What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-08 · 304 added, 443 removed, 532 unchanged (58% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(In thousands, except per share data)

12 unchanged sentences

Depreciation and amortization expenses 92,673 73,606

Loss on disposal of assets

— 2,927 4,090 15,166

(Gain) loss on disposal of assets, net

Total operating costs and expenses 423,983 315,293

2 unchanged sentences

Interest and other income 785 91

Loss on debt extinguishment — — ( 525 ) —

Gain on sale of equity method investment 29,953 — 89,837 —

Interest expense ( 55,714 ) ( 47,467 )

12 unchanged sentences

Diluted 61,001 58,392

(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.

(1) Includes amounts associated with related parties of nil and $ 17.2 million for the three months ended March 31, 2025 and 2024, respectively.

(2) Includes amounts associated with related parties of $ 4.7 million and $ 23.3 million for the three months ended March 31, 2025 and 2024, respectively .

(3) Costs of sales (exclusive of depreciation and amortization) is net of gas service fees totaling $ 62.2 million and $ 44.5 million for the three months ended March 31, 2025 and 2024, 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

September 30, December 31,

March 31, December 31,

(In thousands, except shares data)

4 unchanged sentences

Accounts receivable pledged

148,800 140,200

Derivative assets 2,285 2,308

5 unchanged sentences

Derivative asset, non-current 83 65

Deferred tax assets 203,671 235,627

Operating lease right-of-use assets 35,356 29,814

Deferred tax assets 207,729 203,996

Deferred charges and other assets 80,749 76,994

10 unchanged sentences

Current debt obligations

148,800 140,200

Other current liabilities 10,843 35,689

12 unchanged sentences

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

$ 0.0001 par, 1,500,000,000 shares authorized, 60,922,044 and 59,929,611 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

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

$ 0.0001 par, 1,500,000,000 shares authorized, 97,039,202 and 97,783,034 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Deferred consideration

3 unchanged sentences

Total liabilities, noncontrolling interest, and equity $ 7,030,683 $ 6,814,937

(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.

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

6 unchanged sentences

Amortization of contract costs 1,656 1,655

Contingent liabilities fair value adjustment 1,400 —

Distributions from unconsolidated affiliates 63,337 77,213

Derivatives settlement ( 8,103 ) 15,111

Derivative settlement ( 4,714 ) 3,754

Derivative fair value adjustment 22,171 1,957

Warrants fair value adjustment — ( 73 )

Gain on sale of equity method investment

Loss on disposal of assets 4,090 15,166

(Gain) loss on disposal of assets, net ( 40 ) 4,166

Equity in earnings of unconsolidated affiliates ( 57,478 ) ( 60,469 )

Loss on debt extinguishment 525 —

Share-based compensation 20,653 22,561

12 unchanged sentences

Investments in unconsolidated affiliates ( 888 ) ( 3,273 )

Net cash paid for acquisition of interest in unconsolidated affiliate

Distributions from unconsolidated affiliate 560 1,240

Cash proceeds from sale of equity method investment

Cash proceeds from disposals of assets

Net cash paid for acquisition

( 341,183 ) ( 125,000 )

Cash proceeds from disposals 45 251

Net cash paid for acquisitions ( 178,380 ) —

Net cash used in investing activities ( 260,138 ) ( 61,980 )

( 65,909 ) ( 582,600 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from borrowings 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 borrowing under A/R Facility 8,600 —

Proceeds from borrowings from long-term debt 250,000 —

Payments of debt issuance costs, net ( 2,497 ) ( 11 )

Proceeds from debt premium, net 625 —

Proceeds from revolver 388,000 44,000

1 unchanged sentence

Cash dividends paid to Class A Common Stock shareholders ( 46,983 ) ( 38,747 )

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

Distributions paid to Common Unit limited partners ( 76,198 ) ( 721 )

Net cash provided by (used in) financing activities 88,547 ( 86,479 )

Net change in cash 5,239 5,246

CASH, BEGINNING OF PERIOD 3,606 4,510

CASH, END OF PERIOD $ 8,845 $ 9,756

KINETIK HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(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 $ 23,710 $ 57,095

Cash paid for income taxes, net

Property and equipment and intangible accruals in accounts payable and accrued liabilities $ 41,907 $ 20,564

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 $ 390 $ 74,247

Fair value of Durango assets acquired (1)

$ 910,221 $ —

Cash consideration paid

Class C Common Units issued in exchange

Deferred consideration

Contingent consideration

Durango liabilities assumed

(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.

3 unchanged sentences

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 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 )

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)

Deferred Consideration Additional Paid-in Capital Accumulated Deficit Total

Shares Amount Shares Amount Shares (1)

(In thousands)

For the Nine Months Ended September 30, 2023

For the Three Months Ended March 31, 2024

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

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

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

Issuance of common stock through dividend and distribution reinvestment plan — 2,179 — — — — — 74,247 — 74,247

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

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

Share-based compensation — 290 — — — — — 22,561 — 22,561

Net income 23,857 — — — — — — — 11,550 11,550

Change in redemption value of noncontrolling interests 236,358 — — — — — — ( 339,838 ) 103,480 — ( 236,358 )

Change in redemption value of noncontrolling interest 518,581 — — — — — — ( 300,296 ) ( 218,285 ) ( 518,581 )

Recognition of deferred tax asset — — — — — — — 5,750 — 5,750

Distributions paid to Common Unit limited partners ( 70,515 ) — — — — — — — — —

1 unchanged sentence

— — — — — — — — ( 43,200 ) ( 43,200 )

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

For the Three Months Ended March 31, 2025

Balance at December 31, 2024 $ 5,955,662 59,930 $ 6 97,783 $ 9 7,680 $ 1 $ — $ ( 2,976,612 ) $ ( 2,976,596 )

$ 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 ( 40,821 ) 744 — ( 744 ) — — — 40,821 — 40,821

2 unchanged sentences

Net income 13,132 — — — — — — — 6,130 6,130

Change in redemption value of noncontrolling interests 1,268,038 — — — — — — ( 330,196 ) ( 937,842 ) — ( 1,268,038 )

Change in redemption value of noncontrolling interest ( 401,214 ) — — — — — — — 401,214 401,214

Recognition of deferred tax asset — — — — — — 5,102 — 5,102

Distribution paid to Common Unit limited partners ( 214,309 ) — — — — — — — — — —

Distributions paid to Common Unit limited partners ( 76,204 ) — — — — — — — — —

Dividends on Class A Common Stock ($ 0.78 per share)

— — — — — — — — ( 47,367 ) ( 47,367 )

Balance at September 30, 2024 $ 4,783,180 59,751 $ 6 97,783 $ 9 7,680 $ 1 $ — $ ( 1,720,721 ) $ — $ ( 1,720,705 )

Balance at March 31, 2025 $ 5,450,555 60,922 $ 6 97,039 $ 9 7,680 $ 1 $ 66,966 $ ( 2,616,635 ) $ ( 2,549,653 )

(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.

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All intercompany balances and transactions have been eliminated in consolidation.

During the year ended December 31, 2024, the Company adopted ASU 2023-07, S egment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which has required prior periods to reflect the change in presentation.

See Note 2—Summary of Significant Accounting Policies, Recent Accounting Pronouncements in our 2024 Annual Report on Form 10-K for further discussion.

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.

There were no significant updates or revisions to our accounting policies during the three months ended March 31, 2025.

Transactions with related parties

3 unchanged sentences

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.

For the three months ended March 31, 2025, the Company recorded cost of sales of $ 4.7 million with these affiliates.

For the three months ended March 31, 2024, the Company recorded cost of sales of $ 13.9 million 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.

Improvements to Income Tax Disclosures (“ASU 2023-09”).

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.

ASU 2023-09 is effective for the fiscal year 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.

We are evaluating the effects of the amendment 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.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40), Disaggregation of Income Statement Expenses (“ASU 2024-23”).

In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures - Clarifying the Effective Date (“ASU 2025-01”).

ASU 2024-03 and ASU 2025-01 require a public business entity to disclose specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods.

All public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026.

The requirements will be applied prospectively with the option for retrospective application.

Early adoption is permitted.

The Company is currently evaluating the effect that ASU 2024-03 and 2025-01 will have on the disclosures within its Consolidated Financial Statements.

BUSINESS COMBINATIONS

1 unchanged sentence

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.

As of March 31, 2025, our allocations of purchase price for acquisitions made during 2025 and 2024 are detailed below:

Acquisition Date Acquisition Consideration Transferred

Current Assets Property Plant & Equipment Intangible Assets Other Long Term Assets Liabilities Contingent Consideration

(In thousands)

(1) Q1 2025 Barilla Draw

$ 178,380 $ — $ 167,780 $ 10,600 $ 15,652 $ 15,652 $ —

(2) Q2 2024 Durango Permian, LLC $ 781,167 $ 61,171 $ 627,452 $ 183,000 $ 3,621 $ 89,577 $ 4,500

Barilla Draw Acquisition

On January 14, 2025, the Company completed the previously announced bolt-on acquisition with Permian Resources Corporation (“Permian Resources”, or “Seller”), who directly owns all of the issued and outstanding membership interests of (a) RC Permian Gathering, LLC, a Delaware limited liability company (“Permian Interests”) and (b) Barilla Draw Gathering, LLC, a Delaware limited liability company (“Barilla Interests”), to acquire all issued and outstanding Permian Interests and Barilla Interests (the “Barilla Acquisition”) for $ 178.4 million of cash consideration.

Assets acquired consisted of natural gas and crude gathering pipelines and compression of $ 167.8 million, intangible right-of-way assets of $ 10.6 million and operating lease right of use assets of $ 15.7 million.

Acquired gathering pipelines and compression were valued based on replacement cost along with economic obsolescence adjustments.

These assets are depreciated over an estimated useful life of 20 years.

Intangible right-of-way assets were valued based on the across-the-fence method and are amortized over an estimated useful life of seven years .

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

This transaction was accounted for as a business combination in accordance with ASC 805.

Certain data necessary to complete the purchase price allocation is not yet available, including, but not limited to, the completion of the valuation of the underlying

assets and liabilities assumed.

The Company is continuing its review of these matters during the measurement period.

Acquisition-related costs were immaterial for this transaction.

For the three months ended March 31, 2025, Barilla Draw recorded revenues of $ 9.1 million and net income of $ 1.7 million.

Durango Acquisition

On June 24, 2024 (the “Durango Closing Date”), the Company consummated 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 $ 785.7 million (the “Durango Acquisition”).

Durango Seller is 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 reductions based on actual capital costs associated with the Kings Landing Project.

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.

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.

Starting on the Durango 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 Durango 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 Durango Closing Date going forward.

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.

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 29,386

Prepaid and other current assets

Property, plant, and equipment, net 471,429

Intangible assets, net 379,000

Deferred charges and other assets

Operating lease ROU assets

Total assets acquired 910,221

Accounts payable

Accrued expenses

Contract liabilities

Operating lease liabilities

Deferred tax liabilities

Total liabilities assumed 65,053

Contingent consideration (1)

Consideration transferred

(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.

For the three months ended March 31, 2025, Durango recorded revenues of $ 51.6 million and net income of $ 3.8 million.

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

The table below presents the unaudited supplemental pro forma combined financial information for the three months ended March 31, 2024 as if the Durango Acquisition had been completed on January 1, 2023.

Three Months Ended March 31, 2024

(In thousands)

Revenues $ 396,362 $ 410,988 $ 1,210,257 $ 1,138,419

Net income including noncontrolling interest

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.

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.

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.

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

REVENUE RECOGNITION

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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

Three Months Ended March 31,

(In thousands)

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Total revenues $ 443,263 $ 341,394

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.

There have been no significant changes to the Company’s contracts with customers during the three months ended March 31, 2025, aside from the addition of certain gas gathering and processing agreements associated with the Durango Acquisition in 2024.

Contracts with customers acquired through the Durango Acquisition had similar structures to the Company’s existing contracts with customers.

The Company recognized $ 0.3 million in revenues from MVC deficiency payments for the three months ended March 31, 2025.

The Company did no t recognize any revenue from MVC deficiency payments for the three months ended March 31, 2024.

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:

Fiscal Year (In thousands)

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Contract Liabilities

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

The following table provides information about contract liabilities from contracts with customers as of March 31, 2025:

(In thousands)

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Cash received in advance and not recognized as revenue 425

Balance at September 30, 2024 28,053

Balance at March 31, 2025 25,403

Current portion 5,049

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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.

As of March 31, 2025 and December 31, 2024, the Company had contract acquisition cost assets of $ 62.9 million and $ 64.6 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.

The Company recognized costs of sales associated with these assets of $ 1.7 million for the three months ended March 31, 2025 and 2024.

PROPERTY, PLANT AND EQUIPMENT

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

September 30, December 31,

March 31, December 31,

(In thousands)

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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.

The Company recorded $ 62.1 million and $ 42.9 million of depreciation expense for the three months ended March 31, 2025 and 2024, respectively.

There were no impairment triggering events for property, plant and equipment during the three months ended March 31, 2025 and 2024.

INTANGIBLE ASSETS, NET

Intangible assets, net, are comprised of the following:

September 30, December 31,

March 31, December 31,

(In thousands)

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Total amortizable intangible assets, net $ 633,775 $ 652,490

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.

On March 31, 2025, the remaining customer contract amortization terms range from one to seventeen years with weighted average amortization periods of approximately 6.79 years and the right-of-way assets remaining amortization terms range from three months to fourteen years with weighted average amortization periods of approximately 6.57 years.

The overall remaining weighted average amortization period for the intangible assets as of March 31, 2025 was approximately 6.75 years.

The Company recorded $ 30.6 million and $ 30.7 million of amortization expense for the three months ended March 31, 2025 and 2024, respectively.

There was no impairment recognized on intangible assets for the three months ended March 31, 2025 and 2024.

EQUITY METHOD INVESTMENTS

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

As of March 31, 2025, 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:

September 30, December 31,

Ownership (1)

March 31, December 31,

(In thousands)

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$ 2,112,347 $ 2,117,878

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.

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.

The unamortized net basis differences included in the EMI pipeline balances were $ 40.0 million and $ 40.3 million as of March 31, 2025 and December 31, 2024, 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.

There was capitalized interest of $ 23.7 million and $ 23.9 million as of March 31, 2025 and December 31, 2024, 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

The following table presents the activity in the Company’s EMIs for the three months ended March 31, 2025:

Permian Highway Pipeline LLC Breviloba, LLC EPIC Crude Holdings, LP Total

(In thousands)

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Contributions and acquisitions

3,273 — 85,417 — 88,690

Distributions (1)

( 55,837 ) ( 8,060 ) — ( 63,897 )

Disposition — — — ( 430,941 ) ( 430,941 )

Equity income, net (2)

42,427 11,696 3,355 57,478

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.

Balance at March 31, 2025 $ 1,594,801 $ 432,019 $ 85,527 $ 2,112,347

(1) Distributions consisted a return on investment of $ 63.3 million, which was included in cash flows from operating activities and a return of investment of $ 0.6 million, which was included in cash flows from investing activities.

(2) For the three months ended March 31, 2025, net of amortization and accretion 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 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,

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,

The following table represents selected data for the Company’s ongoing EMI pipelines (on a 100 percent basis) for the three months ended March 31, 2025 and 2024.

Three Months Ended March 31,

Permian Highway Pipeline LLC Breviloba, LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC EPIC Crude Holdings, LP

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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,

December 2028 Sustainability-Linked Senior Notes

On March 14, 2025, the Company completed an additional private placement of $ 250.0 million aggregate principal amount of 6.625 % Sustainability-Linked Senior Notes due 2028 (the “New 2028 Notes”) at 101.25 % of par.

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

The aggregate fees and expenses totaling $ 2.5 million paid to third parties to issue the New 2028 Notes and the initial purchasers’ discount of $ 2.5 million were capitalized as debt issuance cost and original debt discount, respectively.

These capitalized costs were included in the Condensed Consolidated Balance Sheets as a direct deduction to the New 2028 Notes.

In addition, original debt premium of $ 3.1 million was added to the New 2028 Notes.

The debt issuance cost and original debt discount are amortized, and the debt premium is accreted to interest expense over the term of the New 2028 Notes using the effective interest method.

The New 2028 Notes were issued as additional notes under the indenture dated as of December 6, 2023, as may be supplemented from time to time (the “Indenture”), pursuant to which the Partnership has previously issued $ 800.0 million aggregate principal amount of 6.625 % Sustainability-Linked Senior Notes due 2028 (the “Existing Notes” and together with the New 2028 Notes, the “2028 Notes”).

The New 2028 Notes and the Existing Notes are treated as a single series of securities under the Indenture and vote together as a single class and the New 2028 Notes have substantially identical terms, other than the issue date, issue price and the first interest payment date, as the Existing Notes.

The following table summarizes the Company’s debt obligations as of March 31, 2025 and December 31, 2024:

March 31, December 31,

(In thousands)

A/R Facility (1)

$ 148,800 $ 140,200

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Unsecured term loan (2)

$ 1,000,000 $ 1,000,000

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

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Total long-term debt, net $ 3,568,457 $ 3,363,996

(1) The effective interest rate was 5.32 % and 5.55 % as of March 31, 2025 and December 31, 2024, respectively.

(2) The effective interest rate was 6.00 % and 6.25 % as of March 31, 2025 and December 31, 2024, respectively.

(3) The weighted average effective interest rate was 6.25 % and 6.43 % as of March 31, 2025 and December 31, 2024, respectively.

(4) 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.

Unamortized debt issuance costs associated with the revolving line of credit were $ 3.4 million and $ 3.8 million as of March 31, 2025 and December 31, 2024, 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

September 30, Nine Months Ended

September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(In thousands)

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Total financing costs, net of capitalized interest $ 55,714 $ 47,467

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.

As of March 31, 2025 and December 31, 2024, unamortized debt issuance costs associated with the 2030 Notes, the 2028 Notes and the Term Loan Credit Facility (as defined herein) were $ 27.4 million and $ 26.2 million, respectively, and unamortized debt premiums and discount, net, associated with the 2028 Notes and the unsecured term loan were $ 0.8 million and $ 0.2 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.

Each of 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.

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.

The A/R Facility contains covenants and restrictive provisions with respect to the Partnership and Kinetik Receivables, LLC, a wholly owned subsidiary of the Partnership (“Kinetik Receivables”) that are customary for accounts receivable securitization facilities.

As of March 31, 2025, 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.

Our obligations with respect to related letters of credit totaled $ 12.6 million as of March 31, 2025 and December 31, 2024.

As of March 31, 2025, the Revolving Credit Facility has a borrowing base of $ 692.4 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.

The fair value of the Company and its subsidiaries’ consolidated debt as of March 31, 2025 and December 31, 2024 was $ 3.74 billion and $ 3.52 billion, respectively.

On March 31, 2025, 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.

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,

The following table provides the Company’s current accrued expenses on March 31, 2025 and December 31, 2024:

March 31, December 31,

(In thousands)

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Total accrued expenses $ 233,725 $ 186,714

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.

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 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.

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”).

During the three months ended March 31, 2025, 0.7 million 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.

There were 97.0 million Common Units and an equal number of Class C Common Stock issued and outstanding as of March 31, 2025 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 $ 5.45 billion, including deferred consideration valued as of March 31, 2025.

As of March 31, 2025, there were 60.9 million and 97.0 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.

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.

During the quarter ended March 31, 2025, the Company did no t repurchase any of its Class A Common Stock under the Repurchase Program.

On February 12, 2025, the Company made cash dividend payments of $ 123.2 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 the same quarter in 2024 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 September 30, 2024 and December 31, 2023:

September 30, 2024

The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024:

March 31, 2025

Level 1 Level 2 Level 3 Total

(In thousands)

Commodity swap $ — $ 7,785 $ — $ 7,785

Interest rate derivatives — 84 — 84

Commodity swaps $ — $ 1,915 $ — $ 1,915

Interest rate swaps — 453 — 453

Total assets $ — $ 2,368 $ — $ 2,368

Commodity swaps $ — $ 28,915 $ — $ 28,915

Interest rate derivatives — 3,888 — 3,888

Interest rate swaps — 485 — 485

Contingent liability

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(In thousands)

Commodity swap $ — $ 3,663 $ — $ 3,663

Interest rate derivatives — 4,314 — 4,314

Commodity swaps $ — $ 1,869 $ — $ 1,869

Interest rate swaps — 504 — 504

Total assets $ — $ 2,373 $ — $ 2,373

Commodity swaps $ — $ 10,742 $ — $ 10,742

Interest rate derivatives — 5,348 — 5,348

Interest rate swaps — 1,206 — 1,206

Contingent liability — — 4,700 4,700

Total liabilities $ — $ 11,948 $ 4,700 $ 16,648

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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.

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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 nine months ended September 30, 2024 and 2023.

There were no transfers between Levels 1, 2 or 3 of the fair value hierarchy during the three months ended March 31, 2025 and 2024.

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 September 30, 2024 and December 31, 2023.

Interest Rate Risk

4 unchanged sentences

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 %.

As of March 31, 2025, the Company had two interest rate swap contracts with total notional amounts of $ 1.70 billion effective on May 1, 2023 and maturing on May 31, 2025 that pay a fixed rate ranging from 4.38 % to 4.48 % and seven interest rate swap contracts with a notional amount of $ 525.0 million maturing on December 31, 2025 that pays a fixed rate ranging from 3.02 % to 4.06 %.

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,

March 31, December 31,

(In thousands)

Derivatives assets - current $ 76 $ 4,314

Derivative assets - noncurrent 8 —

Derivative assets - current

Total derivative assets $ 453 $ 504

Derivative liabilities - current $ 485 $ 1,206

Derivatives liabilities - noncurrent — 5,348

Total derivative liabilities $ 485 $ 1,206

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

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

The following table presents interest rate swap derivative activities for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(In thousands)

Realized gain on interest rate swaps

Realized (loss) gain on interest rate swaps

$ ( 343 ) $ 3,952

(Unfavorable) favorable fair value adjustment

Favorable fair value adjustment

$ 327 $ 13,329

6 unchanged sentences

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.

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

September 30, 2024

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

These contracts are effective over the next 1 to 15 months and are used to hedge against location price risk of the respective commodities 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, 2025 (in thousands, except volumes):

March 31, 2025

Commodity Unit Notional Volume

4 unchanged sentences

Crude Collars Bbl 91,400 311

Crude Basis Spread Swaps

Natural Gas Basis Spread Swaps

MMBtus 19,500,000 ( 5,050 )

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

The fair value or settlement value of the outstanding swaps 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,

March 31, December 31,

(In thousands)

Derivatives assets - current $ 6,200 $ 3,498

Derivative assets - current

$ 1,832 $ 1,804

Derivative assets - noncurrent 83 65

2 unchanged sentences

Derivative liabilities - current $ 26,981 $ 8,805

Derivatives liabilities - noncurrent 1,081 15

Derivative liabilities - noncurrent

Total derivative liabilities

$ 28,915 $ 10,742

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

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

The following table presents commodity swap derivatives activities for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(In thousands)

Realized (loss) gain on commodity swaps

Realized loss on commodity swaps

$ ( 4,371 ) $ ( 198 )

Favorable (unfavorable) fair value adjustment

Unfavorable fair value adjustment

$ ( 22,498 ) $ ( 15,286 )

5 unchanged sentences

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:

The table below summarizes Class A Share and Class C Share activities for the three months ended March 31, 2025:

Number of Shares

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Outstanding and unvested shares at December 31, 2024 5,399,730 $ 28.89

Outstanding and unvested shares at September 30, 2024

2,359,102 31.18

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

Outstanding and unvested shares at March 31, 2025

3,040,628 $ 27.12

The 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, 2025:

Three Months Ended March 31,

(In thousands)

1 unchanged sentence

Grant-date fair value of vested Class A Shares $ 73,545 $ 511

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.

No vesting or forfeiture occurred for Class C Shares for the three months ended March 31, 2025 and 2024.

As of March 31, 2025, there were $ 18.7 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 0.92 years.

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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:

The table below summarizes RSUs activities for the three months ended March 31, 2025:

Number of Shares (1)

3 unchanged sentences

242,294 46.89

Outstanding and unvested shares at September 30, 2024

Outstanding and unvested shares at March 31, 2025

920,981 $ 38.63

(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

The 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, 2025 and 2024.

Three Months Ended March 31,

(In thousands)

1 unchanged sentence

Grant-date fair value of vested RSUs $ 11,335 $ 9,954

As of September 30, 2024, there were $ 13.0 million of unrecognized compensation costs related to the RSUs.

As of March 31, 2025, there were $ 24.4 million of unrecognized compensation costs related to the RSUs.

These costs are expected to be recognized over a weighted average period of 1.78 years.

Performance Stock Units

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

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

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.

3 unchanged sentences

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:

The table below summarizes PSU activities for the three months ended March 31, 2025:

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

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

148,794 $ 42.10

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:

Outstanding and unvested shares at March 31, 2025

347,497 $ 39.05

No vesting or forfeiture occurred for PSUs for the three months ended March 31, 2025 and 2024.

The table below presents a summary of the grant-date fair value assumptions used to value the PSUs granted during 2025:

Grant-date fair value per unit $ 42.10

3 unchanged sentences

Expected term

As of September 30, 2024, there were $ 5.8 million of unrecognized compensation costs related to the PSUs.

As of March 31, 2025, there were $ 11.7 million of unrecognized compensation costs related to the PSUs.

These costs are expected to be recognized over a weighted average period of 2.36 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.

With respect to the above Class A Shares, Class C Shares, RSUs and PSUs, the Company recorded compensation expenses of $ 20.7 million and $ 22.6 million for the three months ended March 31, 2025 and 2024, respectively.

In addition, during the three months ended March 31, 2025, the Company modified certain equity awards in connection with a key employee retiring from the Company.

The modifications allowed for continued vesting of unvested equity awards that would have otherwise been forfeited upon the former employee’s retirement.

As a result of the modification, the Company will recognize $ 2.2 million in additional stock-based compensation cost, which will be amortized over the remaining term of respective equity awards.

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 September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Three Months Ended March 31,

(In thousands)

2 unchanged sentences

Effective tax rate 11.76 % 9.66 %

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.

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.

The effective tax rate for the three months ended March 31, 2025 was lower than the statutory rate, mainly due to the impact of tax attributable to noncontrolling interest related to the Common Unit limited partners.

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 interest related to the Common Unit limited partners.

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

Three Months Ended March 31,

(In thousands, except per share amounts)

7 unchanged sentences

Dilutive effect of unvested Class A common shares (2)

613 123 736 255

Weighted average shares outstanding - diluted (3)

10 unchanged sentences

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.

As of March 31, 2025 and December 31, 2024, 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 September 30, 2024 and December 31, 2023.

There were no litigation-related accrued reserves as of March 31, 2025 and December 31, 2024.

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.

3 unchanged sentences

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.

Although we believe our operations are in substantial compliance with applicable environmental laws and regulations, 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.

As of the Durango Closing Date, the Company has become potentially liable for civil penalties related to excess emission violations of certain gas plants and compressor stations acquired.

The Company recorded an initial liability of $ 24.0 million based on information related to the alleged violations available as of the Durango Closing Date.

The estimated environmental matter-related liability was $ 24.0 million as of March 31, 2025 and December 31, 2024.

The estimated environmental matter-related liability was reclassified as noncurrent liabilities and included in “Other liabilities” in the Condensed Consolidated Balance Sheet as of March 31, 2025 as the Company expects the matter to be settled beyond the next 12 months.

Contingent Liabilities

6 unchanged sentences

As of Closing, the Company recorded an initial contingent liability of $ 4.5 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.

The estimated contingent liability associated with the Kings Landing Project was $ 4.7 million as of March 31, 2025 and December 31, 2024.

Permian Gas Acquisition

2 unchanged sentences

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.

PDC’s actual annual Mcf volume did not exceed the incentive forecast volume during the past five 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 March 31, 2025 and December 31, 2024.

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.

4 unchanged sentences

• 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.

The Midstream Logistics segment operates under three streams, 1) gas gathering and processing, 2) crude oil gathering, stabilization and storage services and 3) produced water gathering and disposal.

• Pipeline Transportation:

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

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

Gulf Coast, Kinetik NGL Pipeline and Delaware Link Pipeline.

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.

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.

Our Chief Executive Officer, who is the CODM, uses segment net income or loss including noncontrolling interest adjusted for interest, taxes, depreciation and amortization, gain or loss on disposal of assets, the proportionate EBITDA from our EMI pipelines, share-based compensation expense, noncash increases and decreases related to commodity hedging activities, integration and transaction costs and extraordinary losses and unusual or non-recurring charges (“Segment Adjusted EBITDA”) to assess performance of each operating segment.

For both segments, the CODM uses Segment Adjusted EBITDA to allocate resources.

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

The Midstream Logistics segment accounts for more than 98 % of the Company’s operating revenues, cost of sales (excluding depreciation and amortization), operating expenses and ad valorem expenses.

The Pipeline Transportation segment contains all of the Company’s equity method investments, which contribute more than 93 % of the segment’s adjusted EBITDA.

Corporate and Other contains the Company’s executive and administrative functions, including 80 % 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:

The Company regularly provides management reports to the CODM that include cost of sales, operating, general and administrative expenses related to the segments, which are all considered to be significant.

Midstream Logistics Pipeline Transportation Corporate and Other (1)

For the three months ended March 31, 2025

(In thousands)

For the Three Months Ended September 30, 2024

Segment income (loss) before income taxes $ 88,581 $ 88,797 $ ( 85,464 ) $ 91,914

Interest expense 2,666 — 63,363 66,029

Depreciation and amortization expenses

Revenue $ 438,025 $ 2,406 $ — $ — $ 440,431

Other revenue 2,830 2 — — 2,832

Intersegment revenue (2)

— 4,804 — ( 4,804 ) —

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

Interest income

Commodity hedging unrealized gain

Total segment operating revenue 440,855 7,212 — ( 4,804 ) 443,263

Costs of sales (excluding depreciation and amortization expense)

( 223,360 ) ( 4 ) — — ( 223,364 )

Gain on sale of equity method investment

Intersegment costs of sales

( 4,804 ) — — 4,804 —

Equity income from unconsolidated affiliates — 53,244 — 53,244

Operating expenses (3)

( 69,909 ) ( 485 ) — — ( 70,394 )

General and administrative expenses ( 7,125 ) ( 372 ) ( 30,095 ) — ( 37,592 )

Proportionate EMI EBITDA — 87,530 — — 87,530

Other segment items (4)

24,541 — 26,033 — 50,574

Segment Adjusted EBITDA (5)

$ 160,198 $ 93,881 $ ( 4,062 ) $ — $ 250,017

Midstream Logistics Pipeline Transportation Corporate and Other (1)

(In thousands)

For the Three Months Ended September 30, 2023

Segment income (loss) before income taxes

Reconciliation of segment adjusted EBITDA to income before income taxes

Segment Adjusted EBITDA (5)

$ 160,198 $ 93,881 $ ( 4,062 ) $ — $ 250,017

Other interest income — — 790 — 790

Equity in earnings of unconsolidated affiliates — 57,478 — — 57,478

Interest expense 28 — 55,686 — 55,714

Depreciation and amortization expenses 90,359 2,308 6 — 92,673

69,456 473 6 69,935

Contract assets amortization

1,656 — — — 1,656

Proportionate EMI EBITDA — 87,530 — — 87,530

Share-based compensation

Loss on disposal of assets 2,927 — — 2,927

Unrealized loss on derivatives 8,259 — — 8,259

— — 20,653 — 20,653

Gain on disposal of assets

( 40 ) — — — ( 40 )

Commodity hedging unrealized loss

18,127 — — — 18,127

Integration costs 2,475 — 1,063 — 3,538

Acquisition transaction costs — — 378 378

Other one-time costs or amortization 2,288 — 4,317 — 6,605

Warrant valuation adjustment — — 4 4

Interest income — — 293 293

Equity income from unconsolidated affiliates — 50,754 — 50,754

Segment Adjusted EBITDA (2)

Income (loss) before income taxes

$ 45,305 $ 61,521 $ ( 84,997 ) $ — $ 21,829

Midstream Logistics Pipeline Transportation Corporate and Other (1)

Elimination Consolidated

For the three months ended March 31, 2024

(In thousands)

For the Nine Months Ended September 30, 2024

Segment income (loss) before income taxes $ 215,196 $ 275,246 $ ( 241,172 ) $ 249,270

Interest expense 5,273 — 162,272 167,545

Depreciation and amortization expenses

Revenue $ 336,688 $ 2,074 $ — $ — $ 338,762

Other revenue 2,630 2 — — 2,632

Intersegment revenue (2)

— 6,215 — ( 6,215 ) —

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

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

Other interest income

Total segment operating revenue 339,318 8,291 — ( 6,215 ) 341,394

Costs of sales (excluding depreciation and amortization expense) ( 153,695 ) 8 — — ( 153,687 )

Intersegment costs of sales

( 6,215 ) — — 6,215 —

Commodity hedging unrealized gain

Operating expenses (3)

( 48,970 ) ( 728 ) — — ( 49,698 )

Gain on sale of equity method investment

General and administrative expenses ( 4,287 ) ( 452 ) ( 29,397 ) — ( 34,136 )

Proportionate EMI EBITDA — 88,402 — — 88,402

Other segment items (4)

16,834 — 24,450 — 41,284

Equity income from unconsolidated affiliates — 169,668 — 169,668

Segment Adjusted EBITDA (5)

$ 142,985 $ 95,521 $ ( 4,947 ) $ — $ 233,559

Midstream Logistics Pipeline Transportation Corporate and Other (1)

(In thousands)

For the Nine Months Ended September 30, 2023

Segment income (loss) before income taxes $ 163,794 $ 146,524 $ ( 189,190 ) $ 121,128

Reconciliation of segment adjusted EBITDA to income before income taxes

Segment Adjusted EBITDA (5)

$ 142,985 $ 95,521 $ ( 4,947 ) $ — $ 233,559

Other interest income — — 577 — 577

Equity in earnings of unconsolidated affiliates — 60,469 — — 60,469

Interest expense 16 — 47,451 — 47,467

Depreciation and amortization expenses 71,310 2,290 6 — 73,606

206,855 1,398 18 208,271

Contract assets amortization 1,655 — — — 1,655

2 unchanged sentences

Loss on disposal of assets 4,166 — — — 4,166

Unrealized loss on derivatives 616 — — 616

Commodity hedging unrealized loss 15,088 — — — 15,088

Integration costs 41 — — — 41

Acquisition transaction costs 33 — 615 648

Other one-time costs or amortization 536 — 1,889 — 2,425

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

Income (loss) before income taxes $ 50,173 $ 65,298 $ ( 76,277 ) $ — $ 39,194

(1) Corporate and Other represents those results that:

(i) are not specifically attributable to a reportable segment;

(i) are not specifically attributable to an operating segment;

(ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense items.

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

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

Intersegment revenue is eliminated at consolidation.

(3) Operating expenses includes ad valorem taxes.

(4) Other segment items include certain other income items, share-based compensation, one-time or nonrecurring cost adjustments related to amortization of contract costs, commodity hedging unrealized loss, integration cost and other one-time cost or amortization.

(5) Segment Adjusted EBITDA is a non-GAAP measure;

1 unchanged sentence

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

The following tables present other segment expenses that are not included in the segment profit measurements above for the three months ended March 31, 2025 and 2024:

Midstream Logistics Pipeline Transportation Corporate and Other (1)

For the three months ended March 31, 2025

(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)

Income tax expenses $ — $ — $ 2,567 $ 2,567

Capital expenditures (3)(4)

$ 81,232 $ 243 $ — $ 81,475

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

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)

For the three months ended March 31, 2024

Income tax expenses $ — $ — $ 3,787 $ 3,787

Capital expenditure (3)(4)

$ 58,627 $ 1,571 $ — $ 60,198

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,

March 31, December 31,

(In thousands)

4 unchanged sentences

Corporate and other (1)

225,990 217,580

Total assets $ 7,030,683 $ 6,814,937

(1) Includes investment in unconsolidated affiliates of $ 2.14 billion and $ 2.54 billion as of September 30, 2024 and December 31, 2023, respectively .

(1) Corporate and Other represents those results that:

(i) are not specifically attributable to an operating segment;

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

(2) Pipeline Transportation includes investment in unconsolidated affiliates of $ 2.11 billion and $ 2.12 billion as of March 31, 2025 and December 31, 2024, respectively.

(3) Excludes capital assets acquired in the Company’s business combination that is included in the Midstream Logistic segment.

See Note 2—Business Combinations in the Notes to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information.

(4) Excludes contributions, acquisition and divestiture of equity interest in the Company’s EMIs included in the Pipeline Transportation segment assets.

See Note 6 —Equity Method Investment s in the Notes to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information.

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.

On April 1, 2025, the Partnership and Kinetik Receivables, entered into an amendment (“Amendment No.

1 to the A/R Facility”) to their accounts receivable securitization facility dated April 2, 2024 (the “A/R Facility” and as amended, the “Amended A/R Facility”).

Pursuant to Amendment No.

1 to the A/R Facility, the facility limit of the A/R Facility was increased to $ 250 million and the scheduled termination date was extended to March 31, 2026.

On April 17, 2025, 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 April 25, 2025 on May 2, 2025.

In May 2025, the Board approved a $ 400 million increase to the previously announced Repurchase Program, pursuant to which we are authorized to repurchase the Company’s Class A Common Stock for an aggregate purchase price of up to $ 500 million.

Repurchases may be made at management’s discretion from time to time, in accordance with applicable securities laws, on the open market or through privately negotiated transactions and may be made pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act.

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