Kinetik Holdings Inc.

11/05/2026 | Press release | Distributed by Public on 11/05/2026 16:21

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

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, 2026, as compared to our results of operations for the same period in 2025. 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 operations are strategically located in the heart of the Delaware Basin in the Permian, one of the fastest growing oil and gas development regions in the world. Our core capabilities include a variety of service offerings including natural gas gathering, transportation, compression, treating and processing; NGL stabilization and transportation; produced water gathering and disposal; and crude oil gathering, stabilization, storage and transportation.
Our Operations and Segments
We operate through two reportable segments that generate revenue 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 two EMI pipelines originating in the Permian Basin that provide various access points to the U.S. Gulf Coast and Mexico markets, along with the Kinetik NGL Pipelines, the Brandywine Pipeline, the Delaware Link Pipeline and ECCC Pipeline assets. The pipelines transport natural gas and NGLs 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 and over 825,000 horsepower of compression capacity. Gas processing assets are centralized at eight processing complexes with total cryogenic processing capacity totaling over 2.4 Bcf/d. In addition, the Midstream Logistics segment provides system-wide amine treating and 6.5 MMcf/d of acid gas injection capacity.
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 290 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. Over 50 miles of gathering pipeline were added to our crude gathering assets through the Barilla Draw Acquisition, which closed in January 2025.
Water Gathering and Disposal. The system includes approximately 370 miles of gathering pipeline and approximately 610,000 barrels per day of permitted disposal capacity.
Pipeline Transportation
EMI pipelines. The Company owns the following equity interests in two 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 PHP, which is operated by Kinder Morgan; and 2) a 33.0% equity interest in Breviloba, the owner of the Shin Oak pipeline, which is operated by Enterprise Products Operating LLC.
Kinetik NGL Pipeline System. The Kinetik NGL Pipeline System consists of over 100 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 28-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.
Recent Developments
ECCC Pipeline
Construction of the ECCC Pipeline was completed and the pipeline was placed into service in June 2026. The ECCC Pipeline establishes a connection between Eddy County, New Mexico and Culberson County, Texas, and provides approximately 150 MMcf/d of initial rich gas throughput capacity.
Amendment to A/R Facility
On March 31, 2026, the Partnership executed Amendment No. 2 to its Amended A/R Facility, with PNC Bank. Pursuant to this amendment, the facility limit was reduced to $225.0 million, and the scheduled termination date was extended to March 30, 2027. Furthermore, Amendment No. 2 introduced an option permitting Kinetik Receivables LLC to request an increase in commitments of up to $50.0 million in aggregate, subject to the PNC Bank's approval. Amendment No. 2 also removed all sustainability-linked pricing provisions from the A/R Facility, including the sustainability rate adjustment, sustainability fee adjustment and related reporting obligations.
On October 30, 2026, Kinetik Receivables LLC requested an increase of commitments pursuant to Amendment No. 2 to the Receivable Purchase Agreement, originally dated as of April 2, 2024, by $50.0 million. After giving effect to such request, the aggregate commitments under the Amended A/R Facility increased to $275.0 million.
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,
2026 2025 % Change 2026 2025 % Change
(In thousands, except percentages)
Operating revenues:
Service revenue $ 116,576 $ 103,338 13 % $ 297,239 $ 343,918 (14 %)
Product revenue 447,923 357,608 25 % 1,250,956 981,703 27 %
Other revenue 4,902 3,023 62 % 12,622 8,349 51 %
Total operating revenues 569,401 463,969 23 % 1,560,817 1,333,970 17 %
Operating costs and expenses:
Cost of sales (excluding depreciation and amortization) (1)
300,330 235,391 28 % 726,646 615,452 18 %
Operating expenses
71,634 76,137 (6 %) 213,857 207,785 3 %
Ad valorem taxes 7,524 7,099 6 % 24,692 20,449 21 %
General and administrative expenses 22,379 30,096 (26 %) 92,840 91,932 1 %
Depreciation and amortization expenses 103,803 95,409 9 % 308,967 281,845 10 %
(Gain) loss on disposal of assets, net (7) 50 (114 %) (62) (15) NM
Total operating costs and expenses 505,663 444,182 14 % 1,366,940 1,217,448 12 %
Operating income 63,738 19,787 NM 193,877 116,522 66 %
Other income (expense):
Interest and other income 195 303 (36 %) 659 3,820 (83 %)
Loss on debt extinguishment - - - % - (635) (100 %)
Interest expense (54,709) (61,721) (11 %) (162,250) (173,949) (7 %)
Equity in earnings of unconsolidated affiliates 47,225 58,289 (19 %) 155,796 174,472 (11 %)
Total other income (expense), net (7,289) (3,129) 133 % (5,795) 3,708 NM
Income before income taxes
56,449 16,658 NM 188,082 120,230 56 %
Income tax expense 5,527 1,109 NM 19,172 11,003 74 %
Net income including noncontrolling interest $ 50,922 $ 15,549 NM $ 168,910 $ 109,227 55 %
(1)Cost of sales (excluding depreciation and amortization) is net of gas service revenues totaling $101.1 million and $88.3 million for the three months ended September 30, 2026 and 2025, respectively, and $314.0 million and $224.1 million for the nine months ended September 30, 2026 and 2025, respectively, for certain volumes, where we function as principal.
Three Months Ended September 30, 2026 Compared to Three Months Ended September 30, 2025
Revenues
For the three months ended September 30, 2026, revenue increased by $105.4 million, or 23%, to $569.4 million, compared to $464.0 million for the same period in 2025. The increase was primarily driven by higher product revenue due to higher NGL and condensate volumes sold, as well as higher commodity prices.
Service revenue
Service revenue for the three months ended September 30, 2026 increased by $13.2 million, or 13%, to $116.6 million, compared to $103.3 million for the same period in 2025, driven by increases in period-over-period gathered and processed gas volumes of 109.7 MMcf/d, or 5% and 101.8 MMcf/d, or 6%, respectively. Over 97% of service revenues are included in the Midstream Logistics segment for the three months ended September 30, 2026.
Product revenue
Product revenue for the three months ended September 30, 2026 increased by $90.3 million, or 25%, to $447.9 million compared to $357.6 million for the same period in 2025, primarily driven by increases in NGL and condensate sales volumes, as well as higher commodity prices. Period-over-period NGL and condensate volumes sold increased by 4.3 million barrels, or 32%. The increase was also driven by increases in NGL and condensate prices of $6.12 per barrel, or 32%, and $22.26 per barrel, or 35%, respectively. The increase was partially offset by a decrease in natural gas residue volumes of 0.3 million MMBtus, or 2%, which impact was reduced by an increase in natural gas prices of $0.51 per MMBtu, or 32%. Product revenue was also impacted by our commodity hedging activities. Net realized and unrealized losses increased $23.7 million for the three months ended September 30, 2026 compared to the same period in 2025. Product revenues are included entirely in the Midstream Logistics segment.
Operating Costs and Expenses
Cost 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, 2026, cost of sales increased by $64.9 million, or 28%, to $300.3 million, compared to $235.4 million for the same period in 2025. The increase was primarily driven by the aforementioned period-over-period increase in NGL volumes sold and increases in commodity prices, partially offset by a decrease in natural gas residue volumes. Over 99% of cost of sales (excluding depreciation and amortization) is included in the Midstream Logistics segment.
General and administrative expenses
General and administrative expenses decreased by $7.7 million, or 26%, to $22.4 million for the three months ended September 30, 2026, compared to $30.1 million for the same period in 2025. The decrease was mainly driven by decreases in share-based compensation expenses of $4.9 million, litigation-related fees of $1.9 million and insurance expenses of $1.3 million.
Depreciation and amortization expenses
Depreciation and amortization expenses increased by $8.4 million, or 9%, to $103.8 million for the three months ended September 30, 2026, compared to $95.4 million for the same period in 2025. Of the total increase, $5.0 million primarily related to the Kings Landing Project being placed into service in September 2025, and the balance was associated with other new assets being placed in service over the course of 2025 and the first nine months of 2026.
Other Income (Expenses)
Interest expense
Interest expense decreased by $7.0 million, or 11%, to $54.7 million for the three months ended September 30, 2026, compared to $61.7 million for the same period in 2025. The decrease in interest expense was primarily driven by a decrease in interest expenses of $5.0 million resulting from lower outstanding debt balances and a $3.2 million increase in net realized and unrealized gains on interest rate swaps, partially offset by a decrease in capitalized interest of $1.1 million. 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.
Equity in earnings of unconsolidated affiliates
Equity in earnings of unconsolidated affiliates decreased by $11.1 million, or 19%, to $47.2 million for the three months ended September 30, 2026, compared to $58.3 million for the same period in 2025. The decrease was primarily driven by decreases in equity in earnings from PHP of $3.6 million and Breviloba of $3.7 million due to normal operations, and EPIC of $3.8 million due to the divestiture of the Company's related equity interest in October 2025.
Nine Months Ended September 30, 2026 Compared to Nine Months Ended September 30, 2025
Revenues
For the nine months ended September 30, 2026, revenue increased by $226.8 million, or 17%, to $1.56 billion, compared to $1.33 billion for the same period in 2025. The increase was primarily driven by higher product revenue due to higher NGL, condensate and natural gas residue volumes sold and higher NGL and condensate prices, partially offset by a decrease in service revenue.
Service revenue
Service revenue for the nine months ended September 30, 2026 decreased by $46.7 million, or 14%, to $297.2 million, compared to $343.9 million for the same period in 2025, due to the period-over-period increase in total gathered and processed gas volumes where we function as the principal, resulting in higher amounts of fee revenue being reported within cost of sales as noted in footnote (1) of the table above, where fee revenue reported within cost of sales increased by $89.9 million for the nine months ended September 30, 2026 compared to the same period in 2025. The decrease was also partially driven by a period-over-period decrease in gathered gas volumes of 20.0 MMcf/d, or 1%, which was partially offset by a period-over-period increase in processed gas volumes of 38.4 MMcf/d, or 2%. Over 97% of service revenues are included in the Midstream Logistics segment for the nine months ended September 30, 2026.
Product revenue
Product revenue for the nine months ended September 30, 2026 increased by $269.3 million, or 27%, to $1.25 billion, compared to $981.7 million for the same period in 2025, primarily driven by increases in NGL, condensate, and natural gas residue volumes sold and increases in NGL and condensate prices. Period-over-period NGL and condensate volumes sold increased by 13.0 million barrels, or 33% and period-over-period natural gas residue volumes sold increased by 6.1 million MMBtu, or 16%. The increase was also driven by increases in NGL and condensate prices of $1.45 per barrel, or 7%, and $18.72 per barrel, or 29%, respectively. The increases were partially offset by a decrease in natural gas residue prices of $1.12 per MMBtu, or 55%. Product revenue was also impacted by our commodity hedging activities. The Company recognized net realized and unrealized losses of $49.9 million for the nine months ended September 30, 2026 compared to net realized and unrealized gains of $13.4 million for the same period in 2025. Product revenues are included entirely in the Midstream Logistics segment.
Operating Costs and Expenses
Cost 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, 2026, cost of sales increased by $111.2 million, or 18%, to $726.6 million, compared to $615.5 million for the same period in 2025. The increase was primarily driven by the aforementioned period-over-period increases in NGL, condensate and natural gas residue volumes sold and increases in NGL and condensate prices, partially offset by a decrease in natural gas residue prices. Over 99% of cost of sales (excluding depreciation and amortization) is included in the Midstream Logistics segment.
Depreciation and amortization expenses
Depreciation and amortization expenses increased by $27.1 million, or 10% to $309.0 million for the nine months ended September 30, 2026, compared to $281.8 million for the same period in 2025. Of the total increase, $17.7 million primarily relates to the Kings Landing Project being placed into service in September 2025, and the balance is associated with other new assets being placed in service over the course of 2025 and the first nine months of 2026.
Other Income (Expenses)
Interest expense
Interest expense decreased by $11.7 million, or 7%, to $162.3 million for the nine months ended September 30, 2026, compared to $173.9 million for the same period in 2025. The decrease in interest expense was primarily driven by a decrease in interest expenses of $7.3 million due to lower outstanding debt balances, and an $8.6 million increase in net realized and unrealized gains on interest rate swaps, partially offset by a $4.2 million decrease in capitalized interest. 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.
Equity in earnings of unconsolidated affiliates
Equity in earnings of unconsolidated affiliates decreased by $18.7 million, or 11%, to $155.8 million for the nine months ended September 30, 2026, compared to $174.5 million for the same period in 2025. The decrease was primarily driven by decreases in equity in earnings from Breviloba of $12.2 million due to normal operations, and EPIC of $11.3 million due to the divestiture of the Company's related equity interest in October 2025. The decrease was partially offset by an increase in equity in earnings from PHP of $4.8 million.
Income Tax Expense
Income tax expense increased by $8.2 million, or 74% to $19.2 million for the nine months ended September 30, 2026, compared to $11.0 million for the same period in 2025. The increase was primarily driven by higher income before income taxes for the nine months ended September 30, 2026.
Key Performance Metrics
Adjusted EBITDA
Adjusted EBITDA is defined as 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 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 nonrecurring 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 creditworthiness; and
•is used by our management for various purposes, including as a basis for strategic planning and forecasting.
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,
2026 2025 % Change 2026 2025 % Change
(In thousands, except percentages)
Reconciliation of net income including noncontrolling interest to Adjusted EBITDA
Net income including noncontrolling interest
$ 50,922 $ 15,549 NM $ 168,910 $ 109,227 55 %
Add back:
Interest expense 54,709 61,721 (11 %) 162,250 173,949 (7 %)
Income tax expense
5,527 1,109 NM 19,172 11,003 74 %
Depreciation and amortization expenses
103,803 95,409 9 % 308,967 281,845 10 %
Amortization of contract cost assets 2,054 1,744 18 % 6,058 5,054 20 %
Proportionate EMI EBITDA 67,623 87,715 (23 %) 212,530 263,345 (19 %)
Share-based compensation 9,346 14,229 (34 %) 39,074 44,577 (12 %)
Loss on disposal of assets, net - 50 (100 %) - - - %
Loss on debt extinguishment - - - % - 635 (100 %)
Commodity hedging unrealized loss
27,800 6,485 NM 25,189 - 100 %
Contingent liability fair value adjustment
- 5,700 (100 %) - 5,700 (100 %)
Integration costs
- 6,650 (100 %) 368 12,621 (97 %)
Acquisition / divestiture transaction costs
- 812 (100 %) - 812 (100 %)
Litigation costs
2,959 3,746 (21 %) 19,947 9,142 118 %
Other one-time cost or amortization 828 170 NM 4,180 6,566 (36 %)
Deduct:
Interest income 195 166 17 % 659 1,274 (48 %)
Commodity hedging unrealized gain - - - % - 13,131 (100 %)
Gain on disposal of assets, net
7 - 100 % 62 15 NM
Equity in earnings of unconsolidated affiliates
47,225 58,289 (19 %) 155,796 174,472 (11 %)
Adjusted EBITDA $ 278,144 $ 242,634 15 % $ 810,128 $ 735,584 10 %
NM - not meaningful
For the three months ended September 30, 2026, Adjusted EBITDA increased by $35.5 million, or 15%, to $278.1 million, compared to $242.6 million for the same period in 2025. As discussed in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations in this Quarterly Report, the change was driven by higher operating revenues of $105.4 million and lower operating expenses, ad valorem taxes and general and administrative expenses, totaling $11.8 million, partially offset by higher cost of sales (excluding depreciation and amortization) of $64.9 million, a decrease in proportionate EMI EBITDA of $20.1 million, primarily resulting from the divestiture of the Company's equity interest in EPIC. The increase also reflected a higher unrealized losses on commodity hedging activities of $21.3 million, partially offset by decreases in fair value adjustments to contingent liabilities of $5.7 million, share-based compensation expenses of $4.9 million, and integration, transaction and other one-time costs or amortization totaling $7.6 million.
For the nine months ended September 30, 2026, Adjusted EBITDA increased by $74.5 million, or 10%, to $810.1 million, compared to $735.6 million for the same period in 2025. As discussed in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations-Results of Operations in this Quarterly Report, the change reflected higher operating revenues of $226.8 million, partially offset by higher cost of sales (excluding depreciation and amortization), operating expenses, ad valorem taxes and general and administrative expenses, totaling $122.4 million, a decrease in proportionate EMI EBITDA of $50.8 million, primarily resulting from the divestiture of the Company's equity interest in EPIC, and an unrealized loss on commodity hedging activities of $25.2 million compared to an unrealized gain on commodity hedging activities of $13.1 million in the same period in 2025. The increase was further offset by lower integration, transaction and other one-time costs or amortization totaling $15.5 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 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 nonrecurring charges. The following table presents Segment Adjusted EBITDA for the three and nine months ended September 30, 2026 and 2025. 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,
2026 2025 % Change 2026 2025 % Change
(In thousands, except percentages)
Midstream Logistics $ 203,571 $ 151,358 34 % $ 587,259 $ 462,763 27 %
Pipeline Transportation 78,511 95,454 (18 %) 239,487 286,104 (16 %)
Corporate and Other(1)
(3,938) (4,178) (6 %) (16,618) (13,283) 25 %
Total Segment Adjusted EBITDA
$ 278,144 $ 242,634 15 % $ 810,128 $ 735,584 10 %
(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 increased by $52.2 million, or 34%, to $203.6 million for the three months ended September 30, 2026, compared to $151.4 million for the same period in 2025. The change was primarily driven by higher operating revenues of $102.9 million and higher unrealized losses on commodity hedging activities of $21.3 million, partially offset by higher cost of sales (excluding depreciation and amortization) of $65.4 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 in this Quarterly Report.
Midstream Logistics Segment Adjusted EBITDA increased by $124.5 million, or 27%, to $587.3 million for the nine months ended September 30, 2026, compared to $462.8 million for the same period in 2025. The change was primarily driven by higher operating revenues of $224.7 million, partially offset by higher cost of sales (excluding depreciation and amortization), operating expenses and ad valorem taxes, totaling $123.4 million. Also lending to the increase was an unrealized loss on commodity hedging activities of $25.2 million during the nine months ended September 30, 2026 compared to an unrealized gain on commodity hedging activities of $13.1 million in the same period of 2025. The increase was also offset by decreases in fair value adjustments to contingent liabilities of $5.7 million and integration, transaction and other one-time costs or amortizations totaling $10.8 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 in this Quarterly Report.
Pipeline Transportation Segment Adjusted EBITDA decreased by $16.9 million, or 18%, to $78.5 million for the three months ended September 30, 2026, compared to $95.5 million for the same period in 2025. The decrease was mainly due to lower proportionate EMI EBITDA of $20.1 million, primarily related to the divestiture of the Company's equity interest in EPIC during October 2025, partially offset by higher operating revenues of $3.5 million.
Pipeline Transportation Segment Adjusted EBITDA decreased by $46.6 million, or 16%, to $239.5 million for the nine months ended September 30, 2026, compared to $286.1 million for the same period in 2025. The decrease was mainly due to lower proportionate EMI EBITDA of $50.8 million, primarily related to the divestiture of the Company's equity interest in EPIC during October 2025, partially offset by higher operating revenues of $3.9 million.
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.
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 2026, the Company's primary spending requirements are related to budgeted capital expenditures for the construction and maintenance of gathering and processing assets, the Company's contractual debt obligations, and quarterly cash dividends.
During the nine months ended September 30, 2026, the Company's primary sources of cash were distributions from the EMI pipelines, borrowings under the revolving credit facility and Amended A/R Facility, and cash generated from operations. Based on the Company's current financial plan, the Company believes that cash from operations, 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, 2026
(In thousands)
Total Capacity Outstanding Borrowings
Letters of Credit
Available Borrowing Capacity
A/R Facility $ 225,000 $ 225,000 $ - $ -
Revolving Line of Credit 1,600,000 525,000 12,600 1,062,400
Total $ 1,825,000 $ 750,000 $ 12,600 $ 1,062,400
Cash and cash equivalents 7,024
Total liquidity $ 1,069,424
December 31, 2025
(In thousands)
Total Capacity Outstanding Borrowings
Letters of Credit
Available Borrowing Capacity
A/R Facility $ 250,000 $ 165,200 $ - $ 84,800
Revolving Line of Credit 1,600,000 453,000 12,600 1,134,400
Total $ 1,850,000 $ 618,200 $ 12,600 $ 1,219,200
Cash and cash equivalents 3,951
Total liquidity $ 1,223,151
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 Amended 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, 2026, 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. From time to time, we may seek to retire or repurchase our outstanding senior unsecured notes through open-market purchases, privately negotiated transactions or otherwise.
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, 2026, 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, 2026, we had an outstanding borrowing of $525.0 million and remaining borrowing capacity of $1.06 billion.
A/R Facility
On March 31, 2026, the Partnership executed Amendment No. 2 to its Amended A/R Facility, with PNC Bank. Pursuant to this amendment, the facility limit was reduced to $225.0 million, and the scheduled termination date was extended to March 30, 2027. Furthermore, Amendment No. 2 introduced an option permitting Kinetik Receivables LLC to request an increase in commitments of up to $50.0 million in aggregate, subject to the Purchaser's approval. Amendment No. 2 also removed all sustainability-linked pricing provisions previously applicable under the A/R Facility. As of September 30, 2026, eligible accounts receivable of $225.0 million were pledged to the Amended A/R Facility as collateral.
Capital Requirements and Expenditures
Our operations require investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational regulations. During the nine months ended September 30, 2026 and 2025, capital spending mainly consisted of spending on property, plant and equipment totaling $325.8 million and $358.4 million, respectively, and intangible asset purchases totaling $22.0 million and $30.9 million, respectively.
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.
Cash Flow
The following tables present cash flows from operating, investing and financing activities during the periods presented:
Nine Months Ended September 30,
2026 2025
(In thousands)
Cash provided by operating activities $ 614,387 $ 494,030
Cash used in investing activities
$ (348,076) $ (562,930)
Cash (used in) provided by financing activities
$ (263,238) $ 73,031
Operating activities. Net cash provided by operating activities increased by $120.4 million for the nine months ended September 30, 2026 to $614.4 million, compared to $494.0 million for the same period in 2025. The change in the operating cash flows reflected (i) an increase in net income including noncontrolling interest of $59.7 million; (ii) an increase in adjustments reconciling net income to operating cash flows of $72.2 million, which was mainly driven by an increase in non-cash derivative fair value adjustments of $54.7 million, partially offset by higher outgoing derivative cash settlements of $24.4 million, an increase in depreciation and amortization expenses of $27.1 million, and a decrease in equity in earnings of unconsolidated affiliates of $18.7 million; and (iii) a decrease in working capital of $11.5 million.
Investing activities. Net cash used in investing activities decreased by $214.9 million for the nine months ended September 30, 2026 to $348.1 million, compared to $562.9 million used in the same period in 2025. The decrease was primarily driven by a decrease in cash used in business acquisitions of $175.5 million related to Barilla Draw Acquisition completed in January 2025 and decreases in property, plant and equipment and intangible assets expenditures of $32.6 million and $8.9 million, respectively.
Financing activities. Net cash used in financing activities was $263.2 million for the nine months ended September 30, 2026, which was comprised of net proceeds from the revolving credit facility and Amended A/R Facility of $131.6 million, fully offset by cash dividends of $394.9 million paid to the holders of Class A Common Stock and Common Units, compared with net cash provided by financing activities of $73.0 million for the nine months ended September 30, 2025, which was comprised of net proceeds from the Company's long-term debt, revolving credit facility and Amended 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 of $172.6 million.
Dividend
During the nine months ended September 30, 2026, the Company made cash dividend payments of $394.9 million to holders of Class A Common Stock and Common Units and $1.6 million was reinvested in shares of Class A Common Stock by Class A Common Stock and Common Units holders.
On October 13, 2026, the Board declared a cash dividend of $0.81 per share on the Company's Class A Common Stock which was paid to stockholders on October 30, 2026. The Company, through its ownership of the general partner of the Partnership, declared a distribution of $0.81 per Common Unit from the Partnership to the holders of Common Units, which was paid on October 30, 2026. 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 the Repurchase Program, authorizing discretionary purchases of the Company's Class A Common Stock up to $100.0 million in aggregate. In May 2025, the Board approved a $400.0 million increase to the previously announced Repurchase Program. Repurchases may be made at management's discretion from time to time and will depend on market conditions and may be discontinued at any time without prior notice.
During the nine months ended September 30, 2026, the Company did not repurchase any of its Class A Common Stock under the Repurchase Program.
Off-Balance Sheet Arrangements
As of September 30, 2026, 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 in our Annual Report on Form 10-K for the year ended December 31, 2025. 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, 2025, filed with the SEC on February 26, 2026.
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