What changed in this filing

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Item 1. Financial Statements

2024-08-09 compared with 2024-05-09 · 424 added, 189 removed, 519 unchanged (54% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(In thousands, except per share data)

12 unchanged sentences

Depreciation and amortization expenses 75,061 69,482 148,667 138,336

Loss on disposal of assets 4,166 102

(Gain) loss on disposal of assets

( 76 ) 12,137 4,090 12,239

Total operating costs and expenses 302,869 258,750 618,162 512,525

2 unchanged sentences

Interest and other income 309 1,042 400 1,336

Loss on debt extinguishment ( 525 ) — ( 525 ) —

Gain on sale of equity method investment 59,884 — 59,884 —

Interest expense ( 54,049 ) ( 16,126 ) ( 101,516 ) ( 85,434 )

Equity in earnings of unconsolidated affiliates 55,955 49,610 116,424 96,074

Total other income (expense), net 13,093 ( 22,550 )

Total other income, net 61,574 34,526 74,667 11,976

Income before income taxes 118,162 71,979 157,356 76,694

9 unchanged sentences

Diluted 60,279 50,625 59,503 49,220

(1) Includes amounts associated with related parties of $ 17.2 million and $ 25.8 million for the three months ended March 31, 2024 and 2023, respectively.

(2) Includes amounts associated with related parties of $ 23.3 million and $ 19.7 million for the three months ended March 31, 2024 and 2023, respectively .

(3) 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.

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

(1) Includes amounts associated with related parties of nil and $ 25.1 million for the three months ended June 30, 2024 and 2023, respectively, and $ 17.2 million and $ 50.9 million for the six months ended June 30, 2024 and 2023, respectively.

(2) Includes amounts associated with related parties of $ 12.5 million and $ 15.4 million for the three months ended June 30, 2024 and 2023, respectively, and $ 35.9 million and $ 35.1 million for the six months ended June 30, 2024 and 2023, respectively .

(3) Cost of sales (exclusive of depreciation and amortization) is net of gas service revenues totaling $ 54.7 million and $ 38.1 million for the three months ended June 30, 2024 and 2023, respectively, and $ 99.2 million and $ 68.5 million for the six months ended June 30, 2024 and 2023, respectively, for certain volumes where we act as principal.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, December 31,

June 30, December 31,

(In thousands, except shares data)

3 unchanged sentences

94,438 215,721

Accounts receivable pledged

Derivative assets 11,256 7,812

18 unchanged sentences

Current portion of operating lease liabilities 32,985 29,203

Current debt obligations

Other current liabilities 7,830 7,786

12 unchanged sentences

Class A Common Stock:

$ 0.0001 par, 1,500,000,000 shares authorized, 59,712,487 and 57,096,538 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

$ 0.0001 par, 1,500,000,000 shares authorized, 59,735,864 and 57,096,538 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Class C Common Stock:

$ 0.0001 par, 1,500,000,000 shares authorized, 93,942,788 and 94,089,038 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

$ 0.0001 par, 1,500,000,000 shares authorized, 97,783,034 and 94,089,038 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Deferred consideration

Additional paid-in capital — 192,678

2 unchanged sentences

Total liabilities, noncontrolling interest, and equity $ 6,860,272 $ 6,496,873

(1) Includes amounts of $ 11.4 million and $ 15.8 million associated with related parties as of March 31, 2024 and December 31, 2023, respectively.

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

No related party balance as of June 30, 2024.

See Note 1—Description of the Organization and Summary of Significant Accounting Polices in the Notes to Condensed Consolidated Financial Statements for additional information.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands)

9 unchanged sentences

Warrants fair value adjustment — ( 77 )

Gain on sale of equity method investment

Loss on disposal of assets 4,090 12,239

Equity in earnings from unconsolidated affiliates ( 116,424 ) ( 96,074 )

Loss on debt extinguishment 525 —

Share-based compensation 37,697 30,839

1 unchanged sentence

Changes in operating assets and liabilities:

Accounts receivable 5,843 5,008

Accounts receivable and pledged receivable ( 12,855 ) 22,055

Other assets ( 1,966 ) ( 7,298 )

9 unchanged sentences

Distributions from unconsolidated affiliate 1,240 5,793

Cash proceeds from disposals 251 14

Net cash paid for acquisitions

Cash proceeds from sale of equity method investment

Cash proceeds from disposals of assets

Net cash paid for acquisition

( 349,266 ) ( 125,000 )

Net cash used in investing activities ( 61,980 ) ( 246,468 )

Net cash provided by (used in) investing activities

43,302 ( 447,903 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments on debt issuance cost ( 11 ) —

Proceeds from borrowing under A/R Facility

Payments on A/R Facility ( 1,200 ) —

Payments on Term Loan Credit Facility

( 200,000 ) —

Payments of debt issuance costs ( 1,086 ) —

Payment of debt discount

Proceeds from revolver 607,000 563,000

Payments on revolver ( 91,000 ) ( 125,000 )

Payments of revolver ( 714,000 ) ( 308,000 )

Cash dividends paid to Class A Common Stock shareholders ( 83,526 ) ( 36,196 )

6 unchanged sentences

CASH, END OF PERIOD $ 12,549 $ 2,237

KINETIK HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

(In thousands)

SUPPLEMENTAL SCHEDULE OF INVESTING AND FINANCING ACTIVITIES

Cash paid for interest, net of amounts capitalized $ 140,477 $ 125,411

Cash paid for income taxes, net

Property and equipment and intangible accruals in accounts payable and accrued liabilities $ 13,301 $ 39,631

Lease assets obtained in exchange for lease liabilities

$ 42,537 $ 4,978

Class A Common Stock issued through dividend and distribution reinvestment plan $ 74,799 $ 175,626

Fair value of Durango assets acquired

$ 898,865 $ —

Cash consideration paid

Class C Common Units issued in exchange

Deferred consideration

Contingent consideration

Durango liabilities assumed

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

4 unchanged sentences

Common Stock Additional Paid-in Capital Accumulated Deficit Treasury

Shares Amount Shares Amount

Shares Amount Shares Amount Deferred Consideration Shares (1)

(In thousands)

For the Quarter Ended June 30, 2023

Balance at March 31, 2023 $ 2,910,861 49,054 $ 5 94,089 $ 9 — $ — $ 229,672 $ ( 863,452 ) $ ( 2,432 ) $ ( 636,198 )

Issuance of common stock through dividend and distribution reinvestment plan — 3,024 — — — — — 87,968 — — 87,968

Retirement of treasury stock — — — — — — — — ( 2,432 ) 2,432 —

Repurchase of Class A Common Stock — ( 112 ) — — — — — — — ( 3,325 ) ( 3,325 )

Share-based compensation — 7 — — — — — 13,299 — — 13,299

Net income 46,654 — — — — — — — 25,014 — 25,014

Change in redemption value of noncontrolling interests 355,670 — — — — — — ( 330,939 ) ( 24,731 ) — ( 355,670 )

Distributions paid to Common Unit limited partners ( 70,566 ) — — — — — — — — — —

Dividends on Class A Common Stock ($ 0.75 per share)

— — — — — — — — ( 36,845 ) — ( 36,845 )

Balance at June 30, 2023 $ 3,242,619 51,973 $ 5 94,089 $ 9 — $ — $ — $ ( 902,446 ) $ ( 3,325 ) $ ( 905,757 )

For the Quarter Ended June 30, 2024

Balance at March 31, 2024 $ 3,624,670 59,712 $ 6 93,943 $ 9 — $ — $ — $ ( 973,451 ) $ — $ ( 973,436 )

Durango Acquisition

423,200 — — 3,840 — 7,680 1 — — — 1

Issuance of common stock through dividend and distribution reinvestment plan — 15 — — — — — 552 — — 552

Share-based compensation — 9 — — — — — 15,136 — — 15,136

Net income 71,756 — — — — — — — 37,192 — 37,192

Change in redemption value of noncontrolling interests 240,422 — — — — — — ( 15,099 ) ( 225,323 ) — ( 240,422 )

Recognition of deferred tax asset — — — — — — — ( 589 ) — — ( 589 )

Distribution paid to Common Unit limited partners ( 70,457 ) — — — — — — — — — —

Dividends on Class A Common Stock ($ 0.75 per share)

— — — — — — — — ( 45,327 ) — ( 45,327 )

Balance at June 30, 2024 $ 4,289,591 59,736 $ 6 97,783 $ 9 7,680 $ 1 $ — $ ( 1,206,909 ) $ — $ ( 1,206,893 )

KINETIK HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS

Redeemable Noncontrolling Interest — Common Unit Limited Partners Class A

Common Stock Class C

Common Stock Additional Paid-in Capital Accumulated Deficit Treasury

Shares Amount Shares Amount Deferred Consideration Shares (1)

(In thousands)

For the Six Months Ended June 30, 2023

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 — 6,095 — — — — — 175,626 — — 175,626

Retirement of treasury stock — — — — — — — — ( 2,432 ) 2,432 —

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

5 unchanged sentences

— — — — — — — — ( 71,315 ) — ( 71,315 )

Balance at March 31, 2023 $ 2,910,861 49,054 $ 5 94,089 $ 9 $ 229,672 $ ( 863,452 ) $ ( 2,432 ) $ ( 636,198 )

Balance at June 30, 2023 $ 3,242,619 51,973 $ 5 94,089 $ 9 — $ — $ — $ ( 902,446 ) $ ( 3,325 ) $ ( 905,757 )

For the Six Months Ended June 30, 2024

Balance at December 31, 2023

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

Durango Acquisition

423,200 — — 3,840 — 7,680 1 — — — 1

Redemption of Common Units ( 5,060 ) 146 — ( 146 ) — — — 5,060 — — 5,060

4 unchanged sentences

Recognition of deferred tax asset — — — — — — 5,161 — — 5,161

— — — — — 5,750 — — 5,750

Distribution paid to Common Unit limited partners ( 140,972 ) — — — — — — — — — —

1 unchanged sentence

— — — — — — — — ( 88,527 ) — ( 88,527 )

Balance at March 31, 2024 $ 3,624,670 59,712 $ 6 93,943 $ 9 $ — $ ( 973,451 ) $ — $ ( 973,436 )

Balance at June 30, 2024 $ 4,289,591 59,736 $ 6 97,783 $ 9 7,680 $ 1 $ — $ ( 1,206,909 ) $ — $ ( 1,206,893 )

(1) Pursuant to the Durango MIPA (as defined herein), deferred consideration of 7.7 million shares of Class C Common Stock is to be issued on July 1, 2025.

Fair value of the deferred consideration was included in the “Redeemable noncontrolling interest—Common Units limited partners” of the Condensed Consolidated Balance Sheets as of June 30, 2024.

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

11 unchanged sentences

The Company provides comprehensive gathering, produced water disposal, transportation, compression, processing and treating services necessary to bring natural gas, NGLs and crude oil to market.

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

Additionally, the Company owns equity interests in three separate Permian Basin pipeline entities that have access to various markets along the U.S.

Basis of Presentation

8 unchanged sentences

The accounting policies that we follow are set forth in Note 2 – Summary of Significant Accounting Policies of the Notes to consolidated financial statements in our Annual Report on Form 10-K.

There were no significant updates or revisions to our accounting policies during the three months ended March 31, 2024.

There were no significant updates or revisions to our accounting policies during the six months ended June 30, 2024, except discussed herein.

Accounts Receivable Securitization Facility

Pursuant to ASC 860, Transfers and Servicing, accounts receivable that are sold or contributed by the Partnership to the special purpose vehicle (“SPV”) are treated as collateral for borrowings under the third party A/R Facility (as defined below) and are included in “Accounts receivable pledged” of the Condensed Consolidated Balance Sheet as pledged receivables.

Proceeds from the transfer of the eligible accounts receivable under the third party A/R Facility are secured borrowings included in the “Current debt obligations” of our Condensed Consolidated Balance Sheets.

Proceeds and repayments under such facility are reflected as cash flows from financing activities in our Consolidated Statements of Cash Flows.

See Note 7—Debt and Financing Cost s in the Notes to our Condensed Consolidated Financial Statements set forth in this Form 10-Q for further discussion.

Transactions with related parties

The Company has revenue contracts and incurs cost of sales and operating expenses with Apache Midstream LLC (“Apache”), which owned more than 5 % of the Company’s common stock prior to its secondary offerings completed in December 2023 and March 2024.

Pursuant to FASB ASC 850, Related Party Transactions, Apache was no longer a related party after the completion of its secondary offering in December 2023 as its owned less than 10 % of the Company’s common stock.

Pursuant to ASC 850 , Related Party Transactions , Apache was no longer a related party after the completion of its secondary offering in December 2023 as it owned less than 10 % of the Company’s common stock.

Pursuant to Regulation S-K, Item 404(a), Apache ceased to be a related party as of March 18, 2024 as it no longer owned any of the Company’s common stock.

In 2024, for the period ended March 18, 2024, revenue from Apache was $ 17.2 million, cost of sales was $ 9.4 million and operating expenses were $ 0.2 million.

In 2023, for the three months ended March 31, 2023, revenue from Apache was $ 25.8 million, cost of sales was $ 17.8 million and operating expenses were $ 0.3 million.

In 2023, revenue from Apache was $ 25.1 million and $ 50.9 million, cost of sales was $ 13.3 million and $ 31.1 million, and operating expenses were $ 0.2 million and $ 0.4 million for the three and six months ended June 30, 2023, respectively.

In addition, the Company incurs cost of sales with two of its equity method investment (“EMI”) pipeline entities, Permian Highway Pipeline LLC (“PHP”) and Breviloba, LLC (“Breviloba”).

The Company pays a demand fee to PHP and pays a capacity fee to Breviloba for certain volumes moving on the Shin Oak NGL Pipeline (“Shin Oak”).

For each of the three months ended March 31, 2024 and 2023, the Company recorded cost of sales of $ 13.9 million and $ 1.9 million, respectively, with these affiliates.

The Company pays a demand fee to PHP and pays a capacity fee to Breviloba for certain volumes moving on the Shin Oak NGL Pipeline.

For the three and six months ended June 30, 2024, the Company recorded cost of sales of $ 12.5 million and $ 26.5 million, respectively, with these affiliates.

For the three and six months ended June 30, 2023, the Company recorded cost of sales of $ 2.1 million and $ 4.0 million, respectively, with these affiliates.

Recently issued accounting pronouncements not yet adopted

Improvements to Reportable Segment Disclosures

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

Improvements to Reportable Segment Disclosures.

The amendments in this update require, among other items, that public entities disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss.

Additionally, the amendments require annual disclosure of the title and position of the CODM and how that individual uses the reported measure(s) of segment profit or loss in assessing segment performance and how to allocate resources.

These amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The disclosures required in the amendments apply retrospectively to all prior periods presented in the financial statements.

We are evaluating the effect of the amendments on our consolidated financial statements and expect to disclose the required information for fiscal years beginning in the Annual Report on Form 10-K for the year ended December 31, 2024 and for interim periods beginning in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.

Improvements to Income Tax Disclosures

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

Improvements to Income Tax Disclosures.

The amendments in this update require, among other items, that public entities disclose, on an annual and interim basis, (i) specific categories of income taxes in the rate reconciliation, and (ii) a disaggregation of income taxes paid by federal, state, and foreign taxes.

These amendments are effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments are required to be applied prospectively with retrospective application permitted.

We are evaluating the effect of the amendments on our consolidated financial statements and expect to disclose the required information beginning in the Annual Report on Form 10-K for the year ended December 31, 2025.

BUSINESS COMBINATIONS

As of March 31, 2024, our allocation of purchase price for acquisitions made during 2023 are detailed below:

Acquisition Date Acquisition Considerations Transferred Current Assets Property Plant & Equipment Intangible Assets Other Long Term Assets Goodwill Liabilities Noncontrolling Interest

(In thousands)

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

For acquired businesses, we recognize the identifiable assets acquired, the liabilities assumed at their estimated fair values on the date of acquisition with any excess purchase price over the fair value of net assets acquired recorded to goodwill.

Determining the fair value of these items requires management’s judgment and the utilization of an independent valuation specialist, if applicable, and involves the use of significant estimates and assumptions.

Durango Permian LLC Acquisition

On June 24, 2024 (the “Closing Date”), the Company consummated the previously announced transaction contemplated by the Membership Interest Purchase Agreement (the “Durango MIPA”), dated May 9, 2024, by and between the Company, the Partnership, and Durango Midstream LLC, an affiliate of Morgan Stanley Equity Partners (the “Durango Seller”), pursuant to which the Partnership purchased all of the membership interests of Durango Permian, LLC and its wholly owned subsidiaries (“Durango”) from Durango Seller for an adjusted purchase price of approximately $ 845.2 million (the “Durango Acquisition”), consisting of (i) $ 358.0 million of cash consideration paid at closing, (ii) approximately 3.8 million shares of Class C Common Stock, par value $ 0.0001 per share of the Company (“Class C Common Stock”) (and an equivalent number of common units in the Partnership (“OpCo Units”)), valued at $ 148.2 million, issued at closing and (iii) approximately 7.7 million shares of Class C Common Stock (and an equivalent number of OpCo Units), valued at $ 275.0 million, to be issued on July 1, 2025.

Durango Seller is also entitled to an earn out of up to $ 75.0 million in cash contingent upon the Kings Landing gas processing complex in Eddy County, New Mexico (the “Kings Landing Project”), which is currently under construction, being placed into service (the “Kings Landing Earnout”).

The Kings Landing Earnout is subject to reduction based on actual capital costs associated with the Kings Landing Project.

The Durango Acquisition allows the Company to further expands its footprint into New Mexico and across the Northern Delaware Basin.

The Durango Acquisition was accounted for as a business combination in accordance with ASC 805 Business Combination (“ASC 805”).

Starting on the Closing Date, our Consolidated Financial Statements reflected Durango as a consolidated subsidiary.

The accompanying Condensed Consolidated Financial Statements herein include (i) the combined net assets of the Company carried at historical costs and net assets of Durango carried at fair value as of the Closing Date and (ii) the combined results of operations with Durango’s results presented within the Condensed Consolidated Financial Statements from the Closing Date going forward.

The preliminary purchase price allocation, based on Durango’s latest financial statements available as of May 31, 2024, includes preliminary adjustments for working capital and fair value of underlying assets acquired and liabilities assumed.

Both observable and non-observable market data, thus Level 2 and Level 3 inputs, are used in the assessment of the fair value of the assets acquired and liabilities assumed listed in the below table.

The Company recorded goodwill of $ 10.4 million related to operational synergies and the acquired assembled workforce.

The fair value of the processing plants, gathering system and related facilities and equipment is based on market and cost approaches and will be depreciated over an estimated useful life of 20 years, which is consistent with the Company’s policy over similar facilities and equipment.

The fair value of the intangible assets is based on the market approach for the right-of-way (“ROW”) and discounted cash flow approach for customer contracts, which will be amortized over estimated useful lives ranging from seven to twenty years .

The assumed liabilities are approximate to fair value at the Closing Date.

The Company will continue to identify necessary adjustments to finalize the purchase price allocation during the 12-month period following the acquisition Closing Date as information about facts and circumstances that existed at the acquisition Closing Date become available.

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

In addition, the Company recorded contingent liabilities related to the Kings Landing Earnout based on project completion probability, see additional information in Note 15 —C ommitments and Contingencies in the Notes to our Condensed Consolidated Financial Statements set forth in this Form 10-Q.

The following table summarizes the estimated fair value of assets acquired and liabilities assumed in the Durango Acquisition as of June 24, 2024, in accordance with ASC 805 :

(In thousands) Amount

Cash and cash equivalents

Accounts receivable 14,662

Prepaid and other current assets

Property, plant, and equipment, net 457,028

Intangible assets, net 404,000

Deferred charges and other assets

Operating lease ROU assets

Goodwill 10,411

Total assets acquired 898,865

Accounts payable

Accrued expenses

Contract liabilities

Operating lease liabilities

Deferred tax liabilities

Total liabilities assumed 53,698

Contingent consideration

Consideration transferred

The Company incurred acquisition-related costs of $ 3.2 million for the three and six months ended June 30, 2024, which was included in the “General and administrative expenses” of the Condensed Consolidated Statements of Operations.

The Company’s Condensed Consolidated Statement of Operations included results of operations from Durango starting from the Closing Date through June 30, 2024, which included estimated revenues of $ 3.2 million and net income including noncontrolling interest of $ 0.2 million, excluding intercompany revenue and cost of sales, for the three and six months ended June 30, 2024.

Supplemental Pro Forma Information

The unaudited supplemental pro forma financial data is for informational purposes only and is not indicative of future results.

The results below for the three and six months ended June 30, 2024 and 2023 combine the results of the Company and Durango, giving effect to the Durango Acquisition as if it had been completed on January 1, 2023.

Three Months Ended June 30,

Six Months Ended June 30,

2024 2023 2024 2023

(a) Consideration includes $ 65 million paid for certain midstream assets and the $ 60 million paid related to the incentive and acceleration agreement.

(In thousands)

Revenues $ 399,115 $ 345,168 $ 800,124 $ 697,977

Net income including noncontrolling interest $ 112,581 $ 73,092 $ 152,072 $ 81,228

Given the assumed pro forma transaction date of January 1, 2023, we removed $ 3.3 million and $ 3.5 million of acquisition-related expenses for the three and six months ended June 30, 2024, respectively, and recognized $ 3.5 million of acquisition-related expenses for six months ended June 30, 2023.

We also removed $ 5.9 million and $ 12.2 million of interest expense on Durango’s debt for the three and six months ended June 30, 2024, respectively, and $ 3.7 million and $ 7.2 million for the three and six months ended June 30, 2023, respectively, as if the business combination had occurred and the debt had been paid off on January 1, 2023.

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 intangibles based on the ratio of historical long-lived assets and intangible assets acquired.

In the first half 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 of $ 61.9 million and intangible right-of-way assets of $ 3.1 million.

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 Condensed Consolidated Balance Sheet as of the date of acquisition.

These transactions were accounted for as a business combination in accordance with ASC 805, and the measurement period ended on December 31, 2023.

Acquisition-related costs were immaterial for this transaction.

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

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

The Company had goodwill of $ 15.5 million recorded in the Midstream Logistic segment related to various business combinations as of June 30, 2024.

Goodwill is tested at least annually, 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 assessed 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 respective business combinations and concluded that goodwill was no t impaired as of June 30, 2024.

REVENUE RECOGNITION

1 unchanged sentence

The following table presents a disaggregation of the Company’s revenue:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(In thousands)

3 unchanged sentences

Total revenues $ 359,457 $ 296,203 $ 700,851 $ 577,243

There have been no significant changes to the Company’s contracts with customers during the three months ended March 31, 2024.

The Company recognized revenues from MVC deficiency payments of nil and $ 1.1 million for the three months ended March 31, 2024 and 2023, respectively.

There have been no significant changes to the Company’s contracts with customers during the three and six months ended June 30, 2024.

The Company recognized revenues from MVC deficiency payments of nil for the three and six months ended June 30, 2024 and $ 0.1 million and $ 1.2 million for the three and six months ended 2023, respectively.

Remaining Performance Obligations

The following table presents our estimated revenue from contracts with customers for remaining performance obligations that have not yet been recognized, representing our contractually committed revenues as of March 31, 2024:

Fiscal Year (In thousands)

3 unchanged sentences

Contract Liabilities

The following table provides information about contract liabilities from contracts with customers as of March 31, 2024:

The following table provides information about contract liabilities from contracts with customers as of June 30, 2024:

(In thousands)

2 unchanged sentences

Cash received in advance and not recognized as revenue 600

Balance at March 31, 2024 31,138

Balance at June 30, 2024 29,479

Current portion 6,519

4 unchanged sentences

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.

As of March 31, 2024 and December 31, 2023, the Company had contract acquisition cost assets of $ 69.5 million and $ 71.2 million, respectively.

As of June 30, 2024 and December 31, 2023, the Company had contract acquisition cost assets of $ 68.1 million and $ 71.2 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 Condensed Consolidated Balance Sheets.

The Company amortizes these assets as cost of sales on a straight-line basis over the life of the associated long-term customer contracts.

The Company recognized cost of sales associated with these assets of $ 1.7 million and $ 1.7 million for the three months ended March 31, 2024 and 2023, respectively.

The Company recognized cost of sales associated with these assets of $ 1.7 million for the three months ended June 30, 2024 and 2023, respectively, and $ 3.3 million for the six months ended June 30, 2024 and 2023, respectively.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, at carrying value, is as follows:

March 31, December 31,

June 30, December 31,

(In thousands)

9 unchanged sentences

These amounts represent property that is not yet available to be placed into productive service as of the respective reporting date.

The Company recorded $ 42.9 million and $ 38.4 million of depreciation expense for the three months ended March 31, 2024 and 2023, respectively.

There were no impairment triggering events for property, plant and equipment during the three months ended March 31, 2024 and 2023.

The Company recorded $ 43.8 million and $ 38.9 million of depreciation expense for the three months ended June 30, 2024 and 2023, respectively, and $ 86.6 million and $ 77.3 million for the six months ended June 30, 2024 and 2023, respectively.

There were no impairment triggering events for property, plant and equipment during the three and six months ended June 30, 2024 and 2023.

INTANGIBLE ASSETS, NET

Intangible assets, net, are comprised of the following:

March 31, December 31,

June 30, December 31,

(In thousands)

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Total amortizable intangible assets, net $ 936,216 $ 591,670

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 ranged from one to twenty years .

Right-of-way assets relate primarily to underground pipeline easements which have a useful life of ten years and are amortized using the straight-line method.

Right-of-way assets relate primarily to underground pipeline easements which generally have a useful life of ten years and are amortized using the straight-line method.

The right of way agreements are typically 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.

On March 31, 2024, the remaining weighted average amortization periods for customer contracts and right of way assets were approximately 6.81 years and 6.45 years, respectively.

The overall remaining weighted average amortization period for the intangible assets as of March 31, 2024 was approximately 6.76 years.

The Company recorded $ 30.7 million and $ 30.5 million of amortization expense for the three months ended March 31, 2024 and 2023, respectively.

There was no impairment recognized on intangible assets for the three months ended March 31, 2024 or 2023.

On June 30, 2024, the remaining weighted average amortization periods for customer contracts and right of way assets were approximately 12.30 years and 6.86 years, respectively.

The overall remaining weighted average amortization period for the intangible assets as of June 30, 2024 was approximately 11.41 years.

The Company recorded $ 31.3 million and $ 30.6 million of amortization expense for the three months ended June 30, 2024 and 2023, respectively, and $ 62.0 million and $ 61.1 million for the six months ended June 30, 2024 and 2023, respectively.

There was no impairment recognized on intangible assets for the three and six months ended June 30, 2024 and 2023.

EQUITY METHOD INVESTMENTS

As of March 31, 2024, the Company owned investments in the following long-haul pipeline entities in the Permian Basin.

As of June 30, 2024, the Company owned investments in the following long-haul pipeline entities in the Permian Basin.

These investments were accounted for using the equity method of accounting.

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The table below presents the ownership percentages and investment balances held by the Company for each entity:

March 31, December 31,

June 30, December 31,

Ownership (1)

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$ 2,075,888 $ 2,540,989

(1) As of March 31, 2024 the Company also owned 15.0 % of Epic Crude Holdings, LP (“EPIC”).

The unamortized basis differences included in the EMI pipeline balances were $ 345.9 million and $ 349.3 million as of March 31, 2024 and December 31, 2023, respectively.

(1) As of June 30, 2024 the Company also owned 15 % of Epic Crude Holdings, LP (“EPIC”).

(2) The Company owned 16 % of GCX as of December 31, 2023 and divested entire ownership in June 2024.

On June 4, 2024, the Company consummated the previously announced transaction contemplated by the Purchase and Sale Agreement dated as of May 9, 2024 (the "GCX Purchase Agreement"), to sell its 16 % equity interest in GCX to GCX Pipeline, LLC (the "GCX Buyer") for an adjusted price of $ 524.4 million (the "GCX Sale"), consisting of cash, including working capital adjustments at closing and an additional $ 30.0 million earn out in cash upon the approval by the GCX Board of Directors of one or more capital projects that achieve certain capacity expansion criteria.

Net cash proceeds of $ 494.4 million were received from the GCX Buyer on June 4, 2024.

The Company recognized a gain of $ 59.9 million upon closing of the GCX Sale and no gain contingency related to the earn out was recognized.

The unamortized basis differences included in the EMI pipeline balances were $ 205.1 million and $ 349.3 million as of June 30, 2024 and December 31, 2023, respectively.

These amounts represent differences in the Company’s contributions to date and the Company’s underlying equity in the separate net assets within the financial statements of the respective entities.

Unamortized basis differences will be amortized into equity income over the useful lives of the underlying pipeline assets, which ranged from 20 years to 32 years as determined at the Closing of the ALTM business combination.

There was capitalized interest of $ 24.5 million and $ 24.7 million as of March 31, 2024 and December 31, 2023, respectively.

Unamortized basis differences will be amortized into equity income over the useful lives of the underlying pipeline assets.

Due to the GCX Sale, its unamortized basis difference of $ 137.8 million was written off upon closing of the transaction.

There was capitalized interest of $ 24.3 million and $ 24.7 million as of June 30, 2024 and December 31, 2023, respectively.

Capitalized interest is amortized on a straight-line basis into equity income.

The following table presents the activity in the Company’s EMIs for the three months ended March 31, 2024:

The following table presents the activity in the Company’s EMIs for the six months ended June 30, 2024:

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

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( 115,705 ) ( 22,567 ) ( 15,610 ) ( 153,882 )

Disposition — — ( 430,916 ) ( 430,916 )

Equity income, net (2)

85,805 15,144 15,475 116,424

Balance at March 31, 2024 $ 1,654,920 $ 440,869 $ 430,489 $ 2,526,278

(1) Distributions consisted of distributions from returns on investment of $ 77.2 million, which was included in cash flows from operating activities and distributions from returns of investment of $ 1.2 million, which was included in cash flows from investing activities.

(2) For the three months ended March 31, 2024, net of amortization of basis differences and capitalized interests, which represents undistributed earnings, the amortization was $ 2.0 million from PHP, $ 0.2 million from Breviloba, LLC and $ 1.6 million from GCX.

Balance at June 30, 2024 $ 1,639,627 $ 436,261 $ — $ 2,075,888

(1) Distributions consisted of distributions from a return on investment of $ 152.6 million, which was included in cash flows from operating activities and distributions from a return of investment of $ 1.2 million, which was included in cash flows from investing activities.

(2) For the six months ended June 30, 2024, net of amortization of basis differences and capitalized interests, which represents undistributed earnings, the amortization was $ 3.9 million from PHP, $ 0.3 million from Breviloba, LLC and $ 2.7 million from GCX.

Summarized Financial Information

The following table represents selected data for the Company’s EMI pipelines (on a 100 percent basis) for the three months ended March 31, 2024 and 2023.

Three Months Ended March 31,

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

The following table represents selected data for the Company’s ongoing EMI pipelines (on a 100 percent basis) for the three and six months ended June 30, 2024 and 2023.

Three Months Ended June 30,

Permian Highway Pipeline LLC Breviloba, LLC Permian Highway Pipeline LLC Breviloba, LLC

(In thousands)

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Net income 81,074 21,895 64,342 22,651

Six Months Ended June 30,

Permian Highway Pipeline LLC Breviloba, LLC Permian Highway Pipeline LLC Breviloba, LLC

(In thousands)

Revenues $ 252,640 $ 102,397 $ 191,935 $ 92,542

Operating income 161,681 47,165 120,312 44,496

Net income 161,233 47,447 124,032 44,863

DEBT AND FINANCING COSTS

The following table summarizes the Company’s debt obligations as of March 31, 2024 and December 31, 2023:

March 31, December 31,

Accounts Receivable Securitization Facility

On April 2, 2024, Kinetik Receivables LLC (“Kinetik Receivables”), a bankruptcy remote special purpose entity formed as a direct subsidiary of the Partnership , which is a subsidiary of the Company, entered into an accounts receivable securitization facility with an initial facility limit of $ 150.0 million (“A/R Facility”) with PNC Bank, as the administrative agent, and certain purchasers party thereto from time to time, which has a scheduled termination date of April 1, 2025.

The aggregate fees and expenses paid directly to third parties in obtaining the A/R Facility totaled $ 1.1 million and were capitalized as debt issuance costs and included in the Condensed Consolidated Balance Sheets as a current asset within “Prepaid and other current assets”, amortized over the term of the A/R Facility to interest expense using the effective-interest method.

There were unamortized debt issuance costs related to the A/R Facility of $ 0.8 million as of June 30, 2024.

Pursuant to the A/R Facility, the Company and certain of its subsidiaries continuously transfer receivables to Kinetik Receivables and Kinetik Receivables transfers receivables that meet certain qualifying conditions to third-party purchasers in exchange for cash.

These receivables are held by Kinetik Receivables and are pledged to secure the collectability of the sold receivables and are accounted for as secured borrowings.

The amount available for borrowing at any one time under the A/R Facility is limited to an amount calculated based on the outstanding balance of eligible receivables sold to the purchasers, subject to certain reserves, concentration limits, and other limitations.

Under the A/R Facility, the Company is subject to pay a yield to the purchasers equal to SOFR plus a spread adjustment of 0.10 % and a drawn fee of 0.90 %.

The Company also pays a fee of 0.40 % on the undrawn committed amount of the A/R Facility.

Yield and fees payable by the Company under the AR Facility are due monthly.

As of June 30, 2024, eligible accounts receivable of $ 148.8 million were pledged to the A/R Facility as collateral and $ 1.2 million was available to be invested by the purchasers.

The Partnership has continuing involvement with the receivables transferred by Kinetik Receivables to the third-party purchasers by providing collection services.

The A/R Facility is linked to sustainability performance targets (“SPTs”) with respect to (a) female representation in corporate officer positions and (b) reduction in methane emissions intensity.

A positive 0.02 % and 0.05 % fee and interest rate adjustments will be applied, respectively, if neither of the SPTs have been satisfied and a negative 0.02 % and 0.05 % fee and interest rate adjustments will be applied, respectively, if both of the SPTs have been satisfied.

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.

The Company recognized a loss on debt extinguishment of $ 0.5 million for the partial payment made on the Term Loan Credit Facility.

The following table summarizes the Company’s debt obligations as of June 30, 2024 and December 31, 2023:

June 30, December 31,

(In thousands)

$ 148,800 $ —

Total current debt obligations

$ 148,800 $ —

Unsecured term loan $ 1,000,000 $ 1,200,000

$ 1.00 billion 2030 senior unsecured notes

5.875 % senior unsecured notes due 2030 (“2030 Notes”)

1,000,000 1,000,000

$ 0.80 billion 2028 senior unsecured notes

6.625 % senior unsecured notes due 2028 (“2028 Notes”)

800,000 800,000

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Total long-term debt, net $ 3,258,403 $ 3,562,809

(1) Excludes unamortized debt issuance cost related to the revolving line of credit.

Unamortized debt issuance cost associated with the revolving line of credit was $ 5.0 million and $ 5.4 million as of March 31, 2024 and December 31, 2023, respectively.

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 the “Deferred charges and other assets” of the Condensed Consolidated Balance Sheets.

(1) Excludes unamortized debt issuance costs related to the revolving line of credit.

Unamortized debt issuance costs associated with the revolving line of credit were $ 4.6 million and $ 5.4 million as of June 30, 2024 and December 31, 2023, respectively.

The unamortized debt issuance costs related to the revolving credit facilities were included in the “Deferred charges and other assets” of the Condensed Consolidated Balance Sheets.

The table below presents the components of the Company’s financing costs, net of capitalized interest:

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

(In thousands)

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Total financing costs, net of capitalized interest $ 54,049 $ 16,126 $ 101,516 $ 85,434

As of March 31, 2024 and December 31, 2023, unamortized debt issuance costs associated with the 5.875 % Sustainability-Linked Senior Notes due 2030 (the “2030 Notes”), the 6.625 % Sustainability-Linked Senior Notes due 2028 (the “2028 Notes”) and the unsecured term loan were $ 30.2 million and $ 31.5 million, respectively, and unamortized debt premiums and discount, net, associated with the 2028 Notes and the unsecured term loan were $ 0.4 million and $ 0.3 million, respectively.

As of June 30, 2024 and December 31, 2023, unamortized debt issuance costs associated with the 2030 Notes, the 2028 Notes and the Term Loan Credit Facility were $ 28.7 million and $ 31.5 million, respectively, and unamortized debt premiums and discount, net, associated with the 2028 Notes and the unsecured term loan were $ 0.1 million and $ 0.3 million, respectively.

Compliance with our Covenants

Both the revolving credit agreement with Bank of America, N.A.

as administrative agent, and the term loan credit agreement with PNC Bank as administrative agent (the “Term Loan Credit Facility”), contain customary covenants and restrictive provisions which may, among other things, limit the Partnership’s ability to create liens, incur additional indebtedness and make restricted payments and the Partnership’s ability to liquidate, dissolve, consolidate with or merge into or with any other person.

Each of the revolving credit agreements with Bank of America, N.A.

as administrative agent and the Term Loan Credit Facility, contain customary covenants and restrictive provisions which may, among other things, limit the Partnership’s ability to create liens, incur additional indebtedness and make restricted payments and the Partnership’s ability to 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.

As of March 31, 2024, the Partnership was in compliance with all customary and financial covenants.

The A/R Facility contains covenants and restrictive provisions with respect to the Partnership and Kinetik Receivables that are customary for accounts receivable securitization facilities.

As of June 30, 2024, the Partnership was in compliance with all customary and financial covenants.

Letters of Credit

Our $ 1.25 billion senior unsecured revolving credit facility (the “Revolving Credit Facility”) scheduled to mature on or before June 8, 2027 can be used for letters of credit.

Our obligations with respect to related letters of credit totaled $ 12.6 million as of March 31, 2024 and December 31, 2023, respectively.

Our obligations with respect to related letters of credit totaled $ 12.6 million as of June 30, 2024 and December 31, 2023, respectively.

As of June 30, 2024, the Revolving Credit Facility has a borrowing base of $ 750.4 million available.

Fair Value of Financial Instruments

The fair value of the Company and its subsidiaries’ consolidated debt as of March 31, 2024 and December 31, 2023 was $ 3.53 billion and $ 3.57 billion, respectively.

On March 31, 2024, the senior unsecured notes’ fair value was based on Level 1 inputs and the Term Loan and Revolving Credit Facility and revolving line of credit’s fair value was based on Level 3 inputs.

The fair value of the Company and its subsidiaries’ consolidated debt as of June 30, 2024 and December 31, 2023 was $ 3.42 billion and $ 3.57 billion, respectively.

On June 30, 2024, the senior unsecured notes’ fair value was based on Level 1 inputs, the Term Loan Credit Facility and Revolving Credit Facility’s fair value was based on Level 3 inputs and the A/R Facility’s fair value is approximate its carrying value due to its short term nature.

ACCRUED EXPENSES

The following table provides detail of the Company’s current accrued expenses on March 31, 2024 and December 31, 2023:

March 31, December 31,

The following table provides detail of the Company’s current accrued expenses on June 30, 2024 and December 31, 2023:

June 30, December 31,

(In thousands)

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Total accrued expenses $ 157,318 $ 177,421

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 March 31, 2024.

Redeemable Noncontrolling Interest — Common Unit Limited Partners

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Therefore, the Common Unit is accounted for as redeemable noncontrolling interest and classified as temporary equity on the Company’s Condensed Consolidated Balance Sheets.

During the three months ended March 31, 2024, 146,250 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 93.9 million Common Units and an equal number of Class C Common Stock issued and outstanding as of March 31, 2024.

The Common Units fair value was approximately $ 3.62 billion as of March 31, 2024.

As of March 31, 2024, there were 59.7 million and 93.9 million shares, respectively, of Class A Common Stock and Class C Common Stock issued and outstanding (collectively, “Common Stock”).

During the six months ended June 30, 2024, 146,250 Common Units were redeemed on a one -for-one basis for shares of Class A Common Stock, par value $ 0.0001 per share of the Company (“Class A Common Stock”) and a corresponding number of shares of Class C Common Stock were cancelled.

In addition, as part of the Durango Acquisition purchase price consideration, approximately 3.8 million shares of Class C Common Stock and an equivalent number of Common Units were issued at closing.

There were 97.8 million Common Units and an equal number of Class C Common Stock issued and outstanding as of June 30, 2024 and 7.7 million shares of Class C Common Stock and equivalent number of Common Units of deferred consideration for the Durango Acquisition that will be issued on July 1, 2025.

The Common Units fair value was approximately $ 4.29 billion, including deferred consideration valued as of June 30, 2024.

As of June 30, 2024, there were 59.7 million and 97.8 million shares, respectively, of Class A Common Stock and Class C Common Stock issued and outstanding (collectively, “Common Stock”).

In addition, 7.7 million shares of Class C Common Stock will be issued as deferred consideration for the Durango Acquisition.

Share Repurchase Program

During the quarter ended March 31, 2024, the Company did not repurchase any of its Class A Common Stock under the Repurchase Program.

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, and certain individuals (each, a “Reinvestment Holder”).

Under the Reinvestment Agreement, each Reinvestment Holder was obligated to reinvest a specified percent of 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.

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.”

On March 7, 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 Reinvestment Holders.

During the quarter ended June 30, 2024, the Company did not repurchase any of its Class A Common Stock under the Repurchase Program.

On May 9, 2024, the Company made cash dividend payments of $ 115.2 million to holders of Class A Common Stock and Common Units and $ 0.6 million was reinvested in shares of Class A Common Stock.

The significant decrease in the amount reinvested in shares of Class A Common Stock compared with prior quarters was due to the automatic termination of the Dividend and Distribution Reinvestment Agreement on March 8, 2024.

FAIR VALUE MEASUREMENTS

The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023:

March 31, 2024

The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:

June 30, 2024

Level 1 Level 2 Level 3 Total

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Commodity swaps $ — $ 8,197 $ — $ 8,197

Interest rate derivatives — 340 — 340

Total liabilities $ — $ 8,197 $ — $ 8,197

8 unchanged sentences

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

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

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.

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

The 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 11—Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further discussion related to commodity and interest rate derivatives.

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

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The carrying amounts reported on the Condensed 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 three months ended March 31, 2024 and 2023.

There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the six months ended June 30, 2024 and 2023.

DERIVATIVES AND HEDGING ACTIVITIES

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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 Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023.

Interest Rate Risk

The Company manages market risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and by using derivative financial instruments.

Specifically, the Company enters into derivative financial instruments to manage exposures that arise from activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates.

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements.

1 unchanged sentence

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.

As of March 31, 2024, 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.

As of June 30, 2024, 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 Condensed Consolidated Balance Sheets.

The following table presents the fair value of derivative assets and liabilities related to the interest rate swap contracts:

March 31, December 31,

June 30, December 31,

(In thousands)

3 unchanged sentences

Total derivative liabilities $ — $ 5,348

The Company recorded cash settlements and change in fair value of the interest rate swap contracts in “Interest expense” of the Condensed Consolidated Statements of Operations.

The following table presents interest rate derivative activities for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

The Company recorded cash settlements and changes in fair value of the interest rate swap contracts in “Interest expense” of the Condensed Consolidated Statements of Operations.

The following table presents interest rate swap derivatives activities for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(In thousands)

Cash settlements $ 3,953 $ 2,417 $ 7,905 $ 2,417

Favorable (unfavorable) fair value adjustment $ 13,329 $ ( 17,190 )

Favorable fair value adjustment

$ 4,142 $ 39,252 $ 17,471 $ 22,063

Commodity Price Risk

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Management regularly reviews the Company’s potential exposure to commodity price risk and manages exposure of such risk through commodity hedge contracts.

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

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

During the past twelve months, 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, the HSC index and the NYMEX West Texas Intermediate Control index.

These contracts are for 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 23 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 following table presents detailed information of commodity swaps outstanding as of March 31, 2024 (in thousands, except volumes):

March 31, 2024

Commodity Unit Volume Net Fair Value

The following table presents detailed information of commodity swaps outstanding as of June 30, 2024 (in thousands, except volumes):

June 30, 2024

Commodity Unit Notional Volume

Net Fair Value

Natural Gas MMBtus 2,140,000 $ ( 326 )

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The following table presents the fair value of derivative assets and liabilities related to commodity swaps:

March 31, December 31,

(In thousands)

8 unchanged sentences

The Company recorded cash settlements and fair value adjustments on commodity swap derivatives in “Product revenue” of the Consolidated Statements of Operations.

The following table presents commodity derivative activities for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

The following table presents commodity swap derivatives activities for the three and six months ended June 30, 2024 and 2023:

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(In thousands)

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SHARE-BASED COMPENSATION

The Company has granted various Class A and Class C Shares, restricted stock units (“RSUs”) and performance stock units (“PSUs”) to members of the Board of Directors ( the “Board”) and employees under the Kinetik Holdings Inc.

2019 Omnibus Incentive Plan (the “2019 Plan”).

Class A Shares and Class C Shares

The Class A Shares and Class C Shares were granted at the Closing of the Altus Midstream Company (“ALTM”) business combination upon conversion of previously outstanding incentive units.

These shares were held in escrow and will vest over three to four years .

These units are recorded at grant-date fair value, which was determined to be fair value on the closing date of the business combination, and compensation expense is recognized on a straight‑line basis over the vesting period within “General and Administrative Expenses” of the Condensed Consolidated Statements of Operations in accordance with FASB ASC 718 , C ompensation - Stock Compensation .

The Company granted various Class A and Class C Shares, restricted stock units (“RSUs”) and performance stock units (“PSUs”) to members of the Board of Directors (the “Board”) and employees.

The Class A Shares and Class C Shares and RSUs are subject to service requirements for vesting and the PSUs have both service requirements and market condition performance requirements for vesting.

These units are recorded at grant-date fair value and compensation expense is recognized on a straight‑line or graded straight-line basis over the vesting period within “General and Administrative Expenses” of the Condensed Consolidated Statements of Operations in accordance with FASB ASC 718 , C ompensation - Stock Compensation .

Forfeitures are recognized as they occur.

In addition, upon the Closing of the ALTM business combination, 395,416 performance Class A awards were granted that will vest over a four year service period and upon certain shareholder’s selling of the Company’s Class A Common Stock at defined return levels.

As the performance outcome is not estimable, no compensation expense is recorded for these performance awards for the three months ended March 31, 2024 and 2023.

The table below summarizes Class A Share and Class C Share activities for the three months ended March 31, 2024:

Number of Shares Weighted Avg Grant-Date Fair Market Value Per Unit

Class A Shares and Class C Shares

The table below summarizes Class A Share and Class C Share activities for the six months ended June 30, 2024:

Number of Shares

Weighted Avg Grant-Date Fair Market Value Per Unit

Outstanding and unvested shares at December 31, 2023 5,444,488 $ 28.91

Outstanding and unvested shares at March 31, 2024 5,427,288 $ 28.90

Table below summarizes aggregate intrinsic value (market value at vesting date) and grant-date fair value of vested Class A Shares for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

Outstanding and unvested shares at June 30, 2024

5,427,288 $ 28.90

Table below summarizes aggregate intrinsic value (market value at vesting date) and grant-date fair value of vested Class A Shares for the three months ended June 30, 2024 and 2023:

Six Months Ended June 30,

(In thousands)

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Grant-date fair value of vested Class A Shares $ 511 $ —

No vesting or forfeiture occurred for Class C Shares for the three months ended March 31, 2024.

No vesting or forfeiture occurred for Class A or Class C Shares for the three months ended March 31, 2023.

As of March 31, 2024, there were $ 61.6 million of unrecognized compensation costs related to unvested Class A Shares and Class C Shares.

No vesting or forfeiture occurred for Class C Shares for the three and six months ended June 30, 2024 and 2023.

No vesting or forfeiture occurred for Class A Shares for the three months ended June 30, 2024 and 2023.

As of June 30, 2024, there were $ 50.4 million of unrecognized compensation costs related to unvested Class A Shares and Class C Shares.

These costs are expected to be recognized over a weighted average period of 1.34 years.

Restricted Stock Units

Certain RSUs were granted in the first quarter of 2024 to certain executives and employees under the 2019 Plan.

Granted RSUs are subject to various service vesting requirements and may be settled only for shares of Class A Common Stock on a one -for-one basis contingent upon continued employment.

RSUs are recorded at grant-date fair value and compensation expense is recognized on a straight‑line or graded straight-line basis over the vesting period within “General and Administrative Expenses.”

The table below summarizes RSU activities for the three months ended March 31, 2024:

Certain RSUs were granted in the first half of 2024 to certain executives and employees under the Kinetik Holdings Inc.

Amended and Restated 2019 Omnibus Compensation Plan (the “2019 Plan”) with various service vesting requirements.

Such RSUs may be settled only for shares of Class A Common Stock on a one -for-one basis, contingent upon continued employment.

The table below summarizes RSU activities for the six months ended June 30, 2024:

Number of Shares (1)

3 unchanged sentences

309,871 34.57

Outstanding and unvested shares at March 31, 2024 725,813 $ 33.30

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

Table below summarizes aggregate intrinsic value (market value at vesting date) and grant-date fair value of RSUs for the three months ended March 31, 2024 and 2023.

Three Months Ended March 31,

Outstanding and unvested shares at June 30, 2024 723,507 $ 33.21

(1) The number of shares and weighted average fair market value per share include RSUs issued to new employees that transitioned from ALTM as part of the merger as replacement awards.

Table below summarizes aggregate intrinsic value (market value at vesting date) and grant-date fair value of RSUs for the three and six months ended June 30, 2024 and 2023.

Three Months Ended June 30,

Six Months Ended June 30,

2024 2023 2024 2023

(In thousands)

1 unchanged sentence

Grant-date fair value of vested RSUs $ 758 $ 604 $ 10,712 $ 6,792

As of March 31, 2024, there were $ 18.5 million of unrecognized compensation costs related to the RSUs.

As of June 30, 2024, there were $ 16.0 million of unrecognized compensation costs related to the RSUs.

These costs are expected to be recognized over a weighted average period of 1.83 years.

Performance Stock Units

The Company granted PSUs pursuant to the 2019 Plan to certain of its employees and executives in the first quarter of 2024.

These PSUs vest and become earned upon the achievement of certain performance goals based on the Company’s annualized absolute total stockholder return and the Company’s relative total stockholder return as compared to the performance peer group during the performance period, if the PSUs holders also satisfy the continued employment requirement during the performance period.

The Company granted PSUs pursuant to the 2019 Plan to certain of its employees and executives in the first half of 2024.

Depending on the results achieved during the three-year performance period, the actual number of Class A Common Stock that a holder of the PSUs earns at the end of the performance period may range from 0 % to 200 % of the target number of PSUs granted.

The fair value of the PSUs is determined using a Monte Carlo simulation at the grant date.

The fair value of the PSUs is determined using the Monte Carlo simulation at the grant date.

The Company recognized compensation expense for PSUs on a straight-line basis over the performance period.

Any PSU not earned at the end of the performance period will be forfeited.

The table below summarizes PSU activities for the three months ended March 31, 2024:

The table below summarizes PSU activities for the six months ended June 30, 2024:

Number of Shares

1 unchanged sentence

Granted in 2024 198,703 $ 36.76

Outstanding and unvested shares at March 31, 2024 198,703 $ 36.76

No vesting or forfeiture occurred for PSUs for the three months ended March 31, 2024.

Outstanding and unvested shares at June 30, 2024 198,703 $ 36.76

No vesting or forfeiture occurred for PSUs for the three and six months ended June 30, 2024.

The table below presents a summary of the grant-date fair value assumptions used to value the PSUs on grant date:

4 unchanged sentences

Expected term

As of March 31, 2024, there were $ 7.1 million of unrecognized compensation costs related to the PSUs.

As of June 30, 2024, there were $ 6.5 million of unrecognized compensation costs related to the PSUs.

These costs are expected to be recognized over a weighted average period of 2.50 years.

With respect to above Class A Shares, Class C Shares, RSUs and PSUs, the Company recorded compensation expenses of $ 22.6 million and $ 17.5 million for the three months ended March 31, 2024 and 2023, respectively.

With respect to above Class A Shares, Class C Shares, RSUs and PSUs, the Company recorded compensation expenses of $ 15.1 million and $ 13.3 million for the three months ended June 30, 2024 and 2023, respectively, and $ 37.7 million and $ 30.8 million for the six months ended June 30, 2024 and 2023.

The Company is subject to U.S.

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Income tax expense included in the condensed consolidated financial statements in this Quarterly Report on Form 10-Q is as follows:

Three Months Ended

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(In thousands)

2 unchanged sentences

Effective tax rate 7.80 % 0.43 % 8.26 % 0.95 %

The effective tax rate for the three months ended March 31, 2024 was lower than the statutory rate mainly due to the impact of tax attributable to noncontrolling interests related to the Common Unit limited partners.

The effective tax rate for the three and six months ended June 30, 2024 was lower than the statutory rate mainly due to the impact of tax attributable to noncontrolling interests related to the Common Unit limited partners.

The effective tax rate for the three and six months ended June 30, 2023 was lower than the statutory rate mainly due to the impact of tax attributable to noncontrolling interests related to the Common Unit limited partners and a full valuation allowance on deferred tax assets as of June 30, 2023.

NET INCOME PER SHARE

1 unchanged sentence

Three Months Ended

Six Months Ended

2024 2023 2024 2023

(In thousands, except per share amounts)

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Dilutive effect of unvested Class A common shares (2)

487 72 663 240

Weighted average shares outstanding - diluted (2)(3)

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(1) Represents dividends paid to unvested Class A Shares.

(2) 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.

(2) Includes dilutive effect from both RSUs and PSUs on unvested Class A common shares.

3 unchanged sentences

These accruals are adjusted as additional information becomes available or circumstances change.

As of March 31, 2024 and December 31, 2023, there were no accruals for loss contingencies.

As of June 30, 2024 and December 31, 2023, there were no accruals for loss contingencies.

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

2 unchanged sentences

Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question.

There were no litigation related accrued reserves as of March 31, 2024 and December 31, 2023.

There were no litigation related accrued reserves as of June 30, 2024 and December 31, 2023.

The Company has entered into litigation with a third party to collect receivables totaling $ 11.6 million and is waiting on settlement of $ 8.0 million in receivables from another counterparty related to prior litigation the Company had previously entered into and subsequently dropped.

5 unchanged sentences

Moreover, changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly requirements could require the Company to make significant expenditures to attain and maintain compliance or may otherwise have a material adverse effect on its operations, competitive position, or financial condition.

The Company is not aware of any environmental claims existing as of March 31, 2024, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity.

The Company is not aware of any material environmental claims existing as of June 30, 2024, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity.

Contingent Liabilities

Durango Acquisition

On June 24, 2024, the Company consummated the previously announced Durango Acquisition.

Pursuant to the Durango MIPA, Durango Seller is entitled to an earn out of up to $ 75.0 million in cash contingent upon the completion of the Kings Landing Project and placing it into service in Eddy County, New Mexico.

This earn out is subject to reduction based on actual capital costs associated with the Kings Landing Project.

The Company recorded a $ 64.0 million contingent liability for the Kings Landing Earnout, based on the project’s completion probability and projected spend, in the “Other liabilities” of the Condensed Consolidated Balance Sheet as of June 30, 2024.

Permian Gas Acquisition

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PDC’s actual annual Mcf volume did not exceed the incentive forecast volume during the past four years , and is not expected to over the next six years ;

therefore, the estimated fair value of the contingent consideration liability was nil as of March 31, 2024 and December 31, 2023.

therefore, the estimated fair value of the contingent consideration liability was nil as of June 30, 2024 and December 31, 2023.

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.

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• Pipeline Transportation:

The Pipeline Transportation segment consists of equity investment interests in four Permian Basin pipelines that access various points along the U.S.

The Pipeline Transportation segment consists of equity investment interests in three Permian Basin pipelines that access various points along the U.S.

Gulf Coast, as well as Kinetik NGL and Delaware Link Pipelines.

3 unchanged sentences

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), and operating expenses and more than 93 % of the ad valorem expenses.

The Pipeline Transportation segment contains all of the Company’s equity method investments, which contribute approximate 92 % of the segment’s Adjusted EBITDA.

The Midstream Logistics segment accounts for more than 97 % of the Company’s operating revenues, more than 99 % of the cost of sales (excluding depreciation and amortization) and operating expenses and more than 93 % of the ad valorem expenses.

The Pipeline Transportation segment contains all of the Company’s equity method investments, which contribute approximately 92 % of the segment’s Adjusted EBITDA.

Corporate and Other contains the Company’s executive and administrative functions, including 87 % of the Company’s General and Administrative Expenses and all of the Company’s debt service costs.

The following tables present the reconciliation of the non-GAAP measure Segment Adjusted EBITDA to the GAAP measure segment income (loss) before income taxes as of and for the three months period ended March 31, 2024 and 2023:

Midstream Logistics Pipeline Transportation Corporate and Other (1)

(In thousands)

For the Three Months Ended March 31, 2024

For the Three Months Ended June 30, 2024

Segment income (loss) before income taxes $ 76,441 $ 121,152 $ ( 79,431 ) $ 118,162

4 unchanged sentences

Share-based compensation — — 15,136 15,136

Loss on debt extinguishment

Integration costs 543 — 1,967 2,510

Acquisition transaction costs — — 3,232 3,232

Other one-time costs or amortization 1,855 — 726 2,581

Other interest income

Gain on disposal of assets

Commodity hedging unrealized gain

8,205 — — 8,205

Gain on sale of equity method investment

— 59,884 — 59,884

Equity income from unconsolidated affiliates — 55,955 — 55,955

Segment Adjusted EBITDA (2)

$ 147,558 $ 93,537 $ ( 6,692 ) $ 234,403

Midstream Logistics Pipeline Transportation Corporate and Other (1)

(In thousands)

For the Three Months Ended June 30, 2023

Segment income (loss) before income taxes

$ 55,680 $ 49,493 $ ( 33,194 ) $ 71,979

Interest expense 11 — 16,115 16,126

Depreciation and amortization 69,005 471 6 69,482

Contract assets amortization 1,655 — — 1,655

Proportionate EMI EBITDA — 74,481 — 74,481

Share-based compensation — — 13,299 13,299

Loss on disposal of assets 12,137 — — 12,137

Acquisition transaction costs 2 — — 2

Integration costs 15 — 26 41

Other one-time costs or amortization 743 — 361 1,104

Warrant valuation adjustment — — 33 33

Commodity hedging unrealized gain

2,678 — — 2,678

Equity income from unconsolidated affiliates — 49,610 — 49,610

Segment Adjusted EBITDA (2)

$ 136,570 $ 74,835 $ ( 3,420 ) $ 207,985

Midstream Logistics Pipeline Transportation Corporate and Other (1)

(In thousands)

For the Six Months Ended June 30, 2024

Segment income (loss) before income taxes $ 126,614 $ 186,450 $ ( 155,708 ) $ 157,356

Interest expense 2,608 — 98,908 101,516

Depreciation and amortization 144,063 4,592 12 148,667

Contract assets amortization 3,310 — — 3,310

Proportionate EMI EBITDA — 174,324 — 174,324

Share-based compensation — — 37,697 37,697

Loss on disposal of assets 4,090 — — 4,090

Loss on debt extinguishment

Commodity hedging unrealized loss

1 unchanged sentence

Integration costs 584 — 1,967 2,551

Acquisition transaction costs — — 3,232 3,232

Other one-time costs or amortization 2,391 — 2,615 5,006

Interest income

Other interest income

Gain on sale of equity method investment

— 59,884 — 59,884

Equity income from unconsolidated affiliates — 116,424 — 116,424

3 unchanged sentences

(In thousands)

For the Three Months Ended March 31, 2023

For the Six Months Ended June 30, 2023

Segment income (loss) before income taxes $ 107,211 $ 95,927 $ ( 126,444 ) $ 76,694

2 unchanged sentences

Contract assets amortization 3,310 — — 3,310

Commodity hedging unrealized gain

( 4,987 ) — — ( 4,987 )

Proportionate EMI EBITDA — 146,348 — 146,348

5 unchanged sentences

Warrant valuation adjustment — — 77 77

Commodity hedging unrealized gain

7,643 — — 7,643

Equity income from unconsolidated affiliates — 96,074 — 96,074

7 unchanged sentences

please see Key Performance Metrics in “Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q, for a definition of segment adjusted EBITDA.

The following tables present the revenue for the individual operating segments for the three month periods ended March 31, 2024 and 2023:

Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q, for a definition and reconciliation to the GAAP measure.

The following tables present the revenue for the individual operating segments for the three and six month period ended June 30, 2024 and 2023:

Midstream Logistics Pipeline Transportation Elimination Consolidated

(In thousands)

For the Three Months Ended March 31, 2024

For the Three Months Ended June 30, 2024

Revenue $ 354,217 $ 2,300 $ — $ 356,517

3 unchanged sentences

Total segment operating revenue $ 356,872 $ 8,910 $ ( 6,325 ) $ 359,457

Midstream Logistics Pipeline Transportation Consolidated

Midstream Logistics Pipeline Transportation Elimination Consolidated

(In thousands)

For the Three Months Ended March 31, 2023

For the Three Months Ended June 30, 2023

Revenue $ 293,251 $ 730 $ — $ 293,981

1 unchanged sentence

Total segment operating revenue $ 295,471 $ 732 $ — $ 296,203

Midstream Logistics Pipeline Transportation Elimination Consolidated

(In thousands)

For the Six Months Ended June 30, 2024

Revenue $ 690,905 $ 4,374 $ — $ 695,279

Other revenue 5,285 287 — 5,572

Intersegment revenue (1)

— 12,540 ( 12,540 ) —

Total segment operating revenue $ 696,190 $ 17,201 $ ( 12,540 ) $ 700,851

Midstream Logistics Pipeline Transportation Elimination Consolidated

(In thousands)

For the Six Months Ended June 30, 2023

Revenue $ 569,806 $ 1,424 $ — $ 571,230

Other revenue 6,009 4 — 6,013

Total segment operating revenue $ 575,815 $ 1,428 $ — $ 577,243

(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.

The following table presents total assets for each operating segment as of March 31, 2024 and December 31, 2023:

March 31, December 31,

The following table presents total assets for each operating segment as of June 30, 2024 and December 31, 2023:

June 30, December 31,

(In thousands)

5 unchanged sentences

Total assets $ 6,860,272 $ 6,496,873

(1) Includes investment in unconsolidated affiliates of $ 2.53 billion and $ 2.54 billion as of March 31, 2024 and December 31, 2023, respectively .

(1) Includes investment in unconsolidated affiliates of $ 2.08 billion and $ 2.54 billion as of June 30, 2024 and December 31, 2023, respectively.

SUBSEQUENT EVENTS

On May 9, 2024, the Company entered into a Membership Interest Purchase Agreement (the “Durango MIPA”) with Durango Midstream LLC, an affiliate of Morgan Stanley Energy Partners (the “Durango Seller”), and the Partnership, pursuant to which the Partnership has agreed to purchase all of the membership interests of Durango Permian, LLC (“Durango”) from Durango Seller for an aggregate purchase price of approximately $ 765.0 million (the “Durango Acquisition”), consisting of $ 315.0 million of cash to be paid at closing, approximately 3.8 million common units in the Partnership and an equivalent number of shares of Class C Common Stock to be issued at closing and approximately 7.7 million common units in the Partnership and an equivalent number of shares of Class C Common Stock to be issued on July 1, 2025.

Durango Seller is also entitled to a $ 75.0 million earn out in cash contingent upon the Kings Landing gas processing complex in Eddy County, New Mexico (the “Kings Landing Project”), which is currently under construction, being placed into service (the “Kings Landing Earnout”).

The Kings Landing Earnout is subject to certain adjustments for capital costs associated with the Kings Landing Project.

The Durango Acquisition is expected to close in the second quarter of 2024, subject to satisfaction of customary closing conditions, including regulatory approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR”).

Also on May 9, 2024, the Company entered into a Purchase and Sale Agreement (the “GCX Purchase Agreement”) with GCX Pipeline, LLC, an affiliate of ArcLight Capital Partners, LLC (the “GCX Buyer”), pursuant to which the Company has agreed to sell its 16 % membership interest in GCX to the GCX Buyer for a total purchase price of $ 540.0 million, consisting of $ 510.0 million of cash (subject to customary adjustments) and an additional $ 30.0 million earn out in cash upon final investment decision on a capacity expansion project.

The transactions pursuant to the GCX Purchase Agreement are expected to close in the second quarter of 2024, subject to customary closing conditions.

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 of record as of April 29, 2024 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.

On April 2, 2024, Kinetik Receivables LLC (“Kinetik Receivables”), a bankruptcy remote special purpose entity formed as a direct subsidiary of the Partnership, which is a subsidiary of the Company, entered into an accounts receivable securitization facility with an initial facility limit of $ 150.0 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, lowering the remaining balance to $ 1.00 billion.

As a result, the maturity of the Term Loan Credit Facility extended to December 8, 2026.

On July 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 of record as of July 29, 2024 on August 7, 2024.

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-Q

Item 1. Financial Statements