Executive Summary

Q4 2024 was resilient operationally but financially muted: total operating revenues were $385.7M while Adjusted EBITDA was $237.5M; sequential EBITDA fell from Q3 on a $15M November headwind tied to negative Waha pricing and plant ethane rejection, partially offset by a strong December rebound in volumes .
Full-year 2024 reached record Adjusted EBITDA of $971.1M (+16% YoY) with leverage reduced to 3.4x; management issued 2025 guidance for Adjusted EBITDA of $1.09–$1.15B and expects Q4 2025 annualized EBITDA to exceed $1.2B, positioning for further growth as Kings Landing ramps .
Strategic execution continued: bolt-on Barilla Draw closed in Jan-2025, EPIC Crude stake increased to 27.5% (distributions expected in 2025), ECCC connector pipeline progressed, and dividend was raised 4% to $0.78 per share (annualized $3.12) .
Key catalysts into 2025: Kings Landing start-up in late June (~50% initial utilization, ramp to full), ~20% gas processed volume growth, ~83% of gross profit from fixed-fee contracts, and only ~4% of total gross profit unhedged and directly commodity-exposed .

What Went Well and What Went Wrong

What Went Well

Record FY 2024 Adjusted EBITDA of $971.1M (+16% YoY) and disciplined CapEx below guidance low-end ($264.5M), demonstrating execution despite commodity volatility .
Strategically accretive footprint expansion: Durango acquisition, EPIC Crude stake to 27.5%, and Barilla Draw bolt-on integration underway; management expects EPIC Crude partner distributions in 2025 .
Management tone confident on 2025 growth: “Adjusted EBITDA averaging well over $1.05 billion on an annualized basis” in recent months and “expect fourth quarter 2025 annualized Adjusted EBITDA to exceed $1.2 billion” .
Quote: “We have a demonstrated track record of compound annual double-digit Adjusted EBITDA growth and expect to continue such growth levels in 2025.” – Jamie Welch, CEO .

What Went Wrong

November Waha dislocation: average gas daily price at Waha was negative $1.40/MMBtu for the first 15 days, driving Apache Alpine High curtailments and exposing equity residue gas at Waha due to ethane rejection; management estimated a $15M headwind for Q4 .
Sequential EBITDA decline: Midstream Logistics EBITDA down ~14% QoQ to $150M on curtailments and operating mode impacts; overall Adjusted EBITDA fell from $265.7M in Q3 to $237.5M in Q4 .
Higher operating costs: Q4 G&A rose to $39.3M (vs $29.6M Q3) and operating expenses were elevated amid maintenance and commissioning activities .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Total Operating Revenues ($USD Millions)	$359.5	$396.4	$385.7
Net Income incl. NCI ($USD Millions)	$108.9	$83.7	$16.2
Net Income attributable to Class A ($USD Millions)	$37.2	$25.8	$5.5
Diluted EPS (Class A) ($USD)	$0.54	$0.35	$0.01
Adjusted EBITDA ($USD Millions)	$234.4	$265.7	$237.5
Distributable Cash Flow ($USD Millions)	$162.9	$184.2	$155.4
Free Cash Flow ($USD Millions)	$105.4	$164.7	$32.5
Capital Expenditures ($USD Millions)	$38.0	$58.5	$107.2
Processed Gas Volumes (Bcf/d)	1.58	1.71	1.74

Segment Adjusted EBITDA

Segment EBITDA ($USD Millions)	Q2 2024	Q3 2024	Q4 2024
Midstream Logistics	$148	$174	$150
Pipeline Transportation	$94	$96	$92

Key Performance Indicators

KPI	Q4 2024
Leverage Ratio (credit agreement)	3.4x
Net Debt ($USD Millions)	$3,526.6
Dividend Coverage Ratio	1.3x
Declared Dividend (per share)	$0.78
Fixed-Fee Gross Profit Share (2025 assumption)	~83%
Unhedged Direct Commodity Gross Profit (2025)	~4%

Note on estimates: Wall Street consensus via S&P Global was unavailable at time of retrieval; see “Estimates Context.”

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA ($USD Billions)	FY 2025	Not previously provided	$1.09 – $1.15	New
Capital (Growth + Maintenance + Contingent) ($USD Millions)	FY 2025	Not previously provided	$450 – $540; includes up to $75 contingent (Durango)	New
Q4 Annualized Adjusted EBITDA ($USD Billions)	Q4 2025	Not previously provided	>$1.2	New
Dividend (per share)	Q4 2024	$0.75 (Q2 declared)	$0.78 (4% increase)	Raised
FY 2024 Adjusted EBITDA ($USD Millions)	FY 2024	$970 – $1,000 (revised in Q3)	Actual $971.1	Achieved near low end
FY 2024 CapEx ($USD Millions)	FY 2024	$270 – $290 (tightened in Q3)	Actual $264.5	Below guidance low end

Additional 2025 assumptions: ~20% YoY growth in processed gas volumes; forward prices WTI ~$71/bbl, HSC gas ~$3.77/MMBtu, NGLs ~$0.65/gal; Kings Landing start-up late June .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024, Q3 2024)	Current Period (Q4 2024)	Trend
Waha Gas Pricing & Residue Exposure	Q2: Persistent Waha weakness; PHP capacity optimization; hedging . Q3: Negative Waha helped pipeline margins; return of Alpine High expected .	November average daily Waha -$1.40/MMBtu; $15M impact; curtailments and ethane rejection exposed equity residue gas; measures implemented to mitigate .	Volatility remains; mitigation improved.
Kings Landing Processing	Q2: KL I on schedule for Apr-2025; pre-FID KL II sanctioned . Q3: KL I in-service expected Q2-2025; KL II long-lead items; connector pipeline announced .	Start-up late June 2025 at ~50% utilization, ramp to full; supports >20% YoY Midstream growth .	Ramp imminent; central growth driver.
ECCC Connector Pipeline	Q3: Announced large diameter rich gas pipeline Eddy→Culberson; in-service Q1 2026 .	Procurement and ROW commenced; construction H2 2025; in-service Q1 2026 .	Execution progressing.
EPIC Crude	Q2: Accretive stake; pipeline contributions . Q3: Stake increased to 27.5%; refinancing; distributions likely in 2025 .	Expecting distributions in 2025; supports Pipeline EBITDA .	Cash distributions visibility improved.
Power Generation JV	—	Exploring behind-the-meter gas-fired power in Reeves County; capacity ~100–110 MW in South; FID as early as 2025; in-service ~end-2027; target OpEx reduction with mid-single-digit build multiples .	New initiative; potential structural OpEx improvement.
Tariffs/Steel	—	Tariffs impact ~$15–$20M; largely steel for ECCC and Carlsbad build-outs .	Cost headwind monitored.
Regulatory (NM Setbacks)	Q3: MRV Plan approvals; CO2 sequestration/45Q .	Management views setback chatter as an economic study with low legislative path; limited risk to operations .	Monitoring; low immediate impact.
Hedging & Fixed-Fee Mix	Q2: Hedge optimization; commodity-linked exposure defined . Q3: ~75% hedged remaining 2024; ~65% for 2025 .	2025 assumptions: ~83% fixed-fee; ~4% unhedged direct commodity gross profit .	High visibility, reduced commodity sensitivity.

Management Commentary

“2024 was another transformational year for Kinetik… We reported record full year 2024 Adjusted EBITDA growth of 16% year-over-year to $971.1 million” – Jamie Welch, CEO .
“Normalizing fourth quarter earnings for [the November] headwind, full year adjusted EBITDA would have been above the midpoint of our revised guidance range” – Jamie Welch .
“We anticipate the 220 million cubic feet per day Kings Landing Complex to start up in late June at nearly 50% utilized… We expect to ramp to full capacity over the balance of the year” – Trevor Howard, CFO .
“As of today, we have hedged approximately 75% of our remaining commodity exposed gross profit in 2025, implying only 4% of total gross profit is unhedged” – Trevor Howard .
“We expect fourth quarter 2025 annualized adjusted EBITDA to exceed $1.2 billion” – Trevor Howard .

Q&A Highlights

Growth trajectory: Management reiterated internal objective of ~10% EBITDA CAGR through decade-end, with organic drivers (KL ramp, NGL re-contracting, compression optimization) and targeted OpEx reductions (power gen) .
M&A posture: Active but disciplined; Barilla Draw and Durango cited as high-bar transactions; future deals must meet strict return thresholds .
Power gen project: Behind-the-meter, JV with customers, ~100–110 MW initial load in South; returns benchmarked to current ERCOT costs without Waha optimization; potential expansion to New Mexico if successful .
Commodity risk management: ~83% fixed-fee gross profit expected in 2025; ~75% of remaining commodity-exposed gross profit hedged; only ~4% total gross profit directly commodity-exposed .
Tariffs impact: Estimated steel tariffs add ~$15–$20M to capital; secured much of required pipe; Kings Landing components already addressed .
EPIC Crude: Partners expect distributions in 2025; improved credit profile post refinancing and long-term Diamondback contracts .

Estimates Context

S&P Global consensus estimates (EPS and revenue) for Q4 2024 were unavailable at time of retrieval due to data access constraints. As a result, formal beat/miss versus Street could not be evaluated. Management noted Q2 results “made consensus” despite timing mismatches, but provided no comparable statement for Q4 .
Implication: Near-term estimate revisions likely reflect the transitory November headwind and strong December/January rebound, with 2025 guidance pointing to double-digit EBITDA growth anchored by Kings Landing and fixed-fee mix .

Key Takeaways for Investors

Q4 softness was transient: a discrete Waha-driven $15M headwind masked otherwise strong operational momentum and December/January rebound; mitigation processes are in place, reducing recurrence risk .
2025 setup is favorable: Kings Landing start-up in late June, ~20% processed volume growth, >80% fixed-fee gross profit, and minimal direct commodity exposure support high-visibility EBITDA growth to $1.09–$1.15B and >$1.2B exit rate .
Capital discipline persists: FY 2024 CapEx came in below guidance low-end; 2025 capital of $450–$540M (including contingent) funds KL ramp, ECCC, and NM buildouts while maintaining leverage at ~3.4x .
Strategic optionality: ECCC connector optimizes sour gas processing in the North by relocating sweet gas South; EPIC Crude distributions add cash and diversify pipeline segment earnings .
Operating cost strategy: Behind-the-meter power generation could structurally lower electricity OpEx and provide a hedge against Waha volatility; FID targeted as early as 2025, in-service around end-2027 .
Dividends: 4% Q4 increase to $0.78 per share evidences confidence; management targets prudent annual ratable growth (3–5% indicated for 2025) balanced with growth CapEx .
Watch items: Tariff-related steel cost inflation (~$15–$20M impact), timing/ramp of Kings Landing, and residue logistics during maintenance windows; fixed-fee mix and hedging materially cushion commodity swings .

Kinetik Holdings Inc. (KNTK)·Q4 2024 Earnings Summary