10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the quarterly period ended September 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-38048

KINETIK HOLDINGS INC.

(Exact name of registrant as specified in its charter)

Delaware	81-4675947
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2700 Post Oak Blvd, Suite 300

Houston, Texas, 77056

(Address of principal executive offices)

(Zip Code)

(713) 621-7330

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, $0.0001 par value	KNTK	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of registrant’s Class A Common Stock, par value $0.0001 per share issued and outstanding as of October 31, 2022	43,082,157
Number of shares of registrant’s Class C Common Stock, par value $0.0001 per share issued and outstanding as of October 31, 2022	94,270,000

TABLE OF CONTENTS

Item		Page
	PART I — FINANCIAL INFORMATION (UNAUDITED)
1.	FINANCIAL STATEMENTS	1
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021	1
	CONDENSED CONSOLIDATED BALANCE SHEETS - AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021	2
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021	3
	CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS - THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021	4
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	6
	1.DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6
	2.BUSINESS COMBINATION	10
	3.REVENUE RECOGNITION	12
	4.PROPERTY, PLANT AND EQUIPMENT	13
	5.GOODWILL AND INTANGIBLE ASSETS, NET	14
	6.DEBT AND FINANCING COSTS	14
	7.ACCRUED EXPENSES	17
	8.COMMITMENTS AND CONTINGENCIES	17
	9.EQUITY METHOD INVESTMENTS	18
	10.EQUITY AND WARRANTS	20
	11.SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS	21
	12.SHARE-BASED COMPENSATION	22
	13.INCOME TAXES	23
	14.NET INCOME PER SHARE	24
	15.FAIR VALUE MEASUREMENTS	25
	16.DERIVATIVES AND HEDGING ACTIVITIES	26
	17.SEGMENTS	27
	18.SUBSEQUENT EVENTS	30
2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31
3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	44
4.	CONTROLS AND PROCEDURES	45
	PART II — OTHER INFORMATION
1.	LEGAL PROCEEDINGS	46
1A.	RISK FACTORS	46
5.	OTHER INFORMATION	47
6.	EXHIBITS	48
	SIGNATURES	49

i

GLOSSARY OF TERMS

The following are abbreviations and definitions of certain terms used in this Quarterly Report on Form 10-Q and certain terms which are commonly used in the exploration, production and midstream sectors of the oil and natural gas industry:

•ASC. Accounting Standards Codification.

•ASU. Accounting Standards Update.

•Bbl. One stock tank barrel of 42 United States (“U.S.”) gallons liquid volume used herein in reference to crude oil, condensate or natural gas liquids.

•Bcf. One billion cubic feet

•Bcf/d. One Bcf per day.

•Btu. One British thermal unit, which is the quantity of heat required to raise the temperature of a one-pound mass of water by one degree Fahrenheit.

•CODM. Chief Operating Decision Maker.

•Delaware Basin. Located on the western section of the Permian Basin. The Delaware Basin covers a 6.4M acre area.

•FASB. Financial Accounting Standards Board.

•Field. An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.

•Formation. A layer of rock which has distinct characteristics that differs from nearby rock.

•GAAP. United States Generally Accepted Accounting Principles.

•GHG. Greenhouse gas.

•LIBOR. London Interbank Offered Rate.

•MBbl. One thousand barrels of crude oil, condensate or NGLs.

•MBbl/d. One MBbl per day.

•Mcf. One thousand cubic feet of natural gas.

•Mcf/d. One Mcf per day.

•MMBtu. One million British thermal units.

•MMcf. One million cubic feet of natural gas.

•MMcf/d. One MMcf per day.

•MVC. Minimum volume commitments.

•NGLs. Natural gas liquids. Hydrocarbons found in natural gas, which may be extracted as liquefied petroleum gas and natural gasoline.

•Throughput. The volume of crude oil, natural gas, NGLs, water and refined petroleum products transported or passing through a pipeline, plant, terminal or other facility during a particular period.

•SEC. United States Securities and Exchange Commission.

•SOFR. Secured Overnight Financing Rate.

•WTI. West Texas Intermediate crude oil.

All references to the Company’s Class A common stock, par value $0.0001 per share (“Class A Common Stock”), and Class C common stock, par value $0.0001 per share (“Class C Common Stock”), reflect such share amounts as retrospectively restated to reflect the Company’s two-for-one stock split, which was effected via stock dividend on June 8, 2022.

ii

FORWARD-LOOKING STATEMENTS AND RISK

This Quarterly Report on Form10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All statements other than statements of historical facts included or incorporated by reference in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans, and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “continue,” “seek,” “guidance,” “might,” “outlook,” “possibly,” “potential,” “prospect,” “should,” “would,” or similar terminology, but the absence of these words does not mean that a statement is not forward looking. Although we believe that the expectations reflected in such forward-looking statements are reasonable under the circumstances, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, assumptions about:

•our ability to integrate operations or realize any anticipated benefits, savings or growth of the Transaction (as defined herein). See Note 2 — Business Combination in the Notes to our Condensed Consolidated Financial Statements set forth in this Form 10-Q;

•the scope, duration, and reoccurrence of any epidemics or pandemics (including, specifically, the coronavirus disease 2019 (“COVID-19”) pandemic or any related variants) and the actions taken by third parties in response to such epidemics or pandemics;

•the market prices of oil, natural gas, NGLs, and other products or services;

•pipeline and gathering system capacity and availability;

•production rates, throughput volumes, reserve levels, and development success of dedicated oil and gas fields;

•our future financial condition, results of operations, liquidity, compliance with debt covenants and competitive position;

•our future revenues, cash flows and expenses;

•our access to capital and our anticipated liquidity;

•our future business strategy and other plans and objectives for future operations;

•the amount, nature and timing of our future capital expenditures, including future development costs;

•the risks associated with potential acquisitions, divestitures, new joint ventures or other strategic opportunities;

•the recruitment and retention of our officers and personnel;

•the likelihood of success of and impact of litigation and other proceedings, including regulatory proceedings;

•our assessment of our counterparty risk and the ability of our counterparties to perform their future obligations;

•the impact of federal, state, and local political, regulatory and environmental developments where we conduct our business operations;

•the occurrence of an extreme weather event, terrorist attack or other event that materially impacts project construction and our operations, including cyber or other attached on electronic systems;

•our ability to successfully implement and execute our environmental, social and governance goals and initiatives and achieve the anticipated results of such initiatives;

•general economic and political conditions, including the armed conflict in Ukraine and the impact of continued inflation and associated changes in monetary policy; and

iii

•other factors disclosed in Part II, Item 1A — Risk Factors of the Company’s Quarterly Report on Form 10-Q for the first quarter of 2022, filed on May 10, 2022.

Other factors or events that could cause the Company’s actual results to differ materially from the Company’s expectations may emerge from time to time, and it is not possible for the Company to predict all such factors or events. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, the Company disclaims any obligation to update or revise its forward-looking statements, whether based on changes in internal estimates or expectations, new information, future developments or otherwise.

iv

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

KINETIK HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,*				Nine Months Ended September 30,*
	2022		2021		2022		2021
	(In thousands, except per share data)
Operating revenues:
Service revenue	$	107,597	$	72,578	$	290,122	$	202,482
Product revenue	213,803		93,266		618,382		244,358
Other revenue	3,776		742		9,493		3,615
Total operating revenues	325,176		166,586		917,997		450,455
Operating costs and expenses:
Costs of sales (exclusive of depreciation and amortization shown separately below)	145,208		60,503		418,197		141,011
Operating expenses	35,845		22,731		100,996		63,575
Ad valorem taxes	5,903		3,238		15,936		9,003
General and administrative expenses	23,468		6,957		72,180		17,920
Depreciation and amortization	65,005		57,154		192,609		170,291
Loss (gain) on disposal of assets	3,946		(37)		12,602		417
Total operating costs and expenses	279,375		150,546		812,520		402,217
Operating income	45,801		16,040		105,477		48,238
Other income (expense):
Interest and other income	—		3,578		250		4,141
Gain on redemption of mandatorily redeemable Preferred Units	—		—		9,580		—
Gain (loss) on debt extinguishment	—		(56)		(27,975)		4
Gain on embedded derivative	488		—		89,050		—
Interest expense	(40,464)		(30,541)		(92,585)		(88,458)
Equity in earnings of unconsolidated affiliates	45,003		16,826		120,706		44,692
Total other income (expense), net	5,027		(10,193)		99,026		(39,621)
Income before income taxes	50,828		5,847		204,503		8,617
Income tax expense	1,406		1,207		2,244		1,207
Net income including noncontrolling interest	49,422		4,640		202,259		7,410
Net income attributable to Preferred Unit limited partners	708		—		115,203		—
Net Income attributable to common shareholders	48,714		4,640		87,056		7,410
Net income attributable to Common Unit limited partners	33,778		4,640		61,817		7,410
Net income attributable to Class A Common Shareholders	$	14,936	$	—	$	25,239	$	—
Net income attributable to Class A Common Shareholders per share
Basic	$	1.04	$	—	$	1.24	$	—
Diluted	$	1.04	$	—	$	1.24	$	—
Weighted-average shares **
Basic	41,816		—		40,042		—
Diluted	41,855		—		40,075		—

* The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

** Share amounts have been retroactively restated to reflect the Company’s Stock Split (as defined in Note 10—Equity and Warrants), which was effected on June 8, 2022. Refer to Note 10 – Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

The accompanying Notes are an integral part of the unaudited Condensed Consolidated Financial Statements

1

KINETIK HOLDINGS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,		December 31,
	2022		2021
	(In thousands, except share amounts)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	11,728	$	18,729
Accounts receivable, net of allowance for credit losses of $1,000 in 2022 and 2021	269,634		178,107
Prepaid and other current assets	37,431		20,683
	318,793		217,519
NONCURRENT ASSETS:
Property, plant and equipment, net	2,528,659		1,839,279
Intangible assets, net	722,391		786,049
Operating lease right-of-use assets	34,677		61,562
Deferred charges and other assets	25,505		22,320
Investment in unconsolidated affiliates	2,372,596		626,477
Goodwill	4,557		—
	5,688,385		3,335,687
Total assets	$	6,007,178	$	3,553,206
LIABILITIES, NONCONTROLLING INTERESTS, AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	16,002	$	12,220
Accrued expenses	235,160		135,643
Derivative liabilities	—		2,667
Current portion of operating lease liabilities	25,466		31,776
Current portion of long-term debt, net	—		54,280
Other current liabilities	8,039		4,339
	284,667		240,925
NONCURRENT LIABILITIES:
Long-term debt, net	3,447,513		2,253,422
Contract liabilities	22,707		11,674
Operating lease liabilities	9,033		29,889
Derivative liabilities	—		200
Other liabilities	2,867		2,219
Contingent liabilities	—		839
Deferred tax liabilities	13,082		7,190
	3,495,202		2,305,433
Total liabilities	3,779,869		2,546,358
COMMITMENTS AND CONTINGENCIES (Note 8)
Redeemable noncontrolling interest — Common Unit limited partners	3,061,861		1,006,838
EQUITY:
Class A Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 43,082,157 and nil shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively*	4		—
Class C Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 94,270,000 and 100,000,000 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively*	9		10
Additional paid-in capital	107,182		—
Accumulated deficit	(941,747)		—
	(834,552)		10
Total liabilities, noncontrolling interests, and equity	$	6,007,178	$	3,553,206

* Share amounts have been retroactively restated to reflect the Company’s Stock Split (as defined in Note 10—Equity and Warrants), which was effected on June 8, 2022. Refer to Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

The accompanying Notes are an integral part of the unaudited Condensed Consolidated Financial Statements

2

KINETIK HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2022		2021
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income including noncontrolling interests	$	202,259	$	7,410
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	192,609		170,291
Amortization of debt issuance costs	8,053		9,991
Amortization of contract costs	1,344		1,815
Contingent liabilities remeasurement	(839)		(377)
Distributions from unconsolidated affiliates	185,786		47,017
Derivatives settlement	11,115		(17,959)
Derivatives fair value adjustment	(103,032)		13,943
Gain on redemption of mandatorily redeemable Preferred Units	(9,580)		—
Loss on disposal of assets	12,602		417
Equity in earnings from unconsolidated affiliates	(120,706)		(44,692)
(Gain) loss on debt extinguishment	27,975		(4)
Share-based compensation	30,966		—
Deferred income taxes	1,882		1,207
Change in operating assets and liabilities:
Accounts receivable	(73,927)		(118,606)
Other assets	(9,583)		(7,303)
Accounts payable	926		(2,141)
Accrued liabilities	95,675		96,347
Operating lease liabilities	(281)		1,994
Net cash provided by operating activities	453,244		159,350
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment expenditures	(160,478)		(60,609)
Intangible assets expenditures	(13,332)		(3,733)
Investment in unconsolidated affiliates	(56,199)		(20,522)
Cash proceeds from disposals	190		3,541
Net cash acquired in acquisition	13,401		—
Net cash used in investing activities	(216,418)		(81,323)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	3,000,000		30,189
Principal payments on long-term debt	(2,294,130)		(80,177)
Payment on debt issuance costs	(36,873)		(3,152)
Proceeds from revolver	537,000		33,000
Payment on revolver	(771,000)		(27,000)
Redemption of mandatorily redeemable Preferred Units	(183,297)		—
Redemption of redeemable noncontrolling interest Preferred Units	(461,460)		—
Distributions paid to mandatorily redeemable Preferred Units holders	(1,850)		—
Distributions paid to redeemable noncontrolling interest Preferred Units limited partners	(6,937)		—
Cash dividends paid to Class A Common Stock shareholders	(24,351)		—
Distributions paid to Class C Common Units limited partners	(929)		(30,189)
Equity contributions	—		14,890
Net cash used in financing activities	(243,827)		(62,439)
Net change in cash	$	(7,001)	$	15,588
CASH, BEGINNING OF PERIOD	$	18,729	$	19,591
CASH, END OF PERIOD	$	11,728	$	35,179
SUPPLEMENTAL SCHEDULE OF INVESTING AND FINANCING ACTIVITIES
Cash paid for interest, net of amounts capitalized	$	76,592	$	81,521
Property and equipment and intangible accruals in accounts payable and accrued liabilities	$	17,717	$	9,357
Class A Common Stock issued through dividend and distribution reinvestment plan	$	175,453	$	—
Fair value of ALTM assets acquired	$	2,446,429	$	—
Class A Common Stock issued in exchange	1,013,745		—
ALTM liabilities and mezzanine equity assumed	$	1,432,684	$	—

The accompanying Notes are an integral part of the unaudited Condensed Consolidated Financial Statements

3

KINETIK HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS

(Unaudited)

	Redeemable Noncontrolling Interest — Preferred Unit Limited Partners*		Redeemable Noncontrolling Interest — Common Unit Limited Partners		Class A Common Stock			Class C Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Equity
					Shares**	Amount		Shares**	Amount
	(In thousands)				(In thousands)
For the Quarter Ended September 30, 2021
Balance at June 30, 2021	$	—	$	1,029,126	—	$	—	100,694	$	10	$	—	$	—	$	10
Net income	—		4,640		—	—		—	—		—		—		—
Balance at September 30, 2021	$	—	$	1,033,766	—	$	—	100,694	$	10	$	—	$	—	$	10
For the Quarter Ended September 30, 2022
Balance at June 30, 2022	$	563,338	$	3,251,290	40,551	$	4	94,450	$	9	$	—	$	(1,181,343)	$	(1,181,330)
Redemption of Common Units	—		(6,765)		180	—		(180)	—		6,765		—		6,765
Redemption of Preferred Units	(461,460)		—		—	—		—	—		—		—		—
Excess of carrying amount over Preferred Units redemption price	(102,586)		76,623		—	—		—	—		—		32,900		32,900
Issuance of Class A Common Stock through dividend and distribution reinvestment plan	—		—		2,351	—		—	—		87,756		—		87,756
Share-based compensation	—		—		—	—		—	—		12,661		—		12,661
Net income	708		33,778		—	—		—	—		—		14,936		14,936
Change in redemption value of noncontrolling interests	—		(222,227)		—	—		—	—		—		222,227		222,227
Distributions paid to Common Unit limited partners	—		(70,838)		—	—		—	—		—		—		—
Dividends on Class A Common Stock ($0.75 per share)	—		—		—	—		—	—		—		(30,467)		(30,467)
Balance at September 30, 2022	$	—	$	3,061,861	43,082	$	4	94,270	$	9	$	107,182	$	(941,747)	$	(834,552)

* Certain redemption features embedded within the Preferred Units require bifurcation and measurement at fair value. For further detail, refer to Note 11—Series A Cumulative Redeemable Preferred Units in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

** Share amounts have been retroactively restated to reflect the Company’s Stock Split (as defined in Note 10—Equity and Warrants), which was effected on June 8, 2022. Refer to Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

The accompanying Notes are an integral part of the unaudited condensed consolidated financial statements

4

KINETIK HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS - (Continued)

(Unaudited)

	Redeemable Noncontrolling Interest — Preferred Unit Limited Partners*		Redeemable Noncontrolling Interest — Common Unit Limited Partners		Class A Common Stock			Class C Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Equity
					Shares**	Amount		Shares**	Amount
	(In thousands)				(In thousands)
For the Nine Months Ended September 30, 2021
Balance at December 31, 2020	$	—	$	1,041,655	—	$	—	101,198	$	10	$	—	$	—	$	10
Contribution	—		14,890		—	—		492	—		—		—		—
Distribution paid to Common Unit limited partners	—		(30,189)		—	—		(996)	—		—		—		—
Net income	—		7,410		—	—		—	—		—		—		—
Balance at September 30, 2021	$	—	$	1,033,766	—	$	—	100,694	$	10	$	—	$	—	$	10
For the Nine Months Ended September 30, 2022
Balance at December 31, 2021	$	—	$	1,006,838	—	$	—	100,000	$	10	$	—	$	—	$	10
ALTM acquisition	462,717		—		32,493	3		—	—		1,013,742		—		1,013,745
Distributions paid to Preferred Unit limited partners	(6,937)		—		—	—		—	—		—		—		—
Redemption of Common Units	—		(179,323)		5,730	1		(5,730)	(1)		179,323		—		179,323
Redemption of Preferred Units	(461,460)		—		—	—		—	—		—		—		—
Excess of carrying amount over Preferred Units redemption price	(109,523)		76,623		—	—		—	—		—		32,900		32,900
Issuance of common stock through dividend and distribution reinvestment plan	—		—		4,855	—		—	—		175,453		—		175,453
Share-based compensation	—		—		4	—		—	—		30,966		—		30,966
Remeasurement of contingent consideration	—		—		—	—		—	—		4,451		—		4,451
Net income	115,203		61,817		—	—		—	—		—		25,239		25,239
Change in redemption value of noncontrolling interests	—		2,237,635		—	—		—	—		(1,296,753)		(940,882)		(2,237,635)
Distributions paid to Common Units limited partners	—		(141,729)		—	—		—	—		—		—		—
Dividends on Class A Common Stock ($1.50 per share)	—		—		—	—		—	—		—		(59,004)		(59,004)
Balance at September 30, 2022	$	—	$	3,061,861	43,082	$	4	94,270	$	9	$	107,182	$	(941,747)	$	(834,552)

* Certain redemption features embedded within the Preferred Units require bifurcation and measurement at fair value. For further detail, refer to Note 11—Series A Cumulative Redeemable Preferred Units in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

** Share amounts have been retroactively restated to reflect the Company’s Stock Split (as defined in Note 10—Equity and Warrants), which was effected on June 8, 2022. Refer to Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

The accompanying Notes are an integral part of the unaudited condensed consolidated financial statements

5

KINETIK HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

These condensed consolidated financial statements have been prepared by Kinetik Holdings Inc. (formerly known as Altus Midstream Company) (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). They reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for interim periods, on a basis consistent with the annual audited financial statements, with the exception of recently adopted accounting pronouncements. All such adjustments are of a normal recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with Kinetik Holdings Inc.’s audited financial statements and related notes thereto for the year ended December 31, 2021 filed as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on July 5, 2022.

1. DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Transaction

On February 22, 2022 (the “Closing Date”), Kinetik Holdings Inc., a Delaware corporation (formerly known as Altus Midstream Company), consummated the previously announced business combination transactions contemplated by the Contribution Agreement, dated as of October 21, 2021 (the “Contribution Agreement”), by and among the Company, Altus Midstream LP (now known as Kinetik Holdings LP), a Delaware limited partnership and subsidiary of Altus Midstream Company (the “Partnership”), New BCP Raptor Holdco, LLC, a Delaware limited liability company (“Contributor”), and BCP Raptor Holdco, LP, a Delaware limited partnership (“BCP”). The transactions are referred to herein as the “Transaction.”

Pursuant to the Contribution Agreement, in connection with the closing of the Transaction (the “Closing”), (i) Contributor contributed all of the equity interests of BCP and BCP Raptor Holdco GP, LLC, a Delaware limited liability company and the general partner of BCP (“BCP GP” and, together with BCP, the “Contributed Entities”), to the Partnership; and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 common units representing limited partner interests in the Partnership (“Common Units”) and t 50,000,000 shares of the Company’s Class C Common Stock, par value $0.0001 per share (“Class C Common Stock”).

The Company’s stockholders immediately prior to the Closing continued to hold their shares of the Company’s Class A Common Stock, par value $0.0001 per share (“Class A Common Stock,” and together with the Company’s Class C Common Stock, “Common Stock”). As a result of the Transaction, immediately following the Closing (i) Contributor held approximately 75% of the issued and outstanding Common Stock, (ii) Apache Midstream LLC, a Delaware limited liability company (“Apache Midstream”), held approximately 20% of the issued and outstanding Common Stock, and (iii) the Company’s remaining stockholders held approximately 5% of the issued and outstanding Common Stock.

The Company completed a two-for-one Stock Split in the form of a stock dividend on June 8, 2022. All corresponding per-share and share amounts for periods prior to June 8, 2022 have been retroactively restated elsewhere in this Form 10-Q to reflect the two-for-one Stock Split. However, the number of Common Units and shares of Class C Common Stock described in this Form 10-Q in relation to the Transaction are presented at pre-Stock-Split amounts to be consistent with our previous public filings and the terms of the Contribution Agreement.

In connection with the Closing, the Company changed its name from “Altus Midstream Company” (“ALTM”) to “Kinetik Holdings Inc.” Unless otherwise noted or the context requires otherwise, references herein to Kinetik Holdings Inc. “the Company”, “us”, “our”, “we” or similar terms, with respect to time periods prior to February 22, 2022, include BCP and its consolidated subsidiaries and do not include ALTM and its consolidated subsidiaries, while references herein to Kinetik Holdings Inc. with respect to time periods from and after February 22, 2022, include ALTM and its consolidated subsidiaries.

Organization

BCP was formed on April 25, 2017 as a Delaware limited partnership to acquire and develop midstream oil and gas assets. BCP’s primary operating subsidiaries are EagleClaw Midstream Ventures, LLC (“EagleClaw”) and CR Permian Holdings, LLC (“CR Permian”). Both subsidiaries were formed to design, engineer, install, own and operate facilities and provide services for produced natural gas gathering, compression, processing, treating and dehydration, and condensate separation, stabilization, and storage, crude oil gathering and storage, water gathering and disposal assets.

6

ALTM was originally incorporated on December 12, 2016 in Delaware under the name Kayne Anderson Acquisition Corp. (“KAAC”) for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. KAAC completed its initial public offering in the second quarter of 2017. On August 3, 2018, Altus Midstream LP was formed in Delaware as a limited partnership and wholly-owned subsidiary of KAAC and entered into a contribution agreement with certain affiliates of Apache Corporation (“Apache” and such affiliates the “Altus Midstream Entities”), formed by Apache between May 2016 and January 2017, for the purpose of acquiring, developing, and operating midstream oil and gas assets in the Alpine High resource play and surrounding areas (“Alpine High”). On November 9, 2018, KAAC acquired all equity interests of the Altus Midstream Entities and changed its name to Altus Midstream Company.

On February 22, 2022, upon the Closing, BCP and its subsidiaries became wholly owned subsidiaries of the Partnership. The Transaction was accounted for as a reverse merger pursuant to ASC 805 Business Combination (“ASC 805”). Refer to Note 2—Business Combination in the Notes to our Condensed Consolidated Financial Statements for further information.

Nature of Operations

Through its consolidated subsidiaries, the Company provides comprehensive gathering, water disposal, transportation, compression, processing and treating services necessary to bring natural gas, NGLs and crude oil to market. Additionally, the Company owns equity interests in four separate Permian Basin pipeline entities that have access to various markets along the Texas Gulf Coast.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP. Certain reclassifications of prior year balances have been made to conform such amounts to current year presentation. These reclassifications have no impact on net income. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. All intercompany balances and transactions have been eliminated in consolidation.

Prior to the Closing, the Company’s financial statements that were filed with the SEC were derived from ALTM’s accounting records. As the Transaction was determined to be a reverse merger, BCP was considered as the accounting acquirer and ALTM was the legal acquirer. The accompanying Condensed Consolidated Financial Statements herein include (1) BCP’s net assets carried at historical value, (2) BCP’s historical results of operations prior to the Transaction, (3) the ALTM’s net assets carried at fair value as of the Closing Date and (4) the combined results of operations with the Company’s results presented within the Condensed Consolidated Financial Statements from February 22, 2022 going forward. Refer to Note 2—Business Combination to our Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion.

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 in this Form 10-Q to reflect the two-for-one Stock Split, except for the number of Common Units and shares of Class C Common Stock described above in relation to the Transaction, which are presented at pre-Stock-Split amounts. This presentation election is consistent with our previous public filings and the terms of the Contribution Agreement.

Use of Estimates

Preparation of financial statements in conformity with GAAP and disclosure of contingent assets and liabilities requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates its estimates and assumptions on a regular basis. Actual results may differ from these estimates and assumptions used in preparation of its condensed consolidated financial statements, and changes in these estimates are recorded when known. Significant items subject to such estimates and assumptions include the valuation of tangible and intangible assets, share-based compensation, contingent liabilities, warrants, and noncontrolling interests.

7

Variable Interest Entity

The Company uses a qualitative approach in assessing the consolidation requirement for variable interest entities. The approach focuses on identifying which enterprise has the power to direct the activities that most significantly impact the variable interest entity’s economic performance and which enterprise has the obligation to absorb losses or the right to receive benefits from the variable interest entity. In the event that the Company is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity would be consolidated in our financial statements. The Company has determined that it has significant influence over the operating and financial policies of the four pipeline entities in which it is invested, but does not exercise control over them; and hence, it accounts for these investments using the equity method. Refer to Note 9—Equity Method Investments in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

Redeemable Noncontrolling Interest — Common Units Limited Partners

Pursuant to the Contribution Agreement, in connection with the Closing, (i) Contributor contributed all of the equity interests of the Contributed Entities to the Partnership; and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 common units representing limited partner interests in the Partnership and 50,000,000 shares of the Company’s Class C Common Stock, par value $0.0001 per share. Please refer to “The Transaction” above.

The Common Units are redeemable at the option of unit holders and accounted for in the Company’s Condensed Consolidated Balance Sheet as a redeemable noncontrolling interest classified as temporary equity. The Company records the redeemable noncontrolling interest at the higher of (i) its initial value plus accumulated earnings/losses associated with the noncontrolling interest or (ii) the maximum redemption value as of the balance sheet date. The redemption value was determined based on a 5-day volume weighted-average closing price of the Class A Common Stock. See discussion and additional details in Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

Redeemable Noncontrolling Interest — Preferred Unit Limited Partners

The Partnership issued Series A Cumulative Redeemable Preferred Units (“Preferred Units”) on June 12, 2019. As the Transaction was accounted for as a reverse merger, the Company assumed certain Preferred Units that were issued and outstanding at Closing for accounting purposes.

The Preferred Units are accounted for on the Company’s Condensed Consolidated Balance Sheet as a redeemable noncontrolling interest classified as temporary equity based on the terms of the Preferred Units. Certain redemption features embedded within the terms of the Preferred Units required bifurcation and measurement at fair value and are accounted for on the Company’s Condensed Consolidated Balance Sheet as a long-term liability embedded derivative. During the nine months ended September 30, 2022, the Company redeemed all outstanding Preferred Units. See discussion and additional detail in Note 11—Series A Cumulative Redeemable Preferred Units in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

Equity Method Investments

The Company follows the equity method of accounting when it does not exercise control over its equity interests, but can exercise significant influence over the operating and financial policies of the entity. Under this method, the equity investments are carried originally at acquisition cost, increased by the Company’s proportionate share of the equity interest’s net income and contributions made, and decreased by the Company’s proportionate share of the equity interest’s net losses and distributions received. The Company determines whether distributions are a return on or a return of the investment based on the nature of the distribution approach, under which the Company classifies distributions from an investee by evaluating the facts, circumstances and nature of each distribution. As distributions from the Company’s equity method investment (“EMI”) pipeline entities are generated from their respective normal course of business, the Company classifies the distributions as return on investments and as cash flow from operating activities. Please refer to Note 9—Equity Method Investments in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q, for further information of the Company’s equity method investments. Equity method investments acquired in the Transaction were recorded at fair value upon Closing. See discussion and additional detail in Note 2—Business Combination in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for purchase price allocation of the Transaction.

8

Inventory

Other current assets include condensate, residue gas and NGLs inventories that are valued at the lower of cost or market. At the end of each reporting period, the Company assesses the carrying value of inventory and makes any adjustments necessary to reduce the carrying value to the applicable net realizable value. Inventory was valued at $13.1 million and $2.1 million as of September 30, 2022 and December 31, 2021, respectively.

Impairment of Long-Lived Assets

In accordance with Financial Accounting Standards Board (“FASB”) ASC 360, Property, Plant and Equipment, long-lived assets, excluding goodwill, to be held and used by the Company are reviewed for impairment annually or on an interim basis if events or circumstances indicate that the fair value of the assets have decreased below their carrying value. For long-lived assets to be held and used, the Company bases their evaluation on impairment indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present.

The Company’s management assesses whether there has been an impairment trigger, and if a trigger is identified, then the Company would perform an undiscounted cash flow test at the lowest level for which identifiable cash flows are independent of cash flows from other assets. If the sum of the undiscounted future net cash flows is less than the net book value of the property, an impairment loss is recognized for any excess of the property’s net book value over its estimated fair value. The Company did not recognize impairment losses for long-lived assets during the three and nine months ended September 30, 2022 and 2021.

Transactions with Affiliates

The accounts receivable from or payable to affiliates represent the net result of the Company’s monthly revenue, capital and operating expenditures, and other miscellaneous transactions to be settled with Apache and its subsidiaries, who controlled the Company prior to the Transaction. Accounts receivable from affiliates was $24.1 million as of September 30, 2022. Revenue from affiliates was $35.2 million and $81.4 million for the three and nine months ended September 30, 2022, respectively. Accrued expense due to affiliates was immaterial as of September 30, 2022, and operating expenses were $0.2 million and $0.5 million for the three and nine months ended September 30, 2022, respectively.

In addition, the Company incurred cost of sales with two of its EMI pipeline entities, Permian Highway Pipeline LLC (“PHP”) and Breviloba, LLC (“Breviloba”). The Company paid a demand fee to PHP and paid a capacity fee to Breviloba for certain volumes moving on the Shin Oak NGL Pipeline. For the three and nine months ended September 30, 2022, the Company recorded cost of sales of $3.7 million and $10.8 million, respectively, with these affiliates.

Net Income Per Share

Basic net income per share is calculated by dividing net income attributable to Class A common shareholders by the weighted-average number of shares of Class A Common Stock outstanding during the period. Class C Common Stock is excluded from the weighted-average shares outstanding for the calculation of basic net income per share, as holders of Class C Common Stock are not entitled to any dividends or liquidating distributions. No net income per share was computed for the three and nine months ended September 30, 2021, as no Class A Common Stock was outstanding with respect to BCP as the accounting acquirer as of September 30, 2021.

The Company uses the “if-converted method” to determine the potential dilutive effect of (i) an assumed exchange of outstanding Common Units (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) for shares of Class A Common Stock and (ii) an assumed exercise of the outstanding public and private warrants for shares of Class A Common Stock. The dilutive effect of any earn-out consideration payable in shares is only included in periods for which the underlying conditions for the issuance are met.

Recently Adopted Accounting Pronouncement

Effective January 1, 2022, the Company adopted ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree.

9

Historically, such amounts were recognized by the acquirer at fair value. With adoption of ASU 2021-08, the Company assumed contract liabilities at carrying value of $9.1 million upon Closing.

Effective January 1, 2022, the Company adopted ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 was issued to ease the potential accounting burden expected when global capital markets move away from LIBOR, the benchmark interest rate banks use to make short-term loans to each other. The amendments in this update provide optional expedients and exceptions for applying GAAP to contracts, hedging relationship, and other transactions affected by reference rate reform if certain criteria are met. Interest rate applied to the Company’s new Term Loan and Revolver borrowings resulting from the comprehensive refinance is based on Secured Overnight Financing Rate (“SOFR”), which is a broad measure of the cost of borrowing cash overnight collateralized by treasury securities. Refer to Note 6—Debt and Financing Costs in the Notes to our Condensed Consolidated Financial Statements of this Form 10-Q for discussion of SOFR applicable to the Company’s debt structures.

Recent Accounting Pronouncement Not Yet Adopted

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). The amendments in ASU 2022-03 clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments also require the following disclosures for equity securities subject to contractual sale restrictions: (1) The fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet; (2) The nature and remaining duration of the restriction(s); (3) The circumstances that could cause a lapse in the restriction(s). This guidance is effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the effect that ASU 2022-03 will have on its Consolidated Financial Statements.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method (“ASU 2022-01”). Current GAAP permits only prepayable financial assets and one or more beneficial interests secured by a portfolio of prepayable financial instruments to be included in a last-of-layer closed portfolio. The amendments in ASU 2022-01 allow nonprepayable financial assets also to be included in a closed portfolio hedged using the portfolio layer method. That expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and nonprepayable financial assets, thereby allowing consistent accounting for similar hedges. The amendments in ASU 2022-01 also clarify the accounting for and promote consistency in the reporting of hedge basis adjustments applicable to both a single hedged layer and multiple hedged layers as follows: (1) an entity is required to maintain basis adjustments in an existing hedge on a closed portfolio basis (that is, not allocated to individual assets), (2) an entity is required to immediately recognize and present the basis adjustment associated with the amount of the designated layer that was breached in interest income. In addition, an entity is required to disclose that amount and the circumstances that led to the breach, (3) an entity is required to disclose the total amount of the basis adjustments in existing hedges as a reconciling amount if other areas of GAAP require the disaggregated disclosure of the amortized cost basis of assets included in the closed portfolio, and (4) an entity is prohibited from considering basis adjustments in an existing hedge when determining credit losses. The guidance is effective for public business entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted on any date on or after the issuance of ASU 2022-01 for any entity that has adopted the amendments in ASU 2017-02 for the corresponding period. The Company is currently evaluating the effect that ASU 2022-01 will have on its Consolidated Financial Statements.

2.    BUSINESS COMBINATION

Altus Business Combination

On February 22, 2022, the Company consummated the previously announced business combination transactions contemplated by the Contribution Agreement, dated as of October 21, 2021. Pursuant to the Contribution Agreement, in connection with the Closing, (i) Contributor contributed all of the equity interests of the Contributed Entities to the Partnership; and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 common units representing limited partner interests in the Partnership and 50,000,000 shares of the Company’s Class C Common Stock, par value $0.0001 per share. Please refer to “The Transaction” discussed above.

10

The Transaction was accounted as a reverse merger in accordance with ASC 805, which, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair value. The Company also adopted ASU 2021-08, effective as of January 1, 2022, to record contract liabilities at their carrying value as of the acquisition date. Although the Company was the legal acquirer, BCP was determined to be the accounting acquirer and legal acquiree. As a result, BCP and its subsidiaries’ net assets were carried at historical value, acquired net assets were measured at fair value except contract liabilities being recorded at carrying value at the acquisition date, and results of operations of ALTM and its subsidiaries were included in the Company’s Condensed Consolidated Financial Statements from the Closing Date going forward.

The preliminary purchase price allocation is based on an assessment of the fair value of the assets acquired and liabilities assumed in the acquisition using inputs that are not observable in the market and thus Level 3 inputs. The fair value of the processing plant, gathering system and related facilities and equipment are based on market and cost approaches. The goodwill of $4.6 million relates to operational synergies and is included in the Midstream Logistics segment. The value of the Preferred Units and assumed contingent liability is determined through a probability-weighted analysis of the expected future cash flows and other applicable valuation techniques. See additional details for Preferred Units in Note 11—Series A Cumulative Redeemable Preferred Units and contingent liabilities in Note 8—Commitments and Contingencies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q. Certain data necessary to complete the purchase price allocation is not yet available, including, but not limited to, valuation of the underlying assets of the equity method investments and liabilities assumed. However, the Company is continuing its review of these matters during the measurement period, and if new information obtained about facts and circumstances that existed at the acquisition date identifies adjustments to the liabilities initially recognized, as well as any additional liabilities that existed at the acquisition date, the acquisition accounting will be revised to reflect the resulting adjustments to the provisional amounts initially recognized. The Company will finalize the purchase price allocation during the 12-month period following the acquisition date.

The following table summarizes the preliminary estimated fair value of assets acquired and liabilities assumed in the Transaction in accordance with ASC 805:

(In thousands)	Amount
Cash and cash equivalent	$	13,401
Accounts receivable	1,919
Accounts receivable - affiliates	15,681
Property, plant, and equipment, net	634,923
Intangible assets, net	13,200
Investments in unconsolidated affiliates	1,755,000
Prepaid expense and other assets	7,748
Goodwill	4,557
Total assets acquired	2,446,429
Accrued expenses and other accrued liabilities	5,687
Long-term debt	657,000
Embedded derivative liabilities	89,050
Contract liabilities	9,102
Mandatory redeemable Preferred Units	200,667
Deferred tax liabilities	4,010
Contingent liabilities	4,451
Total liabilities assumed	969,967
Redeemable noncontrolling interest - Preferred Unit limited partners	462,717
Total consideration transferred	$	1,013,745

The Company incurred acquisition-related costs of $0.1 million and $6.4 million for the three and nine months ended September 30, 2022, respectively.

Supplemental Pro Forma Information

The unaudited supplemental pro forma financials are for informational purposes only and are not indicative of future results. The results below for the three and nine months ended September 30, 2022 and 2021 combine the results of the Company and the Partnership, giving effect to the Transaction as if it had been completed on January 1, 2021.

11

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
(In thousands)	Pro forma		Pro forma		Pro forma		Pro forma
Revenues	$	325,176	$	201,134	$	944,850	$	554,742
Net income including noncontrolling interest	$	46,968	$	28,518	$	193,083	$	64,165

Given the assumed pro forma transaction date of January 1, 2021, we removed $1.5 million and $21.0 million of acquisition-related expenses for the three and nine months ended September 30, 2022, respectively, and recognized $0.1 million and $31.2 million of total acquisition-related expenses for the three and nine months ended September 30, 2021, respectively.

3.    REVENUE RECOGNITION

Disaggregation of Revenue

The following table presents a disaggregation of the Company’s revenue:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In thousands)
Gathering and processing services	$	107,597	$	72,578	$	290,122	$	202,482
Natural gas, NGLs and condensate sales	213,803		93,266		618,382		244,358
Other revenue	3,776		742		9,493		3,615
Total revenues and other	$	325,176	$	166,586	$	917,997	$	450,455

There have been no significant changes to the Company’s contracts with customers during the three and nine months ended September 30, 2022. Contracts with customers acquired through the Transaction had similar structures as the Company’s existing contracts with customers. The Company recognized revenues from minimum volume commitment (“MVC”) deficiency payments of $0.7 million and nil for the three months ended September 30, 2022 and 2021, respectively, and $1.0 million and $2.5 million for the nine months ended September 30, 2022 and 2021, respectively.

Remaining Performance Obligations

The following table presents our estimated revenue from contracts with customers for remaining performance obligations that has not yet been recognized, representing our contractually committed revenues as of September 30, 2022:

	Amount
Fiscal Year	(In thousands)
Remaining of 2022	$	2,151
2023	44,597
2024	40,247
2025	47,898
2026	34,631
Thereafter	191,293
	$	360,817

Our contractually committed revenue, for purposes of the tabular presentation above, is generally limited to customer contracts that have fixed pricing and fixed volume terms and conditions, generally including contracts with payment obligations associated with MVCs.

12

Contract Liabilities

The following table provides information about contract liabilities from contracts with customers as of September 30, 2022:

	Amount
	(In thousands)
Balance at December 31, 2021	$	14,756
Reclassification of beginning contract liabilities to revenue as a result of performance obligation being satisfied	(5,159)
Cash received and not recognized as revenue	20,268
Balance at September 30, 2022	29,865
Less: Current portion	7,158
Non-current portion	$	22,707

Contract liabilities relate to payments received in advance of satisfying performance obligations under a contract, which result from contribution in aid of construction payments. Current and noncurrent contract liabilities are included in “Other Current Liabilities” and “Contract Liabilities,” respectively, of the Condensed Consolidated Balance Sheets.

Contract Cost Assets

The Company has capitalized certain costs incurred to obtain a contract that would not have been incurred if the contract had not been obtained. These costs are recovered through the net cash flows of the associated contract. As of September 30, 2022 and December 31, 2021, the Company had contract acquisition cost assets of $15.3 million and $18.4 million, respectively. Current and noncurrent contract cost assets are included in “Prepaid and Other Current Assets” and “Deferred Charges and Other Assets,” respectively, of the Condensed Consolidated Balance Sheets. The Company amortizes these assets as cost of sales on a straight-line basis over the life of the associated long-term customer contract. The Company recognized cost of sales associated with these assets of $0.4 million and $0.4 million for the three months ended September 30, 2022 and 2021, respectively, and $1.3 million and $1.8 million for the nine months ended September 30, 2022 and 2021, respectively.

4.    PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are carried at cost or fair market value at the date of acquisition less accumulated depreciation. The cost basis of constructed assets includes materials, labor, and other direct costs. Major improvements or betterment are capitalized, while repairs that do not improve the life of the respective assets are expensed as incurred. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets.

Property, plant and equipment, at carrying value, is as follows:

	September 30, 2022		December 31, 2021
	(In thousands)
Gathering, processing and transmission systems and facilities	$	2,850,062	$	2,121,434
Vehicles	8,026		6,090
Computers and equipment	4,255		4,271
Less: accumulated depreciation	(437,049)		(337,030)
Total depreciable assets, net	2,425,294		1,794,765
Construction in progress	82,834		24,888
Land	20,531		19,626
Total property, plant and equipment, net	$	2,528,659	$	1,839,279

The cost of property classified as “Construction in progress” is excluded from capitalized costs being depreciated. These amounts represent property that is not yet available to be placed into productive service as of the respective reporting date. The Company recorded $34.9 million and $26.8 million of depreciation expense for the three months ended September 30, 2022 and 2021, respectively, and $102.4 million and $79.0 million of depreciation expense for the nine months ended September 30, 2022 and 2021, respectively.

13

5.    GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

The Company closed a business combination transaction on February 22, 2022, refer to the Transaction in Note 2—Business Combination in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q. The Transaction was accounted for as a business combination pursuant to ASC 805. In connection with the Transaction, the Company recorded excess of the purchase price over net assets acquired as goodwill. The Company recorded goodwill of $4.6 million as of September 30, 2022.

Goodwill is tested at least annually as of December 31 of each year, or more frequently as events occur or circumstances change that would more-likely-than-not reduce fair value of a reporting unit below its carrying value. Company’s management assesses whether there have been events or circumstances that trigger the fair value of the reporting unit to be lower than its net carrying value since consummation of the Transaction and concluded that goodwill was not impaired as of September 30, 2022.

Intangible Assets

Intangible assets, net are comprised of the following:

	September 30, 2022		December 31, 2021
	(In thousands)
Customer contracts	$	1,136,728	$	1,135,963
Right of way assets	125,164		99,345
Less accumulated amortization	(539,501)		(449,259)
Total amortizable intangible assets, net	$	722,391	$	786,049

The fair value of acquired customer contracts was capitalized as a result of acquiring favorable customer contracts as of the closing dates of certain past acquisitions and is being amortized using a straight-line method over the remaining term of the customer contracts, which range from one to twenty years. Right of way assets relate primarily to underground pipeline easements and have a useful life of ten years and are amortized using the straight-line method. The right of way agreements are generally for an initial term of ten years with an option to renew for an additional ten years at agreed upon renewal rates based on certain indices or up to 130% of the original consideration paid.

The Company recorded $30.1 million and $30.4 million of amortization expense for the three months ended September 30, 2022 and 2021, respectively, and $90.2 million and $91.3 million of amortization expense for the nine months ended September 30, 2022 and 2021, respectively. There was no impairment recognized on intangible assets for the three and nine months ended September 30, 2022 and 2021.

6.    DEBT AND FINANCING COSTS

June 2030 Senior Notes

On June 8, 2022, the Partnership completed a private placement of $1.00 billion aggregate principal amount of its 5.875% Sustainability-Linked Senior Notes due 2030 (the “Notes”), which are fully and unconditionally guaranteed by the Company.

The Notes were issued at 99.588% of their face amount and will mature on June 15, 2030. Interest accrues from June 8, 2022 and is payable semi-annually on June 15 and December 15 of each year, commencing December 15, 2022. The aggregate fees, expenses, and original issue discount paid to obtain the Notes totaled $21.5 million and were capitalized as debt issuance cost and included in the Condensed Consolidated Balance Sheets as a direct deduction to the Notes as the Notes were transferred to third-party investors that pay the stated principal amount without deduction for the initial purchasers’ discount.

On or after June 15, 2027, the interest rate accruing on the Notes will be increased by an additional 0.250% per annum unless the Partnership satisfies, and an independent external verifier confirms satisfaction of the Sustainability Performance Targets (“SPT”) as defined in the indenture governing the Notes related to the three key performance indicators outlined in the Sustainability-Linked Financing Framework published by the Company on May 16, 2022: 1) Scope 1 and Scope 2 greenhouse gas emissions intensity, 2) Scope 1 and Scope 2 methane gas emissions intensity and 3) female representation in corporate officer positions. The interest rate accruing on the Notes will be increased by an additional 0.083% per annum for each SPT which has not been satisfied and externally verified.

14

The Partnership may redeem some or all of the Notes at any time or from time to time prior to maturity based on terms prescribed in the Notes.

Revolving Credit Facility

On June 8, 2022, the Partnership entered into a revolving credit agreement (the “RCA”) among Bank of America, N.A., as administrative agent (“Bank of America”), and the banks and other financial institutions party thereto, as lenders. The RCA provides for a $1.25 billion senior unsecured revolving credit facility (the “Revolving Credit Facility”).

The Partnership may prepay borrowings under the Revolving Credit Facility at any time without premium or penalty (other than customary SOFR breakage costs), subject to certain notice requirements. All borrowings under the Revolving Credit Facility mature on June 8, 2027. The obligations under the RCA are fully and unconditionally guaranteed by the Company.

The RCA provides for borrowings of either, at the Partnership’s option, base rate loans or term SOFR loans. Base rate loans bear interest at a rate per annum equal to the greatest of (a) the prime rate as announced from time to time by Bank of America, (b) the greater of (i) the federal funds effective rate and (ii) the overnight bank funding rate, plus 1/2 of 1.00% and (c) the adjusted term SOFR rate for an interest period of one month plus 1.00%, plus a margin that ranges between 0.25% and 1.00%, depending on the credit rating of the Partnership. SOFR loans bear interest at a rate per annum equal to the term SOFR rate for such interest periods plus 0.10%, plus a margin that ranges between 1.25% and 2.00%, depending on the credit rating of the Partnership. In obtaining the RCA, the Partnership incurred fees and expenses totaling $7.8 million, which was capitalized and included in the Condensed Consolidated Balance Sheets as “Deferred charges and other assets.”

In addition, the Partnership is required to pay to each lender a commitment fee on the daily unfunded amount of such lender’s revolving commitment, which accrues at a rate that ranges between 0.15% and 0.35% depending on the credit rating of the Partnership.

Term Loan Credit Facility

On June 8, 2022, concurrently with the closing of the Revolving Credit Facility, the Partnership entered into a term loan credit agreement (the “TLA”) among PNC Bank, National Association, as administrative agent (“PNC Bank”), and the banks and other financial institutions party thereto, as lenders. The TLA provides for a $2.00 billion senior unsecured term loan credit facility (the “Term Loan Credit Facility”). The TLA matures on June 8, 2025. The obligations under the TLA are fully and unconditionally guaranteed by the Company.

The TLA provides for borrowings of either, at the Partnership’s option, base rate loans or term SOFR loans. Base rate loans bear interest at a rate per annum equal to the greatest of (a) the prime rate as announced from time to time by PNC Bank, (b) the greater of (i) the federal funds effective rate and (ii) the overnight bank funding rate, plus 1/2 of 1.00% and (c) the adjusted term SOFR rate for an interest period of one month plus 1.00%, plus a margin that ranges between 0.25% and 1.0%, depending on the credit rating of the Partnership. SOFR loans bear interest at a rate per annum equal to the term SOFR rate for such interest periods plus 0.10%, that if the plus a margin that ranges between 1.25% and 2.0%, depending on the credit rating of the Partnership. In obtaining the TLA, the Partnership incurred fee and expenses totaled $7.6 million, which was capitalized as debt issuance cost and included in the Condensed Consolidated Balance Sheets as a direct deduction to the Term Loan Credit Facility.

Both the RCA and the TLA contain a “Sustainability Adjustments” feature that could result in a 0.05% increase or reduction to the effective interest rate, dependent upon the Company’s meeting certain sustainability targets after 2022. “Sustainability Rate Adjustment” means, with respect to any KPI Metrics Report, for any period between Sustainability Pricing Adjustment Dates, (a) positive 0.05%, if neither of the Sustainability Performance Targets (as defined in the RCA and TLA) as set forth in the KPI Metrics Report have been satisfied for the relevant calendar year, (b) 0.00% if only one of the Sustainability Performance Targets as set forth in the KPI Metrics Report has been satisfied for the relevant calendar year and (c) negative 0.05% if both of the Sustainability Performance Targets as set forth in the KPI Metrics Report have been satisfied for the relevant calendar year; provided that, in each case, if the Partnership subsequently issues a sustainability-linked debt instrument linked to the same KPI Metric and with an observation date for such calendar year, but with a higher percentage of representation or reduction, as the case may be, the relevant Sustainability Performance Target shall be automatically adjusted upward to equal the percentage of representation or reduction, as applicable, required by such subsequent sustainability-linked debt instrument.

“Sustainability Performance Targets” in the RCA and TLA mean, for any calendar year, with respect to (a) the Female Representation KPI, the target percentage of female representation in corporate officer positions for such calendar year and (b)

15

the Methane Emissions KPI, the percentage reduction in methane gas emissions intensity relative to the baseline year for such calendar year.

Both the RCA and the TLA contain customary covenants and restrictive provisions which may, among other things, limit Partnership’s ability to create liens, incur additional indebtedness, make restricted payments, or liquidate, dissolve, consolidate with, or merge into or with any other person. As of September 30, 2022, the Partnership was in compliance with all customary and financial covenants.

Repayment of Existing Credit Facilities

In June 2022, the Company used the net proceeds from the Notes, together with cash on hand and proceeds from the Term Loan Credit Facility, to repay all outstanding borrowings under its existing credit facilities and to pay certain related fees and expenses. In conjunction with the extinguishment of existing outstanding borrowings, the Company recognized a loss on extinguishment of debt of approximately $28.0 million. In addition, the unamortized debt issuance costs related to the existing outstanding borrowings were fully amortized and included in the loss on debt extinguishment calculation for the three and nine months ended September 30, 2022.

The fair value of the Company and its subsidiaries’ consolidated debt as of September 30, 2022 and December 31, 2021 was $3.02 billion and $2.34 billion, respectively. At September 30, 2022, the Notes’ fair value was based on Level 1 inputs and the Term Loan Credit Facility and Revolver Credit Facility’s fair value was based on Level 3 inputs.

The following table summarizes the Company’s debt obligations as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(In thousands)
$2.0 billion unsecured term loan	$	2,000,000	$	—
$1.0 billion 2030 senior unsecured Notes	1,000,000		—
$1.25 billion revolving credit facility	475,000		—
$1.25 billion term loan	—		1,175,417
$690 million term loan	—		639,393
$513 million term loan	—		479,377
$125 million revolving line of credit	—		52,000
Total Long-term debt	3,475,000		2,346,187
Less: Debt issuance costs, net(1)	(27,487)		(38,485)
	3,447,513		2,307,702
Less: Current portion, net	—		(54,280)
Long-term portion of debt and finance lease obligations, net	$	3,447,513	$	2,253,422

(1) Excluded unamortized debt issuance cost related to the Revolving Credit Facility. Unamortized debt issuance cost associated with the Revolving Credit Facility was $7.3 million and $2.2 million as of September 30, 2022 and December 31, 2021, respectively, and were included in the “Deferred charges and other assets” of the Condensed Consolidated Balance Sheets.

The table below presents the components of the Company’s financing costs, net of capitalized interest:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In thousands)
Capitalized interest	$	961	$	226	$	1,262	$	712
Debt issuance costs	1,515		3,354		8,053		9,991
Interest expense	37,988		26,961		83,270		77,755
Total financing costs, net of capitalized interest	$	40,464	$	30,541	$	92,585	$	88,458

As of September 30, 2022 and December 31, 2021, unamortized debt issuance costs associated with the Notes and the Term Loan Credit Facility were $27.5 million and $38.5 million, respectively.

As of September 30, 2022 and December 31, 2021, unamortized debt issuance costs associated with the new and existing revolving credit facilities were $7.3 million and $2.2 million, respectively. As of September 30, 2022, the unamortized debt issuance costs associated with the new revolving credit facilities were included in the “Deferred charges and other assets” of the

16

Condensed Consolidated Balance Sheets. As of December 31, 2021, the current and non-current portion of the unamortized debt issuance costs were included in the “Other non-current assets” and “Deferred charges and other assets” of the Condensed Consolidated Balance Sheets.

The amortization of the debt issuance costs was charged to interest expense for the periods presented. The amount of debt issuance costs included in interest expense was $1.5 million and $3.4 million for the three months ended September 30, 2022 and 2021, respectively, and $8.1 million and $10.0 million for the nine months ended September 30, 2022 and 2021, respectively.

7.    ACCRUED EXPENSES

The following table provides detail of the Company’s accrued expenses at September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(In thousands)
Accrued product purchases	$	175,575	$	118,364
Accrued taxes	19,442		4,299
Accrued salaries, vacation, and related benefits	4,616		2,113
Accrued capital expenditures	8,713		2,995
Accrued interest expenses	19,120		—
Accrued other expenses	7,694		7,872
Total accrued expenses	$	235,160	$	135,643

Accrued product purchases mainly consisted of accrued gas estimates as of September 30, 2022.

8.    COMMITMENTS AND CONTINGENCIES

Accruals for loss contingencies arising from claims, assessments, litigation, environmental, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. As of September 30, 2022 and December 31, 2021, there were no accruals for loss contingencies.

Litigation

The Company is a party to various legal actions arising in the ordinary course of its businesses. In accordance with ASC 450, Contingencies, the Company accrues reserves for outstanding lawsuits, claims, and proceedings when a loss contingency is probable and can be reasonably estimated. The Company estimates the amount of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage. Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question. Thus, the Company’s exposure and ultimate losses may be higher, and possibly significantly more, than the amounts accrued.

The Company has entered into litigation with two third parties to collect outstanding receivables totaling $19.6 million that remain outstanding from the Winter Storm Uri during February of 2021. Given the counterparties’ sufficient creditworthiness and the valid claims that we hold, no allowance has currently been established for these items as we have legally enforceable agreements with these parties.

Environmental Matters

As an owner of infrastructure assets with rights to surface lands, the Company is subject to various local and federal laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the Company for the cost of pollution clean-up resulting from operations and subject the Company to liability for pollution damages. The Company is not aware of any environmental claims existing as of September 30, 2022, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity.

17

Contingent Liabilities

Permian Gas Acquisition

As part of the acquisition of Permian Gas on June 11, 2019, consideration included a contingent liability arrangement with PDC Permian, Inc. (“PDC”). The arrangement requires additional monies to be paid by the Company to PDC on a per Mcf basis if the actual annual Mcf volume amounts exceed forecasted annual Mcf volume amounts starting in 2020 and continuing through 2029. The arrangement defines the incentive rate per Mcf for each qualifying year and the total monies paid under this arrangement are capped at $60.5 million. Amounts are payable on an annual basis over the earn-out period. The fair value of the contingent liability recognized on the acquisition date of $3.9 million was estimated utilizing the following key assumptions: (1) present value factors based on the Company’s weighted-average cost of capital, 2) a probability weighted payout based on an estimate of future volumes and (3) a discount period consistent with the arrangement’s life and the respective due dates of the potential future payments. Based on current forecasts and discussions with PDC, management revalued this contingent liability with updated assumptions at each reporting period. The Company did not expect PDC’s actual annual Mcf volume amounts to exceed forecasted amounts as of September 30, 2022; therefore, the estimated fair value of the contingent consideration liability was nil as of September 30, 2022. The estimated fair value of the contingent consideration liability related to this acquisition was $0.8 million as of December 31, 2021.

Original Altus Transaction

As part of the Transaction, the Company assumed contingent liabilities of $4.5 million related to earn-out consideration of up to 2,500,000 shares of Class A Common Stock, which was part of the original Altus transaction, as follows:

• 1,250,000 shares if the per share closing price of the Class A Common Stock as reported by the New York Stock Exchange (“NYSE”) during any 30-trading-day period ending prior to November 9, 2023 is equal to or greater than $140.00 for any 20 trading days within such 30-trading-day period.

• 1,250,000 shares if the per share closing price of the Class A Common Stock as reported by the NYSE during any 30-trading-day period ending prior to November 9, 2023 is equal to or greater than $160.00 for any 20 trading days within such 30-trading-day period.

Pursuant to ASC 805, this earn-out consideration was a pre-existing contingency and accounted for as an assumed liability to the acquirer on the acquisition date. Immediately subsequent to the Closing, the Company evaluated the earn-out consideration classification in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The Company determined the earn-out consideration to be classified as equity based on the settlement provision.

9.    EQUITY METHOD INVESTMENTS

As of September 30, 2022, the Company owned investments in the following long-haul pipeline entities in the Permian Basin. These investments were accounted for using the equity method of accounting. For each EMI pipeline entity, the Company has the ability to exercise significant influence based on certain governance provisions and its participation in the significant activities and decisions that impact the management and economic performance of the EMI pipeline. The table below presents the ownership percentages and investment balances held by the Company for each entity:

	Ownership	September 30, 2022		December 31, 2021
		(In thousands)
Permian Highway Pipeline LLC(1)	53.3%	$	1,459,096	$	626,477
Breviloba, LLC (Shin Oak)	33.0%	462,691		—
Gulf Coast Express Pipeline LLC	16.0%	450,809		—
		$	2,372,596	$	626,477

(1) Ownership for PHP was 53.3% and 26.7% as of September 30, 2022 and December 31, 2021, respectively.

Additionally, as of September 30, 2022, the Company also owned 15.0% of Epic Crude Holdings, LP (“EPIC”). However, no dollar value was assigned through the purchase price allocation as adjustment was made to eliminate equity in losses of EPIC. No additional contribution was made to EPIC and no distribution or equity income was received from EPIC during the three and nine months ended September 30, 2022.

18

As of September 30, 2022, the unamortized basis differences included in the EMI pipelines balances were $349.8 million. There was no unamortized basis difference as of December 31, 2021. These amounts represent differences in the Company’s contributions to date and the Company’s underlying equity in the separate net assets within the financial statements of the respective entities. Unamortized basis differences will be amortized into equity income over the useful lives of the underlying pipeline assets. There was capitalized interest of $12.5 million and $12.8 million as of September 30, 2022 and December 31, 2021, respectively. Capitalized interest is amortized on a straight-line basis into equity income.

The following table presents the activity in the Company’s EMIs for the nine months ended September 30, 2022:

		Permian Highway Pipeline LLC		Breviloba, LLC		Gulf Coast Express Pipeline LLC		Total(2)
	(In thousands)
Balance at December 31, 2021		$	626,477	$	—	$	—	$	626,477
Acquisitions		815,000		470,000		470,000		1,755,000
Contributions		56,199		—		—		56,199
Distributions		(125,526)		(25,810)		(34,450)		(185,786)
Equity income, net(1)		86,946		18,501		15,259		120,706
Balance at September 30, 2022		$	1,459,096	$	462,691	$	450,809	$	2,372,596

(1)For the nine months ended September 30, 2022, net of amortization of basis differences and capitalized interests, which represents undistributed earnings, the amortization was $5.3 million from Permian Highway Pipeline LLC, $0.5 million from Breviloba, LLC and $10.4 million from Gulf Coast Express Pipeline, LLC.

(2)The EMIs acquired in the Transaction are included in the results from February 22, 2022 to September 30, 2022, and this is also the case for the additional 26.67% of PHP that was acquired in the Transaction. The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements of this Form 10-Q, for further information on the Company’s basis of presentation.

Summarized Financial Information

The following tables represent selected statement of operations data for the Company’s EMI pipelines (on a 100 percent basis) for the three and nine months ended September 30, 2022 and 2021.

	Three Months Ended September 30,
	2022						2021
	Permian Highway Pipeline LLC		Breviloba, LLC		Gulf Coast Express Pipeline LLC		Permian Highway Pipeline LLC(1)		Breviloba, LLC(1)		Gulf Coast Express Pipeline LLC(1)
	(In thousands)
Revenues	$	100,114	$	53,120	$	91,800	$	99,918	$	45,054	$	91,454
Operating income	69,851		22,205		70,870		61,987		26,796		65,482
Net income	69,926		22,060		70,742		61,753		26,617		65,145

	Nine Months Ended September 30,
	2022					2021
	Permian Highway Pipeline LLC		Breviloba, LLC		Gulf Coast Express Pipeline LLC	Permian Highway Pipeline LLC(1)		Breviloba, LLC(1)		Gulf Coast Express Pipeline LLC(1)
	(In thousands)
Revenues	$	296,779	$	151,732	272,542	$	297,132	$	127,030	$	270,526
Operating income	190,620		73,877		199,130	167,011		72,098		186,356
Net income	190,446		73,711		198,732	166,662		71,621		185,464

(1) For the three and nine months ended September 30, 2021, the Company only had equity interest in Permian Highway Pipeline LLC.

19

10. EQUITY AND WARRANTS

Redeemable Noncontrolling Interest — Common Unit Limited Partners

On February 22, 2022, the Company consummated the Transaction. Pursuant to the Contribution Agreement, in connection with the Closing, (i) Contributor contributed all of the equity interests of the Contributed Entities to the Partnership; and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 common units representing limited partner interests in the Partnership and 50,000,000 shares of the Company’s Class C Common Stock, par value $0.0001 per share. Please refer to “The Transaction” above.

The redemption option of the Common Unit is not legally detachable or separately exercisable from the instrument and is non-transferable, and the Common Unit is redeemable at the option of the holder. Therefore, the Common Unit is accounted for as redeemable noncontrolling interest and classified as temporary equity on the Company’s Condensed Consolidated Balance Sheet. During the first nine months of 2022, 5,730,000 common units were redeemed on a one-for-one basis for shares of Class A Common Stock and a corresponding number of shares of Class C Common Stock were cancelled. There were 94,270,000 Common Units and an equal number of Class C Common Stock issued and outstanding as of September 30, 2022. The Common Units fair value was approximately $3.06 billion as of September 30, 2022.

Redeemable Noncontrolling Interest — Preferred Unit Limited Partners

Upon Closing, the Company assumed certain Preferred Units that were issued and outstanding on acquisition date. The Company has redeemed all assumed Preferred Units since the Closing. Refer to Note 11—Series A Cumulative Redeemable Preferred Units for further discussion.

Public Warrants

As of September 30, 2022, there were 12,577,350 Public Warrants (as defined below) outstanding. Each whole public warrant entitles the holder to purchase one tenth of a share of Class A Common Stock at a price of $115.00 per share (the “Public Warrants”). The Public Warrants will expire on November 9, 2023 or upon redemption or liquidation. The Company may call the Public Warrants for redemption, in whole and not in part, at a price of $0.01 per warrant with not less than 30 days’ notice provided to the Public Warrant holders. However, this redemption right can only be exercised if the reported last sale price of the Class A Common Stock equals or exceeds $180.00 per share for any 20-trading days within a 30-trading day period ending three business days prior to sending the notice of redemption to the Public Warrant holders.

Private Placement Warrants

As of September 30, 2022, there were 6,364,281 Private Placement Warrants (as defined below) outstanding, of which Apache holds 3,182,140. The private placement warrants will expire on November 9, 2023 and are identical to the Public Warrants discussed above, except (i) they will not be redeemable by the Company so long as they are held by the initial holders or their respective permitted transferees and (ii) they may be exercised by the holders on a cashless basis (the “Private Placement Warrants” and, together with the Public Warrants, the “Warrants”).

The Company recorded a fair value of $0.1 million for the Public Warrants and a fair value of $0.1 million for the Private Warrants as of September 30, 2022 on the Condensed Consolidated Balance Sheet in other non-current liabilities. Refer to Note 15—Fair Value Measurement in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion regarding valuation of the Warrants.

20

Dividend

On February 22, 2022, the Company entered into a Dividend and Distribution Reinvestment Agreement (the “Reinvestment Agreement”) with certain stockholders including BCP Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC, APA Corporation Apache Midstream LLC, and certain individuals (each, a “Reinvestment Holder”). Under the Reinvestment Agreement, each Reinvestment Holder is obligated to reinvest at least 20% of all distributions on Common Units or dividends on shares of Class A Common Stock in the Company’s Class A Common Stock. Additionally, the Audit Committee and subsequently the Company’s Board of Directors (the “Board”) resolved that for the calendar year 2022, 100% of all distributions or dividends received by each Reinvestment Holder would be reinvested in newly issued shares of Class A Common Stock. As described in these Condensed Consolidated Financial Statements, as the context requires, dividends paid to holders of Class A Common Stock and distributions paid to holders of Common Units may be referred to collectively as “dividends.”

During the nine months ended September 30, 2022, the Company made cash dividend payments of $25.3 million to holders of Class A Common Stock and Common Units and $175.5 million was reinvested in shares of Class A Common Stock by Reinvestment Holders.

On October 19, 2022, the Board declared a cash dividend of $0.75 per share on the Company’s Class A Common Stock and a distribution of $0.75 per Common Unit from the Partnership to the holders of Common Units. Dividends are payable on November 17, 2022. Certain holders of Class A Common Stock and Class C Common Stock will receive a cash dividend with the balance receiving additional shares of Class A Common Stock under the Reinvestment Agreement.

Stock Split

On May 19, 2022, the Company announced that its Board approved and declared a two-for-one stock split with respect to its Class A Common Stock and Class C Common Stock, in the form of a stock dividend (the “Stock Split”). The Stock Split was accomplished by distributing one additional share of Class A Common Stock for each share of Class A Common Stock outstanding and one additional share of Class C Common Stock for each share of Class C Common Stock outstanding. The additional shares of Common Stock were issued on June 8, 2022 to holders of record at the close of business on May 31, 2022.

All corresponding per-share and share amounts, excluding the Transaction, for periods prior to June 8, 2022 have been retroactively restated in this Form 10-Q to reflect the Stock Split.

11.    SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS

Prior to the Closing Date of the Transaction, the Partnership had 625,000 Preferred Units issued and outstanding. Immediately prior to the Closing, on February 22, 2022, the Partnership redeemed for cash, 100,000 Preferred Units in an amount equal to approximately $120.1 million. The Company assumed the remaining 525,000 Preferred Units as well as 29,983 paid-in-kind (“PIK”) Preferred Units that were issued and outstanding at the closing of the Transaction. At the close, 150,000 preferred units and 8,567 associated PIK units became mandatorily redeemable and liability classified with the balance of preferred units remaining unchanged and classified as redeemable noncontrolling interest. The Company redeemed 125,000 mandatorily redeemable preferred units during the first two quarters of 2022 with the balance of mandatorily redeemable preferred units being redeemed during July for $30.7 million.

In July 2022, the Company redeemed all outstanding redeemable noncontrolling interest Preferred Units for an aggregate $461.5 million. The excess of the carrying amount of the redeemable noncontrolling interest Preferred units immediately prior to redemption over redemption price was included in “Retained Earnings” in the Condensed Consolidated Balance Sheets.

21

Activities related to Preferred Units for the nine months ended September 30, 2022 are as follows:

	Units Outstanding	Amount
	(In thousands, except for unit data)
Redeemable noncontrolling interest — Preferred Units, immediately upon Closing of Transaction(1)	396,417	$	462,717
Redemption, including PIK units	(396,417)	(461,460)
Cash distribution paid to Preferred Unit limited partners	—	(6,937)
Allocation of net income	—	18,128
Accreted redemption value adjustment	—	97,075
Excess of carrying amount over redemption price	—	(109,523)
Redeemable noncontrolling interest — Preferred Units, as of September 30, 2022	—	$	—

(1)Included 21,417 PIK units on a pro rata basis.

12. SHARE-BASED COMPENSATION

Prior to the Closing, the Company issued incentive units, which included performance and service conditions, to certain employees and board members. The units consisted of Class A-1, Class A-2, and Class A-3 units. These units derived value from the Company’s certain wholly owned subsidiaries. Class A-1 and A-2 units would have vested upon either (i) the date of consummation of a change in control or (ii) the date that is 1-year following the consummation of the initial public offering (“IPO”) of the Company (or its successor) (collectively “Exit Events”). Class A-3 units would have vested upon a change in control, if the participants were employed at the time of the event, or upon termination of the participant by the Company.

Immediately upon Closing, all outstanding Class A-1 and Class A-2 units were cancelled and exchanged for 5,300,000 shares (the “Class A Shares”), post-Stock Split, of the Company’s Class A Common Stock. These Class A Shares are issued and outstanding as they were distributed pro rata to all holders of Class A-1 and Class A-2 units by the Common Unit limited partners from the 50,000,000 common units, pre-Stock-Split, that such limited partners received upon the Closing. The Common Unit limited partners redeemed Common Units needed for the Class A shares distribution upon the Closing. The Class A Shares are held in escrow and will vest over three to four years. Similarly, the Class A-3 units were exchanged for approximately 326,000, post Stock Split, Class C Common Stock and Common Units (the “Class C Shares”) and will vest over four years. The Company also issued approximately 76,000, post Stock Split, replacement restricted share awards (“Replacement Awards”) to new employees that transitioned from ALTM as part of the Transaction. These changes for all three share types established a new measurement date. The Class A Shares, Class C Shares and Replacement Awards were valued based on the Company’s publicly quoted stock price on the measurement date, which was the Closing Date of the Transaction.

During 2022, pursuant to the Company’s 2019 Omnibus Compensation Plan, as amended from time to time (the “Plan”), the Company granted a total of 13,941 restricted stock units (“RSUs”) to certain members of the Board, which were vested immediately on grant date, and granted a total of 14,144 RSUs to new employees, which are subject to a vesting period between one and three years.

With respect to the above shares, the Company recorded compensation expenses of $12.7 million and $31.0 million for the three and nine months ended September 30, 2022, respectively, based on a straight line amortization of the associated awards’ fair value over the respective vesting life of the shares. With respect to the above incentive units, no compensation expenses were recorded for the three and nine months ended September 30, 2021, as the incentive units were considered non-vested prior to their cancellation and exchange for Class A or Class C Common Stock, and no RSUs were granted during 2021.

22

13. INCOME TAXES

The Company is subject to U.S. federal income tax and the Texas margin tax. Income tax expense included in the Condensed Consolidated Financial Statements in this Form 10-Q is as follows:

	Three Months Ended September 30,			Nine Months Ended September 30,
	2022			2022
	(In thousands)
Income before income taxes	$	50,828		$	204,503
Income tax expense	$	1,406		$	2,244
Effective tax rate (1)	2.77		%	1.10		%

(1) Prior to the Closing on February 22, 2022, BCP, the accounting acquirer, was organized as limited partnership and was not subject to the U.S. federal income tax for the three and nine months ended September 30, 2021.

The effective tax rate for the three and nine months ended September 30, 2022 was lower than the statutory rate mainly due to the impact of tax attributable to noncontrolling interests related to the Common Units and Preferred Units limited partners and valuation allowance.

Upon Closing, the Company assumed certain uncertain tax positions from ALTM. The Company accounts for income taxes in accordance with ASC 740—Income Taxes, which prescribes a minimum recognition threshold a tax position must meet before being recognized in the financial statements. Tax positions generally refer to a position taken in a previously filed income tax return or expected to be included in a tax return to be filed in the future that is reflected in the measurement of current and deferred income tax assets and liabilities. Reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

(In thousands)	Amount
Balance at December 31, 2021	$	—
Increase related to ALTM acquisition	5,238
Reduction related to current year activities	(5,238)
Balance at September 30, 2022	$	—

23

14.    NET INCOME PER SHARE

The computation of basic and diluted net income per share for the periods presented in the Condensed Consolidated Financial Statements is shown in the tables below.

	Three Months Ended September 30,
	2022					2021
	Income		Weighted-average shares(3)	Per Share		Income		Weighted-average shares(3)	Per Share
	(In thousands, except per share data)
Basic:
Net income attributable to Class A common shareholders	$	14,936	41,816	$	0.36	$	—	—	$	—
Less: Net income available to participating unvested restricted Class A common shareholders(4)	(4,174)		—	$	—	—		—	$	—
Excess preferred carrying amount over consideration paid(5)	32,900		—	$	—	—		—	$	—
Total net income attributable to Class A common shareholders	$	43,662	41,816	$	1.04	$	—	—	$	—
Effect of dilutive securities:
Unvested Class A common shares	—		39	$	—	—		—	$	—
Diluted(1)(2):
Net income attributable to Class A common shareholders	$	43,662	41,855	$	1.04	$	—	—	$	—

	Nine Months Ended September 30,
	2022					2021
	Income		Weighted-average shares(3)	Per Share		Income		Weighted-average share (3)	Per Share
	(In thousands, except per share data)
Basic:
Net income attributable to Class A common shareholders	$	25,239	40,042	$	0.63	$	—	—	$	—
Less: Net income available to participating unvested restricted Class A common shareholders(4)	(8,358)		—	$	—	—		—	$	—
Excess preferred carrying amount over consideration paid(5)	32,900		—	$	—	—		—	$	—
Total net income attributable to Class A common shareholders	$	49,781	40,042	$	1.24	$	—	—	$	—
Effect of dilutive securities:
Unvested Class A common shares	—		33	$	—	—		—	$	—
Diluted(1)(2):
Net income attributable to Class A common shareholders	$	49,781	40,075	$	1.24	$	—	—	$	—

(1)The effect of an assumed exchange of the outstanding public and private warrants for shares of Class A Common Stock would have been anti-dilutive for all periods presented in which the public and private warrants were outstanding.

(2)The effect of an assumed exchange of outstanding Common Units (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) would have been anti-dilutive for all periods presented in which the Common Units were outstanding.

(3)Share amounts have been retroactively restated to reflect the Company’s two-for-one Stock Split. Refer to Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

(4)Represents dividends paid to unvested restricted Class A common shareholders.

(5)Represented excess of carrying value of redeemable noncontrolling interest Preferred Units over redemption price at redemption.

24

15. FAIR VALUE MEASUREMENTS

The Company’s financial assets and liabilities measured at fair value on a recurring basis include cash and cash equivalents, accrued receivables, accounts receivable, accounts receivable from affiliates, dividends and distributions payable, interest rate and commodity swap derivatives, and Company’s private and public warrants and an embedded derivative liability related to the issuance of Preferred Units.

Topic 820 establishes a framework for measuring fair value in U.S. GAAP, clarifies the definition of fair value within that framework, and requires disclosures about the use of fair value measurements. Topic 820 defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Topic 820 provides a framework for measuring fair value, establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and requires consideration of the counterparty’s creditworthiness when valuing certain assets.

Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets (Level 1 inputs). The three levels of the fair value hierarchy under Topic 820 are described below:

Level 1 inputs: Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 inputs: Inputs, other than quoted prices in active markets, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3 inputs: Prices or valuations that require unobservable inputs that are both significant to the fair value measurement and unobservable. Valuation under Level 3 generally involves a significant degree of judgment from management.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Where available, fair value is based on observable market prices or inventory parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instrument’s complexity.

The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021:

	September 30, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Public warrants	$	126	$	—	$	—	$	126
Private warrants	—		—		95		95
Total liabilities	$	126	$	—	$	95	$	221

	December 31, 2021
	Level 1		Level 2		Level 3		Total
	(In thousands)
Commodity swaps	$	—	$	205	$	—	$	205
Interest rate derivatives	—		2,662		—		2,662
Contingent liabilities	—		—		839		839
Total liabilities	$	—	$	2,867	$	839	$	3,706

25

The Company is exposed to certain risks arising from both its business operations and economic conditions, and the Company enters into certain derivative contracts to manage the exposures. Refer to Note 16—Derivatives and Hedging Activities in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further discussion related to commodity swaps and interest rate derivatives.

The Company bifurcated and recognized the embedded derivative associated with the Preferred Units related to the exchange option provided to the Preferred Unit holders under the terms of the Partnership LPA. The Company redeemed all outstanding Preferred Units in July 2022 and wrote off related embedded derivative liabilities as of September 30, 2022. The Company recorded gains of $0.5 million and $89.1 million for the three and nine months ended September 30, 2022, which was recorded as a “Gain on embedded derivative” in the Condensed Consolidated Statement of Operations.

The carrying value of the Company’s Public Warrants are recorded at fair value based on quoted market prices, a Level 1 fair value measurement. The carrying value of the Company’s Private Placement Warrants are recorded at fair value determined using an option pricing model, a Level 3 fair value measurement, which is calculated based on key assumptions related to expected volatility of the Company’s common stock, an expected dividend yield, the remaining term of the warrants outstanding and the risk-free rate based on the U.S. Treasury yield curve in effect at the time of the valuation. These assumptions are estimated utilizing historical trends of the Company’s common stock, Public Warrants and other factors. The Company has recorded a liability of $0.2 million as of September 30, 2022. There was no change in fair value of the warrants since closing of the Transaction through reporting date.

The carrying amounts reported on the Condensed Consolidated Balance Sheets for the Company’s remaining financial assets and liabilities approximate fair value due to their short-term nature. There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the three and nine months ended September 30, 2022 and 2021.

16.    DERIVATIVES AND HEDGING ACTIVITIES

The Company is exposed to certain risks arising from both its business operations and economic conditions, and it enters into certain derivative contracts to manage exposure to these risks. The Company did not elect to apply hedge accounting to these derivative contracts and recorded fair value of the derivatives on the Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021.

Interest Rate Risk

The Company manages market risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and by using derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company minimizes counterparty credit risk in derivative instruments by entering into transactions with high credit-rating counterparties.

The Company’s objectives in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and Term SOFR elections, (able to fix up to six months forward SOFR), granted under the company’s debt agreements as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract.

In June 2022, all of BCP PHP, LLC’s (“BCP PHP”) outstanding interest rate swaps were terminated as BCP PHP’s outstanding term loan credit facility was extinguished on June 8, 2022. Refer to Note 6—Debt and Financing Costs in the Notes to our Condensed Consolidated Financial Statements for additional information about the refinancing transactions.

The fair value or settlement value of the consolidated interest rate swaps outstanding are presented on a gross basis on the Condensed Consolidated Balance Sheets. Interest rate swap derivative liabilities were nil and $2.7 million as of September 30, 2022 and December 31, 2021, respectively. The Company recorded cash settlements on interest rate swap derivatives of nil and $0.7 million for the three months ended September 30, 2022 and 2021, respectively, and $11.3 and $2.2 million for the nine months ended September 30, 2022 and 2021, respectively, in “Interest Expense” of the Condensed Consolidated Statements of Operations. In addition, the Company recorded fair value adjustments of nil and $26 thousand for the change in fair value of the interest rate swap derivatives for the three months ended September 30, 2022 and 2021, respectively, and $14.0 million and $3.1 million for the nine months ended September 30, 2022 and 2021, respectively, in “Interest Expense” of the Condensed Consolidated Statements of Operations.

26

Commodity Price Risk

Similarly, in 2020 and 2021 BCP Raptor, LLC (“BCP I”) and BCP Raptor II, LLC (“BCP II”) had WTI crude hedges at a specific notional amount that provides for a fixed price for crude in the Permian Basin and Waha basis hub hedges on various notional quantities of gas that either provided for a fixed price differential of natural gas in the Permian Basin relative to the NYMEX natural gas contract or provided for a fixed price for natural gas in the Permian Basin.

All of the Company’s commodity swaps had reached maturity as of December 31, 2021. The fair value or settlement value of the swaps outstanding are presented on a gross basis on the Condensed Consolidated Balance Sheet. Commodity swap derivative liability was nil and $0.2 million as of September 30, 2022 and December 31, 2021, respectively. The Company recorded cash settlements on commodity swap derivatives of nil and $0.9 million for the three months ended September 30, 2022 and 2021, respectively, and $0.2 million and $15.8 million for the nine months ended September 30, 2022 and 2021, respectively, in “Other Revenue” of the Condensed Consolidated Statements of Operations. In addition, the Company recorded fair value adjustments of $0.6 million and $17.1 million for the change in fair value of commodity swap derivatives for the three and nine months ended September 30, 2021, respectively, in “Other Revenue” of the Condensed Consolidated Statements of Operations. No fair value adjustment recognized for the three and nine months ended September 30, 2022 as no commodity swaps were outstanding.

17.    SEGMENTS

Our two operating segments represent the Company’s segments for which discrete financial information is available and is utilized on a regular basis by our chief operating decision maker (“CODM”) to make key operating decisions, assess performance and allocate resources. Our Chief Executive Officer is the CODM. These segments are strategic business units with differing products and services. No operating segments have been aggregated to form the reportable segments. Therefore, our two operating segments represent our reportable segments. The activities of each of our reportable segments from which the Company earns revenues and incurs expenses are described below:

•Midstream Logistics: The Midstream Logistics segment operates under three streams, 1) gas gathering and processing, 2) crude oil gathering, stabilization and storage services and 3) water gathering and disposal.

•Pipeline Transportation: The Pipeline Transportation segment consists of equity investment interests in four Permian Basin pipelines that access various points along the Texas Gulf Coast, Brandywine NGL Pipeline and Delaware Link Pipeline that is under development. The current operating pipelines transport crude oil, natural gas and NGLs.

Upon Closing, our CODM reviewed the Company and ALTM’s reporting segment activities. The Company then renamed its Gathering and Processing segment to Midstream Logistics and its Transmission segment to Pipeline Transportation. These name changes were made to better align segment activities with the name of the respective segment. There was no change in segment composition or structure for the three and nine months ended September 30, 2022.

27

The following tables present the reconciliation of the segment profit measure as of and for the three and nine months ended September 30, 2022 and 2021:

	Midstream Logistics		Pipeline Transportation		Corporate and Other(1)		Consolidated(2)
For the three months ended September 30, 2022	(In thousands)
Segment net income (loss) including noncontrolling interests	$	65,525	$	44,750	$	(60,853)	$	49,422
Add back:
Interest expense	7		—		40,457		40,464
Income tax expense	—		—		1,406		1,406
Depreciation and amortization	64,655		345		5		65,005
Contract assets amortization	448		—		—		448
Proportionate EMI EBITDA	—		78,357		—		78,357
Share-based compensation	—		—		12,661		12,661
Loss on disposal of assets	3,946		—		—		3,946
Integration costs	14		81		2,243		2,338
Acquisition transaction costs	5		—		57		62
Other one-time costs or amortization	2,945		162		645		3,752
Deduct:
Gain on embedded derivative	—		—		488		488
Equity income from unconsolidated affiliates	—		45,003		—		45,003
Segment adjusted EBITDA	$	137,545	$	78,692	$	(3,867)	$	212,370

	Midstream Logistics		Pipeline Transportation		Corporate and Other(1)		Consolidated(2)
For the three months ended September 30, 2021	(In thousands)
Segment net income (loss) including noncontrolling interests	$	(6,210)	$	13,333	$	(2,483)	$	4,640
Add back:
Interest expense	27,682		2,859		—		30,541
Income tax expense	1,207		—		—		1,207
Depreciation and amortization	57,026		128		—		57,154
Contract assets amortization	448		—		—		448
Proportionate EMI EBITDA	—		21,704		—		21,704
Loss (gain) on disposal of assets	(60)		23		—		(37)
Loss on debt extinguishment	56		—		—		56
Other one-time costs or amortization	802		160		205		1,167
Deduct:
Interest and other income	74		—		—		74
Equity income from unconsolidated affiliates	—		16,826		—		16,826
Segment adjusted EBITDA	$	80,877	$	21,381	$	(2,278)	$	99,980

28

	Midstream Logistics		Pipeline Transportation		Corporate and Other(1)		Consolidated(2)
For the nine months ended September 30, 2022	(In thousands)
Segment net income (loss) including noncontrolling interests	$	89,274	$	120,162	$	(7,177)	$	202,259
Add back:
Interest expense	47,411		(664)		45,838		92,585
Income tax expense (benefit)	457		(39)		1,826		2,244
Depreciation and amortization	192,007		597		5		192,609
Contract assets amortization	1,344		—		—		1,344
Proportionate EMI EBITDA	—		190,438		—		190,438
Share-based compensation	—		—		30,966		30,966
Loss (gain) on disposal of assets	12,636		—		(34)		12,602
Loss (gain) on debt extinguishment	27,983		(8)		—		27,975
Integration costs	933		81		8,998		10,012
Acquisition transaction costs	9		—		6,403		6,412
Other one-time costs or amortization	8,865		162		1,942		10,969
Deduct:
Gain on redemption of mandatorily redeemable Preferred units	—		—		9,580		9,580
Gain on embedded derivative	—		—		89,050		89,050
Equity income from unconsolidated affiliates	—		120,706		—		120,706
Segment adjusted EBITDA	$	380,919	$	190,023	$	(9,863)	$	561,079

	Midstream Logistics		Pipeline Transportation		Corporate and Other(1)		Consolidated(2)
For the nine months ended September 30, 2021	(In thousands)
Segment net income (loss) including noncontrolling interests	$	(22,238)	$	37,072	$	(7,424)	$	7,410
Add back:
Interest expense	82,967		5,491		—		88,458
Income tax expense	1,207		—		—		1,207
Depreciation and amortization	169,906		385		—		170,291
Contract assets amortization	1,815		—		—		1,815
Proportionate EMI EBITDA	—		59,677		—		59,677
Loss on disposal of assets	394		23		—		417
Gain on debt extinguishment	(4)		—		—		(4)
Derivatives loss due to Winter Storm Uri	13,456		—		—		13,456
Other one-time costs or amortization	1,675		182		153		2,010
Producer settlement	6,827		—		—		6,827
Deduct:
Interest and other income	115		—		—		115
Equity income from unconsolidated affiliates	—		44,692		—		44,692
Segment adjusted EBITDA	$	255,890	$	58,138	$	(7,271)	$	306,757

(1) Corporate and Other represents those results that: (i) are not specifically attributable to a reportable segment; (ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense items.

(2) Results do not include legacy ALTM prior to February 22, 2022. Refer to Note 1 —Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q, for further information on the Company’s basis of presentation. Adjusted EBITDA is a non-GAAP measure; please see Key Performance Metrics in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q, for a definition and reconciliation to the GAAP measure.

29

The following tables present the revenue for individual operating segment for the three and nine months ended September 30, 2022 and 2021:

	Midstream Logistics		Pipeline Transportation		Consolidated
For the three months ended September 30, 2022	(In thousands)
Revenue	$	320,667	$	733	$	321,400
Other revenue	3,774		2		3,776
Total segment operating revenue	$	324,441	$	735	$	325,176

	Midstream Logistics		Pipeline Transportation		Consolidated
For the three months ended September 30, 2021	(In thousands)
Revenue	$	165,844	$	—	$	165,844
Other revenue	740		2		742
Total segment operating revenue	$	166,584	$	2	$	166,586

	Midstream Logistics		Pipeline Transportation		Consolidated
For the nine months ended September 30, 2022	(In thousands)
Revenue	$	907,771	$	733	$	908,504
Other revenue	9,487		6		9,493
Total segment operating revenue	$	917,258	$	739	$	917,997

	Midstream Logistics		Pipeline Transportation		Consolidated
For the nine months ended September 30, 2021	(In thousands)
Revenue	$	446,840	$	—	$	446,840
Other revenue	3,609		6		3,615
Total segment operating revenue	$	450,449	$	6	$	450,455

The following table presents total assets for each operating segment as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(In thousands)
Midstream Logistics	$	3,575,642	$	2,916,774
Pipeline Transportation	2,417,663		635,784
Segment total assets	5,993,305		3,552,558
Corporate and other	13,873		648
Total assets	$	6,007,178	$	3,553,206

18.    SUBSEQUENT EVENTS

On October 10, 2022, the Company announced the transfer of its Class A Common Stock to the New York Stock Exchange (“NYSE”) from the Nasdaq Global Select Market (“Nasdaq”). The Company’s Class A Common Stock began trading on the NYSE under its current ticker symbol, “KNTK”, at the open of trading on Monday, October 24, 2022.

On October 19, 2022, the Board declared a cash dividend of $0.75 per share on the Company’s Class A Common Stock which will be payable to stockholders on November 17, 2022. The Company, through its ownership of the general partner of the Partnership, declared a distribution of $0.75 per Common Unit from the Partnership to the holders of Common Units. Please refer to Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for additional information.

30

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis addresses the results of our operations for the three and nine month periods ended September 30, 2022, as compared to our results of operations for the same periods in 2021. In addition, the discussion and analysis addresses our liquidity, financial condition and other matters for these periods. The previously announced merger of ALTM and BCP and their respective consolidated subsidiaries closed on February 22, 2022. As the Transaction was determined to be a reverse merger, BCP was considered the accounting acquirer and ALTM was considered the legal acquirer. Therefore, BCP’s net assets, carried 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. The results of operations of ALTM is reflected within the Company’s Condensed Consolidated Financial Statements from the Closing Date through September 30, 2022.

Unless otherwise noted or the context requires otherwise, references herein to Kinetik Holdings Inc. “the Company”, “us”, “our”, “we” or similar terms, with respect to time periods prior to February 22, 2022, include BCP and its consolidated subsidiaries and do not include ALTM and its consolidated subsidiaries, while references herein to Kinetik Holdings Inc. with respect to time periods from and after February 22, 2022, include ALTM and its consolidated subsidiaries.

The Transaction

On February 22, 2022, the Company consummated the previously announced business combination transactions contemplated by the Contribution Agreement, dated as of October 21, 2021, by and among the Company, the Partnership, Contributor and BCP. Pursuant to the Contribution Agreement, in connection with the Closing, (i) Contributor contributed all of the equity interests in BCP and BCP Raptor Holdco GP, LLC, a Delaware limited liability company and the general partner of BCP (“BCP GP”), to the Partnership; and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 Common Units and 50,000,000 shares of the Company’s Class C common stock, par value $0.0001 per share (“Class C Common Stock”).

The Company’s stockholders immediately prior to the Closing continued to hold their shares of the Company’s Class A common stock, par value $0.0001 per share (“Class A Common Stock,” together with the Class C Common Stock, the “Common Stock”). As a result of the Transaction, immediately following the Closing (i) Contributor owns approximately 75% of the issued and outstanding Common Stock, (ii) Apache Midstream owns approximately 20% of the issued and outstanding Common Stock, and (iii) the Company’s remaining stockholders own approximately 5% of the issued and outstanding Common Stock. Upon close of the Transaction, the Company’s Pipeline Transportation segment expanded to include three additional EMI pipelines and to increase its ownership interest in PHP. Further note that a secondary offering of 4 million Apache shares was closed during March of 2022 further reducing Apache’s ownership to approximately 13%.

The Transaction also brought in additional volume capacity from ALTM for the Midstream Logistics segment, including 182 miles of in-service natural gas gathering pipelines, approximately 46 miles of residue gas pipelines with four market connections, and approximately 66 miles of NGLs pipelines. The increased volume capacity has contributed to the increase in operating revenue for the three and nine months ended September 30, 2022 compared to the same periods in 2021.

Overview

We are an integrated midstream energy company in the Permian Basin providing comprehensive gathering, transportation, compression, processing, and treating services. Our core capabilities include a variety of service offerings across multiple streams, including natural gas gathering, transportation, compression, treating and processing; NGLs stabilization and transportation; produced water gathering and disposal; and crude oil gathering, stabilization, storage and transportation. We have approximately 2.0 Bcf/d cryogenic natural gas processing capacity strategically located near the Waha Hub in West Texas. As measured by processing capacity, we are the second largest natural gas processor in the Delaware Basin and the fourth largest across the entire Permian Basin. In addition, we have interests in four long-term contracted pipelines transporting natural gas, NGLs, and crude oil from the Permian Basin to the Gulf Coast.

Our Operations

Upon Closing, the Company renamed its Gathering and Processing segment to Midstream Logistics and renamed its Transmission segment to Pipeline Transportation. These name changes were made to better align segment activities with the name of each respective segment. The Midstream Logistics segment operates under three service offerings, 1) gas gathering and processing, 2) crude oil gathering, stabilization, and storage services, and 3) water gathering and disposal. The Pipeline Transportation segment consists of four EMI pipelines originating in the Permian Basin with various access points to the Texas

31

Gulf Coast, Kinetik NGL Pipeline and Delaware Link Pipeline that is under development. The pipelines transport crude oil, natural gas, and NGLs within the Permian Basin and to the Texas Gulf Coast.

Midstream Logistics

Gas Gathering and Processing

The Midstream Logistics segment provides gas gathering and processing services with approximately 1,200 miles of low and high-pressure steel pipeline located throughout the Southern Delaware Basin. Gas processing assets are centralized at five processing complexes with total cryogenic processing capacity of approximately 2.0 Bcf/d: the East Toyah complex (460 MMcf/d), the Pecos Bend complex (540 MMcf/d), the Pecos complex (260 MMcf/d), the Sierra Grande complex (60 MMcf/d), and Diamond Cryogenic complex (600 MMcf/d). The Company plans to expand the Diamond Cryogenic complex to 720 MMcf/d by the end of the first quarter of 2023. Current and under construction residue gas outlets include the El Paso Natural Gas Pipeline, Energy Transfer Comanche Trail Pipeline, ONEOK Roadrunner Pipeline, Energy Transfer Oasis Pipeline, and Whitewater Aqua Blanca Pipeline. NGLs outlets include Energy Transfer’s Lone Star NGL Pipeline, Targa’s Grand Prix NGL Pipeline, and Enterprise’s Shin Oak NGL Pipeline.

Crude Oil Gathering, Stabilization, and Storage Services

The Midstream Logistics segment also includes crude oil gathering, stabilization, and storage services throughout the Texas Delaware Basin. Crude gathering assets are centralized at the Caprock Stampede Terminal and the Pinnacle Sierra Grande Terminal. The system includes approximately 200 miles of gathering pipeline and 90,000 barrels of crude storage. The crude facilities have connections for takeaway transportation into Plains’ 285 Central Station and State Line and Oryx’s Orla & Central Mentone facilities.

Water Gathering and Disposal

In addition, this segment includes water gathering and disposal assets located in northern Reeves County, Texas which are included in the Midstream Logistics segment. The system includes approximately 70 miles of gathering pipeline and approximately 500,000 barrels per day of permitted disposal capacity.

Pipeline Transportation

The Pipeline Transportation segment consists of four EMI pipelines in the Permian Basin with access to various points along the Texas Gulf Coast, Brandywine NGL Pipeline and the Delaware Link Pipeline, which is currently under development. EMI pipelines include the following:

•An approximate 53.3% equity interest in Permian Highway Pipeline LLC (“PHP”), which is also owned and operated by Kinder Morgan Texas Pipeline, LLC (“Kinder Morgan”). PHP transports natural gas from the Waha area in northern Pecos County, Texas to the Katy, Texas area with connections to Texas Gulf Coast and Mexico markets. PHP was placed in service January 2021, with the total capacity of 2.1 Bcf/d fully subscribed under long-term contracts. In June 2022, PHP announced a final investment decision to proceed with its expansion project to increase total capacity to 2.65 Bcf/d fully subscribed under 10 year take or pay contracts. The project will increase PHP’s capacity by nearly 550 MMcf/d with target in-service date in November 2023. The funding for the expansion is 67% by the Company and the remainder by Kinder Morgan. As a result, post the in service of the expansion, Kinetik’s ownership interest in PHP will increase approximately 56.0%.

•A 16% equity interest in the Gulf Coast Express Pipeline (“GCX”), which is owned and operated by Kinder Morgan. GCX transports natural gas from the Permian Basin in West Texas to Agua Dulce near the Texas Gulf Coast. GCX was placed in service during 2019, with the total capacity of 2.0 Bcf/d fully subscribed under long-term contracts.

•A 33% equity interest in the Shin Oak NGL Pipeline (“Shin Oak”), which is owned by Breviloba, LLC, and operated by Enterprise Products Operating LLC. Shin Oak transports NGLs from the Permian Basin to Mont Belvieu, Texas. Shin Oak was placed in service during 2019, with total capacity of up to 550 MBbl/d.

•A 15% equity interest in the EPIC Crude oil pipeline (“EPIC”), which is operated by EPIC Consolidated Operations, LLC. EPIC transports crude oil from Orla, Texas in Northern Reeves County to the Port of Corpus Christi, Texas. EPIC was placed in service early 2020, with initial throughput capacity of approximately 600 MBbl/d.

32

Factors Affecting Our Business

The Significance of Crude Oil and Producer Volumes on Our Revenues, Cost of Sales and Gross Margin

The Company’s assets include approximately 1,700 miles of NGLs, natural gas, condensate, produced water, and crude oil pipelines as well as approximately 2 Bcf/d of natural gas processing capacity as of September 30, 2022. Most of the gas gathered and processed by the Company is associated gas included in the oil stream, making producers’ oil break-even prices the primary driver of activity. The average price of WTI crude oil was $98.39/Bbl during the first nine months of 2022. If crude prices were to fall below producers’ break-even prices for a prolonged period of time, drilling activity and volumes might decline and might have a negative impact on our business. In addition, because the Company’s Pipeline Transportation segment provides NGLs transmission service through its EMI pipelines, a decrease in natural gas and NGL price will have an adverse impact on the Company’s results of operations as it may lead to lower natural gas production and thus lower volumes of NGLs transported. The average natural gas price was $6.66/MMBtu during the first nine months of 2022. For additional risk factors that affect the Company’s business, please refer to Part II, Item 1A — Risk Factors of the Company’s Quarterly Report Form 10-Q for the first quarter of 2022 filed on May 10, 2022.

Recent Developments

Transfer to the New York Stock Exchange

On October 10, 2022, the Company notified the Nasdaq Global Select Market (“Nasdaq”) that it would voluntarily transfer the listing of its Class A Common Stock from Nasdaq to the New York Stock Exchange (the “NYSE”). The listing and trading of the Common Stock on Nasdaq ended at market close on October 21, 2022, and trading commenced on the NYSE at market open on October 24, 2022. The Class A Common Stock continues to trade under the current stock symbol “KNTK”.

Brandywine NGL Acquisition

In September 2022, the Company acquired approximately 30 miles of 20 inch NGL pipelines connected to Diamond Cryo called the Brandywine NGL Pipeline (“Brandywine”) for approximately $25 million. Brandywine is a strategic intrabasin natural gas liquids pipeline, affording Kinetik greater control over its system’s NGLs and providing interconnectivity to Shin Oak.

Comprehensive Refinancing

On June 8, 2022, the Partnership, completed a private placement of $1.00 billion aggregate principal amount of its 5.875% Sustainability-Linked Senior Notes due 2030 (the “Notes”), which are fully and unconditionally guaranteed by the Company. In addition, the Partnership entered into a new revolving credit agreement (the “RCA”), which provides for a $1.25 billion senior unsecured revolving credit facility (the “Revolving Credit Facility”) maturing on June 8, 2027, and a new term loan agreement (the “TLA”), which provides for a $2.00 billion senior unsecured term loan credit facility (the “Term Loan Credit Facility”) maturing on June 8, 2025. Proceeds from the Notes and the Term Loan Credit Facility were used to repay all outstanding borrowings under our existing credit facilities and to pay fees and expenses related to the offering. Refer to Note 6 — Debt and Financing Costs in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

Sustainability-linked Financing Framework

On May 16, 2022, we published our Sustainability Framework, which we developed in alignment with the five components outlined in the International Capital Markets Association Sustainability-Linked Bond Principles as of June 2020 and the Loan Syndications and Trading Association Sustainability-Linked Loan Principles as of July 2021 (each as referred to in our Sustainability-Linked Financing Framework), and corresponding Second Party Opinion provided by ISS ESG.

This framework establishes key-performance indicators (“KPIs”) that will be used to measure our progress against sustainability performance targets (“SPTs”). Under this framework, our KPIs are Scope 1 and Scope 2 greenhouse gas emissions intensity, Scope 1 and Scope 2 methane gas emissions intensity and female representation in corporate officer positions and our SPTs are (1) reducing the intensity of all Scope 1 and Scope 2 greenhouse gas emissions from our operations by 35% by 2030 from a 2021 Baseline Year (as defined in the Sustainability Framework), (2) reducing the intensity of Scope 1 and Scope 2 methane gas emissions from our operations by 30% by 2030 from a 2021 Baseline Year, and (3) increasing female representation in corporate officer positions of Vice President and above to 20% by year-end 2026.

33

Stock Split

On May 19, 2022, the Company announced a two-for-one stock split with respect to its Class A Common Stock and Class C Common Stock in the form of a stock dividend (the “Stock Split”). The Stock Split was accomplished by distributing one additional share of Class A Common Stock for each share of Class A Common Stock outstanding and one additional share of Class C Common Stock for each share of Class C Common Stock outstanding. The additional shares of Common Stock were issued on June 8, 2022 to holders of record at the close of business on May 31, 2022.

Commodity Price Volatility

There has been, and we believe there will continue to be, volatility in commodity prices and in the relationships among NGLs, crude oil and natural gas prices. As a result of uncertainty around global commodity supply and demand, the impact of China’s zero covid policy, the continued headwinds from a stronger US dollar, both here and abroad, global oil and natural gas commodity prices continue to remain volatile. The volatility and uncertainty of natural gas, crude oil and NGL prices impact drilling, completion and other investment decisions by producers and ultimately supply to our systems. Our operations benefit in an environment of higher natural gas, NGLs and condensate prices, the instability of international political environments and human and economic hardship resulting from the international political instability would have a uncertain impact on the U.S. economy, which in turn, might affect our business and operations adversely. The Company continues to monitor commodity prices closely and is likely to enter into commodity price hedges from time to time as necessary to mitigate the volatility risk.

Inflation and Interest Rates

The annual rate of inflation in the United States hit 8.2% in September 2022, as measured by the Consumer Price Index. We expect that inflation will continue to increase our operating costs and the overall cost of capital projects we undertake. In addition, the Federal Reserve has continued to tighten its monetary policy by raising interest rates and Chairman Powell has indicated that the target Federal Funds Rate range will likely be approximately 4.5% by the end of 2022. Furthermore, the Chairman of the Federal Reserve signaled that the Federal Reserve would continue to take necessary action to bring inflation down and to ensure price stability, including continued rate increases. Increased interest rates will have a negative impact on the Company’s ability to meet its contractual debt obligations and to fund its operating expenses, capital expenditures, dividends and distributions. The Company will continue to actively evaluate and analyze whether any form of interest rate hedging should be implemented to mitigate interest rate exposure.

Supply Chain Considerations

During 2021 and 2022, challenging supply chain issues have emerged that will continue at least through the remainder of 2022. Geopolitical events have further disrupted global supply chains and caused volatile commodity prices for natural gas, NGLs and crude oil. The United States has banned the import of Russian oil, NGLs and other energy commodities and European Union has taken steps to reduce imports of Russian oil and natural gas. The principal supply issues facing our industry for the next twelve months include: raw materials availability, finished good inventory, rising freight costs, delays due to port congestion and continued labor shortages.

All bidding will require the risk of shipping costs and delays to be factored into proposals. Trucking availability and pricing will impact North American opportunities while sea-freight costs will impact sales of North American manufactured goods being delivered internationally for the foreseeable future. The import of raw materials from China will also incur price increases. To that end, accelerating tensions between China and the U.S. could also result in further supply disruption.

34

Results of Operations

The following table presents the Company’s results of operations for the periods presented:

	Three Months Ended September 30,*						Nine Months Ended September 30,*
	2022		2021		% Change		2022		2021		% Change
	(In thousands, except percentages)
Revenues:
Service revenue	$	107,597	$	72,578	48	%	$	290,122	$	202,482	43	%
Product revenue	213,803		93,266		129	%	618,382		244,358		153	%
Other revenue	3,776		742		409	%	9,493		3,615		163	%
Total revenues	325,176		166,586		95	%	917,997		450,455		104	%
Operating costs and expenses:
Cost of sales (exclusive of depreciation and amortization)	145,208		60,503		140	%	418,197		141,011		197	%
Operating expense	35,845		22,731		58	%	100,996		63,575		59	%
Ad valorem taxes	5,903		3,238		82	%	15,936		9,003		77	%
General and administrative	23,468		6,957		237	%	72,180		17,920		303	%
Depreciation and amortization	65,005		57,154		14	%	192,609		170,291		13	%
Loss (gain) on disposal of assets	3,946		(37)		(10765)	%	12,602		417		2922	%
Total operating costs and expenses	279,375		150,546		86	%	812,520		402,217		102	%
Operating income	45,801		16,040		186	%	105,477		48,238		119	%
Other income (expense):
Interest and other income	—		3,578		(100)	%	250		4,141		(94)	%
Gain on Preferred Units redemption	—		—		NM		9,580		—		NM
Gain (loss) on debt extinguishment	—		(56)		(100)	%	(27,975)		4		(699475)	%
Gain on embedded derivative	488		—		NM		89,050		—		NM
Interest expense	(40,464)		(30,541)		32	%	(92,585)		(88,458)		5	%
Equity in earnings of unconsolidated affiliates	45,003		16,826		167	%	120,706		44,692		170	%
Total other income (expense), net	5,027		(10,193)		(149)	%	99,026		(39,621)		(350)	%
Income before income tax	50,828		5,847		769	%	204,503		8,617		2273	%
Current income tax expense	1,406		1,207		16	%	2,244		1,207		86	%
Net income including noncontrolling interests	$	49,422	$	4,640	965	%	$	202,259	$	7,410	2630	%

*The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the Form 10-Q basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q, for further information.

NM - Not meaningful

Three Months Ended September 30, 2022 Compared to Three Months Ended September 30, 2021

Revenues

For the three months ended September 30, 2022, revenue increased $158.6 million, or 95%, to $325.2 million, compared to $166.6 million for the same period in 2021. The increase was primarily driven by period to period higher commodity prices, increases in gathered and processed gas volumes, as well as similar increases in condensate and NGL volumes sold.

Service revenue

Service revenue consists of service fees paid to us by our customers for providing comprehensive gathering, treating, processing and water disposal services necessary to bring natural gas, NGLs and crude oil to market. Service revenue for the three months ended September 30, 2022, increased by $35.0 million, or 48%, to $107.6 million, compared to $72.6 million for the same period in 2021. This increase was primarily due to a period over period increase in gathered and processed gas volumes of 585.4 Mcf per day and 541.5 Mcf per day, respectively. Over 99% of service revenues are included in the Midstream Logistics segment.

35

Product revenue

Product revenue consists of commodity sales (including condensate, natural gas residue, and NGLs). Product revenue for the three months ended September 30, 2022, increased by $120.5 million, or 129%, to $213.8 million, compared to $93.3 million for the same period in 2021, primarily due to period over period increases in condensate prices combined with increased NGL and condensate sales volumes. Condensate prices increased $23.30 per barrel or 35%. NGL and condensate sales volumes increased 3.5 million barrels, or 550%. The increase in NGL and condensate sales volumes offset the decreased NGL prices of $5.77 per barrel, or 14%. This overall increase in NGL and condensate revenue was due to our plants being run in recovery for parts of the three months ended September 30, 2022 versus rejection during the same period in 2021. For the same reason, natural gas residue sales volumes decreased by 1.9 million MMBtu, or 28%. Partially offsetting this decrease in volumes, natural gas prices increased period over period by $3.34 per MMBtu, or 86%. Product revenues are included entirely in the Midstream Logistics segment.

Operating Costs and Expenses

Costs of sales (exclusive of depreciation and amortization)

Cost of sales (exclusive of depreciation and amortization) primarily consists of purchases of NGLs and natural gas from our producers at contracted market prices to support product sales to other third parties. For the three months ended September 30, 2022, cost of sales increased $84.7 million, or 140%, to $145.2 million, compared to $60.5 million for the same period in 2021. The increase was primarily driven by the period to period increase in commodity prices and increased NGL and condensate volumes. Cost of sales (exclusive of depreciation and amortization) are included entirely in the Midstream Logistics segment.

Operating expenses

Operating expenses increased by $13.1 million, or 58%, to $35.8 million for the three months ended September 30, 2022, compared to $22.7 million for the same period in 2021. Of the total increase, $7.7 million was driven by new operations acquired through the Transaction. The remaining increases were primarily driven by an increase in repairs and maintenance costs of $1.2 million, higher contract labor costs of $1.2 million, and higher safety and environmental expenditures of $0.8 million.

General and administrative

General and administrative (“G&A”) expense increased by $16.5 million, or 237%, to $23.5 million for the three months ended September 30, 2022, compared to $7.0 million for the same period in 2021. The increases were primarily driven by recognition of share-based compensation of $12.7 million, acquisition and integration costs of $2.7 million incurred in relation to the Transaction, and an increase of $0.8 million in insurance expenses.

Other Income (Expense)

Equity in earnings of unconsolidated affiliates

Income from EMI pipelines increased by $28.2 million, or 167%, to $45.0 million for the three months ended September 30, 2022, compared to $16.8 million for the same period in 2021. The increase was primarily due to the acquisition of new EMI pipelines and additional equity interests in the Company’s existing EMI pipeline, PHP. Equity in earnings of unconsolidated affiliates is included entirely in the Pipeline Transportation segment.

Nine Months Ended September 30, 2022 Compared to Nine Months Ended September 30, 2021

Revenues

For the nine months ended September 30, 2022, revenue increased $467.5 million, or 104%, to $918.0 million, compared to $450.5 million for the same period in 2021. The increase was primarily driven by period to period higher commodity prices, increases in gathered and processed gas volumes, as well as similar increases in condensate and NGL volumes sold.

36

Service revenue

Service revenue consists of service fees paid to us by our customers for providing comprehensive gathering, treating, processing and water disposal services necessary to bring natural gas, NGLs and crude oil to market. Service revenue for the nine months ended September 30, 2022, increased by $87.6 million, or 43%, to $290.1 million, compared to $202.5 million for the same period in 2021. This increase was primarily due to a period over period increase in gathered and processed gas volumes of 559.9 Mcf per day and 523.8 Mcf per day, respectively. Over 99% of service revenues are included in the Midstream Logistics segment.

Product revenue

Product revenue consists of commodity sales (including condensate, natural gas residue, and NGLs). Product revenue for the nine months ended September 30, 2022, increased by $374.0 million, or 153%, to $618.4 million, compared to $244.4 million for the same period in 2021, primarily due to period over period increases in NGL and condensate prices combined with increased sales volumes of these liquids. NGL prices increased $6.60 per barrel, or 20%, and condensate prices increased $35.69 per barrel, or 60%. NGL and condensate sales volumes increased 8.2 million barrels, or 280%. This substantial increase was due to our plants being run in recovery for most of the nine months ended September 30, 2022 versus rejection during the same period in 2021. For the same reason, natural gas residue sales volumes decreased by 3.2 million MMBtu, or 17%. Partially offsetting this decrease in volumes, natural gas prices increased period over period by $2.61 per MMBtu, or 73%. Product revenues are included entirely in the Midstream Logistics segment.

Operating Costs and Expenses

Costs of sales (exclusive of depreciation and amortization)

Cost of sales (exclusive of depreciation and amortization) primarily consists of purchases of NGLs and natural gas from our producers at contracted market prices to support product sales to other third parties. For the nine months ended September 30, 2022, cost of sales increased $277.2 million, or 197%, to $418.2 million, compared to $141.0 million for the same period in 2021. The increase was primarily driven by the period to period increases in commodity prices and NGL and condensate volumes discussed above. Cost of sales (exclusive of depreciation and amortization) are included entirely in the Midstream Logistics segment.

Operating expenses

Operating expenses increased by $37.4 million, or 59%, to $101.0 million for the nine months ended September 30, 2022, compared to $63.6 million for the same period in 2021. Of the total increase, $16.2 million was driven by the new operations acquired through the Transaction. The remaining increase was primarily driven by higher period over period electricity costs of $10.7 million, higher salaries and benefits of $3.7 million, higher repairs and maintenance costs of $2.9 million and higher contract labor costs of $2.8 million. The higher electricity costs were primarily due to electricity credits received in 2021 related to the extreme weather caused by Winter Storm Uri.

General and administrative

General and administrative (“G&A”) expense increased by $54.3 million, or 303%, to $72.2 million for the nine months ended September 30, 2022, compared to $17.9 million for the same period in 2021. The increases were primarily driven by recognized share-based compensation of $31.0 million, acquisition and integration costs of $18.5 million incurred in relation to the Transaction and an increase in insurance expenses of $2.2 million.

Depreciation and amortization

Depreciation and amortization expense increased by $22.3 million, or 13%, to $192.6 million for the nine months ended September 30, 2022, compared to $170.3 million for the same period in 2021. The increase was primarily driven by the new assets acquired through the Transaction.

Other Income (Expense)

Gain (loss) on debt extinguishment

For the nine months ended September 30, 2022, the Company recognized a loss on debt extinguishment of $28.0 million, compared with a gain of $4 thousand for the same period in 2021. The change reflected the loss on debt extinguishment recognized in relation to the comprehensive refinancing completed in June 2022.

37

Gain on embedded derivative

For the nine months ended September 30, 2022, the Company recognized a gain on embedded derivative of $89.1 million. The gain is a result of the decrease in fair value of the embedded derivative liability related to the redeemable noncontrolling interest Preferred Units, which was eliminated upon the ultimate redemption of these Preferred Units during July of 2022.

Equity in earnings of unconsolidated affiliates

Income from EMI pipelines increased by $76.0 million, or 170% to $120.7 million for the nine months ended September 30, 2022, compared to $44.7 million for the same period in 2021. The increase was primarily due to the acquisition of new EMI pipelines and additional equity interests in the Company’s existing EMI pipeline, PHP, through the Transaction closed in February 2022. Equity in earnings of unconsolidated affiliates is included entirely in the Pipeline Transportation segment.

Key Performance Metrics

Adjusted EBITDA

Adjusted EBITDA is defined as net income including noncontrolling interests adjusted for interest, taxes, depreciation and amortization, impairment charges, asset write-offs, the proportionate EBITDA from our equity method investments, equity in earnings from investments recorded using the equity method, share-based compensation expense, extraordinary losses and unusual or non-recurring charges. Adjusted EBITDA provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.

We believe that Adjusted EBITDA provides a meaningful understanding of certain aspects of earnings before the impact of investing and financing charges and income taxes. Adjusted EBITDA is useful to an investor in evaluating our performance because this measure:

•Is widely used by analysts, investors and competitors to measure a company’s operating performance;

•Is a financial measurement that is used by rating agencies, lenders, and other parties to evaluate our credit worthiness; and;

•Is used by our management for various purposes, including as a measure of performance and as a basis for strategic planning and forecasting.

Adjusted EBITDA is not defined in GAAP

The GAAP measure used by the Company that is most directly comparable to Adjusted EBITDA is net income including noncontrolling interests. Adjusted EBITDA should not be considered as an alternative to the GAAP measure of net income including noncontrolling interests or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income including noncontrolling interests. Adjusted EBITDA should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. The Company’s definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies in the industry, thereby diminishing its utility.

Reconciliation of non-GAAP financial measure

Company management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable GAAP measure, understanding the differences between Adjusted EBITDA as compared to net income including noncontrolling interests, and incorporating this knowledge into its decision-making processes. Management believes that investors benefit from having access to the same financial measure that the Company uses in evaluating operating results.

The following table presents a reconciliation of the GAAP financial measure of net income including noncontrolling interests to the non-GAAP financial measure of Adjusted EBITDA.

38

	Three Months Ended September 30,*						Nine Months Ended September 30,*
	2022		2021		% Change		2022		2021		% Change
Reconciliation of net income including noncontrolling interests to Adjusted EBITDA	(In thousands, except percentages)
Net income including noncontrolling interests	$	49,422	$	4,640	965	%	$	202,259	$	7,410	2630	%
Add back:
Interest expense	40,464		30,541		32	%	92,585		88,458		5	%
Income tax expense	1,406		1,207		16	%	2,244		1,207		86	%
Depreciation and amortization	65,005		57,154		14	%	192,609		170,291		13	%
Amortization of contract costs	448		448		—	%	1,344		1,815		(26)	%
Proportionate EMI EBITDA	78,357		21,704		261	%	190,438		59,677		219	%
Share-based compensation	12,661		—		NM		30,966		—		NM
Loss (gain) on sale of assets	3,946		(37)		(10765)	%	12,602		417		2922	%
Loss (gain) on debt extinguishment	—		56		(100)	%	27,975		(4)		(699475)	%
Derivative loss due to Winter Storm Uri	—		—		NM		—		13,456		(100)	%
Integration Costs	2,338		—		NM		10,012		—		NM
Acquisition transaction Costs	62		—		NM		6,412		—		NM
Other one-time cost or amortization	3,752		1,167		222	%	10,969		2,010		446	%
Producer Settlement	—		—		NM		—		6,827		(100)	%
Deduct:
Interest and other income	—		74		(100)	%	—		115		(100)	%
Gain on redemption of mandatorily redeemable Preferred Units	—		—		NM		9,580		—		NM
Gain on embedded derivative	488		—		NM		89,050		—		NM
Equity income from unconsolidated affiliates	45,003		16,826		167	%	120,706		44,692		170	%
Adjusted EBITDA	$	212,370	$	99,980	112	%	$	561,079	$	306,757	83	%

* The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to Note 1—Description of the Organization and Summary of Significant Accounting Policies for further information on the Company’s basis of presentation.

NM - not meaningful

Adjusted EBITDA increased by $112.4 million, or 112%, to $212.4 million for the three months ended September 30, 2022, compared to $100.0 million for the same period in 2021. The increase was primarily driven by an increase in net income including noncontrolling interest of $44.8 million, or 965%, and increases in add back related to the Company’s proportionate share of its EMI pipelines’ EBITDA of $56.7 million, or 261%, share-based compensation of $12.7 million, interest expense of $9.9 million and depreciation and amortization expense of $7.9 million, which are results of new operations acquired through the Transaction. The increase in adjusted EBITDA was partially offset by increases in EMI pipelines equity income of $28.2 million, which was the result of acquisitions of new EMI pipeline entities and additional PHP equity interests acquired.

Adjusted EBITDA increased by $254.3 million, or 83% to $561.1 million for the nine months ended September 30, 2022, compared to $306.8 million for the same period in 2021. The increase was primarily driven by an increase in net income including noncontrolling interest of $194.8 million, or 2630%, and increases in add back related to the Company’s proportionate share of its EMI pipelines’ EBITDA of $130.8 million, or 219%, share-based compensation of $31.0 million, depreciation and amortization expense of $22.3 million and integration costs of $10.0 million. The increase in add back was also due to increase in loss on debt extinguishment of $28.0 million as the Company completed its comprehensive refinancing in June 2022. The increase in adjusted EBITDA was partially offset by increases in gain on embedded derivatives of $89.1 million, EMI pipelines equity income of $76.0 million and the derivative loss add back due to the Winter Storm Uri of $13.5 million.

The 2022 Adjusted EBITDA presented in the above table does not include any expected synergies including ad valorem taxes, operating expenses and corporate G&A, which continue to be recognized over the course of 2022.

Segment Adjusted EBITDA

Segment Adjusted EBITDA is defined as segment net earnings adjusted to exclude interest expense, income tax expense, depreciation and amortization, the proportionate effect of these same items for our equity method investments and other non-recurring items. The following table presents segment adjustment EBITDA for the three and nine months ended September 30,

39

2022 and 2021. Also refer to Note 17—Segments in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for reconciliation of segment adjusted EBITDA to net income including noncontrolling interests.

	Three Months Ended September 30,*						Nine Months Ended September 30,*
	2022		2021		% Change		2022		2021		% Change
	(In thousands, except percentages)
Midstream Logistics	$	137,545	$	80,877	70	%	$	380,919	$	255,890	49	%
Pipeline Transportation	78,692		21,381		268	%	190,023		58,138		227	%
Corporate and Other**	(3,867)		(2,278)		70	%	(9,863)		(7,271)		36	%
Total segment adjusted EBITDA	$	212,370	$	99,980	112	%	$	561,079	$	306,757	83	%

* The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements of this Form 10-Q for further information on the Company’s financial statement consolidation.

** Corporate and Other represents those results that: (i) are not specifically attributable to a reportable segment; (ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense items.

Midstream Logistics segment adjusted EBITDA increased by $56.7 million, or 70%, to $137.5 million for the three months ended September 30, 2022, compared to $80.9 million for the same period in 2021. The increase was primarily driven by an increase in segment net income including noncontrolling interests of $71.7 million and increases in the add back related to depreciation and amortization expense of $7.6 million due to new operations acquired through the Transaction.

Midstream Logistics segment adjusted EBITDA increased by $125.0 million, or 49%, to $380.9 million for the nine months ended September 30, 2022, compared to $255.9 million for the same period in 2021. The increase was primarily driven by an increase in segment net income including noncontrolling interests of $111.5 million and increases in the add back related to loss on debt extinguishment of $28.0 million as the Company completed its comprehensive refinancing in June 2022, depreciation and amortization expense of $22.1 million due to new operations acquired through the Transaction.

Pipeline Transportation segment adjusted EBITDA increased by $57.3 million, or 268%, to $78.7 million for the three months ended September 30, 2022, compared to $21.4 million for the same period in 2021. The increase was driven by investments in GCX, EPIC and Shin Oak and a 100% increase in the Company’s investment in PHP, which were all acquired through the Transaction closed in February 2022. During the three months ended September 30, 2021, the Company only held a 26.67% interest in PHP.

Pipeline Transportation segment adjusted EBITDA increased by $131.9 million, or 227%, to $190.0 million for the nine months ended September 30, 2022, compared to $58.1 million for the same period in 2021. The increase was driven by the same factors driving the quarter over quarter increase disclosed above.

Capital Resources and Liquidity

For 2022, the Company’s primary capital spending requirements are anticipated to be related to the PHP expansion project, integration of the Alpine High gathering system with the legacy BCP system, certain integration related synergies including the relocation of compression units and treating assets to the legacy BCP processing plants, organic growth and maintenance capital expenditures in the Midstream Logistic segment, the Company’s contractual debt obligations and the Company’s payment of quarterly cash dividend on its Class A Common Stock and Class C Common Units as may be declared by its Board of Directors (the “Board”).

During the nine months ended September 30, 2022, the Company’s primary sources of cash were distributions from the EMI pipelines, borrowings under the Term Loan and Revolving Credit Facility, proceeds from the offering of the Notes, and cash generated from operations. Based on the Company’s current financial plan and related assumptions including the Reinvestment Agreement (as defined below), the Company believes that cash from operations and distributions from the EMI pipelines will generate cash flows in excess of capital expenditures and the amount required to fund the Company’s planned quarterly dividend over the next 12 months. Additionally, the Company has locked in the floating base rate on its Term Loan A through April 2023 to reduce short-term interest rate risk. Further, the Company entered into an interest rate swap with a $1 billion notional that is effective from May 1, 2023 through May 31, 2025 swapping floating SOFR for a fixed swap rate of 4.46%.

40

Comprehensive Refinancing

On June 8, 2022, the Partnership completed the private placement of $1.00 billion aggregate principal amount of 5.875% Sustainability-Linked Senior Notes due 2030, which are fully and unconditionally guaranteed by the Company. In addition, the Partnership entered into the new RCA, which provides for a $1.25 billion senior unsecured Revolving Credit Facility maturing on June 8, 2027, and a new TLA, which provides for a $2.00 billion senior unsecured Term Loan Credit Facility maturing on June 8, 2025. Proceeds from the Notes and the Term Loan Credit Facility were used to repay all outstanding borrowings under our existing credit facilities and to pay fees and expenses related to the offering. Refer to Note 6 — Debt and Financing Costs in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

Capital Requirements and Expenditures

Our operations can be capital intensive, requiring investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational regulations. During the nine months ended September 30, 2022 and 2021, capital spending for midstream infrastructure assets totaled $160.5 million and $60.6 million, respectively. The current year capital spend includes $25 million for the purchase of Brandywine NGL Pipeline and $12.5 million for the ongoing construction of the Delaware Link Pipeline. Management believes its existing gathering, processing, and transmission infrastructure capacity is capable of fulfilling its midstream contracts to service its customers. During the nine months ended September 30, 2022, the Company contributed $56.2 million to PHP, for the 2022 Capacity Expansion Project, compared to $20.5 million contributed in the same period of 2021.

The Company anticipates its existing capital resources will be sufficient to fund the future capital expenditures for EMI pipelines and the Company’s existing infrastructure assets over the next 12 months. For further information on EMIs, refer to Note 9—Equity Method Investments in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

Cash Flows

The following tables present cash flows from operating, investing, and financing activities during the periods presented:

	For the Nine Months Ended September 30,
	2022		2021
	(In thousands)
Cash provided by operating activities	$	453,244	$	159,350
Cash used in investing activities	$	(216,418)	$	(81,323)
Cash used in financing activities	$	(243,827)	$	(62,439)

Operating Activities. Net cash provided by operating activities increased by $293.9 million for the nine months ended September 30, 2022 compared with the same period in 2021. The change in the operating cash flows reflected increases in net income including noncontrolling interests of $194.8 million, adjustments related to non-cash items of $56.5 million and cash provided by changes in working capital of $42.5 million. Period over period increase in cash provided by operating activities was primarily driven by the new operations acquired through the Transaction, including distributions received from EMI pipelines acquired through the Transaction. The increase was partially offset by non-cash adjustment related to derivative fair value adjustment recognized during 2022.

Investing Activities. Net cash used in investing activities increased by $135.1 million for the nine months ended September 30, 2022 compared with the same period in 2021. The increase was primarily driven by an increase in property, plant and equipment expenditures of $99.9 million, which includes the Brandywine asset acquisition, an increase in contribution made to unconsolidated affiliates of $35.7 million and an increase in intangible assets expenditure of $9.6 million. The increase in cash outflow was offset by an increase in cash inflow of $13.4 million acquired through the acquisition closed in February 2022.

Financing Activities. Net cash used in financing activities increased by $181.4 million for the nine months ended September 30, 2022 compared with the same period in 2021. The increase was primarily due to increases in cash outflow for redemption of Preferred Units of $644.8 million, cash dividends paid to holders of Class A Common Stock of $24.4 million, cash distributions paid to holders of Preferred Units of $8.8 million and the increase in cash outflow was offset by net proceeds from the Company’s long-term debt and Revolving Credit Facility of $482.1 million and a reduction of cash distributions paid to holders of Class C Common Units of $29.3 million.

41

Dividend and Distribution Reinvestment Agreement

On February 22, 2022, the Company entered into a Dividend and Distribution Reinvestment Agreement (the “Reinvestment Agreement”) with certain stockholders including BCP Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC, APA Corporation Apache Midstream LLC, and certain individuals (each, a “Reinvestment Holder”). Under the Reinvestment Agreement, each Reinvestment Holder is obligated to reinvest at least 20% of all distributions on Common Units or dividends on shares of Class A Common Stock in the Company’s Class A Common Stock. Additionally, the Audit Committee and subsequently the Board resolved that for the calendar year 2022, 100% of all distributions or dividends received by each Reinvestment Holder would be reinvested in newly issued shares of Class A Common Stock.

During the first nine months of 2022, the Company made cash dividend payments of $24.4 million to holders of Class A Common Stock and $175.5 million was reinvested in shares of Class A Common Stock by the Reinvestment Holders.

Stock Split

On May 19, 2022, the Company announced a two-for-one Stock Split with respect to its Class A Common Stock and Class C Common Stock in the form of a stock dividend. The Stock Split was accomplished by distributing one additional share of Class A Common Stock for each share of Class A Common Stock outstanding and one additional share of Class C Common Stock for each share of Class C Common Stock outstanding. The additional shares of Common Stock were issued on June 8, 2022 to holders of record at the close of business on May 31, 2022.

Dividend

On October 19, 2022, the Board declared a cash dividend of $0.75 per share on the Company’s Class A Common Stock, which will be payable on November 17, 2022. The Company, through its ownership of the general partner of the Partnership, also declared a distribution of $0.75 per Common Unit from the Partnership to the holders of Common Units, which will be payable on November 17, 2022. As context requires, dividends paid to holders of Class A Common Stock and distributions paid to holders of Common Units may be referred to collectively as “dividends.”

Series A Cumulative Redeemable Preferred Units

The Partnership issued Preferred Units on June 12, 2019. Because the Transaction was accounted for as a reverse merger, certain Preferred Units that were issued and outstanding were assumed at Closing for accounting purposes. The Company assumed 525,000 Preferred Units as well as 29,983 paid-in-kind (“PIK”) Preferred Units immediately after the Closing.

Since the Closing, the Company redeemed all outstanding Preferred Units and PIK units for an aggregate redemption price of $644.8 million. The Company recognized a gain of $9.6 million on redemption of the mandatorily redeemable Preferred Units and excess of carrying amount over redemption price of $109.5 million on redemption of the redeemable noncontrolling interest Preferred Units. Refer to Note 11—Series A Cumulative Redeemable Preferred Units in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

Liquidity

The following table presents a summary of the Company’s key liquidity indicators at the dates presented:

	September 30, 2022		December 31, 2021
	(In thousands)
Cash and cash equivalents	$	11,728	$	18,729
Total debt	$	3,447,513	$	2,307,702
Available committed borrowing capacity	$	775,000	$	133,000

Cash and cash equivalents

As of September 30, 2022 and December 31, 2021, the Company had $11.7 million and $18.7 million, respectively, in cash and cash equivalents. The majority of the cash is invested in highly liquid, investment-grade instruments with maturities of three months or less at the time of purchase.

42

Total Debt and Available credit facilities

There is no assurance that the financial condition of banks with lending commitments to the Company will not deteriorate. The Company closely monitors the ratings of the banks in the Company’s bank group. Having a large bank group allows the Company to mitigate the potential impact of any bank’s failure to honor its lending commitment.

Guarantor Information

In June 2022, the Company completed the comprehensive refinancing, which included the issuance of the Notes and entry into the TLA and the Revolving Credit Agreement by the Partnership. These debt obligations are fully and unconditionally guaranteed by the Company. The guarantee of the Notes is subject to certain customary release, including the exercise of legal defeasance or covenant defeasance options, the satisfaction and discharge of the indentures governing the Notes, and the release of the guarantor from its guarantee of the Notes in accordance to the indentures governing the Notes.

Contractual Obligations

We have contractual obligations for principal and interest payments on our term loan credit facility. See Note 6—Debt and Financing Costs in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

Under certain of our transportation services agreements with third party pipelines to transport natural gas and NGLs, if we fail to ship a minimum throughput volume during any year, then we will pay a deficiency payment for transportation based on the volume shortfall up to the MVC amount. The Company has made no historical shortfall payments through September 30, 2022.

Off-Balance Sheet Arrangements

As of September 30, 2022, there were no off-balance sheet arrangements.

Critical Accounting Policies

The Company’s significant accounting policies, described in the Summary of Significant Accounting Policies in Exhibit 99.1 to Current Report on Form 8-K filed on July 5, 2022 and the Company’s Quarterly Report on Form 10-Q filed on May 10, 2022, are fundamental to understanding our results of operations and financial condition. There has been no significant change to the Company’s significant accounting policies subsequent to the Form 8-K filed on July 5, 2022. Any new accounting policies or updates to existing accounting policies as a result of new accounting pronouncements have been included in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

43

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosure About Market Risk

The Company is exposed to various market risks, including the effects of adverse changes in commodity prices and credit risk as described below. The Company continually monitors its market risk exposure, including the impact and developments related to the armed conflict in Ukraine, increase in interest rate and inflation trend, which introduced significant volatility and uncertainties in the financial markets during 2022.

Commodity Price Risk

The results of the Company’s operations may be affected by the market prices of oil and natural gas. A portion of the Company’s revenue is directly tied to local natural gas, NGLs and condensate prices in the Permian Basin. Fluctuations in commodity prices also impact operating cost elements both directly and indirectly. For example, commodity prices directly impact costs such as power and fuel, which are expenses that increase or decrease in line with changes in commodity prices. Commodity prices also affect industry activity and demand, thus indirectly impacting the cost of items such as labor and equipment rentals. Management regularly reviews the Company’s potential exposure to commodity price risk, and may periodically enter into financial or physical arrangements intended to mitigate potential volatility. Refer to Note 16—Derivative and Hedging Activities in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion regarding our hedging strategies and objectives.

Interest Rate Risk

The market risk inherent in our financial instruments and our financial position represents the potential loss arising from adverse changes in interest rates. As of September 30, 2022, the Company had interest bearing debt, net of deferred financing costs, with principal amount of $3.45 billion. The interest rate for the revolving and term loan credit facilities are variable, which exposes the Company to the risk of increased interest expense in the event of increases to short-term interest rates. Accordingly, results of operations, cash flows, financial condition, and the ability to make cash distributions could be adversely affected by significant increases in interest rates. If interest rates increase by 1.0%, the Company’s consolidated interest expense would have increased by approximately $6.3 million for the quarter ended September 30, 2022. The Company may periodically enter into interest rate derivatives to add stability to interest expense and to manage its exposure to interest rate movements. Refer to Note 16—Derivative and Hedging Activities in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion regarding our hedging strategies and objectives.

Credit Risk

The Company is subject to credit risk resulting from nonpayment or nonperformance by, or the insolvency or liquidation of third-party customers. Any increase in the nonpayment and nonperformance by, or the insolvency or liquidation of, the Company’s customers could adversely affect the Company’s results of operations.

44

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As of September 30, 2022, pursuant to Rule 13a-15(b) of the Exchange Act, the Company conducted an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Accounting and Administrative Operating Officer, who serves as the principal accounting officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Accounting and Administrative Operating Officer, concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2022.

The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. The Company’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that the Company files under the Exchange Act is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Accounting and Administrative Operating Officer, as appropriate, to allow timely decisions regarding required disclosure.

Change in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended September 30, 2022, that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

45

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For further information regarding legal proceedings, refer to Note 8—Commitments and Contingencies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

ITEM 1A. RISK FACTORS

Please refer to Part II, Item 1A — Risk Factors of the Company’s Quarterly Report Form 10-Q for the first quarter of 2022 filed on May 10, 2022.

46

ITEM 5. OTHER INFORMATION

Amended and Restated Code of Business Conduct

On November 9, 2022, our Board of Directors adopted an amended and restated Code of Business Conduct (the “Code of Ethics”). The Code of Ethics includes, among other things, updates to reflect the Company’s transition from the Nasdaq to the NYSE. The Code of Ethics took effect upon adoption by our Board of Directors and did not result in any waiver, explicit or implicit, of any provision of our previous Code of Ethics.

The Code of Ethics is available on our website at www.ir.kinetik.com/governance.

The foregoing description of the amendments reflected in the Code of Ethics does not purport to be complete and is qualified in its entirety by reference to the Code of Ethics, attached as Exhibit 14.1 hereto and incorporated herein by reference.

47

ITEM 6. EXHIBITS

EXHIBIT NO.		DESCRIPTION
2.1***	–	Contribution Agreement, dated October 21, 2021, by and among Altus Midstream Company, Altus Midstream LP, New BCP Raptor Holdco, LLC, and BCP Raptor Holdco, LP
3.1	–	Third Amended and Restated Certificate of Incorporation of Kinetik Holdings Inc.
3.2	–	Amended and Restated Bylaws of Kinetik Holdings Inc.
4.1	–	Amended and Restated Stockholders Agreement, dated October 21, 2021, by and among APA Corporation, Apache Midstream LLC, Altus Midstream Company, New BCP Raptor Holdco, LLC, Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC, and BCP Raptor Holdco, LP.
4.2	–	Second Amended and Restated Registration Rights Agreement, dated February 22, 2022, by and among Altus Midstream Company, Apache Midstream LLC, Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC and the other holders party thereto.
4.3	–	Indenture, dated June 8, 2022, by and among Kinetik Holdings Inc., Kinetik Holdings LP and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on June 14, 2022).
4.4	–	Form of 5.875% Sustainability-Linked Senior Notes (included in Exhibit 4.3) (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on June 14, 2022).
10.1	–	Third Amended and Restated Agreement of Limited Partnership of Altus Midstream LP, dated as of October 22, 2021.
14.1*	–	Kinetik Holdings Inc. Code of Business Conduct, as amended November 9, 2022.
31.1*	–	Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2*	–	Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1**	–	Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(b) and 18 U.S.C. 1350.
32.2**	–	Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(b) and 18 U.S.C. 1350.
101*	–	The following financial statements from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows, (iv) Condensed Consolidated Statements of Changes in Equity and Noncontrolling Interests and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
101.SCH*	–	Inline XBRL Taxonomy Schema Document.
101.CAL*	–	Inline XBRL Calculation Linkbase Document.
101.DEF*	–	Inline XBRL Definition Linkbase Document.
101.LAB*	–	Inline XBRL Label Linkbase Document.
101.PRE*	–	Inline XBRL Presentation Linkbase Document.
104*	–	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith.

** Furnished herewith.

*** Schedules and exhibits to this Exhibit have been omitted pursuant to Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.

48

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		KINETIK HOLDINGS INC.
Dated:	November 9, 2022	/s/ Jamie Welch
		Jamie Welch
		Chief Executive Officer, President, Chief Financial Officer and Director
		(Principal Executive Officer)
Dated:	November 9, 2022	/s/ Steven Stellato
		Steven Stellato
		Executive Vice President, Chief Accounting and Chief Administrative Officer
		(Principal Financial Officer)

49

EX-14.1

Exhibit 14.1

KINETIK HOLDINGS INC.

CODE OF BUSINESS CONDUCT

CONTENTS

OVERVIEW    1

OUR OVERARCHING POLICY    2

OUR COMMITMENT TO THE CODE OF BUSINESS CONDUCT AND ETHICS    3

Duty to Report    3

How to Report    3

No Retaliation    4

Enforcement    4

OUR COMMITMENT TO OUR GREATEST ASSET, OUR PEOPLE    5

Equal Employment Opportunity    5

Harassment    5

Social Media    5

Handling External Communications    6

OUR COMMITMENT TO SAFEGUARD COMPANY ASSETS

AND TO MAINTAIN FINANCIAL INTEGRITY    6

Conflicts Of Interest    6

Protecting Corporate Opportunities    8

Proper Handling Of Confidential Information    9

Maintaining Accurate Books And Records    9

Information Technology Acceptable Use    10

Records Management And Data Privacy 10

Protection and Proper Use of Company Assets    11

OUR COMMITMENT TO HEALTH, SAFETY, SECURITY

AND ENVIRONMENT (HSSE)    11

HSSE    11

Drugs And Alcohol    11

OUR COMMITMENT TO OUR STAKEHOLDERS    12

Gifts And Entertainment    12

Lobbying Expenditures, Gifts To U.S. Public Officials And Industry Activities    13

OUR COMMITMENT TO ADHERE TO ALL LEGAL

AND REGULATORY REQUIREMENTS    14

Insider Trading    14

Compliance With Applicable Laws, Rules And Regulations    15

Waivers Of The Requirements Of This Code    17

i

OVERVIEW

This Code of Business Conduct and Ethics (“Code”) consists of an overarching policy and sections of interest. The Code in its entirety applies to all directors, officers, employees and other individuals working for Kinetik Holdings Inc. and its subsidiaries (collectively and severally for purposes of this Code, “Kinetik” and “the Company”), with express authority to act on behalf of the Company (collectively “Kinetik Representative(s)”). As a member of this group, you are expected to:

•Read and understand this Code;

•Conduct yourself in accordance with its expectations;

•Raise questions or concerns if you become aware of possible violations;

•Fully cooperate with any investigation; and

•Annually certify you have fulfilled these expectations.

1

OUR OVERARCHING POLICY

Kinetik will conduct its business fairly and ethically and will comply with all applicable laws, regulations and government requirements. All conduct inconsistent with this policy is prohibited.

Kinetik is committed to conducting its business in accordance with the highest standards. It is Kinetik’s policy to conduct its business fairly, ethically and in compliance with all applicable laws, rules, regulations and government requirements applicable to Kinetik’s business (hereinafter “laws”). Conduct inconsistent with this policy is prohibited.

This policy, and the Code generally, require not only the avoidance of misconduct, but also the avoidance of acts or omissions that give the appearance of misconduct. Kinetik Representatives shall not enter into any activity or incur any expense or liability that would compromise our commitment to these high standards.

This Code is designed to deter wrong-doing and to promote:

•Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

•Fair, full, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the Securities and Exchange Commission and in other public communications made by the Company;

•Compliance with applicable governmental laws;

•Prompt internal reporting of violations or suspected violations of the Code to an appropriate person or persons identified in the Code; and

•Accountability for adherence to the Code.

Failure to comply with this policy or any other provision of this Code by any Kinetik Representative will subject that person to disciplinary action, up to and including termination of employment. Failure to comply with this policy or any other provision of this Code by a Company director shall be reported to the Audit Committee of the board of directors, which shall make a recommendation to the board of directors on appropriate action, up to and including removal of the subject director from the board of directors. The subject director shall not participate as a voting member in the committee’s or the board’s deliberations.

It is not possible to enumerate all of the situations that could result in an actual or apparent violation of this policy. However, the following areas are of particular concern to Kinetik with respect to the conduct of the Company’s business and are an extension of this policy and part of the Code. This Code must be interpreted using good judgment and common sense. Kinetik Representatives are encouraged to discuss questions or concerns relating to this Code with their supervisors, a member of the Compliance Team, the Human Resources Department, or other members of management, while directors should direct their questions and concerns to the Audit Committee.

2

OUR COMMITMENT TO THE CODE OF BUSINESS CONDUCT AND ETHICS

Duty to Report

Each Kinetik Representative is directly responsible for promptly reporting to the Company any actual, attempted or apparent violation of law.

Protecting and preserving Kinetik’s reputation requires that Kinetik Representatives promptly disclose any actual or suspected violation of law or this Code. Importantly, it is your duty as a Kinetik Representative to voice your concern so that the matter can be properly investigated and addressed. In the event that a Kinetik Representative in good faith believes, directly observes or through documentation or other information becomes aware of a violation of law or this Code, the Kinetik Representative must promptly report the matter to the Legal Department, the Human Resources Department, the internal audit department or such other persons as the Audit Committee determines to be appropriate. Such persons are referred to herein as the “Compliance Team.” This report may be made directly to the Compliance Team, or through his or her immediate supervisor, a member of the Compliance Team, the Human Resources Department, the Hotline or any member of management with whom the person is comfortable discussing the matter, and with respect to matters involving the board of directors, the Audit Committee.1

For concerns regarding accounting, internal accounting controls or auditing matters that are subject to the Company’s “Procedures for the Submission of Complaints and Concerns Regarding Accounting, Internal Accounting Controls or Auditing Matters,” the Kinetik Representative should also report the matter in accordance with those procedures or the through the Hotline, which is available on Kinetik’s website at www.kinetik.com.

How to Report

To report an actual or suspected violation of law or this Code, you may contact any of the following:

•Your supervisor

•A member of the Compliance Team

•The Human Resources Department

•The Hotline: 1-844-659-5688

You may also file an online Hotline report at: https://secure.ethicspoint.com/domain/media/en/gui/57863/index.html.

Q:    I have seen and heard things that lead me to believe that a co-worker may be violating this Code by removing confidential information for the purpose of taking that information to a new job at one of Kinetik’s competitors, but I don’t have any hard evidence or know that for certain. Should I report this?

A:    Absolutely, you should report your concern. You do not need to have conclusive proof that a violation has been committed in order to make a report, only a good faith belief based on facts or observations that a violation may be occurring. It is far better to report and have the investigation conclude that no violation has taken place, than to sit by idly

1 Nothing herein shall require an attorney representative of Kinetik to jeopardize or waive privilege of the organization without its express written consent.

3

while Kinetik’s confidential information is stolen and/or provided to a competitor. It is your duty to speak up.

Q:    If I utilize the Hotline to make a report, will I be able to remain anonymous?

A:    Yes. Any person calling the Hotline to report an alleged violation of law or this Code has the option to remain anonymous. The Hotline is hosted by a reputable third party. It is possible that your identity will be uncovered during any subsequent investigation, but Kinetik will preserve your anonymity to the extent possible under the law.

No Retaliation

Retaliation or retribution against any Kinetik Representative who in good faith reports a violation is strictly prohibited.

All Kinetik Representatives can be confident that Kinetik management will stand behind and support those who raise good faith concerns of behavior that potentially violates the law or this Code. In no event will the Company take or threaten any action against a Kinetik Representative for making a complaint or reporting in good faith a potential violation of law or this Code. Retaliation or retribution against any Kinetik Representative who in good faith reports a violation pursuant to this Code is cause for disciplinary action of the person or persons engaging in retaliation, up to and including termination of employment.

Q:    Will I get in trouble with my supervisor if I report a concern through the Hotline or otherwise?

A:    If the matter is one that you can discuss with your supervisor, Kinetik encourages this as a first course of action. If you are uncomfortable speaking with your supervisor, rest assured that no adverse action will be taken against you for reporting a good faith concern to others as set forth in the Code, including through the Hotline. To the contrary, Kinetik encourages good faith reporting. However, if you knowingly or recklessly submit false information or misrepresent the facts in making your report, then you will be subject to disciplinary action for filing a false report, up to and including termination.

Enforcement

Each officer and employee of the Company will be responsible for enforcement of this Code in his or her activity and in the activities of his or her direct reports, in consultation with the Company’s General Counsel, Compliance Team and Human Resources Department.

All Kinetik Representatives shall comply with the policies set forth and incorporated by reference in this Code. Kinetik retains the sole discretion to interpret the terms and conditions of this Code, as well as all other policies regarding the terms and conditions of employment for all Kinetik Representatives. Any violation of this Code or other Company policies may give rise to disciplinary action, up to and including termination of employment. Under certain circumstances, a violation of this Code or other Company policies may also result in referral for civil action or criminal prosecution.

4

OUR COMMITMENT TO OUR GREATEST ASSET, OUR PEOPLE

Equal Employment Opportunity

Kinetik’s employment policy is to provide equal employment opportunity to all persons.

Kinetik’s employment policy is to provide equal employment opportunity to all persons. No employee or applicant for employment will be discriminated against because of race, color, religion, sex, familial status, marital status, sexual orientation, genetic information, gender identity, national origin, age, otherwise qualified disability or veteran status.

Harassment

Kinetik is committed to providing all employees with a work environment free from any form of harassment.

Kinetik is committed to providing a work environment free of any form of harassment, including sexual harassment or harassment on the basis of race, national origin, ethnicity, religion, gender, sexual orientation, age or disability. Harassment also includes any offensive treatment or behavior, which, to a reasonable person, creates an intimidating, hostile or abusive work environment. This could take the form of the harassment listed above, but could also include other forms of hostile, intimidating, threatening, humiliating or violent behavior, which are also prohibited.

All individuals are expected to avoid any behavior or conduct that could reasonably be interpreted as unlawful harassment. Such conduct includes: offensive sexual flirtation; unwelcome advances and/or propositions; verbal abuse, including that of a sexual nature; graphic or degrading comments about an individual or his/her appearance; and the display of sexually suggestive, explicit or offensive objects, materials or pictures. Such conduct also includes sexually-oriented jokes, inappropriate comments and racial or ethnic remarks, jokes and slurs.

It is also misconduct for managers or supervisors who know of harassment to fail to report such behavior or to fail to take immediate, appropriate corrective action.

Q:    I have a co-worker that frequently makes inappropriate and suggestive sexual jokes in my presence. I have tried to politely indicate that I would prefer that he not make those statements to or around me, but the behavior has not stopped. What can I do?

A:    The behavior you have described is not appropriate workplace behavior. You should discuss the situation with your supervisor, or if you are not comfortable speaking to your supervisor regarding this situation, then you should contact Human Resources, a member of the Compliance Team or the Hotline.

Social Media

Social media discussions about Kinetik or other industry topics should follow the Company’s general guidelines.

In an era where social media is prevalent and allows for thoughts to be immediately shared on Facebook, Twitter or a multitude of other sites, the Company encourages all Kinetik Representatives to pause, use good judgment and ensure that social media posts are consistent with this Code. As an aid, the following guidelines have been established:

5

•Protect confidential and proprietary information. Do not ever post or publish information that may even possibly be confidential or proprietary to Kinetik. If you have any question on whether it is appropriate to release the information, do not post.

•If an official response is needed concerning a matter involving Kinetik, refer the matter to a Company spokesperson in the Public Relations group.

•Disclose that your opinions are your own and be honest about who you are.

•Follow the terms of service and other legal guidelines.

•Use good judgment and keep in mind Kinetik’s high standards of conduct and the importance of always acting with honesty, integrity and respect for the dignity of others.

•You are responsible for what you post. If it gives you pause, then pause rather than post or publish.

Handling External Communications

Only authorized personnel may speak to media or the investment community on the Company’s behalf.

Kinetik takes steps to ensure that the Company’s public disclosures are accurate and honest. As part of the Company’s system of controls, only authorized personnel are allowed to speak on the Company’s behalf to media or members of the investment community. If you receive an inquiry from any external source requesting a statement concerning Kinetik’s business, please be polite and courteous at all times. Then, please refer the inquiry to the Public Relations group. In the event any employee is engaged by a trespasser or protester, do not engage with them except to provide contact information for Public Relations. Employees should then contact their supervisor or security. Always assume you are being recorded, even if it is not readily apparent.

OUR COMMITMENT TO SAFEGUARD COMPANY ASSETS AND TO MAINTAIN FINANCIAL INTEGRITY

Conflicts Of Interest

All business decisions for Kinetik should be based upon what a Kinetik Representative honestly believes to be in the best interests of the Company and in the long-term interest of our stockholders.

Any action or decision taken in furtherance of Kinetik’s business must be made in the Company’s best interests, based upon sound business judgment, and without a conflict of interest. Any direct or indirect conflict of interest between a Kinetik Representative and the Company is prohibited, unless the Company grants its consent. In addition, pursuant to the Amended and Restated Stockholders’ Agreement, dated October 21, 2021, for so long as such agreement remains in effect, certain transactions between the Company and the stockholders specified therein or their affiliates will require prior approval of 66% or more of the disinterested directors of the Company’s board of directors.

A Kinetik Representative has a conflict of interest if, in the course of his or her duties for the Company, his or her judgment and discretion is or may be influenced by considerations of personal gain or benefit, or gain or benefit to a third party other than the Company. Note that a

6

conflict exists and must be disclosed, as set forth below, where you could be influenced to act in a way that benefits you or a third party—that is, you need not be actually influenced. Thus, even if you are certain and steadfast that you can set the actual or potential conflict aside and only make decisions that are in the best interest of Kinetik, that issue must nonetheless be disclosed so that the company can make a determination about how the conflict should be addressed. Kinetik Representatives should use reasonable judgment when assessing a potential conflict of interest, especially with regard to any family or personal business interest or relationship or any business owned or operated by a close personal friend.

Depending upon your role with the company, it is your affirmative responsibility to identify and disclose all conflicts of interest as set forth in this section. Potential conflicts of interest should be immediately reported by directors notifying the Audit Committee. Employees are required to disclose conflicts or potential conflicts in accordance with this policy and Kinetik’s Employee Handbook. Once a conflict has been submitted in accordance with those procedures, the relevant manager or supervisor and Compliance must discuss and agree upon actions that can be taken, or controls implemented, to remove or mitigate the conflict.

Q:    My brother co-owns a company that has recently supplied services to Kinetik. In my new role with Kinetik, I have decision-making authority regarding which vendors to hire in this area. What should I do?

A:    This issue has created, at the very least, the appearance of a conflict of interest, which must be remedied. You are required to disclose the conflict in accordance with the processes and procedures outlined in Kinetik’s Employee Handbook and take no further action with respect to your brother’s company until the conflict has been appropriately considered and addressed. For employees, that means disclosing the potential conflict to the Compliance Team. Disclosure and adherence to any mitigation efforts put into place by management protects you from any allegation that your decision was biased or that you discriminated against other Kinetik vendors in favor of your brother. Even though Kinetik has used your brother’s company in the past, any decision regarding additional or future business should be made by a Kinetik employee free from conflicts and senior to you. If you have any questions regarding whether a matter is a conflict and/or whether a matter must be disclosed, you should discuss the matter with your supervisor and/or a member of the Compliance Team. When in doubt, it is always better to err on the side of disclosure.

Outside Employment, Positions And Directorships

Kinetik encourages all Kinetik Representatives to be involved in the community, assist charities and pursue personal interests outside of the office. Those activities, however, must be undertaken responsibly and pursued on personal time. Accordingly, Kinetik Representatives are prohibited from accepting any employment, position or directorship (of any organization) outside of Kinetik if that employment, position or directorship would:

•Create an irreconcilable conflict of interest between the Kinetik Representative and Kinetik;

•Require the Kinetik Representative to divulge Kinetik’s confidential or proprietary information;

•·    Prevent the Kinetik Representative from being available to perform his or her job responsibilities during all regular office hours (unless, of course, the employee has elected to use his or her allotted personal holidays or vacation time for the activities in question);

7

•Require the Kinetik Representative to work on matters relating to the other employment, position or directorship while on Kinetik time or by using Kinetik property or information; or

•Significantly reduce the Kinetik Representative’s efficiency or availability.

If you have any question regarding whether any outside employment, position or directorship will be a conflict or present an unreasonable demand on your time given your responsibilities at Kinetik, speak with your supervisor, Human Resources or a member of the Compliance Team regarding your concern so that the issue may be addressed proactively.

Protecting Corporate Opportunities

Kinetik Representatives are prohibited from using corporate property, information or position for personal gain.

During employment by or service with Kinetik, all Kinetik Representatives are prohibited from:

1.Taking for themselves or their associates corporate opportunities that they learn about through their employment with or service to Kinetik;

2.Using Company property or information or their position with the Company for personal gain; or

3.Competing with the Company.

In addition, after employment by or service with Kinetik, all Kinetik Representatives are prohibited from using corporate property, information or their former position for personal gain.

Proper Handling Of Confidential Information

Kinetik Representatives shall not divulge to third parties any confidential information obtained during employment or service for Kinetik.

One of Kinetik’s most valuable assets, which must be safeguarded by all Kinetik Representatives, is Kinetik’s confidential information. Such information is the lifeblood of Kinetik’s success and it can take many forms, including technical, strategic, operational, financial and other non-public business information. Release of confidential information outside of Kinetik risks harm to Kinetik by giving our competitors an insight into Kinetik’s operations and/or strategic goals and thereby providing an unfair advantage to those competitors.

During and after employment by or service with Kinetik, Kinetik Representatives shall not divulge to third parties, or appropriate to their own use, or to the use of others, any confidential information obtained during employment or service for Kinetik. Further, every Kinetik Representative has an affirmative duty and responsibility to use due care when in possession of Kinetik’s confidential information in order to prevent an inadvertent or unintentional disclosure of confidential information. The term “confidential information” as used in this policy includes but is not limited to:

•Trade secrets;

•Intellectual property;

•Technical materials and information;

8

•Bid data, acquisition and divestiture activities, counterparty names and transaction timing and transaction information;

•Processes and technology developed for or used by Kinetik;

•Joint venture, partnership, financing and marketing activities;

•Compilations of information, engineering information, financial information or specifications that are used in the operation of Kinetik’s business or that may be used in the operation of Kinetik’s business in the future; and

•Other information relating to the Company’s business that is not public knowledge.

Q:    I often go to work with a group of co-workers, and at times we discuss Kinetik business that is not generally known to the public. Is this a violation of the Code?

A:    We rely upon and expect that Kinetik Representatives will exercise good judgment and discretion concerning Kinetik business and confidential information. Discussing confidential Kinetik business in an environment where it could be overheard by a competitor is not consistent with the due care that should be exercised to protect Kinetik’s confidential information, and it could provide the basis for disciplinary action, up to and including termination, depending upon the facts and circumstances. Therefore, you should take great care to ensure that your conversations in public places do not violate this Code.

Maintaining Accurate Books And Records

It is the responsibility of every Kinetik Representative to follow Company procedures to ensure that the Company’s books and records are accurate and fairly represent the financial condition of Kinetik.

The maintenance of books and records that are fair, accurate, complete and timely recorded and updated is crucial for both the efficient operation of our business and for Kinetik’s disclosure and financial reporting obligations. In support of the Company’s obligations, Kinetik Representatives shall follow Company procedures to ensure that business transactions are consistently executed, recorded and reported in such a manner as to allow the Company to accurately compile and report its financial statements and other information necessary for the management of the business.

Any attempt to conceal, alter, modify or misstate information in Kinetik’s books and records is both illegal and unethical. Any violation of this policy will result in disciplinary action, up to and including termination, and may result in criminal prosecution as well. If you are aware of or suspect any accounting irregularities or concerns with Kinetik’s books and records, you have a duty to report that information in conformity with the “Procedures for the Submission of Complaints and Concerns Regarding Accounting, Internal Accounting Controls or Auditing Matters.” Additionally, all books and records shall be preserved for the appropriate amount of time in accordance with Company policy.

Q:    We are nearing quarter close and, over my objections, I am feeling a lot of pressure to “make the numbers work” but I don’t feel like I can raise this issue with my direct supervisor. What can I do?

9

A:    Kinetik strictly prohibits and will not permit any behavior that may call into question the integrity of the Company’s books and records. The pressure being applied to you is inappropriate and if you are uncomfortable raising this with your direct supervisor, then you are obligated under this Code to report it to a member of the Compliance Team, through the Hotline, or by utilizing the “Procedures for the Submission of Complaints and Concerns Regarding Accounting, Internal Accounting Controls or Auditing Matters.”

Information Technology Acceptable Use

Kinetik’s computing environment is to be used for Kinetik business purposes.

Kinetik is committed to protecting the Company and its employees and partners from illegal or damaging actions performed on purpose or unwittingly by individuals using our computing environment. Thus, accordingly, Kinetik’s computing environment is to be used for Kinetik business purposes only and is for approved users only; passwords must not be shared or provided to any unapproved user. Incidental personal use is generally allowed provided it does not interfere with the performance of job duties, consume an inordinate amount of system resources or violate any other provision of the Company’s Information Security Policy or this Code.

Records Management And Data Privacy

Kinetik Representatives must take steps to preserve and protect Company records.

Records are information created or received on any media preserved because it reflects the position, transactions or business of the Company. Non-records are information including copies for convenience, materials in the public domain, material relating to non-business activities and working papers, drafts and versions not considered critical. Kinetik manages its records consistent with the following principles:

•Create only those records that are needed for the operation of the Company.

•Comply with state, federal, regional and international legal and regulatory requirements including requirements related to litigation, government investigation and audit.

•Destroy non-records as soon as they are no longer required.

All Company information (made up of records and non-records) is the property of the Company. No Kinetik Representative has any personal or property right to the information of the Company including anything that the Kinetik Representative helped develop or compile.

Kinetik is further committed to protecting the sensitive and/or confidential information in its control of both the Company and any of its employees consistent with and subject to all legal and regulatory requirements. Without specific, prior authorization from both the Human Resources and Legal Departments, unless their role requires it, no Kinetik Representative is permitted to obtain, view or access the personal information of another Kinetik Representative. Such personal information shall only be accessed by those Kinetik Representatives whose job function requires access to the information. The information must not be distributed, transported or circulated beyond those for whom it is necessary to complete their job requirements for the Company. This policy applies to information identifying a unique person, for example sensitive medical, financial, training, address or employment information. It is not intended to create any right of privacy in other potentially personal information a Kinetik Representative chooses to house within Kinetik’s computing environment. Users have no expectation of privacy whatsoever for

10

any personal information stored on Kinetik’s IT and communications systems (for further information, please refer to the Information Security Policy).

Protection and Proper Use of Company Assets

Kinetik Representatives should endeavor to protect the Company’s assets and resources, and ensure their efficient use.

The use of any Company funds or assets for any unlawful or improper purpose is prohibited. Theft, carelessness and waste have a direct impact on the Company’s profitability. Any suspected incident of fraud or theft should be reported immediately for investigation. Company equipment should not be used for non-business related purposes, though incidental personal use may be permitted (such as occasional use of the Company’s stationery, supplies, copying facilities or telephone when the cost to the Company is insignificant).

OUR COMMITMENT TO HEALTH, SAFETY, SECURITY AND ENVIRONMENT (HSSE)

HSSE

Kinetik will conduct business in a responsible manner that protects the environment and the health, safety and security of our employees, contractors and the communities where we operate.

At Kinetik, safety is not negotiable and will not be compromised. Kinetik is committed to meeting this core value through applicable Health, Safety, Security and Environment policies, standards and practices, which define workforce expectations and behaviors that drive Kinetik to build and maintain a culture of safety and environmental responsibility. Violating any of these policies, standards and practices has consequences up to and including immediate termination.

Every Kinetik Representative is empowered to fulfill their responsibility to stop work where they believe a potential for a safety or environmental incident exists. Accidents, unsafe practices or conditions or potential noncompliance with applicable laws or policies and procedures must be reported immediately and investigated.

Kinetik reserves the right to conduct searches for security reasons for unauthorized substances and other contraband of employee and contractor personal property, living quarters, common areas and vehicles located on Kinetik property.

Q:    Will any reprisal, punishment or other consequences result if I stop work because I believe that a task is being performed may result in an unsafe act or condition?

A:    There will not be any retribution when a job is stopped in good faith even if it is deemed unnecessary. Employees and contractors must not feel apprehensive to act on their obligation to stop work.

Drugs And Alcohol

To ensure we conduct our business in a safe and environmentally sound manner, Kinetik prohibits the use or possession of drugs or alcohol on Company premises.

Kinetik recognizes that any Kinetik Representative under the influence of drugs, alcohol and other substances pose a serious threat to the work environment. Kinetik prohibits the use, sale, distribution or possession of illegal or illicit drugs or alcohol on Company premises. Kinetik

11

Representatives are prohibited from being under the influence of illegal or illicit drugs or prescription medication that can impair judgment, or alcohol while performing work activities on Company business or property. Kinetik may at times, such as official Company events or celebrations, permit the use of alcohol so long as it is approved in advance by management; however, the Kinetik Representative remains at all times personally responsible for his or her own conduct.

OUR COMMITMENT TO OUR STAKEHOLDERS

Gifts And Entertainment

Gifts and entertainment to or from third parties must be reasonable in value, appropriate in nature, and disclosed and/or approved as required in accordance with company policy.

The Company recognizes that customary business practices on occasion may include the provision of meals, token gifts, and/or entertainment by or to current or prospective customers, vendors, and business partners in the course of pursuing the legitimate business interests of the Company. This Code and Kinetik’s separate policies on conflicts of interest and gifts and entertainment are not intended to prohibit such legitimate customary business practices that are meant to create goodwill and enhance business relationships. However, consistent with Kinetik’s commitment to conducting our business with honestly and integrity and the Company’s policy prohibiting any undisclosed actual or potential conflicts of interest, the following forms of gifts or entertainment are strictly prohibited:

•Gifts of cash or cash equivalents (including gift cards)—whether given or received;

•Gifts or entertainment that could be construed as a bribe or a payoff;

•Gifts or entertainment to influence business with a person or an entity with whom they are affiliated; and

•Gifts or entertainment that are illegal, lewd, or offensive in nature or would embarrass Kinetik if made public.

Kinetik Representatives should also not solicit a favor, gift, or entertainment. You are encouraged to discuss with your supervisor or management any proposed gift or entertainment if you are uncertain about whether it is reasonable or acceptable to give or receive a particular gift or entertainment.

This policy and Kinetik’s Employee Handbook are designed to protect Kinetik and each of its employees by avoiding even the appearance of a conflict or improper bias. To promote transparency and protect Kinetik, certain gifts, entertainment, or other benefits received by Kinetik employees must now be disclosed to the Compliance Team at the time the gift, entertainment, or other benefit is received or as soon thereafter as reasonably practicable. The matters that must be disclosed and the disclosure procedure are detailed in Kinetik’s separate policies on conflicts of interest and gifts and entertainment, and every employee is required to read the policies and understand and adhere to their obligations.

If you have any questions regarding what gifts and entertainment must be disclosed or what approvals are required under certain circumstances, review Kinetik’s Employee Handbook. If you still have questions following that review, reach out to your supervisor or a member of the Compliance Team for guidance.

12

Q:    A manager of a company with which Kinetik currently maintains a business relationship has invited me out to dinner at a nice Houston restaurant when she is next in town. There is no bid process underway or planned. As an employee, may I accept the dinner invitation? If so, am I required to tell anyone?

A:    Generally, this is acceptable and a common way to cultivate and retain business relationships. If you have any question concerning whether it would be appropriate to accept the invitation, reaching out to your supervisor and obtaining authorization in writing will help to ensure that your motives are not later questioned. In addition, you should consult Kinetik’s Employee Handbook to determine whether the dinner and any other associated gifts or entertainment must be disclosed to the Compliance Team.

Lobbying Expenditures, Gifts To U.S. Public Officials And Industry Activities

Lobbying Expenditures

Lobbying activities are highly regulated and subject to a number of legal requirements. To the extent any Kinetik Representative intends to communicate with government officials concerning matters relevant to or of concern to Kinetik, please contact the General Counsel to ensure that the Company’s message is coordinated.

Gifts to U.S. Public Officials

While the Foreign Corrupt Practices Act is often discussed in the context of gifts or other offerings to foreign officials, it is important to keep in mind that gifts to U.S. public officials are also highly regulated and come with their own legal requirements. Such public officials include appointed or elected officials at the local, state and federal levels, as well as all government employees such as public safety officers. The U.S. Government, the states and many local jurisdictions have laws governing gifts to such individuals that are broad and cover anything of value that could be provided to the public official, such as meals, entertainment and gift certificates. Violations of these laws carry potentially serious penalties, including both civil fines and the prospect of criminal prosecution. Before providing anything of value to a public official, it is important that you consult with the General Counsel, a member of the Compliance Team and/or the Legal Department to ensure that you do not inadvertently run afoul of any gift prohibition, reporting requirement or other legal obligation.

Industry Activities

Kinetik abides by all applicable freedom of association laws in the areas in which the Company operates.

Kinetik Representatives may, from time to time and as a result of their experience and expertise in our industry, be asked to participate in industry trade associations, focus groups, seminars or other activities. Kinetik is proud to have industry-leading subject matter experts in a number of disciplines working for the Company. In the context of these activities, however, it is important that Kinetik reaches consensus on and conveys a consistent message to ensure that the strategic goals and vision of the Company as a whole are represented and communicated. Kinetik has an established procedure for corporate memberships in various industry trade associations that is managed by the Public Relations Department. To the extent you wish to participate in any such trade associations, focus groups or seminars, please contact the Public Relations Department to ensure the Company is aware of and able to coordinate all such activities by Kinetik Representatives.

13

Kinetik’s Commitment to Human Rights

Every Kinetik Representative and business partner is expected to conduct business with integrity and respect for human rights.

Kinetik operates its business in a manner that reflects its support and respect for the protection and advancement of human rights. Although governments have the primary responsibility for protecting human rights, Kinetik expects and requires that each Kinetik Representative as well as our business partners will adhere to their responsibility to respect and observe universally recognized rights and freedoms. These include, among other things, the right to a safe work environment and the right to a workplace free from any form of forced labor, modern slavery, or human trafficking.

These principles in action mean that Kinetik Representatives must embody and model the company’s core values at all times. Accordingly, Kinetik Representatives are prohibited from engaging in any activity that supports, encourages, or is linked to forced labor, modern slavery, or human trafficking. Such activities include, among other things, soliciting or engaging in prostitution (even if legal in the jurisdiction where it occurs); using force, fraud, or coercion to subject a person to involuntary servitude; or obtaining labor from a person by threats of harm to that person or another.

Kinetik’s commitment to human rights goes beyond our employees or those working for the company on contract status. Kinetik respects the local laws of the communities in which we operate, and the company ensures we are conducting our business as a responsible member of society. Kinetik furthers this commitment in its business dealings with our vendors, contractors, and business partners. Kinetik expects and requires those that do business with the company to reflect our values and share our commitment to promoting ethical conduct and human rights.

OUR COMMITMENT TO ADHERE TO ALL LEGAL AND REGULATORY
REQUIREMENTS

Insider Trading

Kinetik Representatives are prohibited from using material, nonpublic information for personal gain or to enrich others.

Using material, nonpublic information gained – whether about Kinetik or any other publicly traded company – in order to enrich yourself or others is not only unethical, but it is also illegal. All Kinetik Representatives are expected to be familiar with the laws governing insider trading and, specifically, to read, understand and adhere to Kinetik’s Insider Trading Policy. Violations of insider trading laws carry significant penalties, including not only civil fines but the

possibility of criminal prosecution and jail time. Under U.S. securities laws, it is unlawful for any person, who by virtue of his or her employment with Kinetik has access to material, nonpublic information concerning Kinetik, its prospects or activities, to:

•Buy or sell Kinetik securities (stock, bonds, debentures, etc.) or the securities of any other company to which the information relates, while in possession of inside information; or

•Disseminate the information, directly or indirectly, to friends, family members or others who in turn trade on or misuse the information; or

•Otherwise use the information to his or her own advantage.

14

It is important to note that the prohibition extends not only to trading in Kinetik securities, but also to securities of any other company with which Kinetik does business if the employee gains the information at work. The most common example of another company whose securities Kinetik Representatives may be restricted in trading is a company with which Kinetik may be negotiating a prospective merger or acquisition or disposition of assets that would be significant to the other company.

You need not trade yourself to violate securities laws. Providing inside information to others may itself be illegal if the recipient trades on it, even if you did not intend for the other person to trade or did not know that they planned to do so. If you are in possession of inside information, it is important that you discuss it only with those Kinetik Representatives who need to know the information to perform their work for Kinetik. If you have any question concerning the Insider Trading Policy, you should contact the General Counsel.

Q:    I recently overheard a conversation in which a co-worker stated that he was planning to purchase a large amount of Kinetik stock. This co-worker works on the same projects as I do and I therefore believe that he may be in possession of material, nonpublic information. What should I do?

A:    You have a duty to report this issue to ensure that it is adequately investigated. You should immediately notify your supervisor, the General Counsel or the Hotline of your concern.

Q:    If I am in possession of material, nonpublic information, how long must I wait before I am permitted to buy or sell Kinetik stock (or that of another company impacted by the information)?

A:    You may not trade until two full trading days have elapsed since the information was released publicly. For example, if the information was released before markets opened on Monday, you could begin trading on Wednesday.

Q:    In general conversation with friends, the subject of Kinetik and how the company is doing may come up. In the context of those discussions, is it okay for me to tell people if I am blacked out from buying or selling Kinetik stock?

A:    No, you should not disclose to others if a blackout period has been imposed, nor should you discuss with anyone the advisability of trading in Kinetik’s securities.

Compliance With Applicable Laws, Rules And Regulations

It is Kinetik’s policy to conduct its business in accordance with all applicable laws. Kinetik Representatives are expected to understand the requirements of the laws relevant to Kinetik’s business and are required, as directed by the General Counsel to receive training concerning these laws.

Each Kinetik Representative is responsible for familiarizing himself or herself with the laws that are applicable to his or her responsibilities within the Company. In addition, as directed by Compliance, Kinetik Representatives are required to receive periodic training concerning this Code and the various laws applicable to our business and operations. These laws include, but are not limited to, the following:

15

Anti-Bribery and Anti-Corruption

Kinetik is committed to conducting its business fairly and in accordance with the highest ethical standards. Kinetik Representatives should endeavor to deal fairly with the Company’s customers, suppliers, competitors and employees and shall not use unfair techniques, such as manipulation, abuse of privileged information, misrepresentation of material facts or improper concealment of business information to gain a business advantage.

Additionally, Kinetik Representatives shall not offer or accept a bribe, kickback or improper favor in order to secure a business advantage. Such activities are strictly prohibited, and are not only unethical but also illegal. Any violations may result in disciplinary action as well as criminal prosecution and civil litigation.

As a publicly-traded entity, Kinetik is also subject to the Foreign Corrupt Practices Act (FCPA) and similar laws of other nations, which apply to those dealing with officials of domestic and foreign government agencies and companies owned by foreign governments and agencies.

Kinetik Representatives are expected to understand and comply with these requirements in our business relationships. Gifts to government employees and officials, generally, are restricted under U.S. law or the local laws in the countries in which we do business. Any gift to a government employee, official or their family members must be nominal in amount, must not violate local or U.S. law, and must be approved by the General Counsel for the relevant area before such gift is made.

The laws governing Kinetik’s interactions with government officials, including employees of state-owned entities (such as any employee of a national utility or oil company) can be complex and require a discussion of the facts and circumstances. If you have any question concerning whether an action implicates the FCPA or other similar laws, you should contact a member of the Compliance Team or the Legal Department to discuss the matter fully. If you know or suspect that another person may be violating the FCPA, you should report your concern immediately so that it can be properly investigated. You can report the concern to your supervisor, a member of the Compliance Team, to the Legal Department or through the Hotline.

Q:    The managing director of a national utility with which Kinetik does substantial business has suggested that Kinetik make a donation to a local charity that supports underprivileged children. This is a worthy cause but is there any concern with Kinetik making this donation?

A:    It is certainly a good cause, but before any donation can be made, Kinetik should ensure that it undertakes its due diligence on the charity and individuals affiliated with the charity. To work through the issues that may be implicated by this donation, you should contact the General Counsel or another member of the Legal Department.

Q:    In my job duties, I often review various financial entries related to Kinetik’s activities. I have noticed a number of unusually high dollar entries noted only as “consulting fees.” I’m not responsible for ordering the work and don’t want to cause any problems, but should I tell someone about this?

A:    Yes, you should raise this issue immediately so that it can be properly investigated. This concern can be reported through the Hotline, to the General Counsel, and/or in accordance with the “Procedures for the Submission of Complaints and Concerns Regarding Accounting, Internal Accounting Controls or Auditing Matters.”

16

Export Controls and Economic Sanctions

Kinetik is committed to ensuring that it is in compliance with all international trade laws, including export controls and economic sanctions. To that end, the Company adheres to procedures that are designed to, among other things, prevent Kinetik from conducting business with or transferring any items to countries, entities or persons that are subject to economic sanctions or any of the restricted-party lists maintained by the U.S. Government. It is the responsibility of each Kinetik Representative to whom these issues may be relevant to understand these procedures and ensure they are followed.

If you have any questions concerning this policy or the procedures relevant to export controls and adherence to economic sanctions, you should contact the General Counsel or another member of the Legal Department for further information.

Antitrust/Competition

Antitrust laws are intended to promote the free market economy and encourage competition. These laws are complex, but in general, they prohibit competitors from making agreements that could be seen as a restraint on trade or an attempt to limit or eliminate competition. Kinetik derives its advantage in the industry through a commitment to honest and ethical conduct and not through potentially illegal or unethical actions. Accordingly, it is important that you keep these laws in mind before reaching any agreement, or even exchanging information, with Kinetik’s competitors. Violation of these laws can have serious consequences to Kinetik and Kinetik Representatives, including both fines and potential imprisonment for the individuals involved. If you have any question concerning a proposed course of action and its potential interaction with U.S. or international antitrust laws, you should contact the Legal Department or a member of the Compliance Team for guidance.

Anti-Boycott

From time to time, foreign governments may institute boycotts or economic sanctions against other nations. U.S. anti-boycott laws, however, generally prohibit individuals or companies from taking part in or cooperating with international boycotts that are not supported by the United States. Further, U.S. individuals and companies are required to report to the government any request that they cooperate or participate in a foreign boycott. If you receive any request or demand that is potentially covered by anti-boycott laws, you should contact the Legal Department or a member of the Compliance Team for guidance.

Waivers Of The Requirements Of This Code

The Company does not approve of the types of conduct prohibited by this Code and would grant exceptions very rarely.

In the rare circumstance where a waiver of this Code would be appropriate, such a waiver for a Kinetik Representative who is not an executive officer must be approved by the Chief Executive Officer (CEO) or a person to whom he delegates this responsibility clearly in writing, or pursuant to policies and procedures approved in writing by the CEO. Any waiver of the Code for a director or executive officer of the Company must be approved by the full board of directors. Any waiver of this Code approved for a director or executive officer will be promptly disclosed to the extent required by law or listing standards.

Approved: November 9, 2022

17

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Jamie Welch, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Kinetik Holdings Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2022

/s/ Jamie Welch

Jamie Welch

Chief Executive Officer, President, Chief Financial Officer and Director

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Steven Stellato, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Kinetik Holdings Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.     The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2022

/s/ Steven Stellato

Steven Stellato

Executive Vice President, Chief Accounting and Chief Administrative Officer

EX-32.1

EXHIBIT 32.1

KINETIK HOLDINGS INC.

Certification of Principal Executive Officer

I, Jamie Welch, Chief Executive Officer, President, Chief Financial Officer and Director, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Quarterly Report on Form 10-Q of Kinetik Holdings Inc. for the quarterly period ending September 30, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o (d)) and that information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Kinetik Holdings Inc.

Date: November 9, 2022

/s/ Jamie Welch

Jamie Welch

Chief Executive Officer, President, Chief Financial Officer and Director

EX-32.2

EXHIBIT 32.2

KINETIK HOLDINGS INC.

Certification of Principal Financial Officer

I, Steven Stellato, Executive Vice President, Chief Accounting and Chief Administrative Operating Officer, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Quarterly Report on Form 10-Q of Kinetik Holdings Inc. for the quarterly period ending September 30, 2022 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. §78m or §78o (d)) and that information contained in such report fairly presents, in all material respects, the financial condition and results of operations of Kinetik Holdings Inc.

Date: November 9, 2022

/s/ Steven Stellato

Steven Stellato

Executive Vice President, Chief Accounting and Chief Administrative Officer

XML

Cover - shares	9 Months Ended
	Sep. 30, 2022	Oct. 31, 2022
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	001-38048
Entity Registrant Name	KINETIK HOLDINGS INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	81-4675947
Entity Address, Address Line One	2700 Post Oak Blvd
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77056
City Area Code	713
Local Phone Number	621-7330
Title of 12(b) Security	Class A common stock, $0.0001 par value
Trading Symbol	KNTK
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001692787
Current Fiscal Year End Date	--12-31
Class A Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		43,082,157
Class C Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		94,270,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands		3 Months Ended				9 Months Ended
		Sep. 30, 2022		Sep. 30, 2021		Sep. 30, 2022		Sep. 30, 2021
Operating revenues:
Total operating revenues	[1]	$ 325,176		$ 166,586		$ 917,997		$ 450,455
Operating costs and expenses:
Costs of sales (exclusive of depreciation and amortization shown separately below)	[1]	145,208		60,503		418,197		141,011
Operating expenses	[1]	35,845		22,731		100,996		63,575
Ad valorem taxes	[1]	5,903		3,238		15,936		9,003
General and administrative expenses	[1]	23,468		6,957		72,180		17,920
Depreciation and amortization	[1]	65,005		57,154		192,609		170,291
Loss (gain) on disposal of assets		3,946	[1]	(37)	[1]	12,602	[1]	417
Loss (gain) on disposal of assets	[1]							417
Total operating costs and expenses	[1]	279,375		150,546		812,520		402,217
Operating income	[1]	45,801		16,040		105,477		48,238
Other income (expense):
Interest and other income	[1]	0		3,578		250		4,141
Gain on redemption of mandatorily redeemable Preferred Units	[1]	0		0		9,580		0
(Gain) loss on debt extinguishment		0		(56)		(27,975)		4
Gain on embedded derivative	[1]	488		0		89,050		0
Interest expense	[1]	(40,464)		(30,541)		(92,585)		(88,458)
Equity in earnings of unconsolidated affiliates	[1]	45,003		16,826		120,706		44,692
Total other income (expense), net	[1]	5,027		(10,193)		99,026		(39,621)
Income before income taxes	[1]	50,828		5,847		204,503		8,617
Income tax expense	[1]	1,406		1,207		2,244		1,207
Net income including noncontrolling interest	[1]	49,422		4,640		202,259		7,410
Net income attributable to Preferred Unit limited partners	[1]	708		0		115,203		0
Net Income attributable to common shareholders	[1]	48,714		4,640		87,056		7,410
Net income attributable to Common Unit limited partners	[1]	33,778		4,640		61,817		7,410
Net income attributable to Class A Common Shareholders	[1]	$ 14,936		$ 0		$ 25,239		$ 0
Net income attributable to Class A Common Shareholders per share
Basic (in USD per share)	[1]	$ 1.04		$ 0		$ 1.24		$ 0
Diluted (in USD per share)		$ 1.04	[1]	$ 0	[1]	$ 1.24	[1]	$ 0
Weighted-average shares
Basic (in shares)	[1],[2]	41,816		0		40,042		0
Diluted (in shares)	[1],[2]	41,855		0		40,075		0
Service
Operating revenues:
Total operating revenues	[1]	$ 107,597		$ 72,578		$ 290,122		$ 202,482
Product
Operating revenues:
Total operating revenues	[1]	213,803		93,266		618,382		244,358
Other revenue
Operating revenues:
Total operating revenues	[1]	$ 3,776		$ 742		$ 9,493		$ 3,615

[1] The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

[2] Share amounts have been retroactively restated to reflect the Company’s Stock Split (as defined in Note 10—Equity and Warrants), which was effected on June 8, 2022. Refer to Note 10 – Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands		Sep. 30, 2022	Dec. 31, 2021
CURRENT ASSETS:
Cash and cash equivalents		$ 11,728	$ 18,729
Accounts receivable, net of allowance for credit losses of $1,000 in 2022 and 2021		269,634	178,107
Prepaid and other current assets		37,431	20,683
Total assets, current		318,793	217,519
NONCURRENT ASSETS:
Property, plant and equipment, net		2,528,659	1,839,279
Intangible assets, net		722,391	786,049
Operating lease right-of-use assets		34,677	61,562
Deferred charges and other assets		25,505	22,320
Investment in unconsolidated affiliates		2,372,596	626,477
Goodwill		4,557	0
Total assets, noncurrent		5,688,385	3,335,687
Total assets		6,007,178	3,553,206
CURRENT LIABILITIES:
Accounts payable		16,002	12,220
Accrued expenses		235,160	135,643
Derivative liabilities		0	2,667
Current portion of operating lease liabilities		25,466	31,776
Current portion of long-term debt, net		0	54,280
Other current liabilities		8,039	4,339
Current liabilities		284,667	240,925
NONCURRENT LIABILITIES:
Long-term debt, net		3,447,513	2,253,422
Contract liabilities		22,707	11,674
Operating lease liabilities		9,033	29,889
Derivative liabilities		0	200
Other liabilities		2,867	2,219
Contingent liabilities		0	839
Deferred tax liabilities		13,082	7,190
Noncurrent liabilities		3,495,202	2,305,433
Total liabilities		3,779,869	2,546,358
COMMITMENTS AND CONTINGENCIES (Note 8)
Redeemable noncontrolling interest — Common Unit limited partners		3,061,861	1,006,838
EQUITY:
Additional paid-in capital		107,182	0
Accumulated deficit		(941,747)	0
Total equity		(834,552)	10
Total liabilities, noncontrolling interests, and equity		6,007,178	3,553,206
Class A Common Stock
EQUITY:
Common stock	[1]	4	0
Class C Common Stock
EQUITY:
Common stock	[1]	$ 9	$ 10

[1] Share amounts have been retroactively restated to reflect the Company’s Stock Split (as defined in Note 10—Equity and Warrants), which was effected on June 8, 2022. Refer to Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Accounts receivable, allowance for credit losses	$ 1,000	$ 1,000
Class A Common Stock
Common stock, par value (in USD per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	1,500,000,000	1,500,000,000
Common stock, shares issued (in shares)	43,082,157	0
Common stock, shares outstanding (in shares)	43,082,157	0
Class C Common Stock
Common stock, par value (in USD per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	1,500,000,000	1,500,000,000
Common stock, shares issued (in shares)	94,270,000	100,000,000
Common stock, shares outstanding (in shares)	94,270,000	100,000,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)		9 Months Ended
		Sep. 30, 2022		Sep. 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net income including noncontrolling interests	[1]	$ 202,259,000		$ 7,410,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	[1]	192,609,000		170,291,000
Amortization of debt issuance costs		8,053,000		9,991,000
Amortization of contract costs		1,344,000		1,815,000
Contingent liabilities remeasurement		(839,000)		(377,000)
Distributions from unconsolidated affiliates		185,786,000		47,017,000
Derivatives settlement		11,115,000		(17,959,000)
Derivatives fair value adjustment		(103,032,000)		13,943,000
Gain on redemption of mandatorily redeemable Preferred Units		(9,580,000)		0
Loss on disposal of assets		12,602,000	[1]	417,000
Equity in earnings from unconsolidated affiliates	[1]	(120,706,000)		(44,692,000)
(Gain) loss on debt extinguishment		27,975,000		(4,000)
Share-based compensation		30,966,000		0
Deferred income taxes		1,882,000		1,207,000
Change in operating assets and liabilities:
Accounts receivable		(73,927,000)		(118,606,000)
Other assets		(9,583,000)		(7,303,000)
Accounts payable		926,000		(2,141,000)
Accrued liabilities		95,675,000		96,347,000
Operating lease liabilities		(281,000)		1,994,000
Net cash provided by operating activities		453,244,000		159,350,000
CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant and equipment expenditures		(160,478,000)		(60,609,000)
Intangible assets expenditures		(13,332,000)		(3,733,000)
Investment in unconsolidated affiliates		(56,199,000)		(20,522,000)
Cash proceeds from disposals		190,000		3,541,000
Net cash acquired in acquisition		13,401,000		0
Net cash used in investing activities		(216,418,000)		(81,323,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt		3,000,000,000		30,189,000
Principal payments on long-term debt		(2,294,130,000)		(80,177,000)
Payment on debt issuance costs		(36,873,000)		(3,152,000)
Proceeds from revolver		537,000,000		33,000,000
Payment on revolver		(771,000,000)		(27,000,000)
Redemption of mandatorily redeemable Preferred Units		(183,297,000)		0
Redemption of redeemable noncontrolling interest Preferred Units		(461,460,000)		0
Distributions paid to mandatorily redeemable Preferred Units holders		(1,850,000)		0
Distributions paid to redeemable noncontrolling interest Preferred Units limited partners		(6,937,000)		0
Cash dividends paid to Class A Common Stock shareholders		(24,351,000)		0
Distributions paid to Class C Common Units limited partners		(929,000)		(30,189,000)
Equity contributions		0		14,890,000
Net cash used in financing activities		(243,827,000)		(62,439,000)
Net change in cash		(7,001,000)		15,588,000
CASH, BEGINNING OF PERIOD		18,729,000		19,591,000
CASH, END OF PERIOD		11,728,000		35,179,000
SUPPLEMENTAL SCHEDULE OF INVESTING AND FINANCING ACTIVITIES
Cash paid for interest, net of amounts capitalized		76,592,000		81,521,000
Property and equipment and intangible accruals in accounts payable and accrued liabilities		17,717,000		9,357,000
Class A Common Stock issued through dividend and distribution reinvestment plan		175,453,000		0
Restructuring Cost and Reserve [Line Items]
Class A Common Stock issued in exchange		1,013,745,000
Altus Midstream LP
Restructuring Cost and Reserve [Line Items]
Fair value of ALTM assets acquired		2,446,429,000		0
Class A Common Stock issued in exchange		1,013,745,000		0
ALTM liabilities and mezzanine equity assumed		$ 1,432,684,000		$ 0

[1] The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS - USD ($)		Total		Preferred Unit limited partners		Apache limited partner	Class A Common Stock	Class C Common Stock	Common Stock Class A Common Stock		Common Stock Class C Common Stock		Additional Paid-in Capital	Accumulated Deficit
Beginning balance at Dec. 31, 2020				$ 0	[1]	$ 1,041,655,000
Increase (Decrease) in Temporary Equity [Roll Forward]
Contribution						14,890,000
Distribution paid to Common Unit limited partners						(30,189,000)
Net income	[2]	$ (7,410,000)
Net income						7,410,000
Ending balance at Sep. 30, 2021				0	[1],[3]	1,033,766,000
Beginning balance, shares (in shares) at Dec. 31, 2020	[4]								0		101,198,000
Beginning balance at Dec. 31, 2020		10,000							$ 0		$ 10,000		$ 0	$ 0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Contribution (in shares)	[4]										492,000
Contribution		0									$ 0
Distribution paid to common unit limited partners (in shares)	[4]										(996,000)
Distribution paid to Common Unit limited partners		0									$ 0
Excess of carrying amount over Preferred Units redemption price		0
Share-based compensation		0
Net income (loss)	[2]	0
Ending balance, shares (in shares) at Sep. 30, 2021	[4],[5]								0		100,694,000
Ending balance at Sep. 30, 2021		10,000							$ 0		$ 10,000		0	0
Beginning balance at Jun. 30, 2021				0	[3]	1,029,126,000
Increase (Decrease) in Temporary Equity [Roll Forward]
Net income		(4,640,000)	[2]			4,640,000
Ending balance at Sep. 30, 2021				0	[1],[3]	1,033,766,000
Beginning balance, shares (in shares) at Jun. 30, 2021	[5]								0		100,694,000
Beginning balance at Jun. 30, 2021		10,000							$ 0		$ 10,000		0	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Excess of carrying amount over Preferred Units redemption price		0
Share-based compensation		0
Net income (loss)	[2]	0
Ending balance, shares (in shares) at Sep. 30, 2021	[4],[5]								0		100,694,000
Ending balance at Sep. 30, 2021		10,000							$ 0		$ 10,000		0	0
Beginning balance at Dec. 31, 2021				0	[1]	1,006,838,000
Ending balance at Jun. 30, 2022				563,338,000	[3]	3,251,290,000
Beginning balance, shares (in shares) at Dec. 31, 2021							0	100,000,000	0	[4]	100,000,000
Beginning balance at Dec. 31, 2021		10,000							$ 0		$ 10,000		0	0
Ending balance, shares (in shares) at Jun. 30, 2022	[5]								40,551,000		94,450,000
Ending balance at Jun. 30, 2022		(1,181,330,000)							$ 4,000		$ 9,000		0	(1,181,343,000)
Beginning balance at Dec. 31, 2021				0	[1]	1,006,838,000
Increase (Decrease) in Temporary Equity [Roll Forward]
Distribution paid to Common Unit limited partners						(141,729,000)
ALTM acquisition	[1]			462,717,000
Distributions paid to Preferred Unit limited partners				(6,937,000)
Redemption of Stock Units				(461,460,000)		(179,323,000)
Excess of carrying amount over Preferred Units redemption price				(109,523,000)		76,623,000
Net income	[2]	(61,817,000)
Net income				115,203,000	[1]	61,817,000
Change in redemption value of noncontrolling interests						2,237,635,000
Ending balance at Sep. 30, 2022				0	[1],[3]	3,061,861,000
Beginning balance, shares (in shares) at Dec. 31, 2021							0	100,000,000	0	[4]	100,000,000
Beginning balance at Dec. 31, 2021		10,000							$ 0		$ 10,000		0	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
ALTM acquisition (in shares)	[4]								32,493,000
ALTM acquisition		1,013,745,000							$ 3,000				1,013,742,000
Redemption of Common Units (in shares)	[4]								5,730,000		(5,730,000)
Redemption of Common Units		179,323,000							$ 1,000		$ (1,000)		179,323,000
Excess of carrying amount over Preferred Units redemption price		32,900,000												32,900,000
Issuance of Class A Common Stock through dividend and distribution reinvestment plan (in shares)									4,855,000
Issuance of Class A Common Stock through dividend and distribution reinvestment plan		175,453,000											175,453,000
Share-based compensation (in shares)									4,000
Share-based compensation		30,966,000											30,966,000
Remeasurement of contingent consideration		4,451,000											4,451,000
Net income (loss)		25,239,000	[2]											25,239,000
Change in redemption value of noncontrolling interests		(2,237,635,000)											(1,296,753,000)	(940,882,000)
Dividends on Class A Common Stock		(59,004,000)												(59,004,000)
Ending balance, shares (in shares) at Sep. 30, 2022							43,082,157	94,270,000	43,082,000	[4],[5]	94,270,000	[4],[5]
Ending balance at Sep. 30, 2022		(834,552,000)							$ 4,000		$ 9,000		107,182,000	(941,747,000)
Beginning balance at Jun. 30, 2022				563,338,000	[3]	3,251,290,000
Increase (Decrease) in Temporary Equity [Roll Forward]
Distribution paid to Common Unit limited partners						(70,838,000)
Redemption of Stock Units				461,460,000		(6,765,000)
Excess of carrying amount over Preferred Units redemption price				(102,586,000)		76,623,000
Net income	[2]	(33,778,000)
Net income				708,000	[3]	33,778,000
Change in redemption value of noncontrolling interests						(222,227,000)
Ending balance at Sep. 30, 2022				$ 0	[1],[3]	$ 3,061,861,000
Beginning balance, shares (in shares) at Jun. 30, 2022	[5]								40,551,000		94,450,000
Beginning balance at Jun. 30, 2022		(1,181,330,000)							$ 4,000		$ 9,000		0	(1,181,343,000)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Redemption of Common Units (in shares)	[5]								180,000		(180,000)
Redemption of Common Units		6,765,000											6,765,000
Excess of carrying amount over Preferred Units redemption price		32,900,000												32,900,000
Issuance of Class A Common Stock through dividend and distribution reinvestment plan (in shares)									2,351,000
Issuance of Class A Common Stock through dividend and distribution reinvestment plan		87,756,000											87,756,000
Share-based compensation		12,661,000											12,661,000
Net income (loss)		14,936,000	[2]											14,936,000
Change in redemption value of noncontrolling interests		222,227,000												222,227,000
Dividends on Class A Common Stock		(30,467,000)												(30,467,000)
Ending balance, shares (in shares) at Sep. 30, 2022							43,082,157	94,270,000	43,082,000	[4],[5]	94,270,000	[4],[5]
Ending balance at Sep. 30, 2022		$ (834,552,000)							$ 4,000		$ 9,000		$ 107,182,000	$ (941,747,000)

[1] Certain redemption features embedded within the Preferred Units require bifurcation and measurement at fair value. For further detail, refer to Note 11—Series A Cumulative Redeemable Preferred Units in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

[2] The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

[3] Certain redemption features embedded within the Preferred Units require bifurcation and measurement at fair value. For further detail, refer to Note 11—Series A Cumulative Redeemable Preferred Units in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

[4] Share amounts have been retroactively restated to reflect the Company’s Stock Split (as defined in Note 10—Equity and Warrants), which was effected on June 8, 2022. Refer to Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

[5] Share amounts have been retroactively restated to reflect the Company’s Stock Split (as defined in Note 10—Equity and Warrants), which was effected on June 8, 2022. Refer to Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS (Parenthetical) - $ / shares	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022
Class A Common Stock
Cash dividends (in USD per share)	$ 0.75	$ 1.50

XML

DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Transaction

On February 22, 2022 (the “Closing Date”), Kinetik Holdings Inc., a Delaware corporation (formerly known as Altus Midstream Company), consummated the previously announced business combination transactions contemplated by the Contribution Agreement, dated as of October 21, 2021 (the “Contribution Agreement”), by and among the Company, Altus Midstream LP (now known as Kinetik Holdings LP), a Delaware limited partnership and subsidiary of Altus Midstream Company (the “Partnership”), New BCP Raptor Holdco, LLC, a Delaware limited liability company (“Contributor”), and BCP Raptor Holdco, LP, a Delaware limited partnership (“BCP”). The transactions are referred to herein as the “Transaction.”

Pursuant to the Contribution Agreement, in connection with the closing of the Transaction (the “Closing”), (i) Contributor contributed all of the equity interests of BCP and BCP Raptor Holdco GP, LLC, a Delaware limited liability company and the general partner of BCP (“BCP GP” and, together with BCP, the “Contributed Entities”), to the Partnership; and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 common units representing limited partner interests in the Partnership (“Common Units”) and t 50,000,000 shares of the Company’s Class C Common Stock, par value $0.0001 per share (“Class C Common Stock”).

The Company’s stockholders immediately prior to the Closing continued to hold their shares of the Company’s Class A Common Stock, par value $0.0001 per share (“Class A Common Stock,” and together with the Company’s Class C Common Stock, “Common Stock”). As a result of the Transaction, immediately following the Closing (i) Contributor held approximately 75% of the issued and outstanding Common Stock, (ii) Apache Midstream LLC, a Delaware limited liability company (“Apache Midstream”), held approximately 20% of the issued and outstanding Common Stock, and (iii) the Company’s remaining stockholders held approximately 5% of the issued and outstanding Common Stock.

The Company completed a two-for-one Stock Split in the form of a stock dividend on June 8, 2022. All corresponding per-share and share amounts for periods prior to June 8, 2022 have been retroactively restated elsewhere in this Form 10-Q to reflect the two-for-one Stock Split. However, the number of Common Units and shares of Class C Common Stock described in this Form 10-Q in relation to the Transaction are presented at pre-Stock-Split amounts to be consistent with our previous public filings and the terms of the Contribution Agreement.

In connection with the Closing, the Company changed its name from “Altus Midstream Company” (“ALTM”) to “Kinetik Holdings Inc.” Unless otherwise noted or the context requires otherwise, references herein to Kinetik Holdings Inc. “the Company”, “us”, “our”, “we” or similar terms, with respect to time periods prior to February 22, 2022, include BCP and its consolidated subsidiaries and do not include ALTM and its consolidated subsidiaries, while references herein to Kinetik Holdings Inc. with respect to time periods from and after February 22, 2022, include ALTM and its consolidated subsidiaries.

Organization

BCP was formed on April 25, 2017 as a Delaware limited partnership to acquire and develop midstream oil and gas assets. BCP’s primary operating subsidiaries are EagleClaw Midstream Ventures, LLC (“EagleClaw”) and CR Permian Holdings, LLC (“CR Permian”). Both subsidiaries were formed to design, engineer, install, own and operate facilities and provide services for produced natural gas gathering, compression, processing, treating and dehydration, and condensate separation, stabilization, and storage, crude oil gathering and storage, water gathering and disposal assets.

ALTM was originally incorporated on December 12, 2016 in Delaware under the name Kayne Anderson Acquisition Corp. (“KAAC”) for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. KAAC completed its initial public offering in the second quarter of 2017. On August 3, 2018, Altus Midstream LP was formed in Delaware as a limited partnership and wholly-owned subsidiary of KAAC and entered into a contribution agreement with certain affiliates of Apache Corporation (“Apache” and such affiliates the “Altus Midstream Entities”), formed by Apache between May 2016 and January 2017, for the purpose of acquiring, developing, and operating midstream oil and gas assets in the Alpine High resource play and surrounding areas (“Alpine High”). On November 9, 2018, KAAC acquired all equity interests of the Altus Midstream Entities and changed its name to Altus Midstream Company.

On February 22, 2022, upon the Closing, BCP and its subsidiaries became wholly owned subsidiaries of the Partnership. The Transaction was accounted for as a reverse merger pursuant to ASC 805 Business Combination (“ASC 805”). Refer to Note 2—Business Combination in the Notes to our Condensed Consolidated Financial Statements for further information.

Nature of Operations

Through its consolidated subsidiaries, the Company provides comprehensive gathering, water disposal, transportation, compression, processing and treating services necessary to bring natural gas, NGLs and crude oil to market. Additionally, the Company owns equity interests in four separate Permian Basin pipeline entities that have access to various markets along the Texas Gulf Coast.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP. Certain reclassifications of prior year balances have been made to conform such amounts to current year presentation. These reclassifications have no impact on net income. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. All intercompany balances and transactions have been eliminated in consolidation.

Prior to the Closing, the Company’s financial statements that were filed with the SEC were derived from ALTM’s accounting records. As the Transaction was determined to be a reverse merger, BCP was considered as the accounting acquirer and ALTM was the legal acquirer. The accompanying Condensed Consolidated Financial Statements herein include (1) BCP’s net assets carried at historical value, (2) BCP’s historical results of operations prior to the Transaction, (3) the ALTM’s net assets carried at fair value as of the Closing Date and (4) the combined results of operations with the Company’s results presented within the Condensed Consolidated Financial Statements from February 22, 2022 going forward. Refer to Note 2—Business Combination to our Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion.

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 in this Form 10-Q to reflect the two-for-one Stock Split, except for the number of Common Units and shares of Class C Common Stock described above in relation to the Transaction, which are presented at pre-Stock-Split amounts. This presentation election is consistent with our previous public filings and the terms of the Contribution Agreement.

Use of Estimates

Preparation of financial statements in conformity with GAAP and disclosure of contingent assets and liabilities requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates its estimates and assumptions on a regular basis. Actual results may differ from these estimates and assumptions used in preparation of its condensed consolidated financial statements, and changes in these estimates are recorded when known. Significant items subject to such estimates and assumptions include the valuation of tangible and intangible assets, share-based compensation, contingent liabilities, warrants, and noncontrolling interests.

Variable Interest Entity

The Company uses a qualitative approach in assessing the consolidation requirement for variable interest entities. The approach focuses on identifying which enterprise has the power to direct the activities that most significantly impact the variable interest entity’s economic performance and which enterprise has the obligation to absorb losses or the right to receive benefits from the variable interest entity. In the event that the Company is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity would be consolidated in our financial statements. The Company has determined that it has significant influence over the operating and financial policies of the four pipeline entities in which it is invested, but does not exercise control over them; and hence, it accounts for these investments using the equity method. Refer to Note 9—Equity Method Investments in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

Redeemable Noncontrolling Interest — Common Units Limited Partners

Pursuant to the Contribution Agreement, in connection with the Closing, (i) Contributor contributed all of the equity interests of the Contributed Entities to the Partnership; and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 common units representing limited partner interests in the Partnership and 50,000,000 shares of the Company’s Class C Common Stock, par value $0.0001 per share. Please refer to “The Transaction” above.

The Common Units are redeemable at the option of unit holders and accounted for in the Company’s Condensed Consolidated Balance Sheet as a redeemable noncontrolling interest classified as temporary equity. The Company records the redeemable noncontrolling interest at the higher of (i) its initial value plus accumulated earnings/losses associated with the noncontrolling interest or (ii) the maximum redemption value as of the balance sheet date. The redemption value was determined based on a 5-day volume weighted-average closing price of the Class A Common Stock. See discussion and additional details in Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

Redeemable Noncontrolling Interest — Preferred Unit Limited Partners

The Partnership issued Series A Cumulative Redeemable Preferred Units (“Preferred Units”) on June 12, 2019. As the Transaction was accounted for as a reverse merger, the Company assumed certain Preferred Units that were issued and outstanding at Closing for accounting purposes.

The Preferred Units are accounted for on the Company’s Condensed Consolidated Balance Sheet as a redeemable noncontrolling interest classified as temporary equity based on the terms of the Preferred Units. Certain redemption features embedded within the terms of the Preferred Units required bifurcation and measurement at fair value and are accounted for on the Company’s Condensed Consolidated Balance Sheet as a long-term liability embedded derivative. During the nine months ended September 30, 2022, the Company redeemed all outstanding Preferred Units. See discussion and additional detail in Note 11—Series A Cumulative Redeemable Preferred Units in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

Equity Method Investments

The Company follows the equity method of accounting when it does not exercise control over its equity interests, but can exercise significant influence over the operating and financial policies of the entity. Under this method, the equity investments are carried originally at acquisition cost, increased by the Company’s proportionate share of the equity interest’s net income and contributions made, and decreased by the Company’s proportionate share of the equity interest’s net losses and distributions received. The Company determines whether distributions are a return on or a return of the investment based on the nature of the distribution approach, under which the Company classifies distributions from an investee by evaluating the facts, circumstances and nature of each distribution. As distributions from the Company’s equity method investment (“EMI”) pipeline entities are generated from their respective normal course of business, the Company classifies the distributions as return on investments and as cash flow from operating activities. Please refer to Note 9—Equity Method Investments in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q, for further information of the Company’s equity method investments. Equity method investments acquired in the Transaction were recorded at fair value upon Closing. See discussion and additional detail in Note 2—Business Combination in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for purchase price allocation of the Transaction.

Inventory

Other current assets include condensate, residue gas and NGLs inventories that are valued at the lower of cost or market. At the end of each reporting period, the Company assesses the carrying value of inventory and makes any adjustments necessary to reduce the carrying value to the applicable net realizable value. Inventory was valued at $13.1 million and $2.1 million as of September 30, 2022 and December 31, 2021, respectively.

Impairment of Long-Lived Assets

In accordance with Financial Accounting Standards Board (“FASB”) ASC 360, Property, Plant and Equipment, long-lived assets, excluding goodwill, to be held and used by the Company are reviewed for impairment annually or on an interim basis if events or circumstances indicate that the fair value of the assets have decreased below their carrying value. For long-lived assets to be held and used, the Company bases their evaluation on impairment indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present.

The Company’s management assesses whether there has been an impairment trigger, and if a trigger is identified, then the Company would perform an undiscounted cash flow test at the lowest level for which identifiable cash flows are independent of cash flows from other assets. If the sum of the undiscounted future net cash flows is less than the net book value of the property, an impairment loss is recognized for any excess of the property’s net book value over its estimated fair value. The Company did not recognize impairment losses for long-lived assets during the three and nine months ended September 30, 2022 and 2021.

Transactions with Affiliates

The accounts receivable from or payable to affiliates represent the net result of the Company’s monthly revenue, capital and operating expenditures, and other miscellaneous transactions to be settled with Apache and its subsidiaries, who controlled the Company prior to the Transaction. Accounts receivable from affiliates was $24.1 million as of September 30, 2022. Revenue from affiliates was $35.2 million and $81.4 million for the three and nine months ended September 30, 2022, respectively. Accrued expense due to affiliates was immaterial as of September 30, 2022, and operating expenses were $0.2 million and $0.5 million for the three and nine months ended September 30, 2022, respectively.

In addition, the Company incurred cost of sales with two of its EMI pipeline entities, Permian Highway Pipeline LLC (“PHP”) and Breviloba, LLC (“Breviloba”). The Company paid a demand fee to PHP and paid a capacity fee to Breviloba for certain volumes moving on the Shin Oak NGL Pipeline. For the three and nine months ended September 30, 2022, the Company recorded cost of sales of $3.7 million and $10.8 million, respectively, with these affiliates.

Net Income Per Share

Basic net income per share is calculated by dividing net income attributable to Class A common shareholders by the weighted-average number of shares of Class A Common Stock outstanding during the period. Class C Common Stock is excluded from the weighted-average shares outstanding for the calculation of basic net income per share, as holders of Class C Common Stock are not entitled to any dividends or liquidating distributions. No net income per share was computed for the three and nine months ended September 30, 2021, as no Class A Common Stock was outstanding with respect to BCP as the accounting acquirer as of September 30, 2021.

The Company uses the “if-converted method” to determine the potential dilutive effect of (i) an assumed exchange of outstanding Common Units (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) for shares of Class A Common Stock and (ii) an assumed exercise of the outstanding public and private warrants for shares of Class A Common Stock. The dilutive effect of any earn-out consideration payable in shares is only included in periods for which the underlying conditions for the issuance are met.

Recently Adopted Accounting Pronouncement

Effective January 1, 2022, the Company adopted ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree.

Historically, such amounts were recognized by the acquirer at fair value. With adoption of ASU 2021-08, the Company assumed contract liabilities at carrying value of $9.1 million upon Closing.

Effective January 1, 2022, the Company adopted ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 was issued to ease the potential accounting burden expected when global capital markets move away from LIBOR, the benchmark interest rate banks use to make short-term loans to each other. The amendments in this update provide optional expedients and exceptions for applying GAAP to contracts, hedging relationship, and other transactions affected by reference rate reform if certain criteria are met. Interest rate applied to the Company’s new Term Loan and Revolver borrowings resulting from the comprehensive refinance is based on Secured Overnight Financing Rate (“SOFR”), which is a broad measure of the cost of borrowing cash overnight collateralized by treasury securities. Refer to Note 6—Debt and Financing Costs in the Notes to our Condensed Consolidated Financial Statements of this Form 10-Q for discussion of SOFR applicable to the Company’s debt structures.

Recent Accounting Pronouncement Not Yet Adopted

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). The amendments in ASU 2022-03 clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments also require the following disclosures for equity securities subject to contractual sale restrictions: (1) The fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet; (2) The nature and remaining duration of the restriction(s); (3) The circumstances that could cause a lapse in the restriction(s). This guidance is effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the effect that ASU 2022-03 will have on its Consolidated Financial Statements.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method (“ASU 2022-01”). Current GAAP permits only prepayable financial assets and one or more beneficial interests secured by a portfolio of prepayable financial instruments to be included in a last-of-layer closed portfolio. The amendments in ASU 2022-01 allow nonprepayable financial assets also to be included in a closed portfolio hedged using the portfolio layer method. That expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and nonprepayable financial assets, thereby allowing consistent accounting for similar hedges. The amendments in ASU 2022-01 also clarify the accounting for and promote consistency in the reporting of hedge basis adjustments applicable to both a single hedged layer and multiple hedged layers as follows: (1) an entity is required to maintain basis adjustments in an existing hedge on a closed portfolio basis (that is, not allocated to individual assets), (2) an entity is required to immediately recognize and present the basis adjustment associated with the amount of the designated layer that was breached in interest income. In addition, an entity is required to disclose that amount and the circumstances that led to the breach, (3) an entity is required to disclose the total amount of the basis adjustments in existing hedges as a reconciling amount if other areas of GAAP require the disaggregated disclosure of the amortized cost basis of assets included in the closed portfolio, and (4) an entity is prohibited from considering basis adjustments in an existing hedge when determining credit losses. The guidance is effective for public business entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted on any date on or after the issuance of ASU 2022-01 for any entity that has adopted the amendments in ASU 2017-02 for the corresponding period. The Company is currently evaluating the effect that ASU 2022-01 will have on its Consolidated Financial Statements.

XML

BUSINESS COMBINATION

9 Months Ended

Sep. 30, 2022

Business Combinations [Abstract]

BUSINESS COMBINATION

BUSINESS COMBINATION

Altus Business Combination

On February 22, 2022, the Company consummated the previously announced business combination transactions contemplated by the Contribution Agreement, dated as of October 21, 2021. Pursuant to the Contribution Agreement, in connection with the Closing, (i) Contributor contributed all of the equity interests of the Contributed Entities to the Partnership; and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 common units representing limited partner interests in the Partnership and 50,000,000 shares of the Company’s Class C Common Stock, par value $0.0001 per share. Please refer to “The Transaction” discussed above.

The Transaction was accounted as a reverse merger in accordance with ASC 805, which, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair value. The Company also adopted ASU 2021-08, effective as of January 1, 2022, to record contract liabilities at their carrying value as of the acquisition date. Although the Company was the legal acquirer, BCP was determined to be the accounting acquirer and legal acquiree. As a result, BCP and its subsidiaries’ net assets were carried at historical value, acquired net assets were measured at fair value except contract liabilities being recorded at carrying value at the acquisition date, and results of operations of ALTM and its subsidiaries were included in the Company’s Condensed Consolidated Financial Statements from the Closing Date going forward.

The preliminary purchase price allocation is based on an assessment of the fair value of the assets acquired and liabilities assumed in the acquisition using inputs that are not observable in the market and thus Level 3 inputs. The fair value of the processing plant, gathering system and related facilities and equipment are based on market and cost approaches. The goodwill of $4.6 million relates to operational synergies and is included in the Midstream Logistics segment. The value of the Preferred Units and assumed contingent liability is determined through a probability-weighted analysis of the expected future cash flows and other applicable valuation techniques. See additional details for Preferred Units in Note 11—Series A Cumulative Redeemable Preferred Units and contingent liabilities in Note 8—Commitments and Contingencies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q. Certain data necessary to complete the purchase price allocation is not yet available, including, but not limited to, valuation of the underlying assets of the equity method investments and liabilities assumed. However, the Company is continuing its review of these matters during the measurement period, and if new information obtained about facts and circumstances that existed at the acquisition date identifies adjustments to the liabilities initially recognized, as well as any additional liabilities that existed at the acquisition date, the acquisition accounting will be revised to reflect the resulting adjustments to the provisional amounts initially recognized. The Company will finalize the purchase price allocation during the 12-month period following the acquisition date.

The following table summarizes the preliminary estimated fair value of assets acquired and liabilities assumed in the Transaction in accordance with ASC 805:

(In thousands)	Amount
Cash and cash equivalent	$	13,401
Accounts receivable	1,919
Accounts receivable - affiliates	15,681
Property, plant, and equipment, net	634,923
Intangible assets, net	13,200
Investments in unconsolidated affiliates	1,755,000
Prepaid expense and other assets	7,748
Goodwill	4,557
Total assets acquired	2,446,429
Accrued expenses and other accrued liabilities	5,687
Long-term debt	657,000
Embedded derivative liabilities	89,050
Contract liabilities	9,102
Mandatory redeemable Preferred Units	200,667
Deferred tax liabilities	4,010
Contingent liabilities	4,451
Total liabilities assumed	969,967
Redeemable noncontrolling interest - Preferred Unit limited partners	462,717
Total consideration transferred	$	1,013,745

The Company incurred acquisition-related costs of $0.1 million and $6.4 million for the three and nine months ended September 30, 2022, respectively.

Supplemental Pro Forma Information

The unaudited supplemental pro forma financials are for informational purposes only and are not indicative of future results. The results below for the three and nine months ended September 30, 2022 and 2021 combine the results of the Company and the Partnership, giving effect to the Transaction as if it had been completed on January 1, 2021.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
(In thousands)	Pro forma		Pro forma		Pro forma		Pro forma
Revenues	$	325,176	$	201,134	$	944,850	$	554,742
Net income including noncontrolling interest	$	46,968	$	28,518	$	193,083	$	64,165

Given the assumed pro forma transaction date of January 1, 2021, we removed $1.5 million and $21.0 million of acquisition-related expenses for the three and nine months ended September 30, 2022, respectively, and recognized $0.1 million and $31.2 million of total acquisition-related expenses for the three and nine months ended September 30, 2021, respectively.

XML

REVENUE RECOGNITION

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

REVENUE RECOGNITION

Disaggregation of Revenue

The following table presents a disaggregation of the Company’s revenue:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In thousands)
Gathering and processing services	$	107,597	$	72,578	$	290,122	$	202,482
Natural gas, NGLs and condensate sales	213,803		93,266		618,382		244,358
Other revenue	3,776		742		9,493		3,615
Total revenues and other	$	325,176	$	166,586	$	917,997	$	450,455

There have been no significant changes to the Company’s contracts with customers during the three and nine months ended September 30, 2022. Contracts with customers acquired through the Transaction had similar structures as the Company’s existing contracts with customers. The Company recognized revenues from minimum volume commitment (“MVC”) deficiency payments of $0.7 million and nil for the three months ended September 30, 2022 and 2021, respectively, and $1.0 million and $2.5 million for the nine months ended September 30, 2022 and 2021, respectively.

Remaining Performance Obligations

The following table presents our estimated revenue from contracts with customers for remaining performance obligations that has not yet been recognized, representing our contractually committed revenues as of September 30, 2022:

	Amount
Fiscal Year	(In thousands)
Remaining of 2022	$	2,151
2023	44,597
2024	40,247
2025	47,898
2026	34,631
Thereafter	191,293
	$	360,817

Our contractually committed revenue, for purposes of the tabular presentation above, is generally limited to customer contracts that have fixed pricing and fixed volume terms and conditions, generally including contracts with payment obligations associated with MVCs.

Contract Liabilities

The following table provides information about contract liabilities from contracts with customers as of September 30, 2022:

	Amount
	(In thousands)
Balance at December 31, 2021	$	14,756
Reclassification of beginning contract liabilities to revenue as a result of performance obligation being satisfied	(5,159)
Cash received and not recognized as revenue	20,268
Balance at September 30, 2022	29,865
Less: Current portion	7,158
Non-current portion	$	22,707

Contract liabilities relate to payments received in advance of satisfying performance obligations under a contract, which result from contribution in aid of construction payments. Current and noncurrent contract liabilities are included in “Other Current Liabilities” and “Contract Liabilities,” respectively, of the Condensed Consolidated Balance Sheets.

Contract Cost Assets

The Company has capitalized certain costs incurred to obtain a contract that would not have been incurred if the contract had not been obtained. These costs are recovered through the net cash flows of the associated contract. As of September 30, 2022 and December 31, 2021, the Company had contract acquisition cost assets of $15.3 million and $18.4 million, respectively. Current and noncurrent contract cost assets are included in “Prepaid and Other Current Assets” and “Deferred Charges and Other Assets,” respectively, of the Condensed Consolidated Balance Sheets. The Company amortizes these assets as cost of sales on a straight-line basis over the life of the associated long-term customer contract. The Company recognized cost of sales associated with these assets of $0.4 million and $0.4 million for the three months ended September 30, 2022 and 2021, respectively, and $1.3 million and $1.8 million for the nine months ended September 30, 2022 and 2021, respectively.

XML

PROPERTY, PLANT AND EQUIPMENT

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are carried at cost or fair market value at the date of acquisition less accumulated depreciation. The cost basis of constructed assets includes materials, labor, and other direct costs. Major improvements or betterment are capitalized, while repairs that do not improve the life of the respective assets are expensed as incurred. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets.

Property, plant and equipment, at carrying value, is as follows:

	September 30, 2022		December 31, 2021
	(In thousands)
Gathering, processing and transmission systems and facilities	$	2,850,062	$	2,121,434
Vehicles	8,026		6,090
Computers and equipment	4,255		4,271
Less: accumulated depreciation	(437,049)		(337,030)
Total depreciable assets, net	2,425,294		1,794,765
Construction in progress	82,834		24,888
Land	20,531		19,626
Total property, plant and equipment, net	$	2,528,659	$	1,839,279

The cost of property classified as “Construction in progress” is excluded from capitalized costs being depreciated. These amounts represent property that is not yet available to be placed into productive service as of the respective reporting date. The Company recorded $34.9 million and $26.8 million of depreciation expense for the three months ended September 30, 2022 and 2021, respectively, and $102.4 million and $79.0 million of depreciation expense for the nine months ended September 30, 2022 and 2021, respectively.

XML

GOODWILL AND INTANGIBLE ASSETS, NET

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS, NET

GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

The Company closed a business combination transaction on February 22, 2022, refer to the Transaction in Note 2—Business Combination in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q. The Transaction was accounted for as a business combination pursuant to ASC 805. In connection with the Transaction, the Company recorded excess of the purchase price over net assets acquired as goodwill. The Company recorded goodwill of $4.6 million as of September 30, 2022.

Goodwill is tested at least annually as of December 31 of each year, or more frequently as events occur or circumstances change that would more-likely-than-not reduce fair value of a reporting unit below its carrying value. Company’s management assesses whether there have been events or circumstances that trigger the fair value of the reporting unit to be lower than its net carrying value since consummation of the Transaction and concluded that goodwill was not impaired as of September 30, 2022.

Intangible Assets

Intangible assets, net are comprised of the following:

	September 30, 2022		December 31, 2021
	(In thousands)
Customer contracts	$	1,136,728	$	1,135,963
Right of way assets	125,164		99,345
Less accumulated amortization	(539,501)		(449,259)
Total amortizable intangible assets, net	$	722,391	$	786,049

The fair value of acquired customer contracts was capitalized as a result of acquiring favorable customer contracts as of the closing dates of certain past acquisitions and is being amortized using a straight-line method over the remaining term of the customer contracts, which range from one to twenty years. Right of way assets relate primarily to underground pipeline easements and have a useful life of ten years and are amortized using the straight-line method. The right of way agreements are generally for an initial term of ten years with an option to renew for an additional ten years at agreed upon renewal rates based on certain indices or up to 130% of the original consideration paid.

The Company recorded $30.1 million and $30.4 million of amortization expense for the three months ended September 30, 2022 and 2021, respectively, and $90.2 million and $91.3 million of amortization expense for the nine months ended September 30, 2022 and 2021, respectively. There was no impairment recognized on intangible assets for the three and nine months ended September 30, 2022 and 2021.

XML

DEBT AND FINANCING COSTS

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

DEBT AND FINANCING COSTS

DEBT AND FINANCING COSTS

June 2030 Senior Notes

On June 8, 2022, the Partnership completed a private placement of $1.00 billion aggregate principal amount of its 5.875% Sustainability-Linked Senior Notes due 2030 (the “Notes”), which are fully and unconditionally guaranteed by the Company.

The Notes were issued at 99.588% of their face amount and will mature on June 15, 2030. Interest accrues from June 8, 2022 and is payable semi-annually on June 15 and December 15 of each year, commencing December 15, 2022. The aggregate fees, expenses, and original issue discount paid to obtain the Notes totaled $21.5 million and were capitalized as debt issuance cost and included in the Condensed Consolidated Balance Sheets as a direct deduction to the Notes as the Notes were transferred to third-party investors that pay the stated principal amount without deduction for the initial purchasers’ discount.

On or after June 15, 2027, the interest rate accruing on the Notes will be increased by an additional 0.250% per annum unless the Partnership satisfies, and an independent external verifier confirms satisfaction of the Sustainability Performance Targets (“SPT”) as defined in the indenture governing the Notes related to the three key performance indicators outlined in the Sustainability-Linked Financing Framework published by the Company on May 16, 2022: 1) Scope 1 and Scope 2 greenhouse gas emissions intensity, 2) Scope 1 and Scope 2 methane gas emissions intensity and 3) female representation in corporate officer positions. The interest rate accruing on the Notes will be increased by an additional 0.083% per annum for each SPT which has not been satisfied and externally verified.

The Partnership may redeem some or all of the Notes at any time or from time to time prior to maturity based on terms prescribed in the Notes.

Revolving Credit Facility

On June 8, 2022, the Partnership entered into a revolving credit agreement (the “RCA”) among Bank of America, N.A., as administrative agent (“Bank of America”), and the banks and other financial institutions party thereto, as lenders. The RCA provides for a $1.25 billion senior unsecured revolving credit facility (the “Revolving Credit Facility”).

The Partnership may prepay borrowings under the Revolving Credit Facility at any time without premium or penalty (other than customary SOFR breakage costs), subject to certain notice requirements. All borrowings under the Revolving Credit Facility mature on June 8, 2027. The obligations under the RCA are fully and unconditionally guaranteed by the Company.

The RCA provides for borrowings of either, at the Partnership’s option, base rate loans or term SOFR loans. Base rate loans bear interest at a rate per annum equal to the greatest of (a) the prime rate as announced from time to time by Bank of America, (b) the greater of (i) the federal funds effective rate and (ii) the overnight bank funding rate, plus 1/2 of 1.00% and (c) the adjusted term SOFR rate for an interest period of one month plus 1.00%, plus a margin that ranges between 0.25% and 1.00%, depending on the credit rating of the Partnership. SOFR loans bear interest at a rate per annum equal to the term SOFR rate for such interest periods plus 0.10%, plus a margin that ranges between 1.25% and 2.00%, depending on the credit rating of the Partnership. In obtaining the RCA, the Partnership incurred fees and expenses totaling $7.8 million, which was capitalized and included in the Condensed Consolidated Balance Sheets as “Deferred charges and other assets.”

In addition, the Partnership is required to pay to each lender a commitment fee on the daily unfunded amount of such lender’s revolving commitment, which accrues at a rate that ranges between 0.15% and 0.35% depending on the credit rating of the Partnership.

Term Loan Credit Facility

On June 8, 2022, concurrently with the closing of the Revolving Credit Facility, the Partnership entered into a term loan credit agreement (the “TLA”) among PNC Bank, National Association, as administrative agent (“PNC Bank”), and the banks and other financial institutions party thereto, as lenders. The TLA provides for a $2.00 billion senior unsecured term loan credit facility (the “Term Loan Credit Facility”). The TLA matures on June 8, 2025. The obligations under the TLA are fully and unconditionally guaranteed by the Company.

The TLA provides for borrowings of either, at the Partnership’s option, base rate loans or term SOFR loans. Base rate loans bear interest at a rate per annum equal to the greatest of (a) the prime rate as announced from time to time by PNC Bank, (b) the greater of (i) the federal funds effective rate and (ii) the overnight bank funding rate, plus 1/2 of 1.00% and (c) the adjusted term SOFR rate for an interest period of one month plus 1.00%, plus a margin that ranges between 0.25% and 1.0%, depending on the credit rating of the Partnership. SOFR loans bear interest at a rate per annum equal to the term SOFR rate for such interest periods plus 0.10%, that if the plus a margin that ranges between 1.25% and 2.0%, depending on the credit rating of the Partnership. In obtaining the TLA, the Partnership incurred fee and expenses totaled $7.6 million, which was capitalized as debt issuance cost and included in the Condensed Consolidated Balance Sheets as a direct deduction to the Term Loan Credit Facility.

Both the RCA and the TLA contain a “Sustainability Adjustments” feature that could result in a 0.05% increase or reduction to the effective interest rate, dependent upon the Company’s meeting certain sustainability targets after 2022. “Sustainability Rate Adjustment” means, with respect to any KPI Metrics Report, for any period between Sustainability Pricing Adjustment Dates, (a) positive 0.05%, if neither of the Sustainability Performance Targets (as defined in the RCA and TLA) as set forth in the KPI Metrics Report have been satisfied for the relevant calendar year, (b) 0.00% if only one of the Sustainability Performance Targets as set forth in the KPI Metrics Report has been satisfied for the relevant calendar year and (c) negative 0.05% if both of the Sustainability Performance Targets as set forth in the KPI Metrics Report have been satisfied for the relevant calendar year; provided that, in each case, if the Partnership subsequently issues a sustainability-linked debt instrument linked to the same KPI Metric and with an observation date for such calendar year, but with a higher percentage of representation or reduction, as the case may be, the relevant Sustainability Performance Target shall be automatically adjusted upward to equal the percentage of representation or reduction, as applicable, required by such subsequent sustainability-linked debt instrument.

“Sustainability Performance Targets” in the RCA and TLA mean, for any calendar year, with respect to (a) the Female Representation KPI, the target percentage of female representation in corporate officer positions for such calendar year and (b)

the Methane Emissions KPI, the percentage reduction in methane gas emissions intensity relative to the baseline year for such calendar year.

Both the RCA and the TLA contain customary covenants and restrictive provisions which may, among other things, limit Partnership’s ability to create liens, incur additional indebtedness, make restricted payments, or liquidate, dissolve, consolidate with, or merge into or with any other person. As of September 30, 2022, the Partnership was in compliance with all customary and financial covenants.

Repayment of Existing Credit Facilities

In June 2022, the Company used the net proceeds from the Notes, together with cash on hand and proceeds from the Term Loan Credit Facility, to repay all outstanding borrowings under its existing credit facilities and to pay certain related fees and expenses. In conjunction with the extinguishment of existing outstanding borrowings, the Company recognized a loss on extinguishment of debt of approximately $28.0 million. In addition, the unamortized debt issuance costs related to the existing outstanding borrowings were fully amortized and included in the loss on debt extinguishment calculation for the three and nine months ended September 30, 2022.

The fair value of the Company and its subsidiaries’ consolidated debt as of September 30, 2022 and December 31, 2021 was $3.02 billion and $2.34 billion, respectively. At September 30, 2022, the Notes’ fair value was based on Level 1 inputs and the Term Loan Credit Facility and Revolver Credit Facility’s fair value was based on Level 3 inputs.

The following table summarizes the Company’s debt obligations as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(In thousands)
$2.0 billion unsecured term loan	$	2,000,000	$	—
$1.0 billion 2030 senior unsecured Notes	1,000,000		—
$1.25 billion revolving credit facility	475,000		—
$1.25 billion term loan	—		1,175,417
$690 million term loan	—		639,393
$513 million term loan	—		479,377
$125 million revolving line of credit	—		52,000
Total Long-term debt	3,475,000		2,346,187
Less: Debt issuance costs, net(1)	(27,487)		(38,485)
	3,447,513		2,307,702
Less: Current portion, net	—		(54,280)
Long-term portion of debt and finance lease obligations, net	$	3,447,513	$	2,253,422

(1) Excluded unamortized debt issuance cost related to the Revolving Credit Facility. Unamortized debt issuance cost associated with the Revolving Credit Facility was $7.3 million and $2.2 million as of September 30, 2022 and December 31, 2021, respectively, and were included in the “Deferred charges and other assets” of the Condensed Consolidated Balance Sheets.

The table below presents the components of the Company’s financing costs, net of capitalized interest:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In thousands)
Capitalized interest	$	961	$	226	$	1,262	$	712
Debt issuance costs	1,515		3,354		8,053		9,991
Interest expense	37,988		26,961		83,270		77,755
Total financing costs, net of capitalized interest	$	40,464	$	30,541	$	92,585	$	88,458

As of September 30, 2022 and December 31, 2021, unamortized debt issuance costs associated with the Notes and the Term Loan Credit Facility were $27.5 million and $38.5 million, respectively.

As of September 30, 2022 and December 31, 2021, unamortized debt issuance costs associated with the new and existing revolving credit facilities were $7.3 million and $2.2 million, respectively. As of September 30, 2022, the unamortized debt issuance costs associated with the new revolving credit facilities were included in the “Deferred charges and other assets” of the

Condensed Consolidated Balance Sheets. As of December 31, 2021, the current and non-current portion of the unamortized debt issuance costs were included in the “Other non-current assets” and “Deferred charges and other assets” of the Condensed Consolidated Balance Sheets.

The amortization of the debt issuance costs was charged to interest expense for the periods presented. The amount of debt issuance costs included in interest expense was $1.5 million and $3.4 million for the three months ended September 30, 2022 and 2021, respectively, and $8.1 million and $10.0 million for the nine months ended September 30, 2022 and 2021, respectively.

XML

ACCRUED EXPENSES

9 Months Ended

Sep. 30, 2022

Payables and Accruals [Abstract]

ACCRUED EXPENSES

ACCRUED EXPENSES

The following table provides detail of the Company’s accrued expenses at September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(In thousands)
Accrued product purchases	$	175,575	$	118,364
Accrued taxes	19,442		4,299
Accrued salaries, vacation, and related benefits	4,616		2,113
Accrued capital expenditures	8,713		2,995
Accrued interest expenses	19,120		—
Accrued other expenses	7,694		7,872
Total accrued expenses	$	235,160	$	135,643

Accrued product purchases mainly consisted of accrued gas estimates as of September 30, 2022.

XML

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Accruals for loss contingencies arising from claims, assessments, litigation, environmental, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. As of September 30, 2022 and December 31, 2021, there were no accruals for loss contingencies.

Litigation

The Company is a party to various legal actions arising in the ordinary course of its businesses. In accordance with ASC 450, Contingencies, the Company accrues reserves for outstanding lawsuits, claims, and proceedings when a loss contingency is probable and can be reasonably estimated. The Company estimates the amount of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage. Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question. Thus, the Company’s exposure and ultimate losses may be higher, and possibly significantly more, than the amounts accrued.

The Company has entered into litigation with two third parties to collect outstanding receivables totaling $19.6 million that remain outstanding from the Winter Storm Uri during February of 2021. Given the counterparties’ sufficient creditworthiness and the valid claims that we hold, no allowance has currently been established for these items as we have legally enforceable agreements with these parties.

Environmental Matters

As an owner of infrastructure assets with rights to surface lands, the Company is subject to various local and federal laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the Company for the cost of pollution clean-up resulting from operations and subject the Company to liability for pollution damages. The Company is not aware of any environmental claims existing as of September 30, 2022, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity.

Contingent Liabilities

Permian Gas Acquisition

As part of the acquisition of Permian Gas on June 11, 2019, consideration included a contingent liability arrangement with PDC Permian, Inc. (“PDC”). The arrangement requires additional monies to be paid by the Company to PDC on a per Mcf basis if the actual annual Mcf volume amounts exceed forecasted annual Mcf volume amounts starting in 2020 and continuing through 2029. The arrangement defines the incentive rate per Mcf for each qualifying year and the total monies paid under this arrangement are capped at $60.5 million. Amounts are payable on an annual basis over the earn-out period. The fair value of the contingent liability recognized on the acquisition date of $3.9 million was estimated utilizing the following key assumptions: (1) present value factors based on the Company’s weighted-average cost of capital, 2) a probability weighted payout based on an estimate of future volumes and (3) a discount period consistent with the arrangement’s life and the respective due dates of the potential future payments. Based on current forecasts and discussions with PDC, management revalued this contingent liability with updated assumptions at each reporting period. The Company did not expect PDC’s actual annual Mcf volume amounts to exceed forecasted amounts as of September 30, 2022; therefore, the estimated fair value of the contingent consideration liability was nil as of September 30, 2022. The estimated fair value of the contingent consideration liability related to this acquisition was $0.8 million as of December 31, 2021.

Original Altus Transaction

As part of the Transaction, the Company assumed contingent liabilities of $4.5 million related to earn-out consideration of up to 2,500,000 shares of Class A Common Stock, which was part of the original Altus transaction, as follows:

• 1,250,000 shares if the per share closing price of the Class A Common Stock as reported by the New York Stock Exchange (“NYSE”) during any 30-trading-day period ending prior to November 9, 2023 is equal to or greater than $140.00 for any 20 trading days within such 30-trading-day period.

• 1,250,000 shares if the per share closing price of the Class A Common Stock as reported by the NYSE during any 30-trading-day period ending prior to November 9, 2023 is equal to or greater than $160.00 for any 20 trading days within such 30-trading-day period.

Pursuant to ASC 805, this earn-out consideration was a pre-existing contingency and accounted for as an assumed liability to the acquirer on the acquisition date. Immediately subsequent to the Closing, the Company evaluated the earn-out consideration classification in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The Company determined the earn-out consideration to be classified as equity based on the settlement provision.

XML

EQUITY METHOD INVESTMENTS

9 Months Ended

Sep. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

EQUITY METHOD INVESTMENTS

EQUITY METHOD INVESTMENTS

As of September 30, 2022, the Company owned investments in the following long-haul pipeline entities in the Permian Basin. These investments were accounted for using the equity method of accounting. For each EMI pipeline entity, the Company has the ability to exercise significant influence based on certain governance provisions and its participation in the significant activities and decisions that impact the management and economic performance of the EMI pipeline. The table below presents the ownership percentages and investment balances held by the Company for each entity:

	Ownership	September 30, 2022		December 31, 2021
		(In thousands)
Permian Highway Pipeline LLC(1)	53.3%	$	1,459,096	$	626,477
Breviloba, LLC (Shin Oak)	33.0%	462,691		—
Gulf Coast Express Pipeline LLC	16.0%	450,809		—
		$	2,372,596	$	626,477

(1) Ownership for PHP was 53.3% and 26.7% as of September 30, 2022 and December 31, 2021, respectively.

Additionally, as of September 30, 2022, the Company also owned 15.0% of Epic Crude Holdings, LP (“EPIC”). However, no dollar value was assigned through the purchase price allocation as adjustment was made to eliminate equity in losses of EPIC. No additional contribution was made to EPIC and no distribution or equity income was received from EPIC during the three and nine months ended September 30, 2022.

As of September 30, 2022, the unamortized basis differences included in the EMI pipelines balances were $349.8 million. There was no unamortized basis difference as of December 31, 2021. These amounts represent differences in the Company’s contributions to date and the Company’s underlying equity in the separate net assets within the financial statements of the respective entities. Unamortized basis differences will be amortized into equity income over the useful lives of the underlying pipeline assets. There was capitalized interest of $12.5 million and $12.8 million as of September 30, 2022 and December 31, 2021, respectively. Capitalized interest is amortized on a straight-line basis into equity income.

The following table presents the activity in the Company’s EMIs for the nine months ended September 30, 2022:

		Permian Highway Pipeline LLC		Breviloba, LLC		Gulf Coast Express Pipeline LLC		Total(2)
	(In thousands)
Balance at December 31, 2021		$	626,477	$	—	$	—	$	626,477
Acquisitions		815,000		470,000		470,000		1,755,000
Contributions		56,199		—		—		56,199
Distributions		(125,526)		(25,810)		(34,450)		(185,786)
Equity income, net(1)		86,946		18,501		15,259		120,706
Balance at September 30, 2022		$	1,459,096	$	462,691	$	450,809	$	2,372,596

(1)For the nine months ended September 30, 2022, net of amortization of basis differences and capitalized interests, which represents undistributed earnings, the amortization was $5.3 million from Permian Highway Pipeline LLC, $0.5 million from Breviloba, LLC and $10.4 million from Gulf Coast Express Pipeline, LLC.

(2)The EMIs acquired in the Transaction are included in the results from February 22, 2022 to September 30, 2022, and this is also the case for the additional 26.67% of PHP that was acquired in the Transaction. The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements of this Form 10-Q, for further information on the Company’s basis of presentation.

Summarized Financial Information

The following tables represent selected statement of operations data for the Company’s EMI pipelines (on a 100 percent basis) for the three and nine months ended September 30, 2022 and 2021.

	Three Months Ended September 30,
	2022						2021
	Permian Highway Pipeline LLC		Breviloba, LLC		Gulf Coast Express Pipeline LLC		Permian Highway Pipeline LLC(1)		Breviloba, LLC(1)		Gulf Coast Express Pipeline LLC(1)
	(In thousands)
Revenues	$	100,114	$	53,120	$	91,800	$	99,918	$	45,054	$	91,454
Operating income	69,851		22,205		70,870		61,987		26,796		65,482
Net income	69,926		22,060		70,742		61,753		26,617		65,145

	Nine Months Ended September 30,
	2022					2021
	Permian Highway Pipeline LLC		Breviloba, LLC		Gulf Coast Express Pipeline LLC	Permian Highway Pipeline LLC(1)		Breviloba, LLC(1)		Gulf Coast Express Pipeline LLC(1)
	(In thousands)
Revenues	$	296,779	$	151,732	272,542	$	297,132	$	127,030	$	270,526
Operating income	190,620		73,877		199,130	167,011		72,098		186,356
Net income	190,446		73,711		198,732	166,662		71,621		185,464

(1) For the three and nine months ended September 30, 2021, the Company only had equity interest in Permian Highway Pipeline LLC.

XML

EQUITY AND WARRANTS

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

EQUITY AND WARRANTS

EQUITY AND WARRANTS

Redeemable Noncontrolling Interest — Common Unit Limited Partners

On February 22, 2022, the Company consummated the Transaction. Pursuant to the Contribution Agreement, in connection with the Closing, (i) Contributor contributed all of the equity interests of the Contributed Entities to the Partnership; and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 common units representing limited partner interests in the Partnership and 50,000,000 shares of the Company’s Class C Common Stock, par value $0.0001 per share. Please refer to “The Transaction” above.

The redemption option of the Common Unit is not legally detachable or separately exercisable from the instrument and is non-transferable, and the Common Unit is redeemable at the option of the holder. Therefore, the Common Unit is accounted for as redeemable noncontrolling interest and classified as temporary equity on the Company’s Condensed Consolidated Balance Sheet. During the first nine months of 2022, 5,730,000 common units were redeemed on a one-for-one basis for shares of Class A Common Stock and a corresponding number of shares of Class C Common Stock were cancelled. There were 94,270,000 Common Units and an equal number of Class C Common Stock issued and outstanding as of September 30, 2022. The Common Units fair value was approximately $3.06 billion as of September 30, 2022.

Redeemable Noncontrolling Interest — Preferred Unit Limited Partners

Upon Closing, the Company assumed certain Preferred Units that were issued and outstanding on acquisition date. The Company has redeemed all assumed Preferred Units since the Closing. Refer to Note 11—Series A Cumulative Redeemable Preferred Units for further discussion.

Public Warrants

As of September 30, 2022, there were 12,577,350 Public Warrants (as defined below) outstanding. Each whole public warrant entitles the holder to purchase one tenth of a share of Class A Common Stock at a price of $115.00 per share (the “Public Warrants”). The Public Warrants will expire on November 9, 2023 or upon redemption or liquidation. The Company may call the Public Warrants for redemption, in whole and not in part, at a price of $0.01 per warrant with not less than 30 days’ notice provided to the Public Warrant holders. However, this redemption right can only be exercised if the reported last sale price of the Class A Common Stock equals or exceeds $180.00 per share for any 20-trading days within a 30-trading day period ending three business days prior to sending the notice of redemption to the Public Warrant holders.

Private Placement Warrants

As of September 30, 2022, there were 6,364,281 Private Placement Warrants (as defined below) outstanding, of which Apache holds 3,182,140. The private placement warrants will expire on November 9, 2023 and are identical to the Public Warrants discussed above, except (i) they will not be redeemable by the Company so long as they are held by the initial holders or their respective permitted transferees and (ii) they may be exercised by the holders on a cashless basis (the “Private Placement Warrants” and, together with the Public Warrants, the “Warrants”).

The Company recorded a fair value of $0.1 million for the Public Warrants and a fair value of $0.1 million for the Private Warrants as of September 30, 2022 on the Condensed Consolidated Balance Sheet in other non-current liabilities. Refer to Note 15—Fair Value Measurement in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion regarding valuation of the Warrants.

Dividend

On February 22, 2022, the Company entered into a Dividend and Distribution Reinvestment Agreement (the “Reinvestment Agreement”) with certain stockholders including BCP Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC, APA Corporation Apache Midstream LLC, and certain individuals (each, a “Reinvestment Holder”). Under the Reinvestment Agreement, each Reinvestment Holder is obligated to reinvest at least 20% of all distributions on Common Units or dividends on shares of Class A Common Stock in the Company’s Class A Common Stock. Additionally, the Audit Committee and subsequently the Company’s Board of Directors (the “Board”) resolved that for the calendar year 2022, 100% of all distributions or dividends received by each Reinvestment Holder would be reinvested in newly issued shares of Class A Common Stock. As described in these Condensed Consolidated Financial Statements, as the context requires, dividends paid to holders of Class A Common Stock and distributions paid to holders of Common Units may be referred to collectively as “dividends.”

During the nine months ended September 30, 2022, the Company made cash dividend payments of $25.3 million to holders of Class A Common Stock and Common Units and $175.5 million was reinvested in shares of Class A Common Stock by Reinvestment Holders.

On October 19, 2022, the Board declared a cash dividend of $0.75 per share on the Company’s Class A Common Stock and a distribution of $0.75 per Common Unit from the Partnership to the holders of Common Units. Dividends are payable on November 17, 2022. Certain holders of Class A Common Stock and Class C Common Stock will receive a cash dividend with the balance receiving additional shares of Class A Common Stock under the Reinvestment Agreement.

Stock Split

On May 19, 2022, the Company announced that its Board approved and declared a two-for-one stock split with respect to its Class A Common Stock and Class C Common Stock, in the form of a stock dividend (the “Stock Split”). The Stock Split was accomplished by distributing one additional share of Class A Common Stock for each share of Class A Common Stock outstanding and one additional share of Class C Common Stock for each share of Class C Common Stock outstanding. The additional shares of Common Stock were issued on June 8, 2022 to holders of record at the close of business on May 31, 2022.

All corresponding per-share and share amounts, excluding the Transaction, for periods prior to June 8, 2022 have been retroactively restated in this Form 10-Q to reflect the Stock Split.

  SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS

Prior to the Closing Date of the Transaction, the Partnership had 625,000 Preferred Units issued and outstanding. Immediately prior to the Closing, on February 22, 2022, the Partnership redeemed for cash, 100,000 Preferred Units in an amount equal to approximately $120.1 million. The Company assumed the remaining 525,000 Preferred Units as well as 29,983 paid-in-kind (“PIK”) Preferred Units that were issued and outstanding at the closing of the Transaction. At the close, 150,000 preferred units and 8,567 associated PIK units became mandatorily redeemable and liability classified with the balance of preferred units remaining unchanged and classified as redeemable noncontrolling interest. The Company redeemed 125,000 mandatorily redeemable preferred units during the first two quarters of 2022 with the balance of mandatorily redeemable preferred units being redeemed during July for $30.7 million.

In July 2022, the Company redeemed all outstanding redeemable noncontrolling interest Preferred Units for an aggregate $461.5 million. The excess of the carrying amount of the redeemable noncontrolling interest Preferred units immediately prior to redemption over redemption price was included in “Retained Earnings” in the Condensed Consolidated Balance Sheets.

Activities related to Preferred Units for the nine months ended September 30, 2022 are as follows:

	Units Outstanding	Amount
	(In thousands, except for unit data)
Redeemable noncontrolling interest — Preferred Units, immediately upon Closing of Transaction(1)	396,417	$	462,717
Redemption, including PIK units	(396,417)	(461,460)
Cash distribution paid to Preferred Unit limited partners	—	(6,937)
Allocation of net income	—	18,128
Accreted redemption value adjustment	—	97,075
Excess of carrying amount over redemption price	—	(109,523)
Redeemable noncontrolling interest — Preferred Units, as of September 30, 2022	—	$	—

(1)Included 21,417 PIK units on a pro rata basis.

XML

SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS

EQUITY AND WARRANTS

Redeemable Noncontrolling Interest — Common Unit Limited Partners

On February 22, 2022, the Company consummated the Transaction. Pursuant to the Contribution Agreement, in connection with the Closing, (i) Contributor contributed all of the equity interests of the Contributed Entities to the Partnership; and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 common units representing limited partner interests in the Partnership and 50,000,000 shares of the Company’s Class C Common Stock, par value $0.0001 per share. Please refer to “The Transaction” above.

The redemption option of the Common Unit is not legally detachable or separately exercisable from the instrument and is non-transferable, and the Common Unit is redeemable at the option of the holder. Therefore, the Common Unit is accounted for as redeemable noncontrolling interest and classified as temporary equity on the Company’s Condensed Consolidated Balance Sheet. During the first nine months of 2022, 5,730,000 common units were redeemed on a one-for-one basis for shares of Class A Common Stock and a corresponding number of shares of Class C Common Stock were cancelled. There were 94,270,000 Common Units and an equal number of Class C Common Stock issued and outstanding as of September 30, 2022. The Common Units fair value was approximately $3.06 billion as of September 30, 2022.

Redeemable Noncontrolling Interest — Preferred Unit Limited Partners

Upon Closing, the Company assumed certain Preferred Units that were issued and outstanding on acquisition date. The Company has redeemed all assumed Preferred Units since the Closing. Refer to Note 11—Series A Cumulative Redeemable Preferred Units for further discussion.

Public Warrants

As of September 30, 2022, there were 12,577,350 Public Warrants (as defined below) outstanding. Each whole public warrant entitles the holder to purchase one tenth of a share of Class A Common Stock at a price of $115.00 per share (the “Public Warrants”). The Public Warrants will expire on November 9, 2023 or upon redemption or liquidation. The Company may call the Public Warrants for redemption, in whole and not in part, at a price of $0.01 per warrant with not less than 30 days’ notice provided to the Public Warrant holders. However, this redemption right can only be exercised if the reported last sale price of the Class A Common Stock equals or exceeds $180.00 per share for any 20-trading days within a 30-trading day period ending three business days prior to sending the notice of redemption to the Public Warrant holders.

Private Placement Warrants

As of September 30, 2022, there were 6,364,281 Private Placement Warrants (as defined below) outstanding, of which Apache holds 3,182,140. The private placement warrants will expire on November 9, 2023 and are identical to the Public Warrants discussed above, except (i) they will not be redeemable by the Company so long as they are held by the initial holders or their respective permitted transferees and (ii) they may be exercised by the holders on a cashless basis (the “Private Placement Warrants” and, together with the Public Warrants, the “Warrants”).

The Company recorded a fair value of $0.1 million for the Public Warrants and a fair value of $0.1 million for the Private Warrants as of September 30, 2022 on the Condensed Consolidated Balance Sheet in other non-current liabilities. Refer to Note 15—Fair Value Measurement in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion regarding valuation of the Warrants.

Dividend

On February 22, 2022, the Company entered into a Dividend and Distribution Reinvestment Agreement (the “Reinvestment Agreement”) with certain stockholders including BCP Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC, APA Corporation Apache Midstream LLC, and certain individuals (each, a “Reinvestment Holder”). Under the Reinvestment Agreement, each Reinvestment Holder is obligated to reinvest at least 20% of all distributions on Common Units or dividends on shares of Class A Common Stock in the Company’s Class A Common Stock. Additionally, the Audit Committee and subsequently the Company’s Board of Directors (the “Board”) resolved that for the calendar year 2022, 100% of all distributions or dividends received by each Reinvestment Holder would be reinvested in newly issued shares of Class A Common Stock. As described in these Condensed Consolidated Financial Statements, as the context requires, dividends paid to holders of Class A Common Stock and distributions paid to holders of Common Units may be referred to collectively as “dividends.”

During the nine months ended September 30, 2022, the Company made cash dividend payments of $25.3 million to holders of Class A Common Stock and Common Units and $175.5 million was reinvested in shares of Class A Common Stock by Reinvestment Holders.

On October 19, 2022, the Board declared a cash dividend of $0.75 per share on the Company’s Class A Common Stock and a distribution of $0.75 per Common Unit from the Partnership to the holders of Common Units. Dividends are payable on November 17, 2022. Certain holders of Class A Common Stock and Class C Common Stock will receive a cash dividend with the balance receiving additional shares of Class A Common Stock under the Reinvestment Agreement.

Stock Split

On May 19, 2022, the Company announced that its Board approved and declared a two-for-one stock split with respect to its Class A Common Stock and Class C Common Stock, in the form of a stock dividend (the “Stock Split”). The Stock Split was accomplished by distributing one additional share of Class A Common Stock for each share of Class A Common Stock outstanding and one additional share of Class C Common Stock for each share of Class C Common Stock outstanding. The additional shares of Common Stock were issued on June 8, 2022 to holders of record at the close of business on May 31, 2022.

All corresponding per-share and share amounts, excluding the Transaction, for periods prior to June 8, 2022 have been retroactively restated in this Form 10-Q to reflect the Stock Split.

  SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS

Prior to the Closing Date of the Transaction, the Partnership had 625,000 Preferred Units issued and outstanding. Immediately prior to the Closing, on February 22, 2022, the Partnership redeemed for cash, 100,000 Preferred Units in an amount equal to approximately $120.1 million. The Company assumed the remaining 525,000 Preferred Units as well as 29,983 paid-in-kind (“PIK”) Preferred Units that were issued and outstanding at the closing of the Transaction. At the close, 150,000 preferred units and 8,567 associated PIK units became mandatorily redeemable and liability classified with the balance of preferred units remaining unchanged and classified as redeemable noncontrolling interest. The Company redeemed 125,000 mandatorily redeemable preferred units during the first two quarters of 2022 with the balance of mandatorily redeemable preferred units being redeemed during July for $30.7 million.

In July 2022, the Company redeemed all outstanding redeemable noncontrolling interest Preferred Units for an aggregate $461.5 million. The excess of the carrying amount of the redeemable noncontrolling interest Preferred units immediately prior to redemption over redemption price was included in “Retained Earnings” in the Condensed Consolidated Balance Sheets.

Activities related to Preferred Units for the nine months ended September 30, 2022 are as follows:

	Units Outstanding	Amount
	(In thousands, except for unit data)
Redeemable noncontrolling interest — Preferred Units, immediately upon Closing of Transaction(1)	396,417	$	462,717
Redemption, including PIK units	(396,417)	(461,460)
Cash distribution paid to Preferred Unit limited partners	—	(6,937)
Allocation of net income	—	18,128
Accreted redemption value adjustment	—	97,075
Excess of carrying amount over redemption price	—	(109,523)
Redeemable noncontrolling interest — Preferred Units, as of September 30, 2022	—	$	—

(1)Included 21,417 PIK units on a pro rata basis.

XML

SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

Prior to the Closing, the Company issued incentive units, which included performance and service conditions, to certain employees and board members. The units consisted of Class A-1, Class A-2, and Class A-3 units. These units derived value from the Company’s certain wholly owned subsidiaries. Class A-1 and A-2 units would have vested upon either (i) the date of consummation of a change in control or (ii) the date that is 1-year following the consummation of the initial public offering (“IPO”) of the Company (or its successor) (collectively “Exit Events”). Class A-3 units would have vested upon a change in control, if the participants were employed at the time of the event, or upon termination of the participant by the Company.

Immediately upon Closing, all outstanding Class A-1 and Class A-2 units were cancelled and exchanged for 5,300,000 shares (the “Class A Shares”), post-Stock Split, of the Company’s Class A Common Stock. These Class A Shares are issued and outstanding as they were distributed pro rata to all holders of Class A-1 and Class A-2 units by the Common Unit limited partners from the 50,000,000 common units, pre-Stock-Split, that such limited partners received upon the Closing. The Common Unit limited partners redeemed Common Units needed for the Class A shares distribution upon the Closing. The Class A Shares are held in escrow and will vest over three to four years. Similarly, the Class A-3 units were exchanged for approximately 326,000, post Stock Split, Class C Common Stock and Common Units (the “Class C Shares”) and will vest over four years. The Company also issued approximately 76,000, post Stock Split, replacement restricted share awards (“Replacement Awards”) to new employees that transitioned from ALTM as part of the Transaction. These changes for all three share types established a new measurement date. The Class A Shares, Class C Shares and Replacement Awards were valued based on the Company’s publicly quoted stock price on the measurement date, which was the Closing Date of the Transaction.

During 2022, pursuant to the Company’s 2019 Omnibus Compensation Plan, as amended from time to time (the “Plan”), the Company granted a total of 13,941 restricted stock units (“RSUs”) to certain members of the Board, which were vested immediately on grant date, and granted a total of 14,144 RSUs to new employees, which are subject to a vesting period between one and three years.

With respect to the above shares, the Company recorded compensation expenses of $12.7 million and $31.0 million for the three and nine months ended September 30, 2022, respectively, based on a straight line amortization of the associated awards’ fair value over the respective vesting life of the shares. With respect to the above incentive units, no compensation expenses were recorded for the three and nine months ended September 30, 2021, as the incentive units were considered non-vested prior to their cancellation and exchange for Class A or Class C Common Stock, and no RSUs were granted during 2021.

XML

INCOME TAXES

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXES

The Company is subject to U.S. federal income tax and the Texas margin tax. Income tax expense included in the Condensed Consolidated Financial Statements in this Form 10-Q is as follows:

	Three Months Ended September 30,			Nine Months Ended September 30,
	2022			2022
	(In thousands)
Income before income taxes	$	50,828		$	204,503
Income tax expense	$	1,406		$	2,244
Effective tax rate (1)	2.77		%	1.10		%

(1) Prior to the Closing on February 22, 2022, BCP, the accounting acquirer, was organized as limited partnership and was not subject to the U.S. federal income tax for the three and nine months ended September 30, 2021.

The effective tax rate for the three and nine months ended September 30, 2022 was lower than the statutory rate mainly due to the impact of tax attributable to noncontrolling interests related to the Common Units and Preferred Units limited partners and valuation allowance.

Upon Closing, the Company assumed certain uncertain tax positions from ALTM. The Company accounts for income taxes in accordance with ASC 740—Income Taxes, which prescribes a minimum recognition threshold a tax position must meet before being recognized in the financial statements. Tax positions generally refer to a position taken in a previously filed income tax return or expected to be included in a tax return to be filed in the future that is reflected in the measurement of current and deferred income tax assets and liabilities. Reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

(In thousands)	Amount
Balance at December 31, 2021	$	—
Increase related to ALTM acquisition	5,238
Reduction related to current year activities	(5,238)
Balance at September 30, 2022	$	—

XML

NET INCOME PER SHARE

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

NET INCOME PER SHARE

NET INCOME PER SHARE

The computation of basic and diluted net income per share for the periods presented in the Condensed Consolidated Financial Statements is shown in the tables below.

	Three Months Ended September 30,
	2022					2021
	Income		Weighted-average shares(3)	Per Share		Income		Weighted-average shares(3)	Per Share
	(In thousands, except per share data)
Basic:
Net income attributable to Class A common shareholders	$	14,936	41,816	$	0.36	$	—	—	$	—
Less: Net income available to participating unvested restricted Class A common shareholders(4)	(4,174)		—	$	—	—		—	$	—
Excess preferred carrying amount over consideration paid(5)	32,900		—	$	—	—		—	$	—
Total net income attributable to Class A common shareholders	$	43,662	41,816	$	1.04	$	—	—	$	—
Effect of dilutive securities:
Unvested Class A common shares	—		39	$	—	—		—	$	—
Diluted(1)(2):
Net income attributable to Class A common shareholders	$	43,662	41,855	$	1.04	$	—	—	$	—

	Nine Months Ended September 30,
	2022					2021
	Income		Weighted-average shares(3)	Per Share		Income		Weighted-average share (3)	Per Share
	(In thousands, except per share data)
Basic:
Net income attributable to Class A common shareholders	$	25,239	40,042	$	0.63	$	—	—	$	—
Less: Net income available to participating unvested restricted Class A common shareholders(4)	(8,358)		—	$	—	—		—	$	—
Excess preferred carrying amount over consideration paid(5)	32,900		—	$	—	—		—	$	—
Total net income attributable to Class A common shareholders	$	49,781	40,042	$	1.24	$	—	—	$	—
Effect of dilutive securities:
Unvested Class A common shares	—		33	$	—	—		—	$	—
Diluted(1)(2):
Net income attributable to Class A common shareholders	$	49,781	40,075	$	1.24	$	—	—	$	—

(1)The effect of an assumed exchange of the outstanding public and private warrants for shares of Class A Common Stock would have been anti-dilutive for all periods presented in which the public and private warrants were outstanding.

(2)The effect of an assumed exchange of outstanding Common Units (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) would have been anti-dilutive for all periods presented in which the Common Units were outstanding.

(3)Share amounts have been retroactively restated to reflect the Company’s two-for-one Stock Split. Refer to Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

(4)Represents dividends paid to unvested restricted Class A common shareholders.

(5)Represented excess of carrying value of redeemable noncontrolling interest Preferred Units over redemption price at redemption.

XML

FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

The Company’s financial assets and liabilities measured at fair value on a recurring basis include cash and cash equivalents, accrued receivables, accounts receivable, accounts receivable from affiliates, dividends and distributions payable, interest rate and commodity swap derivatives, and Company’s private and public warrants and an embedded derivative liability related to the issuance of Preferred Units.

Topic 820 establishes a framework for measuring fair value in U.S. GAAP, clarifies the definition of fair value within that framework, and requires disclosures about the use of fair value measurements. Topic 820 defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Topic 820 provides a framework for measuring fair value, establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and requires consideration of the counterparty’s creditworthiness when valuing certain assets.

Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets (Level 1 inputs). The three levels of the fair value hierarchy under Topic 820 are described below:

Level 1 inputs: Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 inputs: Inputs, other than quoted prices in active markets, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3 inputs: Prices or valuations that require unobservable inputs that are both significant to the fair value measurement and unobservable. Valuation under Level 3 generally involves a significant degree of judgment from management.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Where available, fair value is based on observable market prices or inventory parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instrument’s complexity.

The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021:

	September 30, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Public warrants	$	126	$	—	$	—	$	126
Private warrants	—		—		95		95
Total liabilities	$	126	$	—	$	95	$	221

	December 31, 2021
	Level 1		Level 2		Level 3		Total
	(In thousands)
Commodity swaps	$	—	$	205	$	—	$	205
Interest rate derivatives	—		2,662		—		2,662
Contingent liabilities	—		—		839		839
Total liabilities	$	—	$	2,867	$	839	$	3,706

The Company is exposed to certain risks arising from both its business operations and economic conditions, and the Company enters into certain derivative contracts to manage the exposures. Refer to Note 16—Derivatives and Hedging Activities in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further discussion related to commodity swaps and interest rate derivatives.

The Company bifurcated and recognized the embedded derivative associated with the Preferred Units related to the exchange option provided to the Preferred Unit holders under the terms of the Partnership LPA. The Company redeemed all outstanding Preferred Units in July 2022 and wrote off related embedded derivative liabilities as of September 30, 2022. The Company recorded gains of $0.5 million and $89.1 million for the three and nine months ended September 30, 2022, which was recorded as a “Gain on embedded derivative” in the Condensed Consolidated Statement of Operations.

The carrying value of the Company’s Public Warrants are recorded at fair value based on quoted market prices, a Level 1 fair value measurement. The carrying value of the Company’s Private Placement Warrants are recorded at fair value determined using an option pricing model, a Level 3 fair value measurement, which is calculated based on key assumptions related to expected volatility of the Company’s common stock, an expected dividend yield, the remaining term of the warrants outstanding and the risk-free rate based on the U.S. Treasury yield curve in effect at the time of the valuation. These assumptions are estimated utilizing historical trends of the Company’s common stock, Public Warrants and other factors. The Company has recorded a liability of $0.2 million as of September 30, 2022. There was no change in fair value of the warrants since closing of the Transaction through reporting date.

The carrying amounts reported on the Condensed Consolidated Balance Sheets for the Company’s remaining financial assets and liabilities approximate fair value due to their short-term nature. There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the three and nine months ended September 30, 2022 and 2021.

XML

DERIVATIVES AND HEDGING ACTIVITIES

9 Months Ended

Sep. 30, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES AND HEDGING ACTIVITIES

DERIVATIVES AND HEDGING ACTIVITIES

The Company is exposed to certain risks arising from both its business operations and economic conditions, and it enters into certain derivative contracts to manage exposure to these risks. The Company did not elect to apply hedge accounting to these derivative contracts and recorded fair value of the derivatives on the Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021.

Interest Rate Risk

The Company manages market risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and by using derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company minimizes counterparty credit risk in derivative instruments by entering into transactions with high credit-rating counterparties.

The Company’s objectives in using interest rate derivatives is to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps and Term SOFR elections, (able to fix up to six months forward SOFR), granted under the company’s debt agreements as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract.

In June 2022, all of BCP PHP, LLC’s (“BCP PHP”) outstanding interest rate swaps were terminated as BCP PHP’s outstanding term loan credit facility was extinguished on June 8, 2022. Refer to Note 6—Debt and Financing Costs in the Notes to our Condensed Consolidated Financial Statements for additional information about the refinancing transactions.

The fair value or settlement value of the consolidated interest rate swaps outstanding are presented on a gross basis on the Condensed Consolidated Balance Sheets. Interest rate swap derivative liabilities were nil and $2.7 million as of September 30, 2022 and December 31, 2021, respectively. The Company recorded cash settlements on interest rate swap derivatives of nil and $0.7 million for the three months ended September 30, 2022 and 2021, respectively, and $11.3 and $2.2 million for the nine months ended September 30, 2022 and 2021, respectively, in “Interest Expense” of the Condensed Consolidated Statements of Operations. In addition, the Company recorded fair value adjustments of nil and $26 thousand for the change in fair value of the interest rate swap derivatives for the three months ended September 30, 2022 and 2021, respectively, and $14.0 million and $3.1 million for the nine months ended September 30, 2022 and 2021, respectively, in “Interest Expense” of the Condensed Consolidated Statements of Operations.

Commodity Price Risk

Similarly, in 2020 and 2021 BCP Raptor, LLC (“BCP I”) and BCP Raptor II, LLC (“BCP II”) had WTI crude hedges at a specific notional amount that provides for a fixed price for crude in the Permian Basin and Waha basis hub hedges on various notional quantities of gas that either provided for a fixed price differential of natural gas in the Permian Basin relative to the NYMEX natural gas contract or provided for a fixed price for natural gas in the Permian Basin.

All of the Company’s commodity swaps had reached maturity as of December 31, 2021. The fair value or settlement value of the swaps outstanding are presented on a gross basis on the Condensed Consolidated Balance Sheet. Commodity swap derivative liability was nil and $0.2 million as of September 30, 2022 and December 31, 2021, respectively. The Company recorded cash settlements on commodity swap derivatives of nil and $0.9 million for the three months ended September 30, 2022 and 2021, respectively, and $0.2 million and $15.8 million for the nine months ended September 30, 2022 and 2021, respectively, in “Other Revenue” of the Condensed Consolidated Statements of Operations. In addition, the Company recorded fair value adjustments of $0.6 million and $17.1 million for the change in fair value of commodity swap derivatives for the three and nine months ended September 30, 2021, respectively, in “Other Revenue” of the Condensed Consolidated Statements of Operations. No fair value adjustment recognized for the three and nine months ended September 30, 2022 as no commodity swaps were outstanding.

XML

SEGMENTS

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

SEGMENTS

SEGMENTS

Our two operating segments represent the Company’s segments for which discrete financial information is available and is utilized on a regular basis by our chief operating decision maker (“CODM”) to make key operating decisions, assess performance and allocate resources. Our Chief Executive Officer is the CODM. These segments are strategic business units with differing products and services. No operating segments have been aggregated to form the reportable segments. Therefore, our two operating segments represent our reportable segments. The activities of each of our reportable segments from which the Company earns revenues and incurs expenses are described below:

•Midstream Logistics: The Midstream Logistics segment operates under three streams, 1) gas gathering and processing, 2) crude oil gathering, stabilization and storage services and 3) water gathering and disposal.

•Pipeline Transportation: The Pipeline Transportation segment consists of equity investment interests in four Permian Basin pipelines that access various points along the Texas Gulf Coast, Brandywine NGL Pipeline and Delaware Link Pipeline that is under development. The current operating pipelines transport crude oil, natural gas and NGLs.

Upon Closing, our CODM reviewed the Company and ALTM’s reporting segment activities. The Company then renamed its Gathering and Processing segment to Midstream Logistics and its Transmission segment to Pipeline Transportation. These name changes were made to better align segment activities with the name of the respective segment. There was no change in segment composition or structure for the three and nine months ended September 30, 2022.

The following tables present the reconciliation of the segment profit measure as of and for the three and nine months ended September 30, 2022 and 2021:

	Midstream Logistics		Pipeline Transportation		Corporate and Other(1)		Consolidated(2)
For the three months ended September 30, 2022	(In thousands)
Segment net income (loss) including noncontrolling interests	$	65,525	$	44,750	$	(60,853)	$	49,422
Add back:
Interest expense	7		—		40,457		40,464
Income tax expense	—		—		1,406		1,406
Depreciation and amortization	64,655		345		5		65,005
Contract assets amortization	448		—		—		448
Proportionate EMI EBITDA	—		78,357		—		78,357
Share-based compensation	—		—		12,661		12,661
Loss on disposal of assets	3,946		—		—		3,946
Integration costs	14		81		2,243		2,338
Acquisition transaction costs	5		—		57		62
Other one-time costs or amortization	2,945		162		645		3,752
Deduct:
Gain on embedded derivative	—		—		488		488
Equity income from unconsolidated affiliates	—		45,003		—		45,003
Segment adjusted EBITDA	$	137,545	$	78,692	$	(3,867)	$	212,370

	Midstream Logistics		Pipeline Transportation		Corporate and Other(1)		Consolidated(2)
For the three months ended September 30, 2021	(In thousands)
Segment net income (loss) including noncontrolling interests	$	(6,210)	$	13,333	$	(2,483)	$	4,640
Add back:
Interest expense	27,682		2,859		—		30,541
Income tax expense	1,207		—		—		1,207
Depreciation and amortization	57,026		128		—		57,154
Contract assets amortization	448		—		—		448
Proportionate EMI EBITDA	—		21,704		—		21,704
Loss (gain) on disposal of assets	(60)		23		—		(37)
Loss on debt extinguishment	56		—		—		56
Other one-time costs or amortization	802		160		205		1,167
Deduct:
Interest and other income	74		—		—		74
Equity income from unconsolidated affiliates	—		16,826		—		16,826
Segment adjusted EBITDA	$	80,877	$	21,381	$	(2,278)	$	99,980

	Midstream Logistics		Pipeline Transportation		Corporate and Other(1)		Consolidated(2)
For the nine months ended September 30, 2022	(In thousands)
Segment net income (loss) including noncontrolling interests	$	89,274	$	120,162	$	(7,177)	$	202,259
Add back:
Interest expense	47,411		(664)		45,838		92,585
Income tax expense (benefit)	457		(39)		1,826		2,244
Depreciation and amortization	192,007		597		5		192,609
Contract assets amortization	1,344		—		—		1,344
Proportionate EMI EBITDA	—		190,438		—		190,438
Share-based compensation	—		—		30,966		30,966
Loss (gain) on disposal of assets	12,636		—		(34)		12,602
Loss (gain) on debt extinguishment	27,983		(8)		—		27,975
Integration costs	933		81		8,998		10,012
Acquisition transaction costs	9		—		6,403		6,412
Other one-time costs or amortization	8,865		162		1,942		10,969
Deduct:
Gain on redemption of mandatorily redeemable Preferred units	—		—		9,580		9,580
Gain on embedded derivative	—		—		89,050		89,050
Equity income from unconsolidated affiliates	—		120,706		—		120,706
Segment adjusted EBITDA	$	380,919	$	190,023	$	(9,863)	$	561,079

	Midstream Logistics		Pipeline Transportation		Corporate and Other(1)		Consolidated(2)
For the nine months ended September 30, 2021	(In thousands)
Segment net income (loss) including noncontrolling interests	$	(22,238)	$	37,072	$	(7,424)	$	7,410
Add back:
Interest expense	82,967		5,491		—		88,458
Income tax expense	1,207		—		—		1,207
Depreciation and amortization	169,906		385		—		170,291
Contract assets amortization	1,815		—		—		1,815
Proportionate EMI EBITDA	—		59,677		—		59,677
Loss on disposal of assets	394		23		—		417
Gain on debt extinguishment	(4)		—		—		(4)
Derivatives loss due to Winter Storm Uri	13,456		—		—		13,456
Other one-time costs or amortization	1,675		182		153		2,010
Producer settlement	6,827		—		—		6,827
Deduct:
Interest and other income	115		—		—		115
Equity income from unconsolidated affiliates	—		44,692		—		44,692
Segment adjusted EBITDA	$	255,890	$	58,138	$	(7,271)	$	306,757

(1) Corporate and Other represents those results that: (i) are not specifically attributable to a reportable segment; (ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense items.

(2) Results do not include legacy ALTM prior to February 22, 2022. Refer to Note 1 —Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q, for further information on the Company’s basis of presentation. Adjusted EBITDA is a non-GAAP measure; please see Key Performance Metrics in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q, for a definition and reconciliation to the GAAP measure.

The following tables present the revenue for individual operating segment for the three and nine months ended September 30, 2022 and 2021:

	Midstream Logistics		Pipeline Transportation		Consolidated
For the three months ended September 30, 2022	(In thousands)
Revenue	$	320,667	$	733	$	321,400
Other revenue	3,774		2		3,776
Total segment operating revenue	$	324,441	$	735	$	325,176

	Midstream Logistics		Pipeline Transportation		Consolidated
For the three months ended September 30, 2021	(In thousands)
Revenue	$	165,844	$	—	$	165,844
Other revenue	740		2		742
Total segment operating revenue	$	166,584	$	2	$	166,586

	Midstream Logistics		Pipeline Transportation		Consolidated
For the nine months ended September 30, 2022	(In thousands)
Revenue	$	907,771	$	733	$	908,504
Other revenue	9,487		6		9,493
Total segment operating revenue	$	917,258	$	739	$	917,997

	Midstream Logistics		Pipeline Transportation		Consolidated
For the nine months ended September 30, 2021	(In thousands)
Revenue	$	446,840	$	—	$	446,840
Other revenue	3,609		6		3,615
Total segment operating revenue	$	450,449	$	6	$	450,455

The following table presents total assets for each operating segment as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(In thousands)
Midstream Logistics	$	3,575,642	$	2,916,774
Pipeline Transportation	2,417,663		635,784
Segment total assets	5,993,305		3,552,558
Corporate and other	13,873		648
Total assets	$	6,007,178	$	3,553,206

XML

SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

On October 10, 2022, the Company announced the transfer of its Class A Common Stock to the New York Stock Exchange (“NYSE”) from the Nasdaq Global Select Market (“Nasdaq”). The Company’s Class A Common Stock began trading on the NYSE under its current ticker symbol, “KNTK”, at the open of trading on Monday, October 24, 2022.

On October 19, 2022, the Board declared a cash dividend of $0.75 per share on the Company’s Class A Common Stock which will be payable to stockholders on November 17, 2022. The Company, through its ownership of the general partner of the Partnership, declared a distribution of $0.75 per Common Unit from the Partnership to the holders of Common Units. Please refer to Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for additional information.

XML

DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of PresentationThe accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP. Certain reclassifications of prior year balances have been made to conform such amounts to current year presentation. These reclassifications have no impact on net income. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. All intercompany balances and transactions have been eliminated in consolidation.

Principles of Consolidation

Prior to the Closing, the Company’s financial statements that were filed with the SEC were derived from ALTM’s accounting records. As the Transaction was determined to be a reverse merger, BCP was considered as the accounting acquirer and ALTM was the legal acquirer. The accompanying Condensed Consolidated Financial Statements herein include (1) BCP’s net assets carried at historical value, (2) BCP’s historical results of operations prior to the Transaction, (3) the ALTM’s net assets carried at fair value as of the Closing Date and (4) the combined results of operations with the Company’s results presented within the Condensed Consolidated Financial Statements from February 22, 2022 going forward. Refer to Note 2—Business Combination to our Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion.

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 in this Form 10-Q to reflect the two-for-one Stock Split, except for the number of Common Units and shares of Class C Common Stock described above in relation to the Transaction, which are presented at pre-Stock-Split amounts. This presentation election is consistent with our previous public filings and the terms of the Contribution Agreement.

Use of Estimates

Use of Estimates

Preparation of financial statements in conformity with GAAP and disclosure of contingent assets and liabilities requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. The Company evaluates its estimates and assumptions on a regular basis. Actual results may differ from these estimates and assumptions used in preparation of its condensed consolidated financial statements, and changes in these estimates are recorded when known. Significant items subject to such estimates and assumptions include the valuation of tangible and intangible assets, share-based compensation, contingent liabilities, warrants, and noncontrolling interests.

Variable Interest Entity

Variable Interest Entity

The Company uses a qualitative approach in assessing the consolidation requirement for variable interest entities. The approach focuses on identifying which enterprise has the power to direct the activities that most significantly impact the variable interest entity’s economic performance and which enterprise has the obligation to absorb losses or the right to receive benefits from the variable interest entity. In the event that the Company is the primary beneficiary of a variable interest entity, the assets, liabilities, and results of operations of the variable interest entity would be consolidated in our financial statements. The Company has determined that it has significant influence over the operating and financial policies of the four pipeline entities in which it is invested, but does not exercise control over them; and hence, it accounts for these investments using the equity method. Refer to Note 9—Equity Method Investments in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

Redeemable Noncontrolling Interest

Redeemable Noncontrolling Interest — Common Units Limited Partners

Pursuant to the Contribution Agreement, in connection with the Closing, (i) Contributor contributed all of the equity interests of the Contributed Entities to the Partnership; and (ii) in exchange for such contribution, the Partnership transferred to Contributor 50,000,000 common units representing limited partner interests in the Partnership and 50,000,000 shares of the Company’s Class C Common Stock, par value $0.0001 per share. Please refer to “The Transaction” above.

The Common Units are redeemable at the option of unit holders and accounted for in the Company’s Condensed Consolidated Balance Sheet as a redeemable noncontrolling interest classified as temporary equity. The Company records the redeemable noncontrolling interest at the higher of (i) its initial value plus accumulated earnings/losses associated with the noncontrolling interest or (ii) the maximum redemption value as of the balance sheet date. The redemption value was determined based on a 5-day volume weighted-average closing price of the Class A Common Stock. See discussion and additional details in Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

Redeemable Noncontrolling Interest — Preferred Unit Limited Partners

The Partnership issued Series A Cumulative Redeemable Preferred Units (“Preferred Units”) on June 12, 2019. As the Transaction was accounted for as a reverse merger, the Company assumed certain Preferred Units that were issued and outstanding at Closing for accounting purposes.

The Preferred Units are accounted for on the Company’s Condensed Consolidated Balance Sheet as a redeemable noncontrolling interest classified as temporary equity based on the terms of the Preferred Units. Certain redemption features embedded within the terms of the Preferred Units required bifurcation and measurement at fair value and are accounted for on the Company’s Condensed Consolidated Balance Sheet as a long-term liability embedded derivative.The excess of the carrying amount of the redeemable noncontrolling interest Preferred units immediately prior to redemption over redemption price was included in “Retained Earnings” in the Condensed Consolidated Balance Sheets.

Equity Method Interests

Equity Method InvestmentsThe Company follows the equity method of accounting when it does not exercise control over its equity interests, but can exercise significant influence over the operating and financial policies of the entity. Under this method, the equity investments are carried originally at acquisition cost, increased by the Company’s proportionate share of the equity interest’s net income and contributions made, and decreased by the Company’s proportionate share of the equity interest’s net losses and distributions received. The Company determines whether distributions are a return on or a return of the investment based on the nature of the distribution approach, under which the Company classifies distributions from an investee by evaluating the facts, circumstances and nature of each distribution. As distributions from the Company’s equity method investment (“EMI”) pipeline entities are generated from their respective normal course of business, the Company classifies the distributions as return on investments and as cash flow from operating activities. Unamortized basis differences will be amortized into equity income over the useful lives of the underlying pipeline assets.

Inventory

InventoryOther current assets include condensate, residue gas and NGLs inventories that are valued at the lower of cost or market. At the end of each reporting period, the Company assesses the carrying value of inventory and makes any adjustments necessary to reduce the carrying value to the applicable net realizable value.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

In accordance with Financial Accounting Standards Board (“FASB”) ASC 360, Property, Plant and Equipment, long-lived assets, excluding goodwill, to be held and used by the Company are reviewed for impairment annually or on an interim basis if events or circumstances indicate that the fair value of the assets have decreased below their carrying value. For long-lived assets to be held and used, the Company bases their evaluation on impairment indicators such as the nature of the assets, the future economic benefit of the assets, any historical or future profitability measurements and other external market conditions or factors that may be present.

The Company’s management assesses whether there has been an impairment trigger, and if a trigger is identified, then the Company would perform an undiscounted cash flow test at the lowest level for which identifiable cash flows are independent of cash flows from other assets. If the sum of the undiscounted future net cash flows is less than the net book value of the property, an impairment loss is recognized for any excess of the property’s net book value over its estimated fair value.

Transactions with Affiliates

Transactions with AffiliatesThe accounts receivable from or payable to affiliates represent the net result of the Company’s monthly revenue, capital and operating expenditures, and other miscellaneous transactions to be settled with Apache and its subsidiaries, who controlled the Company prior to the Transaction.

Net Income per Share

Net Income Per Share

Basic net income per share is calculated by dividing net income attributable to Class A common shareholders by the weighted-average number of shares of Class A Common Stock outstanding during the period. Class C Common Stock is excluded from the weighted-average shares outstanding for the calculation of basic net income per share, as holders of Class C Common Stock are not entitled to any dividends or liquidating distributions. No net income per share was computed for the three and nine months ended September 30, 2021, as no Class A Common Stock was outstanding with respect to BCP as the accounting acquirer as of September 30, 2021.

The Company uses the “if-converted method” to determine the potential dilutive effect of (i) an assumed exchange of outstanding Common Units (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) for shares of Class A Common Stock and (ii) an assumed exercise of the outstanding public and private warrants for shares of Class A Common Stock. The dilutive effect of any earn-out consideration payable in shares is only included in periods for which the underlying conditions for the issuance are met.

Recently Adopted Accounting Pronouncement and Recent Accounting Pronouncement Not Yet Adopted

Recently Adopted Accounting Pronouncement

Effective January 1, 2022, the Company adopted ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which requires contract assets and contract liabilities (i.e., deferred revenue) acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Revenue from Contracts with Customers. Generally, this new guidance will result in the acquirer recognizing contract assets and contract liabilities at the same amounts recorded by the acquiree.

Historically, such amounts were recognized by the acquirer at fair value. With adoption of ASU 2021-08, the Company assumed contract liabilities at carrying value of $9.1 million upon Closing.

Effective January 1, 2022, the Company adopted ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”). ASU 2020-04 was issued to ease the potential accounting burden expected when global capital markets move away from LIBOR, the benchmark interest rate banks use to make short-term loans to each other. The amendments in this update provide optional expedients and exceptions for applying GAAP to contracts, hedging relationship, and other transactions affected by reference rate reform if certain criteria are met. Interest rate applied to the Company’s new Term Loan and Revolver borrowings resulting from the comprehensive refinance is based on Secured Overnight Financing Rate (“SOFR”), which is a broad measure of the cost of borrowing cash overnight collateralized by treasury securities. Refer to Note 6—Debt and Financing Costs in the Notes to our Condensed Consolidated Financial Statements of this Form 10-Q for discussion of SOFR applicable to the Company’s debt structures.

Recent Accounting Pronouncement Not Yet Adopted

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). The amendments in ASU 2022-03 clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments also require the following disclosures for equity securities subject to contractual sale restrictions: (1) The fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet; (2) The nature and remaining duration of the restriction(s); (3) The circumstances that could cause a lapse in the restriction(s). This guidance is effective for public business entities for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the effect that ASU 2022-03 will have on its Consolidated Financial Statements.

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method (“ASU 2022-01”). Current GAAP permits only prepayable financial assets and one or more beneficial interests secured by a portfolio of prepayable financial instruments to be included in a last-of-layer closed portfolio. The amendments in ASU 2022-01 allow nonprepayable financial assets also to be included in a closed portfolio hedged using the portfolio layer method. That expanded scope permits an entity to apply the same portfolio hedging method to both prepayable and nonprepayable financial assets, thereby allowing consistent accounting for similar hedges. The amendments in ASU 2022-01 also clarify the accounting for and promote consistency in the reporting of hedge basis adjustments applicable to both a single hedged layer and multiple hedged layers as follows: (1) an entity is required to maintain basis adjustments in an existing hedge on a closed portfolio basis (that is, not allocated to individual assets), (2) an entity is required to immediately recognize and present the basis adjustment associated with the amount of the designated layer that was breached in interest income. In addition, an entity is required to disclose that amount and the circumstances that led to the breach, (3) an entity is required to disclose the total amount of the basis adjustments in existing hedges as a reconciling amount if other areas of GAAP require the disaggregated disclosure of the amortized cost basis of assets included in the closed portfolio, and (4) an entity is prohibited from considering basis adjustments in an existing hedge when determining credit losses. The guidance is effective for public business entities for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. Early adoption is permitted on any date on or after the issuance of ASU 2022-01 for any entity that has adopted the amendments in ASU 2017-02 for the corresponding period. The Company is currently evaluating the effect that ASU 2022-01 will have on its Consolidated Financial Statements.

Business Combination

The Transaction was accounted as a reverse merger in accordance with ASC 805, which, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair value. The Company also adopted ASU 2021-08, effective as of January 1, 2022, to record contract liabilities at their carrying value as of the acquisition date. Although the Company was the legal acquirer, BCP was determined to be the accounting acquirer and legal acquiree. As a result, BCP and its subsidiaries’ net assets were carried at historical value, acquired net assets were measured at fair value except contract liabilities being recorded at carrying value at the acquisition date, and results of operations of ALTM and its subsidiaries were included in the Company’s Condensed Consolidated Financial Statements from the Closing Date going forward.

The preliminary purchase price allocation is based on an assessment of the fair value of the assets acquired and liabilities assumed in the acquisition using inputs that are not observable in the market and thus Level 3 inputs. The fair value of the processing plant, gathering system and related facilities and equipment are based on market and cost approaches. The goodwill of $4.6 million relates to operational synergies and is included in the Midstream Logistics segment. The value of the Preferred Units and assumed contingent liability is determined through a probability-weighted analysis of the expected future cash flows and other applicable valuation techniques. See additional details for Preferred Units in Note 11—Series A Cumulative Redeemable Preferred Units and contingent liabilities in Note 8—Commitments and Contingencies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q. Certain data necessary to complete the purchase price allocation is not yet available, including, but not limited to, valuation of the underlying assets of the equity method investments and liabilities assumed. However, the Company is continuing its review of these matters during the measurement period, and if new information obtained about facts and circumstances that existed at the acquisition date identifies adjustments to the liabilities initially recognized, as well as any additional liabilities that existed at the acquisition date, the acquisition accounting will be revised to reflect the resulting adjustments to the provisional amounts initially recognized. The Company will finalize the purchase price allocation during the 12-month period following the acquisition date.

Revenue Recognition

Current and noncurrent contract liabilities are included in “Other Current Liabilities” and “Contract Liabilities,” respectively, of the Condensed Consolidated Balance Sheets. The Company has capitalized certain costs incurred to obtain a contract that would not have been incurred if the contract had not been obtained. These costs are recovered through the net cash flows of the associated contract. Current and noncurrent contract cost assets are included in “Prepaid and Other Current Assets” and “Deferred Charges and Other Assets,” respectively, of the Condensed Consolidated Balance Sheets. The Company amortizes these assets as cost of sales on a straight-line basis over the life of the associated long-term customer contract.

Property, Plant and Equipment

Property, plant and equipment are carried at cost or fair market value at the date of acquisition less accumulated depreciation. The cost basis of constructed assets includes materials, labor, and other direct costs. Major improvements or betterment are capitalized, while repairs that do not improve the life of the respective assets are expensed as incurred. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets.The cost of property classified as “Construction in progress” is excluded from capitalized costs being depreciated.

Goodwill

Goodwill is tested at least annually as of December 31 of each year, or more frequently as events occur or circumstances change that would more-likely-than-not reduce fair value of a reporting unit below its carrying value.

Debt and Financing Cost

The aggregate fees, expenses, and original issue discount paid to obtain the Notes totaled $21.5 million and were capitalized as debt issuance cost and included in the Condensed Consolidated Balance Sheets as a direct deduction to the NotesIn obtaining the RCA, the Partnership incurred fees and expenses totaling $7.8 million, which was capitalized and included in the Condensed Consolidated Balance Sheets as “Deferred charges and other assets.the Partnership incurred fee and expenses totaled $7.6 million, which was capitalized as debt issuance cost and included in the Condensed Consolidated Balance Sheets as a direct deduction to the Term Loan Credit FacilityAs of September 30, 2022, the unamortized debt issuance costs associated with the new revolving credit facilities were included in the “Deferred charges and other assets” of the Condensed Consolidated Balance SheetsAs of December 31, 2021, the current and non-current portion of the unamortized debt issuance costs were included in the “Other non-current assets” and “Deferred charges and other assets” of the Condensed Consolidated Balance Sheets. The amortization of the debt issuance costs was charged to interest expense for the periods presented.

Commitments and Contingencies

Accruals for loss contingencies arising from claims, assessments, litigation, environmental, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change.The Company is a party to various legal actions arising in the ordinary course of its businesses. In accordance with ASC 450, Contingencies, the Company accrues reserves for outstanding lawsuits, claims, and proceedings when a loss contingency is probable and can be reasonably estimated. The Company estimates the amount of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage. Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question. Thus, the Company’s exposure and ultimate losses may be higher, and possibly significantly more, than the amounts accrued. Pursuant to ASC 805, this earn-out consideration was a pre-existing contingency and accounted for as an assumed liability to the acquirer on the acquisition dateThe Company determined the earn-out consideration to be classified as equity based on the settlement provision.

Equity and Warrants

Therefore, the Common Unit is accounted for as redeemable noncontrolling interest and classified as temporary equity on the Company’s Condensed Consolidated Balance Sheet.All corresponding per-share and share amounts, excluding the Transaction, for periods prior to June 8, 2022 have been retroactively restated in this Form 10-Q to reflect the Stock Split.

Share-Based Compensation

The Class A Shares, Class C Shares and Replacement Awards were valued based on the Company’s publicly quoted stock price on the measurement date, which was the Closing Date of the Transaction. During 2022, pursuant to the Company’s 2019 Omnibus Compensation Plan, as amended from time to time (the “Plan”), the Company granted a total of 13,941 restricted stock units (“RSUs”) to certain members of the Board, which were vested immediately on grant date, and granted a total of 14,144 RSUs to new employees, which are subject to a vesting period between one and three years. With respect to the above shares, the Company recorded compensation expenses of $12.7 million and $31.0 million for the three and nine months ended September 30, 2022, respectively, based on a straight line amortization of the associated awards’ fair value over the respective vesting life of the shares.

Income Tax

The Company accounts for income taxes in accordance with ASC 740—Income Taxes, which prescribes a minimum recognition threshold a tax position must meet before being recognized in the financial statements.

Fair Value Measurements

The Company’s financial assets and liabilities measured at fair value on a recurring basis include cash and cash equivalents, accrued receivables, accounts receivable, accounts receivable from affiliates, dividends and distributions payable, interest rate and commodity swap derivatives, and Company’s private and public warrants and an embedded derivative liability related to the issuance of Preferred Units.

Topic 820 establishes a framework for measuring fair value in U.S. GAAP, clarifies the definition of fair value within that framework, and requires disclosures about the use of fair value measurements. Topic 820 defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Topic 820 provides a framework for measuring fair value, establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and requires consideration of the counterparty’s creditworthiness when valuing certain assets.

Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets (Level 1 inputs). The three levels of the fair value hierarchy under Topic 820 are described below:

Level 1 inputs: Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 inputs: Inputs, other than quoted prices in active markets, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3 inputs: Prices or valuations that require unobservable inputs that are both significant to the fair value measurement and unobservable. Valuation under Level 3 generally involves a significant degree of judgment from management.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Where available, fair value is based on observable market prices or inventory parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instrument’s complexity.

XML

BUSINESS COMBINATION (Tables)

9 Months Ended

Sep. 30, 2022

Business Combinations [Abstract]

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary estimated fair value of assets acquired and liabilities assumed in the Transaction in accordance with ASC 805:

(In thousands)	Amount
Cash and cash equivalent	$	13,401
Accounts receivable	1,919
Accounts receivable - affiliates	15,681
Property, plant, and equipment, net	634,923
Intangible assets, net	13,200
Investments in unconsolidated affiliates	1,755,000
Prepaid expense and other assets	7,748
Goodwill	4,557
Total assets acquired	2,446,429
Accrued expenses and other accrued liabilities	5,687
Long-term debt	657,000
Embedded derivative liabilities	89,050
Contract liabilities	9,102
Mandatory redeemable Preferred Units	200,667
Deferred tax liabilities	4,010
Contingent liabilities	4,451
Total liabilities assumed	969,967
Redeemable noncontrolling interest - Preferred Unit limited partners	462,717
Total consideration transferred	$	1,013,745

Schedule of Pro Forma Information

The unaudited supplemental pro forma financials are for informational purposes only and are not indicative of future results. The results below for the three and nine months ended September 30, 2022 and 2021 combine the results of the Company and the Partnership, giving effect to the Transaction as if it had been completed on January 1, 2021.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
(In thousands)	Pro forma		Pro forma		Pro forma		Pro forma
Revenues	$	325,176	$	201,134	$	944,850	$	554,742
Net income including noncontrolling interest	$	46,968	$	28,518	$	193,083	$	64,165

XML

REVENUE RECOGNITION (Tables)

9 Months Ended

Sep. 30, 2022

Revenue from Contract with Customer [Abstract]

Summary of Disaggregation of Revenue

The following table presents a disaggregation of the Company’s revenue:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In thousands)
Gathering and processing services	$	107,597	$	72,578	$	290,122	$	202,482
Natural gas, NGLs and condensate sales	213,803		93,266		618,382		244,358
Other revenue	3,776		742		9,493		3,615
Total revenues and other	$	325,176	$	166,586	$	917,997	$	450,455

Schedule of Remaining Performance Obligation, Expected Timing of Satisfaction

The following table presents our estimated revenue from contracts with customers for remaining performance obligations that has not yet been recognized, representing our contractually committed revenues as of September 30, 2022:

	Amount
Fiscal Year	(In thousands)
Remaining of 2022	$	2,151
2023	44,597
2024	40,247
2025	47,898
2026	34,631
Thereafter	191,293
	$	360,817

Schedule of Contract with Customer, Contract Liability

The following table provides information about contract liabilities from contracts with customers as of September 30, 2022:

	Amount
	(In thousands)
Balance at December 31, 2021	$	14,756
Reclassification of beginning contract liabilities to revenue as a result of performance obligation being satisfied	(5,159)
Cash received and not recognized as revenue	20,268
Balance at September 30, 2022	29,865
Less: Current portion	7,158
Non-current portion	$	22,707

XML

PROPERTY, PLANT AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant and Equipment

Property, plant and equipment, at carrying value, is as follows:

	September 30, 2022		December 31, 2021
	(In thousands)
Gathering, processing and transmission systems and facilities	$	2,850,062	$	2,121,434
Vehicles	8,026		6,090
Computers and equipment	4,255		4,271
Less: accumulated depreciation	(437,049)		(337,030)
Total depreciable assets, net	2,425,294		1,794,765
Construction in progress	82,834		24,888
Land	20,531		19,626
Total property, plant and equipment, net	$	2,528,659	$	1,839,279

XML

GOODWILL AND INTANGIBLE ASSETS, NET (Tables)

9 Months Ended

Sep. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

Intangible assets, net are comprised of the following:

	September 30, 2022		December 31, 2021
	(In thousands)
Customer contracts	$	1,136,728	$	1,135,963
Right of way assets	125,164		99,345
Less accumulated amortization	(539,501)		(449,259)
Total amortizable intangible assets, net	$	722,391	$	786,049

XML

DEBT AND FINANCING COSTS - (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Schedule of Long-term Debt

The following table summarizes the Company’s debt obligations as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(In thousands)
$2.0 billion unsecured term loan	$	2,000,000	$	—
$1.0 billion 2030 senior unsecured Notes	1,000,000		—
$1.25 billion revolving credit facility	475,000		—
$1.25 billion term loan	—		1,175,417
$690 million term loan	—		639,393
$513 million term loan	—		479,377
$125 million revolving line of credit	—		52,000
Total Long-term debt	3,475,000		2,346,187
Less: Debt issuance costs, net(1)	(27,487)		(38,485)
	3,447,513		2,307,702
Less: Current portion, net	—		(54,280)
Long-term portion of debt and finance lease obligations, net	$	3,447,513	$	2,253,422

(1) Excluded unamortized debt issuance cost related to the Revolving Credit Facility. Unamortized debt issuance cost associated with the Revolving Credit Facility was $7.3 million and $2.2 million as of September 30, 2022 and December 31, 2021, respectively, and were included in the “Deferred charges and other assets” of the Condensed Consolidated Balance Sheets.

Schedule of Financing Costs, Net

The table below presents the components of the Company’s financing costs, net of capitalized interest:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In thousands)
Capitalized interest	$	961	$	226	$	1,262	$	712
Debt issuance costs	1,515		3,354		8,053		9,991
Interest expense	37,988		26,961		83,270		77,755
Total financing costs, net of capitalized interest	$	40,464	$	30,541	$	92,585	$	88,458

XML

ACCRUED EXPENSES (Tables)

9 Months Ended

Sep. 30, 2022

Payables and Accruals [Abstract]

Components of Accrued Expenses

The following table provides detail of the Company’s accrued expenses at September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(In thousands)
Accrued product purchases	$	175,575	$	118,364
Accrued taxes	19,442		4,299
Accrued salaries, vacation, and related benefits	4,616		2,113
Accrued capital expenditures	8,713		2,995
Accrued interest expenses	19,120		—
Accrued other expenses	7,694		7,872
Total accrued expenses	$	235,160	$	135,643

XML

EQUITY METHOD INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

Schedule of Equity Method Investments

As of September 30, 2022, the Company owned investments in the following long-haul pipeline entities in the Permian Basin. These investments were accounted for using the equity method of accounting. For each EMI pipeline entity, the Company has the ability to exercise significant influence based on certain governance provisions and its participation in the significant activities and decisions that impact the management and economic performance of the EMI pipeline. The table below presents the ownership percentages and investment balances held by the Company for each entity:

	Ownership	September 30, 2022		December 31, 2021
		(In thousands)
Permian Highway Pipeline LLC(1)	53.3%	$	1,459,096	$	626,477
Breviloba, LLC (Shin Oak)	33.0%	462,691		—
Gulf Coast Express Pipeline LLC	16.0%	450,809		—
		$	2,372,596	$	626,477

(1) Ownership for PHP was 53.3% and 26.7% as of September 30, 2022 and December 31, 2021, respectively.

The following table presents the activity in the Company’s EMIs for the nine months ended September 30, 2022:

		Permian Highway Pipeline LLC		Breviloba, LLC		Gulf Coast Express Pipeline LLC		Total(2)
	(In thousands)
Balance at December 31, 2021		$	626,477	$	—	$	—	$	626,477
Acquisitions		815,000		470,000		470,000		1,755,000
Contributions		56,199		—		—		56,199
Distributions		(125,526)		(25,810)		(34,450)		(185,786)
Equity income, net(1)		86,946		18,501		15,259		120,706
Balance at September 30, 2022		$	1,459,096	$	462,691	$	450,809	$	2,372,596

(1)For the nine months ended September 30, 2022, net of amortization of basis differences and capitalized interests, which represents undistributed earnings, the amortization was $5.3 million from Permian Highway Pipeline LLC, $0.5 million from Breviloba, LLC and $10.4 million from Gulf Coast Express Pipeline, LLC.

(2)The EMIs acquired in the Transaction are included in the results from February 22, 2022 to September 30, 2022, and this is also the case for the additional 26.67% of PHP that was acquired in the Transaction. The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements of this Form 10-Q, for further information on the Company’s basis of presentation.

Schedule of Equity Method Investment, Summarized Financial Information

The following tables represent selected statement of operations data for the Company’s EMI pipelines (on a 100 percent basis) for the three and nine months ended September 30, 2022 and 2021.

	Three Months Ended September 30,
	2022						2021
	Permian Highway Pipeline LLC		Breviloba, LLC		Gulf Coast Express Pipeline LLC		Permian Highway Pipeline LLC(1)		Breviloba, LLC(1)		Gulf Coast Express Pipeline LLC(1)
	(In thousands)
Revenues	$	100,114	$	53,120	$	91,800	$	99,918	$	45,054	$	91,454
Operating income	69,851		22,205		70,870		61,987		26,796		65,482
Net income	69,926		22,060		70,742		61,753		26,617		65,145

	Nine Months Ended September 30,
	2022					2021
	Permian Highway Pipeline LLC		Breviloba, LLC		Gulf Coast Express Pipeline LLC	Permian Highway Pipeline LLC(1)		Breviloba, LLC(1)		Gulf Coast Express Pipeline LLC(1)
	(In thousands)
Revenues	$	296,779	$	151,732	272,542	$	297,132	$	127,030	$	270,526
Operating income	190,620		73,877		199,130	167,011		72,098		186,356
Net income	190,446		73,711		198,732	166,662		71,621		185,464

(1) For the three and nine months ended September 30, 2021, the Company only had equity interest in Permian Highway Pipeline LLC.

XML

SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS (Tables)

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Schedule of Preferred Units

Activities related to Preferred Units for the nine months ended September 30, 2022 are as follows:

	Units Outstanding	Amount
	(In thousands, except for unit data)
Redeemable noncontrolling interest — Preferred Units, immediately upon Closing of Transaction(1)	396,417	$	462,717
Redemption, including PIK units	(396,417)	(461,460)
Cash distribution paid to Preferred Unit limited partners	—	(6,937)
Allocation of net income	—	18,128
Accreted redemption value adjustment	—	97,075
Excess of carrying amount over redemption price	—	(109,523)
Redeemable noncontrolling interest — Preferred Units, as of September 30, 2022	—	$	—

(1)Included 21,417 PIK units on a pro rata basis.

XML

INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2022

Income Tax Disclosure [Abstract]

Schedule of Total Income Tax Provision (Benefit)

The Company is subject to U.S. federal income tax and the Texas margin tax. Income tax expense included in the Condensed Consolidated Financial Statements in this Form 10-Q is as follows:

	Three Months Ended September 30,			Nine Months Ended September 30,
	2022			2022
	(In thousands)
Income before income taxes	$	50,828		$	204,503
Income tax expense	$	1,406		$	2,244
Effective tax rate (1)	2.77		%	1.10		%

(1) Prior to the Closing on February 22, 2022, BCP, the accounting acquirer, was organized as limited partnership and was not subject to the U.S. federal income tax for the three and nine months ended September 30, 2021.

Schedule of Unrecognized Tax Benefits

Reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

(In thousands)	Amount
Balance at December 31, 2021	$	—
Increase related to ALTM acquisition	5,238
Reduction related to current year activities	(5,238)
Balance at September 30, 2022	$	—

XML

NET INCOME PER SHARE (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Schedule of Net (Loss) Per Share

The computation of basic and diluted net income per share for the periods presented in the Condensed Consolidated Financial Statements is shown in the tables below.

	Three Months Ended September 30,
	2022					2021
	Income		Weighted-average shares(3)	Per Share		Income		Weighted-average shares(3)	Per Share
	(In thousands, except per share data)
Basic:
Net income attributable to Class A common shareholders	$	14,936	41,816	$	0.36	$	—	—	$	—
Less: Net income available to participating unvested restricted Class A common shareholders(4)	(4,174)		—	$	—	—		—	$	—
Excess preferred carrying amount over consideration paid(5)	32,900		—	$	—	—		—	$	—
Total net income attributable to Class A common shareholders	$	43,662	41,816	$	1.04	$	—	—	$	—
Effect of dilutive securities:
Unvested Class A common shares	—		39	$	—	—		—	$	—
Diluted(1)(2):
Net income attributable to Class A common shareholders	$	43,662	41,855	$	1.04	$	—	—	$	—

	Nine Months Ended September 30,
	2022					2021
	Income		Weighted-average shares(3)	Per Share		Income		Weighted-average share (3)	Per Share
	(In thousands, except per share data)
Basic:
Net income attributable to Class A common shareholders	$	25,239	40,042	$	0.63	$	—	—	$	—
Less: Net income available to participating unvested restricted Class A common shareholders(4)	(8,358)		—	$	—	—		—	$	—
Excess preferred carrying amount over consideration paid(5)	32,900		—	$	—	—		—	$	—
Total net income attributable to Class A common shareholders	$	49,781	40,042	$	1.24	$	—	—	$	—
Effect of dilutive securities:
Unvested Class A common shares	—		33	$	—	—		—	$	—
Diluted(1)(2):
Net income attributable to Class A common shareholders	$	49,781	40,075	$	1.24	$	—	—	$	—

(1)The effect of an assumed exchange of the outstanding public and private warrants for shares of Class A Common Stock would have been anti-dilutive for all periods presented in which the public and private warrants were outstanding.

(2)The effect of an assumed exchange of outstanding Common Units (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) would have been anti-dilutive for all periods presented in which the Common Units were outstanding.

(3)Share amounts have been retroactively restated to reflect the Company’s two-for-one Stock Split. Refer to Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

(4)Represents dividends paid to unvested restricted Class A common shareholders.

(5)Represented excess of carrying value of redeemable noncontrolling interest Preferred Units over redemption price at redemption.

XML

FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2022 and December 31, 2021:

	September 30, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Public warrants	$	126	$	—	$	—	$	126
Private warrants	—		—		95		95
Total liabilities	$	126	$	—	$	95	$	221

	December 31, 2021
	Level 1		Level 2		Level 3		Total
	(In thousands)
Commodity swaps	$	—	$	205	$	—	$	205
Interest rate derivatives	—		2,662		—		2,662
Contingent liabilities	—		—		839		839
Total liabilities	$	—	$	2,867	$	839	$	3,706

XML

SEGMENTS (Tables)

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

The following tables present the reconciliation of the segment profit measure as of and for the three and nine months ended September 30, 2022 and 2021:

	Midstream Logistics		Pipeline Transportation		Corporate and Other(1)		Consolidated(2)
For the three months ended September 30, 2022	(In thousands)
Segment net income (loss) including noncontrolling interests	$	65,525	$	44,750	$	(60,853)	$	49,422
Add back:
Interest expense	7		—		40,457		40,464
Income tax expense	—		—		1,406		1,406
Depreciation and amortization	64,655		345		5		65,005
Contract assets amortization	448		—		—		448
Proportionate EMI EBITDA	—		78,357		—		78,357
Share-based compensation	—		—		12,661		12,661
Loss on disposal of assets	3,946		—		—		3,946
Integration costs	14		81		2,243		2,338
Acquisition transaction costs	5		—		57		62
Other one-time costs or amortization	2,945		162		645		3,752
Deduct:
Gain on embedded derivative	—		—		488		488
Equity income from unconsolidated affiliates	—		45,003		—		45,003
Segment adjusted EBITDA	$	137,545	$	78,692	$	(3,867)	$	212,370

	Midstream Logistics		Pipeline Transportation		Corporate and Other(1)		Consolidated(2)
For the three months ended September 30, 2021	(In thousands)
Segment net income (loss) including noncontrolling interests	$	(6,210)	$	13,333	$	(2,483)	$	4,640
Add back:
Interest expense	27,682		2,859		—		30,541
Income tax expense	1,207		—		—		1,207
Depreciation and amortization	57,026		128		—		57,154
Contract assets amortization	448		—		—		448
Proportionate EMI EBITDA	—		21,704		—		21,704
Loss (gain) on disposal of assets	(60)		23		—		(37)
Loss on debt extinguishment	56		—		—		56
Other one-time costs or amortization	802		160		205		1,167
Deduct:
Interest and other income	74		—		—		74
Equity income from unconsolidated affiliates	—		16,826		—		16,826
Segment adjusted EBITDA	$	80,877	$	21,381	$	(2,278)	$	99,980

	Midstream Logistics		Pipeline Transportation		Corporate and Other(1)		Consolidated(2)
For the nine months ended September 30, 2022	(In thousands)
Segment net income (loss) including noncontrolling interests	$	89,274	$	120,162	$	(7,177)	$	202,259
Add back:
Interest expense	47,411		(664)		45,838		92,585
Income tax expense (benefit)	457		(39)		1,826		2,244
Depreciation and amortization	192,007		597		5		192,609
Contract assets amortization	1,344		—		—		1,344
Proportionate EMI EBITDA	—		190,438		—		190,438
Share-based compensation	—		—		30,966		30,966
Loss (gain) on disposal of assets	12,636		—		(34)		12,602
Loss (gain) on debt extinguishment	27,983		(8)		—		27,975
Integration costs	933		81		8,998		10,012
Acquisition transaction costs	9		—		6,403		6,412
Other one-time costs or amortization	8,865		162		1,942		10,969
Deduct:
Gain on redemption of mandatorily redeemable Preferred units	—		—		9,580		9,580
Gain on embedded derivative	—		—		89,050		89,050
Equity income from unconsolidated affiliates	—		120,706		—		120,706
Segment adjusted EBITDA	$	380,919	$	190,023	$	(9,863)	$	561,079

	Midstream Logistics		Pipeline Transportation		Corporate and Other(1)		Consolidated(2)
For the nine months ended September 30, 2021	(In thousands)
Segment net income (loss) including noncontrolling interests	$	(22,238)	$	37,072	$	(7,424)	$	7,410
Add back:
Interest expense	82,967		5,491		—		88,458
Income tax expense	1,207		—		—		1,207
Depreciation and amortization	169,906		385		—		170,291
Contract assets amortization	1,815		—		—		1,815
Proportionate EMI EBITDA	—		59,677		—		59,677
Loss on disposal of assets	394		23		—		417
Gain on debt extinguishment	(4)		—		—		(4)
Derivatives loss due to Winter Storm Uri	13,456		—		—		13,456
Other one-time costs or amortization	1,675		182		153		2,010
Producer settlement	6,827		—		—		6,827
Deduct:
Interest and other income	115		—		—		115
Equity income from unconsolidated affiliates	—		44,692		—		44,692
Segment adjusted EBITDA	$	255,890	$	58,138	$	(7,271)	$	306,757

(1) Corporate and Other represents those results that: (i) are not specifically attributable to a reportable segment; (ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain general and administrative expense items.

(2) Results do not include legacy ALTM prior to February 22, 2022. Refer to Note 1 —Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q, for further information on the Company’s basis of presentation. Adjusted EBITDA is a non-GAAP measure; please see Key Performance Metrics in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Form 10-Q, for a definition and reconciliation to the GAAP measure.

The following tables present the revenue for individual operating segment for the three and nine months ended September 30, 2022 and 2021:

	Midstream Logistics		Pipeline Transportation		Consolidated
For the three months ended September 30, 2022	(In thousands)
Revenue	$	320,667	$	733	$	321,400
Other revenue	3,774		2		3,776
Total segment operating revenue	$	324,441	$	735	$	325,176

	Midstream Logistics		Pipeline Transportation		Consolidated
For the three months ended September 30, 2021	(In thousands)
Revenue	$	165,844	$	—	$	165,844
Other revenue	740		2		742
Total segment operating revenue	$	166,584	$	2	$	166,586

	Midstream Logistics		Pipeline Transportation		Consolidated
For the nine months ended September 30, 2022	(In thousands)
Revenue	$	907,771	$	733	$	908,504
Other revenue	9,487		6		9,493
Total segment operating revenue	$	917,258	$	739	$	917,997

	Midstream Logistics		Pipeline Transportation		Consolidated
For the nine months ended September 30, 2021	(In thousands)
Revenue	$	446,840	$	—	$	446,840
Other revenue	3,609		6		3,615
Total segment operating revenue	$	450,449	$	6	$	450,455

The following table presents total assets for each operating segment as of September 30, 2022 and December 31, 2021:

	September 30, 2022		December 31, 2021
	(In thousands)
Midstream Logistics	$	3,575,642	$	2,916,774
Pipeline Transportation	2,417,663		635,784
Segment total assets	5,993,305		3,552,558
Corporate and other	13,873		648
Total assets	$	6,007,178	$	3,553,206

XML

DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - The Transaction (Details)	Jun. 08, 2022	Sep. 30, 2022 $ / shares shares	Feb. 22, 2022 $ / shares shares	Dec. 31, 2021 $ / shares shares
Schedule Of Organization [Line Items]
Percent of common stock, issued and outstanding, owned			5.00%
Class C Common Stock
Schedule Of Organization [Line Items]
Common stock, shares issued (in shares)		94,270,000	50,000,000	100,000,000
Common stock, par value (in USD per share) | $ / shares		$ 0.0001	$ 0.0001	$ 0.0001
Class A Common Stock
Schedule Of Organization [Line Items]
Common stock, shares issued (in shares)		43,082,157		0
Common stock, par value (in USD per share) | $ / shares		$ 0.0001	$ 0.0001	$ 0.0001
Common Stock | Class C Common Stock
Schedule Of Organization [Line Items]
Stock split, conversion ratio	2
Common Stock | Class A Common Stock
Schedule Of Organization [Line Items]
Stock split, conversion ratio	2
Altus Midstream LP
Schedule Of Organization [Line Items]
Common stock, shares issued (in shares)			50,000,000
BCP Raptor Holdco, LLC
Schedule Of Organization [Line Items]
Percent of common stock, issued and outstanding, owned			75.00%
Apache Midstream LLC
Schedule Of Organization [Line Items]
Percent of common stock, issued and outstanding, owned			20.00%

XML

DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Details)			3 Months Ended				9 Months Ended
		Jun. 08, 2022	Sep. 30, 2022 USD ($) $ / shares		Sep. 30, 2021 USD ($) $ / shares shares		Sep. 30, 2022 USD ($) $ / shares		Sep. 30, 2021 USD ($) $ / shares shares	Feb. 22, 2022 USD ($)	Dec. 31, 2021 USD ($)
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Recorded cost of sales	[1]		$ 145,208,000		$ 60,503,000		$ 418,197,000		$ 141,011,000
Inventory			13,100,000				13,100,000				$ 2,100,000
Impairment of long-lived assets			0		$ 0		0		$ 0
Accounts receivable, affiliates			24,100,000				24,100,000
Revenue from affiliate			35,200,000				81,400,000
Operating expenses			$ 200,000				$ 500,000
Basic (in USD per share) | $ / shares	[1]		$ 1.04		$ 0		$ 1.24		$ 0
Diluted (in USD per share) | $ / shares			$ 1.04	[1]	$ 0	[1]	$ 1.24	[1]	$ 0
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Contract liability			$ 29,865,000				$ 29,865,000				$ 14,756,000
Highway Pipeline LLC (“PHP”) and Breviloba, LLC
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Recorded cost of sales			$ 3,700,000				$ 10,800,000
Class A Common Stock
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Shares outstanding (in shares) | shares					0				0
Common Stock | Class A Common Stock
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Stock split, conversion ratio		2
Accounting Standards Update 2021-08
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Contract liability										$ 9,100,000

[1] The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Redeemable Noncontrolling Interest (Details) - $ / shares	Sep. 30, 2022	Feb. 22, 2022	Dec. 31, 2021
Class C Common Stock
Class of Stock [Line Items]
Common stock, shares issued (in shares)	94,270,000	50,000,000	100,000,000
Common stock, par value (in USD per share)	$ 0.0001	$ 0.0001	$ 0.0001
Altus Midstream LP
Class of Stock [Line Items]
Common stock, shares issued (in shares)		50,000,000

XML

BUSINESS COMBINATION - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Feb. 22, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Goodwill	$ 4,557		$ 4,557			$ 0
BCP and BCP GP
Business Acquisition [Line Items]
Goodwill	4,600		4,600		$ 4,557
Acquisition-related transaction costs	100	$ 100	6,400	$ 31,200
Reversal of acquisition related expenses	$ 1,500		$ 21,000
Class C Common Stock
Business Acquisition [Line Items]
Common stock, shares issued (in shares)	94,270,000		94,270,000		50,000,000	100,000,000
Common stock, par value (in USD per share)	$ 0.0001		$ 0.0001		$ 0.0001	$ 0.0001
Altus Midstream LP
Business Acquisition [Line Items]
Common stock, shares issued (in shares)					50,000,000

XML

BUSINESS COMBINATION - Allocation of Acquisition Costs to Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Feb. 22, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Goodwill	$ 4,557		$ 0
BCP and BCP GP
Business Acquisition [Line Items]
Cash and cash equivalent		$ 13,401
Accounts receivable		1,919
Accounts receivable - affiliates		15,681
Property, plant, and equipment, net		634,923
Intangible assets, net		13,200
Investments in unconsolidated affiliates		1,755,000
Prepaid expense and other assets		7,748
Goodwill	$ 4,600	4,557
Total assets acquired		2,446,429
Accrued expenses and other accrued liabilities		5,687
Long-term debt		657,000
Embedded derivative liabilities		89,050
Contract liabilities		9,102
Mandatory redeemable Preferred Units		200,667
Deferred tax liabilities		4,010
Contingent liabilities		4,451
Total liabilities assumed		969,967
Redeemable noncontrolling interest - Preferred Unit limited partners		462,717
Total consideration transferred		$ 1,013,745

XML

BUSINESS COMBINATION - Pro Forma (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Business Combination and Asset Acquisition [Abstract]
Revenues	$ 325,176	$ 201,134	$ 944,850	$ 554,742
Net income including noncontrolling interest	$ 46,968	$ 28,518	$ 193,083	$ 64,165

XML

REVENUE RECOGNITION - Disaggregation of Revenue (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Disaggregation of Revenue [Line Items]
Total operating revenues	[1]	$ 325,176	$ 166,586	$ 917,997	$ 450,455
Gathering and processing services
Disaggregation of Revenue [Line Items]
Total operating revenues		107,597	72,578	290,122	202,482
Natural gas, NGLs and condensate sales
Disaggregation of Revenue [Line Items]
Total operating revenues		213,803	93,266	618,382	244,358
Other revenue
Disaggregation of Revenue [Line Items]
Total operating revenues	[1]	$ 3,776	$ 742	$ 9,493	$ 3,615

[1] The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Disaggregation of Revenue [Line Items]
Total operating revenues	[1]	$ 325,176	$ 166,586	$ 917,997	$ 450,455
Capitalized contract cost		15,300		15,300		$ 18,400
Amortization of contract costs		400	400	1,344	1,815
Minimum Volume Commitments
Disaggregation of Revenue [Line Items]
Total operating revenues		$ 700	$ 0	$ 1,000	$ 2,500

[1] The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

REVENUE RECOGNITION - Remaining Performance Obligations (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligations	$ 360,817
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligations	$ 2,151
Expected timing of satisfaction, period	3 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligations	$ 44,597
Expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligations	$ 40,247
Expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligations	$ 47,898
Expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligations	$ 34,631
Expected timing of satisfaction, period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Remaining performance obligations	$ 191,293
Expected timing of satisfaction, period

XML

REVENUE RECOGNITION - Contract Liabilities (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Contract with Customer, Liability [Roll Forward]
Beginning balance	$ 14,756
Reclassification of beginning contract liabilities to revenue as a result of performance obligation being satisfied	(5,159)
Cash received and not recognized as revenue	20,268
Ending balance	29,865
Less: Current portion	7,158
Non-current portion	$ 22,707	$ 11,674

XML

PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Less: accumulated depreciation	$ (437,049)		$ (437,049)		$ (337,030)
Total depreciable assets, net	2,425,294		2,425,294		1,794,765
Total property, plant and equipment, net	2,528,659		2,528,659		1,839,279
Depreciation expense	34,900	$ 26,800	102,400	$ 79,000
Gathering, processing and transmission systems and facilities
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	2,850,062		2,850,062		2,121,434
Vehicles
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	8,026		8,026		6,090
Computers and equipment
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	4,255		4,255		4,271
Construction in progress
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	82,834		82,834		24,888
Land
Property, Plant and Equipment [Line Items]
Total property, plant and equipment, gross	$ 20,531		$ 20,531		$ 19,626

XML

GOODWILL AND INTANGIBLE ASSETS, NET - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Feb. 22, 2022	Dec. 31, 2021
Business Acquisition [Line Items]
Goodwill	$ 4,557,000		$ 4,557,000			$ 0
Finite-Lived Intangible Assets [Line Items]
Initial term			10 years
Option to renewal			10 years
Percent of original consideration paid	130.00%		130.00%
Amortization of intangible assets	$ 30,100,000	$ 30,400,000	$ 90,200,000	$ 91,300,000
Impairment of intangible assets	0	$ 0	$ 0	$ 0
Right of way assets
Finite-Lived Intangible Assets [Line Items]
Useful life			10 years
Minimum
Finite-Lived Intangible Assets [Line Items]
Remaining term			1 year
Maximum
Finite-Lived Intangible Assets [Line Items]
Remaining term			20 years
BCP and BCP GP
Business Acquisition [Line Items]
Goodwill	$ 4,600,000		$ 4,600,000		$ 4,557,000

XML

GOODWILL AND INTANGIBLE ASSETS, NET - Intangible Asset (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Less accumulated amortization	$ (539,501)	$ (449,259)
Total amortizable intangible assets, net	722,391	786,049
Customer contracts
Finite-Lived Intangible Assets [Line Items]
Total amortizable intangible assets, gross	1,136,728	1,135,963
Right of way assets
Finite-Lived Intangible Assets [Line Items]
Total amortizable intangible assets, gross	$ 125,164	$ 99,345

XML

DEBT AND FINANCING COSTS - Additional Information (Details) - USD ($)			3 Months Ended		9 Months Ended
	Jun. 15, 2027	Jun. 08, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Debt Instrument [Line Items]
Deferred financing costs			$ 27,487,000		$ 27,487,000		$ 38,485,000
Gain (loss) on extinguishment of debt			0	$ (56,000)	(27,975,000)	$ 4,000
Debt, fair value			3,020,000,000.00		3,020,000,000.00		$ 2,340,000,000
Amortization of debt issuance costs			$ 1,515,000	$ 3,354,000	$ 8,053,000	$ 9,991,000
Revolving Credit Facility | One-Month SOFR
Debt Instrument [Line Items]
Effective percentage		1.00%
Revolving Credit Facility | One-Month SOFR | Minimum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		0.25%
Revolving Credit Facility | One-Month SOFR | Maximum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		1.00%
Revolving Credit Facility | One, Three or Six-Month SOFR
Debt Instrument [Line Items]
Effective percentage		0.10%
Revolving Credit Facility | One, Three or Six-Month SOFR | Minimum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		1.25%
Revolving Credit Facility | One, Three or Six-Month SOFR | Maximum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		2.00%
Revolving Credit Facility | Overnight Bank Funding Rate
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		0.50%
Term Loan Credit Facility | One-Month SOFR
Debt Instrument [Line Items]
Effective percentage		1.00%
Term Loan Credit Facility | One-Month SOFR | Minimum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		0.25%
Term Loan Credit Facility | One-Month SOFR | Maximum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		1.00%
Term Loan Credit Facility | One, Three or Six-Month SOFR
Debt Instrument [Line Items]
Effective percentage		0.10%
Term Loan Credit Facility | One, Three or Six-Month SOFR | Minimum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		1.25%
Term Loan Credit Facility | One, Three or Six-Month SOFR | Maximum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		2.00%
Term Loan Credit Facility | Overnight Bank Funding Rate
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		0.50%
Additional Percent Added | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument, interest rate, increase (decrease)		0.05%
If Neither of the Sustainability Performance Targets as Set Forth | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument, interest rate, increase (decrease)		0.05%
If Only One of the Sustainability Performance Targets as Set Forth | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument, interest rate, increase (decrease)		0.00%
If Both of the Sustainability Performance Targets as Set Forth | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument, interest rate, increase (decrease)		(0.05%)
Senior Notes | 5.875% Senior Notes Due 2030
Debt Instrument [Line Items]
Face amount		$ 1,000,000,000
Stated percentage		5.875%
Debt instrument, redemption price, percentage					99.588%
Fee, expense, and original issue discounts		$ 21,500,000
Senior Notes | 5.875% Senior Notes Due 2030 | Forecast
Debt Instrument [Line Items]
Debt instrument, interest rate, increase (decrease)	0.25%
Senior Notes | 5.875% Senior Notes Due 2030 | Forecast | Additional Increase if Sustainability Performance Targets are Met
Debt Instrument [Line Items]
Debt instrument, interest rate, increase (decrease)	0.083%
Unsecured Debt | Revolving Credit Facility
Debt Instrument [Line Items]
Debt maximum borrowing capacity		$ 1,250,000,000
Unsecured Debt | Revolving Credit Facility | Minimum
Debt Instrument [Line Items]
Line of credit facility, unused capacity, commitment fee percentage		0.15%
Unsecured Debt | Revolving Credit Facility | Maximum
Debt Instrument [Line Items]
Line of credit facility, unused capacity, commitment fee percentage		0.35%
Unsecured Debt | Term Loan Credit Facility
Debt Instrument [Line Items]
Debt maximum borrowing capacity		$ 2,000,000,000
Deferred financing costs		$ 7,600,000
Line of Credit
Debt Instrument [Line Items]
Gain (loss) on extinguishment of debt					$ 28,000,000
Term Loan | Additional Percent Added
Debt Instrument [Line Items]
Debt instrument, interest rate, increase (decrease)		0.05%
Term Loan | If Neither of the Sustainability Performance Targets as Set Forth
Debt Instrument [Line Items]
Debt instrument, interest rate, increase (decrease)		0.05%
Term Loan | If Only One of the Sustainability Performance Targets as Set Forth
Debt Instrument [Line Items]
Debt instrument, interest rate, increase (decrease)		0.00%
Term Loan | If Both of the Sustainability Performance Targets as Set Forth
Debt Instrument [Line Items]
Debt instrument, interest rate, increase (decrease)		(0.05%)

XML

DEBT AND FINANCING COSTS - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Jun. 08, 2022	Dec. 31, 2021
Debt Instrument [Line Items]
Total Long-term debt	$ 3,475,000		$ 2,346,187
Less: Debt issuance costs, net	(27,487)		(38,485)
Debt outstanding	3,447,513		2,307,702
Less: Current portion, net	0		(54,280)
Long-term debt, net	3,447,513		2,253,422
$2.0 billion unsecured term loan
Debt Instrument [Line Items]
Face amount	2,000,000
$1.0 billion 2030 senior unsecured Notes
Debt Instrument [Line Items]
Face amount	1,000,000
Total Long-term debt	1,000,000		0
$1.25 billion revolving credit facility
Debt Instrument [Line Items]
Face amount	1,250,000
$1.25 billion revolving credit facility | Revolving Credit Facility
Debt Instrument [Line Items]
Unamortized debt issuance cost	7,300	$ 7,800
$690 million term loan
Debt Instrument [Line Items]
Face amount	690,000
$513 million term loan
Debt Instrument [Line Items]
Face amount	513,000
$125 million revolving line of credit
Debt Instrument [Line Items]
Debt maximum borrowing capacity	125,000
$125 million revolving line of credit | Revolving Credit Facility
Debt Instrument [Line Items]
Unamortized debt issuance cost			2,200
Term Loan | $2.0 billion unsecured term loan
Debt Instrument [Line Items]
Total Long-term debt	2,000,000		0
Term Loan | $1.25 billion revolving credit facility
Debt Instrument [Line Items]
Total Long-term debt	475,000		0
Term Loan | $1.25 billion term loan
Debt Instrument [Line Items]
Face amount	1,250,000
Total Long-term debt	0		1,175,417
Term Loan | $690 million term loan
Debt Instrument [Line Items]
Total Long-term debt	0		639,393
Term Loan | $513 million term loan
Debt Instrument [Line Items]
Total Long-term debt	0		479,377
Line of Credit | $125 million revolving line of credit
Debt Instrument [Line Items]
Total Long-term debt	$ 0		$ 52,000

XML

DEBT AND FINANCING COSTS - Schedule of Financing Costs, Net of Capitalized Interest (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Debt Disclosure [Abstract]
Capitalized interest	$ 961	$ 226	$ 1,262	$ 712
Debt issuance costs	1,515	3,354	8,053	9,991
Interest expense	37,988	26,961	83,270	77,755
Total financing costs, net of capitalized interest	$ 40,464	$ 30,541	$ 92,585	$ 88,458

XML

ACCRUED EXPENSES (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Accrued product purchases	$ 175,575	$ 118,364
Accrued taxes	19,442	4,299
Accrued salaries, vacation, and related benefits	4,616	2,113
Accrued capital expenditures	8,713	2,995
Accrued interest expenses	19,120	0
Accrued other expenses	7,694	7,872
Accrued expenses	$ 235,160	$ 135,643

XML

COMMITMENTS AND CONTINGENCIES (Details) - USD ($)	Feb. 22, 2022	Jun. 11, 2019	Sep. 30, 2022	Dec. 31, 2021
Loss Contingencies [Line Items]
Loss contingency accrual			$ 0	$ 0
Permian Gas
Loss Contingencies [Line Items]
Maximum annual amount to be paid		$ 60,500,000
Consideration transferred		$ 3,900,000
Contingent liabilities			0	$ 800,000
Altus Midstream LP | Class A Common Stock
Loss Contingencies [Line Items]
Contingent liabilities	$ 4,500,000
Equity interest issuable (in shares)	2,500,000
Altus Midstream LP | Class A Common Stock | Price Option One
Loss Contingencies [Line Items]
Equity interest issuable (in shares)	1,250,000
Trading period	30 days
Stock price trigger (in USD per share)	$ 140.00
Threshold trading days	20 days
Altus Midstream LP | Class A Common Stock | Price Option Two
Loss Contingencies [Line Items]
Equity interest issuable (in shares)	1,250,000
Trading period	30 days
Stock price trigger (in USD per share)	$ 160.00
Threshold trading days	20 days
Winter Storm Uri
Loss Contingencies [Line Items]
Outstanding receivable			$ 19,600,000

XML

EQUITY METHOD INVESTMENTS - Information of Equity Method Investments (Details) - USD ($)		3 Months Ended		9 Months Ended
		Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Feb. 22, 2022	Dec. 31, 2021
Schedule of Equity Method Investments [Line Items]
Equity method interests		$ 2,372,596,000		$ 2,372,596,000			$ 626,477,000
Difference between carrying amount and underlying equity		349,800,000		349,800,000			0
Capitalized interest		12,500,000		12,500,000			$ 12,800,000
Movement In Equity Method Interests [Roll Forward]
Beginning balance				626,477,000
Acquisitions				1,755,000,000
Contributions				56,199,000
Distributions				(185,786,000)
Equity income, net	[1]	45,003,000	$ 16,826,000	120,706,000	$ 44,692,000
Ending balance		$ 2,372,596,000		$ 2,372,596,000
Permian Highway Pipeline (“PHP”)
Movement In Equity Method Interests [Roll Forward]
Ownership percentage by noncontrolling owners						26.67%
Permian Highway Pipeline LLC
Schedule of Equity Method Investments [Line Items]
Ownership percentage		53.30%		53.30%			26.70%
Equity method interests		$ 1,459,096,000		$ 1,459,096,000			$ 626,477,000
Movement In Equity Method Interests [Roll Forward]
Beginning balance				626,477,000
Acquisitions				815,000,000
Contributions				56,199,000
Distributions				(125,526,000)
Equity income, net				86,946,000
Ending balance		$ 1,459,096,000		1,459,096,000
Amortization				$ (5,300,000)
Breviloba, LLC (Shin Oak)
Schedule of Equity Method Investments [Line Items]
Ownership percentage		33.00%		33.00%
Equity method interests		$ 462,691,000		$ 462,691,000			0
Movement In Equity Method Interests [Roll Forward]
Beginning balance				0
Acquisitions				470,000,000
Contributions				0
Distributions				(25,810,000)
Equity income, net				18,501,000
Ending balance		$ 462,691,000		462,691,000
Amortization				$ (500,000)
Gulf Coast Express Pipeline LLC
Schedule of Equity Method Investments [Line Items]
Ownership percentage		16.00%		16.00%
Equity method interests		$ 450,809,000		$ 450,809,000			$ 0
Movement In Equity Method Interests [Roll Forward]
Beginning balance				0
Acquisitions				470,000,000
Contributions				0
Distributions				(34,450,000)
Equity income, net				15,259,000
Ending balance		$ 450,809,000		450,809,000
Amortization				$ (10,400,000)
EPIC Crude Holdings, LP
Schedule of Equity Method Investments [Line Items]
Ownership percentage		15.00%		15.00%

[1] The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

EQUITY METHOD INVESTMENTS - Summarized Financial Information of Equity Method Investments (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Schedule of Equity Method Investments [Line Items]
Operating income	[1]	$ 45,801	$ 16,040	$ 105,477	$ 48,238
Net income	[1]	49,422	4,640	202,259	7,410
Permian Highway Pipeline LLC
Schedule of Equity Method Investments [Line Items]
Revenues		100,114	99,918	296,779	297,132
Operating income		69,851	61,987	190,620	167,011
Net income		69,926	61,753	190,446	166,662
Breviloba, LLC
Schedule of Equity Method Investments [Line Items]
Revenues		53,120	45,054	151,732	127,030
Operating income		22,205	26,796	73,877	72,098
Net income		22,060	26,617	73,711	71,621
Gulf Coast Express Pipeline LLC
Schedule of Equity Method Investments [Line Items]
Revenues		91,800	91,454	272,542	270,526
Operating income		70,870	65,482	199,130	186,356
Net income		$ 70,742	$ 65,145	$ 198,732	$ 185,464

[1] The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

EQUITY AND WARRANTS (Details)				7 Months Ended		9 Months Ended
	Oct. 19, 2022 $ / shares	Jun. 08, 2022	May 19, 2022	Sep. 30, 2022 USD ($) $ / shares shares		Sep. 30, 2022 USD ($) $ / shares shares		Sep. 30, 2021 USD ($) shares		Jun. 30, 2022 USD ($) shares		Feb. 22, 2022 $ / shares shares	Dec. 31, 2021 USD ($) $ / shares shares		Jun. 30, 2021 USD ($) shares		Dec. 31, 2020 USD ($) shares
Class of Stock [Line Items]
Notice period to redeem warrants						30 days
Threshold trading days						20 days
Trading period						30 days
Derivatives fair value adjustment | $				$ 0
Percent of distributions or dividends reinvested in newly issued Class A shares												100.00%
Class A Common Stock issued through dividend and distribution reinvestment plan | $						$ 175,453,000		$ 0
Public warrants
Class of Stock [Line Items]
Number of warrant outstanding (in shares)				12,577,350		12,577,350
Redemption price of warrants (in USD per share) | $ / shares				$ 0.01		$ 0.01
Derivatives fair value adjustment | $						$ 100,000
Private warrants
Class of Stock [Line Items]
Number of warrant outstanding (in shares)				6,364,281		6,364,281
Derivatives fair value adjustment | $						$ 100,000
Class A Common Stock
Class of Stock [Line Items]
Common stock, shares issued (in shares)				43,082,157		43,082,157							0
Common stock, par value (in USD per share) | $ / shares				$ 0.0001		$ 0.0001						$ 0.0001	$ 0.0001
Common stock, redemption ratio						1
Common stock, shares outstanding (in shares)				43,082,157		43,082,157							0
Warrant exercise price (in USD per share) | $ / shares				$ 115.00		$ 115.00
Percent of required investment												20.00%
Class A Common Stock issued through dividend and distribution reinvestment plan | $						$ 175,500,000
Stock split, additional share issued for each share outstanding (in shares)			1
Class A Common Stock | Subsequent Event
Class of Stock [Line Items]
Dividends declared (in USD per share) | $ / shares	$ 0.75
Class A Common Stock | Public warrants
Class of Stock [Line Items]
Class of warrant or right, purchase ratio for common stock				0.1		0.1
Class C Common Stock
Class of Stock [Line Items]
Common stock, shares issued (in shares)				94,270,000		94,270,000						50,000,000	100,000,000
Common stock, par value (in USD per share) | $ / shares				$ 0.0001		$ 0.0001						$ 0.0001	$ 0.0001
Common stock, shares outstanding (in shares)				94,270,000		94,270,000							100,000,000
Stock split, additional share issued for each share outstanding (in shares)			1
Common Units limited partners
Class of Stock [Line Items]
Equity, carrying amount | $				$ 3,061,861,000		$ 3,061,861,000		$ 1,033,766,000		$ 3,251,290,000			$ 1,006,838,000		$ 1,029,126,000		$ 1,041,655,000
Common Stock
Class of Stock [Line Items]
Stock price trigger (in USD per share) | $ / shares				$ 180.00		$ 180.00
Common Stock | Class A Common Stock
Class of Stock [Line Items]
Common stock, shares outstanding (in shares)				43,082,000	[1],[2]	43,082,000	[1],[2]	0	[1],[2]	40,551,000	[1]		0	[2]	0	[1]	0	[2]
Dividends, cash | $						$ 25,300,000
Stock split, conversion ratio		2
Common Stock | Class C Common Stock
Class of Stock [Line Items]
Issued (in shares)						5,730,000
Common stock, shares outstanding (in shares)				94,270,000	[1],[2]	94,270,000	[1],[2]	100,694,000	[1],[2]	94,450,000	[1]		100,000,000		100,694,000	[1]	101,198,000	[2]
Stock split, conversion ratio		2
Altus Midstream LP
Class of Stock [Line Items]
Common stock, shares issued (in shares)												50,000,000
Apache | Private warrants
Class of Stock [Line Items]
Number of warrant outstanding (in shares)				3,182,140		3,182,140
The Partnership | Subsequent Event
Class of Stock [Line Items]
Distribution declared (in USD per share) | $ / shares	$ 0.75

[1] Share amounts have been retroactively restated to reflect the Company’s Stock Split (as defined in Note 10—Equity and Warrants), which was effected on June 8, 2022. Refer to Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

[2] Share amounts have been retroactively restated to reflect the Company’s Stock Split (as defined in Note 10—Equity and Warrants), which was effected on June 8, 2022. Refer to Note 10—Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS - Additional Information (Details) - USD ($) $ in Thousands		1 Months Ended	6 Months Ended
	Feb. 22, 2022	Jul. 31, 2022	Jun. 30, 2022
Mandatory Redemption Feature
Class of Stock [Line Items]
Stock redeemed (in shares)	150,000		125,000
Stock redeemed value			$ 30,700
Preferred Unit limited partners
Class of Stock [Line Items]
Number of preferred units sold (in shares)	625,000
Stock redeemed (in shares)	100,000
Stock redeemed value	$ 120,100
Shares outstanding (in shares)	525,000
Payments for redemption		$ 461,460
Paid-in-Kind Units
Class of Stock [Line Items]
Shares outstanding (in shares)	29,983
Paid-in-Kind Units | Partnership LPA
Class of Stock [Line Items]
Stock redeemed (in shares)	8,567

XML

SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS - Activity Related to Preferred Units (Details) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended	7 Months Ended	9 Months Ended
	Feb. 22, 2022	Jul. 31, 2022	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2022
Increase (Decrease) in Temporary Equity [Roll Forward]
Paid-in-kind (in shares)	21,417
Preferred Unit limited partners
Movement In Preferred Units [Roll Forward]
Redeemable noncontrolling interest - preferred units: beginning of period (in shares)				396,417
Redemption (in shares)				(396,417)
Redeemable noncontrolling interest - preferred units: end of period (in shares)	396,417		0	0	0
Increase (Decrease) in Temporary Equity [Roll Forward]
Beginning balance				$ 462,717
Redemption, including PIK units		$ (461,460)
Cash distribution paid to Preferred Unit limited partners				(6,937)
Allocation of net income				18,128
Accreted redemption value adjustment				97,075
Excess of carrying amount over redemption price			$ 102,586	(109,523)	$ 109,523
Ending balance	$ 462,717		$ 0	$ 0	$ 0

XML

SHARE-BASED COMPENSATION (Details) - USD ($)		3 Months Ended		9 Months Ended
	Feb. 22, 2022	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation		$ 12,661,000	$ 0	$ 30,966,000	$ 0
Restricted stock units awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)				14,144	0
New Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issued (in shares)				76,000
Board | Restricted stock units awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)				13,941
Minimum | Restricted stock units awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period				1 year
Maximum | Restricted stock units awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period				3 years
Class A Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, shares issued (in shares)		43,082,157		43,082,157		0
Class A Common Stock | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period				3 years
Class A Common Stock | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting period				4 years
Class C Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, shares issued (in shares)	50,000,000	94,270,000		94,270,000		100,000,000
Award vesting period				4 years
Altus Midstream LP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, shares issued (in shares)	50,000,000
Class A-1 and Class A-2 Units | Class A Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued for exchange (in shares)	5,300,000
Class A-3 Units | Class A Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock issued for exchange (in shares)	326,000

XML

INCOME TAXES - Income Tax Expense (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Tax Disclosure [Abstract]
Income before income taxes	[1]	$ 50,828	$ 5,847	$ 204,503	$ 8,617
Income tax expense	[1]	$ 1,406	$ 1,207	$ 2,244	$ 1,207
Effective tax rate		2.77%		1.10%

[1] The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

INCOME TAXES - Reconciliation of Unrecognized Tax Benefits (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($)
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance at December 31, 2021	$ 0
Increase related to ALTM acquisition	5,238
Reduction related to current year activities	(5,238)
Balance at September 30, 2022	$ 0

XML

NET INCOME PER SHARE (Details) $ / shares in Units, shares in Thousands, $ in Thousands			3 Months Ended				9 Months Ended
		Jun. 08, 2022	Sep. 30, 2022 USD ($) $ / shares shares		Sep. 30, 2021 USD ($) $ / shares shares		Sep. 30, 2022 USD ($) $ / shares shares		Sep. 30, 2021 USD ($) $ / shares shares
Basic:
Net income attributable to Class A common shareholders	[1]		$ 14,936		$ 0		$ 25,239		$ 0
Net income attributable to Class A common shareholders (in shares) | shares	[1],[2]		41,816		0		40,042		0
Net income attributable to Class A common shareholders (in dollars per share) | $ / shares			$ 0.36		$ 0		$ 0.63		$ 0
Less: Net income available to participating unvested restricted Class A common shareholders(4)			$ (4,174)		$ 0		$ (8,358)		$ 0
Excess preferred carrying amount over consideration paid			32,900		0		32,900		0
Net income attributable to vested Class A common shareholders			$ 43,662		$ 0		$ 49,781		$ 0
Net income attributable to vested Class A common shareholders (in USD per share) | $ / shares	[1]		$ 1.04		$ 0		$ 1.24		$ 0
Effect of dilutive securities:
Unvested Class A common shares			$ 0		$ 0		$ 0		$ 0
Replacement awards (in shares) | shares			39		0		33		0
Replacement awards (in USD per share) | $ / shares			$ 0		$ 0		$ 0		$ 0
Diluted:
Net income attributable to Class A Common Shareholders			$ 43,662		$ 0		$ 49,781		$ 0
Net income (loss) attributable to Class A common shareholders (in shares) | shares	[1],[2]		41,855		0		40,075		0
Net income (loss) attributable to Class A common shareholders (in USD per share) | $ / shares			$ 1.04	[1]	$ 0	[1]	$ 1.24	[1]	$ 0
Common Stock | Class A Common Stock
Equity, Class of Treasury Stock [Line Items]
Stock split, conversion ratio		2

[1] The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

[2] Share amounts have been retroactively restated to reflect the Company’s Stock Split (as defined in Note 10—Equity and Warrants), which was effected on June 8, 2022. Refer to Note 10 – Equity and Warrants in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

FAIR VALUE MEASUREMENTS - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Liabilities
Warrants outstanding, fair value	$ 200
Total liabilities	3,779,869	$ 2,546,358
Total liabilities	0	2,700
Contingent liabilities	0	839
Fair Value, Measurements, Recurring
Liabilities
Total liabilities	221
Total liabilities		3,706
Fair Value, Measurements, Recurring | Commodity swaps
Liabilities
Total liabilities		205
Fair Value, Measurements, Recurring | Interest rate derivatives
Liabilities
Total liabilities		2,662
Fair Value, Measurements, Recurring | Contingent liabilities
Liabilities
Total liabilities		839
Fair Value, Measurements, Recurring | Public warrants
Liabilities
Warrants outstanding, fair value	126
Fair Value, Measurements, Recurring | Private warrants
Liabilities
Warrants outstanding, fair value	95
Fair Value, Measurements, Recurring | Level 1
Liabilities
Total liabilities	126
Total liabilities		0
Fair Value, Measurements, Recurring | Level 1 | Commodity swaps
Liabilities
Total liabilities		0
Fair Value, Measurements, Recurring | Level 1 | Interest rate derivatives
Liabilities
Total liabilities		0
Fair Value, Measurements, Recurring | Level 1 | Contingent liabilities
Liabilities
Total liabilities		0
Fair Value, Measurements, Recurring | Level 1 | Public warrants
Liabilities
Warrants outstanding, fair value	126
Fair Value, Measurements, Recurring | Level 1 | Private warrants
Liabilities
Warrants outstanding, fair value	0
Fair Value, Measurements, Recurring | Level 2
Liabilities
Total liabilities	0
Total liabilities		2,867
Fair Value, Measurements, Recurring | Level 2 | Commodity swaps
Liabilities
Total liabilities		205
Fair Value, Measurements, Recurring | Level 2 | Interest rate derivatives
Liabilities
Total liabilities		2,662
Fair Value, Measurements, Recurring | Level 2 | Contingent liabilities
Liabilities
Total liabilities		0
Fair Value, Measurements, Recurring | Level 2 | Public warrants
Liabilities
Warrants outstanding, fair value	0
Fair Value, Measurements, Recurring | Level 2 | Private warrants
Liabilities
Warrants outstanding, fair value	0
Fair Value, Measurements, Recurring | Level 3
Liabilities
Total liabilities	95
Total liabilities		839
Fair Value, Measurements, Recurring | Level 3 | Commodity swaps
Liabilities
Total liabilities		0
Fair Value, Measurements, Recurring | Level 3 | Interest rate derivatives
Liabilities
Total liabilities		0
Fair Value, Measurements, Recurring | Level 3 | Contingent liabilities
Liabilities
Total liabilities		$ 839
Fair Value, Measurements, Recurring | Level 3 | Public warrants
Liabilities
Warrants outstanding, fair value	0
Fair Value, Measurements, Recurring | Level 3 | Private warrants
Liabilities
Warrants outstanding, fair value	$ 95

XML

FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($)		3 Months Ended		7 Months Ended	9 Months Ended
		Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Gain on embedded derivative	[1]	$ 488,000	$ 0		$ 89,050,000	$ 0
Warrants outstanding, fair value		$ 200,000		$ 200,000	$ 200,000
Change in fair value of warrants				$ 0

[1] The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

DERIVATIVES AND HEDGING ACTIVITIES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Derivative Instruments, Gain (Loss) [Line Items]
Derivative liability	$ 0		$ 0		$ 2,700,000
Derivative cash settlement			(11,115,000)	$ 17,959,000
Interest Rate Swap
Derivative Instruments, Gain (Loss) [Line Items]
Derivative cash settlement	0	$ (700,000)	11,300,000	(2,200,000)
Unrealized gains	0		14,000,000	3,100,000
Unrealized losses		(26,000)
Commodity Swap
Derivative Instruments, Gain (Loss) [Line Items]
Derivative liability	0		0		$ 200,000
Derivative cash settlement	0	(900,000)	(200,000)	(15,800,000)
Unrealized gains	0		0
Unrealized losses	$ 0	$ 600,000	$ 0	$ 17,100,000

XML

SEGMENTS (Details)		3 Months Ended				9 Months Ended
		Sep. 30, 2022 USD ($) pipeline stream		Sep. 30, 2021 USD ($)		Sep. 30, 2022 USD ($) pipeline Segment stream		Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Segment Reporting [Abstract]
Number of operating segments | Segment						2
Segment Reporting Information [Line Items]
Net income including noncontrolling interests	[1]	$ 49,422,000		$ 4,640,000		$ 202,259,000		$ 7,410,000
Income tax expense (benefit)	[1]	1,406,000		1,207,000		2,244,000		1,207,000
Depreciation and amortization	[1]	65,005,000		57,154,000		192,609,000		170,291,000
Share-based compensation		12,661,000		0		30,966,000		0
Loss (gain) on disposal of assets		3,946,000	[1]	(37,000)	[1]	12,602,000	[1]	417,000
Loss (gain) on debt extinguishment		0		56,000		27,975,000		(4,000)
Interest and other income	[1]	0		3,578,000		250,000		4,141,000
Unrealized gain (loss) on embedded derivative	[1]	488,000		0		89,050,000		0
Equity income from unconsolidated affiliates	[1]	45,003,000		16,826,000		120,706,000		44,692,000
Assets		6,007,178,000				6,007,178,000			$ 3,553,206,000
Operating Segments
Segment Reporting Information [Line Items]
Assets		$ 5,993,305,000				$ 5,993,305,000			3,552,558,000
Operating Segments | Midstream Logistics
Segment Reporting Information [Line Items]
Number of streams in which a segment operates | stream		3				3
Net income including noncontrolling interests		$ 65,525,000		(6,210,000)		$ 89,274,000		(22,238,000)
Interest expense		7,000		27,682,000		47,411,000		82,967,000
Income tax expense (benefit)		0		1,207,000		457,000		1,207,000
Depreciation and amortization		64,655,000		57,026,000		192,007,000		169,906,000
Contract assets amortization		448,000		448,000		1,344,000		1,815,000
Proportionate EMI EBITDA		0		0		0		0
Share-based compensation		0				0
Loss (gain) on disposal of assets		3,946,000		(60,000)		12,636,000		394,000
Loss (gain) on debt extinguishment				56,000		27,983,000		(4,000)
Integration costs		14,000				933,000
Acquisition transaction costs		5,000				9,000
Other one-time costs or amortization		2,945,000		802,000		8,865,000		1,675,000
Producer settlement								6,827,000
Interest and other income				74,000				115,000
Gain on redemption of mandatorily redeemable Preferred units						0
Unrealized gain (loss) on embedded derivative		0				0		(13,456,000)
Equity income from unconsolidated affiliates		0		0		0		0
Segment adjusted EBITDA		137,545,000		80,877,000		380,919,000		255,890,000
Revenue from contract with customer		324,441,000		166,584,000		917,258,000		450,449,000
Assets		3,575,642,000				3,575,642,000			2,916,774,000
Operating Segments | Midstream Logistics | Product and Service
Segment Reporting Information [Line Items]
Revenue from contract with customer		320,667,000		165,844,000		907,771,000		446,840,000
Operating Segments | Midstream Logistics | Other revenue
Segment Reporting Information [Line Items]
Revenue from contract with customer		$ 3,774,000		740,000		$ 9,487,000		3,609,000
Operating Segments | Pipeline Transportation
Segment Reporting Information [Line Items]
Number of pipelines with equity investment interest | pipeline		4				4
Net income including noncontrolling interests		$ 44,750,000		13,333,000		$ 120,162,000		37,072,000
Interest expense		0		2,859,000		(664,000)		5,491,000
Income tax expense (benefit)		0		0		(39,000)		0
Depreciation and amortization		345,000		128,000		597,000		385,000
Contract assets amortization		0		0		0		0
Proportionate EMI EBITDA		78,357,000		21,704,000		190,438,000		59,677,000
Share-based compensation		0				0
Loss (gain) on disposal of assets		0		23,000		0		23,000
Loss (gain) on debt extinguishment				0		(8,000)		0
Integration costs		81,000				81,000
Acquisition transaction costs		0				0
Other one-time costs or amortization		162,000		160,000		162,000		182,000
Producer settlement								0
Interest and other income				0				0
Gain on redemption of mandatorily redeemable Preferred units						0
Unrealized gain (loss) on embedded derivative		0				0		0
Equity income from unconsolidated affiliates		45,003,000		16,826,000		120,706,000		44,692,000
Segment adjusted EBITDA		78,692,000		21,381,000		190,023,000		58,138,000
Revenue from contract with customer		735,000		2,000		739,000		6,000
Assets		2,417,663,000				2,417,663,000			635,784,000
Operating Segments | Pipeline Transportation | Product and Service
Segment Reporting Information [Line Items]
Revenue from contract with customer		733,000		0		733,000		0
Operating Segments | Pipeline Transportation | Other revenue
Segment Reporting Information [Line Items]
Revenue from contract with customer		2,000		2,000		6,000		6,000
Corporate and Other
Segment Reporting Information [Line Items]
Net income including noncontrolling interests		(60,853,000)		(2,483,000)		(7,177,000)		(7,424,000)
Interest expense		40,457,000		0		45,838,000		0
Income tax expense (benefit)		1,406,000		0		1,826,000		0
Depreciation and amortization		5,000		0		5,000		0
Contract assets amortization		0		0		0		0
Proportionate EMI EBITDA		0		0		0		0
Share-based compensation		12,661,000				30,966,000
Loss (gain) on disposal of assets		0		0		(34,000)		0
Loss (gain) on debt extinguishment				0		0		0
Integration costs		2,243,000				8,998,000
Acquisition transaction costs		57,000				6,403,000
Other one-time costs or amortization		645,000		205,000		1,942,000		153,000
Producer settlement								0
Interest and other income				0				0
Gain on redemption of mandatorily redeemable Preferred units						9,580,000
Unrealized gain (loss) on embedded derivative		488,000				89,050,000		0
Equity income from unconsolidated affiliates		0		0		0		0
Segment adjusted EBITDA		(3,867,000)		(2,278,000)		(9,863,000)		(7,271,000)
Assets		13,873,000				13,873,000			$ 648,000
Consolidated
Segment Reporting Information [Line Items]
Net income including noncontrolling interests		49,422,000		4,640,000		202,259,000		7,410,000
Interest expense		40,464,000		30,541,000		92,585,000		88,458,000
Income tax expense (benefit)		1,406,000		1,207,000		2,244,000		1,207,000
Depreciation and amortization		65,005,000		57,154,000		192,609,000		170,291,000
Contract assets amortization		448,000		448,000		1,344,000		1,815,000
Proportionate EMI EBITDA		78,357,000		21,704,000		190,438,000		59,677,000
Share-based compensation		12,661,000				30,966,000
Loss (gain) on disposal of assets		3,946,000		(37,000)		12,602,000		417,000
Loss (gain) on debt extinguishment				56,000		27,975,000		(4,000)
Integration costs		2,338,000				10,012,000
Acquisition transaction costs		62,000				6,412,000
Other one-time costs or amortization		3,752,000		1,167,000		10,969,000		2,010,000
Producer settlement								6,827,000
Interest and other income				74,000				115,000
Gain on redemption of mandatorily redeemable Preferred units						9,580,000
Unrealized gain (loss) on embedded derivative		488,000				89,050,000		(13,456,000)
Equity income from unconsolidated affiliates		45,003,000		16,826,000		120,706,000		44,692,000
Segment adjusted EBITDA		212,370,000		99,980,000		561,079,000		306,757,000
Revenue from contract with customer		325,176,000		166,586,000		917,997,000		450,455,000
Consolidated | Product and Service
Segment Reporting Information [Line Items]
Revenue from contract with customer		321,400,000		165,844,000		908,504,000		446,840,000
Consolidated | Other revenue
Segment Reporting Information [Line Items]
Revenue from contract with customer		$ 3,776,000		$ 742,000		$ 9,493,000		$ 3,615,000

[1] The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

XML

SUBSEQUENT EVENTS (Details) - Subsequent Event	Oct. 19, 2022 $ / shares
The Partnership
Subsequent Event [Line Items]
Distribution declared (in USD per share)	$ 0.75
Class A Common Stock
Subsequent Event [Line Items]
Dividends declared (in USD per share)	$ 0.75