Kinetik Completes Acquisition of Durango Midstream’s New Mexico Gathering and Processing System
Kinetik Holdings (NYSE: KNTK) has completed its acquisition of Durango Permian's New Mexico Gathering and Processing System. This acquisition, funded through the divestiture of Kinetik's 16% equity interest in the Gulf Coast Express pipeline, significantly enhances Kinetik's presence in the Northern Delaware Basin. The transactions are immediately deleveraging, reducing the company's leverage ratio to 3.4 times. Updated 2024 guidance will be provided with the second quarter financial results release.
- Completion of Durango acquisition enhances Kinetik's presence in the Northern Delaware Basin.
- The acquisition is funded by divesting a 16% equity interest in the Gulf Coast Express pipeline.
- Immediate deleveraging effect, reducing leverage ratio to 3.4 times.
- None.
Insights
Kinetik Holdings Inc. (NYSE: KNTK) has completed its acquisition of Durango Permian LLC, a significant player in the Northern Delaware Basin. This move comes after Kinetik divested its 16% equity interest in the Gulf Coast Express pipeline to fund the acquisition. The efficient use of divestiture proceeds highlights Kinetik's strategic financial maneuvering.
The immediate impact on Kinetik's leverage ratio, reducing it to 3.4 times, is noteworthy. This improved financial leverage strengthens Kinetik's balance sheet, potentially lowering financial risk and enhancing creditworthiness. Furthermore, the acquisition boosts Kinetik's operational footprint in a key area, potentially driving future revenue growth and operational efficiencies in the Delaware Basin—a core asset for U.S. energy production.
Investors should monitor Kinetik's updated 2024 guidance, expected with the Q2 financial results, to gain clearer insights into the acquisition's long-term financial impact. The immediate deleveraging effect and the strategic enhancement of Kinetik’s asset portfolio make this acquisition an essential development for stakeholders.
The acquisition of Durango Permian LLC by Kinetik aligns well with current market dynamics where consolidation and asset optimization are key trends in the energy sector. The Delaware Basin is a prolific area for oil and gas production and this acquisition provides Kinetik with increased scale and operational synergies.
Strategically, the move to sell the Gulf Coast Express pipeline stake to fund the acquisition is sensible. The Delaware Basin's assets offer more direct operational control and potentially higher returns compared to a minority pipeline interest. This suggests a focused approach to maximizing shareholder value through core asset expansion.
The market will likely view this favorably as it reflects a disciplined capital allocation strategy, enhancing operational focus while improving financial metrics. Retail investors should recognize the potential for enhanced long-term value creation and operational stability.
Kinetik funded the cash consideration of the Durango acquisition with cash proceeds from the divestiture of its
As a result of the acquisition, Kinetik has significantly enhanced its overall
Kinetik will update its 2024 Guidance with its second quarter 2024 financial results release.
About Kinetik Holdings Inc.
Kinetik is a fully integrated, pure-play, Permian-to-Gulf Coast midstream C-corporation operating in the
-
Leverage
Ratio is net debt divided by first quarter 2024 annualized EBITDA (pro forma for GCX divestiture and Durango acquisition).
Forward-looking statements
This news release includes certain statements that may constitute “forward-looking statements” for purposes of the federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “seeks,” “possible,” “potential,” “predict,” “project,” “prospects,” “guidance,” “outlook,” “should,” “would,” “will,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about the Company’s future business strategy and other plans, expectations, and objectives for the Company’s operations, including statements about strategy, synergies, expansion projects and future operations, and financial guidance; the Company’s leverage and financial profile; and the expected results of the transactions discussed herein. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023. Any forward-looking statement made by us in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement whether as a result of new information, future development, or otherwise, except as may be required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240624591226/en/
Kinetik Investors:
(713) 487-4832 Maddie Wagner
(713) 574-4743 Alex Durkee
Website: www.kinetik.com
Source: Kinetik Holdings Inc.
FAQ
What did Kinetik Holdings acquire?
How did Kinetik fund the Durango acquisition?
What is the impact of the acquisition on Kinetik's leverage ratio?
When will Kinetik provide updated 2024 guidance?
What is Kinetik's stock symbol?
