Kinetik Holdings Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) KINETIK HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands, except per share data) Operating revenues: Service revenue $ 103,100 $ 104,349 $ 301,710 $ 310,325 Product revenue 290,423 221,280 787,092 586,534 Other revenue 2,839 4,672 8,411 10,685 Total operating revenues (1) 396,362 330,301 1,097,213 907,544 Operating costs and expenses: Costs of sales (exclusive of depreciation and amortization) (2) (3) 144,586 147,756 444,786 374,100 Operating expenses 55,804 42,925 143,278 118,804 Ad valorem taxes 5,896 5,607 18,400 14,954 General and administrative expenses 29,619 22,751 94,846 73,131 Depreciation and amortization expenses 87,583 69,935 236,250 208,271 Loss on disposal of assets — 2,927 4,090 15,166 Total operating costs and expenses 323,488 291,901 941,650 804,426 Operating income 72,874 38,400 155,563 103,118 Other income (expense): Interest and other income 1,872 289 2,272 1,625 Loss on debt extinguishment — — ( 525 ) — Gain on sale of equity method investment 29,953 — 89,837 — Interest expense ( 66,029 ) ( 45,009 ) ( 167,545 ) ( 130,443 ) Equity in earnings of unconsolidated affiliates 53,244 50,754 169,668 146,828 Total other income, net 19,040 6,034 93,707 18,010 Income before income taxes 91,914 44,434 249,270 121,128 Income tax expense 8,260 1,303 21,261 2,030 Net income including noncontrolling interest 83,654 43,131 228,009 119,098 Net income attributable to Common Unit limited partners 57,891 27,551 153,504 77,068 Net income attributable to Class A Common Stock Shareholders $ 25,763 $ 15,580 $ 74,505 $ 42,030 Net income attributable to Class A Common Shareholders, per share Basic $ 0.35 $ 0.21 $ 1.03 $ 0.58 Diluted $ 0.35 $ 0.21 $ 1.02 $ 0.57 Weighted-average shares Basic 59,811 53,340 59,116 50,464 Diluted 60,424 53,463 59,852 50,719 (1) Includes amounts associated with related parties of nil and $ 20.0 million for the three months ended September 30, 2024 and 2023, respectively, and $ 17.2 million and $ 70.9 million for the nine months ended September 30, 2024 and 2023, respectively. (2) Includes amounts associated with related parties of $ 12.8 million and $ 15.5 million for the three months ended September 30, 2024 and 2023, respectively, and $ 48.7 million and $ 50.6 million for the nine months ended September 30, 2024 and 2023, respectively . (3) Cost of sales (exclusive of depreciation and amortization) is net of gas service revenues totaling $ 60.2 million and $ 38.6 million for the three months ended September 30, 2024 and 2023, respectively, and $ 159.4 million and $ 107.1 million for the nine months ended September 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 Table of Contents KINETIK HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) September 30, December 31, 2024 2023 (In thousands, except shares data) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 20,438 $ 4,510 Accounts receivable, net of allowance for credit losses of $ 1,000 in 2024 and 2023 (1) 65,615 215,721 Accounts receivable pledged 150,000 — Derivative assets 6,276 7,812 Prepaid and other current assets 43,549 29,256 285,878 257,299 NONCURRENT ASSETS: Property, plant and equipment, net 3,226,884 2,743,227 Intangible assets, net 878,141 591,670 Derivative asset, non-current 1,593 165 Deferred tax assets 203,671 235,627 Operating lease right-of-use assets 38,101 37,569 Deferred charges and other assets 79,169 85,250 Investments in unconsolidated affiliates 2,141,947 2,540,989 Goodwill 5,077 5,077 6,574,583 6,239,574 Total assets $ 6,860,461 $ 6,496,873 LIABILITIES, NONCONTROLLING INTEREST, AND EQUITY CURRENT LIABILITIES: Accounts payable $ 17,160 $ 34,000 Accrued expenses 191,789 177,421 Derivative liabilities 6,743 1,734 Current portion of operating lease liabilities 25,483 29,203 Current debt obligations 150,000 — Other current liabilities 7,505 7,786 398,680 250,144 NONCURRENT LIABILITIES Long term debt, net 3,279,689 3,562,809 Contract liabilities 21,858 25,761 Operating lease liabilities 13,147 9,349 Derivative liabilities 1,081 5,363 Other liabilities 67,517 3,219 Deferred tax liabilities 16,014 13,244 3,399,306 3,619,745 Total liabilities 3,797,986 3,869,889 COMMITMENTS AND CONTINGENCIES (Note 15) Redeemable noncontrolling interest — Common Unit limited partners 4,783,180 3,157,807 EQUITY: Class A Common Stock: $ 0.0001 par, 1,500,000,000 shares authorized, 59,751,435 and 57,096,538 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively 6 6 Class C Common Stock: $ 0.0001 par, 1,500,000,000 shares authorized, 97,783,034 and 94,089,038 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively 9 9 Deferred consideration 1 — Additional paid-in capital — 192,678 Accumulated deficit ( 1,720,721 ) ( 723,516 ) Total equity ( 1,720,705 ) ( 530,823 ) Total liabilities, noncontrolling interest, and equity $ 6,860,461 $ 6,496,873 (1) Includes amounts of $ 15.8 million associated with related parties as of December 31, 2023. No related party balance as of September 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. 2 Table of Contents KINETIK HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 2024 2023 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income including noncontrolling interest $ 228,009 $ 119,098 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 236,250 208,271 Amortization of deferred financing costs 5,497 4,601 Amortization of contract costs 4,965 4,965 Contingent liabilities fair value adjustment 1,400 — Distributions from unconsolidated affiliates 223,670 205,891 Derivatives settlement ( 8,103 ) 15,111 Derivative fair value adjustment 8,938 ( 41,028 ) Warrants fair value adjustment — ( 73 ) Gain on sale of equity method investment ( 89,837 ) — Loss on disposal of assets 4,090 15,166 Equity in earnings of unconsolidated affiliates ( 169,668 ) ( 146,828 ) Loss on debt extinguishment 525 — Share-based compensation 52,868 43,340 Deferred income taxes 19,733 1,675 Changes in operating assets and liabilities: Accounts receivable and pledged receivable 29,492 ( 26,982 ) Other assets ( 3,729 ) ( 7,033 ) Accounts payable ( 53,361 ) ( 780 ) Accrued liabilities 4,815 8,840 Other non-current liabilities ( 1,744 ) 668 Operating leases ( 454 ) 683 Net cash provided by operating activities 493,356 405,585 CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment expenditures ( 155,805 ) ( 245,798 ) Intangible assets expenditures ( 7,744 ) ( 15,079 ) Investments in unconsolidated affiliates ( 3,273 ) ( 202,729 ) Net cash paid for acquisition of interest in unconsolidated affiliate ( 85,417 ) — Distributions from unconsolidated affiliate 2,789 5,793 Cash proceeds from sale of equity method investment 524,390 — Cash proceeds from disposals of assets 334 213 Net cash paid for acquisition ( 341,183 ) ( 125,000 ) Net cash used in investing activities ( 65,909 ) ( 582,600 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from borrowings under A/R Facility 151,200 — 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 ( 500 ) — Proceeds from revolver 826,000 673,000 Payments of revolver ( 913,000 ) ( 438,000 ) Cash dividends paid to Class A Common Stock shareholders ( 128,428 ) ( 58,030 ) Distributions paid to Class C Common Unit limited partners ( 144,505 ) ( 524 ) Repurchase of Class A Common Stock — ( 5,757 ) Net cash (used in) provided by financing activities ( 411,519 ) 170,689 Net change in cash 15,928 ( 6,326 ) 3 Table of Contents KINETIK HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, 2024 2023 (In thousands) CASH, BEGINNING OF PERIOD 4,510 6,394 CASH, END OF PERIOD $ 20,438 $ 68 SUPPLEMENTAL SCHEDULE OF INVESTING AND FINANCING ACTIVITIES Cash paid for interest, net of amounts capitalized $ 166,769 $ 165,877 Cash paid for income taxes, net $ 559 $ 484 Property and equipment and intangible accruals in accounts payable and accrued liabilities $ 24,140 $ 25,237 Right-of-use assets obtained in exchange for lease liabilities $ 42,974 $ 5,189 Class A Common Stock issued through dividend and distribution reinvestment plan $ 75,243 $ 263,771 Fair value of Durango assets acquired (1) $ 910,221 $ — Cash consideration paid 357,968 — Class C Common Units issued in exchange 148,200 — Deferred consideration 275,000 — Contingent consideration 64,000 — Durango liabilities assumed $ 65,053 $ — (1) See Note 2—Business Combinations in the Notes to Condensed Consolidated Financial Statements for additional information regarding the Durango Acquisition (as defined herein). The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 4 Table of Contents KINETIK HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS (Unaudited) Redeemable Noncontrolling Interest — Common Unit Limited Partners Class A Common Stock Class C Common Stock Additional Paid-in Capital Accumulated Deficit Treasury Stock Total Equity Shares Amount Shares Amount Deferred Consideration Shares (1) Amount (In thousands) For the Quarter Ended September 30, 2023 Balance at June 30, 2023 $ 3,242,619 51,973 $ 5 94,089 $ 9 — $ — $ — $ ( 902,446 ) $ ( 3,325 ) $ ( 905,757 ) Issuance of common stock through dividend and distribution reinvestment plan — 2,546 1 — — — — 88,144 — — 88,145 Retirement of treasury stock — — — — — — — — ( 3,325 ) 3,325 — Share-based compensation — 1 — — — — — 12,502 — — 12,502 Net income 27,551 — — — — — — — 15,580 — 15,580 Change in redemption value of noncontrolling interests 8,899 — — — — — — ( 8,899 ) — — ( 8,899 ) Distributions paid to Common Unit limited partners ( 70,568 ) — — — — — — — — — — Dividends on Class A Common Stock ($ 0.75 per share) — — — — — — — — ( 39,587 ) — ( 39,587 ) Balance at September 30, 2023 $ 3,208,501 54,520 $ 6 94,089 $ 9 — $ — $ 91,747 $ ( 929,778 ) $ — $ ( 838,016 ) For the Quarter Ended September 30, 2024 Balance at June 30, 2024 $ 4,289,591 59,736 $ 6 97,783 $ 9 7,680 $ 1 $ — $ ( 1,206,909 ) $ — $ ( 1,206,893 ) Issuance of common stock through dividend and distribution reinvestment plan — 11 — — — — — 444 — — 444 Share-based compensation — 4 — — — — — 15,171 — — 15,171 Net income 57,891 — — — — — — — 25,763 — 25,763 Change in redemption value of noncontrolling interests 509,035 — — — — — — ( 14,801 ) ( 494,234 ) — ( 509,035 ) Recognition of deferred tax asset — — — — — — — ( 814 ) — — ( 814 ) Distribution paid to Common Unit limited partners ( 73,337 ) — — — — — — — — — — Dividends on Class A Common Stock ($ 0.75 per share) — — — — — — — — ( 45,341 ) — ( 45,341 ) Balance at September 30, 2024 $ 4,783,180 59,751 $ 6 97,783 $ 9 7,680 $ 1 $ — $ ( 1,720,721 ) $ — $ ( 1,720,705 ) 5 Table of Contents KINETIK HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS (Unaudited) Redeemable Noncontrolling Interest — Common Unit Limited Partners Class A Common Stock Class C Common Stock Additional Paid-in Capital Accumulated Deficit Treasury Stock Total Equity Shares Amount Shares Amount Deferred Consideration Shares (1) Amount (In thousands) For the Nine Months Ended September 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 — 8,641 1 — — — — 263,771 — — 263,772 Retirement of treasury stock — — — — — — — — ( 5,757 ) 5,757 — Repurchase of Class A Common Stock — ( 194 ) — — — — — — — ( 5,757 ) ( 5,757 ) Share-based compensation — 213 — — — — — 43,340 — — 43,340 Net income 77,068 — — — — — — — 42,030 — 42,030 Change in redemption value of noncontrolling interests 236,358 — — — — — — ( 339,838 ) 103,480 — ( 236,358 ) Distributions paid to Common Unit limited partners ( 211,700 ) — — — — — — — — — — Dividends on Class A Common Stock ($ 2.25 per share) — — — — — — — — ( 110,902 ) — ( 110,902 ) Balance at September 30, 2023 $ 3,208,501 54,520 $ 6 94,089 $ 9 — $ — $ 91,747 $ ( 929,778 ) $ — $ ( 838,016 ) For the Nine Months Ended September 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 Issuance of common stock through dividend and distribution reinvestment plan — 2,205 — — — — — 75,243 — — 75,243 Share-based compensation — 303 — — — — — 52,868 — — 52,868 Net income 153,504 — — — — — — — 74,505 — 74,505 Change in redemption value of noncontrolling interests 1,268,038 — — — — — — ( 330,196 ) ( 937,842 ) — ( 1,268,038 ) Recognition of deferred tax asset — — — — — — 4,347 — — 4,347 Distribution paid to Common Unit limited partners ( 214,309 ) — — — — — — — — — — Dividends on Class A Common Stock ($ 2.25 per share) — — — — — — — — ( 133,868 ) — ( 133,868 ) Balance at September 30, 2024 $ 4,783,180 59,751 $ 6 97,783 $ 9 7,680 $ 1 $ — $ ( 1,720,721 ) $ — $ ( 1,720,705 ) (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 September 30, 2024. The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 6 Table of Contents KINETIK HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) These Condensed Consolidated Financial Statements have been prepared by Kinetik Holdings Inc. (the “Company”), without audit, pursuant to the rules and regulations of the SEC. They reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for interim periods, on a basis consistent with the annual audited financial statements, with the exception of recently adopted accounting pronouncements. All such adjustments are of a normal recurring nature. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with the Company’s audited financial statements and related notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 5, 2024 . 1. DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization The Company is a holding company, whose only significant assets are ownership of the non-economic general partner interest and an approximate 38 % limited partner interest in Kinetik Holdings LP, a Delaware limited partnership (the “Partnership”). As the owner of the non-economic general partner interest in the Partnership, the Company is responsible for all operational, management and administrative decisions related to, and consolidates the results of, the Partnership and its subsidiaries. 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 three separate Permian Basin pipeline entities that have access to various markets along the U.S. Gulf Coast. Basis of Presentation The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with GAAP. Certain reclassifications of prior year balances have been made to conform such amounts to the current year’s presentation. These reclassifications have no impact on net income. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year; accordingly, you should read these Condensed Consolidated Financial Statements in conjunction with our consolidated financial statements and related notes included in our 2023 Annual Report on Form 10-K. All intercompany balances and transactions have been eliminated in consolidation. Significant Accounting Policies 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 nine months ended September 30, 2024, except as 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 are treated as collateral for borrowings under the third party A/R Facility (as defined below) and are included as “Accounts receivable pledged” within the Condensed Consolidated Balance Sheet. Proceeds from the transfer of the eligible accounts receivable under the third party A/R Facility are secured borrowings included as “Current debt obligations” within 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 Costs in the Notes to our Condensed Consolidated Financial Statements set forth in this Form 10-Q for further discussion. 7 Table of Contents 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 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, revenue from Apache was $ 20.0 million and $ 70.9 million, cost of sales was $ 13.1 million and $ 44.2 million, and operating expenses were $ 0.1 million and $ 0.5 million for the three and nine months ended September 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. For the three and nine months ended September 30, 2024, the Company recorded cost of sales of $ 12.8 million and $ 39.3 million, respectively, with these affiliates. For the three and nine months ended September 30, 2023, the Company recorded cost of sales of $ 2.4 million and $ 6.4 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. The impact of the adoption will be limited to additional disclosure in the notes to the consolidated financial statements. 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. 2. BUSINESS COMBINATIONS For acquired businesses, we recognize the identifiable assets acquired and 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. 8 Table of Contents 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 expand 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 of the Company with Durango’s results presented within the Condensed Consolidated Financial Statements from the Closing Date going forward. The preliminary purchase price allocation was based on Durango’s latest financial statements available as of May 31, 2024, and included 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 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 ranging from five to thirty 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 and discounted cash flow approach for customer contracts, which will be amortized over estimated useful lives ranging from seven to twelve years . The assumed liabilities are approximate to fair value at the Closing Date. Acquired net assets from this business combination were included in the Midstream Logistic segment. In addition, the Company recorded a contingent liability related to the Kings Landing Earnout based on project completion probability, see additional information in Note 15—Commitments and Contingencies in the Notes to our Condensed Consolidated Financial Statements set forth in this Form 10-Q. Since the Closing Date, the Company has made necessary adjustments to the purchase price allocation as information about facts and circumstances that existed at the Closing Date have become available. This included certain working capital adjustments as a result of obtaining Durango’s closing balance sheet as of June 30, 2024. During the three months ended September 30, 2024, the Company identified working capital adjustments of $ 21.0 million resulting from the final closing balance sheet, and valuation adjustments related to the long-lived assets and intangible assets of $ 10.6 million, resulting in a decrease in goodwill of $ 10.4 million. The Company will continue to identify necessary adjustments to finalize the purchase price allocation during the 12-month period following the Closing Date as we obtain the remaining original cost data for our tangible asset valuation, as well as complete our evaluation of the potential liabilities assumed, including certain historical environmental exposures. 9 Table of Contents 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 $ 16,785 Accounts receivable 29,386 Prepaid and other current assets 10,000 Property, plant, and equipment, net 471,429 Intangible assets, net 379,000 Deferred charges and other assets 4 Operating lease ROU assets 3,617 Total assets acquired 910,221 Accounts payable 34,314 Accrued expenses 7,140 Contract liabilities 642 Operating lease liabilities 3,617 Deferred tax liabilities 19,340 Total liabilities assumed 65,053 Contingent consideration (1) 64,000 Consideration transferred $ 781,168 (1) Pursuant to ASC 805, the Company evaluated the earn-out consideration classification in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). The Company determined the earn-out consideration to be classified as a liability based on the settlement provision. Therefore, the Company records the contingent consideration at fair value as of September 30, 2024. Additional discussion in Note 15—Commitments and Contingencies in the Notes to our Condensed Consolidated Financial Statements set forth in this Form 10-Q. The Company incurred acquisition-related costs of $ 3.2 million for the nine months ended September 30, 2024, which were 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 September 30, 2024, which included revenues of $ 35.8 million and $ 38.9 million, and net income including noncontrolling interest of $ 1.4 million and $ 1.6 million for the three and nine months ended September 30, 2024, respectively. 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 nine months ended September 30, 2024 and 2023, respectively, 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands) Revenues $ 396,362 $ 410,988 $ 1,210,257 $ 1,138,419 Net income including noncontrolling interest $ 83,602 $ 46,575 $ 228,652 $ 123,738 Given the assumed pro forma transaction date of January 1, 2023, we removed $ 3.5 million of acquisition-related expenses for the nine months ended September 30, 2024 and recognized $ 3.5 million of acquisition-related expenses for the nine months ended September 30, 2023. We also removed $ 24.0 million of interest expense on Durango’s debt for the nine months ended September 30, 2024, and $ 3.9 million and $ 11.1 million for the three and nine months ended September 30, 2023, respectively, as if the business combination had occurred and the debt had been paid off on January 1, 2023. 10 Table of Contents Midstream Infrastructure Assets 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. 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. Acquired net assets from this business combination were included in the Midstream Logistics segment. Goodwill The Company had goodwill of $ 5.1 million recorded in the Midstream Logistic segment related to a past business combination as of September 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 the respective business combination and concluded that goodwill was not impaired as of September 30, 2024. 3. REVENUE RECOGNITION Disaggregation of Revenue The following table presents a disaggregation of the Company’s revenue: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands) Gathering and processing services $ 103,100 $ 104,349 $ 301,710 $ 310,325 Natural gas, NGLs and condensate sales 290,423 221,280 787,092 586,534 Other revenue 2,839 4,672 8,411 10,685 Total revenues $ 396,362 $ 330,301 $ 1,097,213 $ 907,544 There have been no significant changes to the Company’s contracts with customers during the three and nine months ended September 30, 2024 aside from the addition of certain gas gathering and processing agreements associated with the Durango acquisition. The Company did not recognize revenues from MVC deficiency payments for the three and nine months ended September 30, 2024 and recognized $ 0.4 million and $ 1.6 million of revenues from MVC deficiency payments for the three and nine months ended September 30, 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 September 30, 2024: Amount Fiscal Year (In thousands) Remaining of 2024 $ 7,049 2025 71,507 2026 75,387 2027 73,945 2028 72,873 Thereafter 230,750 $ 531,511 11 Table of Contents Our contractually committed revenue, for the purposes of the tabular presentation above, is limited to customer contracts that have fixed pricing and fixed volume terms and conditions, including contracts with payment obligations associated with MVCs. Contract Liabilities The following table provides information about contract liabilities from contracts with customers as of September 30, 2024: Amount (In thousands) Balance at December 31, 2023 $ 32,238 Reclassification of beginning contract liabilities to revenue as a result of performance obligations being satisfied ( 5,182 ) Cash received in advance and not recognized as revenue 997 Balance at September 30, 2024 28,053 Less: Current portion 6,195 Non-current portion $ 21,858 Contract liabilities relate to payments received in advance of satisfying performance obligations under a contract, which result from contribution in aid of construction payments. Current and noncurrent contract liabilities are included in “Other Current Liabilities” and “Contract Liabilities,” respectively, in the Condensed Consolidated Balance Sheets. Contract Cost Assets 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 September 30, 2024 and December 31, 2023, the Company had contract acquisition cost assets of $ 66.2 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, in 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 for the three months ended September 30, 2024 and 2023, respectively, and $ 5.0 million for the nine months ended September 30, 2024 and 2023, respectively. 4. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, at carrying value, is as follows: September 30, December 31, 2024 2023 (In thousands) Gathering, processing, and transmission systems and facilities $ 3,715,716 $ 3,253,539 Vehicles 14,714 11,447 Computers and equipment 7,830 6,242 Less: accumulated depreciation ( 759,280 ) ( 626,223 ) Total depreciable assets, net 2,978,980 2,645,005 Construction in progress 217,637 74,369 Land 30,267 23,853 Total property, plant, and equipment, net $ 3,226,884 $ 2,743,227 The cost of property classified as “Construction in progress” is excluded from capitalized costs being depreciated. These amounts represent property that is not yet available to be placed into productive service as of the respective reporting date. The Company recorded $ 48.7 million and $ 39.4 million of depreciation expense for the three months ended September 30, 2024 and 2023, respectively, and $ 135.3 million and $ 116.6 million for the nine months ended September 30, 2024 and 2023, respectively. There were no impairment triggering events for property, plant and equipment during the three and nine months ended September 30, 2024 and 2023. 12 Table of Contents 5. INTANGIBLE ASSETS, NET Intangible assets, net, are comprised of the following: September 30, December 31, 2024 2023 (In thousands) Customer contracts $ 1,460,287 $ 1,139,665 Right of way assets 199,129 141,711 Less accumulated amortization ( 781,275 ) ( 689,706 ) Total amortizable intangible assets, net $ 878,141 $ 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 terms of the customer contracts, which range from one to seventeen years . 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 September 30, 2024, the remaining weighted average amortization periods for customer contracts and right of way assets were approximately 9.03 years and 6.67 years, respectively. The overall remaining weighted average amortization period for the intangible assets as of September 30, 2024 was approximately 8.69 years. The Company recorded $ 38.9 million and $ 30.6 million of amortization expense for the three months ended September 30, 2024 and 2023, respectively, and $ 100.9 million and $ 91.6 million for the nine months ended September 30, 2024 and 2023, respectively. There was no impairment recognized on intangible assets for the three and nine months ended September 30, 2024 and 2023. 6. EQUITY METHOD INVESTMENTS As of September 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. For each EMI pipeline entity, the Company has the ability to exercise significant influence based on certain governance provisions and its participation in the significant activities and decisions that impact the management and economic performance of the EMI pipeline. The table below presents the ownership percentages and investment balances held by the Company for each entity: September 30, December 31, Ownership (1) 2024 2023 (In thousands) PHP 55.5 % $ 1,623,127 $ 1,666,254 Breviloba 33.0 % 433,193 443,684 Epic Crude Holdings, LP (“EPIC”) (1) 27.5 % 85,627 — Gulf Coast Express Pipeline LLC (“GCX”) (2) — % — 431,051 $ 2,141,947 $ 2,540,989 (1) Investment balance is primarily comprised of the additional 12.5 % interest that was acquired during July 2024. (2) The Company owned 16 % of GCX as of December 31, 2023 and divested entire ownership in June 2024. During the quarter, the Company entered into an Equity Sale and Purchase Agreement with third parties to purchase a 12.5 % equity interest in EPIC, increasing our total equity interest in EPIC to 27.5 %. As the increase in ownership did not result in a controlling interest, and did not represent the funding of prior losses, the Company resumed accounting for its investment in EPIC using the equity method of accounting upon the closing of the acquisition of the additional interests during July 2024. 13 Table of Contents On June 4, 2024, the Company consummated the previously announced transaction contemplated by the Purchase and Sale Agreement dated as of May 9, 2024, 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"), including a $ 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. The Company recognized a net gain of $ 89.8 million for the nine months ended September 30, 2024 in relation to this transaction. The unamortized basis differences included in the EMI pipeline balances were $ 365.7 million and $ 349.3 million as of September 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 or accreted into equity income of unconsolidated affiliates over the useful lives of the underlying pipeline assets. There was capitalized interest of $ 24.1 million and $ 24.7 million as of September 30, 2024 and December 31, 2023, respectively. Capitalized interest is amortized on a straight-line basis into equity income of unconsolidated affiliates. The following table presents the activity in the Company’s EMIs for the nine months ended September 30, 2024: Permian Highway Pipeline LLC Breviloba, LLC EPIC Crude Holdings, LP Gulf Coast Express Pipeline LLC Total (In thousands) Balance at December 31, 2023 $ 1,666,254 $ 443,684 $ — $ 431,051 $ 2,540,989 Contributions and acquisitions 3,273 — 85,417 — 88,690 Distributions (1) ( 177,172 ) ( 33,677 ) — ( 15,610 ) ( 226,459 ) Disposition — — — ( 430,941 ) ( 430,941 ) Equity income, net (2) 130,772 23,186 210 15,500 169,668 Balance at September 30, 2024 $ 1,623,127 $ 433,193 $ 85,627 $ — $ 2,141,947 (1) Distributions consisted of distributions from a return on investment of $ 223.7 million, which was included in cash flows from operating activities and distributions from a return of investment of $ 2.8 million, which was included in cash flows from investing activities. (2) For the nine months ended September 30, 2024, net of amortization and accretion of basis differences and capitalized interests, which represents undistributed earnings, the amortization was $ 5.9 million from PHP, $ 0.5 million from Breviloba, LLC, $ 2.7 million from GCX and accretion of $ 1.6 million from EPIC. Summarized Financial Information The following table represents selected data for the Company’s ongoing EMI pipelines (on a 100 percent basis) for the three and nine months ended September 30, 2024 and 2023. Three Months Ended September 30, 2024 2023 Permian Highway Pipeline LLC Breviloba, LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC EPIC Crude Holdings, LP (In thousands) Revenues $ 127,719 $ 53,929 $ 97,514 $ 99,923 $ 51,002 $ 93,138 Operating income 83,785 27,398 25,052 65,549 25,170 22,521 Net income (loss) 83,783 27,558 ( 5,159 ) 66,630 25,223 ( 11,330 ) Nine Months Ended September 30, 2024 2023 Permian Highway Pipeline LLC Breviloba, LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC EPIC Crude Holdings, LP (In thousands) Revenues $ 380,359 $ 156,326 $ 284,050 $ 291,859 $ 143,544 $ 259,250 Operating income 245,467 74,563 70,631 185,862 69,666 36,148 Net income (loss) 245,016 75,005 ( 29,889 ) 190,662 70,086 ( 62,312 ) 14 Table of Contents 7. DEBT AND FINANCING COSTS 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 $ 0.6 million as of September 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 September 30, 2024, eligible accounts receivable of $ 150.0 million were pledged to the A/R Facility as collateral. 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 yield 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 $ 1.0 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 September 30, 2024 and December 31, 2023: September 30, December 31, 2024 2023 (In thousands) A/R Facility $ 150,000 $ — Total current debt obligations $ 150,000 $ — Unsecured term loan $ 1,000,000 $ 1,200,000 5.875 % senior unsecured notes due 2030 (“2030 Notes”) 1,000,000 1,000,000 6.625 % senior unsecured notes due 2028 (“2028 Notes”) 800,000 800,000 $ 1.25 billion revolving line of credit 507,000 594,000 Total long-term debt 3,307,000 3,594,000 Debt issuance costs, net (1) ( 27,432 ) ( 31,510 ) Unamortized debt premiums and discounts, net 121 319 Total long-term debt, net $ 3,279,689 $ 3,562,809 (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 $ 4.2 million and $ 5.4 million as of September 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. 15 Table of Contents The table below presents the components of the Company’s financing costs, net of capitalized interest: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands) Capitalized interest $ ( 2,955 ) $ ( 6,731 ) $ ( 4,885 ) $ ( 13,775 ) Debt issuance costs 1,916 1,546 5,497 4,601 Interest expense 67,068 50,194 166,933 139,617 Total financing costs, net of capitalized interest $ 66,029 $ 45,009 $ 167,545 $ 130,443 As of September 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 $ 27.4 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 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. 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 September 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 September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, the Revolving Credit Facility has a borrowing base of $ 730.4 million available. Fair Value of Financial Instruments The fair value of the Company and its subsidiaries’ consolidated debt as of September 30, 2024 and December 31, 2023 was $ 3.48 billion and $ 3.57 billion, respectively. On September 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 approximates its carrying value due to its short term nature. 16 Table of Contents 8. ACCRUED EXPENSES The following table provides detail of the Company’s current accrued expenses on September 30, 2024 and December 31, 2023: September 30, December 31, 2024 2023 (In thousands) Accrued product purchases $ 97,635 $ 109,172 Accrued taxes 20,270 632 Accrued salaries, vacation, and related benefits 5,349 1,872 Accrued capital expenditures 13,911 18,534 Accrued interest 34,070 33,760 Accrued other expenses 20,554 13,451 Total accrued expenses $ 191,789 $ 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 September 30, 2024. 9. EQUITY Redeemable Noncontrolling Interest — Common Unit Limited Partners The redemption option of the Common Unit is not legally detachable or separately exercisable from the instrument and is non-transferable; the Common Unit is redeemable at the option of the holder. Therefore, the Common Unit is accounted for as redeemable noncontrolling interest and classified as temporary equity on the Company’s Condensed Consolidated Balance Sheets. During the nine months ended September 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 September 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 $ 4.78 billion, including deferred consideration valued as of September 30, 2024. Common Stock As of September 30, 2024, there were 59.8 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 on July 1, 2025. Share Repurchase Program During the quarter ended September 30, 2024, the Company did not repurchase any of its Class A Common Stock under the Repurchase Program. Dividend On August 7, 2024, the Company made cash dividend payments of $ 118.2 million to holders of Class A Common Stock and Common Units and $ 0.4 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. 17 Table of Contents 10. FAIR VALUE MEASUREMENTS The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023: September 30, 2024 Level 1 Level 2 Level 3 Total (In thousands) Commodity swap $ — $ 7,785 $ — $ 7,785 Interest rate derivatives — 84 — 84 Total assets $ — $ 7,869 $ — $ 7,869 Commodity swaps $ — $ 3,936 $ — $ 3,936 Interest rate derivatives — 3,888 — 3,888 Contingent liability — — 65,400 65,400 Total liabilities $ — $ 7,824 $ 65,400 $ 73,224 December 31, 2023 Level 1 Level 2 Level 3 Total (In thousands) Commodity swap $ — $ 3,663 $ — $ 3,663 Interest rate derivatives — 4,314 — 4,314 Total assets $ — $ 7,977 $ — $ 7,977 Commodity swaps $ — $ 1,749 $ — $ 1,749 Interest rate derivatives — 5,348 — 5,348 Total liabilities $ — $ 7,097 $ — $ 7,097 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 swaps and interest rate derivatives. The Company recorded a contingent liability related to the Kings Landing Earnout using Level 3 inputs, including projected spending and completion probability of the project. Refer to Note 15—Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further discussion related to Kings Landing Earnout contingent liability. Long-term debt’s carrying value can vary from fair value. See Note 7—Debt and Financing Costs in the Notes to Condensed Financial Statements for further information. 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 nine months ended September 30, 2024 and 2023. 11. DERIVATIVES AND HEDGING ACTIVITIES The Company is exposed to certain risks arising from both its business operations and economic conditions, and it enters into certain derivative contracts to manage exposure to these risks. To minimize counterparty credit risk in derivative instruments, the Company enters into transactions with high credit-rating counterparties. The Company did not elect to apply hedge accounting to these derivative contracts and recorded the fair value of the derivatives on the Condensed Consolidated Balance Sheets as of September 30, 2024 and December 31, 2023. 18 Table of Contents 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 is 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. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract. As of September 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 % and one interest rate swap contract with a notional amount of $ 0.08 billion maturing on December 31, 2025 that pays a fixed rate of 3.02 %. 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: September 30, December 31, 2024 2023 (In thousands) Derivatives assets - current $ 76 $ 4,314 Derivative assets - noncurrent 8 — Total derivative assets $ 84 $ 4,314 Derivative liabilities - current $ 3,888 $ — Derivatives liabilities - noncurrent — 5,348 Total derivative liabilities $ 3,888 $ 5,348 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 nine months ended September 30, 2024 and 2023: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands) Realized gain on interest rate swaps $ 3,994 $ 4,665 $ 11,899 $ 7,082 (Unfavorable) favorable fair value adjustment $ ( 8,342 ) $ 12,500 $ 9,129 $ 34,562 Commodity Price Risk The results of the Company’s operations may be affected by the market prices of oil, natural gas and NGLs. A portion of the Company’s revenue is directly tied to local natural gas, natural gas liquids and condensate prices in the Permian Basin and the U.S. Gulf Coast. Fluctuations in commodity prices also impact operating cost elements both directly and indirectly. Management regularly reviews the Company’s potential exposure to commodity price risk and manages exposure of such risk through commodity hedge contracts. During 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 20 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. 19 Table of Contents The following table presents detailed information of commodity swaps outstanding as of September 30, 2024 (in thousands, except volumes): September 30, 2024 Commodity Unit Notional Volume Net Fair Value Natural Gas MMBtus 1,210,000 $ 569 NGL Gallons 312,215,400 917 Crude Bbl 613,000 2,563 Crude Collars Bbl 163,800 937 Crude Basis Spread Swaps Bbl 22,400 ( 9 ) Natural Gas Basis Spread Swaps MMBtus 7,300,000 ( 1,128 ) $ 3,849 The fair value or settlement value of the 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 commodity swaps: September 30, December 31, 2024 2023 (In thousands) Derivatives assets - current $ 6,200 $ 3,498 Derivative assets - noncurrent 1,585 165 Total derivative assets $ 7,785 $ 3,663 Derivative liabilities - current $ 2,855 $ 1,734 Derivatives liabilities - noncurrent 1,081 15 Total derivative liabilities $ 3,936 $ 1,749 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 swap derivatives activities for the three and nine months ended September 30, 2024 and 2023: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands) Realized (loss) gain on commodity swaps $ ( 2,790 ) $ 176 $ ( 20,002 ) $ 8,029 Favorable (unfavorable) fair value adjustment $ 6,027 $ ( 8,083 ) $ ( 18,067 ) $ 6,466 12. SHARE-BASED 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. 20 Table of Contents Class A Shares and Class C Shares The table below summarizes Class A Share and Class C Share activities for the nine months ended September 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 Vested 43,166 31.18 Forfeited 1,592 31.18 Outstanding and unvested shares at September 30, 2024 5,399,730 $ 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 nine months ended September 30, 2024: Three Months Ended Nine Months Ended September 30, 2024 September 30, 2024 (In thousands) Aggregate intrinsic value of vested Class A Shares $ 1,102 $ 1,756 Grant-date fair value of vested Class A Shares $ 834 $ 1,346 No vesting or forfeiture occurred for Class C Shares for the three and nine months ended September 30, 2024 and 2023. No vesting occurred for Class A Shares for the three and nine months ended September 30, 2023. As of September 30, 2024, there were $ 38.8 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 1.16 years. Restricted Stock Units RSUs were granted 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 RSUs activities for the nine months ended September 30, 2024: Number of Shares (1) Weighted Avg Grant-Date Fair Market Value Per Unit (1) Outstanding and unvested shares at December 31, 2023 435,220 $ 31.15 Granted 610,333 35.41 Vested 323,158 34.79 Forfeited 12,565 33.06 Outstanding and unvested shares at September 30, 2024 709,830 $ 33.12 (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 nine months ended September 30, 2024 and 2023. Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands) Aggregate intrinsic value of vested RSUs $ 387 $ 34 $ 11,469 $ 7,340 Grant-date fair value of vested RSUs $ 372 $ 35 $ 11,243 $ 6,827 21 Table of Contents As of September 30, 2024, there were $ 13.0 million of unrecognized compensation costs related to the RSUs. These costs are expected to be recognized over a weighted average period of 1.64 years. Performance Stock Units The Company granted PSUs pursuant to the 2019 Plan to certain of its employees and executives during 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 a three-year performance period. 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 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 nine months ended September 30, 2024: Number of Shares Weighted Avg Grant-Date Fair Market Value Per Unit Granted in 2024 198,703 $ 36.76 Outstanding and unvested shares at September 30, 2024 198,703 $ 36.76 No vesting or forfeiture occurred for PSUs for the three and nine months ended September 30, 2024. The table below presents a summary of the grant-date fair value assumptions used to value the PSUs on grant date: March 2024 Grant-date fair value per unit $ 36.76 Beginning average price $ 32.84 Risk-free interest rate 4.21 % Volatility factor 37 % Expected term 2.82 years As of September 30, 2024, there were $ 5.8 million of unrecognized compensation costs related to the PSUs. These costs are expected to be recognized over a weighted average period of 2.25 years. With respect to above Class A Shares, Class C Shares, RSUs and PSUs, the Company recorded compensation expenses of $ 15.2 million and $ 12.5 million for the three months ended September 30, 2024 and 2023, respectively, and $ 52.9 million and $ 43.3 million for the nine months ended September 30, 2024 and 2023. 13. INCOME TAXES The Company is subject to U.S. federal income tax and state taxes. Income tax expense included in the condensed consolidated financial statements in this Quarterly Report on Form 10-Q is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands) Income before income taxes $ 91,914 $ 44,434 $ 249,270 $ 121,128 Income tax expense $ 8,260 $ 1,303 $ 21,261 $ 2,030 Effective tax rate 8.99 % 2.93 % 8.53 % 1.68 % The effective tax rate for the three and nine months ended September 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. 22 Table of Contents The effective tax rate for the three and nine months ended September 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 September 30, 2023. 14. NET INCOME PER SHARE The computation of basic and diluted net income per share for the periods presented in the condensed consolidated financial statements is shown in the tables below: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (In thousands, except per share amounts) Net income attributable to Class A common shareholders $ 25,763 $ 15,580 $ 74,505 $ 42,030 Less: Net income available to participating unvested restricted Class A common shareholders (1) ( 4,755 ) ( 4,414 ) ( 13,636 ) ( 12,996 ) Total net income attributable to Class A common shareholders $ 21,008 $ 11,166 $ 60,869 $ 29,034 Weighted average shares outstanding - basic 59,811 53,340 59,116 50,464 Dilutive effect of unvested Class A common shares (2) 613 123 736 255 Weighted average shares outstanding - diluted (2)(3) 60,424 53,463 59,852 50,719 Net income available per common share - basic $ 0.35 $ 0.21 $ 1.03 $ 0.58 Net income available per common share - diluted $ 0.35 $ 0.21 $ 1.02 $ 0.57 (1) Represents dividends paid to unvested Class A and Class C Shares, RSUs and PSUs. (2) Includes dilutive effect from both RSUs and PSUs on unvested Class A common shares. (3) The effect of an assumed exchange of outstanding Common Units (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) would have been anti-dilutive for all periods presented in which the Common Units were outstanding. 15. COMMITMENTS AND CONTINGENCIES Accruals for loss contingencies arising from claims, assessments, litigation, environmental and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. As of September 30, 2024 and December 31, 2023, there were no accruals for loss contingencies. Litigation The Company is a party to various legal actions arising in the ordinary course of its business. In accordance with FASB ASC 450, Contingencies , the Company accrues reserves for outstanding lawsuits, claims and proceedings when a loss contingency is probable and can be reasonably estimated. The Company estimates the amount of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage. Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question. There were no litigation-related accrued reserves as of September 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 outstanding vendor credits from another counterparty related to prior litigation the Company had previously entered into and subsequently dropped. These amounts remain outstanding from the Winter Storm Uri during February of 2021. Given the counterparties’ sufficient creditworthiness and the valid claims that we hold, no allowance has currently been established for these items as we have legally enforceable agreements with these parties. 23 Table of Contents Environmental Matters The Company is subject to various local, state, and federal laws and regulations relating to various environmental matters during the ordinary course of business. Although we believe our operations are in substantial compliance with applicable environmental laws and relations, risks of additional costs and liabilities are inherent in our operations. 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 material environmental claims existing as of September 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. Upon Closing, the Company evaluated the earn-out consideration classification in accordance with ASC 480. The Company determined the earn-out consideration to be classified as a liability based on the settlement provision. As of Closing, the Company recorded an initial contingent liability of $ 64.0 million based on the project’s completion probability and projected spend. Pursuant to ASC 805, the Company recorded a subsequent fair value adjustment of $ 1.4 million within “Costs of sales (exclusive of depreciation and amortization)” of the Condensed Consolidated Statement of Operations for the three months ended September 30, 2024. The contingent liability associated with the Kings Landing Project was $ 65.4 million as of September 30, 2024. Permian Gas Acquisition As part of the acquisition of Permian Gas on June 11, 2019, consideration included a contingent liability arrangement with PDC Permian, Inc. (“PDC”). The arrangement requires additional monies to be paid by the Company to PDC on a per Mcf basis if the actual annual Mcf volume amounts exceed forecasted annual Mcf volume amounts starting in 2020 and continuing through 2029. The total monies paid under this arrangement are capped at $ 60.5 million and are payable on an annual basis over the earn-out period. 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 five years ; therefore, the estimated fair value of the contingent consideration liability was nil as of September 30, 2024 and December 31, 2023. 16. SEGMENTS Our two operating segments represent the Company’s segments for which discrete financial information is available and is utilized on a regular basis by our CODM to make key operating decisions, assess performance and allocate resources. These segments represent strategic business units with differing products and services. No operating segments have been aggregated to form the reportable segments. Therefore, our two operating segments represent our reportable segments. The activities of each of our reportable segments from which the Company earns revenues and incurs expenses are described below: • Midstream Logistics: The Midstream Logistics segment operates under three streams, 1) gas gathering, processing and treating, 2) crude oil gathering, stabilization and storage services and 3) produced water gathering and disposal. • Pipeline Transportation: The Pipeline Transportation segment consists of equity investment interests in three Permian Basin pipelines that access various points along the U.S. Gulf Coast, as well as Kinetik NGL and Delaware Link Pipelines. The current operating pipelines transport crude oil, natural gas and NGLs. Our Chief Executive Officer, who is the CODM, uses Segment Adjusted EBITDA, a non-GAAP measure, to measure profitability and allocate resources among segments. Segment Adjusted EBITDA, a non-GAAP measure, is defined as segment net earnings adjusted to exclude interest expense, income tax expense, depreciation and amortization, the proportionate effect of these same items for our EMI pipelines and other non-recurring items. The CODM considers budget-to-actual and forecast-to-actual variances on a monthly basis when making decisions about allocating capital and personnel to the segments. 24 Table of Contents 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 94 % of the ad valorem expenses. The Pipeline Transportation segment contains all of the Company’s equity method investments. Corporate and Other contains the Company’s executive and administrative functions, including 84 % of the Company’s General and Administrative Expenses and all of the Company’s debt service costs. For the three months ended September 30, 2024, the Midstream Logistics segment and the Pipeline Transportation segment represent 65 % and 36 % of total consolidated adjusted EBITDA, respectively, which is consistent with the prior year contributions from each segment. 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 and nine months period ended September 30, 2024 and 2023: Midstream Logistics Pipeline Transportation Corporate and Other (1) Consolidated (In thousands) For the Three Months Ended September 30, 2024 Segment income (loss) before income taxes $ 88,581 $ 88,797 $ ( 85,464 ) $ 91,914 Add back: Interest expense 2,666 — 63,363 66,029 Depreciation and amortization expenses 85,273 2,305 5 87,583 Contract assets amortization 1,655 — — 1,655 Proportionate EMI EBITDA — 88,229 — 88,229 Share-based compensation — — 15,171 15,171 Contingent liabilities fair value adjustment 1,400 — — 1,400 Integration costs 1,208 — 1,332 2,540 Acquisition transaction costs — — 31 31 Other one-time costs or amortization 1,657 — 2,060 3,717 Deduct: Interest income — — 572 572 Commodity hedging unrealized gain 8,817 — — 8,817 Gain on sale of equity method investment — 29,953 — 29,953 Equity income from unconsolidated affiliates — 53,244 — 53,244 Segment Adjusted EBITDA (2) $ 173,623 $ 96,134 $ ( 4,074 ) $ 265,683 25 Table of Contents Midstream Logistics Pipeline Transportation Corporate and Other (1) Consolidated (In thousands) For the Three Months Ended September 30, 2023 Segment income (loss) before income taxes $ 56,584 $ 50,598 $ ( 62,748 ) $ 44,434 Add back: Interest expense 12 — 44,997 45,009 Depreciation and amortization expenses 69,456 473 6 69,935 Contract assets amortization 1,655 — — 1,655 Proportionate EMI EBITDA — 78,585 — 78,585 Share-based compensation — — 12,502 12,502 Loss on disposal of assets 2,927 — — 2,927 Unrealized loss on derivatives 8,259 — — 8,259 Integration costs 21 — — 21 Acquisition transaction costs — — 378 378 Other one-time costs or amortization 1,529 — 1,133 2,662 Warrant valuation adjustment — — 4 4 Deduct: Interest income — — 293 293 Equity income from unconsolidated affiliates — 50,754 — 50,754 Segment Adjusted EBITDA (2) $ 140,443 $ 78,902 $ ( 4,021 ) $ 215,324 Midstream Logistics Pipeline Transportation Corporate and Other (1) Consolidated (In thousands) For the Nine Months Ended September 30, 2024 Segment income (loss) before income taxes $ 215,196 $ 275,246 $ ( 241,172 ) $ 249,270 Add back: Interest expense 5,273 — 162,272 167,545 Depreciation and amortization expenses 229,336 6,897 17 236,250 Contract assets amortization 4,965 — — 4,965 Proportionate EMI EBITDA — 262,553 — 262,553 Share-based compensation — — 52,868 52,868 Loss on disposal of assets 4,090 — — 4,090 Loss on debt extinguishment — — 525 525 Contingent liabilities fair value adjustment 1,400 — — 1,400 Integration costs 1,792 — 3,299 5,091 Acquisition transaction costs — — 3,538 3,538 Other one-time costs or amortization 4,048 — 4,400 8,448 Deduct Other interest income — — 1,459 1,459 Commodity hedging unrealized gain 1,935 — — 1,935 Gain on sale of equity method investment — 89,837 — 89,837 Equity income from unconsolidated affiliates — 169,668 — 169,668 Segment Adjusted EBITDA (2) $ 464,165 $ 285,191 $ ( 15,712 ) $ 733,644 26 Table of Contents Midstream Logistics Pipeline Transportation Corporate and Other (1) Consolidated (In thousands) For the Nine Months Ended September 30, 2023 Segment income (loss) before income taxes $ 163,794 $ 146,524 $ ( 189,190 ) $ 121,128 Add back: Interest expense 32 — 130,411 130,443 Depreciation and amortization expenses 206,855 1,398 18 208,271 Contract assets amortization 4,965 — — 4,965 Proportionate EMI EBITDA — 224,933 — 224,933 Share-based compensation — — 43,340 43,340 Loss on disposal of assets 15,166 — — 15,166 Unrealized loss on derivatives 616 — — 616 Integration costs 29 — 956 985 Acquisition transaction costs 33 — 615 648 Other one-time costs or amortization 5,310 — 2,235 7,545 Deduct: Interest income — — 314 314 Warrant valuation adjustment — — 73 73 Equity income from unconsolidated affiliates — 146,828 — 146,828 Segment Adjusted EBITDA (2) $ 396,800 $ 226,027 $ ( 12,002 ) $ 610,825 (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. Items included here to reconcile operating segments profit and loss with the Company’s consolidated profit and loss. (2) Segment adjusted EBITDA is a non-GAAP measure; 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 and reconciliation to the GAAP measure. The following tables present the revenue for the individual operating segments for the three and nine month period ended September 30, 2024 and 2023: Midstream Logistics Pipeline Transportation Elimination Consolidated (In thousands) For the Three Months Ended September 30, 2024 Revenue $ 391,331 $ 2,192 $ — $ 393,523 Other revenue 2,837 2 — 2,839 Intersegment revenue (1) — 6,748 ( 6,748 ) — Total segment operating revenue $ 394,168 $ 8,942 $ ( 6,748 ) $ 396,362 Midstream Logistics Pipeline Transportation Elimination Consolidated (In thousands) For the Three Months Ended September 30, 2023 Revenue $ 324,863 $ 766 $ — $ 325,629 Other revenue 4,670 2 — 4,672 Total segment operating revenue $ 329,533 $ 768 $ — $ 330,301 27 Table of Contents Midstream Logistics Pipeline Transportation Elimination Consolidated (In thousands) For the Nine Months Ended September 30, 2024 Revenue $ 1,082,236 $ 6,566 $ — $ 1,088,802 Other revenue 8,122 289 — 8,411 Intersegment revenue (1) — 19,288 ( 19,288 ) — Total segment operating revenue $ 1,090,358 $ 26,143 $ ( 19,288 ) $ 1,097,213 Midstream Logistics Pipeline Transportation Elimination Consolidated (In thousands) For the Nine Months Ended September 30, 2023 Revenue $ 894,669 $ 2,190 $ — $ 896,859 Other revenue 10,679 6 — 10,685 Total segment operating revenue $ 905,348 $ 2,196 $ — $ 907,544 (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 September 30, 2024 and December 31, 2023: September 30, December 31, 2024 2023 (In thousands) Midstream Logistics $ 4,323,444 $ 3,772,764 Pipeline Transportation (1) 2,297,544 2,703,588 Segment total assets 6,620,988 6,476,352 Corporate and other 239,473 20,521 Total assets $ 6,860,461 $ 6,496,873 (1) Includes investment in unconsolidated affiliates of $ 2.14 billion and $ 2.54 billion as of September 30, 2024 and December 31, 2023, respectively . 17. SUBSEQUENT EVENTS On October 17, 2024, the Board declared a cash dividend of $ 0.78 per share on the Company’s Class A Common Stock which will be payable to stockholders of record as of October 28, 2024 on November 7, 2024. The Company, through its ownership of the general partner of the Partnership, declared a distribution of $ 0.78 per Common Unit from the Partnership to the holders of Common Units, which will be payable on November 7, 2024. 28 Table of Contents