Kinetik Holdings Inc

Good morning, everyone. Welcome to the Kinetic Third Quarter 2023 results call. My name is Carla and I'll be your operator for today's call. This call will include a Q&A session. To register your question, please press star followed by one on your telephone keypad. If you wish to revoke your question at any point, please press star followed by two. I will now hand the call over to your host, Maddy Wagner, Head of Investor Relations, to begin. Maddy, please go ahead when you're ready.

Thank you. Good morning and welcome to Kinetics' third quarter 2023 earnings conference call. Here with me is our President and Chief Executive Officer, Jamie Welch, as well as Trevor Howard, our Chief Financial Officer, Matt Wall, our Chief Operating Officer, Steve Stilato, our Chief Accounting and Administrative Officer, Annie Pinchik, our Chief Strategy Officer, Todd Carpenter, our General Counsel, Chris Kendrick, our SVP of Commercial, and Tyler Milam, our SVP of Crude Water and New Energy Ventures. The press release we issued yesterday, the slide presentation, and access to the webcast for today's call are available at www.kinetic.com. Before we begin, I would like to remind all listeners that our remarks, including the question and answer section, will provide forward-looking statements, and actual results could differ from what is described in these statements. These statements are not guarantees of future performance and involve a number of risks and assumptions. We may also provide certain performance measures that do not conform to U.S. GAAP. We've provided schedules that reconcile these non-GAAP measures as part of our earnings press release. After our prepared remarks, we will open the call to Q&A. With that, I will turn the call over to Jamie.

Thank you, Maddie, and welcome back. Good morning, everyone, and thank you for joining our call today. Yesterday, we reported our third quarter 2023 results. We achieved average gas processing volumes of 1.49 billion cubic feet per day, representing approximately 23% growth year over year. We continue to set new company records for process volumes with each successive quarter. Despite the operational difficulties our industry faced with hot weather over this past summer, and unfortunately for this past quarter, some unscheduled disruptions to basin takeaway capacity. Interestingly, we achieved average process volumes that exceeded 1.53 billion cubic feet per day in the month of September, and we are now consistently knocking on the door of 1.6 billion cubic feet per day, which is our exit rate guidance. We remain on track to meet or exceed that target by year end. Adjusted EBITDA increased 4% quarter over quarter in line with our forecast and street expectations. Looking ahead to the remainder of the year, we expect sequential adjusted EBITDA growth in the fourth quarter at our midstream logistics segment. Within our pipeline transportation segment, Delaware Link commenced commercial in service on October 1st, and we expect to start up the PHP expansion on December 1st. We are updating our 2023 adjusted EBITDA guidance range to $820 million to $860 million. At the midpoint of the revised guidance range, this implies a fourth quarter annualized EBITDA exit rate over $900 million. This range of $490 to $540 million. The good news is that this past quarter was free cash flow positive, and we are past the peak capital of our 2023 growth program. In 2024, we anticipate a significant increase in free cash flow from meaningful year-over-year adjusted EBITDA growth, coupled with capital expenditures of less than $150 million. We have made significant progress on our projects in our 2023 capital program. Delaware Link, which began flowing gas in late September, will serve as a useful service offering for our customers who value flow assurance and stable access to downstream markets. Construction continued across the state line on our gathering expansion into Lee County, New Mexico. In the quarter, Kinetic received right-of-way approval inclusive of the company's first permits with the Bureau of Land Management and the State of New Mexico. Construction of the Texas portion of the line is largely complete and we have made very good progress on construction in Lee County. The expansion, which is supported by multi-year agreements with minimum volume commitments, remains ahead of schedule with expected in service in early 2024. Once all three projects are in service, we will be able to offer customers in New Mexico a highly competitive solution to premium pricing along the Gulf Coast on wholly owned or majority owned infrastructure. We see Permian production growing to 30 billion cubic feet per day by 2030, which represents a 4% annual growth rate from today, with the biggest challenges within the natural gas value chain being in-basin treating and processing constraints, as well as the egress to the Gulf Coast. Processing capacity in the Delaware remains tight, and as such, we see a great opportunity for future organic growth projects. Our commercial team is actively pursuing a number of gathering and processing opportunities with existing and potential new customers, both in New Mexico and Texas. We expect to provide updates in the near future as these commercial opportunities develop. We are also glad that the uncertainty over a potential expansion of Chinook is now past us. We agree with Enterprise Products on their bullish stance towards the Permian. However, let me repeat what we have said before. We are comfortable with the capacity lease arrangements that we have on Chinook. They are flexible and adequate for our continued growth. We see no compelling reason for significant additional NGL investment in our pipeline transportation segment. On the topic of GCX, we have continued to work through the process of monetizing our stake. We remain confident in a positive conclusion, and at such time, we'll report additional details. 2023 is an important year for our company. The pending completion of our capital growth plan underscores our long-term strategic vision of expanding our gathering footprint in the Delaware Basin. We look forward to issuing full year 2024 financial guidance and sharing more regarding our plans to accelerate shareholder returns with our fourth quarter earnings in February. And with that, I would now like to hand the call over to Trevor.