRL:

(i) Consolidated Statements of Operations, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Changes in Equity and Noncontrolling Interests and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

101.SCH* – Inline XBRL Taxonomy Schema Document.

8 unchanged sentences

The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.

† Management contracts or compensatory plans or arrangements required to be filed herewith pursuant to Item 15 hereof.

‡ Portions have been omitted pursuant to Regulation S-K Item 601(b)(10)(iv), because the omitted information is both not material and is the type that the Company treats as private or confidential.

† Management contracts or compensatory plans or arrangements required pursuant to Item 15 hereof.

FORM 10-K SUMMARY

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ALTUS MIDSTREAM COMPANY

/s/ Clay Bretches

Clay Bretches

Chief Executive Officer and President

February 22, 2022

KINETIK HOLDINGS INC.

March 7, 2023 /s/ Jamie Welch

Chief Executive Officer, President, Chief Financial Officer and Director

(Principal Executive Officer)

March 7, 2023 /s/ Steven Stellato

Steven Stellato

Executive Vice President, Chief Accounting and Chief Administrative Officer

(Principal Financial Officer)

POWER OF ATTORNEY

The officers and directors of Altus Midstream Company, whose signatures appear below, hereby constitute and appoint Clay Bretches and Ben C.

Rodgers, and each of them (with full power to each of them to act alone), the true and lawful attorney-in-fact to sign and execute, on behalf of the undersigned, any amendment(s) to this report and each of the undersigned does hereby ratify and confirm all that said attorneys shall do or cause to be done by virtue thereof.

The officers and directors of Kinetik Holdings Inc., whose signatures appear below, hereby constitute and appoint each of them (with full power to each of them to act alone), the true and lawful attorney-in-fact to sign and execute, on behalf of the undersigned, any amendment(s) to this report and each of the undersigned does hereby ratify and confirm all that said attorneys shall do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name Title Date

/s/ Clay Bretches

Clay Bretches

Director, Chief Executive Officer, and President

(principal executive officer) February 22, 2022

Director, Chief Financial Officer, and Treasurer

(principal financial officer) February 22, 2022

/s/ Rebecca A.

Senior Vice President, Chief Accounting Officer and Controller

(principal accounting officer) February 22, 2022

/s/ Mark Borer

Director February 22, 2022

/s/ Christopher J.

Christopher J.

Director February 22, 2022

/s/ Stephen P.

Director February 22, 2022

/s/ Robert S.

Director February 22, 2022

Director, Chairman of the Board, and Senior Vice President February 22, 2022

/s/ Jamie Welch Chief Executive Officer, President, Chief Financial Officer and Director March 7, 2023

/s/ Steven Stellato

Executive Vice President, Chief Accounting and Chief Administrative Officer March 7, 2023

/s/ David Foley Chair March 7, 2023

/s/ John Paul Munfa Director March 7, 2023

/s/ Elizabeth Cordia Director March 7, 2023

/s/ Ronald Scweizer Director March 7, 2023

/s/ Joseph Payne Director March 7, 2023

/s/ Ben Rogers Director March 7, 2023

/s/ Laura Sugg Director March 7, 2023

/s/ Kevin McCarhty Director March 7, 2023

/s/ Mark Leland Director March 7, 2023

/s/ Deborah Byers Director March 7, 2023

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for the preparation and integrity of the consolidated financial statements appearing in this annual report on Form 10-K.

Management of Kinetik Holdings Inc.

(the “Company”) is responsible for the preparation and integrity of the consolidated financial statements appearing in this Annual Report on Form 10-K.

The financial statements were prepared in conformity with accounting principles generally accepted in the United States and include amounts that are based on management’s best estimates and judgments.

7 unchanged sentences

Based on our assessment, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2022.

The Company’s independent auditors, Ernst & Young LLP, a registered public accounting firm, are appointed by the Audit Committee of the Company’s board of directors.

Ernst & Young LLP have audited and reported on the consolidated financial statements of Altus Midstream Company and its subsidiaries.

The report of the independent auditors follows this report on page F-2.

As such, this annual report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.

/s/ Clay Bretches

Chief Executive Officer and President

The Company’s independent auditors, KPMG, a registered public accounting firm, are appointed by the Audit Committee of the Company’s board of directors.

KPMG has audited and reported on the consolidated financial statements of Kinetik Holdings Inc.

and its subsidiaries.

The reports of the independent auditors follows this report on page F-2 through F-5.

/s/ Jamie Welch

Chief Executive Officer, President, Chief Financial Officer and Director

(Principal Executive Officer)

Chief Financial Officer and Treasurer

/s/ Steven Stellato

Steven Stellato

Executive Vice President, Chief Accounting and Chief Administrative Officer

(Principal Financial Officer)

/s/ Rebecca A.

Senior Vice President, Chief Accounting Officer and Controller

(principal accounting officer)

/s/ Jake Loden

Vice President Controller

Houston, Texas

February 22, 2022

March 7, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of Altus Midstream Company:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Altus Midstream Company (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), cash flows and changes in equity and noncontrolling interests for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, based on our audits and the reports of other auditors, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.

To the Stockholders and the Board of Directors

Kinetik Holdings Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Kinetik Holdings Inc.

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, changes in equity and noncontrolling interests, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

We did not audit the financial statements of Gulf Coast Express Pipeline LLC (“GCX”), an entity in which the Company has a 16% interest, for the years ended December 31, 2021, 2020 and 2019;

EPIC Crude Holdings, LP (“EPIC”), an entity in which the Company has a 15% interest, for the year ended December 31, 2020;

or Permian Highway Pipeline LLC (“PHP”), an entity in which the Company has an approximately 26.7% interest, for the year ended December 31, 2019.

In the consolidated financial statements, the Company’s equity method interest in GCX is stated at approximately $274 million and $284 million as of December 31, 2021 and 2020, respectively, and the Company’s income from equity method interest, net, of GCX is stated at approximately $40 million in 2021, $42 million in 2020, and $18 million in 2019.

The Company’s equity method interest in EPIC is approximately $177 million as of December 31, 2020, and the Company’s loss from equity method interest, net, of EPIC is approximately $16 million for the year ended December 31, 2020.

The Company’s equity method interest in PHP is approximately $310 million as of December 31, 2019, and the Company’s income from equity method interest, net, of PHP is approximately $0.4 million for the year ended December 31, 2019.

Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for GCX, EPIC and PHP, is based solely on the reports of the other auditors.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 7, 2023 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2018.

Houston, Texas

February 22, 2022

Report of Independent Registered Public Accounting Firm

Board of Directors and Members

Gulf Coast Express Pipeline LLC

Houston, Texas

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Gulf Coast Express Pipeline LLC (the “Company”) as of December 31, 2021 and 2020, the related statements of income, members’ equity and cash flows for each of the three years ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years ended December 31, 2021 , in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

Emphasis of Matter — Significant Transactions with Related Parties

As discussed in Note 4 to the financial statements, the Company has entered into significant transactions with related parties.

/s/ BDO USA, LLP

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of impairment indicators for long-lived assets

As discussed in Note 2 to the consolidated financial statements, the Company assesses property, plant, and equipment, net and intangible assets, net (collectively, long-lived assets) for impairment when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

Impairments exist when the carrying value of a long-lived asset exceeds the total estimated undiscounted net cash flows from the future use and eventual disposition of the asset.

The carrying value of property, plant, and equipment, net and intangible assets, net as of December 31, 2022 was $2.5 billion and $695.4 million, respectively.

We identified the evaluation of impairment indicators for long-lived assets as a critical audit matter.

Evaluating the Company’s judgments in determining whether events or changes in circumstances indicate carrying values may not be recoverable required a higher degree of subjective auditor judgment.

Sustained decreases in pricing or throughput volumes and significant increases in competition or operating costs could significantly affect the recoverability of the long-lived assets, and the evaluation of these factors required a higher degree of auditor judgment.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to evaluate triggering events related to the impairment of long-lived assets.

We assessed the Company’s identification of potential impairment indicators by evaluating the Company’s assessment of the factors identified.

Specifically, we:

• read publicly available information to evaluate the performance of industry peers, commodity price trends, and overall macro-economic conditions

• analyzed the financial results for the current period compared to historical results for long-lived assets to determine if there were significant degradations in the related cash flows

• compared the remaining useful lives of the long-lived assets to the period of time required to recover the carrying value of the assets based on historical cash flows

• read publicly available information for the industry, peers, and customers to determine whether a potential impairment indicator was not considered in management’s analysis.

Fair value of certain acquired equity method investments

As discussed in Notes 3 and 7 to the consolidated financial statements, on February 22, 2022, BCP Raptor Holdco, LP (BCP) completed a reverse merger with Altus Midstream Company (a publicly traded entity) (Altus) and Altus Midstream LP (consolidated subsidiary of Altus).

As a result of the transaction, BCP applied the acquisition method of accounting.

The acquired assets included equity method investments of $1.8 billion.

BCP used an income approach, through a discounted cash flow method, and market approach, through a guideline public company method, to estimate the initial fair value of the acquired equity method investments.

We identified the evaluation of the fair value of Permian Highway Pipeline LLC and Gulf Coast Express Pipeline LLC equity method investments as a critical audit matter.

A high degree of subjective auditor judgment was required to evaluate the weighting of the income and market approaches.

The weighting applied to those selected methods could have a significant effect on the determination of the initial fair value.

Additionally, the audit effort associated with evaluating the fair value of certain acquired equity method investments required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process, including a control related to the weighting of the methods used to estimate the initial fair value of the acquired equity method investments.

We performed sensitivity analyses over the weighting of the methods to assess the impact on the Company’s determination of initial fair value.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the fair value of certain acquired equity method investments by reviewing:

• the selection of the discounted cash flow method

• the selection of the guideline public company method

• weighting to be applied to those methods to determine the fair value of the equity method investments by comparing to expectations based on similar transactions.

Fair value of assumed preferred units and associated embedded derivative

As discussed in Notes 3 and 12 to the consolidated financial statements, on February 22, 2022, BCP completed a reverse merger with Altus.

As a result of the transaction, BCP applied the acquisition method of accounting, which included recording the noncontrolling interest at fair value.

The noncontrolling interest included $462.7 million of preferred units along with an $89.1 million associated liability for an embedded derivative.

BCP used a stochastic interest rate model, specifically the Black–Karasinski model (an income approach), to estimate the initial fair values of the preferred units and associated embedded derivative.

We identified the evaluation of the method the Company used to determine the initial fair value of the preferred units and associated embedded derivative assumed in the reverse merger with Altus as a critical audit matter.

A high degree of subjective auditor judgment was required to evaluate the method used by the Company because the selection of the method could have a significant effect on the determination of the initial fair value.

Additionally, the audit effort associated with evaluating the valuation method required specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process, including a control related to the selection of the method used to determine the fair value of the preferred units and associated embedded derivative.

We read the Contribution Agreement and Preferred Unit Purchase Agreement to understand the nature, contractual terms and embedded features of the preferred units.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in evaluating whether the method used was reasonable and consistent with valuation practice given the characteristics of the preferred units and associated embedded derivative being measured.

We have served as the Company’s auditor since 2017.

Houston, Texas

February 16, 2022

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Owners

EPIC Crude Holdings, LP:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of EPIC Crude Holdings, LP and subsidiaries (the Partnership) as of December 31, 2020, the related consolidated statements of operations, changes in owners’ equity, and cash flows for the year then ended, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2020, and the results of its operations and its cash flows for the year then ended, in conformity with U.S.

generally accepted accounting principles.

The consolidated financial statements of the Partnership as of December 31, 2019 and for the year then ended were audited by other auditors whose report dated March 11, 2020, expressed an unmodified opinion on those consolidated financial statements.

Basis for Opinion

These consolidated financial statements are the responsibility of the Partnership’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Partnership in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

We have served as the Partnership’s auditor since 2020.

San Antonio, Texas

February 25, 2021

March 7, 2023

Report of Independent Registered Public Accounting Firm

Board of Directors and Members

Permian Highway Pipeline LLC

Houston, Texas

Opinion on the Financial Statements

We have audited the accompanying statements of operations, members’ equity, and cash flows of Permian Highway Pipeline LLC (the “Company”) for the year ended December 31, 2019, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the results of its operations and its cash flows for the year ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

To the Stockholders and the Board of Directors

Kinetik Holdings Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Kinetik Holdings Inc.

and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, changes in equity and noncontrolling interests, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated March 7, 2023 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Emphasis of Matter — Significant Transactions with Related Parties

As discussed in Note 3 to the financial statements, the Company has entered into significant transactions with related parties.

/s/ BDO USA, LLP

We have served as the Company's auditor since 2020.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Houston, Texas

March 7, 2023

ALTUS MIDSTREAM COMPANY

KINETIK HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

2 unchanged sentences

(In thousands, except per share data)

Midstream services revenue — affiliate (Note 3) $ 142,727 $ 144,714 $ 135,798

Product sales — affiliate (Note 3) 9,754 — —

Product sales — third parties 8,136 3,695 —

Total revenues 160,617 148,409 135,798

COSTS AND EXPENSES:

Costs of product sales — affiliate (Note 3) 9,754 — —

Costs of product sales — third parties 7,793 2,988 —

Operations and maintenance (1)

Operating revenues:

Service revenue $ 393,954 $ 272,677 $ 272,829

Product revenue 806,353 385,622 135,330

Other revenue 13,183 3,745 2,017

Total operating revenues (1)

1,213,490 662,044 410,176

General and administrative (2)

Operating costs and expenses:

Costs of sales (exclusive of depreciation and amortization shown separately below) (2)

541,518 233,619 65,053

Depreciation and accretion 16,201 15,945 41,480

Impairments 441 1,643 1,300,719

Taxes other than income 13,886 15,069 13,231

Total costs and expenses 95,005 86,793 1,421,589

OPERATING INCOME (LOSS) 65,612 61,616 ( 1,285,791 )

Unrealized derivative instrument gain (loss) 82,114 ( 36,080 ) ( 8,470 )

Interest income 4 9 3,606

Income from equity method interests, net 113,764 58,739 19,069

Impairment on equity method interests ( 160,441 ) — —

Warrants valuation adjustment 664 1,200 11,180

Transaction costs ( 4,472 ) — —

Other 12,574 ( 2,306 ) ( 622 )

Total other income 44,207 21,562 24,763

Financing costs, net of capitalized interest 10,598 2,190 1,792

NET INCOME (LOSS) BEFORE INCOME TAXES 99,221 80,988 ( 1,262,820 )

Current income tax benefit — ( 696 ) ( 15 )

Deferred income tax expense — — 64,915

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS 99,221 81,684 ( 1,327,720 )

Operating expenses 137,289 90,894 93,704

Ad valorem taxes 16,970 11,512 10,985

General and administrative expenses 94,268 28,588 22,917

Depreciation and amortization expenses 260,345 243,558 223,763

Loss on disposal of assets 12,611 382 3,454

Goodwill impairment — — 1,010,773

Total operating costs and expenses 1,063,001 608,553 1,430,649

Operating income 150,489 53,491 ( 1,020,473 )

Other income (expense):

Interest and other income 489 4,143 608

Gain on redemption of mandatorily redeemable Preferred Units 9,580 — —

Gain (loss) on debt extinguishment ( 27,975 ) 4 868

Gain on embedded derivative 89,050 — —

Interest expense ( 149,252 ) ( 117,365 ) ( 135,516 )

Equity in earnings (losses) of unconsolidated affiliates 180,956 63,074 ( 308 )

Total other income (expense), net 102,848 ( 50,144 ) ( 134,348 )

Income (loss) before income taxes 253,337 3,347 ( 1,154,821 )

Income tax expense 2,616 1,865 968

Net income (loss) including noncontrolling interest 250,721 1,482 ( 1,155,789 )

Net income attributable to Preferred Unit limited partners 115,203 — —

Net income (loss) attributable to common shareholders 135,518 1,482 ( 1,155,789 )

Net income (loss) attributable to Apache limited partner ( 48,741 ) 2,987 ( 1,008,039 )

NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS $ ( 13,944 ) $ 2,791 $ ( 358,490 )

NET INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS, PER SHARE (3)

Net income (loss) attributable to Common Unit limited partners 94,783 1,482 ( 1,155,789 )

Net income attributable to Class A Common Stock Shareholders $ 40,735 $ — $ —

Net income attributable to Class A Common Shareholders per share

Basic $ 1.48 $ — $ —

4 unchanged sentences

(1) Includes amounts of $ 107.7 million, $ 7.3 million, and $ 13.3 million associated with related parties for the years ended December 31, 2022, 2021, and 2020, respectively.

Refer to Note 2—Transactions with Affiliates .

Refer to Note 19—Related Party Transactions in the Notes to our Consolidated Financial Statements in this Form 10-K for further information.

(2) Includes amounts of $ 39.3 million , $ 62.9 million, and $ 37.1 million associated with related parties for the years ended December 31, 2022, 2021, and 2020, respectively.

Refer to Note 2—Transactions with Affiliates .

(3) Share and per share amounts have been retroactively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020.

Refer to Note—10 Equity and Warrants for further information.

The accompanying notes to consolidated financial statements are an integral part of this statement.

ALTUS MIDSTREAM COMPANY

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME (LOSS)

For the Year Ended December 31,

2021 2020 2019

(In thousands)

NET INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS $ 99,221 $ 81,684 $ ( 1,327,720 )

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:

Share of equity method interests other comprehensive income (loss) 630 523 ( 1,152 )

COMPREHENSIVE INCOME (LOSS) INCLUDING NONCONTROLLING INTERESTS 99,851 82,207 ( 1,328,872 )

Comprehensive income attributable to Preferred Unit limited partners 161,906 75,906 38,809

Comprehensive income (loss) attributable to Apache limited partner ( 48,256 ) 3,389 ( 1,008,925 )

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS $ ( 13,799 ) $ 2,912 $ ( 358,756 )

Refer to Note 19—Related Party Transactions in the Notes to our Consolidated Financial Statements in this Form 10-K for further information.

(3) Share and per share amounts have been retrospectively restated to reflect the Company’s reverse stock split, which was effected June 8, 2022.

Refer to Note—11 Equity and Warrants in the Notes to our Consolidated Financial Statements in this Form 10-K for further information.

The accompanying notes to consolidated financial statements are an integral part of this statement.

ALTUS MIDSTREAM COMPANY

CONSOLIDATED BALANCE SHEET

KINETIK HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

1 unchanged sentence

Cash and cash equivalents $ 6,394 $ 18,729

Accounts receivable 2,249 1,033

Accounts receivable from Apache Corporation (Note 1) 9,875 446

Revenue receivables (Note 3) 13,717 11,378

Inventories 2,958 3,597

Prepaid assets and other 5,866 2,127

Accounts receivable, net of allowance for credit losses of $ 1,000 in 2022 and 2021 (1)

204,036 178,107

PROPERTY, PLANT, AND EQUIPMENT:

Property, plant, and equipment 211,700 208,870

Accumulated depreciation and accretion ( 24,713 ) ( 13,034 )

Derivative assets 6,963 —

Prepaid and other current assets 24,474 20,683

241,867 217,519

OTHER ASSETS:

Equity method interests 1,364,826 1,555,182

Deferred charges and other 6,229 5,843

NONCURRENT ASSETS:

Property, plant and equipment, net 2,535,212 1,839,279

Intangible assets, net 695,389 786,049

Operating lease right-of-use assets 28,551 61,562

Deferred charges and other assets 32,275 22,320

Investment in unconsolidated affiliate 2,381,340 626,477

Goodwill 5,077 —

5,677,844 3,335,687

2 unchanged sentences

CURRENT LIABILITIES:

Distributions payable to Preferred Unit limited partners $ 11,562 $ —

Dividends payable — 5,620

Distributions payable to Apache Corporation (Note 1) — 18,750

Other current liabilities (Note 6) 15,682 5,613

Accounts payable $ 17,899 $ 12,220

Accrued expenses 173,914 135,643

Derivative liabilities 5,718 2,667

Current portion of operating lease liabilities 22,810 31,776

Current portion of long-term debt, net — 54,280

Other current liabilities 7,487 4,339

227,828 240,925

LONG-TERM DEBT 657,000 624,000

DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES:

Asset retirement obligation 68,331 64,062

Embedded derivative 56,895 139,009

Other noncurrent liabilities 10,118 6,424

NONCURRENT LIABILITIES

Long term debt, net 3,368,510 2,253,422

Contract liabilities 22,693 11,674

Operating lease liabilities 6,023 29,889

Derivative liabilities 8,328 200

Other liabilities 2,677 2,219

Contingent liabilities — 839

Deferred tax liabilities 11,018 7,190

3,419,249 2,305,433

1 unchanged sentence

COMMITMENTS AND CONTINGENCIES (Note 18)

Redeemable noncontrolling interest — Apache limited partner 769,855 575,125

Redeemable noncontrolling interest — Preferred Unit limited partners 712,476 608,381

Redeemable noncontrolling interest — Common Unit limited partners 3,112,409 1,006,838

Class A Common Stock:

$ 0.0001 par, 1,500,000,000 shares authorized, 3,746,460 shares issued and outstanding at December 31, 2021 and 2020 (1)

$ 0.0001 par, 1,500,000,000 shares authorized, 45,679,447 and nil shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively (2)

Class C Common Stock:

$ 0.0001 par, 1,500,000,000 shares authorized, 12,500,000 shares issued and outstanding at December 31, 2021 and 2020 (1)

$ 0.0001 par, 1,500,000,000 shares authorized, 94,270,000 and 100,000,000 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively (2)

Additional paid-in capital 118,840 —

Accumulated deficit ( 958,629 ) —

Accumulated other comprehensive loss — ( 145 )

( 577,249 ) ( 247,354 )

Total equity ( 839,775 ) 10

Total liabilities, noncontrolling interests, and equity $ 5,919,711 $ 3,553,206

(1) Share amounts have been retroactively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020.

Refer to Note 10—Equity and Warrants for further information.

(1) Includes amounts of $ 17.6 million and nil associated with related parties as of December 31, 2022 and 2021, respectively.

Refer to Note 19—Related Party Transactions in the Notes to our Consolidated Financial Statements in this Form 10-K for further information.

(2) Share amounts have been retrospectively restated to reflect the Company’s reverse stock split, which was effected June 8, 2022.

Refer to Note 11—Equity and Warrants in the Notes to our Consolidated Financial Statements in this Form 10-K for further information.

The accompanying notes to consolidated financial statements are an integral part of this statement.

ALTUS MIDSTREAM COMPANY

KINETIK HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

5 unchanged sentences

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Unrealized derivative instrument (gain) loss ( 82,114 ) 36,080 8,470

Depreciation and accretion 16,201 15,945 41,480

Deferred income tax expense — — 64,915

Income from equity method interests, net ( 113,764 ) ( 58,739 ) ( 19,069 )

Distributions from equity method interests 133,974 80,747 25,316

Impairments 441 1,643 1,300,719

Impairment on equity method interests 160,441 — —

Power credit, net ( 5,701 ) — —

Warrants valuation adjustment ( 664 ) ( 1,200 ) ( 11,180 )

Other 2,741 3,368 907

Depreciation and amortization expense 260,345 243,558 223,763

Amortization of deferred financing costs 9,569 13,369 11,917

Amortization of contract costs 1,807 1,792 1,805

Contingent liabilities remeasurement ( 839 ) ( 661 ) ( 2,668 )

Distributions from unconsolidated affiliate 256,764 68,335 —

Derivatives settlement 10,667 ( 19,422 ) ( 7,810 )

Derivative fair value adjustment ( 95,501 ) 12,482 17,311

Warrants fair value adjustment ( 133 ) — —

Gain on redemption of mandatorily redeemable Preferred Units ( 9,580 ) — —

Loss on disposal of assets 12,611 382 3,454

Equity in (earnings) losses from unconsolidated affiliates ( 180,956 ) ( 63,074 ) 308

Loss (gain) on debt extinguishment 27,975 ( 4 ) ( 868 )

Share-based compensation 42,780 — —

Deferred income taxes 2,094 1,865 968

Goodwill impairment — — 1,010,773

Changes in operating assets and liabilities:

(Increase) decrease in inventories 356 430 ( 620 )

(Increase) decrease in prepaid assets and other 217 ( 56 ) 3,877

Increase in accounts receivable ( 1,216 ) ( 1,033 ) —

(Increase) decrease in revenue receivables (Note 2) ( 2,339 ) 4,083 ( 4,532 )

(Increase) decrease in account receivables from/payable to affiliate ( 8,174 ) 1,043 ( 6,361 )

Increase in accrued expenses 9,353 280 71

Increase in deferred charges, deferred credits and other noncurrent liabilities 746 19 —

Accounts receivable ( 8,329 ) ( 88,487 ) ( 7,293 )

Other assets ( 4,242 ) ( 11,476 ) ( 6,561 )

Accounts payable ( 1,598 ) ( 2,721 ) 4,228

Accrued liabilities 38,672 77,363 9,241

Operating leases 179 786 ( 683 )

Net cash provided by operating activities 613,006 235,569 102,096

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures ( 4,588 ) ( 29,981 ) ( 342,650 )

Proceeds from sale of assets 3,037 10,240 13,309

Contributions to equity method interests ( 28,420 ) ( 327,305 ) ( 501,352 )

Distributions from equity method interests 38,755 17,419 —

Acquisition of equity method interests — — ( 670,625 )

Capitalized interest paid — ( 8,733 ) ( 2,370 )

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 8,784 ( 338,360 ) ( 1,503,688 )

Property, plant and equipment expenditures ( 206,160 ) ( 78,030 ) ( 181,423 )

Intangible assets expenditures ( 15,419 ) ( 4,682 ) ( 17,631 )

Investments in unconsolidated affiliate ( 78,171 ) ( 20,522 ) ( 306,532 )

Cash proceeds from disposals 219 3,613 —

Net cash acquired in acquisition 13,401 — —

Net cash used in investing activities ( 286,130 ) ( 99,621 ) ( 505,586 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Redeemable noncontrolling interest - Preferred Unit limited partners, net — — 611,249

Distributions paid to Preferred Unit limited partners ( 46,249 ) ( 23,124 ) —

Distributions paid to Apache limited partner ( 75,000 ) — —

Dividends paid ( 22,479 ) — —

Proceeds from revolving credit facility 33,000 228,000 396,000

Finance lease — ( 11,789 ) ( 22,994 )

Deferred facility fees — ( 816 ) ( 792 )

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES ( 110,728 ) 192,271 983,463

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 107,775 18,205 ( 443,952 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 24,188 5,983 449,935

CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 131,963 $ 24,188 $ 5,983

SUPPLEMENTAL CASH FLOW DATA:

Accrued capital expenditures (1)

$ 514 $ 834 $ 18,573

Finance lease liability (2)

Interest paid, net of capitalized interest 9,540 1,013 903

Cash received for income tax refunds — 696 527

(1) Includes $ 0.8 million due from Apache and $ 0.4 million and $ 1.5 million due to Apache of capital expenditures for the years ended December 31, 2021, 2020, and 2019, respectively, pursuant to the terms of the Construction, Operations, and Maintenance Agreement entered into at the closing of the Altus Combination.

Refer to Note 2—Transactions with Affiliates for more information.

(2) The Company entered into a finance lease in the first quarter of 2019 for power generators, which ended during the first quarter of 2020.

The Company then exercised its option to purchase the generators.

Proceeds from issuance of long-term debt 3,000,000 30,189 134,351

Principal payments on long-term debt ( 2,294,130 ) ( 96,548 ) ( 25,862 )

Payments on debt issuance cost ( 37,009 ) ( 3,152 ) ( 576 )

Proceeds from revolver 565,000 38,500 241,250

Payments on revolver ( 879,000 ) ( 69,500 ) ( 178,000 )

Redemption of mandatorily redeemable Preferred Units ( 183,297 ) — —

Redemption of redeemable noncontrolling interest Preferred Units ( 461,460 ) — —

Distributions paid to mandatorily redeemable Preferred Unit holders ( 1,850 ) — —

Distributions paid to redeemable noncontrolling interest Preferred Unit limited partners ( 6,937 ) — —

Cash dividends paid to Class A Common Stock shareholders ( 39,298 ) — —

Consideration payable from acquisition — — ( 79,304 )

Distribution paid to Class C Common Unit limited partners ( 1,230 ) ( 51,189 ) —

Equity contributions — 14,890 280,915

Net cash (used in) provided by financing activities ( 339,211 ) ( 136,810 ) 372,774

Net change in cash $ ( 12,335 ) $ ( 862 ) $ ( 30,716 )

CASH, BEGINNING OF PERIOD $ 18,729 $ 19,591 $ 50,307

CASH, END OF PERIOD $ 6,394 $ 18,729 $ 19,591

SUPPLEMENTAL SCHEDULE OF INVESTING AND FINANCING ACTIVITIES

Cash paid for interest, net of amounts capitalized $ 120,270 $ 108,392 $ 104,678

Property and equipment and intangible accruals in accounts payable and accrued liabilities $ 17,274 $ 8,527 $ 7,125

Lease assets obtained in exchange for lease liabilities $ 7,059 $ 43,580 $ 16,991

Class A Common Stock issued through dividend and distribution reinvestment plan $ 263,285 $ — $ —

Fair value of ALTM assets acquired $ 2,444,450 $ — $ —

Class A Common Stock issued in exchange 1,013,745 — —

ALTM liabilities and mezzanine equity assumed $ 1,430,705 $ — $ —

The accompanying notes to consolidated financial statements are an integral part of this statement.

ALTUS MIDSTREAM COMPANY

STATEMENT OF CONSOLIDATED CHANGES IN EQUITY AND NONCONTROLLING INTERESTS

KINETIK HOLDINGS INC.

STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY AND NONCONTROLLING INTERESTS

Redeemable Noncontrolling Interest — Preferred Unit Limited Partners (1)

Redeemable Noncontrolling Interest — Apache Limited Partner Class A Common Stock Class C Common Stock Additional Paid-in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income (Loss) Total Equity (Deficit)

Redeemable Noncontrolling Interest — Common Unit Limited Partner Class A Common Stock Class C Common Stock Additional Paid-in Capital Accumulated Deficit Total Equity

Amount Shares (2)

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Balance at December 31, 2019 $ — $ 1,916,530 — $ — 91,929 $ 9 $ — $ — $ 9

Issuance of Series A Cumulative Redeemable Preferred Units 516,790 — — — — — — — — —

Net income (loss) 38,809 ( 1,008,039 ) — — — — — ( 358,490 ) — ( 358,490 )

Change in redemption value of noncontrolling interest — ( 230,575 ) — — — — 39,792 190,783 — 230,575

Accumulated other comprehensive loss — ( 886 ) — — — — — — ( 266 ) ( 266 )

Contribution — 280,914 — — 9,269 1 — — 1

Net loss — ( 1,155,789 ) — — — — — — —

Balance at December 31, 2020 $ — $ 1,041,655 — $ — 101,198 $ 10 $ — $ — $ 10

Distributions paid to Preferred Unit limited partners ( 23,124 ) — — — — — — — — —

Distributions payable to Apache limited partner — ( 18,750 )

Quarterly Common Dividends declared ($ 1.50 per share)

— — — — — — ( 5,620 ) — — ( 5,620 )

Contribution — 14,890 — — 491 — — — —

Distributions paid to Class Unit limited partners — ( 51,189 ) — — ( 1,689 ) — — — —

Net income — 1,482 — — — — — — —

Change in redemption value of noncontrolling interest — ( 110,514 ) — — — — 110,514 — — 110,514

Accumulated other comprehensive income — 402 — — — — — — 121 121

Balance at December 31, 2021 $ — $ 1,006,838 — $ — 100,000 $ 10 $ — $ — $ 10

ALTM acquisition 462,717 — 32,493 3 — — 1,013,742 — 1,013,745

Distributions paid to Preferred Unit limited partners ( 6,937 ) — — — — — — — —

Distributions payable to Preferred Unit limited partners ( 11,562 ) — — — — — — — — —

Distributions paid to Apache limited partner — ( 56,250 ) — — — — — — — —

Quarterly Common Dividends declared ($ 1.50 per share)

— — — — — — ( 16,860 ) — — ( 16,860 )

Net income (loss) 161,906 ( 48,741 ) — — — — — ( 13,944 ) — ( 13,944 )

Redemption of Preferred Units ( 461,460 ) — — — — — — — —

Redemption of Common Units — ( 179,323 ) 5,730 1 ( 5,730 ) ( 1 ) 179,323 — 179,323

Excess of carrying amount over Preferred Units redemption price ( 109,523 ) 76,623 — — — — — 32,900 32,900

Issuance of common stock through dividend and distribution reinvestment plan — — 7,452 1 — — 263,284 — 263,285

Share-based compensation — — 4 — — — 42,780 — 42,780

Step up in tax basis for Common Unit conversion — — — — — — 297 — 297

Remeasurement of contingent consideration — — — — — — 4,451 — 4,451

Net income 115,203 94,783 — — — — — 40,735 40,735

Change in redemption value of noncontrolling interests — 2,325,918 — — — — ( 1,385,037 ) ( 940,881 ) ( 2,325,918 )

Accumulated other comprehensive income — 485 — — — — — — 145 145

Distributions paid to Common Units limited partners — ( 212,430 ) — — — — — — —

Cash dividends on Class A Common Stock ($ 2.25 per share)

— — — — — — — ( 91,383 ) ( 91,383 )

Balance at December 31, 2022 $ — $ 3,112,409 45,679 $ 5 94,270 $ 9 $ 118,840 $ ( 958,629 ) $ ( 839,775 )

(1) Share amounts have been retroactively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020.

Refer to Note 10—Equity and Warrants for further information.

(2) Certain redemption features embedded within the Preferred Unit purchase agreement require bifurcation and measurement at fair value.

For further detail, refer to Note 11—Series A Cumulative Redeemable Preferred Units .

(1) Certain redemption features embedded within the Preferred Units require bifurcation and measurement at fair value.

For further detail, refer to Note 12—Series A Cumulative Redeemable Preferred Units in the Notes to the Consolidated Financial Statements in this Form 10-K.

(2) Share amounts have been retrospectively restated to reflect the Company’s reverse stock split, which was effected June 8, 2022.

Refer to Note 11—Equity and Warrants in the Notes to our Consolidated Financial Statements in this Form 10-K for further information.

The accompanying notes to consolidated financial statements are an integral part of this statement.

ALTUS MIDSTREAM COMPANY

KINETIK HOLDINGS INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unless the context otherwise requires, the “Company,” “ALTM” and “Altus” refers to Altus Midstream Company and its consolidated subsidiaries.

“Altus Midstream” refers to Altus Midstream LP and its consolidated subsidiaries.

“Apache” refers to Apache Corporation and its consolidated subsidiaries.

All references to the Company’s Class A common stock, $ 0.0001 par value (Class A Common Stock), and Class C common stock, $ 0.0001 par value (Class C Common Stock), reflect such share amounts as retrospectively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020.

Refer to Note—10 Equity and Warrants for further information.

Nature of Operations

Through its consolidated subsidiaries, the Company owns gas gathering, processing, and transmission assets in the Permian Basin of West Texas.

Construction on the assets began in the fourth quarter of 2016, and operations commenced in the second quarter of 2017.

Additionally, the Company owns equity interests in four separate Permian Basin pipeline entities that have access to various points along the Texas Gulf Coast.

The Company’s operations consist of one reportable segment.

The Company originally incorporated on December 12, 2016 in Delaware under the name Kayne Anderson Acquisition Corp.

DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

The Transaction

On February 22, 2022 (the “Closing Date”), Kinetik Holdings Inc., a Delaware corporation (formerly known as Altus Midstream Company), consummated the previously announced business combination transactions contemplated by the Contribution Agreement, dated as of October 21, 2021 (the “Contribution Agreement”), by and among the Company, Altus Midstream LP (now known as Kinetik Holdings LP), a Delaware limited partnership and subsidiary of Altus Midstream Company (the “Partnership”), New BCP Raptor Holdco, LLC, a Delaware limited liability company (“Contributor”), and BCP Raptor Holdco, LP, a Delaware limited partnership (“BCP”).

The transactions contemplated by the Contribution Agreement are referred to herein as the “Transaction.”

Pursuant to the Contribution Agreement, in connection with the closing of the Transaction (the “Closing”), (i) Contributor contributed all of the equity interests of BCP and BCP Raptor Holdco GP, LLC, a Delaware limited liability company and the general partner of BCP (“BCP GP” and, together with BCP, the “Contributed Entities”), to the Partnership;

and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 common units representing limited partner interests in the Partnership (“Common Units”) and 50,000,000 shares of the Company’s Class C Common Stock, par value $ 0.0001 per share (“Class C Common Stock”).

The Company’s stockholders immediately prior to the Closing continued to hold their shares of the Company’s Class A Common Stock, par value $ 0.0001 per share (“Class A Common Stock,” and together with the Company’s Class C Common Stock, “Common Stock”).

As a result of the Transaction, immediately following the Closing (i) Contributor held approximately 75 % of the issued and outstanding Common Stock, (ii) Apache Midstream LLC, a Delaware limited liability company (“Apache Midstream”), held approximately 20 % of the issued and outstanding Common Stock, and (iii) the Company’s remaining stockholders held approximately 5 % of the issued and outstanding Common Stock.

The Company completed a two -for-one Stock Split in the form of a stock dividend on June 8, 2022.

All corresponding per-share and share amounts for periods prior to June 8, 2022 have been retrospectively restated elsewhere in this Form 10-K to reflect the two -for-one Stock Split.

However, the number of Common Units and shares of Class C Common Stock described in this Form 10-K in relation to the Transaction are presented at pre-Stock-Split amounts to be consistent with our previous public filings and the terms of the Contribution Agreement.

In connection with the Closing, the Company changed its name from “Altus Midstream Company” (“ALTM”) to “Kinetik Holdings Inc.” Unless the context otherwise requires, “ALTM” refers to the registrant prior to the Closing and “we,” “us,” “our,” and the “Company” refer to Kinetik Holdings Inc., the registrant and its subsidiaries following the Closing.

BCP was formed on April 25, 2017 as a Delaware limited partnership to acquire and develop midstream oil and gas assets.

BCP’s primary operating subsidiaries were EagleClaw Midstream Ventures, LLC (“EagleClaw”) and CR Permian Holdings, LLC (“CR Permian”).

Both subsidiaries were formed to design, engineer, install, own and operate facilities and provide services for produced natural gas gathering, compression, processing, treating and dehydration, and condensate separation, stabilization, and storage, crude oil gathering and storage, water gathering and disposal assets.

ALTM was originally incorporated on December 12, 2016 in Delaware under the name Kayne Anderson Acquisition Corp.

(“KAAC”) for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

KAAC completed its initial public offering in the second quarter of 2017.

On August 3, 2018, Altus Midstream LP was formed in Delaware as a limited partnership and wholly-owned subsidiary of KAAC.

On August 8, 2018, KAAC and Altus Midstream LP entered into a contribution agreement (the Altus Contribution Agreement) with certain wholly-owned subsidiaries of Apache, including four Delaware limited partnerships (collectively, Altus Midstream Operating) and their general partner (Altus Midstream Subsidiary GP LLC, a Delaware limited liability company, and together with Altus Midstream Operating, the Altus Midstream Entities).

The Altus Midstream Entities were formed by Apache between May 2016 and January 2017 for the purpose of acquiring, developing, and operating midstream oil and gas assets in the Alpine High resource play and surrounding areas (Alpine High).

On November 9, 2018 (the Closing Date) and pursuant to the terms of the Altus Contribution Agreement, KAAC acquired from Apache the entire equity interests of the Altus Midstream Entities and options to acquire equity interests in five separate third-party pipeline projects (the Pipeline Options).

The acquisition of the entities and the Pipeline Options is referred to herein as the Altus Combination.

In exchange, the consideration provided to Apache included economic voting and non-economic voting shares in KAAC and partnership units representing limited partner interests in Altus Midstream LP (Common Units).

Following the Closing Date and in connection with the completion of the Altus Combination, KAAC changed its name to Altus Midstream Company.

Ownership of Altus Midstream LP

As of and following the Closing Date and in connection with the completion of the Altus Combination, the Company’s wholly-owned subsidiary, Altus Midstream GP LLC, a Delaware limited liability company (Altus Midstream GP), is the sole general partner of Altus Midstream LP.

The Company operates its business through Altus Midstream LP and its subsidiaries, which include Altus Midstream Operating.

As of December 31, 2021, the Company held approximately 23.1 percent of the outstanding Common Units, and a controlling interest, in Altus Midstream and Apache held the remaining 76.9 percent.

As a result of a direct exchange by the Company of Class A Common Stock for Apache’s Common Units in January 2022, the Company owns 100% of the outstanding Common Units (see Note—10 Equity and Warrants ).

Business Combination with BCP

On October 21, 2021, the Company announced that it will combine with privately-owned BCP Raptor Holdco LP (BCP and, together with BCP Raptor Holdco GP, LLC, the Contributed Entities) in an all-stock transaction, pursuant to the Contribution Agreement dated as of that same date and entered into by and among Altus, Altus Midstream LP (the Partnership), New BCP Raptor Holdco, LLC (the Contributor), and BCP (the BCP Contribution Agreement).

BCP is the parent company of EagleClaw Midstream, which includes EagleClaw Midstream Ventures, the Caprock Midstream and Pinnacle Midstream businesses, and a 26.7 percent interest in the Permian Highway Pipeline.

Pursuant to the BCP Contribution Agreement,

Contributor will contribute all of the equity interests of the Contributed Entities (the Contributed Interests) to the Partnership, with each Contributed Entity becoming a wholly-owned subsidiary of the Partnership (the BCP Business Combination).

As consideration for the contribution of the Contributed Interests, the Company will issue 50 million shares of Class C Common Stock (and Altus Midstream LP will issue a corresponding number of Common Units) to BCP’s unitholders, which are principally funds affiliated with Blackstone and I Squared Capital.

The transaction is expected to close during the first quarter of 2022 following completion of customary closing conditions .

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

On August 3, 2018, Altus Midstream LP was formed in Delaware as a limited partnership and wholly-owned subsidiary of KAAC and entered into a contribution agreement with certain affiliates of Apache Corporation (“Apache” and such affiliates the “Altus Midstream Entities”), formed by Apache between May 2016 and January 2017, for the purpose of acquiring, developing, and operating midstream oil and gas assets in the Alpine High resource play and surrounding areas (“Alpine High”).

On November 9, 2018, KAAC acquired all equity interests of the Altus Midstream Entities and changed its name to Altus Midstream Company.

On February 22, 2022, upon the Closing, BCP and its subsidiaries became wholly owned subsidiaries of the Partnership.

The Transaction was accounted for as a reverse merger pursuant to ASC 805 Business Combination (“ASC 805”).

Refer to Note 3 —Business Combination in the Notes to our Consolidated Financial Statements for further information.

Nature of Operations

Through its consolidated subsidiaries, the Company provides comprehensive gathering, water disposal, transportation, compression, processing and treating services necessary to bring natural gas, natural gas liquids (“NGL” or “NGLs”) and crude oil to market.

Additionally, the Company owns an NGL pipeline and equity interests in four separate Permian Basin pipeline entities that have access to various markets along the Texas Gulf Coast.

Basis of Presentation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP).

Principles of Consolidation

The consolidated financial results of Altus Midstream are included in the Company’s consolidated financial statements due to the Company’s 100 percent ownership interest in Altus Midstream GP, and Altus Midstream GP’s control of Altus Midstream.

The Company has no independent operations or material assets other than its partnership interests in Altus Midstream, which constitutes all of its business.

The Company’s only material net assets separate from Altus Midstream relate to deferred taxes and the current and deferred income tax expense (benefit) associated with its investment in Altus Midstream in 2018.

In the fourth quarter of 2019, the Company recorded a full valuation allowance against its net deferred tax assets.

Accordingly, the deferred tax asset balance was nil as of the years ended December 31, 2021 and 2020.

Additionally, the Company’s balance sheet reflects the presentation of noncontrolling interest ownership attributable to the limited partner interests in Altus Midstream held by Apache and the holders of Series A Cumulative Redeemable Preferred Units (the Preferred Units).

Refer to Note 12—Income Taxes , Note 10—Equity and Warrants , and Note 11—Series A Cumulative Redeemable Preferred Units for further information.

Variable Interest Entity

Altus Midstream is a variable interest entity (VIE) because the partners in Altus Midstream with equity at risk lack the power, through voting or similar rights, to direct the activities that most significantly impact Altus Midstream’s economic performance.

A reporting entity that concludes it has a variable interest in a VIE must evaluate whether it has a controlling financial interest in the VIE, such that it is the VIE’s primary beneficiary and should consolidate.

The Company is the primary beneficiary of Altus Midstream, and therefore should consolidate Altus Midstream because (i) the Company has the ability to direct the activities of Altus Midstream that most significantly affect its economic performance, and (ii) the Company has the right to receive benefits or the obligation to absorb losses that could be potentially significant to Altus Midstream.

Redeemable Noncontrolling Interest — Apache Limited Partner

As of December 31, 2021, the Company’s redeemable noncontrolling interest presented in the consolidated financial statements consisted of Common Units representing limited partner interests in Altus Midstream held by Apache.

Pursuant to certain provisions of the partnership agreement of Altus Midstream (as amended in connection with the Altus Combination, and subsequent issuance of Preferred Units, the Amended LPA), the limited partner interests held by Apache were equal to the number of shares of the Company’s Class C Common Stock held by Apache.

The Company initially recorded the redeemable noncontrolling interest upon the issuance of the Common Units to Apache as part of the Altus Combination and based on the recapitalization value ascribed at the Closing Date to the limited partner interest.

All or a portion of these Common Units could be redeemed at Apache’s option, which it elected in January 2022 in respect of all such Common Units.

The Company had the ability to settle the redemption option either (i) in shares of Class A Common Stock on a one -for-one basis, which it did in January 2022, or (ii) in cash (based on the fair market value of the Class A Common Stock as determined pursuant to the Altus Contribution Agreement), subject to customary conversion rate adjustments for stock splits, stock dividends, and reclassifications.

Upon the January 2022 exchange of Common Units held by Apache for Class A Common Stock, a corresponding number of shares of Class C Common Stock were cancelled.

The Company’s policy is to record the redeemable noncontrolling interest represented by the Common Units held by Apache at the higher of (i) its initial fair value plus accumulated earnings/losses associated with the noncontrolling interest or (ii) the redemption value as of the balance sheet date.

See discussion and additional detail further discussed in Note 10—Equity and Warrants .

Redeemable Noncontrolling Interest — Preferred Unit Limited Partners

On June 12, 2019, Altus Midstream issued and sold the Preferred Units in a private offering, and the purchasers of the Preferred Units were admitted as limited partners of Altus Midstream.

The Preferred Units will be exchangeable for shares of the Company’s Class A Common Stock at the option of the Preferred Unit holders after the seventh anniversary of the closing of the Preferred Unit offering or upon the occurrence of specified events, unless otherwise redeemed by Altus Midstream.

The Preferred Units are accounted for on the Company’s consolidated balance sheet as a redeemable noncontrolling interest classified as temporary equity based on the terms of the Preferred Units.

Certain redemption features embedded within the terms of the Preferred Units require bifurcation and measurement at fair value and are accounted for on the Company’s consolidated balance sheet as a long-term liability embedded derivative.

See discussion and additional detail further discussed in Note 11—Series A Cumulative Redeemable Preferred Units and Note 14—Fair Value Measurements .

Equity Method Interests

The Company follows the equity method of accounting when it does not exercise control over its equity interests, but can exercise significant influence over the operating and financial policies of the entity.

Under this method, the equity interests are carried originally at acquisition cost, increased by Altus’ proportionate share of the equity interest’s net income and contributions made by Altus, and decreased by Altus’ proportionate share of the equity interest’s net losses and distributions received by Altus.

Equity method interests are assessed for impairment whenever changes in the facts and circumstances indicate a loss in value has occurred, if the loss is deemed to be other than temporary.

When the loss is deemed to be other than temporary, the carrying value of the equity method investment is written down to fair value, and the amount of the write-down is included in income.

As part of its review of the fair value of its assets in relation to the announced BCP Business Combination, Altus determined the current fair value of its investment in EPIC was below carrying value.

The Company subsequently determined that this loss in value was deemed to be other than temporary.

As such, in the fourth quarter of 2021, Altus recorded an impairment charge of $ 160.4 million on its equity method interest in EPIC.

The fair value of the impaired interest was determined using the income approach, which considered Altus’ estimates of future throughput volumes, tariff rates, and costs.

These assumptions were applied to develop future operating cash flow projections that were then discounted to estimated fair value using a discount rate believed to be consistent with that which would be applied by market participants.

The amount arrived at was then considered against EPIC’s debt and the carrying value of the Company’s interest in EPIC to determine the recoverability of Altus’ interest as of December 31, 2021, resulting in the fourth quarter impairment charge.

Altus has classified this nonrecurring fair value measurements as Level 3 in the fair value hierarchy.

Refer to Note 9—Equity Method Interests for further details of the Company’s equity method interests.

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations have been made and are of a recurring nature unless otherwise disclosed herein.

All intercompany balances and transactions have been eliminated in consolidation.

Prior to the Closing, the Company’s financial statements that were filed with the Securities and Exchange Commission (“SEC”) were derived from ALTM’s accounting records.

As the Transaction was determined to be a reverse merger, BCP was considered the accounting acquirer and ALTM was the legal acquirer.

The accompanying Consolidated Financial Statements herein include (1) BCP’s net assets carried at historical value, (2) BCP’s historical results of operations prior to the Transaction, (3) the ALTM’s net assets carried at fair value as of the Closing Date and (4) the combined results of operations with the Company’s results presented within the Consolidated Financial Statements from February 22, 2022 going forward.

Refer to Note 3—Business Combination to our Consolidated Financial Statements in this Form 10-K for further information.

The Company completed a two -for-one Stock Split on June 8, 2022.

All corresponding per-share and share amounts for periods prior to June 8, 2022 have been retrospectively restated in this Form 10-K to reflect the two -for-one Stock Split, except for the number of Common Units and shares of Class C Common Stock described above in relation to the Transaction, which are presented at pre-Stock-Split amounts.

This presentation election is consistent with our previous public filings and the terms of the Contribution Agreement.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Preparation of financial statements in conformity with GAAP and disclosure of contingent assets and liabilities requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Preparation of financial statements in conformity with GAAP and disclosure of contingent assets and liabilities requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources.

The Company evaluates its estimates and assumptions on a regular basis.

Actual results may differ from these estimates and assumptions used in preparation of its financial statements, and changes in these estimates are recorded when known.

Actual results may differ from these estimates and assumptions used in preparation of its Consolidated Financial Statements, and changes in these estimates are recorded when known.

Significant items subject to such estimates and assumptions include the valuation of enterprise value, assets acquired and liabilities assumed in a business combination, derivatives, tangible and intangible assets and impairment of long-lived assets and equity method investments.

Segment Information

The Company applies Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 280, Segment Reporting, in determining reportable segments for its financial statement disclosure.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance.

Our Chief Executive Officer is the CODM.

The Company has determined it has two operating segments:

(1) Midstream Logistics and (2) Pipeline Transportation.

Revenue Recognition

We provide gathering, processing, and disposal services and we sell commodities (including condensate, natural gas, and NGLs) under various contracts.

The Company recognizes revenue in accordance with the provisions of FASB Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) (“Topic 606”).

We recognize revenues for services and products under revenue contracts as our obligations to perform services or deliver/sell products under the contracts are satisfied.

A contract’s transaction price is allocated to each performance obligation in the contract and recognized as revenue when, or as, the performance obligation is satisfied.

These contracts include:

Fee-based arrangements – Under fee-based contract arrangements, the Company provides gathering, processing and disposal services to producers and earns a net margin based on volumes.

While transactions vary in form, the essential element of each transaction is the use of the Company’s assets to transport a product or provide a processed product to an end-user at the tailgate of the plant or pipeline.

This revenue stream is generally directly related to the volume of water, natural gas, crude oil, NGLs, and condensate that flows through the Company’s systems and facilities and is not normally dependent on commodity prices.

The Company primarily acts as an agent under these contracts selling the underlying commodities on behalf of the producer and remitting back to the producer the net proceeds.

These such sales and remitted proceeds are presented net within revenue.

However, in certain instances, the Company acts as the principal for processed residue gas and NGLs by purchasing them from the associated producer at the tailgate of the plant at index prices.

This purchase and the associated 3 rd party sale are presented gross within revenues and cost of sales.

Percent-of-proceeds arrangements – Under percentage-of-proceeds based contract arrangements, the Company will gather and process natural gas on behalf of producers and sell the outputs, including residue gas, NGLs and condensate at market prices.

The Company remits an agreed-upon percentage of proceeds to the producer based on the market price received from 3 rd parties or the index price defined in the contract.

Under these arrangements, revenue is recognized net of the agreed-upon proceeds remitted to producers when the Company acts as an agent of the producer for the associated 3 rd party sale.

However, in certain instances the Company acts as the principal for processed residue gas and NGLs by purchasing these volumes from the associated producer at the tailgate of the plant at index prices.

This purchase and the associated 3 rd party sale are presented gross within revenues and cost of sales.

Percent-of-products arrangements – Under percent-of-products based contract arrangements, the Company will gather and process natural gas on behalf of producers.

As partial compensation for services, the producer assigns to the Company, for no additional consideration, all right, title and interest to a set percentage, as defined in the contract, of the processed residue volumes.

The Company recognizes the fair value of these products as revenue when the associated performance obligation has been met.

Product sales contracts – Under these contracts, we sell natural gas, NGLs or condensate to third parties.

These sales are presented gross within revenues and cost of sales or net within revenues depending on whether the Company acts as the agent or the principal in the sale transaction as discussed above.

Our fee-based service contracts primarily have a single performance obligation to deliver a series of distinct goods or services that are substantially the same and have the same pattern of transfer to our producers.

For performance obligations associated with these contracts, we recognize revenues over time utilizing the output method based on the actual volumes of products delivered/sold or services performed, because the single performance obligation is satisfied over time using the same performance measure of progress toward satisfaction of the performance obligation.

The transaction price under our fee-based service contracts includes variable consideration that varies primarily based on actual volumes that are delivered under the contracts.

Because the variable consideration specifically relates to our efforts to transfer the services and/or products under the contracts, we allocate the variable consideration entirely to the distinct service utilizing the allocation exception guidance under Topic 606, and accordingly recognize the variable consideration as revenues at the time the good or service is transferred to the producer.

We recognize revenues at a point in time for performance obligations associated with percent-of-proceeds contract elements, percent-of-products contract elements and product sale contracts, and these revenues are recognized because control of the underlying product is transferred to the customer or producer when the distinct good is provided to the customer or producer.

The evaluation of when performance obligations have been satisfied and the transaction price that is allocated to our performance obligations requires judgments and assumptions, including our evaluation of the timing of when control of the underlying good or service has transferred to our producers or customers.

Actual results can vary from those judgments and assumptions.

Minimum Volume Commitments

The Company has certain agreements that provide for quarterly or annual minimum volume commitments (“MVCs”).

Under these MVCs, our producers agree to ship and/or process a minimum volume of production on our gathering and processing systems or to pay a minimum monetary amount over certain periods during the term of the MVC.

A producer must make a shortfall payment to us at the end of the contracted measurement period if its actual throughput volumes are less than its contractual MVC for that period.

None of the Company’s MVC provisions allow for producers to make up past deficient volumes in a future period.

However, certain MVC provisions allow producers to carryforward volumes delivered in excess of a current period MVC to future periods.

The Company recognizes revenue associated with MVCs when a counterparty has not met the contractual MVC at the completion of the measurement period for the specific commitment or we determine that the counterparty cannot meet the contractual MVC by the end of the contracted measurement period.

Disaggregation of Revenue

The Company disaggregates revenue into categories that depict the nature, amount, and timing of revenue and cash flows based on differing economic risk profiles for each category.

In concluding such disaggregation, the Company evaluated the nature of the products and services, consumer markets, sales terms, and sales channels which have similar characteristics such that the level of disaggregation provides an understanding of the Company’s business activities and historical performance.

The level of disaggregation is evaluated annually and as appropriate for changes to the Company or its business, either from internal growth, acquisitions, divestitures, or otherwise.

See Note 4—Revenue Recognition in the Notes to our Consolidated Financial Statements in this Form 10-K for further information.

Concentration Risk

All operations and efforts of the Company are focused in the oil and gas industry and are subject to the related risks of the industry.

The Company’s assets are located in the Delaware Basin.

Demand for the Company’s products and services may be influenced by various regional and global factors and may impact the value of the projects the Company is developing.

The Company’s concentration of customers may impact its overall business risk, either positively or negatively, in that these entities may be similarly affected by changes in the economy or other conditions.

The Company’s operations involve a variety of counterparties, both investment grade and non-investment grade.

The Company analyzes the counterparties’ financial condition prior to entering into an agreement, establishes credit limits and monitors the appropriateness of these limits on an ongoing basis within approved tolerances, with the primary focus on published credit ratings when available and inherent liquidity metrics to mitigate credit risk.

Typically, through our customer contracts, the Company takes title to the rich gas and associated plant products (NGLs and residue gas).

As such, the inherent risk with these types of contracts is mitigated as the Company receives funds for the disposition and sale of such products from downstream counterparties that are large investment grade entities and is able to deduct all fees owed to it by its customers and associated costs before remitting the balance of any funds back to the relevant customer.

For those few counterparties’ that retain ownership of their plant products, the Company attempts to minimize credit risk exposure through its credit policies and monitoring procedures as well as through customer deposits, and letters of credit.

The Company manages trade credit risk to mitigate credit losses and exposure to uncollectible trade receivables and generally receivables are collected within 30 days.

Below is a summary of operating revenue by major customers that individually exceeded 10% of consolidated operating revenue:

For the Year Ended December 31,

2022 2021 2020

(In thousands)

Customer 1 $ 326,899 $ 184,967 $ 71,681

Customer 2 93,286 111,742 29,512

Customer 3 75,188 59,301 55,573

Customer 4 40,187 43,599 52,149

Customer 5 211,093 34,362 9,505

Others 466,837 228,073 191,756

Consolidated Operating Revenue $ 1,213,490 $ 662,044 $ 410,176

As of December 31, 2022 and 2021, approximately 58 % and 72 %, respectively, of accounts receivable were derived from the above customers.

All operating revenue derived from above customers are included in the Midstream Logistics segment.

Major Producers are defined as our producers who we gather natural gas, crude and/or produced water and process gas and dispose of produced water from and account for 10% or more of our cost of sales as presented in the consolidated financial statements.

For the year ended December 31, 2022, approximately 87 % of the Company’s cost of sales were derived from five producers.

For the year ended December 31, 2021, approximately 92 % of the Company’s cost of sales were derived from five producers.

For the year ended December 31, 2020, approximately 76 % of the Company’s cost of sales were derived from three producers.

This concentration of producers may impact the Company's overall business risk, either positively or negatively, in that these entities may be similarly affected by changes in the economy or other conditions.

We do not believe that a loss of revenues from any single customer would have a material adverse effect on our business, financial position, results of operations or cash flows.

The Company regularly maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits.

The Company has not experienced any losses with respect to the related risks to cash and does not believe its exposure to such risk is more than nominal.

Fair Value Measurements

Accounting Standards Codification (ASC) 820-10-35, “Fair Value Measurement” (ASC 820), provides a hierarchy that prioritizes and defines the types of inputs used to measure fair value.

The fair value hierarchy gives the highest priority to Level 1 inputs, which consist of unadjusted quoted prices for identical instruments in active markets.

Level 2 inputs consist of quoted prices for similar instruments.

Level 3 valuations are derived from inputs that are significant and unobservable;

hence, these valuations have the lowest priority.

The valuation techniques that may be used to measure fair value include a market approach, an income approach and a cost approach.

A market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

An income approach uses valuation techniques to convert future amounts to a single present amount based on current market expectations, including present value techniques, option-pricing models, and the excess earnings method.

The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement cost).

Embedded features identified within the Company’s agreements are bifurcated and measured at fair value at the end of each period on the Company’s consolidated balance sheet.

Such recurring fair value measurements are presented in further detail in Note 14—Fair Value Measurements .

The Company also uses fair value measurements on a nonrecurring basis when certain qualitative assessments of its assets indicate a potential impairment.

During the years ended December 31, 2021, 2020, and 2019, the Company recorded an impairment charge of $ 0.4 million, $ 1.6 million, and $ 1.3 billion, respectively, on certain assets.

Refer to Property, Plant and Equipment—Impairment within this Note below and Note 4—Property, Plant and Equipment , for further detail.

During the year ended December 31, 2021, the Company separately recorded an impairment of $ 160.4 million on its interest in EPIC.

Refer to Equity Method Interests within this Note above and Note 9 — Equity M ethod Interests for further detail.

ASC Topic 820 establishes a framework for measuring fair value in U.S.

GAAP, clarifies the definition of fair value within that framework, and requires disclosures about the use of fair value measurements.

Topic 820 defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

Topic 820 provides a framework for measuring fair value, establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and requires consideration of the counterparty’s creditworthiness when valuing certain assets.

Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets (Level 1 inputs).

The three levels of the fair value hierarchy under Topic 820 are described below:

Level 1 inputs :

Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 inputs :

Inputs, other than quoted prices in active markets, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3 inputs :

Prices or valuations that require unobservable inputs that are both significant to the fair value measurement and unobservable.

Valuation under Level 3 generally involves a significant degree of judgment from management.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Where available, fair value is based on observable market prices or inventory parameters or derived from such prices or parameters.

Where observable prices or inputs are not available, valuation models are applied.

These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instrument’s complexity.

The Company’s Consolidated Balance Sheets reflect a mixture of measurement methods for financial assets and liabilities.

Public and private warrants, contingent liabilities and derivative financial instruments are reported at fair value.

See Note 13—Fair Value Measurements and Note 14—Derivative and Hedging Activities in the Notes to our Consolidated Financial Statements in this Form 10-K for further information.

Other financial instruments are reported at historical cost or amortized cost on our Consolidated Balance Sheets.

Long-term debt is primarily the other financial instrument for which carrying value could vary significantly from fair value.

See Note 8—Debt and Financing Costs in the Notes to our Consolidated Financial Statements in this Form 10-K for further information.

Derivative Instruments and Hedging Activities

ASC Topic 815, Derivatives and Hedging (“Topic 815”), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of:

(a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows.

Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

As required by Topic 815, the Company records all derivatives on the balance sheet at fair value.

The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting.

Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge.

For all hedging relationships for which hedge accounting is applied, the Company formally documents the hedging relationship and its risk-management objective and strategy for undertaking the hedge, the hedging instrument, the hedged transaction, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method used to measure ineffectiveness.

The Partnership also formally assesses, both at the inception of the hedging relationship and on an ongoing basis, whether the derivatives that are used in hedging relationships are highly effective in offsetting changes in cash flows of hedged transactions.

For derivative instruments that are designated and qualify as part of a cash flow hedging relationship, the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings.

When the Company does not elect to apply hedge accounting, the instruments are marked-to-market each period end and changes in fair value, realized or unrealized, are recognized in earnings.

Cash and Cash Equivalents

1 unchanged sentence

These investments are carried at cost, which approximates fair value.

As of December 31, 2021 and 2020, Altus Midstream had $ 132.0 million and $ 24.2 million, respectively, of cash and cash equivalents.

Revenue Receivable

For each period presented and upon commencement of operations, revenues were primarily generated from midstream services provided to Apache, which included gathering, processing, and transmission of natural gas.

Revenue receivables represents revenues accrued that have been earned by Altus Midstream but not yet invoiced to Apache.

There were no doubtful accounts written off, nor have we provided an allowance for doubtful accounts, as of December 31, 2021 and 2020.

Inventories consist principally of equipment and material, stated at the lower of cost or net realizable value.

As of December 31, 2022 and 2021, the Company had $ 6.4 million and $ 18.7 million, respectively, of cash and cash equivalents.

Accounts Receivable and Current Expected Credit Losses

Accounts receivable include amounts due from customers for gas, NGLs and condensate sales, pipeline transportation, and gathering, processing and disposal fees, under normal trade terms, generally requiring payment within 30 days.

The Company’s current expected credit losses are determined based upon reviews of individual accounts, existing economics, and other pertinent factors.

The Company had an allowance for credit losses of $ 1.0 million as of December 31, 2022 and 2021.

Gas Imbalance

Quantities of natural gas over-delivered or under-delivered related to imbalance agreements are recorded monthly as receivables or payables using weighted-average prices at the time of the imbalance.

These imbalances are typically settled with deliveries of natural gas.

We had imbalance receivables of $ 1.5 million and $ 1.5 million at December 31, 2022 and 2021, respectively, which are carried at the lower of cost or market value.

We had imbalance payables of nil and $ 0.3 million at December 31, 2022 and 2021, respectively, which approximate the fair value of these imbalances.

Imbalance receivables and imbalance payables are included in “Accounts Receivable” and “Accounts Payable”, respectively, on the Consolidated Balance Sheets.

Other current assets include condensate, residue gas and NGL inventories that are valued at the lower of cost or net realizable value.

At the end of each reporting period, the Partnership assesses the carrying value of inventory and makes any adjustments necessary to reduce the carrying value to the applicable net realizable value.

Inventory was valued at $ 4.8 million and $ 2.1 million as of December 31, 2022 and 2021, respectively.

Property, Plant, and Equipment

Property, plant, and equipment consists of the costs incurred to acquire and construct midstream assets including capitalized interest.

Depreciation is computed over each asset’s estimated useful life using the straight-line method based on estimated useful lives and estimated asset salvage values.

The estimated lives are generally 30 years for plants and facilities and 40 years for pipelines and such estimated useful lives were used to depreciate the Company’s assets in 2019.

The estimation of useful life also takes into consideration anticipated production lives from the fields serviced by these assets, whether operated by Apache or a third-party.

Determination of depreciation expense requires judgment regarding the estimated useful lives and salvage values of property, plant, and equipment.

As circumstances warrant, depreciation estimates are reviewed to determine if any changes in the underlying assumptions are necessary.

Given the fourth quarter 2019 impairment discussed under Impairment below, and as discussed further in Note 4—Property, Plant and Equipment , the Company reassessed the useful life of its assets in January of 2020.

This assessment resulted in a change to estimated useful lives on its impaired assets to 12 years.

For the years ended December 31, 2021, 2020, and 2019 depreciation expense totaled $ 11.9 million, $ 12.0 million, and $ 39.8 million, respectively.

Asset Retirement Obligations and Accretion

The initial estimated asset retirement obligation related to property, plant, and equipment and subsequent revisions are recorded as a liability at fair value, with an offsetting asset retirement cost recorded as an increase to the associated property, plant, and equipment on the consolidated balance sheet.

Revisions in estimated liabilities can result from changes in estimated inflation rates, changes in service and equipment costs, and changes in the estimated timing of an asset’s retirement.

Asset retirement costs are depreciated using a systematic and rational method similar to that used for the associated property, plant, and equipment.

Accretion expense on the liability is recognized over the estimated productive life of the related assets and is included on the consolidated statements of operations under “Depreciation and accretion.” For the years ended December 31, 2021, 2020, and 2019 accretion expense totaled $ 4.3 million, $ 4.0 million, and $ 1.6 million, respectively.

Property, plant and equipment are carried at cost or fair market value at the date of acquisition less accumulated depreciation.

The cost basis of constructed assets includes materials, labor, and other direct costs.

Major improvements or betterments are capitalized, while repairs that do not improve the life of the respective assets are expensed as incurred.

Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets as follows:

Estimated Useful Life

Buildings 30 years

Gathering and processing systems and facilities 20 years

Furniture and fixtures 7 years

Vehicles 5 years

Computer hardware and software 3 years

The Company's lease portfolio includes certain real estate and equipment.

The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement.

Operating leases are recorded on the balance sheet with operating lease assets representing the right to use the underlying asset for the lease term and lease liabilities representing the obligation to make lease payments arising from the lease.

The Company has elected to account for the lease and non-lease components together as a single component for all classes of underlying assets.

The Company excludes variable lease payments in measuring right-of-use (“ROU”) assets and lease liabilities, other than those that depend on an index, a rate or are in-substance fixed payments.

ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

In addition, ROU assets include initial direct costs incurred by the lessee as well as any lease payments made at or before the commencement date are reduced by lease incentives.

As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

The incremental borrowing rate is determined by using the rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment.

Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Leases with a term of one year or less are excluded from ROU assets and liabilities.

Capitalized Interest

Interest is capitalized as part of the historical cost of developing and constructing assets.

Significant midstream development assets, including assets owned by Altus through its equity method interests, that have not commenced operations qualify for interest capitalization.

Capitalized interest is determined by multiplying Altus Midstream’s weighted-average borrowing cost of debt by the average amount of qualifying midstream assets.

The amount of capitalized interest cannot be greater than actual interest incurred.

Once an asset is placed into service, the associated capitalization of interest ceases and is expensed through depreciation over the asset’s useful life.

The Company assesses the carrying amount of its property, plant, and equipment whenever events or changes in circumstances indicate a possible significant deterioration in future cash flows expected to be generated by an asset group.

Individual assets are grouped for impairment purposes based on the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other asset groups.

If, upon review, the carrying amount of an asset group is greater than the sum of the undiscounted expected cash flows, an impairment loss is recognized for the excess of the carrying value over its fair value.

During the fourth quarter of 2020, the Company sold certain of its power generators and, as a result, the remaining power generators owned by the Company were remeasured at fair value based on the proceeds from such sale.

This remeasurement resulted in an impairment of $ 1.6 million on these assets, and this nonrecurring fair value measurement is classified as Level 1 in the fair value hierarchy based on the negotiated sales price.

Apache, as part of its fourth quarter 2019 review of its capital expenditure program, notified Altus that it had materially reduced its investment plans and had no plans to drill new wells at Alpine High.

This notification prompted Altus management to assess its long-lived infrastructure assets for impairment, and as a result of this assessment, Altus recorded impairments of $ 1.3 billion on its gathering, processing, and transmission assets in the fourth quarter of 2019.

Altus also recorded an impairment charge of $ 9.3 million in the third quarter of 2019 related to the cancellation of construction on a previously planned compressor station.

The fair values of the impaired assets were determined using a combination of the income approach and the market approach (when direct sales bids on equivalent equipment was provided from third parties).

The income approach considered several internal estimates of future throughput volumes, processing rates, and costs.

The assumptions were applied to develop future cash flow projections that were then discounted to estimated fair value, using a discount rate believed to be consistent with those applied by market participants.

Altus has classified these nonrecurring fair value measurements as Level 3 in the fair value hierarchy.

These asset impairments are recorded within “Impairments” on the Company’s consolidated statement of operations.

Refer to Note 4—Property, Plant and Equipment , for further detail.

Accounts Receivable From/Payable To Apache

The accounts receivable from or payable to Apache represent the net result of Altus Midstream’s monthly revenue, capital and operating expenditures, and other miscellaneous transactions to be settled with Apache as provided under the Construction, Operations and Maintenance Agreement (COMA) between the two entities.

Generally, cash in this amount will be transferred to Apache in the month after the Company’s transactions are processed and the net results of operations are determined.

However, from time to time, the Company may estimate and transfer the cash settlement amount in the month the transactions are processed, in order to minimize related-party working capital balances.

See discussion and additional detail in Note 2—Transactions with Affiliates .

In 2020, the Company entered into a contract with a provider to supply the Company with electrical power.

If the Company does not utilize all of its fixed purchase volumes under this contract, then it will receive a credit based on a market rate for the related underutilization.

In conjunction with increased power pricing due to the Texas freeze event and underutilization of contractual electricity volumes, the Company recognized an estimated total credit of approximately $ 9.7 million for the six months ended June 30, 2021.

The Company did no t recognize any additional credit during the remainder of 2021.

These amounts are recorded on the statement of consolidated operations in “Other income.” The related power credit will offset the Company’s future monthly power payments and is recorded in “Prepaid assets and other” for the current portion and “Deferred charges and other” for the long-term portion on the consolidated balance sheet.

No credits were recorded for the years ended December 31, 2020 and 2019.

The Company has no remaining performance obligations related to these credits as of December 31, 2021.

Distributions to Apache

During 2021, the Company paid an aggregate $ 22.5 million in dividends on the Company’s Class A Common Stock, of which $ 5.6 million, or $ 1.50 per share, was paid in each quarter of 2021.

Each quarterly Class A Common Stock dividend was funded by a distribution from Altus Midstream to its common unitholders of $ 1.50 per Common Unit, with each quarterly distribution totaling $ 24.4 million, of which $ 5.6 million was paid to the Company and the balance was paid to Apache due to its 76.9 percent ownership of outstanding Common Units.

Please refer to Note 10—Equity and Warrants for further information.

General and Administrative Expense

General and administrative (G&A) expense represents indirect costs and overhead expenditures incurred by the Company associated with managing the midstream assets.

In connection with the closing of the Altus Combination, the Company entered into the COMA, as described above, pursuant to which Apache will provide certain services related to the design, development, construction, operation, management, and maintenance of Altus Midstream’s assets, on the Company’s behalf.

See discussion and additional detail further discussed in Note 2—Transactions with Affiliates .

Maintenance and Repairs

Routine maintenance and repairs are charged to expense as incurred.

The Company had no non-routine maintenance or repair costs in any period presented.

The Company is subject to federal income tax and recognizes deferred tax assets and liabilities based on the difference between the financial statement carrying value and tax basis of its investment in Altus Midstream.

For federal income tax purposes, Altus Midstream is regarded as a partnership and not subject to income tax.

Income and deductions associated with Altus Midstream and the Altus Midstream Entities flow through to the Company.

As such, Altus Midstream and the Altus Midstream Entities do not record a federal income tax provision.

The Company, Altus Midstream, and the Altus Midstream Entities are also subject to the Texas margin tax.

The Company’s policy is to capitalize interest cost incurred on debt during the construction of major projects.

Deferred Financing Costs

Deferred financing costs consist of fees incurred to secure debt financing and are amortized over the life of the related debt using the effective interest rate method.

Deferred financing costs associated with the Company’s unsecured term loans and senior note are presented with the related debt on the Consolidated Balance Sheets, as a reduction to the carrying amounts.

Deferred financing costs associated with the Company's revolving credit facilities are presented within “Other Current Assets” and “Deferred Charges and Other Assets” on the Consolidated Balance Sheets.

Asset Retirement Obligation

The Company follows the provisions of FASB ASC Topic 410, Asset Retirement and Environmental Obligations , which require the fair value of a liability related to the retirement of long-lived assets to be recorded at the time a legal obligation is incurred if the liability can be reasonably estimated.

The liability is based on future retirement cost estimates and incorporates many assumptions, such as time to permanent removal, future inflation rates and the credit-adjusted risk-free rate of interest.

The retirement obligation is recorded at its estimated present value with an offsetting increase to the related asset on the balance sheet.

Over time, the liability is accreted to its future value, with the accretion recorded to expense.

The Company’s assets generally consist of gas processing plants, crude storage terminals, saltwater disposal wells, and underground gathering pipelines installed along rights-of-way acquired from landowners and related above-ground facilities.

The majority of the rights-of-way agreements do not require the dismantling and removal of the pipelines and reclamation of the rights-of-way upon permanent removal of the pipelines from service.

Further, we have in place a rigorous repair and maintenance program that keeps our gathering and processing systems in good working order.

As a result, the ultimate dismantlement and removal dates of the Company’s assets are not determinable.

As such, the fair value of the liability is not estimable and, therefore, no asset retirement obligation has been recognized in the Consolidated Financial Statements as of December 31, 2022 and 2021.

Environmental Costs

The Company is subject to extensive federal, state, and local environmental laws and regulations.

These laws, which are constantly changing, regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites, if applicable.

Environmental costs that relate to current operations are expensed or capitalized as appropriate.

Costs are expensed when they relate to an existing condition caused by past operations and will not contribute to current or future revenue generation.

Liabilities related to environmental assessments and/or remedial efforts are accrued when property or services are probable or can reasonably be estimated.

No environmental liabilities were recorded as of December 31, 2022.

Intangible Assets

Intangible assets consist of rights of way agreements and customer contracts.

Intangible assets are amortized on a straight-line basis over their estimated economic life or remaining term of the contract and are assessed for impairment with the associated long-lived asset group whenever impairment indicators are present.

Goodwill represents the excess of cost over the fair value of assets of businesses acquired.

Goodwill is not amortized, but instead is tested for impairment in accordance with ASC 350, Intangibles – Goodwill and Other (“ASC 350”) at the reporting unit level at least annually.

The Company’s reporting unit is subject to impairment testing annually, on November 30, or more frequently if events and circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount.

ASC 350 provides the option to assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill.

The Company has the unconditional option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing a quantitative goodwill impairment test.

If the assessment of all relevant qualitative factors indicates that it is more likely than not that the fair value of a reporting unit is more than its carrying amount, a quantitative goodwill impairment test is not necessary.

If the assessment of all relevant qualitative factors indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company will perform a quantitative goodwill impairment test.

The quantitative impairment test for goodwill consists of a comparison of the fair value of a reporting unit with its carrying value, including the goodwill allocated to that reporting unit.

If the carrying value of a reporting unit exceeds its fair value, the Company will recognize an impairment loss equal to the amount of the excess, limited to the amount of goodwill allocated to that reporting unit.

Application of the impairment test requires judgement, including the identification of reporting units, assignment of assets and liabilities to reporting units and the determination of the fair value of each reporting unit.

Impairment of Long-Lived Assets

In accordance with FASB ASC 360, Property, Plant and Equipment (“ASC 360”) , long-lived assets, excluding goodwill, to be held and used by the Company are reviewed for impairment annually or on an interim basis if events or circumstances indicate that the fair value of the assets have decreased below their carrying value.

For long-lived assets to be held and used, the Company bases their evaluation on impairment indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present.

The Company’s management assesses whether there has been an impairment trigger, and if a trigger is identified, then the Company would perform an undiscounted cash flow test at the lowest level for which identifiable cash flows are independent of cash flows from other assets.

If the sum of the undiscounted future net cash flows is less than the net book value of the property, an impairment loss is recognized for any excess of the property’s net book value over its estimated fair value.

The Company did no t recognize impairment losses for long-lived assets during the years ended December 31, 2022 and 2021.

Variable Interest Entity

The Company uses a qualitative approach in assessing the consolidation requirement for variable interest entities.

The approach focuses on identifying which enterprise has the power to direct the activities that most significantly impact the variable interest entity’s economic performance and which enterprise has the obligation to absorb losses or the right to receive benefits from the variable interest entity.

In the event that the Company is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity would be consolidated in our financial statements.

The Company has determined that it has significant influence over the operating and financial policies of the four pipeline entities in which it is invested but does not exercise control over them;

and hence, it accounts for these investments using the equity method.

Refer to Note 7—Equity Method Investments in the Notes to our Consolidated Financial Statements in this Form 10-K.

Equity Method Investments

The Company follows the equity method of accounting when it does not exercise control over its equity interests but can exercise significant influence over the operating and financial policies of the entity.

Under this method, the equity investments are carried originally at acquisition cost, increased by the Company’s proportionate share of the equity interest’s net income and contributions made, and decreased by the Company’s proportionate share of the equity interest’s net losses and distributions received.

The Company determines whether distributions are a return on or a return of the investment based on the nature of the distribution approach, under which the Company classifies distributions from an investee by evaluating the facts, circumstances and nature of each distribution.

As distributions from the Company’s equity method investment (“EMI”) pipeline entities are generated from their respective normal course of business, the Company classifies the distributions as return on investments and as cash flow from operating activities.

Please refer to Note 7—Equity Method Investments in the Notes to our Consolidated Financial Statements in this Form 10-K, for further information of the Company’s equity method investments.

Equity method investments acquired in the Transaction were recorded at fair value upon Closing.

See discussion and additional detail in Note 3—Business Combination in the Notes to our Consolidated Financial Statements in this Form 10-K for the purchase price allocation of the Transaction.

The Company’s accounting policy is to classify its line fill as an other long-term asset to be consistent with industry practices and given line fill is required on the 3rd party pipeline to properly flow the Company’s product.

Additionally, this line fill is contractually required to be maintained through the life of the contract with our counterparty and therefore will not be settled within an operating period.

Accordingly, the Company has NGL line fill of $ 10.6 million and $ 4.1 million within other assets as of December 31, 2022 and 2021, respectively.

Redeemable Noncontrolling Interest — Common Units Limited Partners

Pursuant to the Contribution Agreement, in connection with the Closing, (i) Contributor contributed all the equity interests of the Contributed Entities to the Partnership;

and (ii) in exchange for such contribution, the Partnership issued 50,000,000 common units representing limited partner interests in the Partnership and the Company issued 50,000,000 shares of the Company’s Class C Common Stock, par value $ 0.0001 per share, to Contributor.

Please refer to “The Transaction” above.

The Common Units are redeemable at the option of unit holders and accounted for in the Company’s Consolidated Balance Sheet as a redeemable noncontrolling interest classified as temporary equity.

The Company records the redeemable noncontrolling interest at the higher of (i) its initial value plus accumulated earnings/losses associated with the noncontrolling interest or (ii) the maximum redemption value as of the balance sheet date.

The redemption value was determined based on a 5-day volume weighted-average closing price of the Class A Common Stock.

See discussion and additional details in Note 11—Equity and Warrant s in the Notes to our Consolidated Financial Statements in this Form 10-K.

Mandatorily Redeemable Preferred Units

The Partnership issued Series A Cumulative Redeemable Preferred Units (“Preferred Units”) on June 12, 2019.

As the Transaction was accounted for as a reverse merger, the Company assumed certain Preferred Units that were issued and outstanding at Closing for accounting purposes.

At the Close of the Transaction, the Company effectuated the Third Amended and Restated Agreement of Limited Partnership of the Partnership (“Partnership LPA”), which among other things, provides for mandatory pro-rata redemptions by the Partnership.

Given this mandatory redemption feature and pursuant to ASC 480, liability classification is required for these Preferred Units and the pro rata PIK units.

The Company values the liability as of each reporting date and records the change in valuation in the “Other income (expenses)” in the Consolidated Statements of Operations.

During 2022, the Company redeemed all outstanding mandatorily redeemable preferred units.

Redeemable Noncontrolling Interest — Preferred Unit Limited Partners

The remaining Preferred Units assumed on the Closing Date do not contain a mandatory redemption feature and are accounted for on the Company’s Consolidated Balance Sheets as a redeemable noncontrolling interest classified as temporary equity in accordance with the terms of the Preferred Units, including the redemption rights with respect thereto.

During 2022, the Company redeemed all outstanding redeemable noncontrolling Preferred Units.

See discussion and additional detail in Note 12—Series A Cumulative Redeemable Preferred Units in the Notes to our Consolidated Financial Statements in this Form 10-K.

The Company is subject to federal income and Texas margin tax.

The Texas margin tax is assessed on corporations, limited liability companies, and limited partnerships.

As such, each entity recognizes state deferred tax assets and liabilities based on the differences between the financial statement carrying value and tax basis of assets and liabilities on the balance sheet.

As such, the Company accounts for state income taxes in accordance with the asset and liability method of accounting for income taxes.

Deferred income taxes are recognized for the tax consequences of temporary differences, at enacted statutory rates, between the consolidated financial statement carrying amounts and the tax bases of existing assets and liabilities.

Income tax or benefit represents the current tax payable or refundable for the period, plus or minus the tax effect of the net change in the deferred tax assets and liabilities.

The Company routinely assesses the ability to realize its deferred tax assets.

If the Company concludes that it is more likely than not that some or all of the deferred tax assets will not be realized, the tax asset is reduced by a valuation allowance.

If the Company concludes that it is more likely than not that some or all the deferred tax assets will not be realized, the tax asset is reduced by a valuation allowance.

In connection with this assessment, the Company maintained a full valuation allowance against its net deferred tax asset as of December 31, 2022 and 2021.

Change in Accounting Policy

Historically, the Company reported income and loss from equity method interests on a one-month reporting lag.

Effective October 1, 2019, the Company eliminated this one-month reporting lag.

In accordance with ASC 810-10-45-13, “A Change in the Fiscal Year-End Lag Between Subsidiary and Parent” (ASC 810), the elimination of this previously existing reporting lag is considered a voluntary change in accounting principle in accordance with ASC 250-10-50, “Change in Accounting Principle.” The Company believes that this change in accounting principle is preferable as it provides the Company with the ability to present the results of its equity method interests for the same period as all other consolidated results of the Company, which improves overall financial reporting to investors by providing the most current information available.

The Company has not retrospectively applied the change in accounting principle since its impact to the consolidated balance sheet and related statements of operations and cash flows was immaterial for all periods.

For more information on equity method interests owned by the Company, please refer to Note 9—Equity Method Interests .

New Pronouncements Issued But Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848),” which provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (LIBOR) or by another reference rate expected to be discontinued.

In January 2021, the FASB issued ASU 2021-01, which clarified the scope and application of the original guidance.

was effective beginning March 12, 2020 and can be applied prospectively through December 31, 2022.

The Company is evaluating whether to apply any of these expedients and, if elected, will adopt these standards when LIBOR is discontinued.

In August 2020, the FASB issued ASU 2020-06, “Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)” to improve financial reporting associated with accounting for convertible instruments and contracts in an entity’s own equity.

This update is effective for the Company beginning in the first quarter of 2022, with early adoption permitted, using either the modified or fully retrospective method with a cumulative effect adjustment to the opening balance of retained earnings.

The Company will adopt this ASU in the first quarter of 2022 and does not believe it will have a material impact on its financial statements.

TRANSACTIONS WITH AFFILIATES

The Company has contracted to provide services including gas gathering, compression, processing, transmission, and NGL transmission, pursuant to acreage dedications provided by Apache, comprising the entire Alpine High acreage.

In accordance with the terms of these agreements, the Company receives prescribed fees and may receive excess recovery volumes based on the type and volume of product for which the services are provided.

Additionally, beginning in 2020 Altus Midstream entered into three agreements to provide operating and maintenance services for Apache’s compressors in exchange for a fixed monthly fee per compressor serviced.

Revenues generated under these agreements are presented on the Company’s statement of consolidated operations as “Midstream services revenue — affiliate.” Revenues earned that have not yet been invoiced to Apache are presented on the Company’s consolidated balance sheet as “Revenue receivables.” Refer to Note 3—Revenue Recognition , for further discussion.

Cost and Expenses

The Company has no employees, and prior to the Altus Combination, the Company had no banking or cash management facilities.

As such, the Company has contracted with Apache to receive certain operational, maintenance, and management services.

In accordance with the terms of these agreements, the Company incurred operations and maintenance expenses of $ 5.6 million, $ 5.4 million, and $ 8.8 million for the years ended December 31, 2021, 2020, and 2019, respectively.

The Company incurred general and administrative expenses of $ 9.1 million, $ 7.0 million, and $ 5.4 million for the years ended December 31, 2021, 2020, and 2019, respectively, including expenses related to the operational services agreement and the COMA.

Further information on the related-party agreements in place during the period is provided below.

Construction, Operations, and Maintenance Agreement

At the closing of the Altus Combination, the Company entered into the COMA with Apache.

Under the terms of the COMA, Apache provides certain services related to the design, development, construction, operation, management, and maintenance of certain gathering, processing and other midstream assets, on behalf of the Company.

In return, the Company paid or will pay fees to Apache of (i) $ 3.0 million for the period beginning on the execution of the COMA at the closing of the Altus Combination through December 31, 2019, (ii) $ 5.0 million for the period of January 1, 2020 through December 31, 2020, (iii) $ 7.0 million for the period of January 1, 2021 through December 31, 2021 and (iv) $ 9.0 million annually thereafter, adjusted based on actual internal overhead and general and administrative costs incurred, until terminated.

The annual fee was negotiated as part of the Altus Combination to reimburse Apache for indirect costs of performing administrative corporate functions for the Company, including services for information technology, risk management, corporate planning, accounting, cash management, and others.

In addition, Apache may be reimbursed for certain internal costs and third-party costs incurred in connection with its role as service provider under the COMA.

Costs incurred by Apache directly associated with midstream activity, where substantially all the services are rendered for Altus Midstream, are charged to Altus Midstream on a monthly basis.

The COMA stipulates that the Company shall provide reimbursement of amounts owing to Apache attributable to a particular month by no later than the last day of the immediately following month.

Unpaid amounts accrue interest until settled.

The COMA will continue to be effective until terminated (i) upon the mutual consent of Altus and Apache, (ii) by either of Altus and Apache, at its option, upon 30 days’ prior written notice in the event Apache or an affiliate no longer owns a direct or indirect interest in at least 50 percent of the voting or other equity securities of Altus, or (iii) by Altus if Apache fails to perform any of its covenants or obligations due to willful misconduct of certain key personnel and such failure has a material adverse financial impact on Altus.

Lease Agreements

Concurrent with the closing of the Altus Combination, Altus Midstream entered into an operating lease agreement with Apache (the Lease Agreement) relating to the use of certain office buildings, warehouse and storage facilities located in Reeves County, Texas.

Under the terms of the Lease Agreement, Altus Midstream shall pay to Apache on a monthly basis the sum of (i) a base rental charge of $ 44,500 and (ii) an amount based on Apache’s estimate of the annual costs it expects to incur in connection with the ownership, operation, repair, and/or maintenance of the facilities.

The Company incurred total expenses of $ 0.6 million, $ 0.8 million and $ 1.1 million for the years ended December 31, 2021, 2020 and 2019, respectively, in relation to the Lease Agreement, which are included within operations and maintenance expenses.

Unpaid amounts accrue interest until settled.

The initial term of the Lease Agreement is four years and may be extended by Altus Midstream for three additional, consecutive periods of twenty-four months .

To accommodate Altus Midstream’s desire to vacate the leased premises, the Lease Agreement was amended in July 2020 to provide for its termination with respect to all or any portion of the leased premises which Apache may sell, with a pro rata rent reduction if Apache sells less than all of the leased premises.

The Company classified this lease as an operating lease and elected to account for lessee-related lease and non-lease components as a single lease component.

The right-of-use (ROU) asset related to this lease is reflected within “Deferred charges and other” on the Company’s consolidated balance sheet, and the associated operating lease liability is reflected within “Other current liabilities” and “Other noncurrent liabilities,” as applicable.

Operating lease expense associated with ROU assets is recognized on a straight-line basis over the lease term.

Lease expense is reflected on the consolidated statement of operations commensurate with the leased activities and nature of the services performed.

The remaining undiscounted future minimum lease payment as of December 31, 2021 is $ 0.4 million, which will be paid in 2022.

In 2020 and 2021, Altus Midstream entered into various operating lease agreements with Apache related to the use of certain of Altus Midstream’s compressors.

Under the terms of the agreement, Apache pays Altus Midstream fixed monthly lease payments, which are recorded as “Other” in the Company’s consolidated statement of operations.

Each of the lease agreements has an initial term of thirty months and automatically extends on a month-to-month basis unless either party cancels the agreement.

The Company recorded income related to these agreements of $ 1.6 million and $ 0.4 million for the years ended December 31, 2021 and 2020, respectively.

Altus also earns a monthly fee to operate and maintain the compressors under lease.

Refer to Note 3—Revenue Recognition for further discussion.

Distributions to Apache

During 2021, the Company paid an aggregate $ 22.5 million in dividends on the Company’s Class A Common Stock, of which $ 5.6 million, or $ 1.50 per share, was paid in each quarter of 2021.

Altus Combination Agreements

Limited Partnership Agreement of Altus Midstream LP

In connection with the Altus Combination, Altus Midstream Company, Altus Midstream GP, Altus Midstream LP, and Apache entered into an amended and restated limited partnership agreement of Altus Midstream LP, which was further amended in connection with the subsequent issuance of Preferred Units.

The Amended LPA sets forth, among other things, the rights and obligations of (i) Altus Midstream GP as general partner and (ii) Altus Midstream Company, Apache, and Preferred Unit holders as limited partners of Altus Midstream LP.

Altus Midstream GP is not entitled to reimbursement for its services as general partner.

Refer to Note 1—Summary of Significant Accounting Policies and Note 11—Series A Cumulative Redeemable Preferred Units , for further information.

Purchase Rights and Restrictive Covenants Agreement

At the closing of the Altus Combination, the Company entered into a purchase rights and restrictive covenants agreement (the Purchase Rights and Restrictive Covenants Agreement) with Apache.

Under the Purchase Rights and Restrictive Covenants Agreement, until the later of the five-year anniversary of the Closing and the date on which Apache and its affiliates cease to own a majority of the Company’s voting common stock, Apache is obligated to provide (i) the first right to pursue any opportunity (including any expansion opportunities) of Apache to acquire or invest, directly or indirectly (including equity investments), in any midstream assets or participate in any midstream opportunities located, in whole or part, within an area

covering approximately 1.7 million acres in Reeves, Pecos, Brewster, Culberson, and Jeff Davis Counties in Texas, and (ii) a right of first offer on certain retained midstream assets of Apache.

Net Income Per Share

Basic net income per share is calculated by dividing net income attributable to Class A common shareholders by the weighted-average number of shares of Class A Common Stock outstanding during the period.

Class C Common Stock is excluded from the weighted-average shares outstanding for the calculation of basic net income per share, as holders of Class C Common Stock are not entitled to any dividends or liquidating distributions.

No net income per share was computed for the twelve months ended December 31, 2021 and 2020, as no Class A Common Stock was outstanding with respect to BCP as the accounting acquirer as of December 31, 2021 and 2020.

The Company uses the “if-converted method” to determine the potential dilutive effect of (i) an assumed exchange of outstanding Common Units (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) for shares of Class A Common Stock and (ii) an assumed exercise of the outstanding public and private warrants for shares of Class A Common Stock.

The dilutive effect of any earn-out consideration payable in shares is only included in periods for which the underlying conditions for the issuance are met.

Recently Adopted Accounting Pronouncement

Effective January 1, 2021, the Company adopted ASU 2017-12, Derivatives and Hedging (Topic 815):

Targeted Improvements to Accounting for Hedging Activities ("ASU 2017-12"), which simplifies the limitations on how an entity can designate the hedged risks in certain cash flow and fair value hedging relationships.

The guidance better aligns the recognition and presentation of the effects of hedging instrument(s) and item(s) in the financial statements with an entity’s risk management strategies.

The adoption of ASU 2017-12 did not have a material impact on the Company’s Consolidated Financial Statements as of December 31, 2021.

Effective January 1, 2021, the Company adopted ASU 2018-15, Intangibles – Goodwill and Other – Internal Use Software (Subtopic 350-40):

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement (CCA) That is a Service Contract (“ASU 2018-15”).

The ASU provides guidance on how to determine whether an arrangement includes a software license or is solely a hosted CCA service.

Under the new guidance, the same criteria for capitalizing implementation costs for an arrangement with a software license which falls within the scope of internal – use software guidance will be applied to a hosting arrangement.

The new guidance also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense.

The adoption of ASU 2018-15 did not have a material impact on the Company’s Consolidated Financial Statements.

Effective January 1, 2022, the Company adopted ASU 2022-01, Derivatives and Hedging (Topic 815):

Fair Value Hedging - Portfolio Layer Method (“ASU 2022-01”) .

Current GAAP permits only prepayable financial assets and one or more beneficial interests secured by a portfolio of prepayable financial instruments to be included in a last-of-layer closed portfolio.

The amendments in ASU 2022-01 allow nonprepayable financial assets also to be included in a closed portfolio hedged using the portfolio layer method.

That expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and nonprepayable financial assets, thereby allowing consistent accounting for similar hedges.

The amendments in ASU 2022-01 also clarify the accounting for and promote consistency in the reporting of hedge basis adjustments applicable to both a single hedged layer and multiple hedged layers as follows:

(1) an entity is required to maintain basis adjustments in an existing hedge on a closed portfolio basis (that is, not allocated to individual assets), (2) an entity is required to immediately recognize and present the basis adjustment associated with the amount of the designated layer that was breached in interest income.

In addition, an entity is required to disclose that amount and the circumstances that led to the breach, (3) an entity is required to disclose the total amount of the basis adjustments in existing hedges as a reconciling amount if other areas of GAAP require the disaggregated disclosure of the amortized cost basis of assets included in the closed portfolio, and (4) an entity is prohibited from considering basis adjustments in an existing hedge when determining credit losses.

As the Company does not currently elect to apply hedge accounting, the instruments are marked-to-market each period end and changes in fair value, realized or unrealized, are recognized in earnings.

Therefore, adoption of ASU 2022-01 did not have a material impact on the Company’s Consolidated Financial Statements.

Effective January 1, 2022, the Company adopted ASU 2021-08 , Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers .

Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree.

Historically, such amounts were recognized by the acquirer at fair value.

With adoption of ASU 2021-08, the Company assumed contract liabilities at carrying value of $ 9.1 million upon Closing.

Effective January 1, 2022, the Company adopted ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”) .

ASU 2020-04 was issued to ease the potential accounting burden expected when global capital markets move away from LIBOR, the benchmark interest rate banks use to make short-term loans to each other.

The amendments in this update provide optional expedients and exceptions for applying GAAP to contracts, hedging relationship, and other transactions affected by reference rate reform if certain criteria are met.

Interest rate applied to the Company’s new debt resulting from the comprehensive refinance is based on Secured Overnight Financing Rate (“SOFR”), which is a broad measure of the cost of borrowing cash overnight collateralized by treasury securities.

Refer to Note 8—Debt and Financing Costs in the Notes to our Consolidated Financial Statements of this Form 10-K for discussion of SOFR applicable to the Company’s debt structures.

Recent Accounting Pronouncement Not Yet Adopted

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”).

The amendments in ASU 2022-03 clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value.

The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction.

The amendments also require the following disclosures for equity securities subject to contractual sale restrictions:

(1) The fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet;

(2) The nature and remaining duration of the restriction(s);

(3) The circumstances that could cause a lapse in the restriction(s).

This guidance is effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.

The Company is currently evaluating the effect that ASU 2022-03 will have on its Consolidated Financial Statements.

BUSINESS COMBINATION

On February 22, 2022, the Company consummated the previously announced business combination transactions contemplated by the Contribution Agreement, dated as of October 21, 2021.

Pursuant to the Contribution Agreement, in connection with the Closing, (i) Contributor contributed all the equity interests of the Contributed Entities to the Partnership;

and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 shares of the Company’s Class C Common Stock.

Please refer to “The Transaction” discussed above.

The Transaction was accounted for as a reverse merger in accordance with ASC 805, which, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair value.

The Company also adopted ASU 2021-08, effective as of January 1, 2022, to record contract liabilities at their carrying value as of the acquisition date.

Although the Company was the legal acquirer, BCP was determined to be the accounting acquirer and legal acquiree.

As a result, BCP and its subsidiaries’ net assets were carried at historical value, acquired net assets were measured at fair value except contract liabilities being recorded at carrying value at the acquisition date, and results of operations of ALTM and its subsidiaries were included in the Company’s Consolidated Financial Statements from the Closing Date going forward.

The purchase price allocation is based on an assessment of the fair value of the assets acquired and liabilities assumed in the acquisition using inputs that are not observable in the market and thus level 3 inputs.

The fair value of the processing plant, gathering system and related facilities and equipment are based on market and cost approaches.

The initial value of the Preferred Units and associated embedded derivatives was based on expected future interest rates using the Black-Karasinski model and the assumed contingent liability was determined through a probability-weighted analysis of the expected future cash flows and other applicable valuation techniques.

See additional details for Preferred Units in Note 12—Series A Cumulative Redeemable Preferred Units and contingent liabilities in Note 18—Commitments and Contingencies in the Notes to our Consolidated Financial Statements in this Form 10-K.

In addition, the Company used an income approach by incorporation of discounted cash flow method, market approach through a guideline public company method and applied a weighting to the selected methods to estimate the fair values of the equity method investments, see additional details in Note 7—Equity Method Investments in the Notes to our Consolidated Financial Statements in this Form 10-K.

During the 12-month measurement period following the acquisition date, the Company made necessary adjustments as information became available to the purchase price allocation, including, but not limited to, working capital and valuation of the underlying assets of the equity method investments.

The Company recorded goodwill of $ 5.1 million relates to operational synergies as of December 31, 2022.

The following table summarizes the estimated fair value of assets acquired and liabilities assumed in the Transaction in accordance with ASC 805:

(In thousands) Amount

Cash and cash equivalent $ 13,401

Accounts receivable 2,115

Accounts receivable - affiliates 15,485

Property, plant, and equipment, net 634,923

Intangible assets, net 13,200

Investments in unconsolidated affiliates 1,752,500

Prepaid expense and other assets 7,749

Goodwill 5,077

Total assets acquired 2,444,450

Accrued expenses and other accrued liabilities 5,688

Long-term debt 657,000

Embedded derivative liabilities 89,050

Contract liabilities 9,102

Mandatory redeemable Preferred Units 200,667

Deferred tax liabilities 2,030

Contingent liabilities 4,451

Total liabilities assumed 967,988

Redeemable noncontrolling interest - Preferred Unit limited partners 462,717

Total consideration transferred $ 1,013,745

The Company incurred acquisition-related costs of $ 6.4 million and $ 5.7 million, which was included in the “General and administrative expenses” of the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, respectively.

For the year ended December 31, 2022, the Company’s Consolidated Statement of Operations included results of operations from ALTM starting from February 23, 2022, which recorded revenues of $ 129.4 million and net income of $ 44.8 million, excluding intercompany revenue and cost of sales.

The unaudited supplemental pro forma financials are for informational purposes only and are not indicative of future results.

The results below for the years ended December 31, 2022 and 2021 combine the results of the Company and the Partnership, giving effect to the Transaction as if it had been completed on January 1, 2021.

Pro Forma Financials For the Year Ended December 31,

(In thousands)

Revenues $ 1,240,343 $ 822,661

Net income (loss) including noncontrolling interest $ 243,301 $ ( 52,172 )

Given the assumed pro forma transaction date of January 1, 2021, we removed $ 21.0 million of acquisition-related expenses for the year ended months ended December 31, 2022 and recognized $ 31.2 million of total acquisition-related expenses for the year ended December 31, 2021.

REVENUE RECOGNITION

The following table presents a disaggregation of the Company’s revenue:

Year Ended December 31,

For the Year Ended December 31,

2022 2021 2020

(In thousands)

Gas gathering and compression $ 18,192 $ 20,060 $ 17,077

Gas processing 107,878 106,396 101,199

Transmission 12,572 14,548 15,942

NGL transmission 2,422 2,773 1,580

Other 1,663 937 —

Midstream services revenue — affiliate 142,727 144,714 135,798

Product sales — affiliate

Product sales — third parties

Gathering and processing services $ 393,954 $ 272,677 $ 272,829

Natural gas, NGLs and condensate sales 806,353 385,622 135,330

Other revenue 13,183 3,745 2,017

Total revenues and other $ 1,213,490 $ 662,044 $ 410,176

There have been no significant changes to the Company’s contracts with customers during the years ended December 31, 2022, 2021, and 2020.

Contracts with customers acquired through the Transaction had similar structures as the Company’s existing contracts with customers.

For the years ended December 31, 2022, 2021, and 2020 the Company recognized revenues from MVCs of $ 4.0 million, $ 2.5 million and $ 0.1 million, respectively.

Remaining Performance Obligations

The following table presents our estimated revenue from contracts with customers for remaining performance obligations that has not yet been recognized, representing our contractually committed revenues as of December 31, 2022:

Fiscal Year Amount

(In thousands)

2023 $ 38,382

Total revenues $ 160,617 $ 148,409 $ 135,798

The Company primarily generates revenue from its contracts with customers for the gathering, compression, processing, transmission, and sale of natural gas and NGLs in exchange for a fee per unit of volumes processed or delivered during a given month.

Midstream services revenue is primarily attributable to services performed for Apache pursuant to separate long-term commercial midstream agreements .

As part of these agreements, substantially all of Apache’s natural gas production from its existing and future owned or controlled properties within the dedicated area of its entire Alpine High resource play is provided to the Company, so long as Apache has the right to market such product.

Providing the related service on each volumetric unit represents a single, distinct performance obligation that is satisfied over time as services are rendered.

Prior to the Company entering the new Gas Processing Agreement discussed below, the Company did not own or take title to the volumes it serviced under these agreements.

Altus Midstream, in return for its performance, receives a fee per volumetric unit serviced during a given month.

The related service fee charged per unit is set forth for each contract year, subject to yearly fee escalation recalculations.

As the amount of volumes serviced are not subject to minimum commitments and each midstream service agreement contains provisions for fee recalculations, substantially all of the transaction price is variable at inception of each contract term.

Revenue is measured using the output method based on the amount of volumes serviced each month and the applicable service fee and recognized over time in the amount to which Altus Midstream has the right to invoice, as performance completed to date corresponds directly with the value to its customers.

The transaction price is not constrained as variability is resolved prior to the recognition of revenue.

The Company entered into a new Gas Processing Agreement with Apache in October 2021, which superseded the prior agreement.

In addition to the service fees discussed above, the new Gas Processing Agreement contains terms for Apache to provide the Company with excess recovery volumes as consideration under the contract.

Excess recovery volumes represent the net difference between the actual recovery rate of processed volumes and contractually fixed volumetric recovery rates.

The Company obtains control of excess recovery volumes, if any, on a monthly basis.

Any product received is reflected as non-cash consideration and the associated value is included in the transaction price for gas processing services on a net basis.

The associated revenue is valued using the market price of the relevant product during the month such product was processed.

The subsequent sale of any excess recovery volumes to third parties is recorded as “Product sales — third parties” and the subsequent sale of any excess recovery volumes to Apache is recorded as “Product sales — affiliate” in the Company’s statement of operations.

The associated costs of excess recovery volumes sold are recorded based on the market price of the relevant product and are recorded as “Cost of product sales — third parties” or “Cost of product sales — affiliate” in the Company’s consolidated statement of operations.

In 2021, the Company recorded $ 9.8 million of revenues and costs related to sales of excess recovery volumes to Apache and $ 2.4 million of revenues and costs related to sales of excess recovery volumes to third parties.

In addition to the $ 2.4 million of revenue and costs related to the sales of excess recovery volumes to third parties under the new Gas Processing Agreement, the Company also purchased and processed NGL volumes for other third-party customers during 2021 and 2020.

As part of these agreements, Altus Midstream purchases volumes from a third party, which Altus Midstream then owns, controls and services, prior to ultimate sale to the customer.

The Company recorded revenue related to these contracts of $ 5.7 million and $ 3.7 million, respectively, in 2021 and 2020, with associated purchase costs of $ 5.4 million and $ 3.0 million, respectively.

As it relates to product sales, the physical delivery of each unit of quantity represents a single, distinct performance obligation that is satisfied at a point in time when control transfers to the customer, generally determined as the point of delivery.

Prices are determined based on market-indexed values, adjusted for quality and other market-reflective differentials.

As there are no provisions for minimum volume commitments and pricing is variable based on index values, revenue is measured by allocating an entirely variable market price to each performance obligation and recognized at a point in time when control is transferred to the customer.

The transaction price is not constrained as variability is resolved prior to the recognition of revenue.

Other Midstream Service Revenue — Affiliate

Beginning in 2020, Altus Midstream entered into various agreements with Apache to provide compressor maintenance, operations, and other related services for various compressors at compressor stations owned by Apache.

Altus Midstream receives a fixed monthly fee under these contracts for each month that services are provided.

Providing such services on each compressor unit represents a single, distinct performance obligation that is satisfied over time as services are rendered.

Income generated from these contracts in 2021 and 2020 totaled $ 1.7 million and $ 0.9 million, respectively, and is classified as “Other” within Midstream Services Revenue — Affiliate in the table above.

Payment Terms and Contract Balances

Payments are generally due the month immediately following the month of service.

Amounts settled with Apache each month are based on the net amount owed to either party.

Revenue receivables from the Company’s contracts with Apache totaled $ 13.7 million and $ 11.4 million, as of December 31, 2021 and 2020, respectively, as presented on the Company’s consolidated balance sheet.

Sales revenue receivables from the Company’s contracts with third parties totaled $ 2.2 million and $ 1.0 million as of December 31, 2021 and 2020, respectively, as presented on the Company’s consolidated balance sheet.

In accordance with the provisions of ASC Topic 606, “Revenue from Contracts with Customers,” a variable transaction price for each short-term sale is allocated to each performance obligation as the terms of payment relate specifically to the Company’s efforts to satisfy its obligations.

As such, the Company has elected the practical expedients available under the standard to not disclose the aggregate transaction price allocated to unsatisfied, or partially unsatisfied, performance obligations as of the end of the reporting period.

Thereafter 155,888

Our contractually committed revenue, for purposes of the tabular presentation above, is generally limited to customer contracts that have fixed pricing and fixed volume terms and conditions, generally including contracts with payment obligations associated with MVCs.

Contract Liabilities

The following provides information about contract liabilities from contracts with customers:

(In thousands) 2022 2021

Balance as of January 1 $ 14,756 $ 11,085

Reclassification of beginning contract liabilities to revenue as a result of performance obligations being satisfied ( 7,180 ) ( 423 )

Cash received in advance and not recognized as revenue 21,724 4,094

Balance as of December 31 29,300 14,756

Current portion 6,607 3,082

Non-current portion $ 22,693 $ 11,674

Contract liabilities relate to payments received in advance of satisfying performance obligations under a contract, which result from contribution in aid of construction payments.

Current and noncurrent contract liabilities are included in “Other Current Liabilities” and “Contract Liabilities”, respectively, of the Consolidated Balance Sheets.

Contract liabilities balance as of December 31, 2022 increased $ 14.5 million compared to that as of December 31, 2021.

Higher contract liabilities balance reflected new projects assumed upon Closing of the Transaction and new projects started during 2022 with existing customers.

Contract Cost Assets

The Company has capitalized certain costs incurred to obtain a contract that would not have been incurred if the contract had not been obtained.

These costs are recovered through the net cash flows of the associated contract.

As of December 31, 2022 and 2021, the Company had contract acquisition cost assets of $ 17.8 million and $ 18.4 million, respectively.

Current and noncurrent contract cost assets are included in “Prepaid and Other Current Assets” and “Deferred Charges and Other Assets”, respectively, of the Consolidated Balance Sheets.

The Company amortizes these assets as cost of sales on a straight-line basis over the life of the associated long-term customer contract.

For the years ended December 31, 2022, 2021 and 2020, the Company recognized cost of sales associated with these assets of $ 1.8 million, $ 1.8 million and $ 1.8 million, respectively.

PROPERTY, PLANT, AND EQUIPMENT

Property, plant and equipment are carried at cost or fair market value at the date of acquisition less accumulated depreciation.

The cost basis of constructed assets includes materials, labor, and other direct costs.

Major improvements or betterment are capitalized, while repairs that do not improve the life of the respective assets are expensed as incurred.

Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets.

Property, plant, and equipment, at carrying value, is as follows:

1 unchanged sentence

Gathering, processing, and transmission systems and facilities $ 2,904,084 $ 2,121,434

$ 208,211 $ 204,643

Construction in progress 335 904

Other property and equipment 3,154 3,323

Total property, plant, and equipment 211,700 208,870

Vehicles 9,290 6,090

Computers and equipment 4,289 4,271

accumulated depreciation and accretion ( 474,258 ) ( 337,030 )

Total depreciable assets, net 2,443,405 1,794,765

Construction in progress 70,325 24,888

Land 21,482 19,626

Total property, plant, and equipment, net $ 2,535,212 $ 1,839,279

(1) Included in Gathering, processing, and transmissions systems and facilities are compressors under lease to Apache totaling $ 10.0 million and $ 6.2 million, net as of December 31, 2021 and December 31, 2020, respectively.

The cost of property classified as “Construction in progress” is excluded from capitalized costs being depreciated.

These amounts represent property that is not yet available to be placed into productive service as of the respective balance sheet dates.

During 2020, the Company sold various assets for total proceeds of $ 10.2 million.

Included in these assets sales was the sale of 15 power generators.

As a result of the sale, the remaining power generators owned by the Company were remeasured at fair value calculated based on the proceeds of this sale.

This remeasurement resulted in an impairment of $ 1.6 million on these assets based on this fair value assessment, which were written down to their fair value of $ 2.3 million.

The fair value of the assets was determined using the market approach based on the sales proceeds of the assets, which are classified as Level 1 inputs in the fair value hierarchy.

Property, plant, and equipment are evaluated for potential impairment when events or changes in circumstances indicate a possible significant deterioration in future cash flows expected to be generated by an asset group.

In conjunction with Apache’s decision in the fourth quarter of 2019 to materially reduce funding to Alpine High, Altus management assessed its long-lived infrastructure assets for impairment given the expected reduction to future throughput volumes.

As a result of this assessment, Altus recorded impairments totaling $ 1.3 billion on its gathering, processing, and transmission assets in the fourth quarter of 2019.

The fair values of the impaired assets were determined to be $ 203.6 million as of the time of the impairment and were estimated using the income approach.

Altus has classified these nonrecurring fair value measurements as Level 3 in the fair value hierarchy.

During 2019, the Company also elected to cancel construction on a compressor station, and, as a result, certain of its components were marketed for sale.

Accordingly, these assets were measured at fair value less costs to sell.

The Company recorded an impairment of $ 9.3 million on these assets, which were written down to their fair value of $ 18.2 million.

The fair value of the assets was determined using the market approach based on estimated sales proceeds, classified as Level 1 inputs in the fair value hierarchy.

The Company entered into a finance lease during the first quarter of 2019 related to power generators leased on a one-year term with the right to purchase.

The lease expired in January 2020, at which time the Company exercised its purchase option and purchased the power generators under lease for $ 9.8 million.

Depreciation on the Company's finance lease asset was $ 5.0 million for the year ended December 31, 2019.

Interest on the Company's finance lease assets was $ 0.9 million for the year ended December 31, 2019.

No depreciation expense nor interest were recorded related to this finance lease for the years ended December 31, 2021 and 2020.

DEBT AND FINANCING COSTS

In November 2018, Altus Midstream entered into a revolving credit facility for general corporate purposes that matures in November 2023 (subject to Altus Midstream’s two , one year extension options).

The agreement for this revolving credit facility, as amended (the Amended Credit Agreement), provides aggregate commitments from a syndicate of banks of $ 800.0 million.

The aggregate commitments include a letter of credit subfacility of up to $ 100.0 million and a swingline loan subfacility of up to $ 100.0 million.

Altus Midstream may increase commitments up to an aggregate $ 1.5 billion by adding new lenders or obtaining the consent of any increasing existing lenders.

As of December 31, 2021, there were $ 657.0 million of borrowings and a $ 2.0 million of letter of credit outstanding under this facility.

As of December 31, 2020, there were $ 624.0 million of borrowings and no letters of credit outstanding under this facility.

Altus Midstream’s revolving credit facility is unsecured and is not guaranteed by the Company, Apache, APA Corporation or any of their respective subsidiaries.

At Altus Midstream’s option, the interest rate per annum for borrowings under this facility is either a base rate, as defined, plus a margin, or the London Interbank Offered Rate (LIBOR), plus a margin.

Altus Midstream also pays quarterly a facility fee at a rate per annum on total commitments.

The margins and the facility fee vary based upon (i) the Leverage Ratio (as defined below) until Altus Midstream has a senior long-term debt rating and (ii) such senior long-term debt rating once it exists.

The Leverage Ratio is the ratio of (1) the consolidated indebtedness of Altus Midstream and its restricted subsidiaries to (2) EBITDA (as defined in the Amended Credit Agreement) of Altus Midstream and its restricted subsidiaries for the 12 -month period ending immediately before the determination date.

At December 31, 2021, the base rate margin was 0.05 percent, the LIBOR margin was 1.05 percent, and the facility fee was 0.20 percent.

In addition, a commission is payable quarterly to the lenders on the face amount of each outstanding letter of credit at a per annum rate equal to the LIBOR margin then in effect.

Customary letter of credit fronting fees and other charges are payable to issuing banks.

The Amended Credit Agreement contains restrictive covenants that may limit the ability of Altus Midstream and its restricted subsidiaries to, among other things, incur additional indebtedness or guaranty indebtedness, sell assets, make investments in unrestricted subsidiaries, enter into mergers, make certain payments and distributions, incur liens on certain property securing indebtedness, and engage in certain other transactions without the prior consent of the lenders.

Altus Midstream also is subject to a financial covenant under the Amended Credit Agreement, which requires it to maintain a Leverage Ratio not exceeding 5.00 :1.00 at the end of any fiscal quarter, starting with the quarter ended December 31, 2019, except that during the period of up to one year following a qualified acquisition, the Leverage Ratio cannot exceed 5.50 :1.00 at the end of any fiscal quarter.

Unless the Leverage Ratio is less than or equal to 4.00 :1.00, the Amended Credit Agreement limits distributions in respect of Altus Midstream LP’s capital to $ 30 million per calendar year until either (i) the consolidated net income of Altus Midstream LP and its restricted subsidiaries, as adjusted pursuant to the Amended Credit Agreement, for three consecutive calendar months equals or exceeds $ 350.0 million on an annualized basis or (ii) Altus Midstream LP has a specified senior long-term debt rating;

in addition, before the occurrence of one of those events, the Leverage Ratio must be less than or equal to 5.00 :1.00.

In no event can any distribution be made that would, after giving effect to it on a pro forma basis, result in a Leverage Ratio greater than (i) 5.00 :1.00 or (ii) for a specified period after a qualifying acquisition, 5.50 :1.00.

The Leverage Ratio as of December 31, 2021 was less than 4.00 :1.00.

The terms of Altus Midstream’s Preferred Units also contain certain restrictions on distributions on Altus Midstream LP’s Common Units, including the Common Units held by the Company, and any other units that rank junior to the Preferred Units with respect to distributions or distributions upon liquidation.

Refer to Note 11—Series A Cumulative Redeemable Preferred Units for further information.

In addition, the amount of any cash distributions to Altus Midstream LP by any entity in which it has an interest accounted for by the equity method is subject to such entity’s compliance with the terms of any debt or other agreements by which it may be bound, which in turn may impact the amount of funds available for distribution by Altus Midstream LP to its partners.

There are no clauses in the Amended Credit Agreement that permit the lenders to accelerate payments or refuse to lend based on unspecified material adverse changes.

The Amended Credit Agreement has no drawdown restrictions or prepayment obligations in the event of a decline in credit ratings.

However, the agreement allows the lenders to accelerate payment maturity and terminate lending and issuance commitments for nonpayment and other breaches, and if Altus Midstream or any of its restricted subsidiaries defaults on other indebtedness in excess of the stated threshold, is insolvent, or has any unpaid, non-appealable judgment against it for payment of money in excess of the stated threshold.

Lenders may also accelerate payment maturity and terminate lending and issuance commitments if Altus Midstream undergoes a specified change in control or has specified pension plan liabilities in excess of the stated threshold.

Altus Midstream was in compliance with the terms of the Amended Credit Agreement as of December 31, 2021.

Interest Income and Financing Costs, Net of Capitalized Interest

The following table presents the components of Altus Midstream’s interest income and financing costs, net of capitalized interest:

Year Ended December 31,

2021 2020 2019

(in thousands)

Interest income $ 4 $ 9 $ 3,606

Interest expense $ 9,431 $ 9,775 $ 6,384

Amortization of deferred facility fees 1,167 1,148 889

Capitalized interest — ( 8,733 ) ( 5,481 )

Financing costs, net of capitalized interest $ 10,598 $ 2,190 $ 1,792

OTHER CURRENT LIABILITIES

The following table provides detail of the Company’s other current liabilities at December 31, 2021 and 2020:

These amounts represent property that is not yet available to be placed into productive service as of the respective reporting date.

The Company recorded $ 139.6 million , $ 106.8 million and $ 97.4 million of depreciation expense for the years ended December 31, 2022, 2021 and 2020, respectively.

Capitalized interest included in property, plant and equipment amounted to $ 1.4 million, $ 0.9 million and $ 16.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

GOODWILL AND INTANGIBLE ASSETS, NET

The Company closed a business combination transaction on February 22, 2022, refer to the Transaction in Note 3—Business Combination in the Notes to our Consolidated Financial Statements in this Form 10-K.

The Transaction was accounted for as a reverse merger pursuant to ASC 805.

In connection with the Transaction, the Company recorded excess of the purchase price over net assets acquired as goodwill.

The Company recorded goodwill of $ 5.1 million in the Midstream Logistics segment as of December 31, 2022.

Goodwill is tested at least annually as of November 30 of each year, or more frequently as events occur or circumstances change that would more-likely-than-not reduce fair value of a reporting unit below its carrying value.

Company’s management assesses whether there have been events or circumstances that trigger the fair value of the reporting unit to be lower than its net carrying value since consummation of the Transaction and concluded that goodwill was no t impaired as of December 31, 2022.

Intangible Assets

Intangible assets, net are comprised of the following:

(In thousands)

Accrued taxes other than income $ 10,888 $ 165

Accrued capital costs 1,346 360

Accrued incentive compensation 1,585 1,466

Accrued operations and maintenance expense 645 926

Other 1,218 2,696

Total other current liabilities $ 15,682 $ 5,613

ASSET RETIREMENT OBLIGATION

The following table describes changes to the Company’s asset retirement obligation (ARO) liability for the years ended December 31, 2021 and 2020:

Customer contracts $ 1,137,831 $ 1,135,963

Right of way assets 127,539 99,345

Less accumulated amortization ( 569,981 ) ( 449,259 )

Total amortizable intangible assets, net $ 695,389 $ 786,049

The fair value of acquired customer contracts was capitalized as a result of acquiring favorable customer contracts as of the closing dates of certain past acquisitions and is being amortized using a straight-line method over the remaining term of the customer contracts, which range from one to twenty years .

Right-of-way assets relate primarily to underground pipeline easements and have a useful life of ten years and are amortized using the straight-line method.

The right of way agreements are generally for an initial term of ten years with an option to renew for an additional ten years at agreed upon renewal rates based on certain indices or up to 130 % of the original consideration paid.

At December 31, 2022, remaining weighted average amortization periods for customer contracts and right of way assets were approximately 7.53 years and 7.07 years, respectively.

Overall remaining weighted average amortization period for the intangible assets as of December 31, 2022 was approximately 7.47 years.

The Company recorded $ 120.7 million, $ 136.8 million and $ 126.4 million of amortization expense for the years ended December 31, 2022, 2021, and 2020, respectively.

There was no impairment recognized on intangible assets for the years ended December 31, 2022, 2021 and 2020, respectively.

Estimated aggregate amortization expense for the remaining unamortized balance in years is as following:

Fiscal Year Amount

(In thousands)

Asset retirement obligation, beginning balance $ 64,062 $ 60,095

Liabilities incurred during the period — —

Accretion expense 4,269 3,967

Revisions in estimated liabilities — —

Asset retirement obligation, ending balance $ 68,331 $ 64,062

ARO reflects the estimated present value of the amount of dismantlement, removal, site reclamation, and similar activities associated with the Company’s infrastructure assets which include central processing facilities, gathering systems, and pipelines.

Management utilizes independent valuation reports and estimates of current costs to project expected cash outflows for retirement obligations.

Management estimates the ultimate productive life of the properties, a risk-adjusted discount rate, and an inflation factor in order to determine the current present value of this obligation.

To the extent future revisions to these assumptions impact the present value of existing ARO, a corresponding adjustment is made to the property, plant, and equipment balance.

COMMITMENTS AND CONTINGENCIES

Accruals for loss contingencies arising from claims, assessments, litigation, environmental, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated.

These accruals are adjusted as additional information becomes available or circumstances change.

As of December 31, 2021 and 2020, there were no accruals for loss contingencies.

The Company is subject to governmental and regulatory controls arising in the ordinary course of business.

The Company is not aware of any pending or threatened legal proceedings against it at the time of the filing of this Annual Report on Form 10-K that would have a material impact on its financial position, results of operations, or liquidity.

Environmental Matters

As an owner of infrastructure assets and with rights to surface lands, the Company is subject to various local and federal laws and regulations relating to discharge of materials into, and protection of, the environment.

These laws and regulations may, among other things, impose liability on the Company for the cost of pollution clean-up resulting from operations and subject the Company to liability for pollution damages.

In some instances, Altus Midstream may be directed to suspend or cease operations.

The Company maintains insurance coverage, which management believes is customary in the industry, although insurance does not fully cover against all environmental risks.

Additionally, there can be no assurance that current regulatory requirements will not change or past non-compliance with environmental laws will not be discovered.

The Company is not aware of any environmental claims existing as of December 31, 2021, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity.

Contractual Obligations

Altus Midstream’s existing fee-based midstream services agreements, which have no minimum volume commitments or firm transportation commitments, are underpinned by acreage dedications covering Alpine High.

Pursuant to these agreements, Altus Midstream is obligated to perform low and high pressure gathering, processing, dehydration, compression, treating, conditioning, and transportation on all volumes produced from the dedicated acreage, so long as Apache has the right to market such gas.

At the closing of the Altus Combination, the Company entered into the COMA and the Lease Agreement with Apache, which include contractual obligations for the Company to pay certain management and lease rental fees, respectively, to Apache over the term of the agreements.

Refer to Note 2—Transactions with Affiliates for further discussion.

During the fourth quarter of 2020, the Company entered into a three year fixed-rate power contract with a third-party.

The Company estimates its minimum obligation will be $ 4.7 million and $ 3.6 million for 2022 and 2023, respectively.

The actual amount incurred will vary based on usage.

In the second quarter of 2019, Altus Midstream issued and sold the Preferred Units.

Under the terms of the Amended LPA, the Preferred Unit holders are entitled to receive quarterly distributions until such time as the Preferred Units are redeemed or exchanged.

Refer to Note 11—Series A Cumulative Redeemable Preferred Units for further discussion regarding the terms of the Preferred Units and the rights of the holders thereof.

Additionally, the Company is required to fund its pro-rata portion of any future capital expenditures for the development of the pipeline projects as referenced in Note 9—Equity Method Interests .

At December 31, 2021 and 2020, there were no other material contractual obligations related to the entities included in the consolidated financial statements other than the performance of asset retirement obligations as referenced in Note 7—Asset Retirement Obligation and required credit facility fees discussed in Note 5—Debt and Financing Costs .

EQUITY METHOD INTERESTS

As of December 31, 2021, the Company owns the following equity method interests in Permian Basin long-haul pipeline entities.

For each of the equity method interests, the Company has the ability to exercise significant influence based on certain governance provisions and its participation in the significant activities and decisions that impact the management and economic performance of the equity method interests.

December 31, 2021 December 31, 2020

2023 $ 119,321

Thereafter 150,980

Total $ 695,389

EQUITY METHOD INVESTMENTS

As of December 31, 2022, the Company owned investments in the following long-haul pipeline entities in the Permian Basin.

These investments were accounted for using the equity method of accounting.

For each equity method investment (“EMI”) pipeline entity, the Company has the ability to exercise significant influence based on certain governance provisions and its participation in the significant activities and decisions that impact the management and economic performance of the EMI pipeline.

The table below presents the ownership percentages and investment balances held by the Company for each entity:

In thousands, except for ownership percentages Ownership Amount Ownership Amount

Gulf Coast Express Pipeline LLC 16.0 % $ 273,940 16.0 % $ 283,530

EPIC Crude Holdings, LP 15.0 % — 15.0 % 176,640

Permian Highway Pipeline LLC 26.7 % 629,896 26.7 % 615,186

Breviloba, LLC 33.0 % 460,990 33.0 % 479,826

Permian Highway Pipeline LLC (“PHP”) 53.3 % $ 1,474,800 26.7 % $ 626,477

Breviloba LLC (“Breviloba”) 33.0 % 455,057 — % —

Gulf Coast Express Pipeline LLC (“GCX”) 16.0 % 451,483 — % —

$ 2,381,340 $ 626,477

As of December 31, 2021 and 2020, unamortized basis differences included in the equity method interest balances were $ 34.0 million and $ 37.7 million, respectively.

These amounts represent differences in the Company’s initial costs paid to acquire the equity method interests and Altus’ initial underlying equity in the respective entities, as well as capitalized interest related to Permian Highway Pipeline (PHP) construction costs.

Unamortized basis differences are amortized into equity income (loss) over the useful lives of the underlying pipeline assets when they are placed into service.

The following table presents the activity in the Company’s equity method interests for the years ended December 31, 2021 and 2020:

Gulf Coast Express Pipeline LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC

Additionally, as of December 31, 2022, the Company owned 15.0 % of Epic Crude Holdings, LP (“EPIC”).

However, no dollar value was assigned through the purchase price allocation as an adjustment was made to eliminate equity in losses of EPIC.

No additional contribution was made to EPIC and no distribution or equity income was received from EPIC during the twelve months ended December 31, 2022.

As of December 31, 2022, the unamortized basis differences included in the EMI pipelines balances were $ 363.2 million.

There was no unamortized basis difference as of December 31, 2021.

These amounts represent differences in the Company’s contributions to date and the Company’s underlying equity in the separate net assets within the financial statements of the respective entities.

Unamortized basis differences will be amortized into equity income over the useful lives of the underlying pipeline assets.

There was capitalized interest of $ 13.4 million and $ 12.8 million as of December 31, 2022 and 2021, respectively.

Capitalized interest is amortized on a straight-line basis into equity income.

The following table presents the activities in the Company’s EMIs for the years ended December 31, 2022 and 2021:

Permian Highway Pipeline LLC Breviloba LLC Gulf Coast Express Pipeline LLC Total (2)

(In thousands)

2 unchanged sentences

Distributions ( 68,335 ) — — ( 68,335 )

Capitalized interest (1)

— — 8,733 — 8,733

Equity income (loss), net 42,196 ( 16,332 ) ( 308 ) 33,183 58,739

Other comprehensive loss 523 — — 523

Equity income, net 63,074 — — 63,074

Balance at December 31, 2021 $ 626,477 $ — $ — $ 626,477

Acquisitions 817,500 467,500 467,500 1,752,500

Contributions 78,171 — — 78,171

Distributions ( 170,409 ) ( 38,816 ) ( 47,539 ) ( 256,764 )

Equity income (loss), net 40,049 ( 19,079 ) 62,522 30,272 113,764

Other comprehensive income — 630 — — 630

Impairment (2)

Equity income, net (1)

123,061 26,373 31,522 180,956

Balance at December 31, 2022 $ 1,474,800 $ 455,057 $ 451,483 $ 2,381,340

(1) Altus’ proportionate share of the PHP construction costs were funded with the revolving credit facility.

Accordingly, Altus capitalized $ 8.7 million of related interest expense during 2020, which is included in the basis of the PHP equity interest.

(2) The Company impaired its investment in EPIC in the fourth quarter of 2021.

Refer to Note 1 — Summary of Si gnificant Accounting P olicies for further details on this impairment charge.

(1) For the year ended December 31, 2022, net of amortization of basis differences and capitalized interests, which represents undistributed earnings, the amortization was $ 6.8 million from PHP, $ 0.6 million from Breviloba and $ 5.3 million from GCX.

(2) The EMIs acquired in the Transaction are included in the results from February 22, 2022 to December 31, 2022, and this is also the case for the additional 26.67 % of PHP that was acquired in the Transaction.

The results of the legacy ALTM business are not included in the Company’s consolidated financial statements prior to February 22, 2022.

Refer to Note 1—Description of Business and Basis of Presentation in the Notes to our Consolidated Financial Statements of this Form 10-K, for further information on the Company’s basis of presentation .

Summarized Financial Information

The following represents selected income statement and balance sheet data for the Company’s equity method interests (on a 100 percent basis):

The following represented selected income statement and balance sheet data for the Company’s EMI pipeline entities (on a 100 percent basis):

For the Year Ended December 31, 2022

Gulf Coast Express Pipeline LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC

Statements of Income (In thousands)

Permian Highway Pipeline LLC Breviloba, LLC Gulf Coast Express Pipeline LLC

Statements of Operations (In thousands)

Revenues $ 396,846 $ 183,328 $ 364,223

Operating income (loss) 254,772 ( 36,488 ) 237,230 92,568

Net income (loss) 253,535 ( 114,519 ) 236,528 92,005

Other comprehensive income — 4,197 — —

Operating income 261,040 98,119 269,150

Net income 261,028 97,834 268,493

For the Year Ended December 31, 2021

Gulf Coast Express Pipeline LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC

Statements of Income (In thousands)

Permian Highway Pipeline LLC Breviloba, LLC Gulf Coast Express Pipeline LLC

Statements of Operations (In thousands)

Revenues $ 397,237 $ 157,683 $ 362,399

Operating income (loss) 266,219 ( 35,566 ) ( 1,798 ) 102,526

Net income (loss) 264,956 ( 109,614 ) ( 1,140 ) 102,048

Other comprehensive income — 3,484 — —

Operating income 237,230 92,568 254,772

Net income 236,528 92,005 253,535

For the Year Ended December 31, 2020

Gulf Coast Express Pipeline LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC

Statements of Income (In thousands)

Permian Highway Pipeline LLC Breviloba, LLC Gulf Coast Express Pipeline LLC

Statements of Operations (In thousands)

Revenues $ 7,220 $ 167,784 $ 366,185

1 unchanged sentence

Net income (loss) ( 1,140 ) 102,048 264,956

Other comprehensive loss — ( 7,681 ) — —

(1) Although the Company’s interests in EPIC Crude Holdings, LP, Permian Highway Pipeline LLC, and Breviloba, LLC were acquired in March, May, and July of 2019, respectively, the financial results for all equity method interests are presented for the entire twelve months of 2019 for comparability.

As of December 31,

Gulf Coast Express Pipeline LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC Gulf Coast Express Pipeline LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC

Permian Highway Pipeline LLC Breviloba, LLC Gulf Coast Express Pipeline LLC Permian Highway Pipeline LLC Breviloba, LLC Gulf Coast Express Pipeline LLC

Balance Sheets (In thousands)

6 unchanged sentences

Total liabilities and equity $ 2,405,510 $ 1,338,628 $ 1,642,558 $ 2,337,935 $ 1,378,337 $ 1,730,349

DEBT AND FINANCING COSTS

June 2030 Sustainability-Linked Senior Notes

On June 8, 2022, the Partnership completed a private placement of $ 1.00 billion aggregate principal amount of its 5.875 % Senior Notes due 2030 (the “Notes”), which are fully and unconditionally guaranteed by the Company.

The Notes are issued under our Sustainability-Linked Financing Framework and include sustainability-linked features described below.

The Notes were issued at 99.588 % of their face amount and will mature on June 15, 2030.

Interest accrues from the most recent date to which interest has been paid on the Notes or, if no interest has been paid, from and including June 8, 2022 and is payable semi-annually in arrears on June 15 and December 15 of each year, commencing December 15, 2022.

The aggregate fees, expenses, and original issue discount paid to obtain the Notes totaled $ 21.5 million and were capitalized as debt issuance cost and included in the Condensed Balance Sheets as a direct deduction to the Notes as the Notes were transferred to third-party investors that pay the stated principal amount without deduction for the initial purchasers’ discount.

From and including June 15, 2027, the interest rate accruing on the Notes will be increased by an additional 0.250 % per annum unless the Partnership delivers written notice to the trustee on or before the date that is 15 days prior to June 15, 2027 that the Partnership has satisfied, and an independent external verifier has confirmed satisfaction of the Sustainability Performance Targets (“SPT”) as defined in the indenture governing the Notes related to the three key performance indicators:(1) Reduction of Scope 1 and Scope 2 greenhouse gas emissions intensity, (2) Reduction of Scope 1 and Scope 2 methane gas emissions intensity and (3) female representation in corporate officer positions.

If the conditions set forth above have only been satisfied for one or two of the SPTs rather than all three, the interest rate accruing on the Notes will be increased by an additional 0.0833 % per annum for each SPT which has not been satisfied and externally verified on June 15, 2027.

If the interest rate accruing on the Notes is increased in the manner set forth above and the Partnership subsequently delivers written notice to the trustee that it has satisfied the SPTs set forth in clause (1) and (2) above and such satisfaction has been confirmed by an independent external verifier, on or before the date that is 15 days prior to June 15, 2029, the interest rate accruing on the Notes will be reduced by 0.0833 % per annum for each such SPT.

The Partnership may redeem some or all the Notes at any time or from time to time prior to maturity based on terms prescribed in the indenture governing the Notes and the Notes.

Revolving Credit Facility

On June 8, 2022, the Partnership entered into a revolving credit agreement (the “RCA”) among Bank of America, N.A., as administrative agent (“Bank of America”), and the banks and other financial institutions party thereto, as lenders.

The RCA provides for a $ 1.25 billion senior unsecured revolving credit facility (the “Revolving Credit Facility”).

The Partnership may prepay borrowings under the Revolving Credit Facility at any time without premium or penalty (other than customary SOFR breakage costs), subject to certain notice requirements.

All borrowings under the Revolving Credit Facility mature on June 8, 2027.

The obligations under the Revolving Credit Agreement are fully and unconditionally guaranteed by the Company.

The RCA provides for borrowings of either, at the Partnership’s option, base rate loans or term SOFR loans.

Base rate loans bear interest at a rate per annum equal to the greatest of (a) the prime rate as announced from time to time by Bank of America, (b) the greater of (i) the federal funds effective rate and (ii) the overnight bank funding rate, plus 1/2 of 1.00% and (c) the adjusted term SOFR rate for an interest period of one month plus 1.00 %, plus a margin that ranges between 0.25 % and 1.00 %, depending on the credit rating of the Partnership.

SOFR loans bear interest at a rate per annum equal to the term SOFR rate for such interest periods plus 0.10 %, plus a margin that ranges between 1.25 % and 2.00 %, depending on the credit rating of the Partnership.

In obtaining the RCA, the Partnership incurred fees and expenses totaling $ 7.8 million, which was capitalized and included in the Consolidated Balance Sheets as “Prepaid and other current assets” and “Deferred charges and other assets.”

In addition, the Partnership is required to pay to each lender a commitment fee on the daily unfunded amount of such lender’s revolving commitment, which accrues at a rate that ranges between 0.15 % and 0.35 % depending on the credit rating of the Partnership.

Term Loan Credit Facility

On June 8, 2022, concurrently with the closing of the Revolving Credit Facility, the Partnership entered into a term loan credit agreement (the “TLA”) among PNC Bank, National Association, as administrative agent (“PNC Bank”), and the banks and other financial institutions party thereto, as lenders.

The TLA provides for a $ 2.00 billion senior unsecured term loan credit facility (the “Term Loan Credit Facility”).

The TLA matures on June 8, 2025.

The obligations under the TLA are fully and unconditionally guaranteed by the Company.

The TLA provides for borrowings of either, at the Partnership’s option, base rate loans or term SOFR loans.

Base rate loans bear interest at a rate per annum equal to the greatest of (a) the prime rate as announced from time to time by PNC Bank, (b) the greater of (i) the federal funds effective rate and (ii) the overnight bank funding rate, plus 1/2 of 1.00% and (c) the adjusted term SOFR rate for an interest period of one month plus 1.00 %, plus a margin that ranges between 0.25 % and 1.0 %, depending on the credit rating of the Partnership.

SOFR loans bear interest at a rate per annum equal to the term SOFR rate for such interest periods plus 0.10 %, plus a margin that ranges between 1.25 % and 2.0 %, depending on the credit rating of the Partnership.

In obtaining the TLA, the Partnership incurred fees and expenses totaling $ 7.7 million, which was capitalized as debt issuance cost and included in the Consolidated Balance Sheets as a direct deduction to the Term Loan Credit Facility.

Both the RCA and the TLA contain a “Sustainability Adjustments” feature that could result in a 0.05 % increase or reduction to the effective interest rate, dependent upon the Company meeting certain sustainability targets after 2022.

“Sustainability Rate Adjustment” means, with respect to any KPI Metrics Report, for any period between Sustainability Pricing Adjustment Dates, (a) positive 0.05 %, if neither of the Sustainability Performance Targets (as defined in the RCA and TLA) as set forth in the KPI Metrics Report have been satisfied for the relevant calendar year, (b) 0.00 % if only one of the Sustainability Performance Targets as set forth in the KPI Metrics Report has been satisfied for the relevant calendar year and (c) negative 0.05 % if both of the Sustainability Performance Targets as set forth in the KPI Metrics Report have been satisfied for the relevant calendar year;

provided that, in each case, if the Partnership subsequently issues a sustainability-linked debt instrument linked to the same KPI Metric and with an observation date for such calendar year, but with a higher percentage of representation or reduction, as the case may be, the relevant Sustainability Performance Target shall be automatically adjusted upward to equal the percentage of representation or reduction, as applicable, required by such subsequent sustainability-linked debt instrument.

“Sustainability Performance Targets” in the RCA and TLA mean, for any calendar year, with respect to (a) the Female Representation KPI, the target percentage of female representation in corporate officer positions for such calendar year and (b) the Methane Emissions KPI, the percentage reduction in methane gas emissions intensity relative to the baseline year for such calendar year.

Both the RCA and the TLA contain customary covenants and restrictive provisions which may, among other things, limit the Partnership’s ability to create liens, incur additional indebtedness, make restricted payments, or liquidate, dissolve, consolidate with, or merge into or with any other person.

As of December 31, 2022, the Partnership is in compliance with all customary and financial covenants.

Repayment of Existing Credit Facilities

In June 2022, the Company used the net proceeds from the Notes, together with cash on hand and proceeds from the term loan credit facility, to repay all outstanding borrowings under its existing credit facilities and to pay certain related fees and expenses.

In conjunction with the extinguishment of existing outstanding borrowings, the Company recognized a loss on extinguishment of debt of approximately $ 28.0 million.

In addition, the unamortized debt issuance costs related to the existing outstanding borrowings were fully amortized and included in the loss on debt extinguishment calculation for the year ended December 31, 2022.

The fair value of the Company and its subsidiaries’ consolidated debt as of December 31, 2022 and 2021 was $ 2.82 billion and $ 2.34 billion, respectively.

At December 31, 2022, the Notes’ fair value was based on Level 1 inputs and the Term Loan Credit Facility and Revolver Credit Facility’s fair value was based on Level 3 inputs.

The following table summarizes the Company’s debt obligations as of December 31, 2022 and 2021:

(In thousands)

$ 2.0 billion unsecured term loan

$ 2,000,000 $ —

$ 1.0 billion 2030 senior unsecured notes

$ 1.25 billion revolving line of credit

$ 1.25 billion term loan

$ 690 million term loan

$ 513 million term loan

$ 125 million revolving line of credit

Total Long-term debt 3,395,000 2,346,187

Debt issuance costs, net (1)

( 26,490 ) ( 38,485 )

3,368,510 2,307,702

Current portion, net — ( 54,280 )

Long-term portion of debt, net $ 3,368,510 $ 2,253,422

(1) Excluded unamortized debt issuance cost related to the Revolving Credit Facility.

Unamortized debt issuance cost associated with the Revolving Credit Facility was $ 6.9 million and $ 2.2 million as of December 31, 2022 and 2021, respectively.

As of December 31, 2022, the current and non-current portion of the unamortized debt issuance costs related to the revolving credit facilities were included in the “Prepaid and other current assets” and “Deferred charges and other assets” of the Consolidated Balance Sheets.

Interest Income and Financing Costs, Net of Capitalized Interest

The table below presents the components of the Company’s financing costs, net of capitalized interest:

For the Year Ended December 31,

2022 2021 2020

(In thousands)

Capitalized interest $ ( 2,747 ) $ ( 868 ) $ ( 16,131 )

Debt issuance costs 9,569 13,369 11,917

Interest expense 142,430 104,864 139,730

Total financing costs, net of capitalized interest $ 149,252 $ 117,365 $ 135,516

As of December 31, 2022 and 2021, unamortized debt issuance costs associated with the Notes and the Term Loan Credit Facility were $ 26.5 million and $ 38.5 million, respectively.

The amortization of the debt issuance costs was charged to interest expense for the periods presented.

The amount of debt issuance costs included in interest expense was $ 9.6 million, $ 13.4 million and $ 11.9 million for the years ended December 31, 2022, 2021, and 2020, respectively.

The following table reflects future maturities of long-term debt for each of the next five years and thereafter.

These amounts exclude approximately $ 26.5 million in unamortized deferred financing costs:

Fiscal Year Amount

(In thousands)

2025 2,000,000

Thereafter 1,000,000

Total $ 3,395,000

OTHER CURRENT LIABILITIES

The following table provides detail of the Company’s other current liabilities at December 31, 2022 and 2021:

(In thousands)

Accrued product purchases $ 115,773 $ 118,364

Accrued taxes 19,509 4,299

Accrued salaries, vacation, and related benefits 3,934 2,113

Accrued capital expenditures 3,892 2,995

Accrued interest 24,815 —

Accrued other expenses 5,991 7,872

Total other current liabilities $ 173,914 $ 135,643

Accrued product purchases mainly accrue the liabilities related to producer payments and any additional business-related miscellaneous fees we owe to third parties, such as transport or capacity fees as of December 31, 2022.

Components of lease costs are presented on the Consolidated Statements of Operations as “General and administrative expense” for real-estate leases and operating expense for non-real estate leases.

Total operating lease cost for the years ended December 31, 2022, 2021, and 2020 were $ 37.7 million, $ 38.7 million, and $ 43.6 million, respectively.

Short-term lease cost for the years ended December 31, 2022, 2021, and 2020 were $ 6.2 million, $ 4.8 million, and $ 2.8 million, respectively.

For the years ended December 31, 2022, 2021, and 2020, the Company did no t have material variable lease costs.

The following table presents other supplemental lease information:

Year Ended December 31,

(In thousands)

Operating cash flows from operating lease $ 37,420 $ 38,355

Right-of-use assets obtained in exchange for new operating lease liabilities $ 7,059 $ 43,580

Weighted-average remaining lease term — operating leases (in years) 1.72 1.89

Weighted-average discount rate — operating leases 6.62 % 7.75 %

The following table presents future minimum lease payments under operating leases as of December 31, 2022.

Fiscal Year Amount

(In thousands)

2023 $ 23,554

Thereafter 1,178

Total lease payments 30,651

interest ( 1,818 )

Present value of lease liabilities $ 28,833

EQUITY AND WARRANTS

Reverse Stock Split

On June 30, 2020, the Company effected a reverse stock split of the Company’s Class A Common Stock and Class C Common Stock by a ratio of one-for-twenty.

The par value and number of authorized shares of common stock and preferred stock were not affected by the reverse stock split.

A corresponding number of Altus Midstream Common Units were also restated as part of the reverse stock split.

All corresponding per-share and share amounts have been retroactively restated in this Annual Report on Form 10-K for all periods presented to reflect the reverse stock split.

Common Stock and Warrants

The Company’s second amended and restated certificate of incorporation authorizes the issuance of 1,500,000,000 shares of Class A Common Stock, $ 0.0001 par value, and 1,500,000,000 shares of Class C Common Stock, $ 0.0001 par value.

The Company’s shares of Class A Common Stock are listed on the Nasdaq under the symbol “ALTM.” As of December 31, 2021, there were 3,746,460 and 12,500,000 issued and outstanding shares of Class A Common Stock and Class C Common Stock, respectively.

In January 2022, a direct exchange by the Company and Apache was effectuated under the Amended LPA, pursuant to which the Company succeeded to Apache’s 12,500,000 Common Units, issued an additional 12,500,000 shares of Class A Common Stock to Apache, and cancelled Apache’s 12,500,000 shares of Class C Common Stock, whereupon the Company and Altus Midstream remained subsidiaries of Apache.

Holders of each of the Class A Common Stock and Class C Common Stock vote together as a single class on all matters submitted to a vote of the Company’s stockholders, except as required by law.

Only holders of Class A Common Stock are entitled to dividends or other liquidating distributions made by the Company.

On December 10, 2020, the Company announced that its board of directors initiated a dividend program on the Company’s Class A Common Stock as further detailed below under the section titled “Common Stock Dividend.”

Shares of Class A Common Stock and certain warrants were originally issued in connection with the Company’s public offering, while shares of Class C Common Stock were newly-issued in connection with the Altus Combination.

Redeemable Noncontrolling Interest - Common Unit Limited Partners

On February 22, 2022, the Company consummated the previously announced business combination transactions contemplated by the Contribution Agreement, dated as of October 21, 2021.

Pursuant to the Contribution Agreement, in connection with the Closing, (i) Contributor contributed all the equity interests of the Contributed Entities to the Partnership;

and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 common units representing limited partner interests in the Partnership and 50,000,000 shares of the Company’s Class C Common Stock, par value $ 0.0001 per share.

Please refer to “The Transaction” above.

The redemption option of the Common Unit is not legally detachable or separately exercisable from the instrument and is

non-transferable, and the Common Unit is redeemable at the option of the holder.

Therefore, the Common Unit is accounted for

as redeemable noncontrolling interest and classified as temporary equity on the Company’s Consolidated Balance Sheet.

During 2022, 5,730,000 common units were redeemed on a one -for-one basis for shares of Class A Common Stock and a corresponding number of shares of Class C Common Stock were cancelled.

There were 94,270,000 Common Units and an equal number of Class C Common Stock issued and outstanding as of December 31, 2022.

The Common Units fair value was approximately $ 3.11 billion as of December 31, 2022.

Fair value of the Common Units is estimated based on a quoted market price.

Redeemable Noncontrolling Interest — Preferred Unit Limited Partners

Upon Closing, the Company assumed certain Preferred Units that were issued and outstanding on acquisition date.

The Company has redeemed all assumed Preferred Units since the Closing.

Refer to Note 12—Series A Cumulative Redeemable Preferred Units for further discussion.

Public Warrants

As of December 31, 2021, 2020, and 2019 there were 12,577,350 Public Warrants (as defined below) outstanding.

Each whole public warrant entitles the holder to purchase one twentieth of a share of Class A Common Stock at a price of $ 230.00 per share (the Public Warrants).

The Public Warrants will expire five years after closing of the Altus Combination or earlier upon redemption or liquidation.

As of December 31, 2022 there were 12,577,350 Public Warrants (as defined below) outstanding.

Each whole public warrant entitles the holder to purchase one tenth of a share of Class A Common Stock at a price of $ 115.00 per share (the Public Warrants).

The Public Warrants will expire on November 9, 2023 or upon redemption or liquidation.

The Company may call the Public Warrants for redemption, in whole and not in part, at a price of $ 0.01 per warrant with not less than 30 days’ notice provided to the Public Warrant holders.

However, this redemption right can only be exercised if the reported last sale price of the Class A Common Stock equals or exceeds $ 180.00 per share for any 20 -trading days within a 30 -trading day period ending three business days prior to sending the notice of redemption to the Public Warrant holders.

Following the closing of the Altus Combination, the Public Warrants continued trading under the symbol “ALTMW.” On December 11, 2018, the Company received notice from the Staff of the Nasdaq of a delisting determination with respect to its Public Warrants for failure to satisfy the Nasdaq’s minimum round lot holder listing requirement.

The Public Warrants ceased trading on the Nasdaq at the opening of business on December 20, 2018.

The delisting of the Public Warrants did not impact the listing or trading of the Company’s Class A Common Stock.

Private Placement Warrants

As of December 31, 2021, 2020, and 2019 , there were 6,364,281 Private Placement Warrants (as defined below) outstanding, of which Apache holds 3,182,140 .

The private placement warrants are identical to the Public Warrants discussed above, except (i) they will not be redeemable by the Company so long as they are held by the initial holders or their respective permitted transferees and (ii) they may be exercised by the holders on a cashless basis (the Private Placement Warrants and, together with the Public Warrants, the Warrants).

The Warrants are recorded at a fair value of $ 0.2 million and $ 0.9 million as of December 31, 2021 and 2020, respectively, on the consolidated balance sheet in other non-current liabilities.

Earn-Out Consideration

As part of the Altus Combination, Apache was granted the right to receive earn-out consideration of up to 1,250,000 shares of Class A Common Stock as follows:

• 625,000 shares if the per share closing price of the Class A Common Stock as reported by Nasdaq during any 30 -trading-day period ending prior to the fifth anniversary of the Closing Date is equal to or greater than $ 280.00 for any 20 trading days within such 30 -trading-day period.

• 625,000 shares if the per share closing price of the Class A Common Stock as reported by Nasdaq during any 30 -trading-day period ending prior to the fifth anniversary of the Closing Date is equal to or greater than $ 320.00 for any 20 trading days within such 30 -trading-day period.

Redeemable Noncontrolling Interest — Apache Limited Partner

As of December 31, 2021, in conjunction with its ownership of the Class C Common Stock, Apache owned 12,500,000 Altus Midstream Common Units, approximately 76.9 percent of the total Common Units issued and outstanding.

The financial results of Altus Midstream and its subsidiaries are included in the Company’s consolidated financial statements as detailed in Note 1—Summary of Significant Accounting Policies , under the section titled “Principles of Consolidation.”

As of December 31, 2021, Apache had the right, at any time, to cause Altus Midstream to redeem all or a portion of the Common Units issued to Apache, in exchange for shares of the Company’s Class A Common Stock on a one -for-one basis or, at Altus Midstream’s option, an equivalent amount of cash;

provided that the Company could, at its option, effect a direct exchange of cash or Class A Common Stock for such Common Units in lieu of such a redemption by Altus Midstream.

Upon the future redemption or exchange of Common Units held by Apache, a corresponding number of shares of Class C Common Stock held by Apache would be cancelled.

As of December 31, 2021, Apache’s limited partner interest associated with the Common Units issued with the Class C Common Stock is reflected as a redeemable noncontrolling interest in the Company.

The redeemable noncontrolling interest is recognized at the higher of (i) its initial fair value plus accumulated earnings/losses associated with the noncontrolling interest and (ii) the maximum redemption value as of the balance sheet date.

The redemption value is determined based on a 5 -day volume weighted average closing price of the Class A Common Stock ( 5 -day VWAP) as defined in the Amended LPA, a Level 1 non-recurring fair value measurement.

At December 31, 2021 and 2020, the redeemable noncontrolling interest was recorded based on the redemption value as of the balance sheet date of $ 769.9 million and $ 575.1 million, respectively.

For further discussion of Apache’s right to receive additional shares of Class A Common Stock, and other outstanding equity instruments that may impact ownership interests and the limited partner interests of Altus Midstream in future periods, see Note 13—Net Income (Loss) Per Share .

Redeemable Noncontrolling Interest — Preferred Unit Limited Partners

On June 12, 2019, Altus Midstream issued and sold the Preferred Units in a private offering, and the purchasers of the Preferred Units were admitted as limited partners of Altus Midstream.

The Preferred Units will be exchangeable for shares of the Company’s Class A Common Stock at the option of the Preferred Unit holders after the seventh anniversary of Closing (as defined below) or upon the occurrence of specified events, unless otherwise redeemed by Altus Midstream.

Refer to Note 11—Series A Cumulative Redeemable Preferred Units for further discussion.

Common Stock Dividend

During 2021, the Company paid an aggregate $ 22.5 million in dividends on the Company’s Class A Common Stock, of which $ 5.6 million, or $ 1.50 per share, was paid in each quarter of 2021.

Refer to Note 2—Transactions with Affiliates for further discussion of the Common Unit distribution.

As of December 31, 2022 there were 6,364,281 Private Placement Warrants (as defined below) outstanding, of which Apache holds 3,182,140 .

The private placement warrants will expire on November 9, 2023 and are identical to the Public Warrants discussed above, except (i) they will not be redeemable by the Company so long as they are held by the initial holders or their respective permitted transferees and (ii) they may be exercised by the holders on a cashless basis (the “Private Placement Warrants” and, together with the Public Warrants, the “Warrants”).

The Company recorded a fair value of $ 50 thousand for the Public Warrants and a fair value of $ 38 thousand for the Private Warrants as of December 31, 2022 on the Consolidated Balance Sheet in “Other Current Liabilities”.

Refer to Note 13—Fair Value Measurement in the Notes to our Consolidated Financial Statements in this Form 10-K for additional discussion regarding valuation of the Warrants.

On February 22, 2022, the Company entered into a Dividend and Distribution Reinvestment Agreement (the “Reinvestment Agreement”) with certain stockholders including BCP Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC, APA Corporation Apache Midstream LLC, and certain individuals (each, a “Reinvestment Holder”).

Under the Reinvestment Agreement, each Reinvestment Holder is obligated to reinvest at least 20 % of all distributions on Common Units or dividends on shares of Class A Common Stock in the Company’s Class A Common Stock.

Additionally, the Audit Committee resolved that for the calendar year 2022, 100 % of all distributions or dividends received by each Reinvestment Holder would be reinvested in newly issued shares of Class A Common Stock.

As described in these Consolidated Financial Statements, as the context requires, dividends paid to holders of Class A Common Stock and distributions paid to holders of Common Units may be referred to collectively as “dividends.”

During 2022, the Company made cash dividend payments of $ 40.5 million to holders of Class A Common Stock and Common Units and $ 263.3 million was reinvested in shares of Class A Common Stock by each Reinvestment Holder.

On January 17, 2023, the Company declared a cash dividend of $ 0.75 per share on the Company’s Class A Common Stock and a distribution of $ 0.75 per Common Unit from the Partnership to the holders of Common Units.

Dividends are payable on February 16, 2023.

Certain holders of Class A Common Stock and Class C Common Stock will receive a cash dividend with the balance receiving additional shares of Class A Common Stock under the Reinvestment Agreement.

On May 19, 2022, the Company announced that its Board approved and declared a two -for-one stock split with respect to its Class A Common Stock and Class C Common Stock, in the form of a stock dividend (the “Stock Split”).

The Stock Split was accomplished by distributing one additional share of Class A Common Stock for each share of Class A Common Stock outstanding and one additional share of Class C Common Stock for each share of Class C Common Stock outstanding.

The additional shares of Common Stock were issued on June 8, 2022 to holders of record at the close of business on May 31, 2022.

All corresponding per-share and share amounts, excluding the Transaction, for periods prior to June 8, 2022 have been retrospectively restated in this Form 10-K to reflect the Stock Split.

SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS

On June 12, 2019, Altus Midstream issued and sold the Preferred Units in a private offering exempt from the registration requirements of the Securities Act of 1933, as amended (the Closing).

The Closing occurred pursuant to a Preferred Unit Purchase Agreement among Altus Midstream, the Company, and the purchasers party thereto, dated as of May 8, 2019.

A total of 625,000 Preferred Units were sold at a price of $ 1,000 per Preferred Unit, for an aggregate issue price of $ 625.0 million.

Altus Midstream received approximately $ 611.2 million in cash proceeds from the sale after deducting transaction costs and discounts to certain purchasers.

At the Closing, the partners of Altus Midstream entered into the Amended LPA.

The Amended LPA provides the terms of the Preferred Units, including the distribution rate, redemption rights, and rights to exchange the Preferred Units for shares of the Company’s Class A Common Stock, as well as rights of holders of the Preferred Units to approve certain partnership business, financial, and governance-related matters.

The Preferred Units have a perpetual term, unless redeemed or exchanged as described below.

Pursuant to the Amended LPA:

• The Preferred Units entitle the holders thereof to receive quarterly distributions at a rate of 7 percent per annum, commencing with the quarter ended June 30, 2019.

The rate increases to 10 percent per annum after the fifth anniversary of Closing and upon the occurrence of specified events.

For any quarter ending on or prior to December 31, 2020, Altus Midstream could elect to pay distributions in-kind and did so in respect of quarters ended on and before March 31, 2020.

• The Preferred Units are redeemable at Altus Midstream’s option at any time in cash at a redemption price (the Redemption Price) equal to (a) the greater of (i) an 11.5 percent internal rate of return (increasing to 13.75 percent after the fifth anniversary of Closing), and (ii) a 1.3 x multiple of invested capital plus (b) if applicable, the value of any accrued and unpaid distributions.

The Preferred Units will be redeemable at the holder’s option upon a change of control or liquidation of Altus Midstream and certain other events, including certain asset dispositions.

The Company and Altus Midstream remained subsidiaries of Apache upon consummation of the January 2022 direct exchange by the Company and Apache under the Amended LPA, pursuant to which the Company succeeded to Apache’s 12.5 million Common Units, issued an additional 12.5 million shares of Class A Common Stock to Apache, and cancelled Apache’s 12.5 million shares of Class C Common Stock (as further discussed in Note 10—Equity and Warrants ).

• The Preferred Units will be exchangeable for shares of the Company’s Class A Common Stock at the option of the Preferred Unit holders after the seventh anniversary of Closing or upon the occurrence of specified events.

Each Preferred Unit will be exchangeable for a number of shares of Class A Common Stock equal to the Redemption Price divided by the volume-weighted average trading price of the Class A Common Stock on the Nasdaq Global Select Market for the 20 trading days immediately preceding the second trading day prior to the applicable exchange date, less a 6 percent discount.

• Each outstanding Preferred Unit has a liquidation preference equal to the Redemption Price payable before any amounts are paid in respect of Altus Midstream’s Common Units and any other units that rank junior to the Preferred Units with respect to distributions or distributions upon liquidation.

• Altus Midstream is restricted from declaring or making cash distributions on its Common Units until all required distributions on the Preferred Units have been paid.

In addition, before the fifth anniversary of Closing, aggregate cash distributions on, and redemptions of, Common Units are limited to $ 650 million of cash from ordinary course of operations if permitted under the Amended Credit Agreement.

Cash distributions on, and redemptions of, Common Units also are subject to satisfaction of leverage ratio requirements specified in the Amended LPA.

Since the Preferred Units could be exchangeable for a number of shares of Class A Common Stock equal to 20 percent or more of the Company’s outstanding voting power, the Company submitted the potential issuance of such shares for approval of its stockholders (the Stockholder Approval) at its annual stockholder meeting in 2020 and obtained Stockholder Approval.

Classification

The Preferred Units are accounted for on the Company’s consolidated balance sheet as a redeemable noncontrolling interest classified as temporary equity based on the terms of the Preferred Units, including the redemption rights with respect thereto.

Initial Measurement

T he net transaction price as shown below was based on the negotiated transaction price, less issue discounts and transaction costs.

June 12, 2019

Prior to the Closing Date of the Transaction, the Partnership had 625,000 Preferred Units issued and outstanding.

Immediately prior to the Closing, on February 22, 2022, the Partnership redeemed for cash, 100,000 Preferred Units in an amount equal to approximately $ 120.1 million.

The Company assumed the remaining 525,000 Preferred Units as well as 29,983

paid-in-kind (“PIK”) Preferred Units that were issued and outstanding at the close of the acquisition.

At the close, 150,000 preferred units and 8,567 associated PIK units became mandatorily redeemable and liability classified with the balance of preferred units remaining unchanged and classified as redeemable noncontrolling interest.

During 2022, the Company redeemed all mandatorily redeemable preferred units for an aggregate $ 183.3 million and recognized a gain of $ 9.6 million, and the Company redeemed all noncontrolling interest Preferred Units for an aggregate $ 461.5 million and recognized excess of carrying amount over redemption price of $ 109.5 million.

In addition, the Company bifurcated and recognized the embedded derivative associated with the noncontrolling interest Preferred Units related to the exchange option provided to the Preferred Unit holders under the terms of the Partnership LPA.

As the Company redeemed all outstanding noncontrolling interest Preferred Units in July 2022 the embedded derivative liabilities were written off.

The Company recorded gains of $ 89.1 million for the year ended December 31, 2022, which was recorded as a “Gain on embedded derivative” in the Consolidated Statement of Operations.

Activities related to Preferred Units for the year ended December 31, 2022 are as follows:

Units Outstanding Amount

(In thousands, except for unit data)

Redeemable noncontrolling interest — Preferred Units, immediately upon Closing Date of Transaction (1)

396,417 $ 462,717

Redemption, including PIK units ( 396,417 ) ( 461,460 )

Cash distribution paid to Preferred Unit limited partners — ( 6,937 )

Allocation of net income — 18,128

Accreted redemption value adjustment — 97,075

Excess of carrying amount over redemption price — ( 109,523 )

Redeemable noncontrolling interest — Preferred Units, as of December 31, 2022 — $ —

(1) Included 21,417 PIK units on a pro rata basis.

FAIR VALUE MEASUREMENTS

The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2022 and 2021:

December 31, 2022

Level 1 Level 2 Level 3 Total

(In thousands)

Transaction price, gross $ 625,000

Issue discount ( 3,675 )

Transaction costs to other third parties ( 10,076 )

Transaction price, net $ 611,249

Certain redemption features embedded within the terms of the Preferred Units require bifurcation and measurement at fair value.

As such, the net transaction price shown in the table above was allocated to the preferred redeemable noncontrolling interest and the embedded features according to the associated initial fair value measurements as follows:

June 12, 2019

Commodity swap $ — $ 4,288 $ — $ 4,288

Interest rate derivatives — 2,675 — 2,675

Total assets $ — $ 6,963 $ — $ 6,963

Commodity swaps $ — $ 5,718 $ — $ 5,718

Interest rate derivatives — 8,328 — 8,328

Public warrants 50 — — 50

Private warrants — — 38 38

Total liabilities $ 50 $ 14,046 $ 38 $ 14,134

December 31, 2021

Level 1 Level 2 Level 3 Total

(In thousands)

Redeemable noncontrolling interest - Preferred Units $ 516,790

Long-term liability:

Embedded derivative (1)

(1) See Note 14—Fair Value Measurements for further discussion on the nature and recognition of the embedded derivative.

Subsequent Measurement

The Company applies a two-step approach to subsequently measure the redeemable noncontrolling interest related to the Preferred Units, by first allocating a portion of the net income of Altus Midstream in accordance with the terms of the Amended LPA described above.

After consideration of the foregoing, the Company records an additional adjustment to the carrying value of the Preferred Unit redeemable noncontrolling interest at each period end, if applicable.

The amount of such adjustment is determined based upon the accreted value method to reflect the passage of time until the Preferred Units are exchangeable at the option of the holder.

Pursuant to this method, the net transaction price is accreted using the effective interest method, to the Redemption Price calculated at the seventh anniversary of Closing.

The total adjustment is limited to an amount such that the carrying amount of the Preferred Unit redeemable noncontrolling interest at each period end is equal to the greater of (a) the sum of (i) the carrying amount of the Preferred Units determined in accordance with ASC 810, plus (ii) the fair value of the embedded derivative liability and (b) the accreted value of the net transaction price.

Activity related to the Preferred Units for the years ended December 31, 2021 and 2020 is as follows:

Units Outstanding Financial Position (1)

(In thousands, except for unit data)

Redeemable noncontrolling interest — Preferred Units:

at December 31, 2019 638,163 $ 555,599

Distribution of in-kind additional Preferred Units 22,531 —

Cash distributions paid to Preferred Unit limited partners — ( 23,124 )

Allocation of Altus Midstream net income N/A 75,906

Redeemable noncontrolling interest — Preferred Units:

at December 31, 2020 660,694 608,381

Cash distributions paid to Preferred Unit limited partners — ( 46,249 )

Distributions payable to Preferred Unit limited partners — ( 11,562 )

Allocation of Altus Midstream net income N/A 79,931

Accreted redemption value adjustment N/A 81,975

Redeemable noncontrolling interest — Preferred Units:

at December 31, 2021 660,694 $ 712,476

Embedded derivative liability (2)

(1) The Preferred Units are redeemable at Altus Midstream’s option at a redemption price (the Redemption Price), which as of December 31, 2021 is calculated as the greater of (i) an 11.5 percent internal rate of return and (ii) a 1.3 times multiple of invested capital.

As of December 31, 2021, the Redemption Price would have been based on an 11.5 percent internal rate of return, which would equate to a redemption value of $ 738.7 million.

(2) Certain redemption features embedded within the terms of the Preferred Units require bifurcation and measurement at fair value.

Refer to Note 14—Fair Value Measurements for discussion of the fair value changes in the embedded derivative liability during the period.

N/A - not applicable.

The total income tax provision (benefit) consists of the following:

Commodity swaps $ — $ 205 $ — $ 205

Interest rate derivatives 2,662 — 2,662

Contingent liabilities — — 839 839

Total liabilities $ — $ 2,867 $ 839 $ 3,706

Our derivative contracts consist of an interest rate swap and commodity swaps.

Valuation of these derivative contracts involved both observable publicly quoted price and certain inputs to the credit valuation that may not be readily observable in the marketplace.

As such derivative contracts are classified as Level 2 in the hierarchy.

Refer to Note 14—Derivatives and Hedging Activities in the Notes to our Consolidated Financial Statements in this Form 10-K for further discussion related to commodity swaps and interest rate derivatives.

The carrying value of the Company’s Public Warrants are recorded at fair value based on quoted market prices, a Level 1 fair value measurement.

The carrying value of the Company’s Private Placement Warrants are recorded at fair value determined using an option pricing model, a Level 3 fair value measurement , which is calculated based on key assumptions related to expected volatility of the Company’s common stock, an expected dividend yield, the remaining term of the warrants outstanding and the risk-free rate based on the U.S.

Treasury yield curve in effect at the time of the valuation.

These assumptions are estimated utilizing historical trends of the Company’s common stock, Public Warrants and other factors.

The Company has recorded a liability of $ 0.1 million as of December 31, 2022.

Change in fair value of the warrants since closing of the Transaction through reporting date was recorded in “Interest and other income” of the Consolidated Statement of Operations.

The carrying amounts reported on the Consolidated Balance Sheets for the Company’s remaining financial assets and liabilities approximate fair value due to their short-term nature.

There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the year ended December 31, 2022 and 2021.

DERIVATIVE AND HEDGING ACTIVITIES

The Company is exposed to certain risks arising from both its business operations and economic conditions, and it enters into certain derivative contracts to manage exposure to these risks.

To minimize counterparty credit risk in derivative instruments, the Company enters into transactions with high credit-rating counterparties.

The Company did not elect to apply hedge accounting to these derivative contracts and recorded the fair value of the derivatives on the Consolidated Balance Sheets as of December 31, 2022 and December 31, 2021.

Interest Rate Risk

The Company manages market risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and by using derivative financial instruments.

Specifically, the Company enters into derivative financial instruments to manage exposures that arise from activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates.

The Company’s objectives in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements.

To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy.

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract.

In September 2019, BCP PHP, LLC (“BCP PHP”) entered into two interest rate swaps on 75 % of the outstanding $ 513.0 million term loan.

These instruments were effective September 30, 2019 and included a mandatory termination date on November 19, 2024.

The notional amounts of these swaps floated monthly such that 75 % of the total outstanding term loan was covered by the notional of the two swaps over the life of the associated term facility.

In June 2022, these two interest rate swaps were terminated as BCP PHP’s outstanding term loan credit facility was extinguished on June 8, 2022.

Refer to Note 8—Debt and Financing Costs in the Notes to our Consolidated Financial Statements for further information about the refinancing transactions.

In November 2022, the Company entered into an interest rate swap with a notional amount of $ 1.00 billion effective on May 1, 2023 and maturing on May 31, 2025.

The Company pays a fixed rate of 4.46 % for the respective notional amount.

The fair value or settlement value of the consolidated interest rate swaps outstanding are presented on a gross basis on the Consolidated Balance Sheets.

Interest rate swap derivative assets were $ 2.7 million and nil as of December 31, 2022 and 2021, respectively.

Interest rate swap derivative liabilities were $ 8.3 million and $ 2.7 million as of December 31, 2022 and 2021, respectively.

The Company recorded cash settlements on interest rate swap derivatives of $ 10.9 million, $ 2.9 million, and $ 9.2 million for the years ended December 31, 2022, 2021 and 2020, respectively, in “Interest Expense” of the Consolidated Statements of Operations.

In addition, the Company recorded fair value adjustments of $ 7.9 million, $ 4.5 million and $ 18.9 million for the years ended December 31, 2022, 2021 and 2020, respectively, in “Interest Expense” of the Consolidated Statements of Operations.

Commodity Price Risk

The results of the Company’s operations may be affected by the market prices of oil, natural gas and NGLs.

A portion of the Company’s revenue is directly tied to local natural gas, natural gas liquids and condensate prices in the Permian Basin and the U.S.

Fluctuations in commodity prices also impact operating cost elements both directly and indirectly.

Management regularly reviews the Company’s potential exposure to commodity price risk and manages exposure of such risk through commodity hedge contracts.

During 2022, the Company entered into 11 commodity swap contracts based on the NGL-Mont Belvieu Purity Ethane-OPIS and Waha Basis index on various notional quantities of natural gas and NGLs.

These index swaps are used to hedge against location price risk of the commodity resulting from supply and demand volatility and protect cash flows against price fluctuations.

Table below presents detail information of commodity swaps outstanding as of December 31, 2022 (in thousands, except volumes):

December 31, 2022

Commodity Instruments Unit Volume Net Fair Value

Natural Gas (short contracts) Commodity Swap MMBtus 5,895,000 $ 4,737

NGL (short contracts) Commodity Swap Gallons 87,906,000 ( 3,308 )

Similarly, in 2021 and 2020 BCP Raptor, LLC (“BCP I”) and BCP Raptor II, LLC (“BCP II”) had WTI crude hedges at a specific notional amount that provided for a fixed price for crude in the Permian Basin and Waha basis hub hedges on various notional quantities of gas that either provided a fixed price differential of natural gas in the Permian Basin relative to the NYMEX natural gas contract or provided a fixed price for natural gas in the Permian Basin.

These commodity swaps expired before December 31, 2021.

The fair value or settlement value of the swaps outstanding are presented on a gross basis on the Consolidated Balance Sheet.

Commodity swap derivative assets were $ 4.3 million and nil as of December 31, 2022 and 2021, respectively.

Commodity swap derivative liabilities were $ 5.7 million and $ 0.2 million as of December 31, 2022 and 2021, respectively.

The Company recorded cash settlements on commodity swap derivatives of $ 0.2 million, $ 16.5 million, and $ 1.4 million for the years ended December 31, 2022, 2021 and 2020, respectively, in “Product Revenue” of the Consolidated Statements of Operations.

In addition, the Company recorded fair value adjustments of $ 1.4 million, $ 16.9 million and $ 1.6 million for the years ended December 31, 2022, 2021 and 2020, respectively, in “Product Revenue” of the Consolidated Statements of Operations.

SHARE-BASED COMPENSATION

Prior to the Closing, the Company issued incentive units, which included performance and service conditions, to certain employees and board members.

The units consisted of Class A-1, Class A-2, and Class A-3 units.

These units derived value from the Company’s certain wholly owned subsidiaries.

Class A-1 and A-2 units would have vested upon either (i) the date of consummation of a change in control or (ii) the date that is 1-year following the consummation of the initial public offering (“IPO”) of the Company (or its successor) (collectively “Exit Events”).

Class A-3 units would have vested upon a change in control, if the participants were employed at the time of the event, or upon termination of the participant by the Company.

Immediately upon Closing, all outstanding Class A-1 and Class A-2 units were cancelled and exchanged for 5,300,000 shares (the “Class A Shares”), post Stock Split, of the Company’s Class A Common Stock.

These Class A Shares are issued and outstanding as they were distributed pro rata to all holders of Class A-1 and Class A-2 units by the Common Unit limited partners from the 50,000,000 common units, pre-Stock-Split, that such limited partners received upon the Closing.

The Common Unit limited partners redeemed Common Units needed for the Class A shares distribution upon the Closing.

The Class A Shares are held in escrow and will vest over three to four years .

Similarly, the Class A-3 units were exchanged for approximately 326,000 , post Stock Split, Class C Common Stock and Common Units (the “Class C Shares”) and will vest over four years .

The Company also issued approximately 76,000 , post Stock Split, replacement restricted share awards (“Replacement Awards”) to new employees that transitioned from ALTM as part of the merger.

These changes for all three share types established a new measurement date.

The Class A Shares, Class C Shares and Replacement Awards were valued based on the Company’s publicly quoted stock price on the measurement date, which was the Closing Date of the Transaction.

During 2022, pursuant to the Company’s 2019 Omnibus Compensation Plan, as amended from time to time (the “Plan”) , the Company granted a total of 13,941 restricted stock units (“RSUs”) to certain members of the Board, which were valued based on the Company’s publicly quoted stock price on grant date and vested immediately on grant date, which will be settled in shares of Class A Common Stock at such time elected by each non-employee director’s deferral election form.

The Company also granted a total of 46,858 RSUs to employees during 2022, which were valued based on the Company’s publicly quoted stock price on grant date and were subject to a vesting period between one and three years , subject to continued employment through the applicable vesting date.

Once vested, the employee RSUs will be settled in shares of Class A Common Stock.

With respect to above shares and RSUs, the Company recorded compensation expenses of $ 42.8 million, in the “General and administrative expenses” of the Consolidated Statement of Operations, for year ended December 31, 2022 based on a straight-line amortization of the associated awards’ fair value over the respective vesting life of the shares.

With respect to the above incentive units, no compensation expenses were recorded for the years ended December 31, 2021 and 2020, as the incentive units were considered non-vested prior to their cancellation and exchange for Class A or Class C Common Stock, and no RSUs were granted during 2021 or 2020.

The total income tax provision consists of the following:

Year Ended December 31,

2 unchanged sentences

Current income taxes:

Federal $ — $ ( 696 ) $ ( 15 )

— ( 696 ) ( 15 )

State $ 522 $ — $ —

Deferred income taxes:

Federal — — 67,516

State 2,094 1,865 968

Total $ — $ ( 696 ) $ 64,900

The total income tax provision (benefit) differs from the amounts computed by applying the U.S.

statutory income tax rate to net income (loss) before income taxes.

A reconciliation of the tax on the Company’s net income (loss) before income taxes and total tax expense (benefit) is shown below:

Year Ended December 31,

2,094 1,865 968

(In thousands)

Income tax expense (benefit) at U.S.

Total $ 2,616 $ 1,865 $ 968

The difference between the effective income tax rate and the U.S.

statutory rate is reconciled below:

December 31, 2022

statutory rate (1)

Income tax expense (benefit) attributable to Apache limited partner ( 15,932 ) ( 12,892 ) 205,844

Income tax benefit attributable to Preferred Unit limited partners ( 7,833 ) ( 3,676 ) ( 1,879 )

State tax benefit (1)

— — ( 2,610 )

CARES Act tax impact — ( 266 ) —

Tax attributable to Noncontrolling interest ( 17.55 ) %

State tax rate 1.03 %

Valuation allowance ( 4.67 ) %

3,068 ( 620 ) 130,988

Warrant valuation adjustment ( 139 ) ( 252 ) ( 2,348 )

All other, net — 2 97

Income tax expense (benefit) $ — $ ( 696 ) $ 64,900

(1) The change in state valuation allowance is included as a component of state income tax.

Effective rate 1.03 %

(1) Prior to the Closing on February 22, 2022, the Company was organized as a limited partnership and was not subject to the U.S.

federal income tax for the years ended December 31, 2021 and 2020.

The net deferred tax assets reflect the tax impact of temporary differences between the asset and liability amounts carried on the balance sheet under U.S.

4 unchanged sentences

Investment in partnership $ 156,763 $ —

Asset retirement obligation 512 480

Net operating losses 61,555 —

Property, plant, and equipment 3,358 4,471

Other 1,412 —

Total deferred tax assets 219,730 —

2 unchanged sentences

Deferred tax liabilities:

Other 1,098 2,430

Net deferred tax assets $ — $ —

In 2021, the Company recorded an increase in valuation allowance against its net deferred tax asset.

The Company has assessed the future potential to realize these deferred tax assets and has concluded that it is more likely than not that these deferred tax assets will not be realized.

The Company reconciles its effective tax rate to its net income (loss) before income taxes.

This includes net income (loss) before income taxes attributable to both the controlling and noncontrolling interests.

As such, the Company’s effective tax rate includes adjustments to remove income (loss) attributed to the noncontrolling interests.

In 2021, 2020, and 2019, the Company recorded tax benefit adjustments of $ 15.9 million and $ 12.9 million and a tax expense adjustment of $ 205.8 million, respectively, associated with income and losses allocated to Apache.

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief and Economic Security Act (CARES Act) in response to the COVID-19 pandemic.

Under the CARES Act, 100 percent of net operating losses arising in tax years beginning after December 31, 2017 and before January 1, 2021 may be carried back to each of the five preceding tax years of such loss.

For the year ended December 31, 2020, the Company recorded a current income tax benefit of $ 0.7 million associated with a net operating loss carryback claim.

In the first quarter of 2020, the Company early adopted ASU 2019-12, “Simplifying the Accounting for Income Taxes.” The Company’s adoption of ASU 2019-12 did not result in a material impact on the consolidated financial statements.

On June 12, 2019, Altus Midstream issued and sold the Preferred Units in a private offering.

Concurrently, the Preferred Units were established as a new class of partnership unit representing limited partner interests in Altus Midstream pursuant to the terms of the Amended LPA, and the purchasers were admitted as limited partners of Altus Midstream.

In 2021, 2020 and 2019, the Company recorded a tax benefit adjustment of $ 7.8 million, $ 3.7 million, and $ 1.9 million, respectively, associated with income allocated to the noncontrolling Preferred Unit limited partners of Altus Midstream.

For further details on the terms of the Preferred Units and the rights of the holders thereof, refer to Note 11—Series A Cumulative Redeemable Preferred Units .

Altus is also subject to the Texas margin tax.

Unlike federal income taxes, the Texas margin regime assesses tax on corporations, limited liability companies, limited partnerships, and disregarded entities.

As such, the Company records deferred tax assets and liabilities for Texas margin tax based on the differences between the financial statement carrying value and tax basis of assets and liabilities on the balance sheet.

The Texas margin tax associated with Apache's share of the liability is recorded as a component of the noncontrolling interest.

The Company has a federal net operating loss carryforward of $ 211.6 million, which has an indefinite carryforward period.

The Company has recorded a full valuation allowance against the federal net operating loss because it is more likely than not that this attribute will not be realized.

On January 14, 2022, a direct exchange by the Company and Apache Midstream LLC was effectuated under the Amended LPA, pursuant to which the Company succeeded to Apache’s 12,500,000 Common Units, issued an additional 12,500,000 shares of Class A Common Stock to Apache, and cancelled Apache’s 12,500,000 shares of Class C Common Stock (as further discussed in Note 10—Equity and Warrants ).

For federal income tax purposes, the Company is deemed to have acquired 12,500,000 Common Units and as a result, the tax basis of the assets held by Altus Midstream LP was increased to the market value of Class A Common Stock on the exchange date.

The Company accounts for income taxes in accordance with ASC Topic 740, “Income Taxes,” which prescribes a minimum recognition threshold a tax position must meet before being recognized in the financial statements.

Property, plant, and equipment 11,018 7,190

Net deferred tax liabilities $ ( 11,018 ) $ ( 7,190 )

For state purposes, the Company records deferred tax assets and liabilities based on the differences between the carrying value and tax basis of assets and liabilities recorded on the Consolidated Balance Sheets.

The deferred tax liabilities recorded as of December 31, 2022 and 2021 relate to these differences.

For federal purposes, the Company has a deferred tax asset related to our investment in the Partnership and net operating losses.

The Company recorded a full allowance valuation on its deferred tax assets, as it has determined that more-likely-than-not that the benefit of the deferred tax assets will not be realized.

Internal Revenue Code (“IRC”) Section 382 addresses company ownership changes and specifically limits the utilization of certain deductions and other tax attributes on an annual basis following an ownership change.

The Company experienced an ownership change within the meaning of IRC Section 382 during 2022 (prior to the closing of the Transaction) that subjected certain of the Company’s tax attributes, including net operating losses ("NOLs"), to an IRC Section 382 limitation.

Since the ownership change, the Company has generated additional NOLs and other tax attributes that are not currently subject to an IRC Section 382 limitation.

Upon Closing, the Company assumed certain uncertain tax positions from ALTM.

The Company accounts for income taxes in accordance with ASC 740—Income Taxes , which prescribes a minimum recognition threshold a tax position must meet before being recognized in the financial statements.

Tax positions generally refer to a position taken in a previously filed income tax return or expected to be included in a tax return to be filed in the future that is reflected in the measurement of current and deferred income tax assets and liabilities.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

2021 2020 2019

Reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

December 31, 2022

(In thousands)

Balance at beginning of year $ —

Additions based on tax positions related to the prior year — — —

Additions based on tax positions related to the current year 1,622 2,556 2,057

Reductions for tax positions of prior years — — —

Increased related to ALTM acquisition 5,238

Reductions related to current year activities ( 5,238 )

Balance at end of year $ —

4 unchanged sentences

however, the Company does not expect any possible change to have a significant impact on the results of operations or financial position.

If incurred, Altus will record income tax interest and penalties as a component of income tax expense.

The contributor of Altus Midstream LP’s operating assets, Apache Corporation, is currently under IRS audit for the 2014 through 2017 tax years.

NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is calculated by dividing net income (loss) attributable to Class A common shareholders by the weighted average number of shares of Class A Common Stock outstanding during the period.

Class C Common Stock is excluded from the weighted average shares outstanding for the calculation of basic net income (loss) per share, as holders of Class C Common Stock are not entitled to any dividends or liquidating distributions.

The Company uses the “if-converted method” to determine the potential dilutive effect of (i) an assumed exchange of outstanding Common Units of Altus Midstream (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) for shares of Class A Common Stock, and (ii) an assumed exchange of the outstanding Preferred Units of Altus Midstream for shares of Class A Common Stock.

The treasury stock method is used to determine the potential dilutive effect of its outstanding warrants.

The dilutive effect of any earn-out consideration payable in shares is only included in periods for which the underlying conditions for the issuance are met.

The computation of basic and diluted net income (loss) per share for the periods presented in the consolidated financial statements is shown in the table below.

If incurred, Company will record income tax interest and penalties as a component of income tax expense.

As of December 31, 2022, tax years 2018 through 2022 remain subject to examination by various taxing authorities.

EARNINGS PER SHARE (EPS)

Basic EPS is computed by dividing net income attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period.

Diluted EPS is computed by dividing net income attributable to the Company by the weighted average number of shares of common stock outstanding and the assumed issuance of all potentially dilutive securities.

Each issue of potential common shares is evaluated separately in sequence from the most dilutive to the least dilutive.

The dilutive effect of share-based payment awards and stock options is calculated using the treasury stock method, which assumes share purchases are calculated using the average share price of Kinetik common stock during the applicable period.

The Company uses the if-converted method to compute potential common shares from potentially dilutive convertible securities.

Under the if-converted method, dilutive convertible securities are assumed to be converted from the date of the issuance and the resulting common shares are included in the denominator of the diluted EPS calculation for the period being presented.

The following table sets forth a reconciliation of net income and weighted average shares outstanding used in computing basic and diluted net income per common share:

Year Ended December 31,

2022 2021 2020

(In thousands, except per share amounts)

Net income attributable to Class A common shareholders $ 40,735 $ — $ —

Net income available to participating unvested restricted Class A common shareholders (1)

( 12,530 ) — —

Excess preferred carrying amount over consideration paid (2)

Total net income attributable to Class A common shareholders $ 61,105 $ — $ —

Weighted average shares outstanding - basic (3)

Dilutive effect (4)(5) of unvested Class A common shares

Weighted average shares outstanding - diluted 41,361 — —

Net income available per common share - basic $ 1.48 $ — $ —

Net income available per common share - diluted $ 1.48 $ — $ —

(1) Represents dividends paid to unvested restricted Class A common shareholders.

(2) Represented excess of carrying value of redeemable noncontrolling interest Preferred Units over redemption price at redemption.

(3) Share amounts have been retrospectively restated to reflect the Company’s two -for-one Stock Split.

Refer to Note 11—Equity and Warrants in the Notes to our Consolidated Financial Statements for further information.

(4) The effect of an assumed exchange of the outstanding public and private warrants for shares of Class A Common Stock would have been anti-dilutive for all periods presented in which the public and private warrants were outstanding.

(5) The effect of an assumed exchange of outstanding Common Units (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) would have been anti-dilutive for all periods presented in which the Common Units were outstanding.

Further discussion of the Company’s outstanding common stock, warrants and any applicable redemption rights is provided in Note 11—Equity and Warrants .

Further discussion of the Preferred Units and associated embedded features and earn-out consideration can be found in Note 12—Series A Cumulative Redeemable Preferred Units and Note 18—Commitments and Contingencies , respectively.

COMMITMENTS AND CONTINGENCIES

These accruals are adjusted as additional information becomes available or circumstances change.

As of December 31, 2022 and 2021, there were no accruals for loss contingencies.

The Company is a party to various legal actions arising in the ordinary course of its businesses.

In accordance with ASC 450, Contingencies , the Company accrues reserves for outstanding lawsuits, claims, and proceedings when a loss contingency is probable and can be reasonably estimated.

The Company estimates the amount of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage.

Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question.

Thus, the Company’s exposure and ultimate losses may be higher, and possibly significantly more, than the amounts accrued.

The Company has entered into litigation with two third parties to collect outstanding receivables totaling $ 19.6 million that remain outstanding from the Winter Storm Uri during February of 2021.

Given the counterparties’ sufficient creditworthiness and the valid claims that we hold, no allowance has currently been established for these items as we have legally enforceable agreements with these parties.

Environmental Matters

As an owner of infrastructure assets with rights to surface lands, the Company is subject to various local and federal laws and regulations relating to discharge of materials into, and protection of, the environment.

The Company is not aware of any environmental claims existing as of December 31, 2022, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity.

Contingent Liabilities

2019 PDC Acquisition

As part of the acquisition of Permian Gas on June 11, 2019, consideration included a contingent liability arrangement with PDC Permian, Inc.

The arrangement requires additional monies to be paid by the Company to PDC on a per Mcf basis if the actual annual Mcf volume amounts exceed forecasted annual Mcf volume amounts starting in 2020 and continuing through 2029.

The arrangement defines the incentive rate per Mcf for each qualifying year and the total monies paid under this arrangement are capped at $ 60.5 million.

Amounts are payable on an annual basis over the earn-out period.

The fair value of the contingent liability recognized on the acquisition date of $ 3.9 million was estimated utilizing the following key assumptions:

(1) present value factors based on the Company’s weighted-average cost of capital, 2) a probability weighted payout based on an estimate of future volumes and (3) a discount period consistent with the arrangement’s life and the respective due dates of the potential future payments.

Based on current forecasts and discussions with PDC, management revalued this contingent liability with updated assumptions at each reporting period.

The Company did not expect PDC’s actual annual Mcf volume amounts to exceed forecasted amounts as of December 31, 2022;

therefore, the estimated fair value of the contingent consideration liability was nil as of December 31, 2022.

The estimated fair value of the contingent consideration liability related to this acquisition was $ 0.8 million as of December 31, 2021.

Original Altus Transaction

As part of the Transaction, the Company assumed contingent liabilities of $ 4.5 million related to earn-out consideration of up to 2,500,000 shares of Class A Common Stock, which was part of the original Altus transaction, as follows:

• 1,250,000 shares if the per share closing price of the Class A Common Stock as reported by the New York Stock Exchange (“NYSE”) during any 30 -trading-day period ending prior to November 9, 2023 is equal to or greater than $ 140.00 for any 20 trading days within such 30 -trading-day period.

• 1,250,000 shares if the per share closing price of the Class A Common Stock as reported by the NYSE during any 30 -trading-day period ending prior to November 9, 2023 is equal to or greater than $ 160.00 for any 20 trading days within such 30 -trading-day period.

Pursuant to ASC 805, this earn-out consideration was a pre-existing contingency and accounted for as an assumed liability to the acquirer on the acquisition date.

Immediately subsequent to the Closing, the Company evaluated the earn-out consideration classification in accordance with ASC 480, Distinguishing Liabilities from Equity ( “ASC 480” ) and ASC 815, Derivatives and Hedging ( “ASC 815” ).

The Company determined the earn-out consideration to be classified as equity based on the settlement provision.

Related Party Transactions

Transactions between related parties are considered to be related party transactions even though they may not be given accounting recognition.

FASB ASC Topic 850, Related Party Transactions (“Topic 850”) , requires that transactions with related parties that would make a difference in decision making shall be disclosed so that users of the financial statements can evaluate their significance.

Upon the Closing of the Transaction on February 22, 2022, the following shareholders own more than 10 % of the Company’s issued and outstanding Common Stock:

BCP Raptor Aggregator LP, Blackstone Management Partners, LLC, BX Permian Pipeline Aggregator LP, Buzzard Midstream LLC and Apache Midstream, LLC.

Out of these affiliates, the Company has product and service revenue contracts and operating expense contracts with Apache Midstream.

In addition, Apache Midstream acquired Titus Oil and Gas, LLC (“Titus”) in October 2022, at which time Titus became a related party.

The Company identifies the below unconsolidated affiliates as related parties:

Also, upon Closing of the Transaction, the Company acquired initial equity interests in Breviloba, GCX and EPIC- and an additional equity interest in PHP.

Investments in these EMIs are accounted for using the equity investment method and are considered unconsolidated affiliates.

The Company makes contributions, receives distributions and records equity in earnings or losses from these EMIs.

See Note 7—Equity Method Investments in the Notes to our Consolidated Financial Statements in this Form 10-K for further information.

In addition to equity investment activities, the Company pays a demand fee to PHP and a capacity fee to Breviloba for certain volumes transported on the Shin Oak NGL Pipeline.

Jetta Permian, LP (“Jetta”) and Primexx Energy Partners, Ltd.

(“Primexx”) were affiliates of Blackstone under which we shared common control.

Jetta became a related party effective with the Company’s purchase of EagleClaw on June 22, 2017.

Effective July 1, 2021, Jetta was acquired by EOG Resources, Inc.

and was no longer considered a related party as of December 31, 2021.

Primexx became a related party effective October 1, 2017.

Effective October 6, 2021, Primexx was no longer considered a related party as it was purchased by Callon Petroleum Company.

The Company has commercial gas gathering and processing contracts with Jetta and Primexx.

The following table summarizes transactions with the above unconsolidated affiliates.

Investment contributions, distributions and equity in earnings from EMIs are detailed in Note 7—Equity Method Investments in the Notes to our Consolidated Financial Statements in this Form 10-K, thus, not included in the table below.

Apache Midstream, Titus, GCX, EPIC and Breviloba were not considered related parties during 2021 and 2020 and Jetta and Primexx were not considered related parties during 2022.

For the Year Ended December 31,

2022 2021 2020

Loss Shares Per Share Income Shares Per Share Loss Shares (3)

(In thousands, except per share data)

Net income (loss) attributable to Class A common shareholders $ ( 13,944 ) 3,746 $ ( 3.72 ) $ 2,791 3,746 $ 0.75 $ ( 358,490 ) 3,746 $ ( 95.70 )

Effect of dilutive securities:

Redeemable noncontrolling interest — Apache limited partner $ ( 48,741 ) 12,500 $ 2,987 12,500 $ — —

Diluted (1)(2) :

Net income (loss) attributable to Class A common shareholders $ ( 62,685 ) 16,246 $ ( 3.86 ) $ 5,778 16,246 $ 0.36 $ ( 358,490 ) 3,746 $ ( 95.70 )

(1) The effect of an assumed exchange of outstanding Common Units of Altus Midstream (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) would have been anti-dilutive for the year ended December 31, 2019.

(2) The effect of an assumed exchange of the outstanding Preferred Units of Altus Midstream for shares of Class A Common Stock would have been anti-dilutive for all periods presented in which the Preferred Units were outstanding.

(3) Share and per share amounts have been retroactively restated to reflect the Company’s reverse stock split, which was effected June 30, 2020.

Refer to Note 10—Equity and Warrants for further information.

The diluted earnings per share calculation excludes the effects of the outstanding warrants of the Company to purchase an aggregate 947,082 shares of Class A Common Stock, since the associated impacts would have been anti-dilutive for all periods presented.

Earn-out consideration granting Apache the right to receive additional shares of Class A Common Stock is also not included in the earnings per share calculation above, as the conditions for issuance were not satisfied as of the year ended December 31, 2021.

Further discussion of the Company’s outstanding common stock, warrants, and earn-out consideration as well as any applicable redemption rights is provided in Note 10—Equity and Warrants .

Further discussion of the Preferred Units and associated embedded features can be found in Note 11—Series A Cumulative Redeemable Preferred Units and Note 14—Fair Value Measurements , respectively.

FAIR VALUE MEASUREMENTS

The Company’s financial assets and liabilities measured at fair value on a recurring basis consist of:

cash and cash equivalents;

revenue receivables;

accounts receivable from/payable to Apache, the Company’s warrant liability, and an embedded derivative liability related to the issuance of Preferred Units.

This embedded derivative liability is recorded on the Company’s consolidated balance sheet at fair value.

The carrying amounts reported on the consolidated balance sheet for the Company’s remaining financial assets and liabilities approximate fair value due to their short-term nature.

The carrying amount of Altus Midstream’s revolving credit facility approximates fair value because the interest rate is variable and reflective of market rates.

There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the years ended December 31, 2021 or 2020.

The Company bifurcated and recognized the embedded derivative associated with the Preferred Units related to the exchange option provided to the Preferred Unit holders under the terms of the Amended LPA.

The valuation of the embedded derivative (using an income approach) was based on a range of factors including expected future interest rates using the Black-Karasinski model, the Company’s imputed interest rate, interest rate volatility, the expected timing of periodic cash distributions, any anticipated early redemptions of the Preferred Units, the estimated timing for the potential exercise of the exchange option, and anticipated dividend yields of the Preferred Units.

The Company recorded an unrealized gain of $ 82.1 million and unrealized losses of $ 36.1 million and $ 8.5 million for the years ended December 31, 2021, 2020 and 2019, respectively, which are recorded in “Unrealized derivative instrument loss” in the consolidated statement of operations.

Altus has classified these recurring fair value measurements as Level 3 in the fair value hierarchy.

As of the December 31, 2021 valuation date, the Company used the forward B-rated Energy Bond Yield curve to develop the following key unobservable inputs used to value this embedded derivative:

Quantitative Information About Level 3 Fair Value Measurements

Fair Value at December 31, 2021 Valuation Technique Significant Unobservable Inputs Range/Value

(In thousands)

Preferred Units Embedded Derivative $ 56,895 Option Model Altus Midstream Company’s Imputed Interest Rate 5.54 - 11.21 %

Interest Rate Volatility 40.08 %

In addition, no early redemptions of the Preferred Units were assumed for the December 31, 2020 valuation.

As a result of the announced BCP Business Combination and associated publicly filed information, the December 31, 2021 valuation assumed 250,000 Preferred Units would be redeemed before the Preferred Unit holders had the right to exercise their exchange option.

This early redemption assumption significantly reduced the value of the derivative liability year over year.

A one percent increase in the imputed interest rate assumption would significantly increase the value of the embedded derivative liability at December 31, 2021, while a one percent decrease would lead to a similar decrease in value as of December 31, 2021.

The assumed expected timing until exercise of the exchange option at December 31, 2021 was 4.45 years.

The Company has additional embedded derivatives in the Preferred Units related to the exchange option and redemption features that are accounted for separately from the Preferred Units.

Level 3 valuations of the embedded derivatives are based on a range of factors including the likelihood of the event occurring, and these factors are assessed quarterly.

There was no value associated with these additional identified embedded derivatives for any applicable period presented.

The fair value of the Company’s warrant liability was insignificant as of December 31, 2021 and 2020.

Operating revenue $ 107,662 $ 7,300 $ 13,300

Operating expense 632 — —

Cost of sales 39,304 62,900 37,100

As of December 31, 2022, accounts receivable due from Apache Midstream and Titus totaled $ 17.6 million and immaterial accounts payable were due to Apache Midstream or Titus.

As of December 31, 2022, no accounts receivable or payable were due from or to PHP or Breviloba.

As of December 31, 2021, no accounts receivable or payable were due from or to Jetta or Primexx.

Our two operating segments represent the Company’s segments for which discrete financial information is available and is utilized on a regular basis by our chief operating decision maker (“CODM”) to make key operating decisions, assess performance and allocate resources.

Our Chief Executive Officer is the CODM.

These segments are strategic business units with differing products and services.

No operating segments have been aggregated to form the reportable segments.

Therefore, our two operating segments represent our reportable segments.

Upon Closing, our CODM reviewed the Company and ALTM’s reporting segment activities.

The Company then renamed its Gathering and Processing segment to Midstream Logistics and its Transmission segment to Pipeline Transportation.

These name changes were made to better align segment activities with the name of the respective segment.

There was no change in segment composition or structure for the years ended December 31, 2022 and 2021 aside from the additions of new operations as a result of the Transaction.

The activities of each of our reportable segments from which the Company earns revenues, records equity earnings or losses and incurs expenses are described below:

• Midstream Logistics:

The Midstream Logistics segment operates under three service offerings, 1) gas gathering and processing, 2) crude oil gathering, stabilization and storage services and 3) water gathering and disposal.

• Pipeline Transportation:

The Pipeline Transportation segment consists of equity investment interests in four Permian Basin pipelines that access various points along the Texas Gulf Coast, Brandywine NGL Pipeline and Delaware Link Pipeline that is under development.

The current operating pipelines transport crude oil, natural gas and NGLs.

The following tables present the reconciliation of the segment profit measure as of and for the years ended December 31, 2022, 2021 and 2020:

Midstream Logistics Pipeline Transportation Corporate and Other (1)

Consolidated (2)

For the year ended December 31, 2022 (In thousands)

Segment net income (loss) including noncontrolling interests $ 150,957 $ 180,965 $ ( 81,201 ) $ 250,721

Interest expense (income) 47,419 ( 664 ) 102,497 149,252

Income tax expense (benefit) 456 ( 39 ) 2,199 2,616

Depreciation and amortization 259,318 1,016 11 260,345

Contract assets amortization 1,807 — — 1,807

Proportionate EMI EBITDA — 268,826 — 268,826

Share-based compensation — — 42,780 42,780

Loss (gain) on disposal of assets 12,645 — ( 34 ) 12,611

Loss (gain) on debt extinguishment 27,983 ( 8 ) — 27,975

Integration costs 1,314 93 10,801 12,208

Acquisition transaction costs 9 — 6,403 6,412

Other one-time costs or amortization 14,137 4 2,214 16,355

Warrant valuation adjustment — — 133 133

Gain on redemption of mandatorily redeemable Preferred units — — 9,580 9,580

Gain on embedded derivative — — 89,050 89,050

Equity income from unconsolidated affiliates — 180,956 — 180,956

Segment adjusted EBITDA (3)

$ 516,045 $ 269,237 $ ( 13,093 ) $ 772,189

Midstream Logistics Pipeline Transportation Corporate and Other (1)

Consolidated (2)

For the year ended December 31, 2021 (In thousands)

Segment net income (loss) including noncontrolling interests $ ( 35,969 ) $ 53,318 $ ( 15,867 ) $ 1,482

Interest expense 110,389 6,976 — 117,365

Income tax expense 1,535 330 — 1,865

Depreciation and amortization 243,045 513 — 243,558

Contract assets amortization 1,792 — — 1,792

Proportionate EMI EBITDA — 83,593 — 83,593

Loss on disposal of assets 359 23 — 382

Derivatives loss due to Winter Storm Uri 13,456 — — 13,456

Acquisition transaction costs — — 5,730 5,730

Other one-time costs or amortization 2,494 182 180 2,856

Producer settlement 6,827 — — 6,827

Interest income 115 — — 115

Equity income from unconsolidated affiliates — 63,074 — 63,074

Gain on debt extinguishment 4 — — 4

Segment adjusted EBITDA (3)

$ 343,809 $ 81,861 $ ( 9,957 ) $ 415,713

Midstream Logistics Pipeline Transportation Corporate and Other (1)

Consolidated (2)

For the year ended December 31, 2020 (In thousands)

Segment loss including noncontrolling interests $ ( 1,128,529 ) $ ( 17,644 ) $ ( 9,616 ) $ ( 1,155,789 )

Interest expense 119,650 15,866 — 135,516

Income tax expense 968 — — 968

Depreciation and amortization 223,763 — — 223,763

Contract assets amortization 1,805 — — 1,805

Proportionate EMI EBITDA — 1,150 — 1,150

Goodwill impairment 1,010,773 — — 1,010,773

Loss on disposal of assets 3,454 — — 3,454

Loss from unconsolidated affiliate — 308 — 308

Interest income 1 1 1 3

Gain on debt extinguishment 868 — — 868

Segment adjusted EBITDA (3)

$ 231,015 $ ( 321 ) $ ( 9,617 ) $ 221,077

(1) Corporate and Other represents those results that:

(i) are not specifically attributable to a reportable segment;

(ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense items.

(2) Results do not include legacy ALTM prior to February 22, 2022.

Refer to Note 1 —Description of Business and Basis of Presentation in the Notes to our Consolidated Financial Statements in this Form 10-K, for further information on the Company’s basis of presentation.

(3) Adjusted EBITDA is a non-GAAP measure;

please see Key Performance Metrics in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-K, for a definition and reconciliation to the GAAP measure.

The following tables present the revenue for each individual operating segment for the years ended December 31, 2022, 2021 and 2020:

Midstream Logistics Pipeline Transportation Consolidated

For the year ended December 31, 2022 (In thousands)

Revenue $ 1,198,474 $ 1,833 $ 1,200,307

Other revenue 13,175 8 13,183

Total segment operating revenue $ 1,211,649 $ 1,841 $ 1,213,490

Midstream Logistics Pipeline Transportation Consolidated

For the year ended December 31, 2021 (In thousands)

Revenue $ 658,299 $ — $ 658,299

Other revenue 3,737 8 3,745

Total segment operating revenue $ 662,036 $ 8 $ 662,044

Midstream Logistics Pipeline Transportation Consolidated

For the year ended December 31, 2020 (In thousands)

Revenue $ 408,159 $ — $ 408,159

Other revenue 2,012 5 2,017

Total segment operating revenue $ 410,171 $ 5 $ 410,176

The following table presents total capital expenditures, including property, plant and equipment and intangible assets, for each operating segment for the years ended December 31, 2022, 2021 and 2020:

For the Years Ended December 31,

2022 2021 2020

(In thousands)

Midstream Logistics $ 195,346 $ 82,662 $ 199,054

Pipeline Transportation 26,233 50 —

Total capital expenditures $ 221,579 $ 82,712 $ 199,054

The following table presents total assets for each operating segment as of December 31, 2022 and 2021:

December 31, 2022 December 31, 2021

(In thousands)

Midstream Logistics $ 3,486,948 $ 2,916,774

Pipeline Transportation (1)

2,414,829 635,784

Segment total assets 5,901,777 3,552,558

Corporate and other 17,934 648

Total assets $ 5,919,711 $ 3,553,206

(1) Includes investment in unconsolidated affiliates of $ 2,381.3 million and $ 626.5 million as of December 31, 2022 and 2021, respectively.

SUBSEQUENT EVENTS

In February 2023, the Board approved a share repurchase program (“Repurchase Program”), authorizing discretionary purchases of the Company’s Class A Common Stock up to $ 100 million in the aggregate.

Repurchases may be made at management’s discretion from time to time, in accordance with applicable securities laws, on the open market or through privately negotiated transactions and may be made pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act.

Privately negotiated repurchases from affiliates are also authorized under the Repurchase Program, subject to such affiliates’ interest and other limitations.

The repurchases will depend on market conditions and may be discontinued at any time without prior notice.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures