Kinetik Reports Third Quarter 2023 Financial and Operating Results

• Generated third quarter net income of $43.1 million and Adjusted EBITDA¹ of $215.3 million

• Achieved quarterly gas processed volumes of 1.49 Bcf/d, up 23% year-over-year

• Updated the Company's 2023 Adjusted EBITDA¹ Guidance range to $820 million to $860 million

• 2023 Capital Expenditures expected to be at the top end of the Company's Guidance range of $490 million to $540 million

Kinetik Holdings Inc. (NYSE:KNTK) ("Kinetik" or the "Company") today reported financial results for the quarter ended September 30, 2023.

Third Quarter 2023 Results and Commentary

For the three and nine months ended September 30, 2023, Kinetik processed natural gas volumes of 1.49 Bcf/d and 1.44 Bcf/d, respectively, and reported net income including noncontrolling interest of $43.1 million and $119.1 million, respectively.

Kinetik generated Adjusted EBITDA¹ of $215.3 million and $610.8 million for the three and nine months ended September 30, 2023, respectively, Distributable Cash Flow¹ of $148.1 million and $418.8 million for the three and nine months ended September 30, 2023, respectively, and Free Cash Flow¹ of $36.8 million and $(17.0) million for the three and nine months ended September 30, 2023, respectively.

"2023 continues to be a seminal year for our Company as we execute on our capital program that underscores our long-term strategic vision," said Jamie Welch, Kinetik's President & Chief Executive Officer. "In the third quarter, we achieved processed gas volumes of 1.49 Bcf/d, representing 23% growth year-over-year. Adjusted EBITDA¹ increased 4% quarter-over-quarter, despite weather-related challenges in July and August and some unexpected downstream pipeline outages for multiple days throughout the quarter."

"We made significant progress on our 2023 capital program during the quarter. Construction continued across the state line on our expansion into Lea County, New Mexico with right-of-way approval for the route received. The expansion, which is supported by multi-year agreements with minimum volume commitments, remains ahead of schedule with expected in-service in the first quarter of 2024. We completed construction of the Delaware Link pipeline in September and reached commercial in-service on October 1, 2023. These two projects, coupled with the Permian Highway Pipeline ("PHP") expansion nearing completion, enable Kinetik to offer Delaware Basin producers a highly-competitive, integrated wellhead-to-Gulf Coast market solution."

"Looking ahead, we are on track to achieve our 2023 exit rate guidance of 1.6 Bcf/d of gas processed volumes. We forecast sequential Adjusted EBITDA¹ and volume growth in the fourth quarter at our Midstream Logistics segment. Within our Pipeline Transportation segment, the Delaware Link pipeline is in-service, and we expect the start-up of the PHP expansion in December. As a result, we have tightened our 2023 Adjusted EBITDA¹ Guidance range."

"In 2024, we estimate meaningful year-over-year Adjusted EBITDA¹ growth combined with a capital expenditures plan of less than $150 million, demonstrating the attractive Free Cash Flow¹ potential of our asset base."

Financial

a. Achieved quarterly net income of $43.1 million and Adjusted EBITDA¹ of $215.3 million.

b. Declared a dividend of $0.75 per share for the quarter ended September 30, 2023, or $3.00 per share on an annualized basis. 118 million shares have elected to reinvest the third quarter dividend into newly issued shares of Class A common stock. As a result, $23.3 million of third quarter dividends will be paid in cash.²

c. Exited the quarter with a Leverage Ratio^1,3 per the Company's Revolving Credit Agreement of 4.0x and a Net Debt to Adjusted EBITDA^1,4 Ratio of 4.4x.

d. Generated Free Cash Flow¹ of $36.8 million, marking the end of the Company's elevated capital intensity of its 2023 growth Capital Expenditure program.

e. Hedged approximately 25% of its 2024 commodity-linked gross profit exposure.

Selected Key Metrics:

Strategic

a. Kinetik's Commercial team continued to expand gathering and processing services with both new and existing customers around the Company's system in the Delaware Basin including new opportunities in both Texas and New Mexico.

b. Continue to evaluate monetizing the Company's stake in Gulf Coast Express pipeline.

Growth Projects

a. Completion of Delaware Link, Kinetik's 30-inch residue gas pipeline from its processing complexes to Waha with an initial throughput capacity of 1 Bcf/d, achieved ahead of schedule. Commercial in-service started on October 1, 2023.

b. Kinetik's New Mexico system expansion into Lea County remains on budget and construction is ahead of schedule with expected in-service at the beginning of 2024.

c. Construction is nearly complete on the PHP expansion of 550 MMcf/d of incremental capacity, increasing natural gas deliveries from the Permian to U.S. Gulf Coast markets. The project is expected to be in-service on December 1, 2023.

Sustainability

a. Kinetik's ESG rating was upgraded to AA by MSCI.

b. Kinetik was awarded a 2023 New Technology Implementation Grant by The Texas Commission on Environmental Quality and Texas Emissions Reduction Plan. The grant supports the implementation of new technologies that reduce emissions.

Upcoming Tour Dates

Kinetik plans to participate at the following upcoming conferences and events:

a. Bank of America Global Energy Conference in Houston on November 14th

b. Bank of America Leveraged Finance Conference in Boca Raton on November 29th

c. Mizuho Power, Energy & Infrastructure Conference in New York City on December 5th

d. Wells Fargo Midstream and Utilities Symposium in New York City on December 6th

e. Goldman Sachs Global Energy Conference in Miami on January 3rd – 5th

f. UBS Global Energy & Utilities Conference in Park City on January 8th – 10th

g. USCA Midstream Corporate Access Day in Houston on January 23rd

Investor Presentation

An updated investor presentation will be available under Events and Presentations in the Investors section of the Company's website at www.ir.kinetik.com.

Conference Call and Webcast

Kinetik will host its third quarter 2023 results conference call on Thursday, November 9, 2023 at 8:00 am Central Standard Time (9:00 am Eastern Standard Time) to discuss third quarter results. To access a live webcast of the conference call, please visit the Investors section of Kinetik's website at www.ir.kinetik.com. A replay of the conference call also will be available on the website following the call.

About Kinetik Holdings Inc.

Kinetik is a fully integrated, pure-play, Permian-to-Gulf Coast midstream C-corporation operating in the Delaware Basin. Kinetik is headquartered in Midland, Texas and has a significant presence in Houston, Texas. Kinetik provides comprehensive gathering, transportation, compression, processing and treating services for companies that produce natural gas, natural gas liquids, crude oil and water. Kinetik posts announcements, operational updates, investor information and press releases on its website, www.kinetik.com.

Forward-looking statements

This news release includes certain statements that may constitute "forward-looking statements" for purposes of the federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "seeks," "possible," "potential," "predict," "project," "prospects," "guidance," "outlook," "should," "would," "will," and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about the Company's future plans, expectations, and objectives for the Company's operations, including statements about strategy, synergies, sustainability initiatives, portfolio monetization opportunities, expansion projects and future operations, and financial guidance; the Company's projected dividend amounts and the timing thereof; and the Company's leverage and financial profile. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See Part II, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022. Any forward-looking statement made by us in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement whether as a result of new information, future development, or otherwise, except as may be required by law.

Additional information

Additional information follows, including a reconciliation of Adjusted EBITDA, Distributable Cash Flow, Free Cash Flow, and Net Debt (non-GAAP financial measures) to the GAAP measures.

Non-GAAP financial measures

Kinetik's financial information includes information prepared in conformity with generally accepted accounting principles (GAAP) as well as non-GAAP financial information. It is management's intent to provide non-GAAP financial information to enhance understanding of our consolidated financial information as prepared in according with GAAP. Adjusted EBITDA, Distributable Cash Flow, Free Cash Flow, Dividend Coverage Ratio, Net Debt and Leverage Ratio are non-GAAP measures. This non-GAAP information should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP and reconciliations from these results should be carefully evaluated. See "Reconciliation of GAAP to Non-GAAP Measures" elsewhere in this news release.

1. A non-GAAP financial measure. See "Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Measures" for further details.
2. Estimated dividends reinvested and dividends paid in cash as of November 1, 2023. Final numbers are subject to change.
3. Leverage Ratio is total debt less cash and cash equivalents divided by last twelve months Adjusted EBITDA, calculated in the Company's credit agreement. The calculation includes Qualified Project and Acquisition EBITDA Adjustments that pertain to the funding of the Permian Highway Pipeline expansion project, Delaware Link project, first quarter 2023 midstream infrastructure asset acquisition, and other qualified growth capital projects at the Midstream Logistics segment.
4. Net Debt to Adjusted EBITDA Ratio is defined as Net Debt divided by last twelve months Adjusted EBITDA.
5. Net income including noncontrolling interest for the three and nine months ended September 30, 2022 was $49.4 million and $202.3 million, respectively.
6. Dividend Coverage Ratio is Distributable Cash Flow divided by total declared dividends.
7. Issued and outstanding shares of 148,608,696 is the sum of 54,519,658 shares of Class A common stock and 94,089,038 shares of Class C common stock.
8. Net Debt is defined as total long-term debt, excluding deferred financing costs, less cash and cash equivalents.

Notes Regarding Presentation of Financial Information

The following addresses the results of our operations for the three and nine months ended September 30, 2023, as compared to our results of operations for the three and nine months ended September 30, 2022. As the business combination between BCP Raptor Holdco, LP, Kinetik's predecessor for accounting purposes ("BCP") and Altus Midstream LP ("Altus") (the "Transaction") was determined to be a reverse merger, BCP was considered the accounting acquirer and Altus was considered the legal acquirer. Therefore, BCP's net assets, carrying at historical value, were presented as the predecessor to the Company's historical financial statements and the comparable period presented herein reflects the results of operations of BCP for the three and nine months ended September 30, 2022 and Altus' results of operations from February 22, 2022, the closing date of the Transaction, through September 30, 2022. Kinetik's financial results on and after February 22, 2022 reflect the results of the combined company.

Unless otherwise noted or the context requires otherwise, references herein to Kinetik Holdings Inc. or "the Company" with respect to time periods prior to February 22, 2022 include BCP and its consolidated subsidiaries and do not include Altus and its consolidated subsidiaries, while references herein to Kinetik Holdings Inc. with respect to time periods from and after February 22, 2022 include Altus and its consolidated subsidiaries.

The Company completed a two-for-one Stock Split on June 8, 2022. All corresponding per-share and share amounts for periods prior to June 8, 2022 have been retroactively restated to reflect the two-for-one Stock Split.

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