stockrowWhat it does
Kinetik Holdings is a midstream energy company operating in the Permian Basin of Texas and New Mexico. It connects oil and natural gas production to the pipelines and markets that take those products away. Jamie Welch is president and chief executive officer. Its corporate office is in Houston, and its operational headquarters is in Midland, Texas.
For natural gas producers, Kinetik gathers gas from producing areas, compresses it for movement through pipelines, removes unwanted substances and processes it into marketable components. Those components include natural gas liquids, or NGLs, which the company also stabilizes and transports. Its processing complexes have over 2.4 Bcf/d of cryogenic gas processing capacity.
Kinetik also gathers, stabilizes and stores crude oil. It gathers and disposes of produced water, the water that comes out of wells alongside oil and gas. These services give producers ways to move and handle several streams from their wells.
The company owns and operates pipelines within the Permian and holds interests in pipelines that connect the basin with Gulf Coast and Mexico markets. Kinetik Holdings is a holding company responsible for operational, management and administrative decisions at its partnership, whose results it consolidates. The company holds an approximate 40% limited partner interest in that partnership.
How it makes money
Kinetik has two reporting segments: Midstream Logistics and Pipeline Transportation. It earns service fees, product sales revenue and income from pipeline interests. Its service revenue consists of fees paid by customers for gathering, treating, processing and water disposal services needed to bring natural gas, NGLs and crude oil to market.
Midstream Logistics provides gas gathering and processing; crude gathering, stabilization and storage; and produced water gathering and disposal. Its gas system moves production through pipelines and compression equipment to processing complexes. The segment also sells products, including NGLs and condensate. Product sales revenue is exposed to commodity prices, while Kinetik also uses fee-based arrangements and may hedge commodity exposure. Over 97% of service revenues are included in Midstream Logistics.
Pipeline Transportation moves natural gas and NGLs within the Permian Basin and toward the Gulf Coast. Kinetik owns its NGL and Delaware Link pipelines and equity interests in the Permian Highway Pipeline and Shin Oak. It receives distributions from pipeline investments, and its segment results include its proportionate share of pipeline earnings.
For the year ended December 31, 2025, revenue was $1.76 billion; for the third quarter of 2026, adjusted EBITDA was $278 million.
Kinetik’s business is predominantly fee-based. Fees depend on the services and contract arrangements involved: for low-pressure gas, the company can provide a bundle that includes gathering, compression and treating. Customer activity and the volumes moving through its systems affect the services it provides, while product prices also affect the revenue earned from sales.
Customers and how it sells
Kinetik serves oil and gas producers that need gathering, processing, transportation and disposal services. Its systems handle natural gas, NGLs, crude oil and produced water, and its contracts include acreage dedicated to its gathering and processing network. For acreage not dedicated to Kinetik, it competes to provide services.
The company’s operations are concentrated in the Delaware Basin, part of the Permian Basin. Gas processing facilities and gathering assets span Texas and New Mexico. Its crude gathering and storage facilities operate in the Texas Delaware Basin, while its produced water gathering and disposal assets are in northern Reeves County, Texas.
Kinetik’s pipelines and pipeline interests provide routes within the basin and access to Gulf Coast and Mexico markets. The Permian Highway Pipeline carries natural gas from the Waha area toward Katy, Texas, with connections to those markets. Shin Oak carries NGLs from the Permian to Mont Belvieu, Texas.
Since August, Kinetik has executed new and amended gathering and processing agreements across New Mexico and Texas, adding more than 30,000 gross dedicated acres. The company expects first flow from those agreements in the second and third quarters of 2027. It does not itself control customers’ drilling schedules.
Suppliers and costs
Kinetik needs steel and other materials to construct and maintain its pipelines and midstream assets. Higher import tariffs or higher domestic material prices could increase both construction and maintenance costs. It also relies on contractors and equipment suppliers; contractor or supplier non-performance is among the factors that can affect its business.
The company incurs cost of sales, operating expenses, taxes and capital spending. For the year ended December 31, 2025, Midstream Logistics segment adjusted EBITDA rose even as cost of sales, operating expense and ad valorem taxes increased. Kinetik also spends on maintaining and expanding gathering, processing and transportation assets.
For its next gas processing facility, Kinetik has ordered long-lead residue compression equipment and is procuring treating equipment and a cryogenic unit. It is also procuring additional compression equipment for its gathering system. Some rental equipment contracts contain scheduled cost increases, and the company expects volume growth to increase overall operating expense.
- Revenue$1.8B
- Cost of revenue−$1.1B
- Selling, general and administrative−$130.6M
- Other operating costs−$411.5M
- Operating income$164.9M
Competitive position
Kinetik competes for natural gas and NGL volumes against integrated and independent exploration and production companies, interstate and intrastate pipelines, and other midstream businesses. Competition depends on where facilities are located relative to wells and markets, as well as on reliability, efficiency, reputation and pricing. The company competes for additional business where producer acreage is not dedicated to it. No specific competitor is identified as such in the available company disclosures.
Kinetik’s network includes gathering pipelines, compression and processing complexes across the Delaware Basin. It also has routes for residue gas and NGLs to leave its system, including wholly owned pipelines and interests in longer-distance pipelines. The company ranks fourth by processing capacity in both the Delaware Basin and the entire Permian Basin.
Our reading: The geographic reach and connections of Kinetik’s network provide a meaningful local advantage because proximity to production and markets matters in competition. The advantage is not exclusive: other midstream operators compete in the same areas, and pricing and reliability also influence customers’ choices.
Our reading: Dedicated acreage and the ability to provide several services can support customer relationships, but their protection depends on contract terms and the development activity producers direct to that acreage.
Growth opportunities
Kinetik is expanding capacity to serve producer development and move gas between parts of its system. The company expects to reach full utilization across its integrated system by the end of 2027, and expects the first phase of its ECCC expansion to move incremental volumes south to Texas until additional processing capacity enters service.
In September, Kinetik increased the planned capacity of its KL2 processing project from 300 million cubic feet per day to 380 million cubic feet per day, without increasing its approximately $260 million expected project cost. The company expects KL2 to enter service in mid-2028. It is also procuring equipment for a subsequent processing facility, whose timing and location depend on the commercial opportunities and gas sources it will serve.
The new and amended agreements adding more than 30,000 gross dedicated acres provide another source of potential volumes. Kinetik expects first flow from those agreements in the second and third quarters of 2027. It is also upgrading treating at Pacus Bend to handle higher inlet carbon dioxide concentrations and additional volumes moving into Delaware South.
Kinetik expects legacy Lone Star NGL contract expirations and higher-margin, low-pressure developments to improve margins in 2027. It also expects growth capital to remain elevated as it advances projects across its system.
- $662.0MFY2021
- $1.2BFY2022
- $1.3BFY2023
- $1.5BFY2024
- $1.8BFY2025
Structural risks
- Basin concentration: The majority of Kinetik’s operating assets are in the Permian Basin. Producer consolidation and changes in the priority assigned to Delaware Basin acreage could reduce the resources customers devote to development there.
- Volumes and prices: Commodity-price volatility affects producer drilling and completion decisions and, ultimately, supply to Kinetik’s systems. Product sales revenue is also exposed to commodity-price fluctuations. In the third quarter of 2026, the company estimated Waha price-related shut-ins affected volumes.
- Operating hazards: Leaks, fires, ruptures, explosions and equipment disruptions can damage property, cause injury or pollution, and suspend operations. Kinetik maintains insurance against some, but not all, potential operating losses.
- Regulation and environmental costs: Pipeline safety, environmental and other rules can require spending on compliance, inspection and remediation. Changes in requirements or failure to comply could adversely affect the business; some environmental compliance costs may be material.
- Capital and cost pressures: Higher inflation, interest rates, material costs or tariffs can raise operating and capital costs. Expansion also depends on equipment, contractors and access to capital.
Leadership
Entities controlled by Blackstone and I Squared Capital hold a majority of Kinetik’s outstanding voting shares and have director designation rights under a stockholders agreement.
| Name | Role | Since | Total pay, FY2025 |
|---|---|---|---|
| Jamie WelchPresident and | Chief Executive Officer | — | $6.2 million |
| Matthew WallExecutive | Vice President and Chief Operating Officer | — | $2.3 million |
| Steven StellatoExecutive | Vice President, Chief Administrative Officer and Chief Accounting Officer | — | $2.1 million |
| Trevor Howard | Senior Vice President and Chief Financial Officer | — | $1.8 million |
| Lindsay EllisGeneral Counsel, | Chief Compliance Officer and Corporate Secretary | — | $1.2 million |
| R. Todd CarpenterGeneral Counsel and | Chief Compliance Officer | — | $3.4 million |
| Anne PsencikChief Strategy Officer | — | $2.9 million |
Bottom line
Our reading
Our reading: Kinetik’s business rests on connecting Permian producers to processing capacity and markets through a network of gathering assets and pipelines; its dedicated acreage and integrated services support that position, although competition remains local and active (item1, call_prepared). Its exposure is concentrated in producer activity and commodity prices in one basin, while the next phase of growth requires capital and successful execution of new capacity (item1a, item7, call_prepared).