Kinetik Holdings Inc

Good morning, thank you for attending today's Kinetic Third Quarter 2024 Results Conference Call. My name is Makaya and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for your questions and answers at the end. I will now pass the conference over to your host, Alex Durkee. Alex, you may proceed.

Thank you. Good morning and welcome to Kinetic's third quarter 2024 earnings conference call. Our speakers today are Jamie Welch, President and Chief Executive Officer, and Trevor Howard, Chief Financial Officer. Other members of our senior management team are also in attendance for this morning's call. 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, Alex. Good morning, everyone. Thank you for joining our call today. We have a lot to get through, so let's get started. Yesterday, we reported our third quarter results. We logged Kinetic's single best quarter as a public company in terms of adjusted EBITDA, which was an increase of 23% year over year. We also process gas volumes of 1.71 billion cubic feet per day, representing 15% growth year over year. As many of you are aware, negative gas prices persisted at the Waha hub with the gas daily price averaging negative $1 per MCF for the quarter. So the outperformance that we achieved is even more impressive when you take into account the nearly 170 million cubic feet per day of wellhead gas volume curtailed on our system due to pricing. In September, we partnered with Diamondback Energy to acquire an additional equity interest in Epic Crude, bringing Kinetic's total ownership to 27.5%. This was the much needed first step in a series of transactions to support continued growth and strengthen the financial profile of the pipeline. Diamondback has now committed approximately 33% of the overall capacity of the pipeline on a firm long-term basis. Kinetic itself is also now finalizing a long-term transport agreement with Epic. With these actions, Epic Crude received a multi-notch upgrade from the credit rating agencies and in early October, Epic refinanced its term loan B, which significantly reduced its annual interest expense and positions the business to begin distributions to partners in early 2025. Also at the beginning of September, we received MRV plan approval from the EPA. The approved MRV plan covers three acid gas injection wells at our Malgema and Dagger Drawer processing facilities and enables Kinetic to economically benefit from the CO2 that we are currently capturing and sequestering on our system through 45 Q credits. This is only the fourth plan approved in the state of New Mexico. This is a significant step on our sustainability mission to continue decarbonizing our footprint. We are working to fully quantify the economic benefit, which we expect to recognize beginning in 2025. We have also started our MRV plans at our Diamond Cryer and King's Landing processing complexes. Construction has been progressing on our capital projects in Lee and Eddy Counties, New Mexico. Last quarter, we announced an amendment to an existing agreement in Lee County with one of our largest customers. The build-out to facilitate the NVC step-up and treating services is complete, and the amended agreement commenced November 1st. Our operations team remains highly focused on the construction of King's Landing Cryo 1, and we're on track to commence operations in the second quarter of next year. We have 100 million cubic feet per day curtailed on our northern system, as well as significant duct inventory. So the in-service of King's Landing Cryo-1 is critical for our customers in the region. We're also announcing today that we will connect the west side of our system with a large diameter, high pressure, rich gas pipeline between Eddy County, New Mexico and Culberson County, Texas. This pipeline, which is expected in service in the first quarter of 2026, will leverage and optimize our available processing capacity and provide tremendous flexibility to move significant sweet gas volumes south, freeing up treating and processing space on the Durango system north for higher margin sour gas. The announcement represents a change in scope where we were initially contemplating a plant relocation to one of our Delaware North processing sites. Now that we fully understand the gas quality specs of existing PDP and new development on our northern system, this new pipeline is a far better solution across all aspects, operations, commercial, and financial. Starting with operations, the new pipeline will initially increase Delaware North access to processing capacity by 150 million cubic feet per day versus the originally contemplated 60 million cubic feet per day increase with the plant relocation. On the commercial side, not only can we access more processing capacity for Delaware North, but this solution allows us to move lower margin sweet gas south and replace those volumes with higher margin sour gas. On the financial side, the new pipeline does not represent an increase in capex. The new connector pipeline has already been underwritten and supported by our announced Eddy County gathering and processing project. Today's announcement is the first step of several that unlock significant value for our shareholders and customers. When announcing the Durango acquisition earlier this year, we said that connecting our north and south systems was a highly important strategic objective for the company. Today, I am exceptionally proud of our team and excited for our customers with this new pipeline announcement. Our commercial team has also been very active with current and prospective customers up north to commercialize the build-out and expansion of the King's Landing processing complex with Cryo 2, following our decision to purchase long-lead critical path components. Given the need for additional processing capacity in the region, supported by exceptional reservoir quality and producers' well economics, we plan to take FID on King's Landing 2 as soon as possible to enable producers to further develop the resource in that area. Each successive quarter this year, we have demonstrated outstanding performance and cost discipline, which gives us the confidence to tighten our capital expenditures guidance range and again raise our adjusted EBITDA guidance to now $970 million to $1 billion. with an internal goal to achieve at least the top end of this revised EBITDA range. Annualized third quarter adjusted EBITDA actually puts us above our objective. So what was once a medium term EBITDA target is now within immediate reach. And I'm incredibly proud of what our team has accomplished so far this year to make this a reality. 2024 also marks a year of strong execution on our capital allocation framework with achievement of our leverage target, pursuit of strategic and accretive growth projects, and likely our adjusted EBITDA target of $1 billion. Our performance year-to-date and increased confidence in Kinetic's outlook underscored the Board of Directors' decision to raise the quarterly cash dividend to $3.12 on an annualized basis. Looking ahead, we remain committed to a balanced capital allocation approach that provides both flexibility for organic and inorganic growth opportunities, as well as continued acceleration of returns to shareholders through annual rateable dividend growth and opportunistic share repurchases. So with all of that, I'd now like to hand the call over to Trevor to discuss the financial results and revise guidance in more detail.