Kinetik Holdings Inc. · NYSE:KNTK
Kinetik — Investor Presentation (September 2022)
32 slides from Kinetik's investor presentation, September 2022
Slide 1: Investor Presentation
Investor Presentation September 2022
Slide 2: Forward looking statements
Forward looking statements The information in this presentation and the oral statements made in connection therewith include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act
Slide 3: Company highlights
Company highlights Leading, pure-play Permian midstream company • Only large-scale, publicly-traded, pure-play Permian midstream business • Focused on gathering & processing and long-haul transportation • No federal land exposure Super-system in the Delaware Basin with integrated • >2 Bcfpd of proce
Slide 4: Ten years in the Permian Basin
Ten years in the Permian Basin Our home EagleClaw Acquired Announced FID Acquired Published Partnership with Announced Midstream Ventures PennTex on PHP with Caprock Acquired stake in Acquired stake in Inaugural ESG Kinder on Permian PHP expansion (“ECMV”) formed Permian assets Kinder Midstream GCX
Slide 5: A full-service, integrated midstream model
A full-service, integrated midstream model Fee-based business with mission critical infrastructure Produced Water Water Pipelines Water Disposal Well Permian Highway and Delaware Link Gulf Coast Express Intrabasin Residue Gas Pipeline Residue Gas Takeaway Natural Pipelines Gas Natural Gas Pipelines
Slide 6: Pure-play Permian midstream company positioned for growth
Pure-play Permian midstream company positioned for growth Extensive Delaware in-basin gathering system feeds downstream pipeline assets Combined business opportunistically primed for future growth • Fourth largest processor in the Permian Basin >2 Bcfpd processing capacity(1) • Fee-based crude and
Slide 7: Unique system with unmatched reliability and flow assurance
Unique system with unmatched reliability and flow assurance Significant operating leverage maximizes free cash flow generation potential Four, large-scale integrated processing complexes • >2 Bcfpd processing capacity(1) at Diamond, Pecos Bend, East Toyah, Pecos Diamond expansion to increase proce
Slide 8: De-risked cash flows supported by long-term contract portfolio
De-risked cash flows supported by long-term contract portfolio Balance sheet improvement and return of capital core to our strategy Diversified and well-capitalized customer base 2022E Gross Profit by Customer Credit Rating • Greater than 30 customers between the two segments Over ten customers re
Slide 9: Capitalize on accelerating activity within our footprint
Capitalize on accelerating activity within our footprint Reeves County continues to lead the Delaware Basin in rig activity growth Southern Delaware Basin M&A in Last ~24 Months(1) Delaware Basin Indexed Rig Count(1) Reeves Loving Culberson Ward Lea Eddy Conoco 600 Apache Reeves County leads the Rin
Slide 10: Strategic priority to increase exposure to long-haul, take-or-pay cashflow
Strategic priority to increase exposure to long-haul, take-or-pay cashflow Continued Permian supply and U.S. Gulf Coast demand growth requires both new and expanded infrastructure Natural gas takeaway expansions are critical for Permian producers Permian Residue Gas Production(1)(2) • Environmental
Slide 11: Simplification and transparency
Simplification and transparency Management Public Investors 13.4% interest(1) 49.6% interest(1) 20.8% interest(1) 4.5% interest(1) 11.6% interest(1) Fully unsecured capital structure • No asset level or structurally senior debt $1.25bn Unsecured (NASDAQ: KNTK) Revolving Credit • No hybrid securities
Slide 12: Strong governance profile with the right management team
Strong governance profile with the right management team Management and Board are committed to serving all shareholders’ best interests Board Governance Management Four independent directors bring Kinetik incorporates listing exchange BCP management assumed current new perspectives and oversight and
Slide 13: Management team brings tremendous talent and wealth of experience
Management team brings tremendous talent and wealth of experience Significant equity ownership creates alignment with all stakeholders Jamie Welch • CEO and President • Group Chief Financial Officer and Head of Corp Development at Energy Transfer Todd Carpenter Matt Wall Steve Stellato Annie Psencik
Slide 14: Board of Directors comprised of diverse and knowledgeable executives
Board of Directors comprised of diverse and knowledgeable executives Independents, CEO and Apache Board appointees represent more than 50% of the Board David Foley Jamie Welch Laura Sugg Diversity • Chairman of Board • Kinetik CEO and President • Lead Independent Director • Senior Managing Director
Slide 15: 2021 ESG Report: Energy for Change
2021 ESG Report: Energy for Change Commitment to our people, safety, the environment, our customers and communities (1) (1) (1) (1) (1) (1) (1) (1) Reflects BCP only. 15
Slide 16: Financial Update
Financial Update 16
Slide 17: What was new in 2Q22?
What was new in 2Q22? Completion of our capital structure simplification Execution on our value-added Pipeline Transportation opportunities Financial update Capital structure & Organic & inorganic Sustainability focus allocation growth 2Q22 Adjusted EBITDA Completed comprehensive Reached Final Inves
Slide 18: 2Q22 financial results
2Q22 financial results Quarterly results outperformed expectations versus original Guidance across all financial and operating categories 2Q22 Commentary • Volumes grew by ~60 Mmcfpd QoQ Processed Gas Volumes(1) 1.16 Bcfpd • Increases with most customers following weather-related shut-ins in Jan and
Slide 19: 2Q22 operational performance
2Q22 operational performance Volume growth and margin expansion at both segments underpinning strong financial performance Midstream Logistics Pipeline Transportation Financial and activity results 2Q financial performance • 2Q22 Segment Adjusted EBITDA of $140.7mm (+47% YoY)(1) • 2Q22 Segment Adjus
Slide 20: Midstream Logistics volume performance
Midstream Logistics volume performance Robust gas and crude volume growth year over year Gas Processed Volumes(1) (Bcfpd) Crude Gathered Volumes (Mbpd) Water Gathered Volumes (Mbwpd) 1.16 67 152 148 1.09 58 2Q 2021 2Q 2022 2Q 2021 2Q 2022 2Q 2021 2Q 2022 • Modest growth from producers as well as • O
Slide 21: Revised 2022 Adjusted EBITDA Guidance
Revised 2022 Adjusted EBITDA Guidance Solid Guidance increase, even in the face of inflationary headwinds 2022E Pro Forma Adjusted EBITDA(1) ($mm) ~$25 $840 Revised ~$10 ~($10) Guidance Key Drivers ~$15 • New G&P agreements beginning primarily in 4Q22 $810 Pipeline $820 • Elevated commodity prices a
Slide 22: Revised 2022 Capital Guidance
Revised 2022 Capital Guidance Revised Guidance reflects new commercial agreements and Pipeline Transportation organic capex 2022E Capital Expenditures(1) ($mm) Revised $110 $280 to $300 Guidance Key Drivers • Incremental capital expenditures to support expanded development and announced, new +$42.5m
Slide 23: Strong resiliency to commodity price fluctuations
Strong resiliency to commodity price fluctuations Limited commodity exposure remaining in 2022 Simplified capital structure and fortified balance sheet underpin Kinetik’s Aug – Dec Change in Potential Impact to 2022E Commodity earnings stability in a potentially volatile commodity price environment
Slide 24: Capital efficient operating leverage on display
Capital efficient operating leverage on display Strategic pipelines translate into significant upside in ratable cashflow and future credit and dividend benefits Kinetik Processing Volumes and Capacity (Bcfpd) Pipeline Transportation Adjusted EBITDA ($mm) Total spare plant capacity 0.12 after new pr
Slide 25: Merger integration update
Merger integration update Unwavering execution and focus on all three pillars Super-system interconnect Compression relocation Surplus amine treating equipment Completed and in-service Replaced ~15k horsepower of rental Front-end amine treating to be installed June 22nd, 2022 compression with surplu
Slide 26: Capital allocation update
Capital allocation update Simplified capital structure following the refinancing and Series A Preferred redemption Near-term financial priorities Highlights $ Completed comprehensive $3.0bn sustainably-linked refinancing in 2Q22 • Fully unsecured capital structure Debt refinancing complete Completed
Slide 27: Kinetik at a glance
Kinetik at a glance THE LARGEST INTEGRATED MIDSTREAM OVER 30 MIDSTREAM LOGISTICS FOR COMPANY IN THE DELAWARE BASIN CUSTOMERS Offices in Midland and Houston, TX INTERESTS IN OPERATES 4 MAJOR COMPLEXES EQUITY INTERESTS IN LONG-HAUL PIPELINES: 4.7 Bcfpd & OVER 1,700 MILES OF PIPELINE OF RESIDUE GAS TAK
Slide 28: Se, >>> \INETIK
Se, >>> \INETIK —
Slide 29: Glossary of terms
Glossary of terms • Adjusted EBITDA (EBITDA) is defined as net income including noncontrolling interests adjusted for interest, taxes, depreciation and amortization, impairment charges, asset write-offs, the proportionate EBITDA from our equity method investments, equity in earnings from investments
Slide 30: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Three Months Ended June 30,(1) Six Months Ended June 30,(1) 2022 2021 2022 2021 Net Income Including Noncontrolling Interests to Adjusted EBITDA (In thousands) Net income including noncontrolling interests (GAAP) $ 131,448 $ (15,366) $ 152,837 $ 2,770 Add back: Inter
Slide 31: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation Three Months Ended June 30,(1) Six Months Ended June 30,(1) 2022 2021 2022 2021 Distributable Cash Flow (2) (In thousands) Adjusted EBITDA (non-GAAP) $ 207,919 $ 87,741 $ 348,709 $ 206,306 Proportionate EBITDA from unconsolidated affiliates (71,340) (21,717) (112,081
Slide 32: Non-GAAP Measures Reconciliation
Non-GAAP Measures Reconciliation June 30, March 31, December 31, 2022 2022 2021 Net Debt(1) (In thousands) Current portion of long-term debt, net $ — $ 54,324 $ 54,280 Long-term debt, net 2,971,270 2,894,025 2,253,422 Plus: Deferred financing costs 28,730 35,400 38,485 Total long-term debt 3,000,000
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