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美國
證券交易委員會
華盛頓特區20549

表格10-Q
（標記一）
☒根據1934年證券交易法第13或15(d)節的季度報告
報告季度截止日期2024年9月30日
或者
☐根據1934年證券交易法第13或15(d)節的轉型報告書
在過渡期間從_________到_________
委託文件編號：001-39866001-38048
Kinetik Logo.jpg
KINETIK HOLDINGS INC。
(根據其章程規定的註冊人準確名稱)
特拉華州81-4675947
(成立或其他組織管轄權或註冊地
（納稅人識別號碼）
2700 Post Oak Blvd, 300號套房
休斯頓, 得克薩斯州, 77056
（主要執行辦事處地址）
(郵政編碼)

(713) 621-7330
(註冊人電話號碼，包括區號)

每個交易所的名稱
每一類的名稱交易標誌在其上註冊的交易所的名稱
每股普通股A類股票，面值爲$0.0001KNTK請使用moomoo賬號登錄查看New York Stock Exchange
請勾選該欄，標明公司是否（1）在過去12個月（或公司必須定期提交此類報告的較短期間）內提交了《證券交易法》第13或15(d)條要求提交的所有報告，並且（2）過去90天公司一直受到此類提交要求的影響。 Yes ☒ 沒有 ☐
請用勾號勾選以下內容：c註冊人是否已在過去的12個月內（或c註冊人需要提交此類文件的更短期限內）按照S-T法規第405條規定的要求遞交了每份互動數據文件。Yes ☒ 沒有 ☐
請勾選標記以說明註冊人是大型快速申報人、加速申報人、非加速申報人、較小的報告公司還是新興成長型公司。請查看《交易所法》第120億.2條中「大型快速申報人」、「加速申報人」、「較小的報告公司」和「新興成長型公司」的定義。
大型加速文件申報人☐加速文件提交人 ☒
非加速文件提交人☐更小的報告公司 ☐
新興成長公司☐
如果是新興成長型企業，請勾選複選標記，表明註冊者已選擇不使用延長過渡期來符合根據證券交易法第13(a)條規定提供的任何新財務會計準則。 ☐
在選項前打勾，表示註冊者是否爲外殼公司（按照《交易法》第12b-2條的定義）。是☐ 沒有 ☒
截至2024年10月31日，註冊公司A類普通股每股面值0.0001美元的已發行和流通股數量
59,754,273 
截至2024年10月31日，註冊公司C類普通股每股面值0.0001美元的已發行和流通股數量
97,783,034 

目錄
目錄

 
項
第一部分 — 財務信息
1.
基本報表(未經審計)
2.
3.
4.
第二部分 — 其他信息
1.
1A.
2.
5.
6.
i
目錄
術語表
以下是在本季度10-Q表格中可能使用的縮寫詞和定義，以及在石油和天然氣行業的勘探、生產和中游-腦機部門中常用的術語：
•華沙州立大學。 會計準則更新
•桶 42美國加侖液體容積，即一桶原油、凝析油或天然氣液體成交量。
•Bcf。 十億立方英尺
•Bcf/d。 每天一億立方英尺
•千熱單位。 一英熱單位是將一磅水的溫度提高一華氏度所需的熱量。
•CODM（首席運營決策人）首席運營決策人
•德拉華盆地位於Permian盆地西部的Delaware盆地，覆蓋了640萬英畝的面積。
•板塊。 一個區域，包括單一油藏或多個油藏，所有這些油藏都集中在同一地質構造特徵或地層條件控件上。該區塊名稱指的是地表區域，儘管它可能同時指地表和地下的生產層。
•FASb。 財務會計準則委員會
•通用會計準則美國通用會計準則
•MBbl。 一千桶wti原油、凝析油或天然氣液體
•每日MBbl。 每天一MBbl
•Mcf。 一千立方英尺的天然氣
•每日百萬立方英尺。 每日一百萬立方英尺。
•MMBtu。 一百萬Btu
•百萬立方英尺。 一百萬立方英尺的天然氣
•每日百萬立方英尺。 每日一百萬立方英尺
•MVC最低成交量承諾
•NGL或者NGLs。 天然氣液體。在天然氣中發現的碳氫化合物，可能被提取爲液化石油氣和天然汽油
•吞吐量。 在特定時期，通過管道、工廠、終端或其他設施運輸或通過的原油、天然氣、液化天然氣、水和精煉石油產品的體積。
•SEC美國證券交易委員會
•SOFR隔夜擔保融資利率



ii
目錄
前瞻性陳述與風險
本10-Q表格中包含「前瞻性聲明」，根據1933年修正案第27A條和1934年修正案第21E條以及證券交易所法（即「交易法」）。 本季度報告中包含或引用的除歷史事實陳述之外的所有內容，包括但不限於關於我們未來財務狀況、業務策略、預算、預計收入、預計成本和計劃以及管理層對未來經營目標的聲明均爲前瞻性聲明。此外，前瞻性聲明通常通過使用「可能」，「將」，「可能」，「期望」，「打算」，「計劃」，「估計」，「預期」，「計劃」，「相信」， 「繼續」，「尋求」，「指導」，「可能」，「展望」，「可能」，「潛在」，「前景」，「應該」，「將」或類似經濟行動發送。「不見得，不見得，不見得，不見得，不見得。落戶」。雖然我們認爲這樣的前瞻性聲明在情況下是合理的，但我們無法保證這些期望是否會被證明是正確的。可能導致實際結果與我們的期望差異的主要因素包括但不限於有關的假設：
•our ability to integrate operations or realize any anticipated benefits, savings or growth from the Durango Acquisition (as defined herein). 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 recruitment and retention of our officers and personnel;
•the likelihood of success of 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 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 the armed conflicts in Ukraine, Israel and the Gaza Strip and elsewhere in the Middle East, the impact of continued inflation, central bank policy actions 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, 2023, filed on March 5, 2024.
Other factors or events that could cause the Company’s actual results 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 on Form 10-Q. 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.
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PART I — FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
KINETIK HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(In thousands, except per share data)
Operating revenues:
Service revenue$103,100 $104,349 $301,710 $310,325 
Product revenue290,423 221,280 787,092 586,534 
Other revenue2,839 4,672 8,411 10,685 
Total operating revenues(1)
396,362 330,301 1,097,213 907,544 
Operating costs and expenses:
Costs of sales (exclusive of depreciation and amortization)(2) (3)
144,586 147,756 444,786 374,100 
Operating expenses55,804 42,925 143,278 118,804 
Ad valorem taxes5,896 5,607 18,400 14,954 
General and administrative expenses29,619 22,751 94,846 73,131 
Depreciation and amortization expenses87,583 69,935 236,250 208,271 
Loss on disposal of assets
— 2,927 4,090 15,166 
Total operating costs and expenses323,488 291,901 941,650 804,426 
Operating income72,874 38,400 155,563 103,118 
Other income (expense):
Interest and other income1,872 289 2,272 1,625 
Loss on debt extinguishment— — (525)— 
Gain on sale of equity method investment29,953 — 89,837 — 
Interest expense(66,029)(45,009)(167,545)(130,443)
Equity in earnings of unconsolidated affiliates53,244 50,754 169,668 146,828 
Total other income, net19,040 6,034 93,707 18,010 
Income before income taxes91,914 44,434 249,270 121,128 
Income tax expense8,260 1,303 21,261 2,030 
Net income including noncontrolling interest83,654 43,131 228,009 119,098 
Net income attributable to Common Unit limited partners57,891 27,551 153,504 77,068 
Net income attributable to Class A Common Stock Shareholders$25,763 $15,580 $74,505 $42,030 
Net income attributable to Class A Common Shareholders, per share
Basic$0.35 $0.21 $1.03 $0.58 
Diluted$0.35 $0.21 $1.02 $0.57 
Weighted-average shares
Basic59,811 53,340 59,116 50,464 
Diluted60,424 53,463 59,852 50,719 
(1)Includes amounts associated with related parties of nil and $20.0 million for the three months ended September 30, 2024 and 2023, respectively, and $17.2 million and $70.9 million for the nine months ended September 30, 2024 and 2023, respectively.
(2)Includes amounts associated with related parties of $12.8 million and $15.5 million for the three months ended September 30, 2024 and 2023, respectively, and $48.7 million and $50.6 million for the nine months ended September 30, 2024 and 2023, respectively.
(3)Cost of sales (exclusive of depreciation and amortization) is net of gas service revenues totaling $60.2 million and $38.6 million for the three months ended September 30, 2024 and 2023, respectively, and $159.4 million and $107.1 million for the nine months ended September 30, 2024 and 2023, respectively, for certain volumes where we act as principal.
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
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KINETIK HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30,December 31,
20242023
(In thousands, except shares data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$20,438 $4,510 
Accounts receivable, net of allowance for credit losses of $1,000 in 2024 and 2023(1)
65,615 215,721 
Accounts receivable pledged
150,000 — 
Derivative assets6,276 7,812 
Prepaid and other current assets43,549 29,256 
285,878 257,299 
NONCURRENT ASSETS:
Property, plant and equipment, net3,226,884 2,743,227 
Intangible assets, net878,141 591,670 
Derivative asset, non-current1,593 165 
Deferred tax assets203,671 235,627 
Operating lease right-of-use assets38,101 37,569 
Deferred charges and other assets79,169 85,250 
Investments in unconsolidated affiliates2,141,947 2,540,989 
Goodwill5,077 5,077 
6,574,583 6,239,574 
Total assets$6,860,461 $6,496,873 
LIABILITIES, NONCONTROLLING INTEREST, AND EQUITY
CURRENT LIABILITIES:
Accounts payable$17,160 $34,000 
Accrued expenses191,789 177,421 
Derivative liabilities6,743 1,734 
Current portion of operating lease liabilities25,483 29,203 
Current debt obligations
150,000 — 
Other current liabilities7,505 7,786 
398,680 250,144 
NONCURRENT LIABILITIES
Long term debt, net3,279,689 3,562,809 
Contract liabilities21,858 25,761 
Operating lease liabilities13,147 9,349 
Derivative liabilities1,081 5,363 
Other liabilities67,517 3,219 
Deferred tax liabilities16,014 13,244 
3,399,306 3,619,745 
Total liabilities3,797,986 3,869,889 
COMMITMENTS AND CONTINGENCIES (Note 15)
Redeemable noncontrolling interest — Common Unit limited partners4,783,180 3,157,807 
EQUITY:
Class A Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 59,751,435 and 57,096,538 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
6 6 
Class C Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 97,783,034 and 94,089,038 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively
9 9 
Deferred consideration
1 — 
Additional paid-in capital— 192,678 
Accumulated deficit(1,720,721)(723,516)
Total equity(1,720,705)(530,823)
Total liabilities, noncontrolling interest, and equity$6,860,461 $6,496,873 
(1)Includes amounts of $15.8 million associated with related parties as of December 31, 2023. No related party balance as of September 30, 2024. See Note 1—Description of the Organization and Summary of Significant Accounting Polices in the Notes to Condensed Consolidated Financial Statements for additional information.
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
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KINETIK HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 Nine Months Ended September 30,
20242023
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income including noncontrolling interest
$228,009 $119,098 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense236,250 208,271 
Amortization of deferred financing costs5,497 4,601 
Amortization of contract costs4,965 4,965 
Contingent liabilities fair value adjustment1,400 — 
Distributions from unconsolidated affiliates223,670 205,891 
Derivatives settlement(8,103)15,111 
Derivative fair value adjustment8,938 (41,028)
Warrants fair value adjustment— (73)
Gain on sale of equity method investment
(89,837)— 
Loss on disposal of assets4,090 15,166 
Equity in earnings of unconsolidated affiliates(169,668)(146,828)
Loss on debt extinguishment525 — 
Share-based compensation52,868 43,340 
Deferred income taxes19,733 1,675 
Changes in operating assets and liabilities:
Accounts receivable and pledged receivable29,492 (26,982)
Other assets(3,729)(7,033)
Accounts payable(53,361)(780)
Accrued liabilities4,815 8,840 
Other non-current liabilities(1,744)668 
Operating leases(454)683 
Net cash provided by operating activities493,356 405,585 
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment expenditures(155,805)(245,798)
Intangible assets expenditures(7,744)(15,079)
Investments in unconsolidated affiliates(3,273)(202,729)
Net cash paid for acquisition of interest in unconsolidated affiliate
(85,417)— 
Distributions from unconsolidated affiliate2,789 5,793 
Cash proceeds from sale of equity method investment
524,390 — 
Cash proceeds from disposals of assets
334 213 
Net cash paid for acquisition
(341,183)(125,000)
Net cash used in investing activities
(65,909)(582,600)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under A/R Facility
151,200 — 
Payments on A/R Facility(1,200)— 
Payments on Term Loan Credit Facility
(200,000)— 
Payments of debt issuance costs(1,086)— 
Payment of debt discount
(500)— 
Proceeds from revolver826,000 673,000 
Payments of revolver (913,000)(438,000)
Cash dividends paid to Class A Common Stock shareholders(128,428)(58,030)
Distributions paid to Class C Common Unit limited partners(144,505)(524)
Repurchase of Class A Common Stock— (5,757)
Net cash (used in) provided by financing activities
(411,519)170,689 
Net change in cash15,928 (6,326)
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KINETIK HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Nine Months Ended September 30,
20242023
(In thousands)
CASH, BEGINNING OF PERIOD4,510 6,394 
CASH, END OF PERIOD$20,438 $68 
SUPPLEMENTAL SCHEDULE OF INVESTING AND FINANCING ACTIVITIES
Cash paid for interest, net of amounts capitalized$166,769 $165,877 
Cash paid for income taxes, net
$559 $484 
Property and equipment and intangible accruals in accounts payable and accrued liabilities$24,140 $25,237 
Right-of-use assets obtained in exchange for lease liabilities
$42,974 $5,189 
Class A Common Stock issued through dividend and distribution reinvestment plan$75,243 $263,771 
Fair value of Durango assets acquired(1)
$910,221 $— 
Cash consideration paid
357,968 — 
Class C Common Units issued in exchange
148,200 — 
Deferred consideration
275,000 — 
Contingent consideration
64,000 — 
Durango liabilities assumed
$65,053 $— 
(1)See Note 2—Business Combinations in the Notes to Condensed Consolidated Financial Statements for additional information regarding the Durango Acquisition (as defined herein).

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
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KINETIK HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS
(Unaudited)



Redeemable Noncontrolling Interest — Common Unit Limited PartnersClass A
Common Stock		Class C
Common Stock		Additional Paid-in CapitalAccumulated DeficitTreasury
Stock		Total
Equity
 SharesAmountSharesAmount
Deferred Consideration Shares(1)
Amount
(In thousands)
For the Quarter Ended September 30, 2023
Balance at June 30, 2023$3,242,619 51,973 $5 94,089 $9 — $— $— $(902,446)$(3,325)$(905,757)
Issuance of common stock through dividend and distribution reinvestment plan— 2,546 1 — — — — 88,144 — — 88,145 
Retirement of treasury stock— — — — — — — — (3,325)3,325 — 
Share-based compensation— 1 — — — — — 12,502 — — 12,502 
Net income27,551 — — — — — — — 15,580 — 15,580 
Change in redemption value of noncontrolling interests8,899 — — — — — — (8,899)— — (8,899)
Distributions paid to Common Unit limited partners(70,568)— — — — — — — — — — 
Dividends on Class A Common Stock ($0.75 per share)
— — — — — — — — (39,587)— (39,587)
Balance at September 30, 2023$3,208,501 54,520 $6 94,089 $9 — $— $91,747 $(929,778)$— $(838,016)
For the Quarter Ended September 30, 2024
Balance at June 30, 2024$4,289,591 59,736 $6 97,783 $9 7,680 $1 $— $(1,206,909)$— $(1,206,893)
Issuance of common stock through dividend and distribution reinvestment plan— 11 — — — — — 444 — — 444 
Share-based compensation— 4 — — — — — 15,171 — — 15,171 
Net income57,891 — — — — — — — 25,763 — 25,763 
Change in redemption value of noncontrolling interests509,035 — — — — — — (14,801)(494,234)— (509,035)
Recognition of deferred tax asset— — — — — — — (814)— — (814)
Distribution paid to Common Unit limited partners(73,337)— — — — — — — — — — 
Dividends on Class A Common Stock ($0.75 per share)
— — — — — — — — (45,341)— (45,341)
Balance at September 30, 2024$4,783,180 59,751 $6 97,783 $9 7,680 $1 $— $(1,720,721)$— $(1,720,705)
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KINETIK HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS
(Unaudited)


Redeemable Noncontrolling Interest — Common Unit Limited PartnersClass A
Common Stock		Class C
Common Stock		Additional Paid-in CapitalAccumulated DeficitTreasury
Stock		Total
Equity
 SharesAmountSharesAmount
Deferred Consideration Shares(1)
Amount
(In thousands)
For the Nine Months Ended September 30, 2023
Balance at December 31, 2022
$3,112,409 45,679 $5 94,270 $9 — $— $118,840 $(958,629)$— $(839,775)
Redemption of Common Units(5,634)181 — (181)— — — 5,634 — — 5,634 
Issuance of common stock through dividend and distribution reinvestment plan— 8,641 1 — — — — 263,771 — — 263,772 
Retirement of treasury stock— — — — — — — — (5,757)5,757 — 
Repurchase of Class A Common Stock— (194)— — — — — — — (5,757)(5,757)
Share-based compensation— 213 — — — — — 43,340 — — 43,340 
Net income77,068 — — — — — — — 42,030 — 42,030 
Change in redemption value of noncontrolling interests236,358 — — — — — — (339,838)103,480 — (236,358)
Distributions paid to Common Unit limited partners(211,700)— — — — — — — — — — 
Dividends on Class A Common Stock ($2.25 per share)
— — — — — — — — (110,902)— (110,902)
Balance at September 30, 2023$3,208,501 54,520 $6 94,089 $9 — $— $91,747 $(929,778)$— $(838,016)
For the Nine Months Ended September 30, 2024
Balance at December 31, 2023
$3,157,807 $57,097 $6 94,089 $9 — $— $192,678 $(723,516)$— $(530,823)
Durango Acquisition
423,200 — — 3,840 — 7,680 1 — — — 1 
Redemption of Common Units(5,060)146 — (146)— — — 5,060 — — 5,060 
Issuance of common stock through dividend and distribution reinvestment plan— 2,205 — — — — — 75,243 — — 75,243 
Share-based compensation— 303 — — — — — 52,868 — — 52,868 
Net income153,504 — — — — — — — 74,505 — 74,505 
Change in redemption value of noncontrolling interests1,268,038 — — — — — — (330,196)(937,842)— (1,268,038)
Recognition of deferred tax asset— — — — — — 4,347 — — 4,347 
Distribution paid to Common Unit limited partners(214,309)— — — — — — — — — — 
Dividends on Class A Common Stock ($2.25 per share)
— — — — — — — — (133,868)— (133,868)
Balance at September 30, 2024$4,783,180 59,751 $6 97,783 $9 7,680 $1 $— $(1,720,721)$— $(1,720,705)
(1)Pursuant to the Durango MIPA (as defined herein), deferred consideration of 7.7 million shares of Class C Common Stock is to be issued on July 1, 2025. Fair value of the deferred consideration was included in the “Redeemable noncontrolling interest—Common Units limited partners” of the Condensed Consolidated Balance Sheets as of September 30, 2024.
The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.
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KINETIK HOLDINGS INC.
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, 2023 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 5, 2024.

1.    DESCRIPTION OF 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 38% 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 three separate Permian Basin pipeline entities that have access to various markets along the U.S. Gulf Coast.
Basis of Presentation
The accompanying Condensed Consolidated Financial Statements have been prepared in accordance with GAAP. Certain reclassifications of prior year balances have been made to conform such amounts to the current year’s presentation. These reclassifications have no impact on net income. 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 2023 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. There were no significant updates or revisions to our accounting policies during the nine months ended September 30, 2024, except as discussed herein.
Accounts Receivable Securitization Facility
Pursuant to ASC 860, Transfers and Servicing, accounts receivable that are sold or contributed by the Partnership to the special purpose vehicle are treated as collateral for borrowings under the third party A/R Facility (as defined below) and are included as “Accounts receivable pledged” within the Condensed Consolidated Balance Sheet. Proceeds from the transfer of the eligible accounts receivable under the third party A/R Facility are secured borrowings included as “Current debt obligations” within our Condensed Consolidated Balance Sheets. Proceeds and repayments under such facility are reflected as cash flows from financing activities in our Consolidated Statements of Cash Flows. See Note 7—Debt and Financing Costs in the Notes to our Condensed Consolidated Financial Statements set forth in this Form 10-Q for further discussion.
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Transactions with related parties
The Company has revenue contracts and incurs cost of sales and operating expenses with Apache Midstream LLC (“Apache”), which owned more than 5% of the Company’s common stock prior to its secondary offerings completed in December 2023 and March 2024. Pursuant to ASC 850, Related Party Transactions, Apache was no longer a related party after the completion of its secondary offering in December 2023 as it owned less than 10% of the Company’s common stock. Pursuant to Regulation S-K, Item 404(a), Apache ceased to be a related party as of March 18, 2024 as it no longer owned any of the Company’s common stock. In 2024, for the period ended March 18, 2024, revenue from Apache was $17.2 million, cost of sales was $9.4 million and operating expenses were $0.2 million. In 2023, revenue from Apache was $20.0 million and $70.9 million, cost of sales was $13.1 million and $44.2 million, and operating expenses were $0.1 million and $0.5 million for the three and nine months ended September 30, 2023, respectively.
In addition, the Company incurs cost of sales with two of its equity method investment (“EMI”) pipeline entities, Permian Highway Pipeline LLC (“PHP”) and Breviloba, LLC (“Breviloba”). The Company pays a demand fee to PHP and pays a capacity fee to Breviloba for certain volumes moving on the Shin Oak NGL Pipeline. For the three and nine months ended September 30, 2024, the Company recorded cost of sales of $12.8 million and $39.3 million, respectively, with these affiliates. For the three and nine months ended September 30, 2023, the Company recorded cost of sales of $2.4 million and $6.4 million, respectively, with these affiliates.
Recently issued accounting pronouncements not yet adopted
Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update require, among other items, that public entities disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the CODM and included within each reported measure of segment profit or loss. Additionally, the amendments require annual disclosure of the title and position of the CODM and how that individual uses the reported measure(s) of segment profit or loss in assessing segment performance and how to allocate resources.
These amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The disclosures required in the amendments apply retrospectively to all prior periods presented in the financial statements. We are evaluating the effect of the amendments on our consolidated financial statements and expect to disclose the required information for fiscal years beginning in the Annual Report on Form 10-K for the year ended December 31, 2024 and for interim periods beginning in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025. The impact of the adoption will be limited to additional disclosure in the notes to the consolidated financial statements.
Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update require, among other items, that public entities disclose, on an annual and interim basis, (i) specific categories of income taxes in the rate reconciliation, and (ii) a disaggregation of income taxes paid by federal, state, and foreign taxes.
These amendments are effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments are required to be applied prospectively with retrospective application permitted. We are evaluating the effect of the amendments on our consolidated financial statements and expect to disclose the required information beginning in the Annual Report on Form 10-K for the year ended December 31, 2025.

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.
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Durango Permian LLC Acquisition
On June 24, 2024 (the “Closing Date”), the Company consummated the previously announced transaction contemplated by the Membership Interest Purchase Agreement (the “Durango MIPA”), dated May 9, 2024, by and between the Company, the Partnership, and Durango Midstream LLC, an affiliate of Morgan Stanley Equity Partners (the “Durango Seller”), pursuant to which the Partnership purchased all of the membership interests of Durango Permian, LLC and its wholly owned subsidiaries (“Durango”) from Durango Seller for an adjusted purchase price of approximately $845.2 million (the “Durango Acquisition”), consisting of (i) $358.0 million of cash consideration paid at closing, (ii) approximately 3.8 million shares of Class C Common Stock, par value $0.0001 per share of the Company (“Class C Common Stock”) (and an equivalent number of common units in the Partnership (“OpCo Units”)), valued at $148.2 million, issued at closing and (iii) approximately 7.7 million shares of Class C Common Stock (and an equivalent number of OpCo Units), valued at $275.0 million, to be issued on July 1, 2025. Durango Seller is also entitled to an earn out of up to $75.0 million in cash contingent upon the Kings Landing gas processing complex in Eddy County, New Mexico (the “Kings Landing Project”), which is currently under construction, being placed into service (the “Kings Landing Earnout”). The Kings Landing Earnout is subject to reduction based on actual capital costs associated with the Kings Landing Project. The Durango Acquisition allows the Company to further expand its footprint into New Mexico and across the Northern Delaware Basin.
The Durango Acquisition was accounted for as a business combination in accordance with ASC 805 Business Combination (“ASC 805”). Starting on the Closing Date, our Consolidated Financial Statements reflected Durango as a consolidated subsidiary. The accompanying Condensed Consolidated Financial Statements herein include (i) the combined net assets of the Company carried at historical costs and net assets of Durango carried at fair value as of the Closing Date and (ii) the combined results of operations of the Company with Durango’s results presented within the Condensed Consolidated Financial Statements from the Closing Date going forward.
The preliminary purchase price allocation was based on Durango’s latest financial statements available as of May 31, 2024, and included preliminary adjustments for working capital and fair value of underlying assets acquired and liabilities assumed. Both observable and non-observable market data, thus Level 2 and Level 3 inputs, are used in the assessment of the fair value of the assets acquired and liabilities assumed listed in the below table. The fair value of the processing plants, gathering system and related facilities and equipment is based on market and cost approaches and will be depreciated over an estimated useful life ranging from five to thirty years, which is consistent with the Company’s policy over similar facilities and equipment. The fair value of the intangible assets is based on the market approach for the right-of-way and discounted cash flow approach for customer contracts, which will be amortized over estimated useful lives ranging from seven to twelve years. The assumed liabilities are approximate to fair value at the Closing Date. Acquired net assets from this business combination were included in the Midstream Logistic segment. In addition, the Company recorded a contingent liability related to the Kings Landing Earnout based on project completion probability, see additional information in Note 15—Commitments and Contingencies in the Notes to our Condensed Consolidated Financial Statements set forth in this Form 10-Q.
Since the Closing Date, the Company has made necessary adjustments to the purchase price allocation as information about facts and circumstances that existed at the Closing Date have become available. This included certain working capital adjustments as a result of obtaining Durango’s closing balance sheet as of June 30, 2024. During the three months ended September 30, 2024, the Company identified working capital adjustments of $21.0 million resulting from the final closing balance sheet, and valuation adjustments related to the long-lived assets and intangible assets of $10.6 million, resulting in a decrease in goodwill of $10.4 million. The Company will continue to identify necessary adjustments to finalize the purchase price allocation during the 12-month period following the Closing Date as we obtain the remaining original cost data for our tangible asset valuation, as well as complete our evaluation of the potential liabilities assumed, including certain historical environmental exposures.
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The following table summarizes the estimated fair value of assets acquired and liabilities assumed in the Durango Acquisition as of June 24, 2024, in accordance with ASC 805:
(In thousands)Amount
Cash and cash equivalents
$16,785 
Accounts receivable29,386 
Prepaid and other current assets
10,000 
Property, plant, and equipment, net471,429 
Intangible assets, net379,000 
Deferred charges and other assets
4 
Operating lease ROU assets
3,617 
Total assets acquired910,221 
Accounts payable
34,314 
Accrued expenses
7,140 
Contract liabilities
642 
Operating lease liabilities
3,617 
Deferred tax liabilities
19,340 
Total liabilities assumed65,053 
Contingent consideration(1)
64,000 
Consideration transferred
$781,168 
(1)Pursuant to ASC 805, the Company evaluated the earn-out consideration classification in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). The Company determined the earn-out consideration to be classified as a liability based on the settlement provision. Therefore, the Company records the contingent consideration at fair value as of September 30, 2024. Additional discussion in Note 15—Commitments and Contingencies in the Notes to our Condensed Consolidated Financial Statements set forth in this Form 10-Q.
The Company incurred acquisition-related costs of $3.2 million for the nine months ended September 30, 2024, which were included in the “General and administrative expenses” of the Condensed Consolidated Statements of Operations.
The Company’s Condensed Consolidated Statement of Operations included results of operations from Durango starting from the Closing Date through September 30, 2024, which included revenues of $35.8 million and $38.9 million, and net income including noncontrolling interest of $1.4 million and $1.6 million for the three and nine months ended September 30, 2024, respectively.
Supplemental Pro Forma Information
The unaudited supplemental pro forma financial data is for informational purposes only and is not indicative of future results. The results below for the three and nine months ended September 30, 2024 and 2023, respectively, combine the results of the Company and Durango, giving effect to the Durango Acquisition as if it had been completed on January 1, 2023.
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands)
Revenues$396,362 $410,988 $1,210,257 $1,138,419 
Net income including noncontrolling interest$83,602 $46,575 $228,652 $123,738 
Given the assumed pro forma transaction date of January 1, 2023, we removed $3.5 million of acquisition-related expenses for the nine months ended September 30, 2024 and recognized $3.5 million of acquisition-related expenses for the nine months ended September 30, 2023. We also removed $24.0 million of interest expense on Durango’s debt for the nine months ended September 30, 2024, and $3.9 million and $11.1 million for the three and nine months ended September 30, 2023, respectively, as if the business combination had occurred and the debt had been paid off on January 1, 2023.
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Midstream Infrastructure Assets
In the first half of 2023, the Partnership closed on a purchase and sale agreement for certain midstream assets for $65.0 million together with a new 20-year midstream service agreement. Midstream assets acquired consisted of water gathering and disposal assets of $61.9 million and intangible right-of-way assets of $3.1 million. In addition, the Partnership entered into an incentive and acceleration agreement related to near term supplemental development activities on acreage dedicated for midstream services to affiliates of the Partnership. Consideration for the incentive and acceleration agreement of $60.0 million was capitalized as a contract asset in accordance with ASC 606, of which $4.7 million was included in “Prepaid and Other Current Assets” and $55.3 million was included in “Deferred Charges and Other Assets” in the Condensed Consolidated Balance Sheet as of the date of acquisition. Acquired net assets from this business combination were included in the Midstream Logistics segment.
Goodwill
The Company had goodwill of $5.1 million recorded in the Midstream Logistic segment related to a past business combination as of September 30, 2024. Goodwill is tested at least annually, or more frequently as events occur or circumstances change that would more-likely-than-not reduce fair value of a reporting unit below its carrying value. Company’s management assessed whether there have been events or circumstances that trigger the fair value of the reporting unit to be lower than its net carrying value since consummation of the respective business combination and concluded that goodwill was not impaired as of September 30, 2024.

3.    REVENUE RECOGNITION
Disaggregation of Revenue
The following table presents a disaggregation of the Company’s revenue:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands)
Gathering and processing services$103,100 $104,349 $301,710 $310,325 
Natural gas, NGLs and condensate sales290,423 221,280 787,092 586,534 
Other revenue2,839 4,672 8,411 10,685 
   Total revenues$396,362 $330,301 $1,097,213 $907,544 
There have been no significant changes to the Company’s contracts with customers during the three and nine months ended September 30, 2024 aside from the addition of certain gas gathering and processing agreements associated with the Durango acquisition. The Company did not recognize revenues from MVC deficiency payments for the three and nine months ended September 30, 2024 and recognized $0.4 million and $1.6 million of revenues from MVC deficiency payments for the three and nine months ended September 30, 2023, respectively.

Remaining Performance Obligations
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 September 30, 2024:
Amount
Fiscal Year(In thousands)
Remaining of 2024$7,049 
202571,507 
202675,387 
202773,945 
202872,873 
Thereafter230,750 
$531,511 
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Our contractually committed revenue, for the purposes of the tabular presentation 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 September 30, 2024:
Amount
(In thousands)
Balance at December 31, 2023$32,238 
Reclassification of beginning contract liabilities to revenue as a result of performance obligations being satisfied(5,182)
Cash received in advance and not recognized as revenue997 
Balance at September 30, 202428,053 
Less: Current portion6,195 
Non-current portion$21,858 
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 September 30, 2024 and December 31, 2023, the Company had contract acquisition cost assets of $66.2 million and $71.2 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 contracts. The Company recognized cost of sales associated with these assets of $1.7 million for the three months ended September 30, 2024 and 2023, respectively, and $5.0 million for the nine months ended September 30, 2024 and 2023, respectively.

4.    PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at carrying value, is as follows:
September 30,December 31,
20242023
(In thousands)
Gathering, processing, and transmission systems and facilities$3,715,716 $3,253,539 
Vehicles14,714 11,447
Computers and equipment7,830 6,242
Less: accumulated depreciation(759,280)(626,223)
Total depreciable assets, net2,978,980 2,645,005 
Construction in progress217,637 74,369
Land30,267 23,853 
Total property, plant, and equipment, net$3,226,884 $2,743,227 
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 $48.7 million and $39.4 million of depreciation expense for the three months ended September 30, 2024 and 2023, respectively, and $135.3 million and $116.6 million for the nine months ended September 30, 2024 and 2023, respectively. There were no impairment triggering events for property, plant and equipment during the three and nine months ended September 30, 2024 and 2023.

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5.    INTANGIBLE ASSETS, NET
Intangible assets, net, are comprised of the following:
September 30,December 31,
20242023
(In thousands)
Customer contracts$1,460,287 $1,139,665 
Right of way assets199,129 141,711 
Less accumulated amortization(781,275)(689,706)
Total amortizable intangible assets, net$878,141 $591,670 
The fair value of acquired customer contracts was capitalized as a result of acquiring favorable customer contracts as of the closing dates of certain past acquisitions and is being amortized using a straight-line method over the remaining terms of the customer contracts, which range from one to seventeen years. Right-of-way assets relate primarily to underground pipeline easements which generally have a useful life of ten years and are amortized using the straight-line method. The right of way agreements are typically for an initial term of ten years with an option to renew for an additional ten years at agreed upon renewal rates based on certain indices or up to 130% of the original consideration paid.
On September 30, 2024, the remaining weighted average amortization periods for customer contracts and right of way assets were approximately 9.03 years and 6.67 years, respectively. The overall remaining weighted average amortization period for the intangible assets as of September 30, 2024 was approximately 8.69 years.
The Company recorded $38.9 million and $30.6 million of amortization expense for the three months ended September 30, 2024 and 2023, respectively, and $100.9 million and $91.6 million for the nine months ended September 30, 2024 and 2023, respectively. There was no impairment recognized on intangible assets for the three and nine months ended September 30, 2024 and 2023.

6.    EQUITY METHOD INVESTMENTS
As of September 30, 2024, 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:
September 30,December 31,
Ownership(1)
20242023
(In thousands)
PHP
55.5%$1,623,127 $1,666,254 
Breviloba
33.0%433,193 443,684 
Epic Crude Holdings, LP (“EPIC”)(1)
27.5%85,627 — 
Gulf Coast Express Pipeline LLC (“GCX”)(2)
—%— 431,051 
$2,141,947 $2,540,989 
(1)Investment balance is primarily comprised of the additional 12.5% interest that was acquired during July 2024.
(2)The Company owned 16% of GCX as of December 31, 2023 and divested entire ownership in June 2024.
During the quarter, the Company entered into an Equity Sale and Purchase Agreement with third parties to purchase a 12.5% equity interest in EPIC, increasing our total equity interest in EPIC to 27.5%. As the increase in ownership did not result in a controlling interest, and did not represent the funding of prior losses, the Company resumed accounting for its investment in EPIC using the equity method of accounting upon the closing of the acquisition of the additional interests during July 2024.
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On June 4, 2024, the Company consummated the previously announced transaction contemplated by the Purchase and Sale Agreement dated as of May 9, 2024, to sell its 16% equity interest in GCX to GCX Pipeline, LLC (the "GCX Buyer") for an adjusted price of $524.4 million (the "GCX Sale"), including a $30.0 million earn out in cash upon the approval by the GCX Board of Directors of one or more capital projects that achieve certain capacity expansion criteria. The Company recognized a net gain of $89.8 million for the nine months ended September 30, 2024 in relation to this transaction.
The unamortized basis differences included in the EMI pipeline balances were $365.7 million and $349.3 million as of September 30, 2024 and December 31, 2023, 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 will be amortized or accreted into equity income of unconsolidated affiliates over the useful lives of the underlying pipeline assets. There was capitalized interest of $24.1 million and $24.7 million as of September 30, 2024 and December 31, 2023, 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 nine months ended September 30, 2024:
Permian Highway Pipeline LLCBreviloba, LLCEPIC Crude Holdings, LPGulf Coast Express Pipeline LLCTotal
(In thousands)
Balance at December 31, 2023$1,666,254 $443,684 $— $431,051 $2,540,989 
Contributions and acquisitions
3,273 — 85,417 — 88,690 
Distributions(1)
(177,172)(33,677)— (15,610)(226,459)
Disposition— — — (430,941)(430,941)
Equity income, net(2)
130,772 23,186 210 15,500 169,668 
Balance at September 30, 2024$1,623,127 $433,193 $85,627 $— $2,141,947 
(1)Distributions consisted of distributions from a return on investment of $223.7 million, which was included in cash flows from operating activities and distributions from a return of investment of $2.8 million, which was included in cash flows from investing activities.
(2)For the nine months ended September 30, 2024, net of amortization and accretion of basis differences and capitalized interests, which represents undistributed earnings, the amortization was $5.9 million from PHP, $0.5 million from Breviloba, LLC, $2.7 million from GCX and accretion of $1.6 million from EPIC.
Summarized Financial Information
The following table represents selected data for the Company’s ongoing EMI pipelines (on a 100 percent basis) for the three and nine months ended September 30, 2024 and 2023.
Three Months Ended September 30,
20242023
Permian Highway Pipeline LLCBreviloba, LLCEPIC Crude Holdings, LPPermian Highway Pipeline LLCBreviloba, LLCEPIC Crude Holdings, LP
(In thousands)
Revenues$127,719 $53,929 $97,514 $99,923 $51,002 $93,138 
Operating income83,785 27,398 25,052 65,549 25,170 22,521 
Net income (loss)83,783 27,558 (5,159)66,630 25,223 (11,330)

Nine Months Ended September 30,
20242023
Permian Highway Pipeline LLCBreviloba, LLCEPIC Crude Holdings, LPPermian Highway Pipeline LLCBreviloba, LLCEPIC Crude Holdings, LP
(In thousands)
Revenues$380,359 $156,326 $284,050 $291,859 $143,544 $259,250 
Operating income245,467 74,563 70,631 185,862 69,666 36,148 
Net income (loss)245,016 75,005 (29,889)190,662 70,086 (62,312)

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7.    DEBT AND FINANCING COSTS
Accounts Receivable Securitization Facility
On April 2, 2024, Kinetik Receivables LLC (“Kinetik Receivables”), a bankruptcy remote special purpose entity formed as a direct subsidiary of the Partnership, which is a subsidiary of the Company, entered into an accounts receivable securitization facility with an initial facility limit of $150.0 million (“A/R Facility”) with PNC Bank, as the administrative agent, and certain purchasers party thereto from time to time, which has a scheduled termination date of April 1, 2025. The aggregate fees and expenses paid directly to third parties in obtaining the A/R Facility totaled $1.1 million and were capitalized as debt issuance costs and included in the Condensed Consolidated Balance Sheets as a current asset within “Prepaid and other current assets”, amortized over the term of the A/R Facility to interest expense using the effective-interest method. There were unamortized debt issuance costs related to the A/R Facility of $0.6 million as of September 30, 2024.
Pursuant to the A/R Facility, the Company and certain of its subsidiaries continuously transfer receivables to Kinetik Receivables and Kinetik Receivables transfers receivables that meet certain qualifying conditions to third-party purchasers in exchange for cash. These receivables are held by Kinetik Receivables and are pledged to secure the collectability of the sold receivables and are accounted for as secured borrowings. The amount available for borrowing at any one time under the A/R Facility is limited to an amount calculated based on the outstanding balance of eligible receivables sold to the purchasers, subject to certain reserves, concentration limits, and other limitations. Under the A/R Facility, the Company is subject to pay a yield to the purchasers equal to SOFR plus a spread adjustment of 0.10% and a drawn fee of 0.90%. The Company also pays a fee of 0.40% on the undrawn committed amount of the A/R Facility. Yield and fees payable by the Company under the AR Facility are due monthly. As of September 30, 2024, eligible accounts receivable of $150.0 million were pledged to the A/R Facility as collateral.
The Partnership has continuing involvement with the receivables transferred by Kinetik Receivables to the third-party purchasers by providing collection services.
The A/R Facility is linked to sustainability performance targets (“SPTs”) with respect to (a) female representation in corporate officer positions and (b) reduction in methane emissions intensity. A positive 0.02% and 0.05% fee and yield rate adjustments will be applied, respectively, if neither of the SPTs have been satisfied and a negative 0.02% and 0.05% fee and interest rate adjustments will be applied, respectively, if both of the SPTs have been satisfied.
The net proceeds of the A/R Facility were used, together with cash on hand, to repay a portion of the outstanding borrowings under the existing term loan credit facility (“Term Loan Credit Facility”), lowering the remaining balance to $1.0 billion. As a result, the maturity of the Term Loan Credit Facility extended to December 8, 2026. The Company recognized a loss on debt extinguishment of $0.5 million for the partial payment made on the Term Loan Credit Facility.
The following table summarizes the Company’s debt obligations as of September 30, 2024 and December 31, 2023:
September 30,December 31,
20242023
(In thousands)
A/R Facility
$150,000 $— 
Total current debt obligations
$150,000 $— 
Unsecured term loan$1,000,000 $1,200,000 
5.875% senior unsecured notes due 2030 (“2030 Notes”)
1,000,000 1,000,000 
6.625% senior unsecured notes due 2028 (“2028 Notes”)
800,000 800,000 
$1.25 billion revolving line of credit
507,000 594,000 
Total long-term debt3,307,000 3,594,000 
Debt issuance costs, net(1)
(27,432)(31,510)
Unamortized debt premiums and discounts, net121 319 
Total long-term debt, net$3,279,689 $3,562,809 
(1)Excludes unamortized debt issuance costs related to the revolving line of credit. Unamortized debt issuance costs associated with the revolving line of credit were $4.2 million and $5.4 million as of September 30, 2024 and December 31, 2023, respectively. The unamortized debt issuance costs related to the revolving credit facilities were included in the “Deferred charges and other assets” of the Condensed Consolidated Balance Sheets.
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The table below presents the components of the Company’s financing costs, net of capitalized interest:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2024202320242023
(In thousands)
Capitalized interest$(2,955)$(6,731)$(4,885)$(13,775)
Debt issuance costs1,916 1,546 5,497 4,601 
Interest expense67,068 50,194 166,933 139,617 
Total financing costs, net of capitalized interest$66,029 $45,009 $167,545 $130,443 
As of September 30, 2024 and December 31, 2023, unamortized debt issuance costs associated with the 2030 Notes, the 2028 Notes and the Term Loan Credit Facility were $27.4 million and $31.5 million, respectively, and unamortized debt premiums and discount, net, associated with the 2028 Notes and the unsecured term loan were $0.1 million and $0.3 million, respectively.
Compliance with our Covenants
Each of the revolving credit agreements with Bank of America, N.A. as administrative agent and the Term Loan Credit Facility, 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 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 September 30, 2024, the Partnership was in compliance with all customary and financial covenants.
Letters of Credit
Our $1.25 billion senior unsecured revolving credit facility (the “Revolving Credit Facility”) scheduled to mature on or before June 8, 2027 can be used for letters of credit. Our obligations with respect to related letters of credit totaled $12.6 million as of September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, the Revolving Credit Facility has a borrowing base of $730.4 million available.
Fair Value of Financial Instruments
The fair value of the Company and its subsidiaries’ consolidated debt as of September 30, 2024 and December 31, 2023 was $3.48 billion and $3.57 billion, respectively. On September 30, 2024, the senior unsecured notes’ fair value was based on Level 1 inputs, the Term Loan Credit Facility and Revolving Credit Facility’s fair value was based on Level 3 inputs and the A/R Facility’s fair value approximates its carrying value due to its short term nature.

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8.    ACCRUED EXPENSES
The following table provides detail of the Company’s current accrued expenses on September 30, 2024 and December 31, 2023:
September 30,December 31,
 20242023
(In thousands)
Accrued product purchases$97,635 $109,172 
Accrued taxes20,270 632 
Accrued salaries, vacation, and related benefits5,349 1,872 
Accrued capital expenditures13,911 18,534 
Accrued interest34,070 33,760 
Accrued other expenses20,554 13,451 
Total accrued expenses$191,789 $177,421 
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 September 30, 2024.

9.    EQUITY
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 nine months ended September 30, 2024, 146,250 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 were cancelled. In addition, as part of the Durango Acquisition purchase price consideration, approximately 3.8 million shares of Class C Common Stock and an equivalent number of Common Units were issued at closing. There were 97.8 million Common Units and an equal number of Class C Common Stock issued and outstanding as of September 30, 2024 and 7.7 million shares of Class C Common Stock and equivalent number of Common Units of deferred consideration for the Durango Acquisition that will be issued on July 1, 2025. The Common Units fair value was approximately $4.78 billion, including deferred consideration valued as of September 30, 2024.
Common Stock
As of September 30, 2024, there were 59.8 million and 97.8 million shares, respectively, of Class A Common Stock and Class C Common Stock issued and outstanding (collectively, “Common Stock”). In addition, 7.7 million shares of Class C Common Stock will be issued as deferred consideration for the Durango Acquisition on July 1, 2025.
Share Repurchase Program
During the quarter ended September 30, 2024, the Company did not repurchase any of its Class A Common Stock under the Repurchase Program.
Dividend
On August 7, 2024, the Company made cash dividend payments of $118.2 million to holders of Class A Common Stock and Common Units and $0.4 million was reinvested in shares of Class A Common Stock. The significant decrease in the amount reinvested in shares of Class A Common Stock compared with prior quarters was due to the automatic termination of the Dividend and Distribution Reinvestment Agreement on March 8, 2024.

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10.    FAIR VALUE MEASUREMENTS
The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023:
September 30, 2024
Level 1Level 2Level 3Total
(In thousands)
Commodity swap$— $7,785 $— $7,785 
Interest rate derivatives— 84 — 84 
Total assets$— $7,869 $— $7,869 
Commodity swaps$— $3,936 $— $3,936 
Interest rate derivatives— 3,888 — 3,888 
Contingent liability
— — 65,400 65,400 
Total liabilities$— $7,824 $65,400 $73,224 
December 31, 2023
Level 1Level 2Level 3Total
(In thousands)
Commodity swap$— $3,663 $— $3,663 
Interest rate derivatives— 4,314 — 4,314 
Total assets$— $7,977 $— $7,977 
Commodity swaps$— $1,749 $— $1,749 
Interest rate derivatives— 5,348 — 5,348 
Total liabilities$— $7,097 $— $7,097 
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 11—Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further discussion related to commodity swaps and interest rate derivatives.
The Company recorded a contingent liability related to the Kings Landing Earnout using Level 3 inputs, including projected spending and completion probability of the project. Refer to Note 15—Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for further discussion related to Kings Landing Earnout contingent liability.
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 Level 1, Level 2 or Level 3 of the fair value hierarchy during the nine months ended September 30, 2024 and 2023.

11.    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 September 30, 2024 and December 31, 2023.
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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 September 30, 2024, the Company had two interest rate swap contracts with total notional amounts of $1.70 billion maturing on May 31, 2025 that pay a fixed rate ranging from 4.38% to 4.48% and one interest rate swap contract with a notional amount of $0.08 billion maturing on December 31, 2025 that pays a fixed rate of 3.02%. 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:
September 30,December 31,
20242023
(In thousands)
Derivatives assets - current$76 $4,314 
Derivative assets - noncurrent8 — 
      Total derivative assets$84 $4,314 
Derivative liabilities - current$3,888 $— 
Derivatives liabilities - noncurrent— 5,348 
      Total derivative liabilities$3,888 $5,348 
The Company recorded cash settlements and changes in fair value of the interest rate swap contracts in “Interest expense” of the Condensed Consolidated Statements of Operations. The following table presents interest rate swap derivatives activities for the three and nine months ended September 30, 2024 and 2023:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands)
Realized gain on interest rate swaps
$3,994 $4,665 $11,899 $7,082 
(Unfavorable) favorable fair value adjustment
$(8,342)$12,500 $9,129 $34,562 
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 Control index. These contracts are for various notional quantities of NGLs, natural gas and crude. Similarly, the Company has entered into various natural gas and crude 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 commodity resulting from supply and demand volatility and protect cash flows against price fluctuations.
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The following table presents detailed information of commodity swaps outstanding as of September 30, 2024 (in thousands, except volumes):
September 30, 2024
CommodityUnit
Notional Volume
Net Fair Value
Natural Gas MMBtus1,210,000 $569 
NGL Gallons312,215,400 917 
CrudeBbl613,000 2,563 
Crude CollarsBbl163,800 937 
Crude Basis Spread Swaps
Bbl
22,400 (9)
Natural Gas Basis Spread Swaps
MMBtus7,300,000 (1,128)
$3,849 
The fair value or settlement value of the 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 commodity swaps:
September 30,December 31,
20242023
(In thousands)
Derivatives assets - current$6,200 $3,498 
Derivative assets - noncurrent1,585 165 
      Total derivative assets
$7,785 $3,663 
Derivative liabilities - current$2,855 $1,734 
Derivatives liabilities - noncurrent1,081 15 
      Total derivative liabilities
$3,936 $1,749 
The Company recorded cash settlements and fair value adjustments on commodity swap derivatives in “Product revenue” of the Consolidated Statements of Operations. The following table presents commodity swap derivatives activities for the three and nine months ended September 30, 2024 and 2023:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands)
Realized (loss) gain on commodity swaps
$(2,790)$176 $(20,002)$8,029 
Favorable (unfavorable) fair value adjustment
$6,027 $(8,083)$(18,067)$6,466 

12.    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 of Directors (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.
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Class A Shares and Class C Shares
The table below summarizes Class A Share and Class C Share activities for the nine months ended September 30, 2024:
Number of Shares
Weighted Avg Grant-Date Fair Market Value Per Unit
Outstanding and unvested shares at December 31, 20235,444,488 $28.91 
Vested
43,166 31.18 
Forfeited
1,592 31.18 
Outstanding and unvested shares at September 30, 2024
5,399,730 $28.90 
Table below summarizes aggregate intrinsic value (market value at vesting date) and grant-date fair value of vested Class A Shares for the nine months ended September 30, 2024:
Three Months Ended
Nine Months Ended
September 30, 2024September 30, 2024
(In thousands)
Aggregate intrinsic value of vested Class A Shares$1,102 $1,756 
Grant-date fair value of vested Class A Shares$834 $1,346 
No vesting or forfeiture occurred for Class C Shares for the three and nine months ended September 30, 2024 and 2023. No vesting occurred for Class A Shares for the three and nine months ended September 30, 2023. As of September 30, 2024, there were $38.8 million of unrecognized compensation costs related to unvested Class A Shares and Class C Shares. These costs are expected to be recognized over a weighted average period of 1.16 years.
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 nine months ended September 30, 2024:
Number of Shares(1)
Weighted Avg Grant-Date Fair Market Value Per Unit(1)
Outstanding and unvested shares at December 31, 2023435,220 $31.15 
Granted
610,333 35.41 
Vested
323,158 34.79 
Forfeited
12,565 33.06 
Outstanding and unvested shares at September 30, 2024
709,830 $33.12 
(1)The number of shares and weighted average fair market value per share include RSUs issued to new employees that transitioned from ALTM as part of the merger as replacement awards.
Table below summarizes aggregate intrinsic value (market value at vesting date) and grant-date fair value of RSUs for the three and nine months ended September 30, 2024 and 2023.
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands)
Aggregate intrinsic value of vested RSUs$387 $34 $11,469 $7,340 
Grant-date fair value of vested RSUs$372 $35 $11,243 $6,827 
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As of September 30, 2024, there were $13.0 million of unrecognized compensation costs related to the RSUs. These costs are expected to be recognized over a weighted average period of 1.64 years.
Performance Stock Units
The Company granted PSUs pursuant to the 2019 Plan to certain of its employees and executives during 2024. 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 recognized 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 nine months ended September 30, 2024:
Number of Shares
Weighted Avg Grant-Date Fair Market Value Per Unit
Granted in 2024198,703 $36.76 
Outstanding and unvested shares at September 30, 2024
198,703 $36.76 
No vesting or forfeiture occurred for PSUs for the three and nine months ended September 30, 2024.
The table below presents a summary of the grant-date fair value assumptions used to value the PSUs on grant date:
March 2024
Grant-date fair value per unit$36.76
Beginning average price
$32.84
Risk-free interest rate4.21%
Volatility factor37%
Expected term
2.82 years
As of September 30, 2024, there were $5.8 million of unrecognized compensation costs related to the PSUs. These costs are expected to be recognized over a weighted average period of 2.25 years.
With respect to above Class A Shares, Class C Shares, RSUs and PSUs, the Company recorded compensation expenses of $15.2 million and $12.5 million for the three months ended September 30, 2024 and 2023, respectively, and $52.9 million and $43.3 million for the nine months ended September 30, 2024 and 2023.

13.    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 September 30,Nine Months Ended September 30,
2024202320242023
(In thousands)
Income before income taxes$91,914$44,434$249,270$121,128
Income tax expense$8,260$1,303$21,261$2,030
Effective tax rate8.99 %2.93 %8.53 %1.68 %
The effective tax rate for the three and nine months ended September 30, 2024 was lower than the statutory rate mainly due to the impact of tax attributable to noncontrolling interests related to the Common Unit limited partners.
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The effective tax rate for the three and nine months ended September 30, 2023 was lower than the statutory rate mainly due to the impact of tax attributable to noncontrolling interests related to the Common Unit limited partners and a full valuation allowance on deferred tax assets as of September 30, 2023.

14.    NET INCOME PER SHARE
The computation of basic and diluted net income per share for the periods presented in the condensed consolidated financial statements is shown in the tables below:
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
(In thousands, except per share amounts)
Net income attributable to Class A common shareholders$25,763 $15,580 $74,505 $42,030 
Less: Net income available to participating unvested restricted Class A common shareholders(1)
(4,755)(4,414)(13,636)(12,996)
Total net income attributable to Class A common shareholders
$21,008 $11,166 $60,869 $29,034 
Weighted average shares outstanding - basic
59,811 53,340 59,116 50,464 
Dilutive effect of unvested Class A common shares(2)
613 123 736 255 
Weighted average shares outstanding - diluted(2)(3)
60,424 53,463 59,852 50,719 
Net income available per common share - basic
$0.35 $0.21 $1.03 $0.58 
Net income available per common share - diluted
$0.35 $0.21 $1.02 $0.57 
(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.

15.    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 September 30, 2024 and December 31, 2023, there were no accruals for loss contingencies.
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 estimates the amount of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage. Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question. There were no litigation-related accrued reserves as of September 30, 2024 and December 31, 2023.
The Company has entered into litigation with a third party to collect receivables totaling $11.6 million and is waiting on settlement of $8.0 million in outstanding vendor credits from another counterparty related to prior litigation the Company had previously entered into and subsequently dropped. These amounts remain outstanding from the Winter Storm Uri during February of 2021. Given the counterparties’ sufficient creditworthiness and the valid claims that we hold, no allowance has currently been established for these items as we have legally enforceable agreements with these parties.
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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 relations, 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. The Company is not aware of any material environmental claims existing as of September 30, 2024, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity.
Contingent Liabilities
Durango Acquisition
On June 24, 2024, the Company consummated the previously announced Durango Acquisition. Pursuant to the Durango MIPA, Durango Seller is 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 in Eddy County, New Mexico. This earn out is subject to reduction based on actual capital costs associated with the Kings Landing Project.
Upon Closing, the Company evaluated the earn-out consideration classification in accordance with ASC 480. The Company determined the earn-out consideration to be classified as a liability based on the settlement provision. As of Closing, the Company recorded an initial contingent liability of $64.0 million based on the project’s completion probability and projected spend. Pursuant to ASC 805, the Company recorded a subsequent fair value adjustment of $1.4 million within “Costs of sales (exclusive of depreciation and amortization)” of the Condensed Consolidated Statement of Operations for the three months ended September 30, 2024. The contingent liability associated with the Kings Landing Project was $65.4 million as of September 30, 2024.
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 four years, and is not expected to over the next five years; therefore, the estimated fair value of the contingent consideration liability was nil as of September 30, 2024 and December 31, 2023.

16.    SEGMENTS
Our two operating segments represent the Company’s segments for which discrete financial information is available and is 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 streams, 1) gas gathering, processing and treating, 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 three Permian Basin pipelines that access various points along the U.S. Gulf Coast, as well as Kinetik NGL and Delaware Link Pipelines. The current operating pipelines transport crude oil, natural gas and NGLs.
Our Chief Executive Officer, who is the CODM, uses Segment Adjusted EBITDA, a non-GAAP measure, to measure profitability and allocate resources among segments. Segment Adjusted EBITDA, a non-GAAP measure, is defined as segment net earnings adjusted to exclude interest expense, income tax expense, depreciation and amortization, the proportionate effect of these same items for our EMI pipelines and other non-recurring items. The CODM considers budget-to-actual and forecast-to-actual variances on a monthly basis when making decisions about allocating capital and personnel to the segments.
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The Midstream Logistics segment accounts for more than 97% of the Company’s operating revenues, more than 99% of the cost of sales (excluding depreciation and amortization) and operating expenses and more than 94% of the ad valorem expenses. The Pipeline Transportation segment contains all of the Company’s equity method investments. Corporate and Other contains the Company’s executive and administrative functions, including 84% of the Company’s General and Administrative Expenses and all of the Company’s debt service costs. For the three months ended September 30, 2024, the Midstream Logistics segment and the Pipeline Transportation segment represent 65% and 36% of total consolidated adjusted EBITDA, respectively, which is consistent with the prior year contributions from each segment.
The following tables present the reconciliation of the non-GAAP measure Segment Adjusted EBITDA to the GAAP measure segment income (loss) before income taxes as of and for the three and nine months period ended September 30, 2024 and 2023:
Midstream LogisticsPipeline Transportation
Corporate and Other(1)
Consolidated
(In thousands)
For the Three Months Ended September 30, 2024
Segment income (loss) before income taxes$88,581 $88,797 $(85,464)$91,914 
Add back:
Interest expense2,666 — 63,363 66,029 
Depreciation and amortization expenses
85,273 2,305 5 87,583 
Contract assets amortization1,655 — — 1,655 
Proportionate EMI EBITDA— 88,229 — 88,229 
Share-based compensation— — 15,171 15,171 
Contingent liabilities fair value adjustment1,400 — — 1,400 
Integration costs1,208 — 1,332 2,540 
Acquisition transaction costs— — 31 31 
Other one-time costs or amortization1,657 — 2,060 3,717 
Deduct:
Interest income
— — 572 572 
Commodity hedging unrealized gain
8,817 — — 8,817 
Gain on sale of equity method investment
— 29,953 — 29,953 
Equity income from unconsolidated affiliates— 53,244 — 53,244 
Segment Adjusted EBITDA(2)
$173,623 $96,134 $(4,074)$265,683 
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Midstream LogisticsPipeline Transportation
Corporate and Other(1)
Consolidated
(In thousands)
For the Three Months Ended September 30, 2023
Segment income (loss) before income taxes
$56,584 $50,598 $(62,748)$44,434 
Add back:
Interest expense12 — 44,997 45,009 
Depreciation and amortization expenses
69,456 473 6 69,935 
Contract assets amortization1,655 — — 1,655 
Proportionate EMI EBITDA— 78,585 — 78,585 
Share-based compensation— — 12,502 12,502 
Loss on disposal of assets2,927 — — 2,927 
Unrealized loss on derivatives8,259 — — 8,259 
Integration costs21 — — 21 
Acquisition transaction costs— — 378 378 
Other one-time costs or amortization1,529 — 1,133 2,662 
Warrant valuation adjustment— — 4 4 
Deduct:
Interest income— — 293 293 
Equity income from unconsolidated affiliates— 50,754 — 50,754 
Segment Adjusted EBITDA(2)
$140,443 $78,902 $(4,021)$215,324 
Midstream LogisticsPipeline Transportation
Corporate and Other(1)
Consolidated
(In thousands)
For the Nine Months Ended September 30, 2024
Segment income (loss) before income taxes$215,196 $275,246 $(241,172)$249,270 
Add back:
Interest expense5,273 — 162,272 167,545 
Depreciation and amortization expenses
229,336 6,897 17 236,250 
Contract assets amortization4,965 — — 4,965 
Proportionate EMI EBITDA— 262,553 — 262,553 
Share-based compensation— — 52,868 52,868 
Loss on disposal of assets4,090 — — 4,090 
Loss on debt extinguishment
— — 525 525 
Contingent liabilities fair value adjustment1,400 — — 1,400 
Integration costs1,792 — 3,299 5,091 
Acquisition transaction costs— — 3,538 3,538 
Other one-time costs or amortization4,048 — 4,400 8,448 
Deduct
Other interest income
— — 1,459 1,459 
Commodity hedging unrealized gain
1,935 — — 1,935 
Gain on sale of equity method investment
— 89,837 — 89,837 
Equity income from unconsolidated affiliates— 169,668 — 169,668 
Segment Adjusted EBITDA(2)
$464,165 $285,191 $(15,712)$733,644 
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Midstream LogisticsPipeline Transportation
Corporate and Other(1)
Consolidated
(In thousands)
For the Nine Months Ended September 30, 2023
Segment income (loss) before income taxes$163,794 $146,524 $(189,190)$121,128 
Add back:
Interest expense32 — 130,411 130,443 
Depreciation and amortization expenses
206,855 1,398 18 208,271 
Contract assets amortization4,965 — — 4,965 
Proportionate EMI EBITDA— 224,933 — 224,933 
Share-based compensation— — 43,340 43,340 
Loss on disposal of assets15,166 — — 15,166 
Unrealized loss on derivatives616 — — 616 
Integration costs29 — 956 985 
Acquisition transaction costs33 — 615 648 
Other one-time costs or amortization5,310 — 2,235 7,545 
Deduct:
Interest income— — 314 314 
Warrant valuation adjustment— — 73 73 
Equity income from unconsolidated affiliates— 146,828 — 146,828 
Segment Adjusted EBITDA(2)
$396,800 $226,027 $(12,002)$610,825 
(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. Items included here to reconcile operating segments profit and loss with the Company’s consolidated profit and loss.
(2)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 the revenue for the individual operating segments for the three and nine month period ended September 30, 2024 and 2023:
Midstream LogisticsPipeline TransportationEliminationConsolidated
(In thousands)
For the Three Months Ended September 30, 2024
Revenue$391,331 $2,192 $— $393,523 
Other revenue2,837 2 — 2,839 
Intersegment revenue(1)
— 6,748 (6,748)— 
Total segment operating revenue$394,168 $8,942 $(6,748)$396,362 
Midstream LogisticsPipeline TransportationEliminationConsolidated
(In thousands)
For the Three Months Ended September 30, 2023
Revenue$324,863 $766 $— $325,629 
Other revenue4,670 2 — 4,672 
Total segment operating revenue$329,533 $768 $— $330,301 
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Midstream LogisticsPipeline TransportationEliminationConsolidated
(In thousands)
For the Nine Months Ended September 30, 2024
Revenue$1,082,236 $6,566 $— $1,088,802 
Other revenue8,122 289 — 8,411 
Intersegment revenue(1)
— 19,288 (19,288)— 
Total segment operating revenue$1,090,358 $26,143 $(19,288)$1,097,213 
Midstream LogisticsPipeline TransportationEliminationConsolidated
(In thousands)
For the Nine Months Ended September 30, 2023
Revenue$894,669 $2,190 $— $896,859 
Other revenue10,679 6 — 10,685 
Total segment operating revenue$905,348 $2,196 $— $907,544 
(1)The Company accounts for intersegment sales at market prices, while it accounts for asset transfers at book value. Intersegment revenue is eliminated at consolidation.
The following table presents total assets for each operating segment as of September 30, 2024 and December 31, 2023:
September 30,December 31,
20242023
(In thousands)
Midstream Logistics$4,323,444 $3,772,764 
Pipeline Transportation(1)
2,297,544 2,703,588 
Segment total assets6,620,988 6,476,352 
Corporate and other239,473 20,521 
Total assets$6,860,461 $6,496,873 
(1)Includes investment in unconsolidated affiliates of $2.14 billion and $2.54 billion as of September 30, 2024 and December 31, 2023, respectively.

17.    SUBSEQUENT EVENTS
On October 17, 2024, the Board declared a cash dividend of $0.78 per share on the Company’s Class A Common Stock which will be payable to stockholders of record as of October 28, 2024 on November 7, 2024. The Company, through its ownership of the general partner of the Partnership, declared a distribution of $0.78 per Common Unit from the Partnership to the holders of Common Units, which will be payable on November 7, 2024.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis addresses the results of our operations for the three and nine month period ended September 30, 2024, as compared to our results of operations for the same periods in 2023. 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 which are strategic business units with various products and services. The Midstream Logistics segment operates under three service offerings, 1) gas gathering and processing, 2) crude oil gathering, stabilization and storage services and 3) produced water gathering and disposal. The Pipeline Transportation segment consists of three EMI pipelines originating in the Permian Basin with various access points to the U.S. Gulf Coast, as well as Kinetik NGL and Delaware Link Pipelines. The pipelines transport natural gas, NGLs and crude oil within the Permian Basin and to the U.S. Gulf Coast.
Midstream Logistics
Gas Gathering and Processing. The Midstream Logistics segment provides gas gathering and processing services with over 3,900 miles of low and high-pressure steel pipeline located throughout the Delaware Basin, including over 2,300 miles of gas pipeline acquired through the Durango Acquisition, and over 570,000 horsepower of compression capacity. Gas processing assets are centralized at seven processing complexes with system-wide front-end amine treating capability, 6.5 Mmcfpd AGI capacity and total cryogenic processing capacity of approximately 2.2 Bcf/d as of today and over 2.4 BCF/d once the Kings Landing Project is complete in early 2025.
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 220 miles of gathering pipeline and 90,000 barrels of crude storage.
Water Gathering and Disposal. The system includes over 360 miles of gathering pipeline and approximately 580,000 barrels per day of permitted disposal capacity.
Pipeline Transportation
EMI pipelines. The Company owns the following equity interests in three EMI pipelines in the Permian Basin with access to various points along the U.S. Gulf Coast: 1) an approximate 55.5% equity interest in Permian Highway Pipeline LLC (“PHP”), which is operated by Kinder Morgan; 2) 33.0% equity interest in Breviloba, LLC (“Breviloba”), the owner of the Shin Oak NGL Pipeline (“Shin Oak”), which is operated by Enterprise Products Operating LLC; and 3) 27.5% equity interest in Epic Crude Holdings, LP (“EPIC”), which is operated by EPIC Consolidated Operations, LLC.
Kinetik NGL Pipelines. The Kinetik NGL Pipelines consist of approximately 96 miles of NGL pipelines connecting our East Toyah and Pecos complexes to Waha, including our 20-inch Dewpoint pipeline that spans over 40 miles, and our 30 mile, 16-inch Brandywine Pipeline connecting to our Diamond Cryogenic complex. The Kinetik NGL pipeline system has a capacity of approximately 560 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. The project reached commercial in-service in October 2023.
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Recent Developments
EPIC Equity Interest
During the third quarter, the Company consummated the Equity Sale and Purchase Agreement with Dos Rios Crude Intermediate LLC (“Seller”) to purchase a 12.5% of equity interest in EPIC. The acquisition of additional interest is accounted for as a business acquisition pursuant to ASC 805. After completion of the transaction, the Company owned a 27.5% equity interest in EPIC as of September 30, 2024. EPIC has over 800 miles of pipeline connecting the Delaware and Midland Basins and has a capacity of 625 MBbl/d.
Durango Acquisition
On June 24, 2024, the Company consummated the previously announced Durango Acquisition for an adjusted purchase price of approximately $845.2 million, consisting of (i) $358.0 million of cash consideration paid at closing, (ii) approximately 3.8 million shares of Class C Common Stock and an equivalent number of OpCo Units, issued at closing and (iii) approximately 7.7 million shares of Class C Common Stock and an equivalent number of OpCo Units to be issued on July 1, 2025. Durango Seller is also entitled to an earn out of up to $75.0 million in cash contingent upon the completion and placing into service of the Kings Landing Project in Eddy County, New Mexico, which is currently under construction. This earn out is subject to reduction based on actual capital costs associated with the Kings Landing Project. This transaction was accounted for as a business combination pursuant to ASC 805. Refer to Note 2—Business Combinations in the Notes to our Condensed Consolidated Financial Statements for further information.
The Durango Acquisition significantly expands Kinetik’s footprint into New Mexico and the Northern Delaware Basin, expanding Kinetik’s processing capacity by over 200 MMcf/d and doubling its existing gathering pipeline mileage. An additional 200 MMcf/d of processing capacity will be added upon completion of the Kings Landing Project.
GCX Divestiture
On June 4, 2024, the Company consummated the previously announced transaction contemplated by the GCX Purchase Agreement to sell its 16% equity interest in GCX for an adjusted purchase price of $524.4 million (the "GCX Sale"), including an additional $30.0 million earn out in cash upon the approval by the GCX Board of Directors of one or more capital projects that achieve certain capacity expansion criteria. Net cash proceeds of $494.4 million were received from the GCX Buyer on June 4, 2024 and the cash earn out was received in September 2024. The Company recognized a gain of $89.8 million upon closing of the GCX Sale.
Factors Affecting Our Business
Commodity Price Volatility
There has been, and we believe there will continue to be, volatility in commodity prices and in the relationships among NGLs, crude oil and natural gas prices. As a result of uncertainty around global commodity supply and demand, the current conflict in Israel and the Gaza Strip and elsewhere in the Middle East, as well as the ongoing armed conflict in Ukraine, global oil and natural gas commodity prices continue to remain volatile. The volatility and uncertainty of natural gas, crude oil and NGL prices impact drilling, completion and other investment decisions by producers and ultimately supply to our systems. Although ongoing armed conflicts might generate commodity price upward pressure, and our operations could benefit in an environment of higher natural gas, NGLs and condensate prices, the instability of the international political environment and human and economic hardship resulting from the conflicts would have a highly uncertain impact on the U.S. economy, which in turn, might affect our business and operations adversely. Our product sales revenue is exposed to commodity price fluctuations. Therefore, commodity price decline and sustained periods of low natural gas and NGL prices could have an adverse effect on our product revenue stream. The Company continues to monitor commodity prices closely and may enter into commodity price hedges from time to time as necessary to mitigate the volatility risk. In addition, the Company, when economically appropriate, enters into fee-based arrangements that insulate the Company from commodity price volatility.
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Inflation and Interest Rates
The annual rate of inflation in the United States was 2.4% in September 2024 as measured by the Consumer Price Index. In light of the recent economic activity, unemployment level and progress on lowering inflation, the Federal Open Market Committee (“FOMC”) decided to lower the target range for the federal funds rate by 0.50% to 4.75% - 5.00% during its meeting in September 2024. During the meeting, the FOMC noted that the economic outlook is uncertain and the Committee is attentive to the risks to both sides of its dual mandate. If interest rates elevated beyond the term of our hedges, our financing cost will increase and could have a negative impact on the Company’s ability to meet its contractual debt obligations and to fund its operating expenses and capital expenditures. The Company will continue to monitor the FOMC’s monetary policy and interest rate movement. Refer to Note 11—Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional discussion regarding our hedging strategies and objectives for interest rate risk.

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Results of Operations
The following table presents the Company’s results of operations for the periods presented:

Three Months Ended September 30,Nine Months Ended September 30,
20242023% Change2024
2023
% Change
(In thousands, except percentages)
Revenues:
Service revenue$103,100 $104,349 (1 %)$301,710 $310,325 (3 %)
Product revenue290,423 221,280 31 %787,092 586,534 34 %
Other revenue2,839 4,672 (39 %)8,411 10,685 (21 %)
Total revenues396,362 330,301 20 %1,097,213 907,544 21 %
Operating costs and expenses:
Cost of sales (exclusive of depreciation and amortization) (1)
144,586 147,756 (2 %)444,786 374,100 19 %
Operating expense55,804 42,925 30 %143,278 118,804 21 %
Ad valorem taxes5,896 5,607 5 %18,400 14,954 23 %
General and administrative29,619 22,751 30 %94,846 73,131 30 %
Depreciation and amortization expense
87,583 69,935 25 %236,250 208,271 13 %
Loss on disposal of assets
— 2,927 (100 %)4,090 15,166 (73 %)
Total operating costs and expenses323,488 291,901 11 %941,650 804,426 17 %
Operating income72,874 38,400 90 %155,563 103,118 51 %
Other income (expense):
Interest and other income1,872 289 NM2,272 1,625 40 %
Loss on debt extinguishment— — — %(525)— 100 %
Gain on sale of equity method investments
29,953 — 100 %89,837 — 100 %
Interest expense(66,029)(45,009)47 %(167,545)(130,443)28 %
Equity in earnings of unconsolidated affiliates53,244 50,754 5 %169,668 146,828 16 %
Total other income, net
19,040 6,034 NM93,707 18,010 NM
Income before income taxes91,914 44,434 107 %249,270 121,128 106 %
Income tax expense8,260 1,303 NM21,261 2,030 NM
Net income including noncontrolling interest$83,654 $43,131 94 %$228,009 $119,098 91 %
(1)Cost of sales (exclusive of depreciation and amortization) is net of gas service revenues totaling $60.2 million and $38.6 million for the three months ended September 30, 2024 and 2023, respectively, and $159.4 million and $107.1 million for the nine months ended September 30, 2024 and 2023, respectively, for certain volumes, where we act as principal.
NM - Not meaningful

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Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023
Revenues
For the three months ended September 30, 2024, revenue increased $66.1 million, or 20%, to $396.4 million, compared to $330.3 million for the same period in 2023. The increase was primarily driven by higher product revenue related to increased natural gas residue volumes sold and increased gathered and processed gas volumes.
Service revenue
Service revenue consists of service fees paid to us by our customers for providing comprehensive gathering, treating, processing and produced water disposal services necessary to bring natural gas, NGLs and crude oil to market. Service revenue for the three months ended September 30, 2024, decreased by $1.2 million, or 1%, to $103.1 million, compared to $104.3 million for the same period in 2023. This decrease was driven by lower period-over-period gas gathering fees of $1.7 million. Period-over-period gathered and processed gas volumes increased by 212.3 Mcf per day, or 12% and by 238.7 Mcf per day, or 16%, respectively. Of the increase, Durango’s operation accounted for 207.2 Mcf per day and 195.8 Mcf per day of gathered and processed gas volume, respectively. However, the total gathered and processed gas volumes where we function as the agent decreased period over period causing the change in net gas gathering fees presented as revenues to be down 2%. Over 91% of service revenues are included in the Midstream Logistics segment.
Product revenue
Product revenue consists of commodity sales (including condensate, natural gas residue and NGLs). Product revenue for the three months ended September 30, 2024, increased by $69.1 million, or 31%, to $290.4 million, compared to $221.3 million for the same period in 2023, primarily due to increased residue gas volumes sold and higher commodity prices. Period over period natural gas residue volumes sold increased 36.1 million MMBtu, of which, Durango’s operations accounted for 14.2 million MMBtu. Partially offsetting this increase, NGL and condensate volumes sold decreased 2.0 million barrels, or 24%. Product revenues are included entirely in the Midstream Logistics segment.
Operating Costs and Expenses
Operating expenses
Operating expenses increased by $12.9 million, or 30%, to $55.8 million for the three months ended September 30, 2024, compared to $42.9 million for the same period in 2023. Of the total increase, $11.7 million was driven by Durango’s operations that were acquired during June 2024. Over 99% of operating expenses are included in the Midstream Logistics segment.
General and administrative expenses
General and administrative expenses increased by $6.9 million, or 30% to $29.6 million for the three months ended September 30, 2024, compared to $22.8 million for the same period in 2023. The increase was mainly driven by increases in share-based compensation of $2.7 million due to new RSUs and PSUs granted during 2024 and Durango integration costs of $2.2 million. The remaining $2.0 million increase primarily relates to higher internal labor and insurance expenses that have resulted from the overall growth of the organization.
Depreciation and amortization expense
Depreciation and amortization expense increased by $17.6 million, or 25% to $87.6 million for the three months ended September 30, 2024, compared to $69.9 million for the same period in 2023. Of the total increase, $12.8 million was driven by the Durango Acquisition that was completed during June of 2024. The remaining increase was driven by assets placed in service since third quarter of 2023, primarily related to the Delaware Link Pipeline that was placed in service in October 2023.
Other Income (Expense)
Gain on sale of equity method investment
Gain on sale of equity method investment increased by $30.0 million, or 100%, for the three months ended September 30, 2024. The increase was related to the cash earn out received in September 2024 related to the GCX Sale.
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Interest expense
Interest expense increased by $21.0 million, or 47%, to $66.0 million for the three months ended September 30, 2024. The increase was primarily driven by an unrealized loss on interest rate swaps of $12.3 million during the three months ended September 30, 2024 versus an unrealized gain on interest rate swaps of $7.8 million during the same period in 2023. Refer to Note—11 Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements regarding the Company’s strategy in managing interest rate risk.
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Revenues
For the nine months ended September 30, 2024, revenue increased $189.7 million, or 21%, to $1,097.2 million, compared to $907.5 million for the same period in 2023. The increase was primarily driven by higher period-over-period product revenue due to increased natural gas residue volumes sold and increased gathered and processed gas volumes.
Service revenue
Service revenue consists of service fees paid to us by our customers for providing comprehensive gathering, treating, processing and water disposal services necessary to bring natural gas, NGLs and crude oil to market. Service revenue for the nine months ended September 30, 2024, decreased by $8.6 million, or 3%, to $301.7 million, compared to $310.3 million for the same period in 2023. The decrease was primarily driven by lower period-over-period gas gathering fees of $8.2 million. Total gathered and processed gas volumes increased 171.1 Mcf per day, or 10% and 188.0 Mcf per day, or 13%, respectively. Of the increase, Durango’s operations accounted for 74.8 Mcf per day and 70.6 Mcf per day of gathered and processed gas volume, respectively. However, the total gathered and processed gas volumes where we function as the agent decreased period over period causing the change in net gas gathering fees presented as revenues to be down 3%. Over 91% of service revenues are included in the Midstream Logistics segment.
Product revenue
Product revenue consists of commodity sales (including condensate, natural gas residue and NGLs). Product revenue for the nine months ended September 30, 2024, increased by $200.6 million, or 34%, to $787.1 million, compared to $586.5 million for the same period in 2023, primarily due to a period-over-period increase in residue gas volumes sold. Natural gas residue sales volumes increased 59.6 million MMBtu, of which Durango’s operations accounted for 14.6 million MMBtu. The increase was also driven by a period over period increase in NGL prices of $8.46 per barrel, or 39%. The overall increase was partially offset by decreases in NGL and condensate volumes sold of 4.3 million barrels, or 19% and a decrease in natural gas prices of $0.42 per MMBtu, or 25%. Product revenues are included entirely in the Midstream Logistics segment.
Operating Costs and Expenses
Costs of sales (exclusive of depreciation and amortization)
Cost of sales (exclusive of depreciation and amortization) primarily consists of purchases of NGLs and natural gas from our producers at contracted market prices to support product sales to other third parties. For the nine months ended September 30, 2024, cost of sales increased $70.7 million, or 19%, to $444.8 million, compared to $374.1 million for the same period in 2023. As discussed above, the increase was primarily driven by period to period increases in natural gas residue volumes sold, slightly offset by a decrease in NGL and condensate volumes sold as well as lower natural gas prices. Over 99% of cost of sales (exclusive of depreciation and amortization) is included entirely in the Midstream Logistics segment.
Operating Expense
Operating expenses increased by $24.5 million, or 21%, to $143.3 million for the nine months ended September 30, 2024, compared to $118.8 million for the same period in 2023. Of the total increase, $12.7 million was driven by Durango’s operations that were acquired during June of 2024. The remaining increase was primarily driven by increases in internal labor, repairs and maintenance and lubricants and chemicals totaling $9.8 million, which was related to the increased gathered and processed volumes during 2024. Over 99% of operating expenses are included in the Midstream Logistics segment.
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General and administrative expenses
General and administrative expenses increased by $21.7 million, or 30% to $94.8 million for the nine months ended September 30, 2024, compared to $73.1 million for the same period in 2023. The increase was mainly driven by higher share-based compensation of $9.5 million due to new RSUs and PSUs granted during 2024 and $7.9 million of integration and transaction costs associated with the 2024 Durango and Epic transactions. The remaining $4.3 million increase primarily relates to higher internal labor and insurance expenses that have resulted from the overall growth of the organization.
Depreciation and amortization expense
Depreciation and amortization expense increased by $28.0 million, or 13% to $236.3 million for the nine months ended September 30, 2024, compared to $208.3 million for the same period in 2023. Of the total increase, $13.6 million was driven by Durango Acquisition that was completed during June of 2024. The remaining increase was driven by assets placed in service since third quarter of 2023, primarily related to the Delaware Link Pipeline that was placed in service in October 2023 and the rich gas lateral into Lea County, New Mexico.
Loss on disposal of assets
Loss on disposal of asset decreased by $11.1 million, or 73% to $4.1 million for the nine months ended September 30, 2024, compared to $15.2 million for the same period in 2023. The decrease was mainly due to the write off of obsolete gathering and processing systems and facilities of $11.8 million in 2023, but no similar write off took place in 2024.
Other Income (Expense)
Gain on sale of equity method investment
Gain on sale of equity method investment increased by $89.8 million, or 100%, for the nine months ended September 30, 2024, compared to the same period in 2023. The increase was related to the GCX Sale consummated in the second quarter of 2024.
Interest Expense
Interest expense increased by $37.1 million, or 28%, to $167.5 million for the nine months ended September 30, 2024, compared to $130.4 million for the same period in 2023. The increase was driven by a decrease in capitalized interest expense of $8.9 million given the completion of the PHP expansion in December of 2023, and an unrealized loss on interest rate swaps of $2.8 million during the nine months ended September 30, 2024 versus an unrealized gain on interest swaps of $27.5 million during the same period in 2023. Refer to Note—11 Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements regarding the Company’s strategy in managing interest rate risk.
Equity in earnings of unconsolidated affiliates
Income from EMI pipelines increased by $22.8 million, or 16%, to $169.7 million for the nine months ended September 30, 2024, compared to $146.8 million for the same period in 2023. An increase of $35.9 million was driven by higher profitability from the Company’s investment in PHP due to its expanded capacity that was placed into service in December 2023. This increase was partially offset by the decrease in equity in earnings of unconsolidated affiliates from GCX due to the GCX sale consummated in the second quarter of 2024.
Income Tax Expense
Income tax expense increased by $19.2 million for the nine months ended September 30, 2024 compared to the same period in 2023. The increase was primarily due to the release of the valuation allowance against deferred tax assets in December 2023 and the recognition of deferred federal income tax of $18.4 million for nine months ended September 30, 2024 compared to nil for the same period in 2023.

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Key Performance Metrics
Adjusted EBITDA
Adjusted EBITDA is defined as net income including noncontrolling interests adjusted for interest, taxes, depreciation and amortization, gain or loss on disposal of assets and debt extinguishment, the proportionate EBITDA from our EMI pipelines, equity income and gain from sale of investments recorded using the equity method, share-based compensation expense, noncash increases and decreases related to hedging activities, fair value adjustments for contingent liabilities, integration and transaction costs and extraordinary losses and unusual or non-recurring charges. Adjusted EBITDA provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.
We believe that Adjusted EBITDA provides a meaningful understanding of certain aspects of earnings before the impact of investing and financing charges and income taxes. Adjusted EBITDA is useful to an investor in evaluating our performance because this measure:
•is widely used by analysts, investors and competitors to measure a company’s operating performance;
•is a financial measurement that is used by rating agencies and other parties to evaluate our credit worthiness; and
•is used by our management for various purposes, including as a basis for strategic planning and forecasting.
Adjusted EBITDA is not defined in GAAP
The GAAP measure used by the Company that is most directly comparable to Adjusted EBITDA is net income including noncontrolling interest. Adjusted EBITDA should not be considered as an alternative to the GAAP measure of net income including noncontrolling interest or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income including noncontrolling interest. Adjusted EBITDA should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. The Company’s definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies in the industry, thereby diminishing its utility.
Reconciliation of non-GAAP financial measure
Company management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable GAAP measure, understanding the differences between Adjusted EBITDA as compared to net income including noncontrolling interest, and incorporating this knowledge into its decision-making processes. Management believes that investors benefit from having access to the same financial measure that the Company uses in evaluating operating results.
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The following table presents a reconciliation of the GAAP financial measure of net income including noncontrolling interest to the non-GAAP financial measure of Adjusted EBITDA.

Three Months Ended September 30,
Nine Months Ended September 30,
20242023% Change20242023% Change
(In thousands, except percentages)
Reconciliation of net income including noncontrolling interest to Adjusted EBITDA
Net income including noncontrolling interest$83,654 $43,131 94 %$228,009 $119,098 91 %
Add back:
Interest expense66,029 45,009 47 %167,545 130,443 28 %
Income tax expense8,260 1,303 NM21,261 2,030 NM
Depreciation and amortization expenses
87,583 69,935 25 %236,250 208,271 13 %
Amortization of contract costs1,655 1,655 — %4,965 4,965 — %
Proportionate EMI EBITDA88,229 78,585 12 %262,553 224,933 17 %
Share-based compensation15,171 12,502 21 %52,868 43,340 22 %
Loss on disposal of assets
— 2,927 (100 %)4,090 15,166 (73 %)
Loss on debt extinguishment— — — %525 — 100 %
Commodity hedging unrealized loss
— 8,259 (100 %)— 616 (100 %)
Contingent liability fair value adjustment
1,400 — 100 %1,400 — 100 %
Integration costs
2,540 21 NM5,091 985 NM
Acquisition transaction costs
31 378 (92 %)3,538 648 NM
Other one-time cost or amortization3,717 2,662 40 %8,448 7,545 12 %
Warrant valuation adjustment— 4 (100 %)— — — %
Deduct:
Interest income572 293 95 %1,459 314 NM
Warrant valuation adjustment— — — %— 73 (100 %)
Commodity hedging unrealized gain8,817 — 100 %1,935 — 100 %
Gain on sale of equity method investment
29,953 — 100 %89,837 — 100 %
Equity income from EMI's53,244 50,754 5 %169,668 146,828 16 %
Adjusted EBITDA$265,683 $215,324 23 %$733,644 $610,825 20 %
NM - not meaningful
Adjusted EBITDA increased by $50.4 million, or 23%, to $265.7 million for the three months ended September 30, 2024, compared to $215.3 million for the same period in 2023. As discussed in the Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Quarterly Report on Form 10-Q, $49.2 million of the increase was due to increased total operating revenue of $66.1 million, partially offset by increased cost of sales (exclusive of depreciation and amortization), operating expenses, ad valorem taxes and general and administrative expense of $16.9 million. The remaining increases were primarily driven by higher proportionate EMI EBITDA of $9.6 million and higher non-cash amortizations or other one-time costs of $8.6 million. These increases were partially offset by a decrease of $17.1 million related to unrealized commodity hedging activities.
Adjusted EBITDA increased by $122.8 million, or 20%, to $733.6 million for the nine months ended September 30, 2024, compared to $610.8 million for the same period in 2023. As discussed in the Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Quarterly Report on Form 10-Q, $69.3 million of the increase was due to increased total operating revenue of $189.7 million, partially offset by increased cost of sales (exclusive of depreciation and amortization), operating expenses, ad valorem taxes and general and administrative expenses of $120.3 million. The increase was also driven by (i) higher proportionate EMI EBITDA of $37.6 million primarily related to the expanded capacity at PHP that was placed into service during December 2023 and (ii) increases related to stock based compensation of $9.5 million and integration, transaction and other one-time costs of $7.9 million, which was mainly related to the Durango Acquisition completed in June 2024.
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Segment Adjusted EBITDA
Segment Adjusted EBITDA is defined as segment net earnings adjusted to exclude interest expense, income tax expense, depreciation and amortization, the proportionate effect of these same items for our equity method investments and other non-recurring items. The following table presents Segment Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023. Also refer to Note 16—Segments in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for a reconciliation of Segment Adjusted EBITDA to net income before income taxes.

Three Months Ended September 30,
Nine Months Ended September 30,
20242023% Change20242023% Change
(In thousands, except percentages)
Midstream Logistics$173,623 $140,443 24 %$464,165 $396,800 17 %
Pipeline Transportation96,134 78,902 22 %285,191 226,027 26 %
Corporate and Other(1)
(4,074)(4,021)1 %(15,712)(12,002)31 %
Total Segment Adjusted EBITDA
$265,683 $215,324 23 %$733,644 $610,825 20 %
(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 $33.2 million to $173.6 million for the three months ended September 30, 2024, compared to $140.4 million for the same period in 2023. The increase was primarily due to the increased total operating revenue of $57.9 million, partially offset by increased operating expense and ad valorem taxes of $12.7 million and a decrease of $17.1 million related to unrealized commodity hedging activities. The reasons for the fluctuations are discussed in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Quarterly Report on Form 10-Q.
Midstream Logistics Segment Adjusted EBITDA increased by $67.4 million to $464.2 million for the nine months ended September 30, 2024, compared to $396.8 million for the same period in 2023. The increase was primarily due to the increased total operating revenue of $165.7 million, partially offset by increases in cost of sales (exclusive of depreciation and amortization) of $70.7 million and operating expense and ad valorem taxes of $26.2 million. The reasons for the fluctuations are discussed in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Quarterly Report on Form 10-Q.
Pipeline Transportation Segment Adjusted EBITDA increased by $17.2 million to $96.1 million for the three months ended September 30, 2024, compared to $78.9 million for the same period in 2023. The increase was primarily driven by higher proportionate EMI EBITDA of $9.6 million due to increased profitability at PHP related to expanded capacity that was placed into service starting in December 2023. The increase was also driven by the increase in operating revenue of $8.2 million primarily related to the Delaware Link Pipeline going into service during October 2023. The reasons for the fluctuations are discussed in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Quarterly Report on Form 10-Q.
Pipeline Transportation Segment Adjusted EBITDA increased by $59.2 million to $285.2 million for the nine months ended September 30, 2024, compared to $226.0 million for the same period in 2023. The increase was primarily driven by higher proportionate EMI EBITDA of $37.6 million due to increased profitability at PHP related to expanded capacity that was placed into service starting in December 2023. The remaining increase was driven by increased operating revenue of $23.9 million primarily related to the Delaware Link Pipeline going into service during October 2023. The reasons for the fluctuations are discussed in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations to this Quarterly Report on Form 10-Q.

Contractual Obligations
We have contractual obligations for principal and interest payments on our 2028 Notes, 2030 Notes, and under the Term Loan Credit Facility, Revolving Credit Facility and A/R Facility. See Note 7—Debt and Financing Costs in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
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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.

Capital Resources and Liquidity
The Company’s primary use of capital since inception has been for the initial construction of gathering and processing assets, as well as the acquisitions of businesses and EMI pipelines and associated subsequent construction costs. For 2024, the Company’s primary spending requirements are related to the business acquisitions and other budgeted capital expenditures for construction and maintenance of gathering and processing assets, the Company’s contractual debt obligations and quarterly cash dividends. In addition, the Company may repurchase its Class A Common Stock pursuant to the Share Repurchase Program from time to time.
During the nine months ended September 30, 2024, the Company’s primary sources of cash were distributions from the EMI pipelines, borrowings under the Revolving Credit Facility and A/R Facility, proceeds from the GCX Sale and cash generated from operations. Based on the Company’s current financial plan, the Company believes that cash from operations and distributions from the EMI pipelines, and remaining borrowing capacity on our credit facilities will generate cash flows in excess of capital expenditures and the amount required to fund the Company’s planned quarterly dividend over the next 12 months.
A/R Facility
Pursuant to the A/R Facility, the Company and certain of its subsidiaries continuously transfer receivables to Kinetik Receivables and Kinetik Receivables transfers receivables that meet certain qualifying conditions to third-party purchasers in exchange for cash. These receivables are held by Kinetik Receivables and are pledged to secure the collectability of the sold receivables and are accounted for as secured borrowings. The amount available for borrowing at any one time under the A/R Facility is limited to an amount calculated based on the outstanding balance of eligible receivables sold to the purchasers, subject to certain reserves, concentration limits, and other limitations. As of September 30, 2024, eligible accounts receivable of $150.0 million was pledged to the A/R Facility as collateral.
The net proceeds of the A/R Facility were used, together with cash on hand, to repay a portion of the outstanding borrowings under the Term Loan Credit Facility during the second quarter 2024, lowering the remaining balance to $1.00 billion. As a result, the maturity of the Term Loan Credit Facility extended to December 8, 2026.
Capital Requirements and Expenditures
Our operations can be capital intensive, requiring investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational regulations. During the nine months ended September 30, 2024 and 2023, capital spending for property, plant and equipment totaled $155.8 million and $245.8 million, respectively, intangible asset purchases totaled $7.7 million and $15.1 million, respectively, and contributions to EMI totaled $3.3 million and $202.7 million, respectively. The decrease in capital spending was mainly due to completion of the Delaware Link Pipeline and PHP expansion projects in the second half of 2023. 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 the future capital expenditures for EMI pipelines and the Company’s existing infrastructure assets over the next 12 months. For further information on EMIs, refer to Note 6—Equity Method Investments in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.
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Cash Flow
The following tables present cash flows from operating, investing and financing activities during the periods presented:
Nine Months Ended September 30,
20242023
(In thousands)
Cash provided by operating activities$493,356 $405,585 
Cash used in investing activities
$(65,909)$(582,600)
Cash (used in) provided by financing activities
$(411,519)$170,689 
Operating activities. Net cash provided by operating activities increased by $87.8 million for the nine months ended September 30, 2024 compared with the same period in 2023. The change in the operating cash flows reflected (i) an increase in net income including noncontrolling interests of $108.9 million; (ii) a decrease in adjustments related to non-cash items of $20.8 million, which was mainly driven by a gain of $89.8 million recognized on the GCX Sale and an increase in equity in earnings from EMI of $22.8 million, partially offset by increases in distribution from EMIs of $17.8 million, deferred income taxes of $18.1 million, depreciation and amortization expense of $28.0 million and a decrease in favorable derivative activities adjustments of $26.8 million and (iii) a decrease in working capital of $0.4 million.
Investing activities. Net cash used in investing activities decreased by $516.7 million for the nine months ended September 30, 2024 compared with the same period in 2023. The decrease was primarily driven by cash proceeds from the GCX Sale of $524.4 million, lower capital expenditures of $97.3 million and a reduction of investments in EMIs of $199.5 million as the PHP expansion project was completed and put into service in December 2023, partially offset by net cash used in the Durango Acquisition and net cash used in the acquisition of additional equity interests in EPIC.
Financing activities. Net cash used in financing activities was $411.5 million for the nine months ended September 30, 2024, which was primarily comprised of net payments on the Partnership’s Term Loan, Revolving Credit Facility and A/R Facility of $138.6 million and cash dividend of $272.9 million paid to the holders of Class A Common Stock and Common Units, compared with net cash provided by financing activities of $170.7 million for the nine months ended September 30, 2023, which was primarily comprised of net proceeds from the Partnership’s Revolving Credit Facility of $235.0 million and cash dividend of $58.6 million paid to the holders of Class A Common Stock and Common Units. Significant increase in cash dividend paid in the first nine months of 2024 compared to the same period in 2023 was mainly due to the expiration of the Reinvestment Agreement on March 8, 2024, as such Reinvestment Holders are not obligated to reinvest a specified percent of all distributions on Common Units or dividends on shares of Class A Common Stock in the Company’s Class A Common Stock.
Dividend
During the nine months ended September 30, 2024, the Company made cash dividend payments of $272.9 million to holders of Class A Common Stock and Common Units and $75.2 million was reinvested in shares of Class A Common Stock by the Reinvestment Holders.
On October 17, 2024, the Board declared a cash dividend of $0.78 per share on the Company’s Class A Common Stock which will be payable to stockholders on October 28, 2024. The Company, through its ownership of the general partner of the Partnership, declared a distribution of $0.78 per Common Unit from the Partnership to the holders of Common Units, which will be payable on November 7, 2024. As described in these Condensed Consolidated Financial Statements, as the context requires, dividends paid to holders of Class A Common Stock and distributions paid to holders of Common Units may be referred to collectively as “dividends.”
Share Repurchase Program
For nine months ended September 30, 2024, the Company did not repurchase any of its outstanding shares.
For more information regarding the 1% U.S. federal excise tax imposed on certain repurchases of stock by publicly traded U.S. corporations, please refer to Part I, Item 1A.—”Risk Factors— Risks Related to Ownership of our Common Stock” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed on March 5, 2024.
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Liquidity
The following table presents a summary of the Company’s key liquidity indicators at the dates presented:
September 30,December 31,
20242023
 (In thousands)
Cash and cash equivalents$20,438 $4,510 
Total debt, net of unamortized deferred financing cost$3,429,689 $3,562,809 
Available committed borrowing capacity$730,400 $643,400 
Total debt and available credit facilities
There is no assurance that the financial condition of banks with lending commitments to the Company and its subsidiaries will not deteriorate. The Company closely monitors the ratings of the banks in the Company’s bank group. Having a large bank group allows the Company to mitigate the potential impact of any bank’s failure to honor its lending commitment.

Off-Balance Sheet Arrangements
As of September 30, 2024, there were no off-balance sheet arrangements.

Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies and estimates from those disclosed on our Annual Report on Form 10-K for the year ended December 31, 2023. 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, 2023 filed with the Commission on March 5, 2024.

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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 and developments related to the conflicts in Ukraine and Israel, monetary policy addressing the interest rate and inflation trend, which continued to have significant impact on volatility and uncertainties in the financial markets during the third quarter of 2024.
Commodity Price Risk
The results of the Company’s operations may be affected by the market prices of oil and natural gas. A portion of the Company’s revenue is directly tied to local crude, natural gas, NGLs and condensate prices in the Permian Basin. 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 11—Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional discussion regarding our hedging strategies and objectives.
Interest Rate Risk
As of September 30, 2024, the Company had interest bearing debt, net of deferred financing costs, with principal amount of $3.43 billion. The interest rates for the Revolving Credit Facility, the Term Loan and A/R Facility are variable, which expose the Company to the risk of increased interest expense in the event of increases to interest rates. Accordingly, results of operations, cash flows, financial condition and the ability to make cash distributions could be adversely affected by significant increases in interest rates. As of September 30, 2024, the Company had two interest rate swap contracts with total notional amounts of $1.70 billion maturing on May 31, 2025 that pay a fixed rate ranging from 4.38% to 4.48% and one interest rate swap contract with notional amount of $0.08 billion maturing on December 31, 2025 that pays a fixed rate of 3.02%. Refer to Note 11—Derivatives and Hedging Activities in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for additional discussion regarding our hedging strategies and objectives. In addition, the Company realizes 0.05% reductions to the effective interest rates of both the Revolving Credit Facility and the Term Loan during 2024 in relation to sustainability adjustment features embedded in these facilities as the Company has met its sustainability performance targets for fiscal year 2022 and 2023.
Credit Risk
The Company is subject to credit risk resulting from nonpayment or nonperformance by, or the insolvency or liquidation of, third-party customers. Any increase in nonpayment and nonperformance by, or the insolvency or liquidation of, the Company’s customers could adversely affect the Company’s results of operations.

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ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As of September 30, 2024, 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 September 30, 2024.
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.
As disclosed in Note—2 Business Combinations in the Notes to Condensed Consolidated Financial Statements, we acquired Durango on June 24, 2024, and its total revenues constituted approximately 4% of total revenues as shown on our Condensed Consolidated Statements of Operations for the nine months ended September 30, 2024. Durango’s total assets constituted approximately 13% of total assets as shown on our Condensed Consolidated Balance Sheet as of September 30, 2024. We expect to exclude Durango’s internal control over financial reporting from the scope of management's assessment of the effectiveness of our disclosure controls and procedures for one year following the acquisition. As part of the Company’s ongoing integration activities, the Company’s financial reporting controls and procedures are in the process of incorporating the financial information of Durango. The Condensed Consolidated Financial Statements presented in this Quarterly Report on Form 10-Q were prepared using certain information obtained from Durango’s separate, legacy systems.
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 September 30, 2024, that have materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
For further information regarding legal proceedings, refer to Note 15—Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS
Please refer to Part II, Item 1A — “Risk Factors” in the Company’s Annual Report Form 10-K for the year ended December 31, 2023 filed on March 5, 2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
There was no unregistered sale of equity securities or repurchase activities during the three months ended September 30, 2024.

ITEM 5. OTHER INFORMATION
Trading Arrangements
During the three months ended September 30, 2024, 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).
Disclosure Pursuant to Section 13(r) of the Securities Exchange Act of 1934
Pursuant to Section 13(r) of the Exchange Act, we may be required to disclose in our annual and quarterly reports to the SEC whether we or any of our “affiliates” knowingly engaged in certain activities, transactions or dealings relating to Iran or with certain individuals or entities targeted by US economic sanctions. Disclosure is generally required even where the activities, transactions or dealings were conducted in compliance with applicable law. Because the SEC defines the term “affiliate” broadly, it includes any entity under common “control” with us (and the term “control” is also construed broadly by the SEC).
The description of the activities below has been provided to us by Blackstone Inc. (“BX”), affiliates of which: (i) beneficially own more than 10% of our outstanding common stock and are members of our board of directors, and (ii) hold a minority non-controlling interest in Mundys S.p.A (formerly Atlantia S.p.A). Mundys S.p.A. may therefore be deemed to be under common “control” with us; however, this statement is not meant to be an admission that common control exists.
The disclosure below relates solely to activities conducted by Mundys S.p.A. The disclosure does not relate to any activities conducted by us or by BX and does not involve our or BX’s management. Neither we nor BX has had any involvement in or control over the disclosed activities, and neither we nor BX has independently verified or participated in the preparation of the disclosure. Neither we nor BX is representing as to the accuracy or completeness of the disclosure nor do we or BX undertake any obligation to correct or update it.
We understand that BX disclosed the following in their most recent Quarterly report on Form 10-Q, and as of September 30, 2024, the Company is unaware of any changes to the relationship status between BX and Mundys S.p.A, therefore, the Company included BX’s disclosure of certain activities, transactions or dealings between BX and Iran.
Disclosure pursuant to Section 13(r) of the Securities Exchange Act of 1934. Funds affiliated with Blackstone first invested in Mundys S.p.A. on November 18, 2022 in connection with the voluntary public tender offer by Schema Alfa S.p.A. for all of the shares of Mundys S.p.A., pursuant to which such funds obtained a minority non-controlling interest in Mundys S.p.A. Mundys S.p.A. owns and controls Aeroporti di Roma S.p.A. (“ADR”), an operator of airports in Italy including Leonardo da Vinci-Fiumicino Airport. Iran Air has historically operated periodic flights to and from Leonardo da Vinci-Fiumicino Airport as authorized, from time to time, by an aviation-related bilateral agreement between Italy and Iran, scheduled in compliance with European Regulation 95/93, and approved by the Italian Civil Aviation Authority. ADR, as airport operator, is under a mandatory obligation to provide airport services to all air carriers (including Iran Air) authorized by the applicable Italian authority. The relevant turnover attributable to these activities (whose consideration is calculated on the basis of general tariffs determined by such independent Italian authority) in the quarter ended September 30, 2024 was less than €100,000. Mundys S.p.A. does not track profits specifically attributable to these activities.
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ITEM 6. EXHIBITS
EXHIBIT NO.DESCRIPTION
2.1***–
3.1–
3.2–
3.3–
4.1–
4.2–
4.3–
4.4–
4.5–
4.6–
4.7–
10.1
10.2†
10.3***
–
10.4***
–
10.5***
–
10.6***
–
10.7
–
31.1*
–
31.2*
–
32.1**–
32.2**–
101*–
The following financial statements from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, 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.
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EXHIBIT NO.DESCRIPTION
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).
* Filed herewith.
** Furnished herewith.
*** Schedules and exhibits to this Exhibit have been omitted pursuant to Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.
† Management contracts or compensatory plans or arrangements.
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SIGNATURES
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:November 7, 2024 /s/ Jamie Welch
 Jamie Welch
 Chief Executive Officer, President and Director
(Principal Executive Officer)
Dated:November 7, 2024 /s/ Steven Stellato
 Steven Stellato
 Executive Vice President, Chief Accounting and Chief Administrative Officer
(Principal Financial Officer and Principal Accounting Officer)

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