What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-05 compared with 2023-03-07 · 746 added, 602 removed, 969 unchanged (58% of the section changed)

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Disclosure Controls and Procedures

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.

The Company’s Chief Executive Officer, President 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, 2023, the end of the period covered by this Annual Report.

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.

The Company periodically reviews the design and effectiveness of its disclosure controls, including compliance with various laws and regulations that apply to operations.

The Company makes modifications to improve the design and effectiveness of its disclosure controls, and may take other corrective action, if the Company’s reviews identify deficiencies or weaknesses in its controls.

The Company makes modifications to improve the design and effectiveness of its disclosure controls.

Management’s Annual Report on 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.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.

Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

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 and is incorporated herein by reference.

Management concluded that our internal control over financial reporting was effective as of December 31, 2023.

The effectiveness of our internal control over financial reporting as of December 31, 2023 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.

See Attestation Report of Independent Registered Public Accounting Firm under Part IV, Item 15 of this Annual Report.

Changes in Internal Control 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.

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, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

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.

2024 CEO Compensation

On February 28, 2024, the Board of Directors, upon recommendation of the Compensation Committee, approved changes to the compensation of Jamie Welch, the Company’s Chief Executive Officer, in order to better align his total compensation with market.

The Board of Directors approved, effective January 1, 2024:

(i) an increase to Mr.

Welch’s annualized base salary from $676,000 to $720,000;

(ii) an increase to Mr.

Welch’s target annual bonus opportunity for 2024 from $676,000 to $880,000, which will be subject to achievement with respect to certain predefined financial, operational and individual performance goals established by the Compensation Committee;

and (iii) the grant of equity awards with an aggregate value equal to approximately $4,400,000 on the date of grant, which equity awards will be comprised 25% of restricted stock units (“RSUs”) that will vest on the third anniversary of the date of grant, subject to Mr.

Welch’s continued employment through each such vesting date, and 75% of performance stock units (“PSUs”) that will be subject to achievement of absolute total shareholder return and relative total shareholder return performance goals over a three-year performance period, subject to Mr.

Welch’s continued employment through the end of such performance period.

The foregoing description of the awards of RSUs and PSUs does not purport to be complete and is qualified in its entirety by reference to the form of award agreements governing the RSUs and PSUs, copies of which are filed herewith as Exhibits 10.14 and 10.15, respectively, to this Annual Report on Form 10-K and are incorporated by reference herein.

Index to Financial Statements

Trading Arrangements

During the three months ended December 31, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted , terminated or modified a “Rule 10b5-1 trading arrangement” or non-Rule 10b5-1 trading arrangement (as each term is defined in Item 408 of Regulation S-K).

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

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;

The description of the activities below has been provided to us by Blackstone, affiliates of which:

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

(formerly Atlantia S.p.A).

Mundys 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:

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

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

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

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

We understand that Blackstone disclosed the following in its Annual Report, filed with the SEC on February 23, 2024:

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

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

Funds affiliated with Blackstone first invested in Mundys 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.

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

Mundys S.p.A.

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

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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.

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 fiscal year ended December 31, 2023 was less than €210,000.

Mundys S.p.A.

does not track profits specifically attributable to these activities.

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Not applicable.

Index to Financial Statements

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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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.

The Board has adopted the Code of Business Conduct and Ethics (the “Code of Ethics”), which was recently revised in August 2023.

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.

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.

EXECUTIVE COMPENSATION

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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

See Note 18—Related Party Transactions in the Notes to the Company’s Consolidated Financial Statements, under Part IV — Item 15.

Exhibits, Financial Statement Schedule s, 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.

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

Index to Financial Statements

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Documents included in this Annual Report on Form 10-K:

(a) Documents included in this Annual Report:

Financial Statements

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Reports of Independent Registered Public Accounting Firm (PCAOB ID :

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

Consolidated Statements of Operation s for th e Years En de d December 31, 2023 , 202 2 , a nd 2 0 2 1

Consolidated Balance Sheets at December 31, 2023 and 2022

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Property, Plant, and Equipment

Goodwill and Intangible Assets, Net

Intangible Assets, Net

Equity Method Investments

Debt and Financing Costs

Other Current Liabilities

Accrued Expenses

Equity and Warrants

Series A Cumulative Redeemable Preferred Units

Fair Value Measurements

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Net Income Per Share

C ommitments and Contingencies

Commitments and Contingencies

Related Party Transactions

Segment I nformation

S ub sequent Events

Subsequent 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 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

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 consolidated financial statements and related notes.

Index to Financial Statements

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).

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

3.2 Certificate of Amendment to the 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 June 2, 2023).

3.3 – 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* Description of Securities of the Registrant

4.2 – 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.

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4.5 – 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).

4.6 – Indenture, dated December 6, 2023, by and among Kinetik Holdings Inc., Kinetik Holdings LP and U.S.

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 December 6, 2023 ).

4.7 Form of 6.625% Sustainability-Linked Senior Notes (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on December 6, 2023).

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

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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).

(incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on February 22, 2022).

10.12† – Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, SEC File No.

10.13† – Form of Restricted Stock Unit Agreement (Directors) (incorporated by reference to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, SEC File No.

– Form of Restricted Stock Unit Agreement (2024 VPs and Above) .

– Form of Performance Stock Unit Agreement (2024) .

Index to Financial Statements

– Form of Restricted Stock Unit Agreement (2024 All Other Employees) .

– Form of Restricted Stock Unit Agreement (2024 Directors) .

– Form of Deferred Stock Unit Agreement (2024 Directors) .

21.1* – Subsidiaries of the Company.

23.1* – Consent of KPMG LLP.

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

23.2* – Consent of BDO USA, P.C.

relating to the financial statements of Permian Highway Pipeline LLC.

– Consent of KPMG 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 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.

32.1** – Certification of the Principal Executive Officer required by 18 U.S.C.

32.2** – Certification of the Principal Financial Officer required by 18 U.S.C.

97.1* – Kinetik Holdings Inc.

Clawback Policy.

99.1* – Permian Highway Pipeline LLC audited financial statements as of December 31, 2023.

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

FORM 10-K SUMMARY

ANNUAL REPORT ON FORM 10-K SUMMARY

Not Applicable.

Index to Financial Statements

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.

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March 5, 2024 /s/ Jamie Welch

Chief Executive Officer, President, Chief Financial Officer and Director

Chief Executive Officer, President and Director

(Principal Executive Officer)

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Name Title Date

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

/s/ Jamie Welch Chief Executive Officer, President and Director

March 5, 2024

/s/ Steven Stellato

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/s/ Elizabeth Cordia Director March 5, 2024

/s/ Ronald Scweizer Director March 7, 2023

/s/ Joseph Payne Director March 7, 2023

/s/ Michael A.

Director March 5, 2024

/s/ Jesse Krynak

Director March 5, 2024

/s/ Ben Rogers Director March 5, 2024

/s/ Laura Sugg Director March 5, 2024

/s/ Kevin McCarhty Director March 7, 2023

/s/ Kevin McCarthy

Director March 5, 2024

/s/ Mark Leland Director March 5, 2024

/s/ Deborah Byers Director March 5, 2024

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Index to Financial Statements

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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 “Company”) is responsible for the preparation and integrity of the consolidated financial statements appearing in this Annual Report.

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.

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The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements.

Our internal control over financial reporting is supported by a program of internal audits and appropriate reviews by management, written policies and guidelines, careful selection and training of qualified personnel and a written code of business conduct adopted by our Company’s board of directors, applicable to all Company directors and all officers of our Company.

Our internal control over financial reporting is supported by a program of internal audits and appropriate reviews by management, written policies and guidelines, careful selection and training of qualified personnel and a written code of business conduct adopted by our Company’s Board, applicable to all Company directors and all officers of our Company.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation.

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Based on our assessment, management believes that the Company maintained effective internal control over financial reporting as of December 31, 2023.

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

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

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

Chief Executive Officer, President and Director

(Principal Executive Officer)

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March 5, 2024

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Index to Financial Statements

Report of Independent Registered Public Accounting Firm

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

Critical Audit Matters

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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates 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 a critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of impairment indicators for long-lived assets

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The carrying value of property, plant, and equipment, net and intangible assets, net as of December 31, 2023, was $2.7 billion and $591.7 million, respectively.

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Index to Financial Statements

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

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• 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.

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March 5, 2024

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Report of Independent Registered Public Accounting Firm

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March 5, 2024.

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Index to Financial Statements

KINETIK HOLDINGS INC.

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Operating costs and expenses:

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

Costs of sales (exclusive of depreciation and amortization expenses) (3)(4)

515,721 541,518 233,619

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Loss on disposal of assets 19,402 12,611 382

Goodwill impairment — — 1,010,773

Total operating costs and expenses 1,097,157 1,063,001 608,553

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

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

(Loss) gain on debt extinguishment

( 1,876 ) ( 27,975 ) 4

Gain on embedded derivative — 89,050 —

Interest expense ( 205,854 ) ( 149,252 ) ( 117,365 )

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 )

Equity in earnings of unconsolidated affiliates 200,015 180,956 63,074

Total other (expense) income, net

( 5,711 ) 102,848 ( 50,144 )

Income before income taxes

153,544 253,337 3,347

Income tax (benefit) expense

( 232,908 ) 2,616 1,865

Net income including noncontrolling interest 386,452 250,721 1,482

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 Common Unit limited partners 94,783 1,482 ( 1,155,789 )

Net income attributable to common shareholders 386,452 135,518 1,482

Net income attributable to Common Unit limited partners 97,010 94,783 1,482

Net income attributable to Class A Common Stock Shareholders $ 289,442 $ 40,735 $ —

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Diluted 146,197 41,665 —

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

(1) The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022.

Refer to the Annual Report basis of presentation in Note 1—Description of Business and Basis of Presentation in the Notes to Consolidated Financial Statements in this Annual Report, for further information.

(2) Includes amounts of $ 104.1 million, $ 107.7 million, and $ 7.3 million associated with related parties for the years ended December 31, 2023, 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.

Refer to Note 18 — Related Party Transactions in the Notes to our Consolidated Financial Statements in this Annual Report for further information .

(3) Cost of sales (exclusive of depreciation and amortization) is net of gas service revenues totaling $ 148.3 million, $ 70.4 million and $ 29.7 million for the years ended December 31, 2023, 2022 and 2021, respectively, for certain volumes where we act as principal.

(4) Includes related party amounts of $ 59.1 million , $ 39.3 million, and $ 62.9 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Refer to Note 18 — Related Party Transaction s in the Notes to our Consolidated Financial Statements in this Annual Report for further information.

(5) 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.

Refer to N ote 11 — Equity and Warrants in the Notes to our Consolidated Financial Statements in this Annual Report for further information .

(6) Weighted average Class A common shares have been retrospectively restated due to bonus effect of Class A common shares issued under the Reinvestment Agreement for all periods presented in which the Class A common shares were outstanding.

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

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KINETIK HOLDINGS INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(In thousands, except share data)

CURRENT ASSETS:

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Intangible assets, net 591,670 695,389

Derivative asset, non-current 165 —

Operating lease right-of-use assets 37,569 28,551

Deferred tax asset 235,627 —

Deferred charges and other assets 85,250 32,275

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

Investments in unconsolidated affiliates 2,540,989 2,381,340

Goodwill 5,077 5,077

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Total assets $ 6,496,873 $ 5,919,711

LIABILITIES, NONCONTROLLING INTERESTS, AND EQUITY

LIABILITIES, NONCONTROLLING INTEREST, AND EQUITY

CURRENT LIABILITIES:

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Current portion of operating lease liabilities 29,203 22,810

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

Other current liabilities 7,786 7,487

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Other liabilities 3,219 2,677

Contingent liabilities — 839

Deferred tax liabilities 13,244 11,018

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Class A Common Stock:

$ 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)

$ 0.0001 par, 1,500,000,000 shares authorized, 57,096,538 and 45,679,447 shares issued and outstanding at December 31, 2023 and 2022, respectively (2)

Class C Common Stock:

$ 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)

$ 0.0001 par, 1,500,000,000 shares authorized, 94,089,038 and 94,270,000 shares issued and outstanding at December 31, 2023 and 2022, respectively (2)

Additional paid-in capital 192,678 118,840

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Total equity ( 530,823 ) ( 839,775 )

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

(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.

Total liabilities, noncontrolling interest, and equity $ 6,496,873 $ 5,919,711

(1) Includes amounts of $ 15.8 million and $ 17.6 million associated with related parties as of December 31, 2023 and 2022, respectively.

Refer to Note 18 — Related Party Transactions in the Notes to our Consolidated Financial Statements in this Annual Report 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.

Refer to Note 11 — Equity and Warrants in the Notes to our Consolidated Financial Statements in this Annual Report for further information.

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

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KINETIK HOLDINGS INC.

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CASH FLOWS FROM OPERATING ACTIVITIES:

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

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

Net income including noncontrolling interests

$ 386,452 $ 250,721 $ 1,482

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization expense 280,986 260,345 243,558

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Loss on disposal of assets 19,402 12,611 382

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

Equity in earnings from unconsolidated affiliates

( 200,015 ) ( 180,956 ) ( 63,074 )

Loss (gain) on debt extinguishment 1,876 27,975 ( 4 )

Share-based compensation 55,983 42,780 —

Deferred income taxes 2,094 1,865 968

Goodwill impairment — — 1,010,773

Deferred income tax (benefit) expense

( 233,400 ) 2,094 1,865

Changes in operating assets and liabilities:

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Investments in unconsolidated affiliate ( 238,803 ) ( 78,171 ) ( 20,522 )

Distributions from unconsolidated affiliates

Cash proceeds from disposals 358 219 3,613

Net cash acquired in acquisition 13,401 — —

Net cash (paid for) acquired in acquisition ( 125,000 ) 13,401 —

Net cash used in investing activities ( 686,320 ) ( 286,130 ) ( 99,621 )

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Principal payments on long-term debt ( 800,000 ) ( 2,294,130 ) ( 96,548 )

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

Payments of debt issuance costs ( 11,238 ) ( 37,009 ) ( 3,152 )

Proceeds from revolver 752,500 565,000 38,500

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Cash dividends paid to Class A Common Stock shareholders ( 81,352 ) ( 39,298 ) —

Consideration payable from acquisition — — ( 79,304 )

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

Distributions paid to Class C Common Unit limited partners ( 697 ) ( 1,230 ) ( 51,189 )

Equity contributions — — 14,890

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

Repurchase of Class A Common Stock ( 5,757 ) — —

Net cash provided by (used in) financing activities

99,956 ( 339,211 ) ( 136,810 )

Net change in cash $ ( 1,884 ) $ ( 12,335 ) $ ( 862 )

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KINETIK HOLDINGS INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the Year Ended December 31,

2023 2022 2021

(In thousands)

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

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Cash paid for interest, net of amounts capitalized $ 207,700 $ 120,270 $ 108,392

Cash paid for income taxes, net $ 480 $ — $ —

Property and equipment and intangible accruals in accounts payable and accrued liabilities $ 27,316 $ 17,274 $ 8,527

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

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KINETIK HOLDINGS INC.

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Redeemable Noncontrolling Interest — Preferred Unit Limited Partners

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

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

Stock Total Equity

Amount Shares (1)

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Contribution — 14,890 — — 491 — — — — —

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

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

Contribution — 14,890 — — 491 — — — —

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

Distributions paid to Class E Unit limited partners

— ( 51,189 ) — — ( 1,689 ) — — — — —

Net income — 1,482 — — — — — — — —

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

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

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) 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.

(1) 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.

Refer to Note 11—Equity and Warrants in the Notes to our Consolidated Financial Statements in this Annual Report for further information.

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KINETIK HOLDINGS INC.

STATEMENTS OF CONSOLIDATED CHANGES IN EQUITY AND NONCONTROLLING INTERESTS (CONTINUED)

Redeemable Noncontrolling Interest — Preferred Unit Limited Partners

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

Stock Total Equity

Amount Shares (1)

(In thousands) (In thousands)

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

Redemption of Common Units — ( 5,634 ) 181 — ( 181 ) — 5,634 — — 5,634

Issuance of common stock through dividend and distribution reinvestment plan — — 11,215 1 — — 352,059 — — 352,060

Retirement of treasury stock — — — — — — — ( 5,757 ) 5,757 —

Repurchase of Class A Common Stock — — ( 194 ) — — — — — ( 5,757 ) ( 5,757 )

Share-based compensation — — 216 — — — 55,983 — — 55,983

Net income — 97,010 — — — — — 289,442 — 289,442

Change in redemption value of noncontrolling interests — 236,288 — — — — ( 339,838 ) 103,550 — ( 236,288 )

Distribution paid to Common Units limited partners — ( 282,266 ) — — — — — — — —

Dividends on Class A Common Stock ($ 3.00 per share)

— — — — — — — ( 152,122 ) — ( 152,122 )

Balance at December 31, 2023 $ — $ 3,157,807 57,097 $ 6 94,089 $ 9 $ 192,678 $ ( 723,516 ) $ — $ ( 530,823 )

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

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KINETIK HOLDINGS INC.

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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.

BCP Raptor Holdco, LP (“ BCP”), the predecessor for accounting purposes of Kinetik Holdings Inc., a Delaware corporation (the “Company,” formerly known as Altus Midstream Company), 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 are EagleClaw Midstream Ventures, LLC and CR Permian Holdings, LLC.

Altus Midstream Company (“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 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 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.

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.

On February 22, 2022 (the “Closing Date”), the Company consummated the business combination transaction (the “Transaction”) contemplated by that certain 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) (the “Partnership”), New BCP Raptor Holdco, LLC, a Delaware limited liability company (“Contributor”) and BCP.

The transactions contemplated by the Contribution Agreement are referred to herein as the “Transaction.” In connection with the closing of the Transaction (the “Closing”), the Company changed its name from “Altus Midstream Company” 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.

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.

Additionally, the Company owns two NGL pipelines and equity interests in four separate Permian Basin pipeline entities that have access to various markets along the U.S.

Basis of Presentation

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

The accompanying consolidated financial statements have been prepared in accordance with GAAP.

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.

Prior to the Closing, the Company’s financial statements that were filed with the 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 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) 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 s in the Notes to our Consolidated Financial Statements in this Annual Report for further information.

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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.

All corresponding per-share and share amounts for periods prior to June 8, 2022 have been retrospectively restated in this Annual Report to reflect the two -for-one stock split, except for the number of common units representing limited partner interests in the Partnership (“Common Units”) and shares of the Company’s Class C Common Stock, par value $ 0.0001 per share (“Class C Common Stock”) described in relation to the Transaction in this Annual Report, 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.

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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.

The Company applies FASB 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 CODM in deciding how to allocate resources and in assessing performance.

Our Chief Executive Officer is the CODM.

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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 provide gathering, processing, transportation, 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 ASC 606, Revenue from Contracts with Customers (“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.

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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.

This purchase and the associated third-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.

The Company remits an agreed-upon percentage of proceeds to the producer based on the market price received from third 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

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producer for the associated third-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.

This purchase and the associated third-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.

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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.

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Minimum Volume Commitments

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

The Company has certain agreements that provide for quarterly or annual 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.

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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.

See Note 4 — Revenue Recognition in the Notes to our Consolidated Financial Statements in this Annual Report for further information.

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Concentration Risk

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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:

The Company manages 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 customer that individually exceeded 10% of consolidated operating revenue:

For the Year Ended December 31,

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Customer 4 17,335 93,286 111,742

Customer 5 211,093 34,362 9,505

Others 531,876 511,157 293,493

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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, 2023, approximately 60 % of the Company’s cost of sales were derived from three producers.

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.

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Fair Value Measurements

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

FASB ASC Topic 820, Fair Value Measurement (“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.

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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.

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

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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.

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

Level 2 inputs :

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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.

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

See Note 12 — Fair Value Measurements and Note 13 — Derivatives and Hedging Activities in the Notes to our Consolidated Financial Statements in this Annual Report 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.

See Note 8 — Debt and Financing Costs in the Notes to our Consolidated Financial Statements in this Annual Report 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:

FASB 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.

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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.

The Company has not elected to apply hedge accounting to any of its current or recent derivative transactions.

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.

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As of December 31, 2023 and 2022, the Company had $ 4.5 million and $ 6.4 million, respectively, of cash and cash equivalents.

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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.

Accounts receivable include billed and unbilled 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.

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We had imbalance receivables of $ 1.3 million and $ 1.5 million at December 31, 2023 and 2022, 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.

We had no imbalance payables at December 31, 2023 and 2022.

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.

At the end of each reporting period, the Company 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 $ 3.1 million and $ 4.8 million as of December 31, 2023 and 2022, respectively.

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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.

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 as follows:

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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.

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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.

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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 unsecured term loans and senior notes 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.

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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 Company’s assets generally consist of gas processing plants, crude storage terminals, saltwater disposal wells, and underground gathering and transportation 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.

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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.

No environmental liabilities were recorded as of December 31, 2023 and 2022.

Intangible Assets

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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.

Goodwill is not amortized, but instead is tested for impairment in accordance with FASB ASC 350 , Intangibles – Goodwill and Other (“Topic 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.

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Topic 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.

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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.

The Company assessed relevant qualitative factors, such as the Company’s operation, actual versus budgeted results of operation, forecast, macroeconomics conditions, etc.

The Company concluded there is no indication that it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

As such, no quantitative impairment test is necessary and the Company’s goodwill was no t impaired as of December 31, 2023 and 2022.

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.

In accordance with FASB ASC 360, Property, Plant and Equipment, 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.

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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.

There was no impairment trigger event observed in 2023 and 2022.

The Company did no t recognize impairment losses for long-lived assets during the years ended December 31, 2023 and 2022.

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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.

Refer to Note 7 — Equity Method Investments in the Notes to our Consolidated Financial Statements in this Annual Report.

Equity Method Investments

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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.

For distributions from the Company’s EMI pipeline entities that are generated from their respective normal course of business, the Company classifies the distributions as return on investments and as cash flows from operating activities.

For distributions that are a return of the investment, the Company classifies the distribution as cash flows from investing activities.

Please refer to Note 7 — Equity Method Investments in the Notes to our Consolidated Financial Statements in this Annual Report, for further information of the Company’s EMIs.

EMIs acquired in the Transaction were recorded at fair value upon Closing.

See discussion and additional detail in Note 3 — Business Combinations in the Notes to our Consolidated Financial Statements in this Annual Report for the purchase price allocation of the Transaction.

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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 certain third-party and wholly owned pipelines 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.

Accordingly, the Company had NGL and gas line fill of $ 16.4 million and $ 10.6 million within other assets as of December 31, 2023 and 2022, respectively.

Redeemable Noncontrolling Interest — Common Units Limited Partners

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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.

Please refer to Note 1 — Description of Business and Basis of Presentation in the Notes to our Consolidated Financial Statements in this Annual Report.

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.

The redemption value was determined based on a 5-day volume weighted-average closing price of the Company’s Class A Common Stock, par value $ 0.0001 per share (“Class A Common Stock”).

See discussion and additional details in Note 11 — Equity and Warrants in the Notes to our Consolidated Financial Statements in this Annual Report.

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.

As the Transaction was accounted for as a reverse merger, the Company assumed certain Preferred Units that were issued and outstanding as of the Closing Date for accounting purposes.

At the Close of the Transaction, the Company effectuated the Third Amended and Restated Agreement of Limited Partnership of the Partnership, which among other things, provided for mandatory pro-rata redemptions by the Partnership.

Given this mandatory redemption feature and pursuant to FASB ASC 480, liability classification was required for these Preferred Units and the pro rata PIK units.

The Company valued the liability as of each reporting date and recorded the change in valuation in “Other income (expenses)” in the Consolidated Statements of Operations.

During 2022, the Company redeemed all outstanding mandatorily redeemable preferred units and recorded a gain on the redemption of $ 9.6 million.

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 remaining Preferred Units assumed on the Closing Date were 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.

During 2022, the Company redeemed all outstanding redeemable noncontrolling Preferred Units and recorded a gain on the related embedded derivative of $ 89.1 million.

Share-Based Compensation

Immediately upon Closing, all outstanding Class A-1 and Class A-2 units from BCP were cancelled and exchanged for shares of Class A Common Stock (“Class A Shares”).

The Class A Shares are held in escrow and vest over three to four years .

Similarly, the Class A-3 units from BCP were exchanged for shares of Class C Common Stock and a corresponding number of Common Units (“Class C Shares”) and vest over four years .

In addition, the Company granted restricted stock units (“RSUs”) to its officers, directors and employees pursuant to the Company’s 2019 Omnibus Compensation Plan, as amended from time to time.

The Class A and Class C Shares and RSUs are recorded at grant-date fair value and compensation expense is recognized on a straight‑line basis over the vesting period within “General and Administrative Expense” of the Consolidated Statements of Operations in accordance with FASB ASC 718 , C ompensation - Stock Compensation .

Forfeitures are recognized as they occur.

See further discussion of the Company’s assessment in Note 14—Share-Based Compensation in the Notes to our Consolidated Financial Statements in this Annual Report.

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The Company is subject to federal income and Texas margin tax.

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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 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.

Income tax or benefit represents the current tax payable or refundable for the period, as applicable, plus or minus the tax effect of the net change in the deferred tax assets and liabilities.

The Company routinely assesses its ability to realize its deferred tax assets.

If the Company concludes that it is more likely than not that some or all of its deferred tax assets will not be realized, the tax asset is reduced by a valuation allowance.

See further discussion of the Company’s assessment in N ote 15 —Income Taxes in the Notes to our Consolidated Financial Statements in this Annual Report.

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.

Basic earnings per share (“EPS”) 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.

No net income per share was computed for the years ended December 31, 2021, as no Class A Common Stock was outstanding with respect to BCP as the accounting acquirer as of December 31, 2021.

The Company uses the “if-converted method” to determine the potential dilutive effect of 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 includes the dilutive effect of unvested Class A common shares in the diluted weighted average outstanding shares calculation.

Recently Adopted Accounting Pronouncement

Effective January 1, 2022, the Company adopted ASU 2022-01, 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”) .

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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.

With adoption of ASU 2021-08, the Company assumed contract liabilities at carrying value of $ 9.1 million upon Closing of the Transaction.

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.

ASU 2020-04 was issued to ease the potential accounting burden expected when global capital markets move away from London Interbank Offered Rate, the benchmark interest rate banks use to make short-term loans to each other.

The amendments

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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.

The interest rate applied to the Company’s new debt resulting from the comprehensive refinance is based on 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 Annual Report 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 October 2023, the FASB issued ASU 2023-06, Disclosure Improvements (“ASU 2023-06”).

This update represent changes to clarify or improve disclosure and presentation requirements of a variety of Topics, including 230-10 Statement of Cash Flows—Overall, 250-10 Accounting Changes and Error Corrections— Overall, 260-10 Earnings Per Share— Overall, 270-10 Interim Reporting— Overall, 440-10 Commitments—Overall, 470-10 Debt—Overall, 505-10 Equity—Overall, 815-10 Derivatives and Hedging—Overall, 860-30 Transfers and Servicing—Secured Borrowing and Collateral, 932-235 Extractive Activities— Oil and Gas—Notes to Financial Statements, 946-20 Financial Services—Investment Companies—Investment Company Activities and 974-10 Real Estate—Real Estate Investment Trusts—Overall.

For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

For all other entities, the amendments will be effective two years later.

If by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.

The Company is currently evaluating the effect that ASU 2023-06 will have on the disclosures within its Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The amendment requires a public entity disclose, on an annual and interim basis (1) significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”);

(2) an amount for other segment items by reportable segment and a description of its composition.

The other segment items category is the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss;

(3) clarify that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources;

(4) the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

A public entity should apply the amendments in this Update retrospectively to all prior periods presented in the financial statements.

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption.

The Company is currently evaluating the effect that ASU 2023-07 will have on the disclosures within its Consolidated Financial Statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) (“ASU 2023-09”).

The amendments in this update require that public business entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).

A public business entity is required to provide an explanation, if not otherwise evident, of the individual reconciling items disclosed, such as the nature, effect, and underlying causes of the reconciling items and the judgment used in categorizing the reconciling items.

The amendments in this update require that all entities disclose on an annual basis (1) the amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and (2) the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5 percent of total income taxes paid (net of refunds received).

The amendments in this update eliminate the requirement for all entities to (1) disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or (2) make a statement that an estimate of the range cannot be made.

For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2024.

The amendments in this Update should be applied on a prospective basis.

Retrospective application is permitted.

The Company is currently evaluating the effect that ASU 2023-09 will have on the disclosures within its Consolidated Financial Statements.

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BUSINESS COMBINATIONS

As of December 31, 2023, our allocation of purchase price for acquisitions made during 2023 and 2022 are detailed below:

Acquisition Date Acquisition Consideration Transferred

Current Assets Property Plant & Equipment Intangible Assets Other Long Term Assets Goodwill Liabilities Noncontrolling Interest

(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.

(1) Q1 2023 Midstream Infrastructure Assets and Incentive and Acceleration Agreement (a)

$ 125,000 $ 4,736 $ 61,850 $ 3,150 $ 55,264 $ — $ — $ —

(2) Q1 2022 Altus Midstream Company (“ALTM”) $ 1,013,745 $ 38,750 $ 634,923 $ 13,200 $ 1,752,500 $ 5,077 $ ( 967,988 ) $ ( 462,717 )

(a) Consideration includes $ 65.0 million paid for certain midstream assets and $ 60.0 million paid related to the incentive and acceleration agreement.

Midstream Infrastructure Assets

In the first quarter of 2023, the Partnership closed on a purchase and sale agreement for certain midstream assets for $ 65.0 million together with a new 20-year midstream service agreement.

Midstream assets acquired consisted of water gathering and disposal assets and intangible right-of-way assets.

As the net book value of the acquired assets were approximate to their fair market value, consideration was allocated to property plant and equipment and intangible based on the historical long-lived assets and intangible assets ratio acquired.

In addition, the Partnership entered into an incentive and acceleration agreement related to near term supplemental development activities on acreage dedicated for midstream services to affiliates of the Partnership.

Such development activities began in October 2023 and are subject to semi-annual performance milestones and subject to refund with consequential monetary penalty if not satisfied.

Consideration for the incentive and acceleration agreement of $ 60.0 million was capitalized as a contract asset in accordance with ASC 606, of which $ 4.7 million was included in “Prepaid and Other Current Assets” and $ 55.3 million was included in “Deferred Charges and Other Assets” in the Consolidated Balance Sheet as of the date of acquisition.

Acquisition-related costs were immaterial for this transaction.

Acquired net assets from this business combination were included in the Midstream Logistic segment.

Altus Midstream Company

On February 22, 2022, the Company consummated the Transaction.

Pursuant to the Contribution Agreement, in connection with 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 (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.

The Company recorded goodwill of $ 5.1 million related to operational synergies .

The Company incurred acquisition-related costs of nil and $ 6.4 million for the years ended December 31, 2023 and 2022, respectively, related to the Transaction.

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REVENUE RECOGNITION

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Other revenue 16,251 13,183 3,745

Total revenues and other $ 1,213,490 $ 662,044 $ 410,176

Total revenues

$ 1,256,412 $ 1,213,490 $ 662,044

There have been no significant changes to the Company’s contracts with customers during the years ended December 31, 2023, 2022, and 2021.

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.

For the years ended December 31, 2023, 2022, and 2021 the Company recognized revenues from producer MVC short falls of $ 1.6 million, $ 4.0 million and $ 2.5 million, respectively.

Remaining Performance Obligations

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Thereafter 249,296

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.

Our contractually committed revenue, for purposes of the tabular presentation above, is 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

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Contract liabilities balance as of December 31, 2023 increased $ 2.9 million compared to that as of December 31, 2022.

Higher contract liabilities balance reflected new projects assumed upon Closing of the Transaction and new projects started during 2022 with existing customers.

Higher contract liabilities balance reflected new projects started during 2023 that included provisions for customer capital reimbursements.

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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.

The Company has capitalized certain costs incurred to obtain a contract or additional contract dedicated acreage or volumes that would not have been incurred if the contract or associated acreage and volumes 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.

As of December 31, 2023 and 2022, the Company had contract cost assets of $ 71.2 million and $ 17.8 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.

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For the years ended December 31, 2023, 2022, and 2021, the Company recognized cost of sales associated with these assets of $ 6.6 million, $ 1.8 million and $ 1.8 million, respectively.

Contract cost assets balance as of December 31, 2023 increased $ 53.4 million compared to that as of December 31, 2022.

The increase was primarily related to the $ 60.0 million consideration paid for the incentive and acceleration agreement the Company entered into along with the midstream infrastructure assets acquisition consummated in first quarter of 2023.

See further discussion in Note 3—Business Combinations in the Notes to our Consolidated Financial Statements in this Annual Report.

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:

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Computers and equipment 6,242 4,289

accumulated depreciation and accretion ( 474,258 ) ( 337,030 )

accumulated depreciation

( 626,223 ) ( 474,258 )

Total depreciable assets, net 2,645,005 2,443,405

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Capitalized interest included in property, plant and equipment amounted to $ 6.4 million, $ 1.4 million and $ 0.9 million for the years ended December 31, 2023, 2022, and 2021, 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

Intangible assets, net are comprised of the following:

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Total amortizable intangible assets, net $ 591,670 $ 695,389

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 .

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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.

At December 31, 2023, the remaining weighted average amortization periods for customer contracts and right of way assets were approximately 6.94 years and 6.59 years, respectively.

The overall remaining weighted average amortization period for the intangible assets as of December 31, 2023 was approximately 6.89 years.

The Company recorded $ 122.3 million, $ 120.7 million and $ 136.8 million of amortization expense for the years ended December 31, 2023, 2022, and 2021, respectively.

There was no impairment recognized on intangible assets for the years ended December 31, 2023, 2022, and 2021, respectively.

Estimated aggregate amortization expense for the remaining unamortized balance in years is as following:

Estimated aggregate amortization expense for the remaining unamortized balance in future years is as follows:

Fiscal Year Amount

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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.

For each 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

Permian Highway Pipeline LLC (“PHP”) 53.3 % $ 1,474,800 26.7 % $ 626,477

(In thousands, except for ownership percentages)

Ownership Amount Ownership Amount

Permian Highway Pipeline LLP (“PHP”) (1)

55.5 % $ 1,666,254 53.3 % $ 1,474,800

Breviloba LLC (“Breviloba”) 33.0 % 443,684 33.0 % 455,057

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$ 2,540,989 $ 2,381,340

(1) The PHP expansion project, started in June 2022, was completed and went into service in December 2023.

The Company’s ownership increased to 55.5 % upon completion.

Additionally, as of December 31, 2023, 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.

However, no dollar value was assigned through the Transaction’s 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 year-ended December 31, 2023.

As of December 31, 2023 and 2022, the unamortized basis differences included in the EMI pipelines’ investment balances were $ 349.3 million and $ 363.2 million.

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.

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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)

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The following table presents the activities in the Company’s EMIs:

(In thousands)

Balance at December 31, 2021

$ 626,477 $ — $ — $ 626,477

Acquisitions 817,500 467,500 467,500 1,752,500

Contributions 76,770 — — 76,770

Distributions ( 170,409 ) ( 38,816 ) ( 47,539 ) ( 256,764 )

Capitalized interest 1,401 — — 1,401

Equity income, net (1)

123,061 26,373 31,522 180,956

Balance at December 31, 2022

Acquisitions 817,500 467,500 467,500 1,752,500

$ 1,474,800 $ 455,057 $ 451,483 $ 2,381,340

Contributions 226,948 — — 226,948

Distributions ( 178,542 ) ( 42,711 ) ( 57,916 ) ( 279,169 )

Capitalized interest 11,855 — — 11,855

Equity income, net (1)

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Balance at December 31, 2023

$ 1,666,254 $ 443,684 $ 431,051 $ 2,540,989

(1) For the year ended December 31, 2023, net of amortization of basis differences and capitalized interests, which represents undistributed earnings, the amortization was $ 7.5 million from PHP, $ 0.7 million from Breviloba and $ 6.2 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 .

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.

Summarized Financial Information

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For the Year Ended December 31, 2023

Permian Highway Pipeline LLC Breviloba, LLC Gulf Coast Express Pipeline LLC

Statements of Operations (In thousands)

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For the Year Ended December 31, 2022

Permian Highway Pipeline LLC Breviloba, LLC Gulf Coast Express Pipeline LLC

Statements of Operations (In thousands)

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For the Year Ended December 31, 2021

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) ( 1,798 ) 102,526 266,219

Net income (loss) ( 1,140 ) 102,048 264,956

Permian Highway Pipeline LLC Breviloba, LLC Gulf Coast Express Pipeline LLC Permian Highway Pipeline LLC Breviloba, LLC Gulf Coast Express Pipeline LLC

Operating income 237,230 92,568 254,772

Net income 236,528 92,005 253,535

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Balance Sheets (In thousands)

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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.

Comprehensive Refinancing 2022

On June 8, 2022, the Partnership completed the private placement of $ 1.00 billion aggregate principal amount of 5.875 % Senior Notes due 2030 (the “2030 Notes”), which are fully and unconditionally guaranteed by the Company.

The Notes were issued under our Sustainability-Linked Financing Framework and include certain Sustainability Performance Targets (“SPT”) that the Company needs to meet from and including June 15, 2027.

In addition, the Partnership entered into the revolving credit agreement with Bank of America, N.A.

as administrative agent, which provides for a $ 1.25 billion revolving credit facility (the “Revolving Credit Facility”) maturing on June 8, 2027, and the Term Loan with PNC Bank as administrative agent, which provided for a $ 2.00 billion senior unsecured term loan credit facility (“Term Loan”) maturing on June 8, 2025, which was amended on December 6, 2023 to extend the maturity date from June 8, 2025 to June 8, 2026, with an additional automatic six-month extension of the amended maturity date to December 8, 2026, at such time as no more than $ 1.00 billion of an aggregate principal amount of loans under the Term Loan remain outstanding, subject to customary conditions.

Both the Revolving Credit Facility and Term Loan include certain “Sustainability Adjustment” features that could result in an interest rate adjustment that depends on the Company meeting the sustainability targets defined in respective agreement.

Proceeds from the Notes and the Term Loan were used to repay all outstanding borrowings under previous credit facilities and to pay fees and expenses related to the offering.

The Company recorded a loss on debt extinguishment of $ 28.0 million for the year ended December 31, 2022.

December 2028 Sustainability-Linked Senior Notes

On December 6, 2023, the Partnership completed a private placement of $ 500.0 million aggregate principal amount of 6.625 % Sustainability-Linked Senior Notes due 2028 (the “Original 2028 Notes”) at par.

Further, on December 19, 2023, the Company completed an additional private placement of $ 300.0 million aggregate principal amount of 6.625 % Sustainability-Linked Senior Notes due 2028 (the “Additional 2028 Notes”) at 100.50 % of face amount (collectively, the “2028 Notes”).

The Original 2028 Notes and the Additional 2028 Notes are treated as a single series of securities under the indenture governing the 2028 Notes, vote together as a single class, and have substantially identical terms, other than the issue date and issue price.

The 2028 Notes are fully and unconditionally guaranteed by the Company and issued under our Sustainability-Linked Financing Framework, and include sustainability-linked features described below.

Proceeds from the 2028 Notes, together with cash on hand and borrowings under the Partnership’s Revolving Credit Facility, were used to repay a portion of the outstanding borrowings under the Partnership’s existing Term Loan.

See additional information regarding the 2023 Term Loan Amendment below.

Interest on the 2028 Notes is payable semi-annually in arrears on June 15 and December 15 of each year, commencing June 15, 2024.

The aggregate fees and expenses paid to obtain the 2028 Notes totaled $ 11.2 million and were capitalized as debt issuance cost and included in the Consolidated Balance Sheets as a direct deduction to the 2028 Notes.

The $ 1.5 million premium was added to the 2028 Notes.

The debt issuance cost was amortized and debt premium was accreted to interest expense over the term of the 2028 Notes using the effective interest method.

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From and including June 15, 2027, the interest rate accruing on the 2028 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 SPT as defined in the indenture governing the 2028 Notes related to 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 2028 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 2028 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, 2028, the interest rate accruing on the 2028 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.

The Partnership may redeem in whole or in part, at a redemption price equal to the Make-Whole-Redemption Price, which is the greater of (1) 100 % of the principal amount of the 2028 notes to be redeemed or (2) the present value of the 2028 Notes to be redeemed at such redemption date, prior to December 15, 2025.

On or after December 15, 2025, the Partnership may redeem in whole or in part at the redemption price set forth in the indenture agreement governing the 2028 Notes.

Term Loan Amendment 2023

On December 6, 2023, the Partnership, the Company, PNC Bank, and the banks and other financial institutions party thereto, as lenders, entered into a First amendment to Credit Agreement (the “First Amendment”), concurrently with the closing of its 2028 Notes discussed above.

The First Amendment (1) extended the maturity of the Term Loan to June 8, 2026 upon the prepayment of a principal amount of loans under the Term Loan of no less than $ 500.0 million;

and (2) provided for an additional automatic six-month extension of the amended maturity date to December 8, 2026, at such time as no more than $ 1.00 billion of an aggregate principal amount of loans under the Term Loan remain outstanding, subject to customary conditions.

Pursuant to FASB ASC 470-50, Modifications and Extinguishments, the Company determined that the amendment of the maturity date is a modification of the original Term Loan.

Fees paid directly to lenders in arranging the modification totaled $ 1.5 million and were recorded as an original debt discount and included in the Consolidated Balance Sheets as a direct deduction of the Term Loan and was amortized over the modified remaining life of the Term Loan using the effective interest method.

Cost incurred with third parties directly related to the modification totaled $ 0.6 million and were expensed as incurred.

Furthermore, the partial paydown of the principal under the Term Loan totaled $ 800.0 million, using proceeds from the 2028 Notes, resulting in the write off (loss extinguishment) of a proportional amount of the remaining unamortized debt issuance cost and original discount from the Term Loan immediately prior to the paydown.

The Company recorded a $ 1.9 million loss on extinguishment from these write offs in the Consolidated Statements of Operations.

Sustainability Performance Targets

The Partnership’s outstanding debts were 100 % linked to sustainability performance targets as of December 31, 2023 and 2022, among which, the Partnership’s 2030 Notes and the 2028 Notes have SPTs that would result in interest rate adjustments starting on June 15, 2027, and the Partnership’s Term Loan and Revolving Credit Facility have SPTs to be met for each calendar year starting in 2022 and onward.

The Partnership delivered a certificate regarding performance of SPTs under the Term Loan and Revolving Credit Facility, which are linked to key performance indicators with respect to methane emission intensity ratio and female officer representation, in 2023.

The Company met both SPTs by achieving a reduction of 12.0 % of methane emission intensity from 2021 (base year) to 2022, which was 8.7 % higher than the respective SPT under the Term Loan and Revolving Credit Facility, and a 17.7 % female participation rate in 2022, which was 8.0 % higher than the respective SPT under the Term Loan and Revolving Credit Facility.

As a result of meeting both SPTs under the Term Loan and Revolving Credit Facility, there was a negative 0.05 % sustainability rate adjustment made to both instruments.

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Compliance with our Covenants

Both the Revolving Credit Facility with Bank of America, N.A.

as administrative agent, and the Term Loan with PNC Bank as administrative agent, 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.

The 2030 Notes and the 2028 Notes also contain covenants and restrictive provisions, which may, among other things, limit the Partnership’s and its subsidiaries’ ability to create liens to secure indebtedness and the Partnership’s ability to consolidate or combine with or merge into any other person.

As of December 31, 2023, 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.

Fair Value of Financial Instruments

The fair value of the Company and its subsidiaries’ consolidated debt as of December 31, 2023 and 2022 was $ 3.57 billion and $ 3.34 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:

At December 31, 2023, the 2030 Notes and the 2028 Notes’ fair value were based on Level 1 inputs and the Term Loan and Revolving Credit Facility’s fair value was based on Level 3 inputs.

The following table summarizes the Company’s debt obligations:

(In thousands)

$ 2.0 billion unsecured term loan

Unsecured term loan

$ 1,200,000 $ 2,000,000

$ 1.00 billion 2030 senior unsecured notes

1,000,000 1,000,000

$ 0.80 billion 2028 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)

594,000 395,000

Total Long-term debt 3,594,000 3,395,000

Deferred debt issuance costs, net (1)

( 31,510 ) ( 26,490 )

Current portion, net — ( 54,280 )

Unamortized debt premium and discount, net

Long-term portion of debt, net

(1) Excluded unamortized debt issuance cost related to the Revolving Credit Facility.

$ 3,562,809 $ 3,368,510

(1) Excludes unamortized debt issuance cost related to the Revolving Credit Facility.

Unamortized debt issuance cost associated with the Revolving Credit Facility was $ 5.4 million and $ 6.9 million as of December 31, 2023 and 2022, 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.

As of December 31, 2023 and 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, respectively.

Interest Income and Financing Costs, Net of Capitalized Interest

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Total financing costs, net of capitalized interest $ 205,854 $ 149,252 $ 117,365

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.

As of December 31, 2023 and 2022, unamortized debt issuance costs associated with the 2030 Notes, the 2028 Notes and the Term Loan were $ 31.5 million and $ 26.5 million, respectively, and unamortized debt premium and discount, net, associated with the 2028 Notes and Term Loan were $ 0.3 million and nil , respectively.

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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:

These amounts exclude approximately $ 31.2 million in unamortized deferred financing costs, debt premium and discount:

Fiscal Year Amount

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Total $ 3,594,000

OTHER CURRENT LIABILITIES

The following table provides detail of the Company’s other current liabilities at December 31, 2022 and 2021:

ACCRUED EXPENSES

The following table provides detail of the Company’s other current liabilities:

(In thousands)

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Accrued other expenses 13,451 5,991

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.

Total accrued expenses

$ 177,421 $ 173,914

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.

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Short-term lease cost for the years ended December 31, 2023, 2022 and 2021 were $ 3.4 million, $ 6.2 million, and $ 4.8 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:

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Weighted-average discount rate — operating leases 8.76 % 6.62 %

The following table presents future minimum lease payments under operating leases as of December 31, 2022.

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The following table presents future minimum lease payments under operating leases:

Fiscal Year Amount

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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.

Please refer to Note 1— Description of Business and Basis of Presentation in the Notes to our Consolidated Financial Statements in this Annual Report.

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 2023, 180,962 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 94,089,038 Common Units and an equal number of Class C Common Stock issued and outstanding as of December 31, 2023.

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, 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.

Private Placement Warrants

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.

The Common Units fair value was approximately $ 3.16 billion and $ 3.11 billion as of December 31, 2023 and 2022, respectively.

The fair value of the Common Units is estimated based on a quoted market price.

Preferred Units

Upon Closing, the Company assumed certain Preferred Units that were issued and outstanding as of the Closing Date.

At the Closing, the Company assumed liabilities of $ 200.7 million related to mandatory redeemable Preferred Units and temporary equity of $ 462.7 million related to redeemable noncontrolling interest - Preferred Units Limited Partners.

During 2022, the Company redeemed all assumed Preferred Units from the Closing and recorded a gain on the redemption of mandatorily redeemable Preferred Units of $ 9.6 million and a gain on embedded derivative related to the redeemable noncontrolling interest - Preferred Units Limited Partners of $ 89.1 million.

Upon Closing, the Company assumed certain warrants that were outstanding on the Closing Date.

At the Closing, the Company recorded liabilities related to the warrants of $ 0.2 million.

There were 12,577,350 Public Warrants, valued based on Level 1 inputs, and 6,364,281 Private Placement Warrants, valued based on Level 3 inputs.

All Public Warrants and Private Placement Warrants expired on November 9, 2023.

The Company recorded favorable fair value adjustments of $ 0.1 million and $ 0.1 million in “Interest and other income” of the Consolidated Statements of Operations for the years ended December 31, 2023 and 2022, respectively.

Stock Repurchase Program

In February 2023, the Board of Directors (the “Board”) approved a stock repurchase program (“Repurchase Program”), authorizing discretionary purchases of the Company’s Class A Common Stock up to $ 100.0 million in the aggregate.

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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.

During the year ended December 31, 2023, the Company repurchased 194,174 shares at a total cost of $ 5.8 million.

The Company retired all treasury stock as of December 31, 2023.

For more information regarding the non-deductible 1% U.S.

federal excise tax imposed on certain repurchases of stock by publicly traded U.S.

corporations, please refer to Part I—Item 1A Risk Factors—Risks Related to Ownership of our Common Stock.

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”).

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Additionally, the Audit Committee resolved that for the calendar year 2023, 100 % of all distributions or dividends received by each Reinvestment Holder would be reinvested in newly issued shares of Class A Common Stock.

The Reinvestment Agreement will terminate automatically on March 8, 2024.

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 2023, the Company made cash dividend payments of $ 82.0 million to holders of Class A Common Stock and Common Units and $ 352.1 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”).

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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

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.

All corresponding per-share and share amounts, excluding the Transaction, for periods prior to June 8, 2022 have been retrospectively restated in this Annual Report to reflect the Stock Split.

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:

The following tables present financial assets and liabilities that are measured at fair value on a recurring basis:

December 31, 2023

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Interest rate derivatives — 5,348 — 5,348

Public warrants 50 — — 50

Private warrants — — 38 38

Total liabilities $ — $ 7,097 $ — $ 7,097

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December 31, 2022

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(In thousands)

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

Contingent liabilities — — 839 839

Public warrants 50 — — 50

Private warrants — — 38 38

Total liabilities $ 50 $ 14,046 $ 38 $ 14,134

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.

Our derivative contracts consist of interest rate swaps and commodity swaps.

Valuation of these derivative contracts involved both observable publicly quoted prices and certain credit valuation inputs 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.

Refer to Note 13—Derivatives and Hedging Activities in the Notes to our Consolidated Financial Statements for further discussion related to commodity swaps and interest rate swaps.

Long-term debt’s carrying value can vary from fair value.

See Note 8 —Debt and Financing Costs in the Notes to Consolidated Financial Statements for further information.

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

There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the year ended December 31, 2023.

DERIVATIVES 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.

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, 2023 and 2022.

Interest Rate Risk

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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.

Interest rate swaps designated as interest rate derivatives involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract.

In November 2022 and March 2023, the Company entered into three interest rate swap contracts with total notional amounts of $ 2.25 billion effective on May 1, 2023 and maturing on May 31, 2025.

Upon closing of the First Amendment of the Term Loan, the Company terminated one existing interest rate swap contract and partially terminated another in December 2023.

As of December 31, 2023, the Company had two interest rate swap contracts with total notional amounts of $ 1.70 billion maturing on May 31, 2025 that pay a fixed rate ranging from 4.38 % to 4.48 % for the respective notional amounts.

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 assets were $ 4.3 million and $ 2.7 million as of December 31, 2023 and 2022, respectively.

Interest rate swap derivative liabilities were $ 5.3 million and $ 8.3 million as of December 31, 2023 and 2022, respectively.

The Company recorded cash settlements on interest rate swap derivatives of $ 12.7 million, $ 10.9 million and $( 2.9 ) million, for the years ended December 31, 2023, 2022 and 2021, 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.

In addition, the Company recorded favorable fair value adjustments of $ 17.3 million,

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$ 7.9 million and $ 4.5 million for the years ended December 31, 2023, 2022 and 2021, respectively, in “Interest Expense” of the Consolidated Statements of Operations.

Commodity Price Risk

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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.

Fluctuations in commodity prices also impact operating cost 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):

During 2023, the Company entered into multiple commodity swap contracts based on the OPIS NGL Mont Belvieu prices for ethane, propane and butane, the Waha Basis index and the NYMEX West Texas Intermediate Control index.

These contracts are on various notional quantities of NGLs, natural gas and crude.

Similarly, the Company has entered into various natural gas and crude basis spread swaps.

These contracts are effective over the next 1 to 17 months and are used to hedge against location price risk of the respective commodity resulting from supply and demand volatility and protect cash flows against price fluctuations.

The table below presents detail information of commodity swaps outstanding as of December 31, 2023 (in thousands, except volumes):

December 31, 2023

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.

(In thousands)

Natural Gas Commodity Swap MMBtus 920,000 $ 61

NGL Commodity Swap Gallons 58,401,000 1,415

Crude Commodity Swap Bbl 27,300 44

Crude Collars Commodity Swap Bbl 109,600 132

Crude Basis Spread Swaps

Commodity Swap Bbl 132,000 ( 49 )

Natural Gas Basis Spread Swaps Commodity Swap MMBtus 34,415,000 311

The fair value or settlement value of the swaps outstanding are presented on a gross basis on the Consolidated Balance Sheets.

Commodity swap derivative assets were $ 3.7 million and $ 4.3 million as of December 31, 2023 and 2022, respectively.

Commodity swap derivative liabilities were $ 1.7 million and $ 5.7 million as of December 31, 2023 and 2022, respectively.

The Company recorded cash settlements on commodity swap derivatives of $ 13.1 million, $( 0.2 ) million and $( 16.5 ) million for the years ended December 31, 2023, 2022 and 2021, 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.

In addition, the Company recorded favorable (unfavorable) fair value adjustments of $ 16.4 million, $( 1.4 ) million and $( 16.9 ) million for the years ended December 31, 2023, 2022 and 2021, respectively, in “Product Revenue” of the Consolidated Statements of Operations.

SHARE-BASED COMPENSATION

Class A Shares and Class C Shares

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.

Immediately upon Closing, all outstanding Class A-1 and Class A-2 units were cancelled and exchanged for 5,300,000 Class A Shares, 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.

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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.

Similarly, the Class A-3 units were exchanged for approximately 326,000 Class C Shares and will vest over four years .

The Company also issued approximately 76,000 replacement restricted share awards (“Replacement Awards”) to new employees that transitioned from ALTM as part of the merger.

These changes for all three

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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 table below summarizes Class A Shares and Class C Shares activity for the year ended December 31, 2023:

Number of Shares

Weighted Avg Grant-Date Fair Market Value Per Unit

Outstanding and unvested shares at December 31, 2022

5,468,798 $ 28.92

Outstanding and unvested shares at December 31, 2023

5,444,488 $ 28.91

Table below summarizes aggregate intrinsic value (market value at vesting date) and grant-date fair value of vested Class A Shares for the years ended December 31, 2023 and 2022.

No vesting or forfeitures occurred for Class C Shares during 2023 or 2022.

Year Ended December 31,

(In thousands)

Aggregate intrinsic value of vested Class A Shares

Grant-date fair value of vested Class A Shares

Restricted Stock Units

During 2023, pursuant to the Company’s 2019 Omnibus Compensation Plan, as amended from time to time, the Company granted (i) approximately 370,000 RSUs to employees that are scheduled to vest in full on January 1, 2026, subject to continued employment requirements, (ii) approximately 181,000 RSUs to employees in lieu of cash bonus awards that vested immediately upon grant and (iii) approximately 16,000 RSUs to certain members of the Board that vested immediately upon grant.

These RSUs are valued at their fair value at the date of grant.

The table below summarizes RSUs activity for the year ended December 31, 2023:

Number of Shares (1)

Weighted Avg Grant-Date Fair Market Value Per Unit (1)

Outstanding and unvested shares at December 31, 2022 110,490 $ 25.18

Granted 568,764 31.56

Vested 236,251 29.34

Forfeited 7,783 31.43

Outstanding and unvested shares at December 31, 2023 435,220 $ 31.15

(1) Number of shares and weighted average fair market value per share here include restricted share awards issued to new employees transitioned from ALTM as part of the merger.

The table below summarizes aggregate intrinsic value (market value at vesting date) and grant-date fair value of vested RSUs for the years ended December 31, 2023 and 2022.

Year Ended December 31,

(In thousands)

Aggregate intrinsic value of vested RSUs

$ 7,446 $ 486

Grant-date fair value of vested RSUs

$ 6,931 $ 485

With respect to above Class A Shares, Class C Shares and RSUs, the Company recorded compensation expenses of $ 56.0 million, $ 42.8 million and nil in “General and administrative expenses” of the Consolidated Statements of Operations, for the years ended December 31, 2023, 2022 and 2021, respectively, 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 expense was recognized during 2021 as they were considered non-vested prior to their cancellation and exchange.

As of December 31, 2023,

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there were $ 73.0 million and $ 9.0 million of unrecognized compensation costs related to unvested Class A Shares and Class C Shares, and RSUs, respectively, and these costs are expected to be recognized over a weighted average period of 1.77 years and 1.97 years, respectively.

The total income tax provision consists of the following:

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(In thousands)

Current income taxes:

Current income tax expense:

State $ 492 $ 522 $ —

Deferred income taxes:

Deferred tax (benefit) expense:

Federal ( 235,627 ) — —

State 2,227 2,094 1,865

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statutory rate is reconciled below:

December 31, 2022

Year Ended December 31,

statutory rate (1)

21.00 % 21.00 %

Tax attributable to noncontrolling interest

( 13.51 ) % ( 17.55 ) %

State tax rate 1.64 % 1.03 %

Other 0.02 % 1.22 %

Valuation allowance ( 160.84 ) % ( 4.67 ) %

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(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.

federal income tax for the year ended December 31, 2021.

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.

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Other 849 1,412

Total deferred tax assets 219,730 —

Valuation allowance

Net deferred tax assets — —

— ( 219,730 )

Total deferred tax assets 235,627 —

Deferred tax liabilities:

Property, plant, and equipment

Net deferred tax liabilities $ ( 11,018 ) $ ( 7,190 )

13,244 11,018

Net deferred tax assets (liabilities)

$ 222,383 $ ( 11,018 )

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.

For federal purposes, the Company has deferred tax assets related to (i) its investment in the Partnership and (ii) net operating losses (“NOLs”) with no expiration date.

The Company has evaluated all positive and negative evidence to conclude

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that it is more likely than not that such deferred tax assets will be realized.

This determination was based, in part, on the fact that the Company achieved a three-year cumulative position of profitability as of December 31, 2023.

It is also based on our projections of future taxable income at current commodity prices and our current cost structure.

This positive evidence outweighs negative evidence regarding the realization of the Company’s deferred tax assets.

As a result, no valuation allowance was recorded with respect to such deferred tax assets as of December 31, 2023.

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.

Subsequent ownership changes could further impact the limitation in future years.

However, notwithstanding such limitation, we expect to use substantially all of our NOLs to offset our future federal tax liabilities.

The timing of such usage will depend upon our future earnings and future tax circumstances.

The Company accounts for income taxes in accordance with FASB 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.

Reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

December 31, 2022

(In thousands)

Balance at beginning of year $ —

Increased related to ALTM acquisition 5,238

Reductions related to current year activities ( 5,238 )

Balance at end of year $ —

The Company had no uncertain tax position as of December 31, 2023 and 2022.

The Company records interest and penalties related to unrecognized tax benefits as a component of income tax expense.

Each quarter the Company assesses the amounts provided for and, as a result, may increase (expense) or reduce (benefit) the amount of interest and penalties.

The Company has recorded no interest or penalties associated with its unrecognized tax benefit.

Uncertain tax positions may change in the next twelve months;

however, the Company does not expect any possible change to have a significant impact on the results of operations or financial position.

If incurred, Company will record income tax interest and penalties as a component of income tax expense.

The Company has recorded no interest or penalties associated with unrecognized tax benefits.

As of December 31, 2023, tax years 2019 through 2023 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.

NET INCOME PER SHARE

Basic earning per share (“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 Company uses the if-converted method to compute potential common shares exchanged from potentially dilutive Common Units.

Under the if-converted method, dilutive Common Units are assumed to be exchanged from the date of the issuance and the resulting shares of Class A Common Stock are included in the denominator of the diluted EPS calculation for the period being presented.

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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:

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Excess preferred carrying amount over consideration paid (2)

Total net income attributable to Class A common shareholders $ 61,105 $ — $ —

Total net income attributable to Class A common shareholders - basic

$ 272,036 $ 61,105 $ —

Net income attributable to Class A Common shareholders - basic

$ 272,036 $ 61,105 $ —

Net income attributable to Common Units limited partners (4)

Total net income attributable to Class A common shareholders - diluted

$ 369,046 $ 61,105 $ —

Weighted average shares outstanding - basic (3)(5)

51,823 41,630 —

Dilutive effect of unvested Class A common shares

Dilutive effect of exchange of outstanding Common Units (4)

Weighted average shares outstanding - diluted 146,197 41,665 —

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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.

(4) 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 the year ended December 31, 2022.

(5) Weighted average Class A common shares have been retrospectively restated due to bonus effect of Class A common shares issued under the Reinvestment Agreement for all periods presented in which the Class A common shares were outstanding.

Further discussion of the Company’s outstanding common stock, warrants, Preferred Units and any applicable redemption rights is provided in Note 11—Equity and Warrants in the Notes to our Consolidated Financial Statements.

COMMITMENTS AND CONTINGENCIES

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As of December 31, 2023 and 2022, there were no accruals for loss contingencies.

The Company is a party to various legal actions arising in the ordinary course of its businesses.

The Company is a party to various legal actions arising in the ordinary course of its business.

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.

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Thus, the Company’s exposure and ultimate losses may be higher, and possibly significantly more, than the amounts accrued.

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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.

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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.

The Company did not expect PDC’s actual annual Mcf volume amounts to exceed forecasted amounts during the remaining measurement periods as of December 31, 2023 and 2022;

therefore, the estimated fair value of the contingent consideration liability was nil as of each date.

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.

The earn-out consideration expired with no value on November 9, 2023.

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.

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The Company determined the earn-out consideration to be classified as equity based on the settlement provision.

Letters of Credit

Our Revolving Credit Facility maturing on June 8, 2027 can be used for letters of credit.

Our obligations with respect to related letters of credit totaled $ 12.6 million and nil as of December 31, 2023 and 2022, respectively.

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.

FASB ASC 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.

BCP Raptor Aggregator, LP, Blackstone Management Partners, LLC, BX Permian Pipeline Aggregator LP, Buzzard Midstream LLC and Apache Midstream LLC (“Apache Midstream”).

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:

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addition, Apache Midstream acquired Titus Oil and Gas, LLC (“Titus”) in October 2022, at which time Titus became a related party.

Furthermore, in December 2023, Apache entered into an Underwriting Agreement to sell 7,475,000 shares of the Company’s Class A Common Stock in a secondary offering.

Apache owned less than 10 % of the Company’s issued and outstanding Common Stock after the sale.

Also, upon Closing of the Transaction, the Company acquired initial equity interests in Breviloba, GCX and EPIC, and an additional equity interest in PHP.

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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.

See Note 7—Equity Method Investments in the Notes to our Consolidated Financial Statements in this Annual Report 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 pipeline.

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.

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 Annual Report, thus, not included in the table below.

Apache Midstream, Titus, GCX, EPIC and Breviloba were not considered related parties during 2021.

For the Year Ended December 31,

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As of December 31, 2023, accounts receivable due from Apache Midstream and Titus totaled $ 15.8 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.

As of December 31, 2022, accounts receivable from Apache Midstream and Titus totaled $ 17.6 million and immaterial accounts payable were due to Apache Midstream and Titus.

As of December 31, 2023 and 2022, No accounts receivable or payable were due from or to PHP or Breviloba.

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 CODM to make key operating decisions, assess performance and allocate resources.

These segments represent 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:

The activities of each of our reportable segments from which the Company earns revenues 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.

The Midstream Logistics segment operates under three streams, 1) gas gathering and processing, 2) crude oil gathering, stabilization and storage services and 3) produced 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 Pipeline Transportation segment consists of equity investment interests in four Permian Basin pipelines that access various points along the U.S.

Gulf Coast, Kinetik NGL Pipelines and Delaware Link Pipeline.

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:

Our Chief Executive Officer, who is the CODM, uses segment adjusted EBITDA to measure profitability and allocate resources among segments.

Segment Adjusted EBITDA is defined as segment net earnings adjusted to exclude interest expense, income tax expense, depreciation and amortization, the proportionate effect of these same items for our EMI pipelines and other non-recurring items.

The CODM considers budget-to-actual and forecast-to-actual variances on a monthly basis when making decisions about allocating capital and personnel to the segments.

The Midstream Logistics segment accounts for more than 99 % of the Company’s operating revenues, cost of sales (excluding depreciation and amortization), operating expenses and ad valorem expenses.

The Pipeline Transportation segment contains all of the Company’s EMIs, which contribute more than 98 % of the segment’s adjusted EBITDA.

Corporate and Other contains the Company’s executive and administrative functions, including 81 % of the Company’s general and administrative expenses and all of the Company’s debt service costs.

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The following tables present the reconciliation of the segment profit measures for the years ended December 31, 2023, 2022 and 2021:

Midstream Logistics Pipeline Transportation Corporate and Other (1)

For the year ended December 31, 2023

(In thousands)

Segment income (loss) before income taxes

$ 239,756 $ 199,654 $ ( 285,866 ) $ 153,544

Interest expense

47 — 205,807 205,854

Depreciation and amortization 275,568 5,395 23 280,986

Contract assets amortization 6,620 — — 6,620

Proportionate EMI EBITDA — 306,072 — 306,072

Share-based compensation — — 55,983 55,983

Loss on disposal of assets

19,402 — — 19,402

Loss on debt extinguishment

— — 1,876 1,876

Integration costs 59 — 956 1,015

Transaction costs 33 — 615 648

Other one-time costs or amortization 5,996 — 5,905 11,901

Interest income

Warrant valuation adjustment — — 88 88

Unrealized gain on derivatives 4,291 — — 4,291

Equity income from unconsolidated affiliates — 200,015 — 200,015

Segment adjusted EBITDA (3)

$ 543,190 $ 311,106 $ ( 15,466 ) $ 838,830

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

Segment income (loss) before income taxes

$ 151,413 $ 180,926 $ ( 79,002 ) $ 253,337

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

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$ 516,045 $ 269,237 $ ( 13,093 ) $ 772,189

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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

For the year ended December 31, 2021

(In thousands)

Segment income (loss) before income taxes

$ ( 34,434 ) $ 53,648 $ ( 15,867 ) $ 3,347

Interest expense 110,389 6,976 — 117,365

Income tax expense 1,535 330 — 1,865

Depreciation and amortization 243,045 513 — 243,558

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$ 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;

(i) are not specifically attributable to an operating 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.

Items included here to reconcile operating segments profit and loss with the Company’s consolidated profit and loss.

(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;

Refer to Note 1 —Description of Business and Basis of Presentation in the Notes to our Consolidated Financial Statements in this Annual Report, for further information on the Company’s basis of presentation.

(3) Segment 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

Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report, for a definition and reconciliation to the GAAP measure.

The following tables present the revenue for the individual operating segment for the years ended December 31, 2023, 2022 and 2021:

Midstream Logistics Pipeline Transportation Elimination

For the year ended December 31, 2023

(In thousands)

$ 1,236,304 $ 3,857 $ — $ 1,240,161

Other revenue

13,343 2,908 — 16,251

Intersegment revenue (1)

— 1,678 ( 1,678 ) —

Total segment operating revenue $ 1,249,647 $ 8,443 $ ( 1,678 ) $ 1,256,412

Midstream Logistics Pipeline Transportation Consolidated (2)

For the year ended December 31, 2021 (In thousands)

For the year ended December 31, 2022

(In thousands)

Revenue $ 1,198,474 $ 1,833 $ 1,200,307

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Total segment operating revenue

$ 1,211,649 $ 1,841 $ 1,213,490

Midstream Logistics Pipeline Transportation Consolidated (2)

For the year ended December 31, 2020 (In thousands)

For the year ended December 31, 2021

(In thousands)

Revenue $ 658,299 $ — $ 658,299

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Total segment operating revenue

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,

$ 662,036 $ 8 $ 662,044

(1) The Company accounts for intersegment sales at market prices, while it accounts for asset transfers at book value.

Intersegment revenue is eliminated at consolidation.

(2) Results do not include legacy ALTM prior to February 22, 2022.

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The following table presents total capital expenditures, including property, plant and equipment and intangible assets, for each operating segment:

For the Year Ended December 31,

2023 2022 2021

(In thousands)

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Total capital expenditures (1)

The following table presents total assets for each operating segment as of December 31, 2022 and 2021:

December 31, 2022 December 31, 2021

$ 329,554 $ 221,579 $ 82,712

(1) Excludes contributions to the Company’s EMIs.

The following table presents total assets for each operating segment:

(In thousands)

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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.

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.

On January 23, 2024, the Board declared a cash dividend of $ 0.75 per share on the Company’s Class A Common Stock which will be payable to stockholders of record as of February 22, 2024 on March 7, 2024.

The Company, through its ownership of the general partner of the Partnership, declared a distribution of $ 0.75 per Common Unit from the Partnership to the holders of Common Units, which will be payable on March 7, 2024.

Reinvestment Holders will reinvest 100 % of dividends received on Class A Common Stock and Common Units based on the Reinvestment Agreement.

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