Kinetik Holdings Inc

Victoria, Good morning, thank you for attending today's kinetic fourth quarter and full year 2024 results, my name is Victoria and i'll be your moderator today. Victoria, All lines will be muted during the presentation portion of the call with the opportunity for questions and answers at the end if you'd like to ask a question, please press star followed by one on your telephone keypad I would now like to pass the call over to Alex turkey.

Alex Durkee he, Thank you. Good morning and welcome to kinetics fourth quarter and full year 2024 earnings and full year 2025 guidance 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 line for 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. Yesterday, we reported our fourth quarter and full year 2024 results and provided our 2025 financial guidance and outlook. We look forward to discussing each in more detail with you this morning. 2024 was another transformational year for Kinetic, marked by highly strategic M&A and organic growth. We substantially expanded our footprint across the Delaware Basin and at the same time achieved significant milestones in our capital allocation framework. Starting in the first quarter, we placed into service two months early the lateral That extended from Loving County into Lee County, our initial entry into the state of New Mexico. This was the first step in a broader vision of becoming a market leader in the Northern Delaware. In March, we put a stock overhang behind us with Apache exiting its remaining ownership stake in Kinetic. This last trade nearly doubled our public float and created an opportunity for existing and new shareholders to participate in the kinetic growth story in a more meaningful way. In May, we announced $1 billion of highly strategic and accretive transactions that furthered our expansion into New Mexico. Our acquisition of Durango Permian, our largest transaction since the kinetic merger in February of 2022, and the 15-year gas gathering and processing agreement in Eddy County which was primarily funded by the sale of our 16% non-operated, non-core stake in GCX, positioned Kinetic for future opportunities like never before. Importantly, upon closing these transactions, we reduced our leverage by nearly half a turn to 3.4 times, falling below our communicated leverage target. During the third quarter, we announced the sanctioning of pre-FID work for King's Landing II to support continued development of the resource in the Northern Delaware. We also increased our equity interest in Epic Crude to 27.5% ownership in a series of transactions that support the pipe's continued growth and strengthen its financial profile. To close out the year, we announced the ECCC pipeline between our Delaware North and Delaware South positions, which will allow us to flow sweet, rich gas south and process higher margin sour gas across our northern assets. We also announced the strategic bolt-on acquisition of the Barilla Draw assets from Permian Resources. And with a backdrop of strength and visibility in our business in 2025 and beyond, we increased our cash dividend by 4%, accelerating our return of capital to shareholders for the first time as a company, and we were also placed on positive outlook by S&P. Now, addressing our fourth quarter results, the quarter was temporarily impacted by unexpected events in November that resulted in a $15 million headwind. largely driven by the associated volume curtailment impacts from negative Waha gas prices in November and the restricted operating mode for several of our plants in Texas for the first half of the month. Normalizing fourth quarter earnings for this headwind, four-year adjusted EBITDA would have been above the midpoint of our revised guidance range. While Trevor will provide more context on fourth quarter results shortly, It's important to note that the management team has implemented new risk measures and processes to prevent this from happening in the future. By late December, Alpine High Volumes had rebounded to levels not seen since early 2024 prior to when the curtailments began. The last two months have marked a strong rebound in operational and financial performance at the company with adjusted EBITDA averaging well over $1.05 billion on an annualized basis. Moving on to four-year results, we reported record volume growth and earnings. Average gas process volumes of 1.64 billion cubic feet per day were up 13% year-over-year. Adjusted EBITDA of $971 million represents a 16% increase year-over-year and an 18% increase when normalizing for November impacts. We reported 2024 capital expenditures of $265 million, approximately $15 million below the midpoint, and $5 million below the low end of our guidance range. Looking ahead to 2025 and beyond, Kinetic's pure play footprint in the most prolific basin and its close proximity to the largest natural gas and natural gas liquids demand hubs in the world positions us at the epicenter of a long-term supply push, demand pull dynamic. Permian supply and U.S. Gulf Coast demand are growing at mid-single-digit compound annual growth rates through the end of the decade. At the current trajectory, approximately 10 billion cubic feet per day of additional processing capacity is needed to keep up with the pace of growth. Over 5.5 billion cubic feet per day of capacity has been sanctioned in the Permian and is expected to be placed in service in the next several years, implying an additional 20 to 25 unannounced Permian processing plants still needed by 2030. The significant growth out of the Permian will help meet the demand needs in the US Gulf Coast. LNG exports are expected to more than double by 2030 and drive approximately 75% of the nearly 18 billion cubic feet per day expected natural gas demand growth in the region. Increased industrial and power demands as well as growing exports to Mexico would make up the balance. Gulf Coast exports of ethane and LPGs are also growing at mid-single-digit compound annual rates as global demand for feedstock increases, predominantly supported by ethylene and PDH capacity additions in China. Given the cost inflation we have seen in power prices over the last several years, we believe our ability to manage electricity OPEX is going to become even more critical over the balance of this decade, which is why we are exploring a behind-the-meter greenfield, large-scale gas-fired power generation facility and distribution network in Reeves County, Texas. A behind-the-meter solution would allow us to reduce ongoing electricity costs and be able to capitalize on the persistent and expected Waha natural gas price volatility. While the project is still in its early stages, this is something we and others are really excited about. We're in conversations with potential partners with the intent to pursue a joint venture structure. The project could reach FID as early as this year, and we look forward to sharing more as we advance this opportunity. I'm incredibly proud of what our team has accomplished. Since closing the merger in February of 2022, we have a proven track record of compound annual double-digit adjusted EBITDA growth and expect to continue this multi-year growth journey in 2025 and beyond. This earnings growth trajectory, coupled with disciplined capital deployment, reinforces Kinetic's position as a best-in-class leader in the Delaware Basin and the midstream industry. And with that, I'll now hand the call over to Trevor to discuss our financial results and 2025 guidance in more detail.