Item 2. Management’s Discussion and Analysis
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis addresses the results of our operations for the three and nine months ended September 30, 2025, as compared to our results of operations for the same period in 2024. Please read the following discussion of our financial condition and results of operations in conjunction with the financial statements and notes thereto included elsewhere in this report.
Overview
We are an integrated midstream energy company in the Permian Basin providing comprehensive gathering, transportation, compression, processing and treating services. Our core capabilities include a variety of service offerings including natural gas gathering, transportation, compression, treating and processing; NGLs stabilization and transportation; produced water gathering and disposal; and crude oil gathering, stabilization, storage and transportation. Our operations are strategically located in the heart of the Delaware Basin.
Our Operations and Segments
We have two reportable segments with revenue streams from various products and services. The Midstream Logistics segment operates under three revenue streams, 1) gas gathering and processing, 2) crude oil gathering, stabilization and storage services and 3) produced water gathering and disposal. The Pipeline Transportation segment consists of three EMI pipelines originating in the Permian Basin with various access points to the U.S. Gulf Coast, as well as Kinetik NGL and Delaware Link Pipelines. The pipelines transport natural gas, NGLs and crude oil within the Permian Basin and to the U.S. Gulf Coast.
Midstream Logistics
Gas Gathering and Processing. The Midstream Logistics segment provides gas gathering and processing services with over 4,300 miles of low and high-pressure steel pipeline located throughout the Delaware Basin, including over 2,300 miles of gas pipeline acquired through the Durango Acquisition, over 200 miles of gas pipeline acquired through the Barilla Draw Acquisition, and over 630,000 horsepower of compression capacity. Gas processing assets are centralized at eight processing complexes with total cryogenic processing capacity totaling over 2.4 Bcf/d.
Crude Oil Gathering, Stabilization and Storage Services. Crude gathering assets are centralized at the Caprock Stampede Terminal and the Pinnacle Sierra Grande Terminal. The system includes approximately 280 miles of gathering pipeline and 90,000 barrels of crude storage. The crude facilities have connections for takeaway transportation into certain facilities operated by Plains All American Pipeline, L.P.
Water Gathering and Disposal. The system includes approximately 370 miles of gathering pipeline and approximately 580,000 barrels per day of permitted disposal capacity.
Pipeline Transportation
EMI pipelines. The Company owns the following equity interests in three EMI pipelines in the Permian Basin with access to various points along the U.S. Gulf Coast: 1) an approximate 55.5% equity interest in Permian Highway Pipeline LLC (“PHP”), which is operated by Kinder Morgan; 2) 33.0% equity interest in Breviloba, LLC (“Breviloba”), the owner of the Shin Oak NGL Pipeline (“Shin Oak”), which is operated by Enterprise Products Operating LLC; and 3) 27.5% equity interest in Epic Crude Holdings, LP (“EPIC”), which is operated by EPIC Consolidated Operations, LLC.
Kinetik NGL Pipelines. The Kinetik NGL Pipelines consist of approximately 96 miles of NGL pipelines connecting our East Toyah and Pecos complexes to Waha, including our 20-inch Dewpoint pipeline that spans over 40 miles, and our 30 mile, 20-inch Brandywine Pipeline connecting to our Diamond Cryogenic complex. The Kinetik NGL pipeline system has a capacity of approximately 580 MBbl/d.
Delaware Link Pipeline. The Delaware Link Pipeline consists of approximately 40 miles of 30-inch diameter pipeline with an initial capacity of approximately 1.0 Bcf/d that provides additional transportation capacity to Waha.
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Recent Developments
EPIC Sale
On August 30, 2025, Altus Midstream Processing LP, a Delaware limited partnership (“Altus”) and indirect subsidiary of the Company, Kinetik EC Holdco LLC, a Delaware limited liability company and indirect subsidiary of the Company (“Kinetik EC” and, together with Altus, the “Kinetik Sellers”), and, solely for the purposes set forth therein, Kinetik Holdings LP, a subsidiary of the Company, entered into a Purchase and Sale Agreement with Rattler Midstream Operating LLC, a Delaware limited liability company (“Rattler”), Rattler OMOG LLC, a Delaware limited liability company (“Rattler OMOG” together with Rattler, the “Diamondback Sellers” and, the Diamondback Sellers together with the Kinetik Sellers, the “Sellers”), Plains BK Holdco LLC, a Delaware limited liability company (“Buyer”), and, solely for the purposes set forth therein, each of Plains All American Pipeline, L.P., a Delaware limited partnership, and Rattler Midstream LP, a Delaware limited partnership, pursuant to which the Sellers have agreed to sell all of their respective partnership interests in EPIC, collectively representing 55% of the outstanding interests in EPIC, to Buyer for a total purchase price of approximately $1.8 billion (the “EPIC Sale”), consisting of approximately $1.6 billion of cash (subject to customary adjustments, including deductions for outstanding indebtedness) to be paid at closing (the “Purchase Price”) and an additional $192.5 million of contingent cash in the form of an earn out, payable upon the approval by the board of directors of the general partner of EPIC of one or more capital projects that achieve certain capacity expansion criteria (the “Earn Out”).
On October 31, 2025, the Company consummated the EPIC Sale and received $504.2 million of upfront cash consideration in exchange for its 27.5% interest in EPIC. In addition, the Company can receive approximately $96 million attributable to an earn out, payable upon the approval by the board of directors of the general partner of EPIC of one or more capital projects that achieve certain capacity expansion criteria.
Factors Affecting Our Business
Commodity Price Volatility
There has been, and we believe there will continue to be, volatility in commodity prices and in the relationships among NGLs, crude oil and natural gas prices. As a result of uncertainty around global commodity supply and demand, global geopolitical conflicts, foreign and domestic trade policies implemented by the Trump Administration and response thereto, and recent action by OPEC+, global oil and natural gas commodity prices continue to remain volatile. The volatility and uncertainty of natural gas, crude oil and NGL prices impact drilling, completion and other investment decisions by producers and ultimately supply to our systems. In addition, the instability of the international political environment and human and economic hardship resulting from the armed conflicts would have a highly uncertain impact on the U.S. economy, which in turn, might affect our business and operations adversely. Moreover, the impact of tariffs imposed by the Trump Administration and foreign governments is highly uncertain. Our product sales revenue is exposed to commodity price fluctuations. Therefore, commodity price decline and sustained periods of low natural gas, NGL, and condensate prices could have an adverse effect on our product revenue stream. The Company continues to monitor commodity prices closely and may enter into commodity price hedges to mitigate the volatility risk. In addition, the Company, when economically appropriate, enters into fee-based and NGL arbitrage arrangements that insulate the Company from commodity price volatility.
In addition, our business requires access to steel and other materials to construct and maintain our pipelines and other midstream assets. Imposition of, or increase in, tariffs on imports of steel or other materials, as well as corresponding price increases for such materials available domestically, could increase our construction costs and our costs to maintain our assets. The Company continues to monitor costs of materials used for capital expenditure and considers budget-to-actual and forecast-to-actual variances on a monthly basis to mitigate volatility risk. See Part II, Item 1A. Risk Factors for additional discussion.
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Inflation and Interest Rates
The annual rate of inflation in the United States was 3.0% in September 2025 as measured by the Consumer Price Index. In light of the recent economic activity and labor market conditions, the Federal Open Market Committee (the “FOMC”) decided to lower the target range for the federal funds rate to 3.75% - 4.00 % during its meeting in October 2025. During the meeting, the FOMC noted that the economic activity has been expanding at a moderate pace; job gains have slowed, the unemployment rate has edged up but remains low, and inflation has moved up and remains somewhat elevated. The FOMC also noted that it remains attentive to the risks to both sides of its dual mandate, judges that downside risks to employment have risen in recent months and seeks to achieve maximum employment and inflation at the rate of 2.00%. The Company will continue to monitor the FOMC’s monetary policy and interest rate movement. Refer to Note 12—Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for additional discussion regarding our hedging strategies and objectives for interest rate risk.
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Results of Operations
The following table presents the Company’s results of operations for the periods presented:
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 % Change 2025 2024 % Change
(In thousands, except percentages)
Operating revenues:
Service revenue $ 103,338 $ 103,100 — % $ 343,918 $ 301,710 14 %
Product revenue 357,608 290,423 23 % 981,703 787,092 25 %
Other revenue 3,023 2,839 6 % 8,349 8,411 (1 %)
Total operating revenues 463,969 396,362 17 % 1,333,970 1,097,213 22 %
Operating costs and expenses:
Cost of sales (excluding depreciation and amortization) (1)
235,391 144,586 63 % 615,452 444,786 38 %
Operating expenses
76,137 55,804 36 % 207,785 143,278 45 %
Ad valorem taxes 7,099 5,896 20 % 20,449 18,400 11 %
General and administrative expenses 30,096 29,619 2 % 91,932 94,846 (3 %)
Depreciation and amortization expenses 95,409 87,583 9 % 281,845 236,250 19 %
Loss (gain) on disposal of assets, net
50 — 100 % (15) 4,090 (100 %)
Total operating costs and expenses 444,182 323,488 37 % 1,217,448 941,650 29 %
Operating income 19,787 72,874 (73 %) 116,522 155,563 (25 %)
Other income (expense):
Interest and other income 303 1,872 (84 %) 3,820 2,272 68 %
Loss on debt extinguishment — — — % (635) (525) 21 %
Gain on sale of equity method investment
— 29,953 (100 %) — 89,837 (100 %)
Interest expense (61,721) (66,029) (7 %) (173,949) (167,545) 4 %
Equity in earnings of unconsolidated affiliates 58,289 53,244 9 % 174,472 169,668 3 %
Total other (expense) income, net
(3,129) 19,040 (116 %) 3,708 93,707 (96 %)
Income before income taxes 16,658 91,914 (82 %) 120,230 249,270 (52 %)
Income tax expense 1,109 8,260 (87 %) 11,003 21,261 (48 %)
Net income including noncontrolling interest $ 15,549 $ 83,654 (81 %) $ 109,227 $ 228,009 (52 %)
(1) Costs of sales (excluding depreciation and amortization) is net of gas service fees totaling $88.3 million and $60.2 million for the three months ended September 30, 2025 and 2024, respectively, and $224.1 million and $159.4 million for the nine months ended September 30, 2025 and 2024, respectively, for certain volumes, where we act as principal.
NM - Not meaningful
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Three Months Ended September 30, 2025 Compared to Three Months Ended September 30, 2024
Revenues
For the three months ended September 30, 2025, revenue increased by $67.6 million, or 17%, to $464.0 million, compared to $396.4 million for the same period in 2024. The increase was primarily driven by higher product revenues related to higher NGL and condensate volumes sold.
Service
Service revenue for the three months ended September 30, 2025 was flat as compared to the same period in 2024. However, period-over-period gathered and processed gas volumes increased by 307.1 MMcf per day, or 15% and 188.6 MMcf per day, or 11%, respectively. As the total gathered and processed gas volumes where we function as the agent decreased period-over-period, the change in net gas gathering fees presented as revenues were flat versus the expected increase. Of the increase, Durango’s operations accounted for 45.3 MMcf per day and 102.1 MMcf per day of gathered and processed gas volume, respectively. Over 97% of service revenues are included in the Midstream Logistics segment for the three months ended September 30, 2025.
Product revenue
Product revenue for the three months ended September 30, 2025, increased by $67.2 million, or 23%, to $357.6 million, compared to $290.4 million for the same period in 2024, primarily driven by an increase in NGL and condensate volumes sold, partially offset by decreases in natural gas residue volumes sold and NGL and condensate prices. Period-over-period NGL and condensate volumes sold increased 2.4 million barrels, or 22%. The increase in volumes sold was partially offset by decreases in period-over-period NGL and condensate prices of $2.05 per barrel, or 10% and $8.87 per barrel, or 12%, respectively. Period-over-period natural gas residue volumes sold decreased 4.0 million MMBtu, or 21%, partially offset by an increase in natural gas prices of $0.64 per MMBtu, or 67%. Product revenues are included entirely in the Midstream Logistics segment.
Operating Costs and Expenses
Costs of sales (excluding depreciation and amortization)
Cost of sales (excluding depreciation and amortization) primarily consists of purchases of NGLs and natural gas from our producers at contracted market prices to support product sales to other third parties. For the three months ended September 30, 2025, cost of sales increased by $90.8 million, or 63%, to $235.4 million, compared to $144.6 million for the same period in 2024. The increase was primarily driven by the aforementioned period-over-period increases in NGL and condensate volumes sold and higher natural gas residue prices, partially offset by decreases in natural gas volumes sold and NGL and condensate prices. The increase was also driven by a fair value adjustment to the Kings Landing earn out contingent liability of $5.7 million. Costs of sales (excluding depreciation and amortization) is included in the Midstream Logistics segment.
Operating expenses
Operating expenses increased by $20.3 million, or 36%, to $76.1 million for the three months ended September 30, 2025, compared to $55.8 million for the same period in 2024. Of the total increase, $5.5 million was driven by Durango’s operations and the start-up of the Kings Landing plant, and $6.3 million was driven by Barilla Draw operations acquired in January 2025. The remaining increase was primarily driven by increases in utility costs of $8.4 million. Over 99% of operating expenses are included in the Midstream Logistics segment.
Depreciation and amortization expense
Depreciation and amortization expense increased by $7.8 million, or 9% to $95.4 million for the three months ended September 30, 2025, compared to $87.6 million for the same period in 2024. Of the total increase, $2.4 million was from the Barilla Draw Acquisition completed in January 2025. The remaining increase was driven by assets placed into service since the second quarter of 2024.
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Other Income (Expenses)
Gain on sale of equity method investment
The gain on sale of equity method investment decreased by $30.0 million, or 100%, for the three months ended September 30, 2025, compared to the same period in 2024. The decrease was related to the GCX divestiture consummated in the second quarter of 2024 and the related earn out that was realized during the third quarter of 2024.
Income Tax Expense
Income tax expense decreased by $7.2 million, or 87% to $1.1 million for the three months ended September 30, 2025, compared to $8.3 million for the same period in 2024. The decrease is primarily driven by lower income before income taxes for the three months ended September 30, 2025
Nine Months Ended September 30, 2025 Compared to Nine Months Ended September 30, 2024
Revenues
For the nine months ended September 30, 2025, revenue increased by $236.8 million, or 22%, to $1.33 billion, compared to $1.10 billion for the same period in 2024. The increase was primarily driven by higher service and product revenue from the Durango Acquisition completed in June 2024 and the Barilla Draw Acquisition completed in January 2025.
Service revenue
Service revenue for the nine months ended September 30, 2025, increased by $42.2 million, or 14%, to $343.9 million, compared to $301.7 million for the same period in 2024. The increase was primarily driven by higher period-over-period gas gathering fees of $37.4 million. Period-over-period gathered and processed gas volumes increased 376.8 MMcf per day, or 20% and 210.8 MMcf per day, or 13%, respectively. Of the increase, Durango’s operations accounted for 170.4 MMcf per day and 161.0 MMcf per day of gathered and processed gas volume, respectively. Over 97% of service revenues are included in the Midstream Logistics segment for the nine months ended September 30, 2025.
Product revenue
Product revenue for the nine months ended September 30, 2025, increased by $194.6 million, or 25%, to $981.7 million, compared to $787.1 million for the same period in 2024, primarily due to increased NGL and condensate volumes sold and increased natural gas residue prices. Period-over-period NGL and condensate volumes sold increased 9.5 million barrels, or 32%, of which, Durango’s operations accounted for 3.4 million barrels, partially offset by decreases in NGL and condensate prices of $1.53 per barrel, or 7% and $8.70 per barrel, or 12%, respectively. The increase in product revenue was also driven by period-over-period increases in natural gas residue prices of $0.74 per MMBtu, or 58%, partially offset by a decrease in period-over-period natural gas residue volumes sold of 8.3 million MMBtu, or 18%. Product revenues are included entirely in the Midstream Logistics segment.
Operating Costs and Expenses
Costs of sales (excluding depreciation and amortization)
Cost of sales (excluding depreciation and amortization) primarily consists of purchases of NGLs and natural gas from our producers at contracted market prices to support product sales to other third parties. For the nine months ended September 30, 2025, cost of sales increased by $170.7 million, or 38%, to $615.5 million, compared to $444.8 million for the same period in 2024. As discussed above, the increase was primarily driven by period-over-period increases in NGL and condensate volumes sold and higher natural gas residue prices, partially offset by decreases in NGL and condensate prices and natural gas residue volumes sold. The increase was also driven by a fair value adjustment to Kings Landing earn out contingent liability of $5.7 million. Over 100% of cost of sales (excluding depreciation and amortization) is included entirely in the Midstream Logistics segment.
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Operating expenses
Operating expenses increased by $64.5 million, or 45%, to $207.8 million for the nine months ended September 30, 2025, compared to $143.3 million for the same period in 2024. Of the total increase, $33.2 million was driven by Durango’s operations that were acquired in late June 2024, which had a full nine months of operations in 2025 compared to one quarter of operations in the same period in 2024, and $16.0 million was driven by the Barilla Draw operations acquired in January 2025. The remaining increase was primarily driven by increases in utility costs of $14.2 million. Over 99% of operating expenses are included in the Midstream Logistics segment.
Depreciation and amortization expense
Depreciation and amortization expense increased by $45.6 million, or 19%, to $281.8 million for the nine months ended September 30, 2025, compared to $236.3 million for the same period in 2024. Of the total increase, $26.8 million was driven by the Durango Acquisition that was completed in late June 2024 and $7.2 million is from the Barilla Draw Acquisition completed in January 2025. The remaining increase of $11.6 million was driven by assets placed in service since the second quarter of 2024.
Other Income (Expenses)
Gain on sale of equity method investments
Gain on sale of equity method investment decreased by $89.8 million, or 100%, for the nine months ended September 30, 2025, compared to the same period in 2024. The decrease was related to the GCX divestiture, which was consummated in the second quarter of 2024.
Interest expense
Interest expense increased by $6.4 million, or 4%, to $173.9 million for the nine months ended September 30, 2025, compared to $167.5 million for the same period in 2024. The increase in interest expense was primarily driven by a decrease in net realized and unrealized gains on interest rate swaps totaling $8.1 million and an increase in interest expenses of $5.2 million due to higher outstanding debt balances. The increase was partially offset by an increase in capitalized interest of $7.4 million related to the Kings Landing Project. Refer to Note—12 Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements regarding the Company’s strategy in managing interest rate risk.
Income Tax Expense
Income tax expense decreased by $10.3 million, or 48% to $11.0 million for the nine months ended September 30, 2025, compared to $21.3 million for the same period in 2024. The decrease is primarily driven by lower income before income taxes for the nine months ended September 30, 2025.
Key Performance Metrics
Adjusted EBITDA
Adjusted EBITDA is defined as net income including noncontrolling interest adjusted for interest, taxes, depreciation and amortization, gain or loss on disposal of assets and debt extinguishment, the proportionate EBITDA from our EMI pipelines, equity income and gain from sale of investments recorded using the equity method, share-based compensation expense, noncash increases and decreases related to commodity hedging activities, fair value adjustments to contingent liabilities, integration and transaction costs and extraordinary losses and unusual or non-recurring charges. Adjusted EBITDA provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.
We believe that Adjusted EBITDA provides a meaningful understanding of certain aspects of earnings before the impact of investing and financing charges and income taxes. Adjusted EBITDA is useful to an investor in evaluating our performance because this measure:
• is widely used by analysts, investors and competitors to measure a company’s operating performance;
• is a financial measurement that is used by rating agencies and other parties to evaluate our credit worthiness; and
• is used by our management for various purposes, including as a basis for strategic planning and forecasting.
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Adjusted EBITDA is not defined in GAAP
The GAAP measure used by the Company that is most directly comparable to Adjusted EBITDA is net income including noncontrolling interest. Adjusted EBITDA should not be considered as an alternative to the GAAP measure of net income including noncontrolling interest or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income including noncontrolling interest. Adjusted EBITDA should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. The Company’s definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies in the industry, thereby diminishing its utility.
Reconciliation of non-GAAP financial measure
Company management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable GAAP measure, understanding the differences between Adjusted EBITDA as compared to net income including noncontrolling interest, and incorporating this knowledge into its decision-making processes. Management believes that investors benefit from having access to the same financial measure that the Company uses in evaluating operating results.
The following table presents a reconciliation of the GAAP financial measure of net income including noncontrolling interest to the non-GAAP financial measure of Adjusted EBITDA.
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 % Change 2025 2024 % Change
(In thousands, except percentages)
Reconciliation of net income including noncontrolling interest to Adjusted EBITDA
Net income including noncontrolling interest $ 15,549 $ 83,654 (81 %) $ 109,227 $ 228,009 (52 %)
Add back:
Interest expense 61,721 66,029 (7 %) 173,949 167,545 4 %
Income tax expense 1,109 8,260 (87 %) 11,003 21,261 (48 %)
Depreciation and amortization expenses
95,409 87,583 9 % 281,845 236,250 19 %
Amortization of contract costs 1,744 1,655 5 % 5,054 4,965 2 %
Proportionate EMI EBITDA 87,715 88,229 (1 %) 263,345 262,553 — %
Share-based compensation 14,229 15,171 (6 %) 44,577 52,868 (16 %)
Loss (gain) on disposal of assets, net
50 — 100 % (15) 4,090 (100 %)
Loss on debt extinguishment — — — % 635 525 21 %
Commodity hedging unrealized loss
6,485 — 100 % — — — %
Contingent liability fair value adjustment
5,700 1,400 NM 5,700 1,400 NM
Integration costs
6,650 2,540 162 % 12,621 5,091 148 %
Acquisition / divestiture transaction costs
812 31 NM 812 3,538 (77 %)
Other one-time cost or amortization 3,916 3,717 5 % 15,708 8,448 86 %
Deduct:
Interest income 166 572 (71 %) 1,274 1,459 (13 %)
Commodity hedging unrealized gain — 8,817 (100 %) 13,131 1,935 NM
Gain on sale of equity method investment
— 29,953 (100 %) — 89,837 (100 %)
Equity in earnings of unconsolidated affiliates
58,289 53,244 9 % 174,472 169,668 3 %
Adjusted EBITDA $ 242,634 $ 265,683 (9 %) $ 735,584 $ 733,644 — %
NM - not meaningful
For the three months ended September 30, 2025, Adjusted EBITDA decreased by $23.0 million, or 9%, to $242.6 million, compared to $265.7 million for the same period in 2024. As discussed in Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Quarterly Report, the decrease was primarily driven by increased cost of sales (excluding depreciation and amortization), operating expenses, ad valorem taxes and general and administrative expense totaling $112.8 million, partially offset by an increase in operating revenue of $67.6 million. Further offsetting the increases in expenses were period over period net changes in unrealized gain / loss in commodity hedging activities of $15.3 million, and higher fair value adjustments to contingent liabilities of $4.3 million.
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Adjusted EBITDA increased by $1.9 million, to $735.6 million for the nine months ended September 30, 2025, compared to $733.6 million for the same period in 2024. As discussed in Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Quarterly Report Form 10-Q, the increase was due to increased total operating revenue of $236.8 million, offset by increased cost of sales (excluding depreciation and amortization), operating expenses, ad valorem taxes and general and administrative expenses totaling $234.3 million. The increase was also driven by increases related to integration, transaction and other one-time costs or amortization of $12.1 million and higher fair value adjustments to contingent liabilities of $4.3 million, partially offset by a decrease in stock based compensation of $8.3 million and an increase in unrealized gain in commodity hedging activities of $11.2 million.
Segment Adjusted EBITDA
Segment Adjusted EBITDA is defined as segment net income or loss including noncontrolling interest adjusted for interest, taxes, depreciation and amortization, gain or loss on disposal of assets and debt extinguishment, the proportionate EBITDA from our EMI pipelines, equity income and gain from sale of investments recorded using the equity method, 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. The following table presents Segment Adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024. Also refer to Note 17—Segments in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for a reconciliation of Segment Adjusted EBITDA to net income before income taxes.
Three Months Ended September 30, Nine Months Ended September 30,
2025 2024 % Change 2025 2024 % Change
(In thousands, except percentages)
Midstream Logistics $ 151,358 $ 173,623 (13 %) $ 462,763 $ 464,165 — %
Pipeline Transportation 95,454 96,134 (1 %) 286,104 285,191 — %
Corporate and Other (1)
(4,178) (4,074) 3 % (13,283) (15,712) (15 %)
Total Segment Adjusted EBITDA
$ 242,634 $ 265,683 (9 %) $ 735,584 $ 733,644 — %
(1) Corporate and Other represents those results that: (i) are not specifically attributable to a reportable segment; (ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense items.
Midstream Logistics Segment Adjusted EBITDA decreased by $22.3 million, or 13%, to $151.4 million for the three months ended September 30, 2025, compared to $173.6 million for the same period in 2024. The decrease was primarily due to increased cost of sales (excluding depreciation and amortization), operating expenses, ad valorem taxes and general and administrative expenses of $111.9 million, partially offset by an increase in total operating revenue of $67.5 million. Further offsetting the increases in expenses were period over period net changes in unrealized gain / loss in commodity hedging activities of $15.3 million, and higher fair value adjustments to contingent liabilities of $4.3 million. The reasons for the fluctuations are discussed in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Quarterly Report on Form 10-Q.
Midstream Logistics Segment Adjusted EBITDA decreased by $1.4 million, to $462.8 million for the nine months ended September 30, 2025, compared to $464.2 million for the same period in 2024. The decrease was primarily due to increased cost of sales (excluding depreciation and amortization), operating expenses, ad valorem taxes and general and administrative expenses of $241.6 million, partially offset by increased total operating revenue of $236.4 million. Further offsetting the increases in expenses were higher fair value adjustments to contingent liabilities fair of $4.3 million and higher integration, transaction and other one-time costs or amortization of $8.9 million, partially offset by an increase in unrealized gains in commodity hedging activities of $11.2 million. The reasons for the fluctuations are discussed in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Quarterly Report on Form 10-Q.
Pipeline Transportation Segment Adjusted EBITDA was $95.5 million and $286.1 million for the three and nine months ended September 30, 2025, respectively, which were consistent with the corresponding 2024 periods.
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Contractual Obligations
We have contractual obligations for principal and interest payments on our 2028 Notes, 2030 Notes, and under the Term Loan Credit Agreement, the Revolving Credit Agreement and the Amended A/R Facility. See Note 7 —Debt and Financing Costs in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
Under certain clauses of our transportation services agreements with third party pipelines to transport natural gas and NGLs, if we fail to ship a minimum throughput volume, then we will pay certain deficiency payments for transportation based on the volume shortfall up to the MVC amount.
Liquidity and Capital Resources
The Company’s primary use of capital since inception has been for the initial construction of gathering and processing assets, as well as the acquisition of businesses and EMI pipelines and associated subsequent construction costs. For 2025, the Company’s primary spending requirements are related to business acquisitions and other budgeted capital expenditures for the construction and maintenance of gathering and processing assets, the Company’s contractual debt obligations, quarterly cash dividends and repurchases of its Class A Common Stock pursuant to the Repurchase Program from time to time.
During the nine months ended September 30, 2025, the Company’s primary sources of cash were distributions from the EMI pipelines, borrowings under the revolving credit facility and A/R Facility, and cash generated from operations. Based on the Company’s current financial plan, the Company believes that cash from operations and distributions from the EMI pipelines and remaining borrowing capacity on our credit facilities will generate cash flows in excess of capital expenditures and the amount required to fund the Company’s planned quarterly dividend over the next 12 months. The following table presents a summary of the Company’s key liquidity indicators at the dates presented:
Liquidity
September 30, 2025
(In thousands)
Total Capacity Outstanding Borrowings Letters of Credit
Available Borrowing Capacity
A/R Facility $ 250,000 $ 178,600 $ — $ 71,400
Revolving Line of Credit 1,600,000 783,000 12,600 804,400
Total $ 1,850,000 $ 961,600 $ 12,600 $ 875,800
Cash and cash equivalents 7,737
Total liquidity $ 883,537
December 31, 2024
(In thousands)
Total Capacity Outstanding Borrowings Letters of Credit
Available Borrowing Capacity
A/R Facility $ 150,000 $ 140,200 $ — $ 9,800
Revolving Line of Credit 1,250,000 590,000 12,600 647,400
Total $ 1,400,000 $ 730,200 $ 12,600 $ 657,200
Cash and cash equivalents 3,606
Total liquidity $ 660,806
Long-term Financing
From time to time, we issue long-term debt. Our senior unsecured notes are fixed rate borrowings; however, we have some exposure to the risk of changes in interest rates, primarily as a result of the variable rate borrowings under the term loan, revolving credit facilities and the A/R Facility. We use interest rate swaps to mitigate the impact of changes in interest rates on cash flows. See Note 12—Derivatives and Hedging Activities in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report for detailed discussion.
As of September 30, 2025, we had $1.05 billion of our 6.625% senior unsecured notes due 2028 and $1.00 billion of our 5.875% senior unsecured notes due 2030 outstanding.
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On May 30, 2025, the Partnership entered into the Term Loan Credit Agreement. The proceeds were used to repay and terminate the 2022 Term Loan Credit Agreement. As of September 30, 2025, we had an outstanding borrowing of $1.15 billion under the Term Loan Credit Agreement.
Revolving Credit Agreement
On May 30, 2025, the Partnership entered into the Revolving Credit Agreement. The Revolving Credit Agreement provides for a $1.60 billion senior unsecured revolving credit facility, which includes a $200.0 million sublimit for the issuance of letters of credit, and a $300.0 million sublimit for swingline loans.
All borrowings under the Revolving Credit Agreement mature on May 30, 2030, unless such maturity date is adjusted in accordance with the Revolving Credit Agreement. As of September 30, 2025, we had an outstanding borrowing of $783.0 million and remaining borrowing capacity of $804.4 million.
A/R Facility
On April 1, 2025, the Partnership entered into an amendment to its A/R Facility to, among other things, increase the facility limit to $250.0 million and extend the scheduled termination date to March 31, 2026. As of September 30, 2025, we had an outstanding borrowing of $178.6 million and remaining borrowing capacity of $71.4 million.
Capital Requirements and Expenditures
Our operations can be capital intensive, requiring investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational regulations. During the nine months ended September 30, 2025 and 2024, capital spending for property, plant and equipment totaled $358.4 million and $155.8 million, respectively, intangible asset purchases totaled $30.9 million and $7.7 million, respectively, and contributions to EMI totaled $1.2 million and $3.3 million, respectively. The increase in capital spending was mainly related to the Kings Landing Project, which was completed in the third quarter of 2025. Management believes its existing gathering, processing and transmission infrastructure capacity and future planned projects are capable of fulfilling its midstream contracts to service its customers.
The Company anticipates its existing capital resources will be sufficient to fund future capital expenditures for EMI pipelines and the Company’s existing infrastructure assets over the next 12 months. For further information on EMIs, refer to Note 6—Equity Method Investments in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
Cash Flow
The following tables present cash flows from operating, investing and financing activities during the periods presented:
Nine Months Ended September 30,
2025 2024
(In thousands)
Cash provided by operating activities $ 494,030 $ 493,356
Cash used in investing activities
$ (562,930) $ (65,909)
Cash provided by (used in) financing activities
$ 73,031 $ (411,519)
Operating activities . Net cash provided by operating activities increased by $0.7 million for the nine months ended September 30, 2025, compared with the same period in 2024. The change in the operating cash flows reflected (i) a decrease in net income including noncontrolling interest of $118.8 million; (ii) an increase in adjustments related to non-cash items of $80.8 million, which was mainly driven by a decrease in gain related to sale of equity method investment of $89.8 million and an increase in depreciation and amortization expense of $45.6 million, partially offset by a decrease in distributions from unconsolidated affiliates of $18.5 million, and a favorable derivative fair value adjustment of $14.4 million compared to an unfavorable derivative fair value adjustment of $8.9 million in the same period in 2024; and (iii) an increase in working capital of $38.6 million.
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Investing activities . Net cash used in investing activities increased by $497.0 million for the nine months ended September 30, 2025 to $562.9 million, compared to $65.9 million used in the same period in 2024. The increase was primarily driven by proceeds from the sale of GCX in 2024 that totaled $524.4 million and offset almost all of 2024’s capital investment expenditures. Additionally, we incurred higher capital spending for property, plant and equipment of $202.5 million and intangible assets of $23.1 million, mainly related to the Kings Landing Project, partially offset by a decrease in cash used in business and EMI acquisitions of $251.1 million.
Financing activities . Net cash provided by financing activities was $73.0 million for the nine months ended September 30, 2025, which was primarily comprised of net proceeds from the issuance of long-term debt, revolving credit facility and A/R Facility of $619.3 million, partially offset by cash dividends of $373.8 million paid to the holders of Class A Common Stock and Common Units and cash paid to repurchase Class A Common Stock totaling $172.6 million, compared with net cash used in financing activities of $411.5 million for the nine months ended September 30, 2024, which was primarily comprised of net payments to the Company’s long-term debt, revolving credit facility and A/R Facility of $138.6 million and cash dividends of $272.9 million paid to the holders of Class A Common Stock and Common Units.
Dividend
During the nine months ended September 30, 2025, the Company made cash dividend payments of $373.8 million to holders of Class A Common Stock and Common Units and $1.1 million was reinvested in shares of Class A Common Stock by the Reinvestment Holders.
On October 15, 2025, the Board declared a cash dividend of $0.78 per share on the Company’s Class A Common Stock which became payable to stockholders on October 31, 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 became payable on October 31, 2025. As described in these Condensed Consolidated Financial Statements, as the context requires, dividends paid to holders of Class A Common Stock and distributions paid to holders of Common Units may be referred to collectively as “dividends.”
Share Repurchase Program
In February 2023, the Board approved a share repurchase program (“Repurchase Program”), authorizing discretionary purchases of the Company’s Class A Common Stock up to $100 million in the aggregate. 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. Privately negotiated repurchases from affiliates are also authorized under the Repurchase Program, subject to such affiliates’ interest and other limitations. The repurchases will depend on market conditions and may be discontinued at any time without prior notice.
During the three and nine months ended September 30, 2025, the Company repurchased 2.4 million shares at a total cost of $100.0 million and 4.0 million shares at a total cost of 172.6 million, respectively. Furthermore, during the third quarter of 2025, the Company retired the entirety of the 4.0 million shares held as treasury stock. There was $321.7 million available under the Repurchase Program as of September 30, 2025.
Off-Balance Sheet Arrangements
As of September 30, 2025, there were no off-balance sheet arrangements.
Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies and estimates from those disclosed on our Annual Report on Form 10-K for the year ended December 31, 2024. Please refer to information regarding our critical accounting policies and estimates included in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Commission on March 3, 2025.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.