QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 001-38048
KINETIK HOLDINGS INC.
(Exact name of registrant as specified in its charter)
Delaware
81-4675947
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
2700 Post Oak Blvd, Suite 300
Houston, Texas, 77056
(Address of principal executive offices)
(Zip Code)
(713) 621-7330
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A common stock, $0.0001 par value
KNTK
New York Stock Exchange
NYSE Texas
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Number of shares of registrant’s Class A Common Stock, par value $0.0001 per share issued and outstanding as of April 30, 2026
73,602,334
Number of shares of registrant’s Class C Common Stock, par value $0.0001 per share issued and outstanding as of April 30, 2026
The following are abbreviations and definitions of certain terms which may be used in this Quarterly Report on Form 10-Q (“Quarterly Report”) and certain terms which are commonly used in the exploration, production and midstream sectors of the oil and natural gas industry:
•ASC. Accounting Standards Codification
•ASU. Accounting Standards Updates
•Barilla Draw. Barilla Draw Gathering, LLC, a Delaware limited liability company
•Bbl. One stock tank barrel of 42 United States (“U.S.”) gallons liquid volume used herein in reference to crude oil, condensate or natural gas liquids
•Bcf. One billion cubic feet
•Bcf/d. One Bcf per day
•Breviloba. Breviloba, LLC, a Texas limited liability company
•Btu. One British thermal unit, which is the quantity of heat required to raise the temperature of a one-pound mass of water by one-degree Fahrenheit
•CODM. Chief Operating Decision Maker
•Delaware Basin. Located on the western section of the Permian Basin. The Delaware Basin covers a 6.4 million acre area
•Durango. Durango Permian LLC and its wholly owned subsidiaries
•Durango Seller. Durango Midstream LLC, an affiliate of Morgan Stanley Equity Partners
•EBITDA. Earnings before interest, taxes, depreciation, and amortization
•EMI or EMIs. Equity Method Investment(s)
•EPIC. Epic Crude Holdings, LP, a Delaware limited partnership
•FASB. Financial Accounting Standards Board
•FOMC. Federal Open Market Committee
•Field. An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations
•GAAP. United States Generally Accepted Accounting Principles
•MBbl. One thousand barrels of crude oil, condensate or NGLs
•MBbl/d. One MBbl per day
•Mcf. One thousand cubic feet of natural gas
•Mcf/d. One Mcf per day
•MMBtu. One million British thermal units
•MMcf. One million cubic feet of natural gas
•MMcf/d. One MMcf per day
•MVC. Minimum volume commitments
•NGL or NGLs. Natural gas liquids. Hydrocarbons found in natural gas, which may be extracted as liquefied petroleum gas and natural gasoline
•Permian Gathering. RC Permian Gathering, LLC, a Delaware limited liability company
•PHP. Permian Highway Pipeline, LLC, a Delaware limited liability company
•Throughput. The volume of crude oil, natural gas, NGLs, water and refined petroleum products transported or passing through a pipeline, plant, terminal or other facility during a particular period
•SEC. United States Securities and Exchange Commission
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included or incorporated by reference in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans, and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “continue,” “seek,” “guidance,” “might,” “outlook,” “possibly,” “potential,” “prospect,” “should,” “would,” or similar terminology, but the absence of these words does not mean that a statement is not forward-looking. Although we believe that the expectations reflected in such forward-looking statements are reasonable under the circumstances, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, assumptions about:
•our ability to integrate operations or realize any anticipated benefits, savings or growth of business combinations. See Note 2 — Business Combinations in the Notes to our Condensed Consolidated Financial Statements set forth in this Form 10-Q;
•the market prices of oil, natural gas, NGLs, and other products or services;
•competition from other pipelines, terminals or other forms of transportation and competition from other service providers for gathering system capacity and availability;
•production rates, throughput volumes, reserve levels and development success of dedicated oil and gas fields;
•our future financial condition, results of operations, liquidity, compliance with debt covenants and competitive position;
•our future revenues, cash flows and expenses;
•our access to capital and our anticipated liquidity;
•our future business strategy and other plans and objectives for future operations;
•the amount, nature and timing of our future capital expenditures, including future development costs;
•the risks associated with potential acquisitions, divestitures, new joint ventures or other strategic opportunities;
•the risks associated with the construction of midstream infrastructure, including delays and cost overruns;
•the recruitment and retention of our officers and personnel;
•the likelihood of success and impact of litigation and other proceedings, including regulatory proceedings;
•our assessment of our counterparty risk and the ability of our counterparties to perform their future obligations;
•the impact of federal, state and local political, regulatory and environmental developments where we conduct our business operations;
•the changes in the U.S. and foreign trade policy and the impact of tariffs on our business and results of operations;
•the occurrence of an extreme weather event, terrorist attack or other event that materially impacts project construction and our operations, including cyber or other operational electronic systems;
•our ability to successfully implement, execute and achieve our sustainability goals and initiatives;
•the realizability and valuation allowance assessment of our net deferred tax asset position;
•general economic and political conditions, including interest rates, inflation, global geopolitical conflicts, foreign and domestic trade policies under the Trump Administration and other factors; and
•other factors disclosed in “Part I, Item 1A. — Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, filed on February 26, 2026.
Other factors or events that could cause the actual results of Kinetik Holdings, Inc. (the “Company” or “Kinetik”) to differ materially from the Company’s expectations may emerge from time to time, and it is not possible for the Company to predict all such factors or events. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements. All forward-looking statements speak only as of the date of this Quarterly Report. Except as required by law, the Company disclaims any obligation to update or revise its forward-looking statements, whether based on changes in internal estimates or expectations, new information, future developments or otherwise.
Costs of sales (excluding depreciation and amortization)(1) (2)
188,724
223,364
Operating expenses
70,301
63,603
Ad valorem taxes
8,775
6,791
General and administrative expenses
44,200
37,592
Depreciation and amortization expenses
101,833
92,673
Gain on disposal of assets, net
(19)
(40)
Total operating costs and expenses
413,814
423,983
Operating (loss) income
(3,838)
19,280
Other income (expense):
Interest and other income
167
785
Interest expense
(53,420)
(55,714)
Equity in earnings of unconsolidated affiliates
51,188
57,478
Total other (expense) income, net
(2,065)
2,549
(Loss) income before income taxes
(5,903)
21,829
Income tax (benefit) expense
(778)
2,567
Net (loss) income including noncontrolling interest
(5,125)
19,262
Net (loss) income attributable to Common Unit limited partners
(3,458)
13,132
Net (loss) income attributable to holders of Class A Common Stock
$
(1,667)
$
6,130
Net (loss) income attributable to holders of Class A Common Stock, per share
Basic
$
(0.07)
$
0.05
Diluted
$
(0.07)
$
0.05
Weighted-average shares
Basic
65,910
60,162
Diluted
66,684
61,001
(1)Costs of sales (excluding depreciation and amortization) is net of gas service revenues totaling $102.3 million and $62.2 million for the three months ended March 31, 2026 and 2025, respectively, for certain volumes where we function as principal.
(2)Includes amounts associated with related parties of $7.1 million and $4.7 million for the three months ended March 31, 2026 and 2025, respectively.
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
Accounts receivable, net of allowance for credit losses of $1,000 in 2026 and 2025
92,713
85,276
Accounts receivable pledged
187,100
165,200
Derivative assets
7,531
13,906
Prepaid and other current assets
30,733
33,703
318,797
302,036
NONCURRENT ASSETS:
Property, plant and equipment, net
3,891,665
3,866,236
Intangible assets, net
523,184
553,230
Derivative asset, non-current
2,453
1,467
Operating lease right-of-use assets
56,398
71,147
Deferred tax assets
225,944
197,702
Deferred charges and other assets
95,621
89,991
Investments in unconsolidated affiliates
1,991,604
2,008,725
Goodwill
5,077
5,077
6,791,946
6,793,575
Total assets
$
7,110,743
$
7,095,611
LIABILITIES, NONCONTROLLING INTEREST AND EQUITY
CURRENT LIABILITIES:
Accounts payable
$
28,672
$
42,067
Accrued expenses
227,571
172,050
Derivative liabilities
42,046
5,506
Current portion of operating lease liabilities
39,957
43,614
Current debt obligations
187,100
165,200
Other current liabilities
11,723
12,064
537,069
440,501
NONCURRENT LIABILITIES
Long term debt, net
3,644,128
3,627,720
Contract liabilities
30,493
30,959
Operating lease liabilities
18,149
29,033
Derivative liabilities
1,712
—
Other liabilities
14,819
14,717
Deferred tax liabilities
22,222
22,299
3,731,523
3,724,728
Total liabilities
4,268,592
4,165,229
COMMITMENTS AND CONTINGENCIES (Note 16)
Redeemable noncontrolling interest — Common Unit limited partners
4,511,385
3,495,762
EQUITY:
Class A Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 68,802,183 and 64,080,915 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively
7
6
Class C Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 93,557,604 and 97,557,604 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively
9
10
Additional paid-in capital
—
240,725
Accumulated deficit
(1,669,250)
(806,121)
Total equity
(1,669,234)
(565,380)
Total liabilities, noncontrolling interest and equity
$
7,110,743
$
7,095,611
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
These Condensed Consolidated Financial Statements have been prepared by Kinetik Holdings Inc. (the “Company”), without audit, pursuant to the rules and regulations of the SEC. They reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for interim periods, on a basis consistent with the annual audited financial statements, with the exception of recently adopted accounting pronouncements. All such adjustments are of a normal recurring nature. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with the Company’s audited financial statements and related notes thereto for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K filed with the SEC on February 26, 2026.
1. THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company is a holding company, whose only significant assets are ownership of the non-economic general partner interest and an approximate 42% limited partner interest in Kinetik Holdings LP, a Delaware limited partnership (the “Partnership”). As the owner of the non-economic general partner interest in the Partnership, the Company is responsible for all operational, management and administrative decisions related to, and consolidates the results of, the Partnership and its subsidiaries.
The Company provides comprehensive gathering, produced water disposal, transportation, compression, processing and treating services necessary to bring natural gas, NGLs and crude oil to market. Additionally, the Company owns equity interests in two separate Permian Basin pipeline entities that have access to various markets along the U.S. Gulf Coast and Mexico.
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with GAAP. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year; accordingly, you should read these Condensed Consolidated Financial Statements in conjunction with our Consolidated Financial Statements and related notes included in our 2025 Annual Report on Form 10-K. All intercompany balances and transactions have been eliminated in consolidation.
Significant Accounting Policies
The accounting policies that we follow are set forth in Note 2 – Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2025. There were no significant updates or revisions to our accounting policies during the three months ended March 31, 2026.
Transactions with related parties
The Company incurs cost of sales with two of its EMI pipeline entities, PHP and Breviloba. The Company pays a demand fee to PHP and pays a capacity fee to Breviloba for certain volumes moving on Shin Oak. The Company recorded cost of sales of $7.1 million and $4.7 million with these affiliates for the three months ended March 31, 2026 and 2025, respectively.
Recently issued accounting pronouncements not yet adopted
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses, (“ASU 2024-03”). In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures - Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 and ASU 2025-01 require a public business entity to disclose specific information about certain costs and expenses in the notes to its financial statements for interim and annual reporting periods. All public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026. The requirements will be applied prospectively with the option for retrospective application. Early
adoption is permitted. The Company is currently evaluating the effect that ASU 2024-03 and 2025-01 will have on the disclosures within its Consolidated Financial Statements.
In December 2025, the FASB issued ASU 2025‑11, Interim Reporting (Topic 270): Narrow‑Scope Improvements (“ASU 2025‑11”), which clarifies and reorganizes the guidance in Topic 270 to improve navigability and ensure consistent application of interim reporting requirements. ASU 2025‑11 is effective for public business entities for interim periods within annual periods beginning after December 15, 2027, and for all other entities for interim periods within annual periods beginning after December 15, 2028. Entities may apply the amendments prospectively or retrospectively, and early adoption is permitted. The Company is currently evaluating the effect that ASU 2025‑11 will have on future interim reporting disclosures within its Consolidated Financial Statements.
In December 2025, the FASB issued ASU 2025‑12, Codification Improvements, as part of its ongoing project to address technical corrections, clarify guidance, and improve the usability of the ASC. ASU 2025‑12 is effective for all entities for annual periods beginning after December 15, 2026, including interim periods within those annual periods, with adoption applied prospectively. The Company is currently evaluating the effect of ASU 2025-12 on the Consolidated Financial Statements and expects to adopt applicable required improvements when this ASU becomes effective.
2. BUSINESS COMBINATIONS
For acquired businesses, we recognize the identifiable assets acquired and the liabilities assumed at their estimated fair values on the date of acquisition with any excess purchase price over the fair value of net assets acquired recorded to goodwill. Determining the fair value of these items requires management’s judgment and the utilization of an independent valuation specialist, if applicable, and involves the use of significant estimates and assumptions.
Barilla Draw Acquisition
In the first quarter of 2025, the Company completed a bolt-on acquisition with Permian Resources Corporation to acquire all issued and outstanding membership interests of its wholly owned subsidiaries, Permian Gathering and Barilla Draw, for $175.5 million of cash consideration (the “Barilla Draw Acquisition”). Assets acquired consisted of natural gas and crude gathering pipelines and compression equipment of $165.0 million, intangible right-of-way assets of $10.5 million and operating lease right of use assets of $15.7 million. The acquired net assets were included in the Midstream Logistics segment. This transaction was accounted for as a business combination in accordance with ASC 805 Business Combination.
3. REVENUE RECOGNITION
Disaggregation of Revenue
The following table presents a disaggregation of the Company’s revenue:
Three Months Ended March 31,
2026
2025
(In thousands)
Gathering and processing services
$
93,772
$
127,926
Natural gas, NGLs and condensate sales
312,233
312,505
Other revenue
3,971
2,832
Total revenues
$
409,976
$
443,263
There have been no significant changes to the Company’s contracts with customers during the three months ended March 31, 2026. The Company recognized $2.0 million and $0.3 million in revenues from MVC deficiency payments for the three months ended March 31, 2026 and 2025, respectively.
The following table presents our estimated revenue from contracts with customers for remaining performance obligations that have not yet been recognized, representing our contractually committed revenues as of March 31, 2026:
Amount
Fiscal Year
(In thousands)
Remaining 2026
$
29,992
2027
70,331
2028
75,488
2029
74,736
2030
90,133
Thereafter
88,208
$
428,888
Our contractually committed revenue, for the purposes of the table above, is limited to customer contracts that have fixed pricing and fixed volume terms and conditions, including contracts with payment obligations associated with MVCs.
Contract Liabilities
The following table provides information about contract liabilities from contracts with customers as of March 31, 2026:
Amount
(In thousands)
Balance at December 31, 2025
$
36,632
Reclassification of beginning contract liabilities to revenue as a result of performance obligations being satisfied
(1,633)
Cash received in advance and not recognized as revenue
777
Balance at March 31, 2026
35,776
Less: Current portion
5,283
Non-current portion
$
30,493
Contract liabilities relate to payments received in advance of satisfying performance obligations under a contract, which result from contribution in aid of construction payments. Current and noncurrent contract liabilities are included in “Other Current Liabilities” and “Contract Liabilities,” respectively, in the Condensed Consolidated Balance Sheets.
Contract Cost Assets
The Company has capitalized certain costs incurred to obtain a contract or additional contract dedicated acreage or volumes that would not have been incurred if the contract or associated acreage and volumes had not been obtained. As of March 31, 2026 and December 31, 2025, the Company had contract acquisition cost assets of $68.6 million and $61.6 million, respectively. Current and noncurrent contract cost assets are included in “Prepaid and Other Current Assets” and “Deferred Charges and Other Assets,” respectively, in the Condensed Consolidated Balance Sheets. The Company amortizes these assets as cost of sales on a straight-line basis over the life of the associated long-term customer contract. The Company recognized costs of sales associated with these assets of $2.0 million and $1.7 million for the three months ended March 31, 2026 and 2025.
Property, plant and equipment, at carrying value, is as follows:
March 31,
December 31,
2026
2025
(In thousands)
Gathering, processing, and transmission systems and facilities
$
4,755,841
$
4,741,741
Vehicles
20,926
19,802
Computers and equipment
14,586
12,509
Less: accumulated depreciation
(1,113,875)
(1,048,589)
Total depreciable assets, net
3,677,478
3,725,463
Construction in progress
178,367
105,219
Land
35,820
35,554
Total property, plant, and equipment, net
$
3,891,665
$
3,866,236
The cost of property classified as “Construction in progress” is excluded from capitalized costs being depreciated. These amounts represent property that is not yet available to be placed into productive service as of the respective reporting date. The Company recorded $65.4 million and $62.1 million of depreciation expense for the three months ended March 31, 2026 and 2025, respectively. There were no impairment triggering events for property, plant and equipment during the three months ended March 31, 2026 and 2025.
5. INTANGIBLE ASSETS, NET
Intangible assets, net, are comprised of the following:
March 31, 2026
December 31, 2025
(In thousands)
Gross Amount
Accumulated Amortization
Net
Gross Amount
Accumulated Amortization
Net
Customer contracts
$
1,241,858
$
(856,915)
$
384,943
$
1,276,009
$
(862,508)
$
413,501
Right of way assets
243,850
(105,609)
$
138,241
238,876
(99,147)
$
139,729
Total
$
1,485,708
$
(962,524)
$
523,184
$
1,514,885
$
(961,655)
$
553,230
As of March 31, 2026, the remaining customer contract amortization terms range from eight months to sixteen years with weighted average amortization periods of approximately seven years and the right-of-way assets remaining amortization terms range from four months to thirteen years with weighted average amortization periods of approximately seven years. The overall remaining weighted average amortization period for the intangible assets as of March 31, 2026 was approximately seven years.
The Company recorded $36.5 million and $30.6 million of amortization expense for the three months ended March 31, 2026 and 2025, respectively. There was no impairment recognized on intangible assets for the three months ended March 31, 2026 and 2025.
As of March 31, 2026, the Company owned investments in the following long-haul pipeline entities in the Permian Basin. These investments were accounted for using the equity method of accounting. For each EMI pipeline entity, the Company has the ability to exercise significant influence based on certain governance provisions and its participation in the significant activities and decisions that impact the management and economic performance of the EMI pipeline. The table below presents the ownership percentages and investment balances held by the Company for each entity:
March 31,
December 31,
Ownership
2026
2025
(In thousands)
PHP
55.5%
$
1,579,875
$
1,591,384
Breviloba
33.0%
411,729
417,341
$
1,991,604
$
2,008,725
The unamortized, net basis differences included in the EMI pipeline balances were $191.7 million and $193.6 million as of March 31, 2026 and December 31, 2025, respectively. These amounts represent differences in the Company’s contributions to date and the Company’s underlying equity in the separate net assets within the financial statements of the respective entities. Unamortized basis differences are amortized on a straight-line basis into equity income of unconsolidated affiliates over the useful lives of the underlying pipeline assets. In addition, there was capitalized interest of $22.8 million and $23.0 million as of March 31, 2026 and December 31, 2025, respectively. Capitalized interest is amortized on a straight-line basis into equity income of unconsolidated affiliates.
The following table presents the activity in the Company’s EMIs for the three months ended March 31, 2026:
Permian Highway Pipeline LLC
Breviloba, LLC
Total
(In thousands)
Balance at December 31, 2025
$
1,591,384
$
417,341
$
2,008,725
Distributions(1)
(56,619)
(11,690)
(68,309)
Equity income, net(2)
45,110
6,078
51,188
Balance at March 31, 2026
$
1,579,875
$
411,729
$
1,991,604
(1)Distributions consisted of a return on investment of $68.3 million, which was included in cash flows from operating activities.
(2)For the three months ended March 31, 2026, equity income was net of amortization of basis differences and capitalized interest, which represents undistributed earnings, of $2.0 million from PHP and $0.2 million from Breviloba, LLC.
Summarized Financial Information
The following table represents selected data for the Company’s ongoing EMI pipelines (on a 100 percent basis) for the three months ended March 31, 2026 and 2025.
On March 31, 2026, the Partnership executed Amendment No. 2 to its accounts receivable securitization facility, originally dated April 2, 2024 (the “A/R Facility” and, as amended, the “Amended A/R Facility”), with PNC Bank, National Association (“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, with a Final Maturity Date of the earlier of (a) 60 days following the Scheduled Termination Date, and (b) the Termination Date unless such Termination Date occurs solely as a result of the Scheduled Termination Date’s occurrence. In addition, Amendment No. 2 introduced an option permitting Kinetik Receivables, LLC (“Kinetik Receivables”) to request an increase in commitments of up to $50.0 million in aggregate, subject to PNC Bank’s approval. Furthermore, Amendment No. 2 removed all sustainability-linked pricing provisions from the A/R Facility, including the sustainability rate adjustment, sustainability fee adjustment and related reporting obligations that were previously applicable to the yield rate and fees under the facility.
For the three months ended March 31, 2026, the aggregate fees and expenses paid directly to third parties for the amendment were immaterial.
Under the Amended A/R Facility, the Company is subject to pay a yield to the purchasers equal to the highest of (i) the Overnight Bank Funding Rate, plus 0.50%, (ii) the Prime Rate, and (iii) Daily Simple SOFR, plus 1.00%, and a drawn fee of 0.85%. The Company also pays a fee of 0.40% on the undrawn committed amount of the Amended A/R Facility. Yield and fees payable by the Company under the Amended A/R Facility are due monthly. As of March 31, 2026, eligible accounts receivable of $187.1 million were pledged to the Amended A/R Facility as collateral and $37.9 million was available to be invested by the purchasers.
Term Loan Credit Agreement
On May 30, 2025, the Partnership entered into a term loan credit agreement (the “Term Loan Credit Agreement”) among Toronto Dominion (Texas) LLC, as administrative agent and the banks and other financial institutions party thereto, as lenders. The Term Loan Credit Agreement provides for a senior unsecured credit facility of $1.15 billion and matures on May 30, 2028. The obligations under the Term Loan Credit Agreement are guaranteed by the Company.
Revolving Credit Agreement
On May 30, 2025, the Partnership entered into a new revolving credit agreement (the “Revolving Credit Agreement”) among PNC Bank, National Association, as administrative agent (“PNC Bank”), and the banks and other financial institutions party thereto, as lenders. 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, and matures on May 30, 2030. The obligations under the Revolving Credit Agreement are guaranteed by the Company. The aggregate fees and expenses paid directly to lenders and third parties in connection with the Revolving Credit Agreement were capitalized as debt issuance costs, included in “Prepaid and other current assets” and “Deferred charges and other assets” on the Condensed Consolidated Balance Sheets, and were amortized over the term of the revolving credit facility to interest expense using straight-line method. As of March 31, 2026, there were unamortized debt issuance costs of $8.0 million. As of March 31, 2026, we had an outstanding borrowing of $468.0 million and remaining borrowing capacity of $1.12 billion.
December 2028 Sustainability-Linked Senior Notes
On March 14, 2025, the Company completed an additional private placement of $250.0 million aggregate principal amount of 6.625% Sustainability-Linked Senior Notes due 2028 (the “New 2028 Notes”) at 101.25% of par. The New 2028 Notes were issued as additional notes under the Indenture dated as of December 6, 2023 (the “Existing Notes”). The New 2028 Notes and the Existing Notes (together, as “2028 Notes”), are treated as a single series of securities under the indenture and vote together as a single class. Interest on the 2028 Notes is payable semi-annually in arrears on June 15 and December 15 of each year. The 2028 Notes will mature on December 15, 2028.
June 2030 Sustainability-Linked Senior Notes
On June 8, 2022, the Partnership completed a private placement of $1.00 billion aggregate principal amount of its 5.875% Senior Notes due 2030 (the “2030 Notes”), which are fully and unconditionally guaranteed by the Company. The 2030 Notes
were issued at 99.59% of their face amount and will mature on June 15, 2030. Interest is payable semi-annually in arrears on June 15 and December 15 of each year.
The following table summarizes the Company’s debt obligations as of March 31, 2026 and December 31, 2025:
March 31,
December 31,
2026
2025
(In thousands)
A/R Facility(1)
$
187,100
$
165,200
Total current debt obligations
$
187,100
$
165,200
Unsecured term loan(2)
$
1,150,000
$
1,150,000
5.875% senior unsecured notes (“2030 Notes”)
1,000,000
1,000,000
6.625% senior unsecured notes (“2028 Notes”)
1,050,000
1,050,000
Revolving line of credit(3)
468,000
453,000
Total long-term debt
3,668,000
3,653,000
Unamortized debt issuance costs, net(4)
(22,970)
(24,374)
Unamortized debt premiums and discounts, net(5)
(902)
(906)
Total long-term debt, net
$
3,644,128
$
3,627,720
(1)The effective interest rate was 4.61% and 4.65% as of March 31, 2026 and December 31, 2025, respectively.
(2)The effective interest rate of the Term Loan Credit Agreement was 5.39% and 5.44% as of March 31, 2026 and December 31, 2025, respectively.
(3)The weighted average effective interest rate of the Revolving Credit Agreement was 5.39% and 5.44% as of March 31, 2026 and December 31, 2025, respectively.
(4)Fees paid directly to third parties were capitalized as debt issuance cost, included in the Condensed Consolidated Balance Sheets as direct deductions to respective loans, are amortized using effective interest method. As of March 31, 2026, unamortized debt issuance costs consisted of $1.9 million to the unsecured term loan, $8.4 million to the 2028 Notes and $12.6 million to the 2030 Notes.
(5)The original debt premium, net of debt discount were included in the Condensed Consolidated Balance Sheets as adjustments to respective loans and amortized over the life of the loans using the effective interest method.As of March 31, 2026, there were unamortized debt discount of $2.2 million to the unsecured term loan and debt premium, net, of $1.3 million to the 2028 Notes.
The table below presents the components of the Company’s financing costs, net of capitalized interest:
Three Months Ended March 31,
2026
2025
(In thousands)
Capitalized interest
$
(1,774)
$
(3,304)
Debt issuance costs
1,963
1,972
Interest expense
53,231
57,046
Total financing costs, net of capitalized interest
$
53,420
$
55,714
Compliance with our Covenants
The Term Loan Credit Agreement and the Revolving Credit Agreement contain customary covenants and restrictive provisions which may, among other things, limit the Partnership’s ability to create liens, incur additional indebtedness and make restricted payments and the Partnership’s ability to liquidate, dissolve, consolidate with or merge into or with any other person. The 2030 Notes and the 2028 Notes also contain covenants and restrictive provisions, which may, among other things, limit the Partnership’s and its subsidiaries’ ability to create liens to secure indebtedness.
The Amended A/R Facility contains covenants and restrictive provisions with respect to the Partnership and Kinetik Receivables that are customary for accounts receivable securitization facilities.
As of March 31, 2026, the Partnership was in compliance with all customary and financial covenants.
Our Revolving Credit Agreement maturing on May 30, 2030 includes a $200.0 million sublimit for the issuance of letters of credit. Our letters of credit obligations totaled $12.6 million as of March 31, 2026 and December 31, 2025. As of March 31, 2026, the Revolving Credit Agreement has a borrowing capacity of $1.12 billion available.
Fair Value of Financial Instruments
The fair value of the Company and its subsidiaries’ consolidated debt as of March 31, 2026 and December 31, 2025 was $3.88 billion. On March 31, 2026, the senior unsecured notes’ fair value was based on Level 1 inputs, the Term Loan Credit Agreement and the Revolving Credit Agreement’s fair value was based on Level 3 inputs and the Amended A/R Facility’s fair value approximates its carrying value due to its short-term nature.
8. ACCRUED EXPENSES
The following table provides the Company’s current accrued expenses on March 31, 2026 and December 31, 2025:
March 31,
December 31,
2026
2025
(In thousands)
Accrued product purchases
$
129,720
$
118,240
Accrued taxes
8,512
5,106
Accrued salaries, vacation, and related benefits
5,100
3,540
Accrued capital expenditures
20,789
15,309
Accrued interest
38,813
6,681
Accrued other expenses
24,637
23,174
Total accrued expenses
$
227,571
$
172,050
Accrued product purchases mainly accrue the liabilities related to producer payments and any additional business-related miscellaneous fees we owe to third parties, such as transport or capacity fees as of March 31, 2026 and December 31, 2025.
Accrued interest increased by $32.1 million, or over 400%, to $38.8 million as of March 31, 2026, compared to $6.7 million as of December 31, 2025. The increase was primarily due to payments of accrued interest on the 2028 Notes and 2030 Notes made in December 2025 pursuant to the loan agreements. The next interest payments on the 2028 Notes and 2030 Notes will be due in June 2026.
9. LEASES
Components of lease costs are included in the Condensed Consolidated Statements of Operations as “general and administrative expense” for real-estate leases and “operating expenses” for non-real estate leases. Total operating lease costs were $12.3 million for both the three months ended March 31, 2026 and 2025. Short-term lease costs were $1.8 million and $0.5 million for the three months ended March 31, 2026 and 2025, respectively. Variable lease costs were immaterial for the three months ended March 31, 2026 and 2025.
The following table presents other supplemental lease information:
Three Months Ended March 31,
2026
2025
(In thousands)
Operating cash flows from operating leases
$
12,063
$
12,232
Right-of-use assets obtained in exchange for new operating lease liabilities
$
—
$
15,767
Weighted-average remaining lease term — operating leases (in years)
Redeemable Noncontrolling Interest — Common Unit Limited Partners
The redemption option of the Common Unit is not legally detachable or separately exercisable from the instrument and is non-transferable; the Common Unit is redeemable at the option of the holder. Therefore, the Common Unit is accounted for as redeemable noncontrolling interest and classified as temporary equity on the Company’s Condensed Consolidated Balance Sheets. During the three months ended March 31, 2026, 4.0 million common units representing limited partner interests in the Partnership (“Common Units”) were redeemed on a one-for-one basis for shares of Class A Common Stock, par value $0.0001 per share of the Company (“Class A Common Stock”) and a corresponding number of shares of Class C Common Stock, par value $0.0001 per share of the Company (“Class C Common Stock”) were cancelled. There were 93.6 million Common Units and an equal number of Class C Common Stock issued and outstanding as of March 31, 2026. The Common Units fair value was approximately $4.51 billion as of March 31, 2026.
Common Stock
As of March 31, 2026, there were 68.8 million and 93.6 million shares, respectively, of Class A Common Stock and Class C Common Stock issued and outstanding (collectively, “Common Stock”).
Share Repurchase Program
In February 2023, the Board of Directors (the “Board”) approved a share repurchase program (“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, pursuant to which we are authorized to repurchase the Company’s Class A Common Stock for an aggregate purchase price of up to $500.0 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 maybe discontinued at any time without prior notice.
During the three months ended March 31, 2026, the Company did not repurchase any of its Class A Common Stock under the Repurchase Program.
Dividend
On February 13, 2026, the Company made cash dividend payments of $131.3 million to holders of Class A Common Stock and Common Units and $0.5 million was reinvested in shares of Class A Common Stock by Class A Common Stock and Common Units holders.
11. FAIR VALUE MEASUREMENTS
The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2026 and December 31, 2025:
Our derivative contracts consist of interest rate swaps and commodity swaps. The valuation of these derivative contracts involved both observable publicly quoted prices and certain credit valuation inputs that may not be readily observable in the marketplace. As such, derivative contracts are classified as Level 2 in the hierarchy. Refer to Note 12—Derivatives and Hedging Activitiesin the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for further discussion related to commodity swaps and interest rate derivatives.
Long-term debt’s carrying value can vary from fair value. See Note 7—Debt and Financing Costs in the Notes to Condensed Financial Statements for further information. The carrying amounts reported on the Condensed Consolidated Balance Sheets for the Company’s remaining financial assets and liabilities approximate fair value due to their short-term nature. There were no transfers between Levels 1, 2 or 3 of the fair value hierarchy during the three months ended March 31, 2026 and 2025.
12. DERIVATIVES AND HEDGING ACTIVITIES
The Company is exposed to certain risks arising from both its business operations and economic conditions, and it enters into certain derivative contracts to manage exposure to these risks. To minimize counterparty credit risk in derivative instruments, the Company enters into transactions with high credit-rating counterparties. The Company did not elect to apply hedge accounting to these derivative contracts and recorded the fair value of the derivatives on the Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025.
Interest Rate Risk
The Company manages market risks, including interest rate, liquidity and credit risk primarily by managing the amount, sources and duration of its debt funding and by using derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from activities that result in the payment of future-known and uncertain cash amounts, the value of which is determined by interest rates.
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract.
As of March 31, 2026, the Company had seven interest rate swap contracts with a notional amount of $1.00 billion that pays a fixed rate ranging from 3.06% to 3.42%. Of the seven interest rate swap contracts, two will reach maturity on December 31, 2026 and the remaining five will reach maturity on December 31, 2027. The fair value or settlement value of the consolidated interest rate swaps outstanding are presented on a gross basis on the Condensed Consolidated Balance Sheets.
The following table presents the fair value of derivative assets and liabilities related to the interest rate swap contracts:
March 31,
December 31,
2026
2025
(In thousands)
Derivative assets - current
$
1,573
$
4
Derivative assets - noncurrent
1,642
—
Total derivative assets
$
3,215
$
4
Derivative liabilities - current
$
—
$
135
Total derivative liabilities
$
—
$
135
The Company recorded cash settlements and changes in fair value of the interest rate swap contracts in “Interest expense” in the Condensed Consolidated Statements of Operations.The following table presents interest rate swap derivative activities for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
2026
2025
(In thousands)
Realized gain (loss) on interest rate swaps
$
342
$
(343)
Favorable fair value adjustment
$
3,688
$
327
Commodity Price Risk
The results of the Company’s operations may be affected by the market prices of oil, natural gas and NGLs. A portion of the Company’s revenue is directly tied to local natural gas, natural gas liquids and condensate prices in the Permian Basin and the U.S. Gulf Coast. Fluctuations in commodity prices also impact operating cost elements both directly and indirectly. Management regularly reviews the Company’s potential exposure to commodity price risk and manages exposure of such risk through commodity hedge contracts.
During the past twelve months, the Company entered into multiple commodity swap contracts based on the OPIS NGL Mont Belvieu prices for ethane, propane and butane, the Waha Basis index, the HSC index and the NYMEX West Texas Intermediate Crude index. These contracts are for various notional quantities of NGLs, natural gas and crude. Similarly, the Company has entered into various natural gas basis spread swaps. These contracts are effective over the next 1 to 20 months and are used to hedge against location price risk of the respective commodities resulting from supply and demand volatility and protect cash flows against price fluctuations.
The following table presents detailed information of commodity swaps outstanding as of March 31, 2026 (in thousands, except volumes):
The fair value or settlement value of the outstanding swaps are presented on a gross basis on the Condensed Consolidated Balance Sheets. The following table presents the fair value of derivative assets and liabilities related to commodity swaps:
March 31,
December 31,
2026
2025
(In thousands)
Derivative assets - current
$
5,958
$
13,902
Derivative assets - noncurrent
811
1,467
Total derivative assets
$
6,769
$
15,369
Derivative liabilities - current
$
42,046
$
5,371
Derivative liabilities - noncurrent
1,712
—
Total derivative liabilities
$
43,758
$
5,371
The Company recorded cash settlements and fair value adjustments on commodity swap derivatives in “Product revenue” in the Condensed Consolidated Statements of Operations. The following table presents commodity swap derivatives activities for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
2026
2025
(In thousands)
Realized loss on commodity swaps
$
(484)
$
(4,371)
Unfavorable fair value adjustment
$
(47,471)
$
(22,498)
13. SHARE-BASED COMPENSATION
The Company granted various Class A and Class C Shares, restricted stock units (“RSUs”) and performance stock units (“PSUs”) to members of the Board and employees. The Class A Shares and Class C Shares and RSUs are subject to service requirements for vesting and the PSUs have both service requirements and market condition performance requirements for vesting. These units are recorded at grant-date fair value and compensation expense is recognized on a straight‑line or graded straight-line basis over the vesting period within “general and administrative expenses” of the Condensed Consolidated Statements of Operations in accordance with FASB ASC 718, Compensation - Stock Compensation. Forfeitures are recognized as they occur.
Class A Shares and Class C Shares
The table below summarizes Class A Share and Class C Share activities for the three months ended March 31, 2026:
Number of Shares
Weighted Avg Grant-Date Fair Market Value Per Unit
Outstanding and unvested shares at December 31, 2025
3,040,628
$
28.58
Vested(1)
2,845,395
31.18
Outstanding and unvested shares at March 31, 2026(2)
195,233
$
—
(1)Represented vesting of 2,519,829 shares of Class A Shares and 325,566 shares of Class C Shares. All the vested shares were issued and outstanding and held in escrow upon the closing of the Altus Merger in 2022.
(2)Represented Class A shares that were issued in connection with the closing of the Altus Merger in 2022, which had zero grant date fair value as the vesting of such shares was contingent upon the sale of the Company’s Class A Common Stock by a certain third party. The likelihood and timing of this event could not be reasonably estimated as of March 31, 2026. If there is no additional sale of the Company’s Class A Common Stock made by the certain third party, all outstanding unvested shares will vest on February 25, 2028.
The table below summarizes aggregate intrinsic value (market value at vesting date) and grant-date fair value of vested Class A Shares and Class C Shares for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
2026
2025
(In thousands)
Aggregate intrinsic value of vested Class A Shares and Class C Shares
$
133,734
$
134,139
Grant-date fair value of vested Class A Shares and Class C Shares
$
88,705
$
73,545
Restricted Stock Units
RSUs were granted to certain executives and employees under the Kinetik Holdings Inc. Amended and Restated 2019 Omnibus Compensation Plan (the “2019 Plan”) with various service vesting requirements. Such RSUs may be settled only for shares of Class A Common Stock on a one-for-one basis, contingent upon continued employment.
The table below summarizes RSUs activities for the three months ended March 31, 2026:
Number of Shares
Weighted Avg Grant-Date Fair Market Value Per Unit
Outstanding and unvested shares at December 31, 2025
931,507
$
40.98
Granted
761,836
44.50
Vested
705,945
38.60
Forfeited
11,181
44.99
Outstanding and unvested shares at March 31, 2026
976,217
$
44.10
The table below summarizes aggregate intrinsic value (market value at vesting date) and grant-date fair value of RSUs for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
2026
2025
(In thousands)
Aggregate intrinsic value of vested RSUs
$
27,950
$
12,837
Grant-date fair value of vested RSUs
$
27,214
$
11,335
As of March 31, 2026, there were $31.0 million of unrecognized compensation costs related to the RSUs. These costs are expected to be recognized over a weighted average period of 1.87 years.
Performance Stock Units
The Company granted PSUs pursuant to the 2019 Plan to certain of its employees and executives. These PSUs vest and become earned upon the achievement of certain performance goals based on the Company’s annualized absolute total stockholder return and the Company’s relative total stockholder return as compared to the performance peer group during a three-year performance period. Depending on the results achieved during the three-year performance period, the actual number of Class A Common Stock that a holder of the PSUs earns at the end of the performance period may range from 0% to 200% of the target number of PSUs granted. The fair value of the PSUs is determined using a Monte Carlo simulation at the grant date. The Company recognizes compensation expense for PSUs on a straight-line basis over the performance period. Any PSU not earned at the end of the performance period will be forfeited.
The table below summarizes PSU activities for the three months ended March 31, 2026:
Number of Shares
Weighted Avg Grant-Date Fair Market Value Per Unit
Outstanding and unvested shares at December 31, 2025
347,497
$
41.41
Granted
171,756
56.27
Outstanding and unvested shares at March 31, 2026
519,253
$
46.32
No vesting or forfeiture occurred for PSUs for the three months ended March 31, 2026 and 2025.
The table below presents a summary of the grant-date fair value assumptions used to value the PSUs granted during 2026:
February 2026
Grant-date fair value per unit
$45.56
Beginning average price
$35.34
Risk-free interest rate
3.44%
Volatility factor
34%
Expected term
2.86 years
As of March 31, 2026, there were $15.7 million of unrecognized compensation costs related to the PSUs. These costs are expected to be recognized over a weighted average period of 2.18 years.
With respect to the above Class A Shares, Class C Shares, RSUs and PSUs, the Company recorded compensation expenses of $20.7 million for both three months ended March 31, 2026 and 2025.
14. INCOME TAXES
The Company is subject to U.S. federal income tax and state taxes. Income tax expense included in the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q is as follows:
Three Months Ended March 31,
2026
2025
(In thousands)
(Loss) income before income taxes
$
(5,903)
$
21,829
Income tax (benefit) expense
$
(778)
$
2,567
Effective tax rate
13.18
%
11.76
%
The effective tax rate for the three months ended March 31, 2026 and 2025 was lower than the statutory rate mainly due to the impact of tax attributable to noncontrolling interest related to the Common Unit limited partners.
The computation of basic and diluted net income or loss per share for the periods presented in the Condensed Consolidated Financial Statements is shown in the tables below:
Three Months Ended March 31,
2026
2025
(In thousands, except per share amounts)
Net (loss) income attributable to Class A common shareholders
$
(1,667)
$
6,130
Less: Net income available to participating unvested restricted Class A common shareholders(1)
(3,182)
(3,362)
Total net (loss) income attributable to Class A common shareholders
$
(4,849)
$
2,768
Weighted average shares outstanding - basic
65,910
60,162
Dilutive effectof unvested Class A common shares(2)
774
839
Weighted average shares outstanding - diluted(3)
66,684
61,001
Net (loss) income available per common share - basic
$
(0.07)
$
0.05
Net (loss) income available per common share - diluted
$
(0.07)
$
0.05
(1)Represents dividends paid to unvested Class A and Class C Shares, RSUs and PSUs.
(2)Includes dilutive effect from both RSUs and PSUs on unvested Class A common shares.
(3)The effect of an assumed exchange of outstanding Common Units (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) would have been anti-dilutive for all periods presented in which the Common Units were outstanding.
16. COMMITMENTS AND CONTINGENCIES
Accruals for loss contingencies arising from claims, assessments, litigation, environmental and other sources are recorded when it is probable that a liability has been incurred, and the amount can be reasonably estimated. These accruals are adjusted as additional information becomes available, or circumstances change. As of March 31, 2026 and December 31, 2025, the Company has accrued immaterial reserves related to litigations.
Litigation
The Company is a party to various legal actions arising in the ordinary course of its business. In accordance with FASB ASC 450, Contingencies, the Company accrues reserves for outstanding lawsuits, claims and proceedings when a loss contingency is probable and can be reasonably estimated. The Company expenses legal costs as incurred and estimates the amount of loss contingencies using current available information from legal proceedings, advice from legal counsel and other relevant external experts. Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of any legal proceedings, any amounts estimated or accrued may not represent the ultimate loss to the Company from the legal proceedings in question.
The Company and certain of its affiliates are currently defending against two lawsuits brought by Energy Transfer GC NGL Product Services, LLC (formerly Lone Star NGL Product Services, LLC) individually and on behalf of certain of its affiliates, which allege breach of contract and related tort claims arising from two long-term NGL purchase agreements, and which seek remedies in the form of monetary damages, declaratory relief, and specific performance. The first lawsuit was filed in 2021, and the second was filed in 2025, to assert similar claims against additional subsidiaries of the Company. The lawsuits have been consolidated in the Texas Business Court, and a bench trial was held in late March and April 2026. The matter is currently pending before the court. The Company intends to vigorously defend against these claims. At this time, the Company has accrued immaterial reserves, however, we cannot predict with certainty how these matters may ultimately be resolved.
In addition, the Company is involved in a litigation matter arising from Winter Storm Uri in February 2021 to recover approximately $11.6 million in receivables from a third party. The ultimate outcome remains uncertain given the current stage of the proceedings. Based on the creditworthiness of the counterparty and management’s assessment of the claims, defenses,
and related uncertainties, no allowances have been recorded. The Company will continue to monitor developments in this matter and update its evaluation as warranted.
Environmental Matters
The Company is subject to various local, state, and federal laws and regulations relating to various environmental matters during the ordinary course of business. Although we believe our operations are in substantial compliance with applicable environmental laws and regulations, risks of additional costs and liabilities are inherent in our operations. Moreover, changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly requirements could require the Company to make significant expenditures to attain and maintain compliance or may otherwise have a material adverse effect on its operations, competitive position, or financial condition.
Upon closing of the Durango Acquisition, the Company became potentially liable for civil penalties related to excess emission violations of certain gas plants and compressor stations acquired. The estimated environmental matter-related liability was $14.0 million as of March 31, 2026 and December 31, 2025. The estimated environmental matter-related liability was classified as a noncurrent liability and included in “Other liabilities” in the Consolidated Balance Sheets as of March 31, 2026 as the Company expects the matter to be settled beyond the next 12 months.
Contingent Liabilities
Durango Acquisition
On June 24, 2024, the Company consummated the previously announced Durango Acquisition. Pursuant to the Durango MIPA, Durango Seller was entitled to an earn-out of up to $75.0 million in cash contingent upon the completion of the Kings Landing Project and placing it into service. The earn-out was subject to reduction based on actual capital costs associated with the Kings Landing Project. The Company determined the earn-out consideration to be classified as a liability based on the settlement provision. In the fourth quarter of 2025, the Company paid $9.9 million to settle the contingent liability, which amount, in accordance with the MIPA, is subject to review by the Durango Seller, and may be subject to adjustment. No adjustment related to the settlement amount was made during the three months ended March 31, 2026.
Permian Gas Acquisition
As part of the acquisition of Permian Gas on June 11, 2019, consideration included a contingent liability arrangement with PDC Permian, Inc. (“PDC”). The arrangement requires additional monies to be paid by the Company to PDC on a per Mcf basis if the actual annual Mcf volume amounts exceed forecasted annual Mcf volume amounts starting in 2020 and continuing through 2029. The total monies paid under this arrangement are capped at $60.5 million and are payable on an annual basis over the earn-out period. PDC’s actual annual Mcf volume did not exceed the incentive forecast volume during the past six years and is not expected to over the next four years; therefore, no contingent consideration liability is accrued as of March 31, 2026 and December 31, 2025.
17. SEGMENTS
Midstream Logistics and Pipeline Transportation are our operating segments representing the Company’s segments for which discrete financial information is available and utilized on a regular basis by our CODM to make key operating decisions, assess performance and allocate resources. These segments represent strategic business units with differing products and services. No operating segments have been aggregated to form the reportable segments. Therefore, our two operating segments represent our reportable segments. The activities of each of our reportable segments from which the Company earns revenues and incurs expenses are described below:
•Midstream Logistics: The Midstream Logistics segment operates under three revenue streams, 1) gas gathering and processing, 2) crude oil gathering, stabilization and storage services and 3) produced water gathering and disposal.
•Pipeline Transportation: The Pipeline Transportation segment consists of equity investment interests in two Permian Basin pipelines that access various points along the U.S. Gulf Coast and Mexico markets, Kinetik NGL Pipelines, Brandywine Pipeline and Delaware Link Pipeline. The current operating pipelines transport natural gas and NGLs.
Our Chief Executive Officer, who is the CODM, uses segment net income or loss including noncontrolling interest adjusted for interest, taxes, depreciation and amortization, gain or loss on disposal of assets, the proportionate EBITDA from our EMI pipelines, 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 non-recurring charges (“Segment Adjusted EBITDA”) to assess performance of each operating segment. For both segments, the CODM uses Segment Adjusted EBITDA to allocate resources. The CODM considers budget-to-actual and forecast-to-actual variances on a monthly basis for both measures when making decisions about allocating capital and personnel to the segments.
The Midstream Logistics segment accounts for more than 99% of the Company’s operating revenues, cost of sales (excluding depreciation and amortization), operating expenses and ad valorem expenses. The Pipeline Transportation segment contains all of the Company’s equity method investments, which contribute more than 89% of the segment’s adjusted EBITDA. Corporate and Other activities contain the Company’s executive and administrative functions, including more than 86% of the Company’s general and administrative expenses and all of the Company’s debt service costs.
The Company regularly provides management reports to the CODM that include cost of sales, operating, general and administrative expenses related to the segments, which are all considered to be significant.
The following tables present the Segment Adjusted EBITDA of the Company’s reportable segments and reconciliations of the segment profits to consolidated income before income tax expenses for the three months ended March 31, 2026 and 2025:
Midstream Logistics
Pipeline Transportation
Corporate and Other(1)
Elimination
Consolidated
For the three months ended March 31, 2026
(In thousands)
Revenue
$
403,720
$
2,285
$
—
$
—
$
406,005
Other revenue
3,962
9
—
—
3,971
Intersegment revenue(2)
—
6,824
—
(6,824)
—
Total segment operating revenue
407,682
9,118
—
(6,824)
409,976
Costs of sales (excluding depreciation and amortization)
(188,588)
(136)
—
—
(188,724)
Intersegment costs of sales
(6,824)
—
—
6,824
—
Operating expenses(3)
(78,302)
(774)
—
—
(79,076)
General and administrative expenses
(5,510)
(260)
(38,430)
—
(44,200)
Proportionate EMI EBITDA
—
70,029
—
—
70,029
Other segment items(4)
50,463
—
32,732
—
83,195
Segment Adjusted EBITDA(5)
$
178,921
$
77,977
$
(5,698)
$
—
$
251,200
Reconciliation of Segment Adjusted EBITDA to income (loss) before income taxes
Costs of sales (excluding depreciation and amortization)
(223,360)
(4)
—
—
(223,364)
Intersegment costs of sales
(4,804)
—
—
4,804
—
Operating expenses(3)
(69,909)
(485)
—
—
(70,394)
General and administrative expenses
(7,125)
(372)
(30,095)
—
(37,592)
Proportionate EMI EBITDA
—
87,530
—
—
87,530
Other segment items(4)
24,541
—
26,033
—
50,574
Segment Adjusted EBITDA(5)
$
160,198
$
93,881
$
(4,062)
$
—
$
250,017
Reconciliation of Segment Adjusted EBITDA to income (loss) before income taxes
Segment Adjusted EBITDA(5)
$
160,198
$
93,881
$
(4,062)
$
—
$
250,017
Add back:
Other interest income
—
—
790
—
790
Gain on disposal of assets, net
40
—
—
—
40
Equity in earnings of unconsolidated affiliates
—
57,478
—
—
57,478
Deduct:
Interest expense
28
—
55,686
—
55,714
Depreciation and amortization expenses
90,359
2,308
6
—
92,673
Amortization of contract costs
1,656
—
—
—
1,656
Proportionate EMI EBITDA
—
87,530
—
—
87,530
Share-based compensation
—
—
20,653
—
20,653
Commodity hedging unrealized loss
18,127
—
—
—
18,127
Integration costs
2,475
—
1,063
—
3,538
Litigation costs
—
—
3,015
—
3,015
Other one-time costs or amortization
2,288
—
1,302
—
3,590
Income (loss) before income taxes
$
45,305
$
61,521
$
(84,997)
$
—
$
21,829
(1)Corporate and Other represents those results that: (i) are not specifically attributable to an operating segment; (ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense items. Items included here to reconcile operating segments’ profit and loss with the Company’s consolidated profit and loss.
(2)The Company accounts for intersegment sales at market prices, while it accounts for asset transfers at book value. Intersegment revenue is eliminated at consolidation.
(3)Operating expenses include ad valorem taxes.
(4)Other segment items include certain other income items, share-based compensation, adjustments related to amortization of contract costs, commodity hedging unrealized gain or loss, integration costs, litigation costs and other one-time costs or amortization.
(5)Segment Adjusted EBITDA is a non-GAAP measure; please see Key Performance Metrics in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q, for a definition and reconciliation to the GAAP measure.
The following tables present other segment expenses that are not included in the segment profit measurements above for the three months ended March 31, 2026 and 2025:
Midstream Logistics
Pipeline Transportation
Corporate and Other (1)
Consolidated
For the three months ended March 31, 2026
(In thousands)
Income tax benefit
$
—
$
—
$
(778)
$
(778)
Capital expenditure
$
92,575
$
1,309
$
—
$
93,884
For the three months ended March 31, 2025
Income tax expenses
$
—
$
—
$
2,567
$
2,567
Capital expenditure(2)(3)
$
81,232
$
243
$
—
$
81,475
March 31,
December 31,
2026
2025
Total assets:
(In thousands)
Midstream Logistics(4)
$
4,724,647
$
4,714,723
Pipeline Transportation(5)
2,137,517
2,153,280
Segment total assets
6,862,164
6,868,003
Corporate and other(1)
248,579
227,608
Total assets
$
7,110,743
$
7,095,611
(1)Corporate and Other activities represents those results that: (i) are not specifically attributable to an operating segment; (ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense items. Items included here to reconcile operating segments profit and loss with the Company’s consolidated profit and loss.
(2)Excludes capital assets acquired in business combinations and included in the Midstream Logistics segment. SeeNote 2—Business Combinationsin the Notes to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information.
(3)Excludes contributions or acquisitions made in the Company’s EMIs that are included in the Pipeline Transportation segment. SeeNote 6—Equity Method Investments in the Notes to our Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional information.
(4)The Midstream Logistics segment includes goodwill of $5.1 million as of March 31, 2026 and December 31, 2025.
(5)The Pipeline Transportation segment includes investments in unconsolidated affiliates of $1.99 billion and $2.01 billion as of March 31, 2026 and December 31, 2025, respectively.
18. SUBSEQUENT EVENTS
On April 16, 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 of record as of April 24, 2026 on May 1, 2026. The Company, on April 16, 2026 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 May 1, 2026.
Subsequent to the quarter ended March 31, 2026, 4.8 million Common Units were redeemed on a one-for-one basis for shares of Class A Common Stock and a corresponding number of shares of Class C Common Stock were cancelled. The Company now owns an approximately 45% limited partner interest in the Partnership as of May 6, 2026.
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 months ended March 31, 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 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 two EMI pipelines originating in the Permian Basin with various access points to the U.S. Gulf Coast and Mexico markets, as well as Kinetik NGL and Delaware Link Pipelines. 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 4,200 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 was 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 580,000 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) 33.0% equity interest in Breviloba, the owner of Shin Oak, which is operated by Enterprise Products Operating LLC.
Kinetik NGL Pipeline System. The Kinetik NGL Pipeline System consists 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 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.
ECCC Pipeline. The ECCC Pipeline is under construction and will provide connection from Eddy County, New Mexico to Culberson County, Texas, and approximately 150 MMcfp/d of initial rich gas throughput capacity. The ECCC Pipeline is estimated to be in service during the second quarter of 2026.
On March 31, 2026, the Partnership executed Amendment No. 2 to its accounts receivable securitization 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 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 from the A/R Facility, including the sustainability rate adjustment, sustainability fee adjustment and related reporting obligations.
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. Recent geopolitical developments in the Middle East, including the ongoing military conflict involving Iran, the closure of the Strait of Hormuz and related disruptions to global energy markets, each have contributed to heightened volatility in crude oil, natural gas, and NGL pricing and increased uncertainty in global supply chains. While the Company’s midstream assets and operations are primarily located in the Permian Basin and our service revenue is supported by fee‑based contracts, our product sales revenue is exposed to commodity price fluctuations. In addition, sustained volatility in global energy markets could indirectly impact producer activity levels, customer credit profiles, and overall demand for our services. Furthermore, prolonged geopolitical instability may contribute to broader macroeconomic effects, including inflationary pressures, higher interest rates, and constrained capital availability. 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.
Inflation and Interest Rates
The annual rate of inflation in the United States was 3.3% in March 2026 as measured by the Consumer Price Index. In light of the recent economic activity and labor market conditions, the FOMC decided to maintain the target range for the federal funds rate at 3.50% - 3.75% during its meeting in April 2026. During the meeting, the FOMC suggested that the economic activity has been expanding at a solid pace; job gains have remained low, the unemployment rate has changed minimally in the recent months and inflation remains somewhat elevated, in part reflecting the recent increase in global energy prices. The FOMC also noted that uncertainty about the economic outlook remained elevated, including because of the implications of developments in the Middle East. The FOMC remains attentive to the risks to both sides of its dual mandate and seeks to achieve maximum employment and inflation at the rate of 2.00% over the long run. The Company will continue to monitor the FOMC’s monetary policy and interest rate movement. Refer to Note 12—Derivatives and Hedging Activitiesin the Notes to Condensed Consolidated Financial Statements in this Quarterly Report for additional discussion regarding our hedging strategies and objectives for interest rate risk.
The following table presents the Company’s results of operations for the periods presented:
Three Months Ended March 31,
2026
2025
% Change
(In thousands, except percentages)
Operating revenues:
Service revenue
$
93,772
$
127,926
(27
%)
Product revenue
312,233
312,505
—
%
Other revenue
3,971
2,832
40
%
Total operating revenues
409,976
443,263
(8
%)
Operating costs and expenses:
Cost of sales (excluding depreciation and amortization) (1)
188,724
223,364
(16
%)
Operating expenses
70,301
63,603
11
%
Ad valorem taxes
8,775
6,791
29
%
General and administrative expenses
44,200
37,592
18
%
Depreciation and amortization expenses
101,833
92,673
10
%
Gain on disposal of assets, net
(19)
(40)
(53
%)
Total operating costs and expenses
413,814
423,983
(2
%)
Operating (loss) income
(3,838)
19,280
(120
%)
Other income (expense):
Interest and other income
167
785
(79
%)
Interest expense
(53,420)
(55,714)
(4
%)
Equity in earnings of unconsolidated affiliates
51,188
57,478
(11
%)
Total other (expense) income, net
(2,065)
2,549
(181
%)
(Loss) income before income taxes
(5,903)
21,829
(127
%)
Income tax (benefit) expense
(778)
2,567
(130
%)
Net (loss) income including noncontrolling interest
$
(5,125)
$
19,262
(127
%)
(1)Cost of sales (excluding depreciation and amortization) is net of gas service fees totaling $102.3 million and $62.2 million for the three months ended March 31, 2026 and 2025, respectively, for certain volumes, where we function as principal.
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
Revenues
For the three months ended March 31, 2026, revenue decreased by $33.3 million, or 8%, to $410.0 million, compared to $443.3 million for the same period in 2025. The decrease was primarily driven by lower gas service revenues on gathered gas volumes where we function as an agent versus principal.
Service revenue
Service revenue for the three months ended March 31, 2026 decreased by $34.2 million, or 27%, to $93.8 million, compared to $127.9 million for the same period in 2025. The period-over-period gathered and processed gas volumes increased by 105.9 MMcf per day, or 5% and 14.1 MMcf per day, or 1%, respectively. However, the total gathered and processed gas volumes where we function as the agent decreased period-over-period, resulting in a decrease of $33.5 million to gas service fees presented as revenues, or 31%. Over 97% of service revenues are included in the Midstream Logistics segment for the three months ended March 31, 2026.
Product revenue
Product revenue for the three months ended March 31, 2026 was flat compared to the same period in 2025, due to the confluence of offsetting variables. Period-over-period NGL prices and natural gas residue prices decreased by $5.59 per barrel, or 23% and $1.43 per MMBtu, or 53%, respectively. These pricing decreases were partially offset by period-over-period increases in NGL and condensate volumes sold of 3.2 million barrels, or 26%. Period-over-period increases in natural gas residue sales volumes of 0.9 million MMBtu, or 9%, and condensate prices of $1.08 per barrel, or 2%, also helped partially offset the pricing headwinds. Product revenue was also impacted by our commodity hedging activities. Realized and unrealized losses increased $25.0 million for the three months ended March 31, 2026 compared to the same period in 2025. 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 March 31, 2026, cost of sales decreased by $34.6 million, or 16%, to $188.7 million, compared to $223.4 million for the same period in 2025. The decrease was primarily driven by the aforementioned period-over-period decreases in NGL and natural gas prices, partially offset by an increase in NGL, condensate and natural gas residue volumes sold. Over 99% of costs of sales (excluding depreciation and amortization) are included in the Midstream Logistics segment.
Operating expenses
Operating expenses increased by $6.7 million, or 11%, to $70.3 million for the three months ended March 31, 2026, compared to $63.6 million for the same period in 2025. The increase was mainly driven by increases in utility costs of $4.6 million associated with increasing volumes on the system, and higher labor costs of $2.2 million, primarily related to the Kings Landing processing complex going into service during September 2025. Over 99% of operating expenses are included in the Midstream Logistics segment.
General and administrative expenses
General and administrative expenses increased by $6.6 million, or 18%, to $44.2 million for the three months ended March 31, 2026, compared to $37.6 million for the same period in 2025. The increase was mainly driven by an increase in legal fees of $9.0 million, partially offset by a decrease in labor and professional fees of $2.2 million.
Depreciation and amortization expense
Depreciation and amortization expense increased by $9.2 million, or 10%, to $101.8 million for the three months ended March 31, 2026, compared to $92.7 million for the same period in 2025. Of the total increase, $6.3 million relates to Durango and Kings Landing being placed into service in September 2025, and the balance is associated with new assets being placed in service over the course of 2025.
Equity in earnings of unconsolidated affiliatesdecreased by $6.3 million, or 11%, to $51.2 million for the three months ended March 31, 2026, compared to $57.5 million for the same period in 2025. The decrease was primarily driven by decreases in equity in earnings from Breviloba of $5.6 million due to normal operations, and EPIC of $3.4 million due to the divestiture of the Company’s equity interest in EPIC in October 2025. The decrease was partially offset by an increase in equity in earnings from PHP of $2.7 million.
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, 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 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 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 or loss including noncontrolling interest. Adjusted EBITDA should not be considered as an alternative to the GAAP measure of net income or loss 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 or loss 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 (loss) income including noncontrolling interest to the non-GAAP financial measure of Adjusted EBITDA.
Three Months Ended March 31,
2026
2025
% Change
(In thousands, except percentages)
Reconciliation of net (loss) income including noncontrolling interest to Adjusted EBITDA
Net (loss) income including noncontrolling interest
$
(5,125)
$
19,262
(127
%)
Add back:
Interest expense
53,420
55,714
(4
%)
Income tax (benefit) expense
(778)
2,567
(130
%)
Depreciation and amortization expenses
101,833
92,673
10
%
Amortization of contract costs
1,950
1,656
18
%
Proportionate EMI EBITDA
70,029
87,530
(20
%)
Share-based compensation
20,663
20,653
—
%
Commodity hedging unrealized loss
46,987
18,127
159
%
Integration costs
368
3,538
(90
%)
Litigation costs
11,613
3,015
NM
Other one-time cost or amortization
1,614
3,590
(55
%)
Deduct:
Interest income
167
790
(79
%)
Gain on disposal of assets, net
19
40
(53
%)
Equity in earnings of unconsolidated affiliates
51,188
57,478
(11
%)
Adjusted EBITDA
$
251,200
$
250,017
—
%
NM - not meaningful
For the three months ended March 31, 2026, Adjusted EBITDA increased by $1.2 million, or 0.5%, to $251.2 million, compared to $250.0 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 Operationsto this Quarterly Report, the change reflected lower operating revenues of $33.3 million, which was primarily driven by an increase in unrealized loss on commodity hedging activities of $28.9 million, thus mostly EBITDA neutral, and lower proportionate EMI EBITDA of $17.5 million, partially offset by lower cost of sales (excluding depreciation and amortization), operating expenses, ad valorem taxes and general and administrative expenses, totaling $19.4 million. The remaining decrease was fully offset by higher net one-time costs related primarily to integration and litigation totaling $3.5 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 non-recurring charges. The following table presents Segment Adjusted EBITDA for the three months ended March 31, 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.
(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 $18.7 million, or 12%, to $178.9 million for the three months ended March 31, 2026, compared to $160.2 million for the same period in 2025. The change reflected lower cost of sales (excluding depreciation and amortization), operating expenses, ad valorem taxes and general and administrative expenses totaling $26.0 million, partially offset by a lower operating revenues of $33.2 million, which was primarily driven by an increase in unrealized loss on commodity hedging activities of $28.9 million, which is EBITDA neutral. The reasons for the fluctuations are discussed in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operationsto this Quarterly Report on Form 10-Q.
Pipeline Transportation Segment Adjusted EBITDA decreased by $15.9 million, or 17%, to $78.0 million for the three months ended March 31, 2026, compared to $93.9 million for the same period in 2025. The decrease was mainly due to lower proportionate EMI EBITDA of $17.5 million, primarily related to the divestiture of the Company’s equity interest in EPIC during October 2025.
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 Costsin 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 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, quarterly cash dividends and repurchases of its Class A Common Stock pursuant to the Repurchase Program from time to time.
During the three months ended March 31, 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:
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 March 31, 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.
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 March 31, 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 March 31, 2026, we had an outstanding borrowing of $468.0 million and remaining borrowing capacity of $1.12 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 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 March 31, 2026, eligible accounts receivable of $187.1 million were pledged to the Amended A/R Facility as collateral and $37.9 million was available to be invested by the purchasers.
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 three months ended March 31, 2026 and 2025, capital spending mainly consisted of spending on property, plant and equipment totaling $83.0 million and $74.5 million,
respectively, and intangible asset purchases totaling $6.1 million and $6.9 million, respectively. 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 Investmentsin 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:
Three Months Ended March 31,
2026
2025
(In thousands)
Cash provided by operating activities
$
180,431
$
176,830
Cash used in investing activities
$
(89,129)
$
(260,138)
Cash (used in) provided by financing activities
$
(94,533)
$
88,547
Operating activities. Net cash provided by operating activities increased by $3.6 million for the three months ended March 31, 2026 to $180.4 million, compared to $176.8 million for the same period in 2025. The change in the operating cash flows reflected (i) a decrease in net income including noncontrolling interest of $24.4 million; (ii) an increase in adjustments related to non-cash items of $43.7 million, which was mainly driven by an increase in non-cash derivative fair value adjustments and lower derivative cash settlements, together totaling $26.2 million, an increase in depreciation and amortization expense of $9.2 million, and a decrease in equity in earnings of unconsolidated affiliates of $6.3 million; and (iii) a decrease in working capital of $15.7 million.
Investing activities. Net cash used in investing activities decreased by $171.0 million for the three months ended March 31, 2026 to $89.1 million, compared to $260.1 million used in the same period in 2025. The decrease was primarily driven by a decrease in cash used in business acquisitions of $178.4 million related to the Barilla Draw Acquisition completed in January 2025. The decrease was partially offset by higher capital spending for property, plant and equipment of $8.5 million.
Financing activities. Net cash used in financing activities was $94.5 million for the three months ended March 31, 2026, which was primarily comprised of net proceeds from revolving credit facility and Amended A/R Facility of $36.8 million, fully offset by cash dividends of $131.3 million paid to the holders of Class A Common Stock and Common Units, compared with net cash provided by financing activities of $88.5 million for the three months ended March 31, 2025, which was primarily comprised of net proceeds from the Company’s long-term debt, revolving credit facility and Amended A/R Facility of $211.7 million, partially offset by cash dividends of $123.2 million paid to the holders of Class A Common Stock and Common Units.
Dividend
During the three months ended March 31, 2026, the Company made cash dividend payments of $131.3 million to holders of Class A Common Stock and Common Units and $0.5 million was reinvested in shares of Class A Common Stock by holders of Class A Common Stock and Common Units.
On April 16, 2026, the Board declared a cash dividend of $0.81 per share on the Company’s Class A Common Stock which was paid on May 1, 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 May 1, 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.”
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, pursuant to which we are authorized to repurchase the Company’s Class A Common Stock for an aggregate purchase price of up to $500.0 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 months ended March 31, 2026, the Company did not repurchase any of its Class A Common Stock under the Repurchase Program.
Off-Balance Sheet Arrangements
As of March 31, 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 Commission on February 26, 2026.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and Qualitative Disclosure About Market Risk
The Company is exposed to various market risks, including the effects of adverse changes in commodity prices and credit risk as described below. The Company continually monitors its market risk exposure, including the impact of regional and international political instability, foreign and domestic trade policies under the Trump Administration and monetary policy addressing the interest rate and inflation trend, which continued to have significant impact on volatility and uncertainties in the financial markets during 2025.
Commodity Price Risk
The results of the Company’s operations may be affected by the market prices of oil, natural gas and NGLs. A portion of the Company’s revenue is directly tied to local crude, natural gas, NGLs and condensate prices in the Permian Basin and the U.S. Gulf Coast. Fluctuations in commodity prices also impact operating cost elements both directly and indirectly. For example, commodity prices directly impact costs such as power and fuel, which are expenses that increase or decrease in line with changes in commodity prices. Commodity prices also affect industry activity and demand, thus indirectly impacting the cost of items such as labor and equipment rentals. Management regularly reviews the Company’s potential exposure to commodity price risk and uses financial or physical arrangements to mitigate potential volatility. Refer to Note 12—Derivatives and Hedging Activitiesin the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Qfor additional discussion regarding our hedging strategies and objectives.
Interest Rate Risk
As of March 31, 2026, the Company had $1.81 billion of floating rate debt outstanding. A hypothetical 1.0% change in interest rates would result in a maximum potential change to annual interest expense of approximately $18.1 million for the Revolving Credit Agreement, the Term Loan Credit Agreement and the Amended A/R Facility. Refer to Note 12—Derivatives and Hedging Activitiesin the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional discussion regarding our related hedging strategies and objectives.
Credit Risk
There have been no material changes in the Company’s credit risk exposure that would affect the quantitative or qualitative disclosures presented as of December 31, 2025, in Part II, Item 7A in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Commission on February 26, 2026.
As of March 31, 2026, pursuant to Rule 13a-15(b) of the Exchange Act, the Company conducted an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Accounting and Administrative Officer, who serves as the principal accounting officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Accounting and Administrative Officer concluded that the design and operation of the Company’s disclosure controls and procedures were effective as of March 31, 2026.
The Company’s disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the applicable rules and forms of the SEC. The Company’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Accounting and Administrative Officer, as appropriate, to allow timely decisions regarding required disclosure.
Change in Internal Control over Financial Reporting
Except as described above, there were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended March 31, 2026, that have materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
For further information regarding legal proceedings, refer to Note 16—Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
ITEM 1A. RISK FACTORS
Please refer to Part I, Item 1A — “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed on February 26, 2026.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Repurchase of Class A Common Stock
During the three months ended March 31, 2026, the Company did not repurchase any of its Class A Common Stock under the Repurchase Program.
ITEM 5. OTHER INFORMATION
Trading Arrangements
During the three months ended March 31, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted,terminated or modified a “Rule 10b5-1 trading arrangement” or non-Rule 10b5-1 trading arrangement (as each term is defined in Item 408 of Regulation S-K).
The following financial statements from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows, (iv) Condensed Consolidated Statements of Changes in Equity and Noncontrolling Interests and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
101.SCH*
–
Inline XBRL Taxonomy Schema Document.
101.CAL*
–
Inline XBRL Calculation Linkbase Document.
101.DEF*
–
Inline XBRL Definition Linkbase Document.
101.LAB*
–
Inline XBRL Label Linkbase Document.
101.PRE*
–
Inline XBRL Presentation Linkbase Document.
104*
–
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
KINETIK HOLDINGS INC.
Dated:
May 7, 2026
/s/ Jamie Welch
Jamie Welch
Chief Executive Officer, President and Director
(Principal Executive Officer)
Dated:
May 7, 2026
/s/ Steven Stellato
Steven Stellato
Executive Vice President, Chief Accounting and
Chief Administrative Officer
(Principal Financial Officer and Principal Accounting Officer)
