Kinetik Revises 2025 Outlook and Highlights Progress at Kings Landing Amid Permian Slowdown
Full Commercial In-Service at Kings Landing Expands Capacity in New Mexico
Kinetik Holdings Inc. (NYSE: KNTK) reported Q3 2025 results with a strong operational milestone: the Kings Landing Complex in New Mexico reached full commercial service in late September, adding more than 200 Mmcf/d of gas processing capacity. According to CEO Jamie Welch, this expansion is crucial for Delaware North customers who faced up to two years of curtailments, enabling both the resumption of prior plans and new system activity. Kinetik also announced a final investment decision (FID) on the acid gas injection (AGI) project at Kings Landing, aiming to enhance processing of sour gas and further support long-term regional opportunities.
Permian Slowdown Impacts Guidance but Backlog and Balance Sheet Show Strength
Despite these advancements, Kinetik revised its 2025 Adjusted EBITDA guidance to a range of $965 million to $1.005 billion. The adjustment comes amid negative short-term Waha natural gas prices, capacity constraints on regional pipelines, and a nearly 20% year-to-date drop in Delaware Basin rig counts. Delays in producer development, commodity price softness, and temporary production curtailments have added pressure. However, Kinetik’s backlog of organic projects and the October sale of a 27.5% interest in EPIC Crude for over $500 million provide fuel for new growth and balance sheet flexibility.
| Financial Metric | Q3 2025 | 9M 2025 | FY 2025 Guidance |
|---|---|---|---|
| Net Income (incl. NCI) | $15.5M | $109.2M | — |
| Adjusted EBITDA | $242.6M | $735.6M | $965M–$1.005B |
| Distributable Cash Flow | $158.5M | $468.8M | — |
| Free Cash Flow | $50.9M | $179.2M | — |
| Net Debt | $4.15B (as of 9/30/25) | — | |
| Leverage Ratio | 3.9x | — | |
| 2025 Capital Guidance | — | $485M–$515M | |
Operational Segments Show Mixed Performance
Kinetik’s Midstream Logistics segment reported Adjusted EBITDA of $151 million in Q3—down 13% year-over-year—but saw an 8% increase in processed natural gas volumes (1.84 Bcf/d). Pipeline Transportation contributed $95 million in Adjusted EBITDA, with performance mostly in line with last year. Segment results reflect lower-than-expected Kings Landing volumes during the delayed ramp-up, Waha price-induced shut-ins, and higher costs on the Delaware South system.
| Segment | Q3 2025 Adj. EBITDA | % Change YoY | Q3 2025 Key Volume |
|---|---|---|---|
| Midstream Logistics | $151M | -13% | 1.84 Bcf/d (gas processed, +8%) |
| Pipeline Transportation | $95M | -1% | In line |
Strategic Projects Expand Growth Prospects
With Kings Landing online, Kinetik has accelerated strategic projects including:
- FID on the AGI project (targeted in-service by year-end 2026).
- Progress on the ECCC Pipeline, set for a 2026 in-service date, to better connect regional assets.
- Expansion agreements for natural gas takeaway and LNG delivery: a five-year, 0.5 MTPA contract with INEOS starting 2027 (tied to European TTF index) and new Gulf Coast pipeline capacity commencing in 2028.
- CPV Basin Ranch Energy Center gas supply connection, with full reimbursement for the related capital by CPV and expected service by 2029.
Capital Allocation Focuses on Shareholder Value and Debt Reduction
Kinetik repurchased $176 million in Class A common stock in 2025, with $100 million repurchased in Q3 alone. Proceeds from the EPIC Crude divestiture are being used to pay down revolving debt and fund upcoming cost reduction and growth projects, underlining the company’s focus on balance sheet resilience and return on capital even amid Permian-wide challenges.
Takeaway for Investors
Kinetik’s Q3 results reflect the ongoing pressures facing Permian midstream players—reduced drilling, negative regional gas pricing, and temporary pipeline constraints. However, its robust capital return program, revised yet still sizable guidance, and progress on multi-year infrastructure projects all suggest management’s confidence in its positioning and longer-term growth. As the company navigates through short-term headwinds, investors may want to monitor further updates on project ramp-ups, contract executions, and Permian market stabilization to gauge potential upside in 2026 and beyond.
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