Kinetik Hits Record EBITDA, Navigates Waha Storm with Strategic Plays

HOUSTON & MIDLAND, TX – May 06, 2026 – Kinetik Holdings Inc. (NYSE: KNTK) announced a record-setting first quarter for operational earnings, posting an Adjusted EBITDA of $251.2 million. The strong performance, which surpassed the company's internal expectations, came despite a reported net loss of $5.1 million and significant headwinds from a volatile West Texas natural gas market.

In a display of confidence, the Permian-to-Gulf Coast midstream company affirmed its full-year 2026 financial guidance, signaling that its long-term strategy is on track to weather the current market turbulence. The results paint a picture of a company successfully executing a multifaceted plan to insulate itself from commodity price swings while building out the infrastructure needed for future growth.

Navigating a Turbulent Gas Market

The first quarter of 2026 was marked by extreme volatility in the Permian Basin's Waha Hub, where a glut of natural gas production has consistently overwhelmed pipeline takeaway capacity. This oversupply has driven prices into negative territory for extended periods, forcing some producers to pay to have their gas taken away.

Kinetik’s CEO, Jamie Welch, acknowledged the severity of the situation in the company’s report. “Year to date through April, the Waha Hub is even more oversupplied and volatile than our original expectations with Waha gas daily averaging negative $2.37 per Mmbtu,” he stated. “We continue to experience price-related volume curtailments from our gas price-sensitive customers.”

As a result, Kinetik revised its assumptions for these production shut-ins, now estimating an average of 220 million cubic feet per day (Mmcf/d) for the year, more than double its original forecast of 100 Mmcf/d. Despite these curtailments, the company’s Midstream Logistics segment posted a 12% year-over-year increase in Adjusted EBITDA to $178.9 million, a testament to its mitigation strategies.

Welch highlighted the company’s strategic advantage, noting, “our Gulf Coast transportation position more than offsets this impact by capitalizing on wider Permian to Gulf Coast price differentials.” By securing access to more stable and profitable Gulf Coast markets, Kinetik has created a financial buffer against the pricing chaos at the Waha Hub, a move that is proving critical to its performance.

Building for the Future: Contracts and Infrastructure

While navigating the immediate market challenges, Kinetik has been aggressively securing its long-term future. The company announced significant progress on commercial agreements and strategic projects designed to enhance earnings visibility for years to come.

One of the most significant developments is the amendment of multiple gas gathering and processing agreements with a major customer in New Mexico. These deals extend contract terms to 2039, increase the dedicated acreage by approximately 25%, and cover roughly 75% of the company's legacy Durango gas volumes. According to Welch, these agreements, along with other new contracts, “demonstrate our commercial strategy translating into multi-year earnings visibility.”

On the infrastructure front, Kinetik is advancing several key projects. The company received final approvals from the Bureau of Land Management and New Mexico regulators for its acid gas injection and sour conversion project at the Kings Landing facility. The project, on track for completion by year-end 2026, will enable Kinetik to process sour gas—gas with higher levels of sulfur—unlocking a valuable, underserved market in the Delaware Basin.

Additionally, the ECCC Pipeline, which connects the northern and southern portions of Kinetik’s system in the western Delaware Basin, is nearing completion and is expected to begin service in the second quarter of 2026. This pipeline will improve system flexibility and support the growth of both sweet and sour gas processing.

A Deeper Look at the Financials

The divergence between Kinetik’s record Adjusted EBITDA and its $5.1 million net loss highlights the difference between core operational performance and the bottom-line accounting figure. Adjusted EBITDA, a non-GAAP measure, strips out items like interest, taxes, depreciation, and certain one-time costs to provide a clearer view of the business's cash-generating power. The company's Distributable Cash Flow of $180.8 million resulted in a healthy dividend coverage ratio of 1.4x, indicating its shareholder payouts are well-supported by cash flow.

The company’s financial performance was a tale of two segments. The Midstream Logistics business thrived, with its Adjusted EBITDA growing to $178.9 million. This growth was attributed to strong operating performance and wider price spreads between the Permian and the Gulf Coast, which more than offset the volumes lost to Waha-related shut-ins.

In contrast, the Pipeline Transportation segment saw its Adjusted EBITDA decrease nearly 17% year-over-year to $78.0 million. However, this decline was primarily driven by the company's prior divestiture of its equity interest in the EPIC Crude pipeline, not a decline in underlying operations. Welch noted that excluding the EPIC Crude sale, the quarter's Adjusted EBITDA represented a new record for the company.

By reaffirming its full-year guidance—projecting an Adjusted EBITDA between $950 million and $1,050 million and capital expenditures of $450 million to $510 million—Kinetik's leadership is expressing strong confidence in its strategic positioning and its ability to execute its plan throughout the remainder of a challenging year.