Kinetik Holdings Inc. (KNTK)·Q3 2025 Earnings Summary

Executive Summary

• Kinetik’s Q3 2025 printed mixed: Revenue rose 17% YoY to $463.97M, but GAAP diluted EPS fell to $0.03 (Class A) and Adjusted EBITDA declined 9% YoY to $242.6M; management revised FY25 Adjusted EBITDA guidance down to $0.965–$1.005B from $1.03–$1.09B, citing delayed Kings Landing ramp, commodity-driven curtailments, and the EPIC Crude sale timing .
• Versus S&P Global consensus, KNTK beat on revenue ($463.97M vs $430.81M estimate) and S&P Primary EPS ($0.52 vs $0.30), but missed on S&P standardized EBITDA (actual $120.9M vs $256.6M est). Note: company-reported Adjusted EBITDA was $242.6M and is not directly comparable to S&P’s standardized EBITDA measure. Values retrieved from S&P Global.*
• Strategic positives: Kings Landing reached full commercial in-service in late September; AGI at Kings Landing reached FID; CPV 1,350 MW residue connection and a 0.5 MTPA TTF-linked LNG pricing agreement with INEOS add optionality and market access .
• Key headwinds: negative Waha pricing drove production shut-ins (some days ~20% curtailed in October), delayed TILs into late Q4/early 2026, and higher OpEx (electricity, compression); CFO quantified ~$20M headwind from curtailments and ~$30M from lower commodity prices versus original assumptions .

What Went Well and What Went Wrong

• What Went Well

  • Kings Landing achieved full commercial in-service in late September, adding >200 MMcf/d of New Mexico processing capacity; AGI at Kings Landing reached FID, enabling materially higher sour-gas handling capability by YE 2026 .
  • Commercial momentum: five-year LNG pricing agreement with INEOS at Port Arthur (~0.5 MTPA, TTF-linked, starting 2027), additional firm transport to Gulf Coast starting 2028, and the CPV Basin Ranch 1,350 MW residue connection (capital reimbursed) .
  • Management candidly acknowledged forecasting misses and is “forensically analyzing” assumptions, including adopting AI/ML tools to improve forecasting accuracy; commitment to reduce controllable costs and restore credibility .

• What Went Wrong

  • Q3 Adjusted EBITDA of $242.6M declined YoY (vs $265.7M), driven by delayed Kings Landing ramp, lower commodity pricing, higher COGS/OpEx, and Waha-induced shut-ins; Midstream Logistics Adj. EBITDA fell 13% YoY to $151.4M .
  • FY25 Adjusted EBITDA guidance reduced to $0.965–$1.005B, with ~60% of the guide-down driven by shut-ins, delayed TILs, and EPIC Crude divestiture timing; additional ~$30M headwind from commodity prices vs February assumptions .
  • Waha volatility: on certain October days ~20% of volumes curtailed, including oil-focused producers—an unusual dynamic not seen since 2020—pressuring Q4 run-rate and near-term outlook .

Financial Results

Segment Adjusted EBITDA

Key KPIs and Cash Metrics

Estimate vs Actual (S&P Global) — Q3 2025

Note: Company-reported Adjusted EBITDA was $242.6M (non-GAAP), which is not directly comparable to S&P standardized “EBITDA.” Values retrieved from S&P Global.*

Guidance Changes

Management’s drivers of the guide-down: slower Kings Landing ramp (approx. $20M impact), commodity price decline vs February assumptions (approx. $30M), curtailments from negative Waha and oil-focused producer shut-ins (approx. $20M), and EPIC Crude sale timing .

Earnings Call Themes & Trends

Management Commentary

• “Kinetik achieved a significant milestone in the third quarter of 2025 with the full commercial in-service of Kings Landing... And today, we announced FID on the AGI project at Kings Landing” — Jamie Welch, CEO .
• “Over the past four quarters, we have stumbled... Our reputations and credibility are in question, and we will respond with relentless grit... including evaluating the use of AI tools and machine learning” — Jamie Welch, CEO .
• “On some days during October, approximately 20% of volumes were curtailed... lower crude and NGL pricing, as well as negative in-basin gas pricing, has deferred or changed our customers’ development plans... negatively impacting full-year 2025 EBITDA by approximately $30 million” — Trevor Howard, CFO .
• “A five-year LNG pricing agreement with INEOS at Port Arthur LNG... approximately 0.5 MTPA... priced monthly based on the European TTF index” — Company release .
• “Finalized an agreement with CPV to connect... to the 1,350 MW CPV Basin Ranch Energy Center... capital for the pipeline connection will be fully reimbursed” — Company release .

Q&A Highlights

• Producer delays largely intra-quarter: many TILs shifted from September into late November/December; minimal push into 2026; timing affects quarterly run-rate math .
• Q4 2025 implied EBITDA and drivers: Guidance midpoint implies ~$250M; impacts include curtailments from negative Waha and delayed TILs; EPIC Crude sale reduces Q4 contribution .
• Hedging posture: 2025 relatively well hedged across C1–C5 and WTI; targeting 40–80% hedge on rolling 12-month view into 2026; skewed lower for WTI given strip .
• Recontracting T&F/NGL: Expect favorable seller dynamics into 2026 amid capacity needing to be filled; no change in approach near term .
• Power/data center optionality: Residue network can support in-basin power generation for growing demand; CPV connection is a blueprint; evaluating behind-the-meter and other options as power costs rise .

Estimates Context

• S&P Global consensus vs actual (Q3 2025): Revenue beat ($463.97M vs $430.81M); S&P Primary EPS beat ($0.52 vs $0.30); S&P standardized EBITDA missed ($120.9M vs $256.6M). Company-reported Adjusted EBITDA was $242.6M, which is not directly comparable to S&P’s standardized EBITDA. Values retrieved from S&P Global.*
• Implication: Street models may adjust lower for FY25 following the guide-down; near-term revisions likely focus on Q4 curtailment risk and timing of TILs (intra-quarter). Medium-term, LNG/egress and AGI-backed sour gas positioning may support 2026–2027 outlook normalization as takeaway expands .

Key Takeaways for Investors

• FY25 reset: Guidance lowered to $0.965–$1.005B Adjusted EBITDA on slower Kings Landing ramp, commodity headwinds, and EPIC timing; watch Q4 curtailment sensitivity given negative Waha and oil-focused producer behavior .
• Execution milestones achieved: Kings Landing in-service and AGI FID position KNTK to capture sour-gas growth in Northern Delaware; ECCC (2Q26) adds routing flexibility .
• Commercial optionality expanding: TTF-linked LNG agreement, incremental Gulf Coast FT (2028), and capital-light CPV connection diversify pricing and enhance market access .
• Cost discipline and forecasting overhaul: Management acknowledges misses and is adopting AI/ML in forecasting and pursuing controllable cost reductions (power/compression) to protect margins .
• Capital framework intact: 2025 capex tightened to $485–$515M; leverage at 3.9x (credit-agreement basis) with EPIC proceeds used to reduce RCF; continued shareholder returns via dividend ($0.78 quarterly) and opportunistic buybacks YTD ($176M, $100M in Q3) .
• Near-term trading lens: Focus on Q4 volume normalization, Waha/basis prints, and Kings Landing throughput cadence; any improvement in curtailments or commodity strip could de-risk the exit rate .
• Medium-term thesis: Sour-gas advantage (AGI), recontracting tailwinds (2026+), and expanded egress/LNG optionality support multi-year EBITDA/FCF growth once basin takeaway tightness eases and producer activity stabilizes .

Footnotes:

• Company figures (Revenue, EPS, Adjusted EBITDA, segment results, KPIs, guidance) sourced from Kinetik’s Q3 2025 8‑K/press release and earnings call .
• Prior-quarter comparisons sourced from Q1/Q2 2025 releases and Q2 call .
• S&P Global consensus and actuals (Primary EPS, Revenue, EBITDA) marked with asterisks. Values retrieved from S&P Global.*