Kinetik Completes Divestiture of Its Equity Interest in Gulf Coast Express Pipeline
Kinetik Holdings (NYSE: KNTK) has completed the sale and transfer of its 16% equity stake in the Gulf Coast Express pipeline to an affiliate of ArcLight Capital Partners for $510 million upfront and an additional $30 million deferred cash payment contingent on a future capacity expansion project. The proceeds will be used for general corporate purposes, including acquiring Durango Permian and investing in a new 15-year gas gathering and processing agreement in Eddy County, New Mexico, which strengthens Kinetik’s operational presence in the region.
- Kinetik received $510 million in upfront cash from the divestiture.
- An additional $30 million deferred payment is expected contingent on a capacity expansion project.
- Proceeds will support the acquisition of Durango Permian, enhancing asset portfolio.
- Investment in a new 15-year gas gathering and processing agreement in New Mexico improves operational presence.
- Sale of equity interest in the Gulf Coast Express pipeline reduces Kinetik's direct involvement in the pipeline's future operations.
Insights
Kinetik Holdings' completion of the sale of its 16% equity interest in the Gulf Coast Express pipeline for
The sale proceeds, specifically targeted for the acquisition of Durango Permian LLC and investments in New Mexico gas gathering and processing, suggest a strategic pivot towards expanding operational infrastructure and capacity. This could potentially lead to enhanced revenue streams and improved market positioning in the high-growth Permian Basin. However, investors should be cautious about the potential risks associated with large capital investments and acquisitions, as they can also bring integration challenges and execution risks.
The sale aligns with Kinetik’s broader strategic objectives, signaling a focused approach on enhancing its footprint in New Mexico's gas gathering and processing sector. The company's move to divest from the Gulf Coast Express pipeline reflects a calculated decision to allocate resources towards more lucrative and strategic projects in the Permian Basin. The acquisition of Durango Permian LLC and the new gas gathering and processing agreement demonstrate Kinetik’s commitment to expanding its service offerings and capacity.
This strategic shift is likely to appeal to investors looking for growth potential in the energy sector, particularly within the Permian Basin, which remains one of the most prolific oil and gas producing regions in the U.S. The long-term gas gathering and processing agreement also offers a steady revenue stream, improving earnings visibility. However, the effectiveness of these investments will depend on successful execution and market conditions, which can be volatile in the energy sector.
The cash proceeds will be used for general corporate purposes including to fund Kinetik’s previously announced (i) acquisition of Durango Permian LLC and (ii) capital investment to support its new 15-year low-pressure and high-pressure gas gathering and processing agreement in
About Kinetik Holdings Inc.
Kinetik is a fully integrated, pure-play, Permian-to-Gulf Coast midstream C-corporation operating in the
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; return of capital to shareholders and the timing thereof; the Company’s leverage and financial profile; and the consummation of the Durango Acquisition and timing thereof, the funding for the Durango Acquisition and capital required under the New Eddy County Agreement, expected results of the transactions discussed herein, including reinvestment in new projects and the returns thereon. 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/20240604606324/en/
Kinetik Investors:
(713) 487-4832 Maddie Wagner
(713) 574-4743 Alex Durkee
Website: www.kinetik.com
Source: Kinetik Holdings Inc.
FAQ
What is the significance of Kinetik's sale of its equity interest in the Gulf Coast Express pipeline?
How will Kinetik use the proceeds from the divestiture of its Gulf Coast Express pipeline interest?
What is the deferred payment associated with Kinetik's divestiture of its Gulf Coast Express pipeline interest?
What is the impact of Kinetik's divestiture on its operations in New Mexico?
