Kinetik Holdings Inc

Howard, Senior Vice President and Chief Financial Officer. Other members of our senior management team are also in attendance for this morning's call. As a reminder, today's discussion will include forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. For a discussion of these factors, please refer to our SEC filing. We will also reference certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures can be found and our earnings materials and on our website. With that, I will turn the call over to Jamie.

Thank you, Alex. Good morning, everyone. 2025 was a challenging year for the energy industry in Connecticut. Commodity price volatility, macroeconomic uncertainty, tempered customer development activity, and inflationary pressures tested our business, and so our financial results underperformed expectations. But it was also a year of important strategic progress, progress that strengthened our core business, deepened customer alignment, and positioned us for a bright future. Our team is keenly aware that 2026 is our rebuilding year, a year to reestablish credibility through consistent execution, disciplined capital allocation, and transparent communication. Despite the challenging operating conditions, we still managed to deliver year-over-year EBITDA growth and executed on several foundational initiatives. We closed the bolt-on acquisition of the Barilla Draw gathering assets, enhancing our Delaware South footprint and expanding our systems capture area. We achieved full commercial in-service at King's Landing, a multi-year strategic build that doubled processing capacity in Delaware North. Kings Landing is performing exceptionally well with a 99.8% runtime, strong ethane recoveries, and reliable performance even through the recent winter storm fern. This reliability is critical as inlet volumes rise and eventually sour gas content increases. We also reached FID on the King's Landing sour gas conversion project that is expected in service by year end 2026. That project will ultimately increase our total permitted acid gas injection capacity across our Delaware North processing complexes to over 31 million cubic feet per day, enabling us to meaningfully scale sour gas handling across the northern Delaware basin. Completion of the ECCC pipeline remains on schedule for in-service next quarter. ECCC is a critical link between Eddy and Culberson counties and unlocks additional growth by providing Delaware North with direct access to our latent processing capacity in Delaware South. Yesterday, we announced that we reached FID on our first behind-the-meter gas-fired power generation project at the Diamond Cryer facility. We had purchased a 40-megawatt gas turbine scheduled to arrive in West Texas during the second quarter. The project requires less than $25 million of capital, is expected to be in service in late 2026, and provides a scalable, cost-efficient power solution that can be replicated at several of our other processing facilities in Delaware South. Continuing to execute on initiatives that reduce our operating cost structure, thereby making our existing assets more profitable and our business more competitive, is a key focus for our team going forward. 2025 was also a year of meaningful commercial advancement. we amended gas gathering and processing agreements with our two largest legacy Durango midstream customers, extending terms into the mid-2030s and enhancing long-term cash flow visibility through fixed fee structures, treating fees, and control of residue gas and NGLs. Importantly, these amended agreements increase expected EBITDA beginning in 2026, strengthen long-term customer alignment and position Kinetic to grow alongside these producers as development increasingly shifts towards more sour gas ventures. A GMP agreement in Delaware South was amended to shift the residue gas price point from Waha to premium Gulf Coast markets, improving this customer's natural gas price realizations and reducing our indirect exposure to in-basin price volatility via price-related production curtailments. These types of commercial refinements underscore our focus on creating win-win outcomes that enhance system utilization and long-term value. We also executed long-term agreements with CPV and INEOS, demonstrating our ability to create differentiated pricing solutions across power generation and international gas markets. And our commercial success has continued into this year as we're finalizing a new agreement for low and high pressure gathering and processing services in Lee County with one of our large existing customers. We are reminded daily that location, a low cost structure, and connectivity determine the winners in midstream. The Texas and New Mexico natural gas supply and demand forces at play today reinforce a very attractive thesis for our business. Kinetic strategically sits at the crossroads of rising low-cost natural gas supply and rapidly growing demand along the US Gulf Coast, for which our system is a critical link in the energy value chain. Permian natural gas production is expected to grow nearly 4% annually through 2030, supported by rising GORs attractive gas-rich plays, and accelerating domestic natural gas demand. Gas-to-oil ratios, especially in the Delaware, are climbing steadily as development moves into gassier zones. Delaware Basin GORs are projected to increase nearly 70% over the next couple of decades. At the same time, highly productive gas-rich plays like the Barnett, Woodford, and Alpine High are becoming increasingly attractive as producers delineate and prove out the resource and gas fundamentals improve. Permian gas takeaway capacity remains a critical component of the outlook. The industry is bringing online approximately 5 billion cubic feet per day of incremental egress by the first quarter of next year, representing nearly 20% of current Permian natural gas production volume. While we still anticipate Waha gas price volatility during the spring and fall pipeline maintenance seasons, takeaway gas pipeline utilization near 90% should provide pricing relief at Waha. Additional projects like Iger Express and Desert Southwest, slated to come online in 2028 and 2029, further strengthen the Waha price relief narrative. Accelerating ERCOT power generation demand, driven largely by data centers, creates substantial upside for gas-fired power generation, especially in West Texas. Further downstream, the U.S. Gulf Coast remains the most attractive natural gas demand story globally, with LNG capacity expansions expected to increase gas demand by nearly 12 billion cubic feet per day through 2030. Before turning the call to Trevor, I'd like to reiterate that we recognize the importance of restoring investor confidence this year. Our priorities for 2026 are clear. Meet or exceed our financial estimates. Tighten operating cost discipline. Deliver projects on time and on budget. Play offense regarding our Waha exposure. Examples include amendments of existing GNP agreements, as mentioned earlier. potentially being part of the solution for new takeaway capacity options and creative sales agreements. And lastly, convert our commercial opportunities pipeline into long-term agreements, which would result in the FID of additional system investments at compelling multiples. We enter 2026 with momentum, a strong system and a clear mandate. While I am incredibly proud of our team's success to date, there is a huge opportunity to meaningfully and accretively continue to grow our business. To capture that opportunity, we need to operate at a higher level in 2026. And I know we have the right people to do just that.

With that, I will turn it over to Trevor. Thanks, Jamie. In the fourth quarter, we reported adjusted EBITDA of $252 million. We generated distributable cash flow of $152 million and free cash flow with negative $12 million. Midstream Logistics delivered $173 million of adjusted EBITDA, up 15% year-over-year, driven by gas volume growth, Gold Coast marketing gains, and a one-time operating expense benefit partially offset by Waha price-related production shut-ins. Pipeline transportation generated $84 million of adjusted EBITDA down year-over-year due to the Epic Crude divestiture that closed on October 31st. The approximately $500 million of proceeds received from the Epic Crude sale were used to pay down borrowings at the revolving credit facility, improving liquidity and deleveraging the balance sheet, both important for our revised capital allocation framework. Additionally, distributions from PHP were down approximately $31 million in the fourth quarter versus the third quarter due to a change in distribution policy resulting in a portion of the fourth quarter distribution being paid at the beginning of January. This change in the distribution policy has no further consequence, nor is it a reflection on PHP's financial performance. For the full year, adjusted EBITDA was $988 million. slightly above the midpoint of revised guidance. Capital expenditures were $497 million in line with revised guidance. We repurchased $176 million of Class A common stock and exited the year at 3.8 times leverage. Turning to the financial guidance issued yesterday, we expect 2026 adjusted EBITDA of $950 million to $1.05 billion. The midpoint of $1 billion represents over 7% growth year-over-year when adjusting for the sale of Epic crude. Within the midstream logistics segment, key assumptions include high single-digit growth in process gas volumes across the system, outpacing broader Permian production growth. Approximately 100 million cubic feet per day of expected Waha price-related production shut-ins, and these are most pronounced during pipeline maintenance periods in the fall and spring. Gas process volumes exceeding 2 billion cubic feet per day in the second half of this year, supported by ECCC in service and King's Landing ramping to full utilization. Approximately 84% of fixed fee gross profit and flat to slightly down operating expenses relative to our third quarter 2025 run rate. Since we still expect substantial volatility at Waha this year, I would like to spend a bit of time on how we approach guidance with utilization of our Gulf Coast transport capacity to offset the financial impact of anticipated production shut-ins. We believe our guidance is appropriately risked based on the following. We saw the extent to which curtailments could impact the business in the fall of 2025 and assumed similar levels in our forecast. We are modeling strip pricing, which suggests depressed Waha pricing for most of the year, especially during the spring and fall pipeline maintenance seasons. While we are planning for material price-related shut-ins, we are also expecting marketing contributions as a financial offset. Given the magnitude of the Waha to Gulf Coast hub natural gas price differential, we have approximately 40% of our transport spread exposure hedged. Our 2026 adjusted EBITDA guidance also reflects the full year impact of the epic crude divestiture as well as margin and volume adjustments at chinook within the pipeline transportation segment moving to 2026 capital expenditures guidance we expect 450 million dollars to 510 million dollars of capital expenditures with approximately 70 percent of capital spent in new mexico including the e triple c pipeline gathering investments in eddie and lee counties and the Kings Landing sour gas conversion project. Our Delaware South budget includes the behind the meter power generation project, regular way low pressure gathering and compression capital to service existing agreements, and a handful of optimization projects that will increase processing capacity at several of our Delaware South processing complexes. I would like to discuss our revised capital allocation framework and how we're positioning the company for long-term value creation. Over the past year, we've shifted from a balanced all of the above capital allocation model to a growth oriented framework aligned with multi-year visibility and high return opportunities. Our updated capital allocation framework reflects a structural opportunity to reinvest in projects that generate highly attractive rates of return and enhance our overall strategic and integrated enterprise value. All the while, we plan to modestly increase capital returns to shareholders via annual dividend increases and remain disciplined around leverage and balance sheet resiliency. As growth projects come online and cash flow steps up, we expect to accelerate cash returns to shareholders. There are a few elements I want to highlight. First, elevated growth capital budgets are expected, driven by high return projects supported by our system footprint, operational reliability, and long-term commercial agreements. Second, we will target leverage between 3.5 and 4 times. The scale of the opportunity set requires disciplined project high grading in order for us to operate within this range, which we believe appropriately protects our company's financial health. Third, we plan to increase the dividend annually by 3 to 5% until our dividend coverage reaches 1.6 times. Upon achievement of 1.6 times, dividend increases should track earnings growth. Fourth, we will pursue share repurchases opportunistically. With elevated capex, buybacks will naturally be lower in the near term, but over time they will become an additional mechanism for incremental cash returns as free cash flow implies. And finally, we will preserve balance sheet flexibility with investment grade ratings remaining an objective, but not at the expense of alternative compelling returns. Before we start Q&A, I would like to pass the call back to Jamie.