Kinetik Holdings Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED) KINETIK HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, 2025 2024 (In thousands, except per share data) Operating revenues: Service revenue $ 127,926 $ 102,195 Product revenue 312,505 236,567 Other revenue 2,832 2,632 Total operating revenues (1) 443,263 341,394 Operating costs and expenses: Costs of sales (exclusive of depreciation and amortization) (2) (3) 223,364 153,687 Operating expenses 63,603 43,406 Ad valorem taxes 6,791 6,292 General and administrative expenses 37,592 34,136 Depreciation and amortization expenses 92,673 73,606 (Gain) loss on disposal of assets, net ( 40 ) 4,166 Total operating costs and expenses 423,983 315,293 Operating income 19,280 26,101 Other income (expense): Interest and other income 785 91 Interest expense ( 55,714 ) ( 47,467 ) Equity in earnings of unconsolidated affiliates 57,478 60,469 Total other income, net 2,549 13,093 Income before income taxes 21,829 39,194 Income tax expense 2,567 3,787 Net income including noncontrolling interest 19,262 35,407 Net income attributable to Common Unit limited partners 13,132 23,857 Net income attributable to Class A Common Stock Shareholders $ 6,130 $ 11,550 Net income attributable to Class A Common Shareholders, per share Basic $ 0.05 $ 0.12 Diluted $ 0.05 $ 0.12 Weighted-average shares Basic 60,162 57,869 Diluted 61,001 58,392 (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 Table of Contents KINETIK HOLDINGS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, 2025 2024 (In thousands, except shares data) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 8,845 $ 3,606 Accounts receivable, net of allowance for credit losses of $ 1,000 in 2025 and 2024 122,527 111,940 Accounts receivable pledged 148,800 140,200 Derivative assets 2,285 2,308 Prepaid and other current assets 32,541 36,705 314,998 294,759 NONCURRENT ASSETS: Property, plant and equipment, net 3,640,569 3,433,864 Intangible assets, net 633,775 652,490 Derivative asset, non-current 83 65 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 Investments in unconsolidated affiliates 2,112,347 2,117,878 Goodwill 5,077 5,077 6,715,685 6,520,178 Total assets $ 7,030,683 $ 6,814,937 LIABILITIES, NONCONTROLLING INTEREST, AND EQUITY CURRENT LIABILITIES: Accounts payable $ 38,672 $ 27,239 Accrued expenses 233,725 186,714 Derivative liabilities 27,466 10,011 Current portion of operating lease liabilities 15,810 18,701 Current debt obligations 148,800 140,200 Other current liabilities 10,843 35,689 475,316 418,554 NONCURRENT LIABILITIES Long term debt, net 3,568,457 3,363,996 Contract liabilities 20,354 20,985 Operating lease liabilities 20,170 11,490 Derivative liabilities 1,934 1,937 Other liabilities 25,698 2,148 Deferred tax liabilities 17,852 16,761 3,654,465 3,417,317 Total liabilities 4,129,781 3,835,871 COMMITMENTS AND CONTINGENCIES (Note 15) Redeemable noncontrolling interest — Common Unit limited partners 5,450,555 5,955,662 EQUITY: Class A Common Stock: $ 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 6 6 Class C Common Stock: $ 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 9 9 Deferred consideration 1 1 Additional paid-in capital 66,966 — Accumulated deficit ( 2,616,635 ) ( 2,976,612 ) Total equity ( 2,549,653 ) ( 2,976,596 ) Total liabilities, noncontrolling interest, and equity $ 7,030,683 $ 6,814,937 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 2 Table of Contents KINETIK HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 2025 2024 (In thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income including noncontrolling interest $ 19,262 $ 35,407 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization expense 92,673 73,606 Amortization of deferred financing costs 1,972 1,699 Amortization of contract costs 1,656 1,655 Distributions from unconsolidated affiliates 63,337 77,213 Derivative settlement ( 4,714 ) 3,754 Derivative fair value adjustment 22,171 1,957 (Gain) loss on disposal of assets, net ( 40 ) 4,166 Equity in earnings of unconsolidated affiliates ( 57,478 ) ( 60,469 ) Share-based compensation 20,653 22,561 Deferred income taxes 2,460 3,660 Changes in operating assets and liabilities: Accounts receivable and pledged receivable ( 19,187 ) 5,843 Other assets ( 1,886 ) 1,865 Accounts payable ( 7,090 ) ( 20,982 ) Accrued liabilities 19,244 1,756 Other non-current liabilities 23,550 11 Operating leases 247 3 Net cash provided by operating activities 176,830 153,705 CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment expenditures ( 74,546 ) ( 57,975 ) Intangible assets expenditures ( 6,929 ) ( 2,223 ) Investments in unconsolidated affiliates ( 888 ) ( 3,273 ) Distributions from unconsolidated affiliate 560 1,240 Cash proceeds from disposals 45 251 Net cash paid for acquisitions ( 178,380 ) — Net cash used in investing activities ( 260,138 ) ( 61,980 ) CASH FLOWS FROM FINANCING ACTIVITIES: 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 Payments of revolver ( 433,000 ) ( 91,000 ) Cash dividends paid to Class A Common Stock shareholders ( 46,983 ) ( 38,747 ) 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 3 Table of Contents KINETIK HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 2025 2024 (In thousands) SUPPLEMENTAL SCHEDULE OF INVESTING AND FINANCING ACTIVITIES Cash paid for interest, net of amounts capitalized $ 23,710 $ 57,095 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 $ 15,767 $ — Class A Common Stock issued through dividend and distribution reinvestment plan $ 390 $ 74,247 The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 4 Table of Contents KINETIK HOLDINGS INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS (Unaudited) Redeemable Noncontrolling Interest — Common Unit Limited Partners Class A Common Stock Class C Common Stock Class C Common Stock Deferred Consideration Additional Paid-in Capital Accumulated Deficit Total Equity Shares Amount Shares Amount Shares (1) Amount (In thousands) 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 ) 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 Share-based compensation — 290 — — — — — 22,561 — 22,561 Net income 23,857 — — — — — — — 11,550 11,550 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 ) — — — — — — — — — Dividends on Class A Common Stock ($ 0.75 per share) — — — — — — — — ( 43,200 ) ( 43,200 ) 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 ) Redemption of Common Units ( 40,821 ) 744 — ( 744 ) — — — 40,821 — 40,821 Issuance of common stock through dividend and distribution reinvestment plan — 6 — — — — — 390 — 390 Share-based compensation — 242 — — — — — 20,653 — 20,653 Net income 13,132 — — — — — — — 6,130 6,130 Change in redemption value of noncontrolling interest ( 401,214 ) — — — — — — — 401,214 401,214 Recognition of deferred tax asset — — — — — — 5,102 — 5,102 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 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 March 31, 2025 and December 31, 2024. The accompanying notes are an integral part of the Condensed Consolidated Financial Statements. 5 Table of Contents KINETIK HOLDINGS INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) These Condensed Consolidated Financial Statements have been prepared by Kinetik Holdings Inc. (the “Company”), without audit, pursuant to the rules and regulations of the SEC. They reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for interim periods, on a basis consistent with the annual audited financial statements, with the exception of recently adopted accounting pronouncements. All such adjustments are of a normal recurring nature. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with the Company’s audited financial statements and related notes thereto for the year ended December 31, 2024 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 3, 2025 . 1. DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization The Company is a holding company, whose only significant assets are ownership of the non-economic general partner interest and an approximate 39 % limited partner interest in Kinetik Holdings LP, a Delaware limited partnership (the “Partnership”). As the owner of the non-economic general partner interest in the Partnership, the Company is responsible for all operational, management and administrative decisions related to, and consolidates the results of, the Partnership and its subsidiaries. The Company provides comprehensive gathering, produced water disposal, transportation, compression, processing and treating services necessary to bring natural gas, NGLs and crude oil to market. Additionally, the Company owns equity interests in three separate Permian Basin pipeline entities that have access to various markets along the U.S. Gulf Coast. Basis of Presentation The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with GAAP. Certain reclassifications of prior year balances have been made to conform such amounts to the current year’s presentation. These reclassifications have no impact on net income. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year; accordingly, you should read these Condensed Consolidated Financial Statements in conjunction with our Consolidated Financial Statements and related notes included in our 2024 Annual Report on Form 10-K. 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 three months ended March 31, 2025. Transactions with related parties The Company has revenue contracts and incurs cost of sales and operating expenses with Apache Midstream LLC (“Apache”), which owned more than 5 % of the Company’s common stock prior to its secondary offerings completed in December 2023 and March 2024. Pursuant to ASC 850 , Related Party Transactions , Apache was no longer a related party after the completion of its secondary offering in December 2023 as it owned less than 10 % of the Company’s common stock. Pursuant to Regulation S-K, Item 404(a), Apache ceased to be a related party as of March 18, 2024 as it no longer owned any of the Company’s common stock. In 2024, for the period ended March 18, 2024, revenue from Apache was $ 17.2 million, cost of sales was $ 9.4 million and operating expenses were $ 0.2 million. 6 Table of Contents 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 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 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): 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. 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 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. 2. BUSINESS COMBINATIONS For acquired businesses, we recognize the identifiable assets acquired and the liabilities assumed at their estimated fair values on the date of acquisition with any excess purchase price over the fair value of net assets acquired recorded to goodwill. Determining the fair value of these items requires management’s judgment and the utilization of an independent valuation specialist, if applicable, and involves the use of significant estimates and assumptions. 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 7 Table of Contents 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 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. 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 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 $ 414,096 Net income including noncontrolling interest $ 37,228 The unaudited supplemental pro forma financial data is for informational purposes only and is not indicative of future results. 3. REVENUE RECOGNITION Disaggregation of Revenue The following table presents a disaggregation of the Company’s revenue: Three Months Ended March 31, 2025 2024 (In thousands) Gathering and processing services $ 127,926 $ 102,195 Natural gas, NGLs and condensate sales 312,505 236,567 Other revenue 2,832 2,632 Total revenues $ 443,263 $ 341,394 8 Table of Contents 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 March 31, 2025: Amount Fiscal Year (In thousands) Remaining of 2025 $ 40,424 2026 72,548 2027 75,961 2028 74,856 2029 72,225 Thereafter 163,731 $ 499,745 Our contractually committed revenue, for the purposes of the tabular presentation above, is limited to customer contracts that have fixed pricing and fixed volume terms and conditions, including contracts with payment obligations associated with MVCs. Contract Liabilities The following table provides information about contract liabilities from contracts with customers as of March 31, 2025: Amount (In thousands) Balance at December 31, 2024 $ 26,665 Reclassification of beginning contract liabilities to revenue as a result of performance obligations being satisfied ( 1,687 ) Cash received in advance and not recognized as revenue 425 Balance at March 31, 2025 25,403 Less: Current portion 5,049 Non-current portion $ 20,354 Contract liabilities relate to payments received in advance of satisfying performance obligations under a contract, which result from contribution in aid of construction payments. Current and noncurrent contract liabilities are included in “Other Current Liabilities” and “Contract Liabilities,” respectively, in the Condensed Consolidated Balance Sheets. Contract Cost Assets The Company has capitalized certain costs incurred to obtain a contract or additional contract dedicated acreage or volumes that would not have been incurred if the contract or associated acreage and volumes had not been obtained. As of 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 costs of sales associated with these assets of $ 1.7 million for the three months ended March 31, 2025 and 2024. 9 Table of Contents 4. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, at carrying value, is as follows: March 31, December 31, 2025 2024 (In thousands) Gathering, processing, and transmission systems and facilities $ 4,194,065 $ 3,977,825 Vehicles 17,721 15,659 Computers and equipment 11,208 7,872 Less: accumulated depreciation ( 870,114 ) ( 813,371 ) Total depreciable assets, net 3,352,880 3,187,985 Construction in progress 256,894 215,168 Land 30,795 30,711 Total property, plant, and equipment, net $ 3,640,569 $ 3,433,864 The cost of property classified as “Construction in progress” is excluded from capitalized costs being depreciated. These amounts represent property that is not yet available to be placed into productive service as of the respective reporting date. The Company recorded $ 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. 5. INTANGIBLE ASSETS, NET Intangible assets, net, are comprised of the following: March 31, December 31, 2025 2024 (In thousands) Customer contracts $ 1,270,106 $ 1,270,106 Right of way assets 214,194 196,979 Less accumulated amortization ( 850,525 ) ( 814,595 ) Total amortizable intangible assets, net $ 633,775 $ 652,490 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. 10 Table of Contents 6. EQUITY METHOD INVESTMENTS 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. For each EMI pipeline entity, the Company has the ability to exercise significant influence based on certain governance provisions and its participation in the significant activities and decisions that impact the management and economic performance of the EMI pipeline. The table below presents the ownership percentages and investment balances held by the Company for each entity: March 31, December 31, Ownership 2025 2024 (In thousands) PHP 55.5 % $ 1,594,801 $ 1,607,323 Breviloba 33.0 % 432,019 428,383 Epic Crude Holdings, LP (“EPIC”) 27.5 % 85,527 82,172 $ 2,112,347 $ 2,117,878 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 $ 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 three months ended March 31, 2025: Permian Highway Pipeline LLC Breviloba, LLC EPIC Crude Holdings, LP Total (In thousands) Balance at December 31, 2024 $ 1,607,323 $ 428,383 $ 82,172 $ 2,117,878 Contributions and acquisitions 888 — — 888 Distributions (1) ( 55,837 ) ( 8,060 ) — ( 63,897 ) Equity income, net (2) 42,427 11,696 3,355 57,478 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 months ended March 31, 2025 and 2024. Three Months Ended March 31, 2025 2024 Permian Highway Pipeline LLC Breviloba, LLC EPIC Crude Holdings, LP Permian Highway Pipeline LLC Breviloba, LLC EPIC Crude Holdings, LP (In thousands) Revenues $ 128,306 $ 59,492 $ 102,427 $ 126,215 $ 50,958 $ 84,122 Operating income 82,572 31,976 28,555 80,567 25,420 17,535 Net income (loss) 82,649 31,991 6,545 80,159 25,552 ( 16,535 ) 11 Table of Contents 7. DEBT AND FINANCING COSTS 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, 2025 2024 (In thousands) A/R Facility (1) $ 148,800 $ 140,200 Total current debt obligations $ 148,800 $ 140,200 Unsecured term loan (2) $ 1,000,000 $ 1,000,000 5.875 % senior unsecured notes due 2030 (“2030 Notes”) 1,000,000 1,000,000 6.625 % senior unsecured notes due 2028 (“2028 Notes”) 1,050,000 800,000 $ 1.25 billion revolving line of credit (3) 545,000 590,000 Total long-term debt 3,595,000 3,390,000 Debt issuance costs, net (4) ( 27,380 ) ( 26,174 ) Unamortized debt premiums and discounts, net 837 170 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 $ 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 March 31, 2025 2024 (In thousands) Capitalized interest $ ( 3,304 ) $ ( 944 ) Debt issuance costs 1,972 1,699 Interest expense 57,046 46,712 Total financing costs, net of capitalized interest $ 55,714 $ 47,467 12 Table of Contents 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 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, 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 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 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. 8. ACCRUED EXPENSES The following table provides the Company’s current accrued expenses on March 31, 2025 and December 31, 2024: March 31, December 31, 2025 2024 (In thousands) Accrued product purchases $ 143,297 $ 132,439 Accrued taxes 10,202 15,538 Accrued salaries, vacation, and related benefits 4,532 3,111 Accrued capital expenditures 16,411 13,484 Accrued interest 38,794 6,127 Accrued other expenses 20,489 16,015 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 March 31, 2025 and December 31, 2024. 13 Table of Contents 9. EQUITY Redeemable Noncontrolling Interest — Common Unit Limited Partners The redemption option of the Common Unit is not legally detachable or separately exercisable from the instrument and is non-transferable; the Common Unit is redeemable at the option of the holder. Therefore, the Common Unit is accounted for as redeemable noncontrolling interest and classified as temporary equity on the Company’s Condensed Consolidated Balance Sheets. During the 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. Common Stock 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 March 31, 2025, the Company did no t repurchase any of its Class A Common Stock under the Repurchase Program. Dividend 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. 10. FAIR VALUE MEASUREMENTS The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024: March 31, 2025 Level 1 Level 2 Level 3 Total (In thousands) 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 swaps — 485 — 485 Contingent liability — — 4,700 4,700 Total liabilities $ — $ 29,400 $ 4,700 $ 34,100 14 Table of Contents December 31, 2024 Level 1 Level 2 Level 3 Total (In thousands) 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 swaps — 1,206 — 1,206 Contingent liability — — 4,700 4,700 Total liabilities $ — $ 11,948 $ 4,700 $ 16,648 Our derivative contracts consist of interest rate swaps and commodity swaps. The valuation of these derivative contracts involved both observable publicly quoted prices and certain credit valuation inputs that may not be readily observable in the marketplace. As such, derivative contracts are classified as Level 2 in the hierarchy. Refer to Note 11—Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further discussion related to commodity swaps and interest rate derivatives. The Company recorded a contingent liability related to the Kings Landing Earnout using Level 3 inputs, including projected spending and completion probability of the project. Refer to Note 15—Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further discussion related to the Kings Landing Earnout contingent liability. Long-term debt’s carrying value can vary from fair value. See Note 7—Debt and Financing Costs in the Notes to Condensed Financial Statements for further information. The carrying amounts reported on the Condensed Consolidated Balance Sheets for the Company’s remaining financial assets and liabilities approximate fair value due to their short-term nature. There were no transfers between Levels 1, 2 or 3 of the fair value hierarchy during the three months ended March 31, 2025 and 2024. 11. DERIVATIVES AND HEDGING ACTIVITIES The Company is exposed to certain risks arising from both its business operations and economic conditions, and it enters into certain derivative contracts to manage exposure to these risks. To minimize counterparty credit risk in derivative instruments, the Company enters into transactions with high credit-rating counterparties. The Company did not elect to apply hedge accounting to these derivative contracts and recorded the fair value of the derivatives on the Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024. Interest Rate Risk The Company manages market risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and by using derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from activities that result in the payment of future-known and uncertain cash amounts, the value of which is determined by interest rates. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract. As of 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: 15 Table of Contents March 31, December 31, 2025 2024 (In thousands) Derivative assets - current $ 453 $ 504 Total derivative assets $ 453 $ 504 Derivative liabilities - current $ 485 $ 1,206 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” 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, 2025 2024 (In thousands) Realized (loss) gain on interest rate swaps $ ( 343 ) $ 3,952 Favorable fair value adjustment $ 327 $ 13,329 Commodity Price Risk The results of the Company’s operations may be affected by the market prices of oil, natural gas and NGLs. A portion of the Company’s revenue is directly tied to local natural gas, natural gas liquids and condensate prices in the Permian Basin and the U.S. Gulf Coast. Fluctuations in commodity prices also impact operating cost elements both directly and indirectly. Management regularly reviews the Company’s potential exposure to commodity price risk and manages exposure of such risk through commodity hedge contracts. During the past twelve months, the Company entered into multiple commodity swap contracts based on the OPIS NGL Mont Belvieu prices for ethane, propane and butane, the Waha Basis index, the HSC index and the NYMEX West Texas Intermediate Control index. These contracts are for various notional quantities of NGLs, natural gas and crude. Similarly, the Company has entered into various natural gas 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 Net Fair Value Natural Gas MMBtus 900,000 $ ( 607 ) NGL Gallons 376,924,800 ( 22,787 ) Crude Bbl 586,000 1,133 Crude Collars Bbl 91,400 311 Natural Gas Basis Spread Swaps MMBtus 19,500,000 ( 5,050 ) $ ( 27,000 ) 16 Table of Contents 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: March 31, December 31, 2025 2024 (In thousands) Derivative assets - current $ 1,832 $ 1,804 Derivative assets - noncurrent 83 65 Total derivative assets $ 1,915 $ 1,869 Derivative liabilities - current $ 26,981 $ 8,805 Derivative liabilities - noncurrent 1,934 1,937 Total derivative liabilities $ 28,915 $ 10,742 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, 2025 2024 (In thousands) Realized loss on commodity swaps $ ( 4,371 ) $ ( 198 ) Unfavorable fair value adjustment $ ( 22,498 ) $ ( 15,286 ) 12. SHARE-BASED COMPENSATION The Company granted various Class A and Class C Shares, restricted stock units (“RSUs”) and performance stock units (“PSUs”) to members of the Board of Directors (the “Board”) and employees. The Class A Shares and Class C Shares and RSUs are subject to service requirements for vesting and the PSUs have both service requirements and market condition performance requirements for vesting. These units are recorded at grant-date fair value and compensation expense is recognized on a straight‑line or graded straight-line basis over the vesting period within “General and Administrative Expenses” of the Condensed Consolidated Statements of Operations in accordance with FASB ASC 718 , C ompensation - Stock Compensation . Forfeitures are recognized as they occur. Class A Shares and Class C Shares The table below summarizes Class A Share and Class C Share activities for the three months ended March 31, 2025: Number of Shares Weighted Avg Grant-Date Fair Market Value Per Unit Outstanding and unvested shares at December 31, 2024 5,399,730 $ 28.89 Vested 2,359,102 31.18 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, 2025 2024 (In thousands) Aggregate intrinsic value of vested Class A Shares $ 134,139 $ 654 Grant-date fair value of vested Class A Shares $ 73,545 $ 511 17 Table of Contents 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. Restricted Stock Units RSUs were granted to certain executives and employees under the Kinetik Holdings Inc. Amended and Restated 2019 Omnibus Compensation Plan (the “2019 Plan”) with various service vesting requirements. Such RSUs may be settled only for shares of Class A Common Stock on a one -for-one basis, contingent upon continued employment. The table below summarizes RSUs activities for the three months ended March 31, 2025: Number of Shares (1) Weighted Avg Grant-Date Fair Market Value Per Unit (1) Outstanding and unvested shares at December 31, 2024 698,595 $ 33.11 Granted 465,949 51.19 Vested 242,294 46.89 Forfeited 1,269 35.66 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. 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, 2025 2024 (In thousands) Aggregate intrinsic value of vested RSUs $ 12,837 $ 10,148 Grant-date fair value of vested RSUs $ 11,335 $ 9,954 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. These PSUs vest and become earned upon the achievement of certain performance goals based on the Company’s annualized absolute total stockholder return and the Company’s relative total stockholder return as compared to the performance peer group during a three-year performance period. Depending on the results achieved during the three-year performance period, the actual number of Class A Common Stock that a holder of the PSUs earns at the end of the performance period may range from 0 % to 200 % of the target number of PSUs granted. The fair value of the PSUs is determined using a Monte Carlo simulation at the grant date. The Company recognized compensation expense for PSUs on a straight-line basis over the performance period. Any PSU not earned at the end of the performance period will be forfeited. The table below summarizes PSU activities for the three months ended March 31, 2025: Number of Shares Weighted Avg Grant-Date Fair Market Value Per Unit Outstanding and unvested shares at December 31, 2024 198,703 $ 36.76 Granted 148,794 $ 42.10 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. 18 Table of Contents The table below presents a summary of the grant-date fair value assumptions used to value the PSUs granted during 2025: March 2025 Grant-date fair value per unit $ 42.10 Beginning average price $ 55.95 Risk-free interest rate 3.93 % Volatility factor 33 % Expected term 2.82 years 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 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. 13. INCOME TAXES The Company is subject to U.S. federal income tax and state taxes. Income tax expense included in the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q is as follows: Three Months Ended March 31, 2025 2024 (In thousands) Income before income taxes $ 21,829 $ 39,194 Income tax expense $ 2,567 $ 3,787 Effective tax rate 11.76 % 9.66 % 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. 19 Table of Contents 14. NET INCOME PER SHARE The computation of basic and diluted net income per share for the periods presented in the Condensed Consolidated Financial Statements is shown in the tables below: Three Months Ended March 31, 2025 2024 (In thousands, except per share amounts) Net income attributable to Class A common shareholders $ 6,130 $ 11,550 Less: Net income available to participating unvested restricted Class A common shareholders (1) ( 3,362 ) ( 4,394 ) Total net income attributable to Class A common shareholders $ 2,768 $ 7,156 Weighted average shares outstanding - basic 60,162 57,869 Dilutive effect of unvested Class A common shares (2) 839 523 Weighted average shares outstanding - diluted (3) 61,001 58,392 Net income available per common share - basic $ 0.05 $ 0.12 Net income available per common share - diluted $ 0.05 $ 0.12 (1) Represents dividends paid to unvested Class A and Class C Shares, RSUs and PSUs. (2) Includes dilutive effect from both RSUs and PSUs on unvested Class A common shares. (3) The effect of an assumed exchange of outstanding Common Units (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) would have been anti-dilutive for all periods presented in which the Common Units were outstanding. 15. COMMITMENTS AND CONTINGENCIES Accruals for loss contingencies arising from claims, assessments, litigation, environmental and other sources are recorded when it is probable that a liability has been incurred, and the amount can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. As of March 31, 2025 and December 31, 2024, there were no accruals for loss contingencies. Litigation The Company is a party to various legal actions arising in the ordinary course of its business. In accordance with FASB ASC 450, Contingencies , the Company accrues reserves for outstanding lawsuits, claims and proceedings when a loss contingency is probable and can be reasonably estimated. The Company estimates the amount of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage. Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question. There were no litigation-related accrued reserves as of 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. These amounts remain outstanding from the Winter Storm Uri during February of 2021. Given the counterparties’ sufficient creditworthiness and the valid claims that we hold, no allowance has currently been established for these items as we have legally enforceable agreements with these parties. Environmental Matters The Company is subject to various local, state, and federal laws and regulations relating to various environmental matters during the ordinary course of business. Although we believe our operations are in substantial compliance with applicable environmental laws and 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. 20 Table of Contents 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 Durango Acquisition On June 24, 2024, the Company consummated the previously announced Durango Acquisition. Pursuant to the Durango MIPA, Durango Seller is entitled to an earn out of up to $ 75.0 million in cash contingent upon the completion of the Kings Landing Project and placing it into service in Eddy County, New Mexico. This earn out is subject to reduction based on actual capital costs associated with the Kings Landing Project. Upon Closing, the Company evaluated the earn-out consideration classification in accordance with ASC 480. The Company determined the earn-out consideration to be classified as a liability based on the settlement provision. As of Closing, the Company recorded an initial contingent liability of $ 4.5 million based on the project’s completion probability and projected spend. 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 As part of the acquisition of Permian Gas on June 11, 2019, consideration included a contingent liability arrangement with PDC Permian, Inc. (“PDC”). The arrangement requires additional monies to be paid by the Company to PDC on a per Mcf basis if the actual annual Mcf volume amounts exceed forecasted annual Mcf volume amounts starting in 2020 and continuing through 2029. The total monies paid under this arrangement are capped at $ 60.5 million and are payable on an annual basis over the earn-out period. PDC’s actual annual Mcf volume did not exceed the incentive forecast volume during the past 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. 16. SEGMENTS Our two operating segments represent the Company’s segments for which discrete financial information is available and is utilized on a regular basis by our CODM to make key operating decisions, assess performance and allocate resources. These segments represent strategic business units with differing products and services. No operating segments have been aggregated to form the reportable segments. Therefore, our two operating segments represent our reportable segments. The activities of each of our reportable segments from which the Company earns revenues and incurs expenses are described below: • Midstream Logistics: The Midstream Logistics segment operates under three streams, 1) gas gathering 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, 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 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. 21 Table of Contents 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. 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) Elimination Consolidated For the three months ended March 31, 2025 (In thousands) Revenue $ 438,025 $ 2,406 $ — $ — $ 440,431 Other revenue 2,830 2 — — 2,832 Intersegment revenue (2) — 4,804 — ( 4,804 ) — 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 ) Intersegment costs of sales ( 4,804 ) — — 4,804 — 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 Reconciliation of segment adjusted EBITDA to income before income taxes Segment Adjusted EBITDA (5) $ 160,198 $ 93,881 $ ( 4,062 ) $ — $ 250,017 Add back: Other interest income — — 790 — 790 Equity in earnings of unconsolidated affiliates — 57,478 — — 57,478 Deduct: Interest expense 28 — 55,686 — 55,714 Depreciation and amortization expenses 90,359 2,308 6 — 92,673 Contract assets amortization 1,656 — — — 1,656 Proportionate EMI EBITDA — 87,530 — — 87,530 Share-based compensation — — 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 Other one-time costs or amortization 2,288 — 4,317 — 6,605 Income (loss) before income taxes $ 45,305 $ 61,521 $ ( 84,997 ) $ — $ 21,829 22 Table of Contents Midstream Logistics Pipeline Transportation Corporate and Other (1) Elimination Consolidated For the three months ended March 31, 2024 (In thousands) Revenue $ 336,688 $ 2,074 $ — $ — $ 338,762 Other revenue 2,630 2 — — 2,632 Intersegment revenue (2) — 6,215 — ( 6,215 ) — 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 — Operating expenses (3) ( 48,970 ) ( 728 ) — — ( 49,698 ) 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 Segment Adjusted EBITDA (5) $ 142,985 $ 95,521 $ ( 4,947 ) $ — $ 233,559 Reconciliation of segment adjusted EBITDA to income before income taxes Segment Adjusted EBITDA (5) $ 142,985 $ 95,521 $ ( 4,947 ) $ — $ 233,559 Add back: Other interest income — — 577 — 577 Equity in earnings of unconsolidated affiliates — 60,469 — — 60,469 Deduct: Interest expense 16 — 47,451 — 47,467 Depreciation and amortization expenses 71,310 2,290 6 — 73,606 Contract assets amortization 1,655 — — — 1,655 Proportionate EMI EBITDA — 88,402 — — 88,402 Share-based compensation — — 22,561 — 22,561 Loss on disposal of assets 4,166 — — — 4,166 Commodity hedging unrealized loss 15,088 — — — 15,088 Integration costs 41 — — — 41 Other one-time costs or amortization 536 — 1,889 — 2,425 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 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; please see Key Performance Metrics in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q, for a definition and reconciliation to the GAAP measure. 23 Table of Contents 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) Consolidated For the three months ended March 31, 2025 (In thousands) Income tax expenses $ — $ — $ 2,567 $ 2,567 Capital expenditures (3)(4) $ 81,232 $ 243 $ — $ 81,475 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 March 31, December 31, 2025 2024 Total assets (In thousands) Midstream Logistics $ 4,541,372 $ 4,326,954 Pipeline Transportation (2) 2,263,321 2,270,403 Segment total assets 6,804,693 6,597,357 Corporate and other (1) 225,990 217,580 Total assets $ 7,030,683 $ 6,814,937 (1) Corporate and Other represents those results that: (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) 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. 17. SUBSEQUENT EVENTS 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. 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 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. 24 Table of Contents