Kinetik Holdings Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis addresses the results of our operations for the three month period ended March 31, 2024 , as compared to our results of operations for the same period in 2023 . Please read the following discussion of our financial condition and results of operations in conjunction with the financial statements and notes thereto included elsewhere in this report. Overview We are an integrated midstream energy company in the Permian Basin providing comprehensive gathering, transportation, compression, processing and treating services. Our core capabilities include a variety of service offerings including natural gas gathering, transportation, compression, treating and processing; NGLs stabilization and transportation; produced water gathering and disposal; and crude oil gathering, stabilization, storage and transportation. Our operations are strategically located in the heart of the Delaware Basin. Our Operations and Segments We have two reportable segments which are strategic business units with various products and services. The Midstream Logistics segment operates under three service offerings, 1) gas gathering and processing, 2) crude oil gathering, stabilization and storage services and 3) produced water gathering and disposal. The Pipeline Transportation segment consists of four EMI pipelines originating in the Permian Basin with various access points to the U.S. Gulf Coast, as well as Kinetik NGL and Delaware Link Pipelines. The pipelines transport crude oil, natural gas and NGLs within the Permian Basin and to the U.S. Gulf Coast. Midstream Logistics Gas Gathering and Processing. The Midstream Logistics segment provides gas gathering and processing services with over 1,600 miles of low and high-pressure steel pipelines located throughout the Delaware Basin. Gas processing assets are centralized at five processing complexes with total cryogenic processing capacity of approximately 2.0 Bcf/d. Crude Oil Gathering, Stabilization and Storage Services. Crude gathering assets are centralized at the Caprock Stampede Terminal and the Pinnacle Sierra Grande Terminal. The system includes approximately 220 miles of gathering pipeline and 90,000 barrels of crude storage. Water Gathering and Disposal. The system includes over 360 miles of gathering pipeline and approximately 580,000 barrels per day of permitted disposal capacity. Pipeline Transportation EMI pipelines. The Company owns the following equity interests in four EMI pipelines in the Permian Basin with access to various points along the U.S. Gulf Coast: 1) an approximate 55.5% equity interest in Permian Highway Pipeline LLC (“ PHP”), which is operated by Kinder Morgan; 2) 16% equity interest in Gulf Coast Express Pipeline LLC (“ GCX”), which is also operated by Kinder Morgan; 3) 33% equity interest in Breviloba, LLC, the owner of Shin Oak, which is operated by Enterprise Products Operating LLC; and 4) 15% equity interest in Epic Crude Holdings, LP (“EPIC”), which is operated by EPIC Consolidated Operations, LLC. Kinetik NGL Pipelines. The Kinetik NGL Pipelines consist of approximately 96 miles of NGL pipelines connecting our East Toyah and Pecos complexes to Waha, including our 20-inch Dewpoint pipeline that spans 40 miles, and our 30 mile, 16-inch Brandywine Pipeline connecting to our Diamond Cryogenic complex. The Kinetik NGL pipeline system has a capacity of approximately 580 MBbl/d. Delaware Link Pipeline. The Delaware Link Pipeline consists of approximately 40 miles of 30-inch diameter pipeline with an initial capacity of approximately 1.0 Bcf/d that provides additional transportation capacity to Waha. The project reached commercial in-service in October 2023. 22 Table of Contents Recent Developments A/R Facility On April 2, 2024, Kinetik Receivables LLC (“Kinetik Receivables”), a bankruptcy remote special purpose entity formed as a direct subsidiary of Kinetik Holdings LP, a Delaware limited partnership ( the “Partnership”) , entered into an accounts receivable securitization facility with an initial facility limit of $150 million (“A/R Facility”) which has a scheduled termination date of April 1, 2025, with renewal options. Pursuant to the terms of the A/R Facility, Kinetik Receivables acquires certain receivables from the Partnership and other subsidiaries of the Company and makes further sales of such receivables to certain purchasers. The net proceeds of the A/R Facility were used, together with cash on hand, to repay a portion of the outstanding borrowings under the existing term loan credit facility (“Term Loan Credit Facility”), lowering the remaining balance to $1.00 billion. As a result, the maturity of the Term Loan Credit Facility extended to December 8, 2026. Secondary Offering of Common Stock On March 13, 2024, the Company and Apache (the “Selling Stockholder”) entered into an Underwriting Agreement with Goldman Sachs & Co. LLC, as representative of the several underwriters named therein (collectively, the “Underwriters”), pursuant to which the Selling Stockholder agreed to sell to the Underwriters, and the Underwriters agreed to purchase from the Selling Stockholder, subject to and upon the terms and conditions set forth therein, 13,079,871 shares of Class A Common Stock. The Company did not receive any proceeds from the sale of shares of Common Stock in the offering. Factors Affecting Our Business Commodity Price Volatility There has been, and we believe there will continue to be, volatility in commodity prices and in the relationships among NGLs, crude oil and natural gas prices. As a result of uncertainty around global commodity supply and demand, the current conflict in Israel and the Gaza Strip and elsewhere in the Middle East, as well as the ongoing armed conflict in Ukraine, global oil and natural gas commodity prices continue to remain volatile. The volatility and uncertainty of natural gas, crude oil and NGL prices impact drilling, completion and other investment decisions by producers and ultimately supply to our systems. Although ongoing armed conflicts might generate commodity price upward pressure, and our operations could benefit in an environment of higher natural gas, NGLs and condensate prices, the instability of the international political environment and human and economic hardship resulting from the conflicts would have a highly uncertain impact on the U.S. economy, which in turn, might affect our business and operations adv ersely. Our product sales revenue is exposed to commodity price fluctuations. Therefore, commodity price decline and sustained periods of low natural gas, condensate and NGL prices could have an adverse effect on our product revenue stream. The Company continues to monitor commodity prices closely and may enter into commodity price hedges from time to time as necessary to mitigate the volatility risk. In addition, the Company, when economically appropriate, enters into fee-based arrangements that insulate the Company from commodity price volatility. Inflation and Interest Rates The annual rate of inflation in the United States was 3.25% in March 2024 compared to 5.0% in March 2023, as measured by the Consumer Price Index. However, the Federal Open Market Committee (“FOMC”) maintains its long-term goals of maximum employment and inflation at the rate of 2.00%. In support of these goals, the FOMC maintained the target range for the federal funds rate to 5.25% - 5.50% during its meeting in March 2024. During the meeting, the FOMC noted the economic outlook is uncertain and the FOMC remains highly attentive to inflation risk. It does not expect to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2.00%. Elevated interest rates beyond the term of our hedges will increase our financing costs and could have a negative impact on the Company’s ability to meet its contractual debt obligations and to fund its operating expenses, capital expenditures, dividends and distributions. 23 Table of Contents Results of Operations The following table presents the Company’s results of operations for the periods presented: Three Months Ended March 31, 2024 2023 % Change (In thousands, except percentages) Revenues: Service revenue $ 102,195 $ 103,425 (1 %) Product revenue 236,567 173,824 36 % Other revenue 2,632 3,791 (31 %) Total operating revenues 341,394 281,040 21 % Operating costs and expenses: Cost of sales (exclusive of depreciation and amortization) (1) 153,687 115,877 33 % Operating expenses 43,406 35,973 21 % Ad valorem taxes 6,292 5,458 15 % General and administrative expenses 34,136 27,511 24 % Depreciation and amortization expenses 73,606 68,854 7 % Loss on disposal of assets 4,166 102 NM Total operating costs and expenses 315,293 253,775 24 % Operating income 26,101 27,265 (4 %) Other income (expense): Interest and other income 91 294 (69 %) Interest expense (47,467) (69,308) (32 %) Equity in earnings of unconsolidated affiliates 60,469 46,464 30 % Total other income (expense), net 13,093 (22,550) 158 % Income before income taxes 39,194 4,715 NM Income tax expenses 3,787 416 NM Net income including noncontrolling interest $ 35,407 $ 4,299 NM (1) Cost of sales (exclusive of depreciation and amortization) is net of gas service revenues totaling $44.5 million and $30.5 million for the three months ended March 31, 2024 and 2023, respectively for certain volumes where we act as principal. NM - Not meaningful 24 Table of Contents Three Months Ended March 31, 2024 Compared to Three Months Ended March 31, 2023 Revenues For the three months ended March 31, 2024, revenue increased $60.4 million, or 21%, to $341.4 million, compared to $281.0 million for the same period in 2023. The increase was primarily driven by higher product revenue related to increased commodity prices and increased natural gas residue volumes sold. Service revenue Service revenue consists of service fees paid to us by our customers for providing comprehensive gathering, treating, processing and produced water disposal services necessary to bring natural gas, NGLs and crude oil to market. Service revenue for the three months ended March 31, 2024, decreased by $1.2 million, or 1%, to $102.2 million, compared to $103.4 million for the same period in 2023. This decrease was driven by lower period over period crude gathering fees of $1.1 million. Period-over-period gathered and processed gas volumes increased by 207.0 Mcf per day, or 13% and by 204.9 Mcf per day, or 15%, respectively. However, the total gathered and processed gas volumes where we function as the agent decreased period over period causing the change in net gas gathering fees presented as revenues to be flat. Over 99% of service revenues are included in the Midstream Logistics segment. Product revenue Product revenue consists of commodity sales (including condensate, natural gas residue and NGLs). Product revenue for the three months ended March 31, 2024, increased by $62.7 million, or 36%, to $236.6 million, compared to $173.8 million for the same period in 2023, primarily due to increased residue gas volumes sold and higher commodity prices. Period over period natural gas residue volumes sold increased 4.4 million MMBtu, or 45% and the period over period natural gas price realized increased by $0.62 per MMBtu, or 49%. Further contributing to the quarter over quarter increased product sales, composite NGL prices increased $8.59 per barrel, or 36%, and condensate prices increased $2.93 per barrel or 4%. Partially offsetting these increases, NGL and condensate volumes sold decreased 0.2 million barrels, or 3%. Product revenues are included entirely in the Midstream Logistics segment. Operating Costs and Expenses Costs of sales (exclusive of depreciation and amortization) Cost of sales (exclusive of depreciation and amortization) primarily consists of purchases of NGLs and natural gas from our producers at contracted market prices to support product sales to other third parties. For the three months ended March 31, 2024, cost of sales increased $37.8 million, or 33%, to $153.7 million, compared to $115.9 million for the same period in 2023. The increase was primarily driven by aforementioned period over period increases in commodity prices and natural gas residue volumes sold. Cost of sales (exclusive of depreciation and amortization) is included entirely in the Midstream Logistics segment. Operating expenses Operating expenses increased by $7.4 million, or 21%, to $43.4 million for the three months ended March 31, 2024, compared to $36.0 million for the same period in 2023. Of the total increase, $1.8 million relates to increased water gathering operating expenses, primarily associated with the assets that were acquired during the first quarter of 2023. The remaining increase relates to higher electricity, internal labor, lubricants and chemicals, and leased compression associated with the increased period over period gathered and processed gas volumes. General and administrative expenses General and administrative expenses increased by $6.6 million, or 24% to $34.1 million for the three months ended March 31, 2024, compared to $27.5 million for the same period in 2023. The increase was mainly driven by an increase in share-based compensation of $5.0 million due to additional incentive units granted to employees during the first quarter of 2024. 25 Table of Contents Other Income (Expense) Interest expense Interest expense decreased by $21.8 million, or 32%, to $47.5 million for the three months ended March 31, 2024, compared to $69.3 million for the same period in 2023. The decrease was primarily driven by realized gains and favorable valuation marks on our interest rate swaps totaling $13.3 million for the first quarter of 2024 compared to unfavorable valuation marks of $17.2 million for the same period in 2023. Refer to Note—11 Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements regarding the Company’s strategy in managing interest rate risk. This decrease was partially offset by higher period over period interest expense of $7.2 million due primarily to higher realized interest rates . Equity in earnings of unconsolidated affiliates Income from EMI pipelines increased by $14.0 million, or 30%, to $60.5 million for the three months ended March 31, 2024, compared to $46.5 million for the same period in 2023. The increase was driven by higher profitability from the Company’s investment in PHP due to its expanded capacity that was placed into service in December 2023. Key Performance Metrics Adjusted EBITDA Adjusted EBITDA is defined as net income including noncontrolling interests adjusted for interest, taxes, depreciation and amortization, warrant valuation, loss on disposal of assets, the proportionate EBITDA from our EMI pipelines, equity income from investments recorded using the equity method, share-based compensation expense, noncash increases and decreases related to trading and hedging activities, integration and transaction costs and extraordinary losses and unusual or non-recurring charges. Adjusted EBITDA provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance. We believe that Adjusted EBITDA provides a meaningful understanding of certain aspects of earnings before the impact of investing and financing charges and income taxes. Adjusted EBITDA is useful to an investor in evaluating our performance because this measure: • is widely used by analysts, investors and competitors to measure a company’s operating performance; • is a financial measurement that is used by rating agencies and other parties to evaluate our credit worthiness; and • is used by our management for various purposes, including as a basis for strategic planning and forecasting. Adjusted EBITDA is not defined in GAAP The GAAP measure used by the Company that is most directly comparable to Adjusted EBITDA is net income including noncontrolling interests. Adjusted EBITDA should not be considered as an alternative to the GAAP measure of net income including noncontrolling interests or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income including noncontrolling interests. Adjusted EBITDA should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. The Company’s definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies in the industry, thereby diminishing its utility. Reconciliation of non-GAAP financial measure Company management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable GAAP measure, understanding the differences between Adjusted EBITDA as compared to net income including noncontrolling interest, and incorporating this knowledge into its decision-making processes. Management believes that investors benefit from having access to the same financial measure that the Company uses in evaluating operating results. 26 Table of Contents The following table presents a reconciliation of the GAAP financial measure of net income including noncontrolling interest to the non-GAAP financial measure of Adjusted EBITDA. Three Months Ended March 31, 2024 2023 % Change (In thousands, except percentages) Reconciliation of net income including noncontrolling interest to Adjusted EBITDA Net income including noncontrolling interest $ 35,407 $ 4,299 NM Add back: Interest expense 47,467 69,308 (32 %) Income tax expense 3,787 416 NM Depreciation and amortization 73,606 68,854 7 % Amortization of contract costs 1,655 1,655 — % Proportionate EMI EBITDA 88,402 71,867 23 % Share-based compensation 22,561 17,540 29 % Loss on disposal of assets 4,166 102 NM Commodity hedging unrealized loss (gain) 15,088 (4,987) NM Integration costs 41 925 (96 %) Transaction costs — 268 (100 %) Other one-time cost or amortization 2,425 3,748 (35 %) Deduct: Interest income 577 — 100 % Warrant valuation adjustment — 44 (100 %) Equity income from EMI's 60,469 46,464 30 % Adjusted EBITDA $ 233,559 $ 187,487 25 % NM - not meaningful Adjusted EBITDA increased by $46.1 million, or 25%, to $233.6 million for the three months ended March 31, 2024, compared to $187.5 million for the same period in 2023. As discussed in the Item 2. “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations ” to this Quarterly Report on Form 10-Q, $7.7 million of the increase was due to increased total operating revenue of $60.4 million, partially offset by increased cost of sales (exclusive of depreciation and amortization) of $37.8 million and an increase in operating expenses, ad valorem taxes and General and Administrative Expenses totaling of $14.9 million. The increase was also driven by (i) higher proportionate EMI EBITDA of $16.5 million due to expanded capacity on PHP that was placed into service in December 2023 (ii) increases in the add backs related to unrealized loss (gain) on commodity hedging activities and share-based compensation. Segment Adjusted EBITDA 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 equity method investments and other non-recurring items. The following table presents Segment Adjusted EBITDA for the three months ended March 31, 2024 and 2023. Also refer to Note 16—Segments in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for a reconciliation of Segment Adjusted EBITDA to net income before income taxes. Three Months Ended March 31, 2024 2023 % Change (In thousands, except percentages) Midstream Logistics $ 142,985 $ 119,249 20 % Pipeline Transportation 95,521 72,290 32 % Corporate and Other (1) (4,947) (4,052) 22 % Total Segment Adjusted EBITDA $ 233,559 $ 187,487 25 % 27 Table of Contents (1) Corporate and Other represents those results that: (i) are not specifically attributable to a reportable segment; (ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense items. Midstream Logistics Segment Adjusted EBITDA increased by $23.7 million, or 20%, to $143.0 million for the three months ended March 31, 2024, compared to $119.2 million for the same period in 2023. The increase was primarily due to the increased total operating revenue of $52.8 million, partially offset by increases in cost of sales (exclusive of depreciation and amortization) of $37.8 million and operating expense of $7.2 million. The reasons for the fluctuations are discussed in Item 2. “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations ” to this Quarterly Report on Form 10-Q. The increase was also driven by an increase in add back related to unrealized loss (gain) on commodity hedging activities of $20.1 million. Pipeline Transportation Segment Adjusted EBITDA increased by $23.2 million, or 32%, to $95.5 million for the three months ended March 31, 2024, compared to $72.3 million for the same period in 2023. The increase was primarily driven by higher proportionate EMI EBITDA of $16.5 million due to the expanded capacity on PHP that was placed into service in December 2023 and an increase in segment revenues of $7.6 million from the Delaware Link Pipeline that was placed into service during October 2023. Contractual Obligations We have contractual obligations for principal and interest payments on our 2028 Notes, 2030 Notes and Term Loan Credit Facility. See Note 7 — Debt and Financing Costs in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. Under certain clauses of our transportation services agreements with third party pipelines to transport natural gas and NGLs, if we fail to ship a minimum throughput volume, then we will pay certain deficiency payments for transportation based on the volume shortfall up to the MVC amount. Capital Resources and Liquidity The Company’s primary use of capital since inception has been for the initial construction of gathering and processing assets, as well as acquisitions, including the EMI pipelines and associated subsequent construction costs. For 2024, the Company’s primary capital spending requirements are expected to relate to the Durango Acquisition and budgeted capital expenditures for construction and maintenance of gathering and processing assets, , the Company’s contractual debt obligations and quarterly cash dividends. In addition, the Company may repurchase its Class A Common Stock pursuant to the Share Repurchase Program from time to time. During the three months ended March 31, 2024, the Company’s primary sources of cash were distributions from the EMI pipelines, borrowings under the Revolving Credit Facility and cash generated from operations. Based on the Company’s current financial plan, the Company believes that cash from operations and distributions from the EMI pipelines, and remaining borrowing capacity on our credit facilities will generate cash flows in excess of capital expenditures and the amount required to fund the Company’s planned quarterly dividend over the next 12 months. The Company expects to fund the cash consideration required to close the Durango Acquisition (“Closing Cash Consideration”) with proceeds from the GCX Sale. However, if the Durango Acquisition closes prior to the GCX Sale, the Company expects to fund the Closing Cash Consideration with borrowings under its revolving credit facility. A/R Facility On April 2, 2024, Kinetik Receivables, a bankruptcy remote special purpose entity formed as a direct subsidiary of the Partnership , entered into an A/R Facility which has a scheduled termination date of April 1, 2025 with renewal options. Pursuant to the terms of the A/R Facility, Kinetik Receivables acquires certain receivables from the Partnership and other subsidiaries of the Company and makes further sales of such receivables to certain purchasers. The net proceeds of the A/R Facility were used, together with cash on hand, to repay a portion of the outstanding borrowings under the Term Loan Credit Facility, lowering the remaining balance to $1.0 billion. As a result, the maturity of the Term Loan Credit Facility extended to December 8, 2026. 28 Table of Contents Capital Requirements and Expenditures Our operations can be capital intensive, requiring investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational regulations. During the three months ended March 31, 2024 and 2023, capital spending for property, plant and equipment totaled $58.0 million and $58.9 million, respectively, intangible asset purchases totaled $2.2 million and $9.8 million, respectively, and contributions to EMI totaled $3.3 million and $58.7 million, respectively. The decrease in capital spending was mainly due to the completion of the Delaware Link Pipeline and PHP expansion projects in the second half of 2023. Management believes its existing gathering, processing and transmission infrastructure capacity is capable of fulfilling its midstream contracts to service its customers. The Company anticipates its existing capital resources will be sufficient to fund the future capital expenditures for EMI pipelines and the Company’s existing infrastructure assets over the next 12 months. For further information on EMIs, refer to Note 6—Equity Method Investments in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q. Cash Flow The following tables present cash flows from operating, investing and financing activities during the periods presented: Three Months Ended March 31, 2024 2023 (In thousands) Cash provided by operating activities $ 153,705 $ 119,591 Cash used in investing activities $ (61,980) $ (246,468) Cash (used in) provided by financing activities $ (86,479) $ 122,467 Operating activities . Net cash provided by operating activities increased by $34.1 million for the three months ended March 31, 2024 compared with the same period in 2023. The change in the operating cash flows reflected (i) an increase in net income including noncontrolling interests of $31.1 million; (ii) an increase in net income reconciliation adjustments of $5.8 million, which was mainly driven by increases in distributions from EMIs of $9.4 million, share-based compensation of $5.0 million, loss on disposal of assets $4.1 million and depreciation and amortization expense of $4.8 million, partially offset by a decrease in net derivative activity of $7.0 million and an increase in earnings from EMIs of $14.0 million and (iii) a decrease in working capital of $2.8 million. Investing activities . Net cash used in investing activities decreased by $184.5 million for the three months ended March 31, 2024 compared with the same period in 2023. The decrease was primarily driven by decreases in cash outflows related to the business acquisition of $125.0 million for certain midstream assets made in the first quarter of 2023 and contributions made to unconsolidated affiliates of $55.4 million, as the PHP expansion project reached commercial in service during December 2023. Financing activities . Net cash used in financing activities was $86.5 million for the three months ended March 31, 2024, which was primarily comprised of net payments on the Partnership’s Revolving Credit Facility of $47.0 million and cash dividends of $39.5 million paid to the holders of Class A Common Stock and Common Units, compared with net cash provided by financing activities of $122.5 million for the three months ended March 31, 2023, which was primarily comprised of net proceeds from the Partnership’s Revolving Credit Facility of $142.0 million and cash dividends of $17.1 million paid to the holders of Class A Common Stock and Common Units. Dividend and Distribution Reinvestment Agreement On February 22, 2022, the Company entered into a Dividend and Distribution Reinvestment Agreement (the “Reinvestment Agreement”) with certain stockholders including BCP Raptor Aggregator, LP, BX Permian Pipeline Aggregator LP, Buzzard Midstream LLC, APA Corporation, Apache Midstream LLC and certain individuals (each, a “Reinvestment Holder”). Under the Reinvestment Agreement, each Reinvestment Holder is obligated to reinvest a specified percent of all distributions on Common Units or dividends on shares of Class A Common Stock in the Company’s Class A Common Stock. The Reinvestment Agreement terminated automatically on March 8, 2024. 29 Table of Contents During the first three months ended March 31, 2024, the Company made cash dividend payments of $39.5 million to holders of Class A Common Stock and Common Units and $74.2 million was reinvested in shares of Class A Common Stock by the Reinvestment Holders. Dividend On April 18, 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 on May 9, 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 May 9, 2024. As described in these Condensed 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.” Share Repurchase Program For the three months ended March 31, 2024, the Company did not repurchase any of its outstanding shares. For more information regarding the 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” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 5, 2024. Liquidity The following table presents a summary of the Company’s key liquidity indicators at the dates presented: March 31, December 31, 2024 2023 (In thousands) Cash and cash equivalents $ 9,756 $ 4,510 Total debt, net of unamortized deferred financing cost $ 3,517,115 $ 3,562,809 Available committed borrowing capacity $ 690,400 $ 643,400 Total debt and available credit facilities There is no assurance that the financial condition of banks with lending commitments to the Company and its subsidiaries will not deteriorate. The Company closely monitors the ratings of the banks in the Company’s bank group. Having a large bank group allows the Company to mitigate the potential impact of any bank’s failure to honor its lending commitment. Off-Balance Sheet Arrangements As of March 31, 2024, there were no off-balance sheet arrangements. Critical Accounting Policies and Estimates There have been no significant changes to our critical accounting policies and estimates from those disclosed on our Annual Report on Form 10-K for the year ended December 31, 2023. Please refer to information regarding our critical accounting policies and estimates included in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Commission on March 5, 2024. 30 Table of Contents