Kinetik Holdings Inc

Good morning, thank you for attending today's Kinetic first quarter 2025 results conference call. My name is Tamia and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I would now ask to pass the conference over to your host, Alex Durkee with Kinetic. You may proceed.

Thank you. Good morning and welcome to Kinetic's first quarter 2025 earnings conference call. Our speakers today are Jamie Welch, President and Chief Executive Officer, and Trevor Howard, Senior Vice President and 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. An actual result could differ from what is described in these statements. These statements are not guaranteed the 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. 2025 is off to an eventful start. Kinetic reported solid first quarter results that exceeded internal expectations. We made strong progress on the strategic projects in our short cycle backlog, and we're excited to increase capital returns to shareholders via our $500 million share repurchase program announced yesterday. These accomplishments are despite the elevated volatility and macroeconomic uncertainty that have prevailed since the beginning of the year. First quarter adjusted EBITDA of $250 million grew 7% year over year, driven by process gas volume growth and margin expansion in our midstream logistics segment, which Trevor will cover in more detail shortly. In the quarter, we made substantial progress across our strategic projects. We completed connections of the inlet and sales pipelines at King's Landing, and we remain on track to start commissioning activities in six weeks. As part of the inlet pipeline connections at King's Landing, the northern stretch of the ECCC pipeline that connects our Eddy County project to the King's Landing complex is almost complete. which is critical as this will allow us to begin flowing volumes from the Carlsbad area to King's Landing for processing upon startup. Also, we have much of the integration of the Barilla Draw assets behind us since closing the transaction in mid-January. Starting in April, one of the existing processing dedications expired and rolled to Kinetic, and we began processing a portion of the gathered gas from that point. We've been really excited about this acquisition, and so far we're seeing very positive results. Kinetic is levered to one of the most prolific oil-producing basins in the world. Innovation and R&D over the past 10 years has only driven producers' break-even costs lower. Now, while the Permian is not insulated from macroeconomic and commodity price headwinds, in our view, it is the best location to weather challenging times, and so we remain bullish on the Permian's resiliency. Even in down cycles, we saw associated gas growth due to rising gas to oil ratios. For example, Permian gas grew over 2 billion cubic feet per day for 1 million barrels per day of crude oil growth in 2018. Whereas today, Permian crude is expected to grow only 200,000 to 300,000 barrels per day, a quarter of 2018 levels at the midpoint. while associated gas growth is expected to remain above 2 billion cubic feet per day. Even if Permian crude production were to stay flat, we still anticipate over 1 billion cubic feet per day or low to mid single digits of gas growth per year. As a pure play Permian midstream company with a focus on natural gas, we are poised to capitalize on this opportunity. First and foremost, Our top priority is to provide flow assurance and operational reliability to our producer customers. We have a proven track record of scaling our growth and asset footprint based on our customers' needs, evidenced by our organic and inorganic expansion into New Mexico last year, our acquisition of Barilla Draw in the first quarter of this year, and our previously announced new large-scale infrastructure projects that will increase resource extraction and drive material cost savings. Importantly, we will take a measured approach to future spend. While we still have the utmost conviction in an expansion at King's Landing and the behind the meter power generation opportunity in Reeves County, Texas, we have the flexibility to be prudent and patient on the timing for final investment decisions. Now, before I turn the call over to Trevor, I want to reiterate the steps we've taken over the past few years that have positioned Kinetic with a multi-year, industry-leading earnings growth outlook, strong free cash flow profile, and substantial financial flexibility. We have grown our asset footprint alongside some of the best producers in the Delaware Basin, enabling their significant multi-year development plans. We maintain a limited short cycle project backlog with very high underwriting standards. In fact, we have less than $50 million of committed growth capital in 2026. Everything else is discretionary and flexible in the event that the macro economy deteriorates significantly. We high graded our contracts with fee based and or take or pay structures, providing strong visibility to our growth outlook. We prioritized deleveraging, achieving a leverage ratio under our 3.5 times target. And we remain focused on what is within our control, applying a high level of scrutiny across all spend categories. This positioning gave our board and management the conviction that now was the right time to increase our share repurchase program up to $500 million. Further underpinning our team's belief in Kinetic's value proposition, senior management will receive a material percentage of this year's remaining salary in Kinetic common stock, including myself at 100%. While we're taking a bit of a wait and see approach, our goal is to be as transparent as possible with our expectations today and over the coming months. With that, I'll turn the call over to Trevor to discuss first quarter results and 2025 expectations in more detail.