How Does Altus Midstream Company Work?

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How Does Kinetik Holdings Inc. Power the Permian Basin?

Dive into the heart of the North American energy sector and discover how Altus Midstream Company, now operating as Kinetik Holdings Inc., is shaping the future of Altus Midstream SWOT Analysis. This pivotal player in the Permian Basin, the largest publicly traded, fully integrated midstream company in the Delaware Basin, offers a critical link between energy producers and markets. Learn how Kinetik's extensive pipeline network and processing capacity fuel the U.S. energy supply chain.

With a focus on Altus Midstream operations, this analysis explores Kinetik's critical role in the midstream energy landscape. Its financial performance, including a strong 2024 net income, showcases its influence within the oil and gas sector. Understanding the company's strategic moves and competitive advantages is key to grasping its long-term potential in the dynamic energy infrastructure market.

Kinetik, formerly known as Altus Midstream, creates value through its extensive midstream services, primarily serving producers of natural gas, natural gas liquids (NGLs), crude oil, and water in the Permian Basin. Its core business is divided into Midstream Logistics and Pipeline Transportation. This integrated approach provides a 'wellhead to end market' service, setting it apart from competitors.

The company's operations are designed to handle the entire lifecycle of these resources, from gathering at the wellhead to processing and transportation to end markets. As of March 31, 2025, Kinetik managed approximately 2,000 miles of pipeline and a processing capacity of 5.8 Bcf/d. This infrastructure is crucial for efficiently moving and processing the raw materials extracted by producers in the Permian Basin, ensuring they can reach their final destinations.

Kinetik's Midstream Logistics segment focuses on gathering and processing natural gas, crude oil, and produced water. The company's assets include gas gathering and processing facilities, crude oil gathering, stabilization, and storage, and produced water gathering and disposal systems. Its gas processing assets are centralized at seven complexes, with a total cryogenic processing capacity of about 2.2 Bcf/d, expected to increase to over 2.4 Bcf/d upon the completion of the Kings Landing Project in mid-2025. This expansion enhances its ability to handle increasing volumes of natural gas from the Permian Basin.

Midstream Logistics Overview

Kinetik's Midstream Logistics segment offers comprehensive services, including gas gathering and processing, crude oil gathering, stabilization, and storage, as well as produced water gathering and disposal. These services are essential for the efficient handling of resources from wellhead to market.

Pipeline Transportation Overview

The Pipeline Transportation segment includes equity interests in key Permian Basin pipelines such as Permian Highway Pipeline (PHP), Shin Oak, and EPIC Crude. These pipelines transport crude oil, natural gas, and NGLs within the Permian Basin and to the U.S. Gulf Coast, supporting the company's integrated service model.

Key Infrastructure

Kinetik operates an extensive network of gathering pipelines, compressing capacity exceeding 570,000 horsepower, and crude storage capacity of 90,000 barrels. The company also manages over 500,000 barrels per day of water injection capacity.

Customer-Focused Approach

Kinetik serves approximately 90 producer customers, emphasizing a 'customer first' approach. This focus helps build strong relationships and provide quality service, which is crucial for long-term success.

Value Proposition

Kinetik's value proposition centers on providing integrated midstream services that enhance reliability, efficiency, and environmental performance. The company's assets and technology contribute to enhanced reliability and system efficiencies, minimizing environmental hazards and operational flaring.

• Comprehensive service offerings from wellhead to end market.
• Modern assets and technology for enhanced reliability and efficiency.
• Strong customer relationships and a customer-first approach.
• Focus on minimizing environmental impact.

The company's operations are supported by an extensive network of gathering pipelines that collect natural gas, NGLs, and crude oil directly from wellheads. These raw commodities are then transported to processing facilities where natural gas is treated and processed to remove impurities and separate NGLs. Crude oil is stabilized and stored before further transportation. For more details on the company's strategic growth, you can read about the Growth Strategy of Altus Midstream.

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Understanding the revenue streams and monetization strategies of the Altus Midstream Company is crucial for investors and stakeholders. The company, operating in the midstream energy sector, employs a multifaceted approach to generate income. This involves leveraging its infrastructure and services to capture value across the oil and gas value chain.

Altus Midstream operations are primarily focused on midstream services, which are categorized into Midstream Logistics and Pipeline Transportation. These segments generate revenue through a mix of fees and strategic investments. The company's financial performance reflects its ability to capitalize on these diverse revenue streams.

The Altus Midstream Company's financial health is supported by a blend of fixed-fee contracts and commodity sales. This strategy aims to provide stability and growth potential. Analysis of its revenue sources reveals the core drivers of its financial performance and its ability to adapt to market dynamics.

Revenue Streams Breakdown

Altus Midstream generates revenue through two primary segments: Midstream Logistics and Pipeline Transportation. The Midstream Logistics segment is the major contributor, accounting for over 98% of service revenues. This segment offers a range of services, including gas gathering and processing, crude oil gathering, and water disposal.

• Midstream Logistics: This segment includes fixed fees for gas gathering and processing, crude oil gathering, stabilization, and storage, and produced water gathering and disposal.
• Pipeline Transportation: Revenue is generated through equity investment interests in pipelines such as Permian Highway Pipeline (PHP), Shin Oak, and EPIC Crude.
• Product Revenue: Commodity sales, including condensate, natural gas residue, and NGLs, also contribute to the revenue.

In 2024, Altus Midstream reported a total revenue of $1.58 billion for the trailing twelve months ended March 31, 2025. Product revenue increased by $240.6 million, or 29%, to $1,063.0 million in 2024, compared to $822.4 million in 2023. Service revenue decreased slightly to $408.0 million in 2024 from $417.8 million in 2023. A significant portion of the company's gross profit, approximately 96% in 2025, is derived from fixed-fee contracts or hedged sources, providing a stable revenue base. The Pipeline Transportation segment benefits from take-or-pay agreements, ensuring consistent cash flow. The company's commitment to returning capital to shareholders is demonstrated by a dividend yield of 6.01% as of April 2025. For a deeper dive into the company's strategic positioning, consider reading about the Target Market of Altus Midstream.

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Kinetik Holdings Inc., formerly known as the Altus Midstream Company, has undergone significant strategic shifts, shaping its operational capabilities and financial outcomes. The company's journey is marked by key milestones, strategic maneuvers, and a focus on maintaining a competitive edge within the midstream energy sector. These elements are crucial for understanding the company's current position and future prospects.

The transformation of Altus Midstream into Kinetik reflects a strategic evolution aimed at enhancing its market presence and operational efficiency. This evolution includes substantial investments in infrastructure and strategic acquisitions, all designed to bolster its position in the competitive oil and gas landscape. These moves are critical for stakeholders assessing the company's long-term viability.

Kinetik's operational strategy is focused on integrated midstream solutions, primarily in the Permian Basin. The company's ability to gather, process, and transport natural gas and crude oil efficiently is a key factor in its success. Recent acquisitions and expansions highlight Kinetik's commitment to growth and its ability to adapt to market demands.

Key Milestones

A pivotal milestone was the February 2022 all-stock business combination of Altus Midstream and BCP Raptor Holdco LP (EagleClaw Midstream), creating Kinetik. This merger expanded processing capacity to approximately 2.0 Bcf/d across five complexes. It integrated EagleClaw's gas gathering and processing with Altus Midstream's pipelines.

Strategic Moves in 2024-2025

In June 2024, Kinetik acquired Durango Permian LLC, increasing processing capacity by approximately 420 MMcf/d. The acquisition was funded by divesting its equity interest in the Gulf Coast Express pipeline. In January 2025, Kinetik announced and closed a bolt-on acquisition of natural gas and crude oil gathering systems in Reeves County, Texas, from Permian Resources.

Competitive Edge

Kinetik benefits from its fully integrated 'super-system' in the Permian Basin. The company's strategic location in the Delaware Basin offers significant growth opportunities. Kinetik has a diverse customer base of approximately 90 producers. The company is committed to ESG initiatives, including a net-zero greenhouse gas emissions goal by 2050.

Operational Expansion

In January 2024, Kinetik completed a new 20-mile rich-gas pipeline extending its West Texas gathering and processing system into Lea County, New Mexico. This expansion was supported by a long-term gathering and processing agreement with a major counterparty. The company increased its equity interest in EPIC Crude Holdings, LP to 27.5%.

Kinetik's Strategic Advantages

Kinetik's strategic moves and operational focus provide a competitive advantage in the midstream energy sector. The company's integrated approach, coupled with its strategic location, supports its ability to offer reliable and efficient services. This positions Kinetik well for future growth.

• Integrated Infrastructure: Combining gathering, processing, and transportation assets.
• Strategic Location: Operating in the prolific Delaware Basin.
• Customer Diversification: A broad customer base to mitigate risk.
• ESG Commitment: Focus on sustainability and environmental responsibility.

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Kinetik Holdings Inc., formerly known as Altus Midstream, holds a prominent position within the midstream energy sector, particularly in the Permian Basin. As the largest natural gas processor in the Delaware Basin and the fourth-largest across the entire Permian Basin based on processing capacity, Kinetik plays a crucial role in the energy infrastructure of this prolific region. Its extensive pipeline network and processing facilities support a significant portion of the oil and gas production in the area.

The company's operations are centered around its fully integrated 'super-system,' which includes approximately 2,000 miles of pipeline and a processing capacity of 5.8 Bcf/d. This infrastructure serves a diverse customer base of around 90 producers, reinforcing its market share and customer loyalty. Kinetik's strategic focus on the Permian Basin, a low-cost production region, offers a solid foundation for its continued growth and operational success. To further understand the company's strategic direction, consider examining the Growth Strategy of Altus Midstream.

Risks

Kinetik faces several risks. Commodity price volatility impacts its financial performance, with 15%-20% of gross profit exposed to price fluctuations. Regulatory changes, particularly concerning environmental regulations and hydraulic fracturing, could affect operations. Competition, technological disruption, and operational risks like infrastructure failures also pose threats.

Future Outlook

Kinetik is focused on revenue generation through strategic initiatives. The 2025 guidance projects Adjusted EBITDA between $1.09 billion and $1.15 billion, with capital expenditures estimated between $450 million and $540 million. The Kings Landing Complex in New Mexico is expected to commence operations in early third quarter 2025, boosting processed gas volumes.

Strategic Initiatives and Developments

Kinetik's future strategy involves operational excellence, disciplined capital deployment, and a strong balance sheet to navigate market uncertainties. The company's investment in projects like Kings Landing and its exploration of CO2 utilization demonstrate its commitment to growth and sustainability. These initiatives are aimed at capitalizing on opportunities within the Permian Basin.

• Completion of key projects such as the Kings Landing Complex with a capacity of 220 Mmcf/d.
• Continued build-out of gathering systems in New Mexico.
• Integration of recently acquired assets.
• Exploring opportunities in CO2 utilization with Infinium for eFuels production.

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