Kinetik Rides Post-Earnings Momentum

Exec Summary: Market Movers: Kinetik Holdings shares gained after 1Q25 earnings, boosted by bullish CEO commentary. Rigs: $60 oil prices are dragging rig counts down on several G&P system in the Permian Basin. Flows: Volumes averaged 47.4 Bcf/d for the week of April 28, down 1% from 1Q25.

Market Movers: Kinetik Holdings shares gained after 1Q25 earnings, boosted by bullish CEO commentary.

Rigs: $60 oil prices are dragging rig counts down on several G&P system in the Permian Basin.

Flows: Volumes averaged 47.4 Bcf/d for the week of April 28, down 1% from 1Q25

Calendar: EDA provides updated Texas plant volumes 05/27

Market Movers:

Kinetik Holdings (KNTK) shares rose after its May 8 1Q25 earnings call, boosted by bullish CEO commentary. Here are the key takeaways:

1. Growth Outlook

KNTK projects 10% CAGR through 2029. In the KNTK Financial Blueprint, East Daley forecasts 8% G&P volumetric growth from 2024–28, driven by activity from APA, Permian Resources (PR), EOG and Chevron (CVX).

EDA tracks KNTK’s progress via plant inlet volumes, residue gas flows and rig activity in Energy Data Studio. Rig counts remain steady between 20–25 rigs on KNTK’s acreage. The company is making inroads in the northern Delaware Basin in New Mexico, supporting growth.

Clients can monitor KNTK’s growth through plant inlet volumes (gray line in graph), residue gas flow data (blue line in graph) and updated rig activity (not shown in the chart below) in Energy Data Studio.

2. Opex Tailwinds

KNTK has five high-cost NGL transport contracts expiring between 2026–28, including contracts on Targa’s (TRGP) Grand Prix and Energy Transfer’s (ET) Lone Star pipelines. KNTK also uses the Shin Oak pipeline, where it holds a 33% stake. CEO Jamie Welch notes these above-market contracts could be recontracted at lower rates. EDA’s NGL Hub Model supports this, projecting <75% utilization on NGL pipelines across 2026–28, which could drive competitive pricing.

What’s Unclear

The exact timing of the NGL contract roll-offs is unknown, but EDA estimates ~135 Mb/d of NGLs could be up for bid by YE28. These volumes are tied to plants launched in 2016–18 with assumed 10-year contracts. Plant in-service dates are included in Energy Data Studio (see figure below).

Bottom Line

Rig counts and plant volumes will indicate whether KNTK can deliver on its growth story. The new Bahia NGL pipeline from Enterprise (EPD) may allow KNTK to shift volumes to Shin Oak, reducing costs and impacting ET’s volumes.

In this regard, KNTK is an interesting M&A target for ET, in a bid to defensively protect the NGLs it currently transports through its infrastructure. EPD could also be a fit, in order to opportunistically capture more of KNTK’s NGLs through its legacy and new Bahia NGL pipeline systems. That said, all three incumbents (ET, EPD, TRGP) and the three emerging NGL companies (MPLX, PSX, OKE) would love a crack at KNTK’s NGL production.

Rigs:

• $60 oil prices are dragging rig counts down on several G&P systems in the Permian Basin. The Permian has lost 12 rigs since peaking recently at 291 rigs in early April ’25, just before WTI prices fell $10/bbl. Targa (TRGP; -7), Energy Transfer (ET; -5) and KNTK (-2) are some of the companies losing rigs in EDA’s Permian allocations since the start of 2Q25.
• Western Midstream (WES) has seen increased drilling on its Rockies G&P systems. WES in mid-April had 9 rigs drilling on its Uinta, Green River and Powder River systems, up from 5 at the start of 2025. Higher natural gas prices (Green River) and increased exploration drilling (Uinta, Powder River) support the gains. EDA counted 34 total rigs on WES systems for the April 28 week, up from an average of 31 rigs in 1Q25.

Flows:

• KMI’s gas sample over the past week has declined the most on its Haynesville KinderHawk and Bakken G&P systems, as reflected in EDA’s Energy Data Studio. The producers behind KinderHawk include Comstock, BP and Aethon. What’s unusual is rigs allocated to KMI’s Haynesville system have increased from 1 to 4 over the past few months (in addition to 2 BP rigs, Ensight Energy and Paloma have recently added a rig each near the system). We expect to see the residue sample rebound in a matter of days or weeks. More aberration than trend, in this case. KMI’s gas sample for its G&P system in the Bakken is also down despite the basin overall bouncing back in March and April post-winter weather operational disruptions through Feb’25.
• The OKE residue sample is “down” by 8% - do not be alarmed. That is bad data as the Midship Pipeline has not reported daily nominations since May 1. EDA is working to update the residue sample point based on the new owner (Howard Energy Partners) so the sample data comes through Energy Data Studio

Calendar: