8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________

FORM 8-K

___________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

June 4, 2024

Date of Report (date of earliest event reported)

Kinetik Holdings Inc.

(Exact name of registrant as specified in its charter)

___________________________________

Delaware (State or other jurisdiction of incorporation or organization)	001-38048 (Commission File Number)	81-4675947 (I.R.S. Employer Identification Number)
2700 Post Oak Blvd. Suite 300 Houston, Texas 77056
(Address of principal executive offices and zip code)
(713) 621-7330
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share	KNTK	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

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. ☐

Item 2.01. Completion of Acquisition or Disposition of Assets

On June 4, 2024, Kinetik Holdings Inc. (the “Company”) consummated the previously announced transaction contemplated by the Purchase and Sale Agreement, dated as of May 9, 2024, by and among Kinetik GCX Pipe LLC, GCX Pipeline, LLC (“GCX Buyer”), solely for purposes of Section 6.7, Article X and Article XI, AL GCX Holdings, LLC and solely for purposes of Section 6.8, Article X and Article XI, Kinetik Holdings LP, pursuant to which the Company agreed to sell its 16% membership interest in Gulf Coast Express Pipeline LLC (“GCX”) to the GCX Buyer for a total purchase price of $540 million (the “GCX Sale”), consisting of $510 million of cash, less certain customary closing adjustments, payable on June 4, 2024 and an additional $30 million earn out in cash upon approval by the GCX Board of Directors of one or more capital projects that achieve certain capacity expansion criteria.

The pro forma financial information required to be filed by Item 9.01(b) of Form 8-K is filed as Exhibit 99.1 to this Current Report.

Item 7.01. Regulation FD Disclosure.

On June 4, 2024, the Company issued a press release announcing the completion of the GCX Sale. A copy of the Company’s press release is attached hereto and furnished as Exhibit 99.2 and is incorporated in this report by reference.

The information provided in this Item 7.01, including the accompanying Exhibit 99.2, shall be deemed “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of such section, nor shall it be incorporated by reference in any filing made by the Company pursuant to the Securities Act of 1933, as amended, or the Exchange Act, regardless of the general incorporation language of such filing, except to the extent that such filing incorporates by reference any or all of such information by express reference thereto.

Item 9.01. Financial Statements and Exhibits.

(b) Pro Forma Financial Information

The unaudited pro forma condensed consolidated financial statements of the Company have been derived from the Company’s historical consolidated financial statements and are being presented to give effect to the GCX Sale. The pro forma financial statements and the related notes thereto are filed as Exhibit 99.1 to this Current Report on Form 8-K.

(d) The following exhibits are being filed herewith.

Exhibit No.		Description of Exhibit
10.1†	-	Purchase and Sale Agreement, dated as of May 9, 2024, by and among Kinetik GCX Pipe LLC, GCX Pipeline, LLC, solely for purposes of Section 6.7, Article X and Article XI, AL GCX Holdings, LLC and solely for purposes of Section 6.8, Article X and Article XI, Kinetik Holdings LP (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on May 13, 2024).
99.1	-	Unaudited pro forma condensed consolidated financial statements of Kinetik Holdings Inc. as of and for the three months ended March 31, 2024 and for the year ended December 31, 2023
99.2		Press Release, dated June 4, 2024, issued by Kinetik Holdings Inc. (furnished solely for purposes of Item 7.01 of this Form 8-K)
104	-	Cover Page Interactive Data File (embedded within the Inline XBRL document)
† Certain schedules and similar attachments to this exhibit have been omitted pursuant to Item 601(a)(5) and/or Item 601(b)(10)(iv), as applicable, of Regulation S-K. The Company agrees to furnish an unredacted, supplemental copy (including any omitted schedule or attachment) to the SEC upon request. Redactions and omissions are designated with brackets containing asterisks.

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:	June 7, 2024	/s/ Todd Carpenter
		Todd Carpenter
		General Counsel, Secretary and Chief Compliance Officer

EX-99.1

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

On June 4, 2024, Kinetik Holdings Inc. (the “Company” or “Kinetik”) completed the previously announced transaction contemplated by the Purchase and Sale Agreement (the "GCX Purchase Agreement") to sell its 16% equity interest in Gulf Coast Express Pipeline LLC ("GCX") through its wholly owned subsidiary Kinetik GCX Pipe LLC to GCX Pipeline, LLC (the "GCX Buyer") for a total purchase price of $540 million (the "GCX Sale"), consisting of $510.0 million of cash, less certain customary closing adjustments, and an additional $30.0 million earn out in cash upon approval by the GCX Board of Directors of one or more capital projects that achieve certain capacity expansion criteria. Net cash proceeds of $494.4 million were received from the GCX Buyer on June 4, 2024.

The unaudited pro forma condensed consolidated balance sheet as of March 31, 2024 gives effect to the GCX Sale as if it was completed on March 31, 2024. The unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2024, and for the year ended December 31, 2023, give effect to the GCX Sale as if it was completed on January 1, 2023.

The unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X. The historical consolidated financial statements have been adjusted in the accompanying unaudited pro forma condensed consolidated financial statements to give effect to pro forma events that are (i) directly attributable to the GCX Sale and (ii) factually supportable. The unaudited pro forma condensed consolidated financial statements do not purport to be indicative of the results of operations or financial position which would have actually resulted if the GCX Sale had been completed on the date indicated. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma condensed consolidated financial statements do not reflect the realization of any expected cost savings, synergies, or dis-synergies as a result of the GCX Sale.

The unaudited pro forma financial information has been prepared by the Company based upon assumptions deemed appropriate by the Company's management. Explanations of certain assumptions is set forth under the notes to the unaudited pro forma condensed consolidated financial statements.

The unaudited pro forma condensed consolidated financial statements and accompanying notes should be read in conjunction with the historical audited consolidated financial statements of Kinetik as of and for the year ended December 31, 2023, which were included in Kinetik’s Annual Report on Form 10-K, filed with the Security Exchange Commission ("SEC") on March 5, 2024, and the unaudited condensed consolidated financial statements of Kinetik as of and for the three months ended March 31, 2024, which were included in Kinetik's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 9, 2024.

1

KINETIK HOLDINGS INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

	March 31, 2024
	Kinetik Historical		GCX Sale			Pro Forma
	(In thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	9,756	$	490,640	(a)	$	500,396
Accounts receivable, net of allowance for credit losses of $1,000 in 2024	209,878		—			209,878
Derivative assets	10,264		—			10,264
Prepaid and other current assets	27,391		—			27,391
	257,289		490,640			747,929
NONCURRENT ASSETS:
Property, plant and equipment, net	2,747,483		—			2,747,483
Intangible assets, net	562,837		—			562,837
Derivative asset, non-current	134		—			134
Operating lease right-of-use assets	27,015		—			27,015
Deferred tax asset	238,258		(4,781)		(e)	233,477
Deferred charges and other assets	83,213		—			83,213
Investments in unconsolidated affiliates	2,526,278		(430,489)		(b)	2,095,789
Goodwill	5,077		—			5,077
	6,190,295		(435,270)			5,755,025
Total assets	$	6,447,584	$	55,370		$	6,502,954
LIABILITIES, NONCONTROLLING INTEREST, AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	16,467	$	—		$	16,467
Accrued expenses	170,075		317		(e)	170,392
Derivative liabilities	14,811		—			14,811
Current portion of operating lease liabilities	24,987		—			24,987
Other current liabilities	7,611		—			7,611
	233,951		317			234,268
NONCURRENT LIABILITIES
Long term debt, net	3,517,115		—			3,517,115
Contract liabilities	24,837		—			24,837
Operating lease liabilities	3,014		—			3,014
Derivative liabilities	418		—			418
Other liabilities	3,230		—			3,230
Deferred tax liabilities	13,785		429		(e)	14,214
	3,562,399		429			3,562,828
Total liabilities	3,796,350		746			3,797,096
COMMITMENTS AND CONTINGENCIES
Redeemable noncontrolling interest — Common Unit limited partners	3,624,670		36,319		(c)	3,660,989
EQUITY:
Class A Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 59,712,487 and 57,096,538 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	6		—			6
Class C Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 93,942,788 and 94,089,038 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	9		—			9
Additional paid-in capital	—		—			—
Accumulated deficit	(973,451)		18,305		(c)	(955,146)
Total equity	(973,436)		18,305			(955,131)
Total liabilities, noncontrolling interest, and equity	$	6,447,584	$	55,370		$	6,502,954

The accompanying notes are an integral part of the unaudited pro forma Condensed Consolidated Financial Statements.

2

KINETIK HOLDINGS INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

	Three Months Ended March 31, 2024
	Kinetik Historical		GCX Sale		Adjustments			Pro Forma
	(In thousands, except per share data)
Operating revenues:
Service revenue	$	102,195	$	—	$	—		$	102,195
Product revenue	236,567		—		—			236,567
Other revenue	2,632		—		—			2,632
Total operating revenues	341,394		—		—			341,394
Operating costs and expenses:
Costs of sales (exclusive of depreciation and amortization)	153,687		—		—			153,687
Operating expenses	43,406		—		—			43,406
Ad valorem taxes	6,292		—		—			6,292
General and administrative expenses	34,136		—		—			34,136
Depreciation and amortization expenses	73,606		—		—			73,606
Loss on disposal of assets	4,166		—		—			4,166
Total operating costs and expenses	315,293		—		—			315,293
Operating income	26,101		—		—			26,101
Other income (expense):
Interest and other income	91		—		—			91
Interest expense	(47,467)		—		—			(47,467)
Equity in earnings of unconsolidated affiliates	60,469				(9,031)		(d)	51,438
Total other income, net	13,093		—		(9,031)			4,062
Income before income taxes	39,194		—		(9,031)			30,163
Income tax expense	3,787		—		2,789		(e)	6,576
Net income including noncontrolling interest	35,407		—		(11,820)			23,587
Net income attributable to Common Unit limited partners	23,857				(5,864)		(f)	17,993
Net income attributable to Class A Common Stock Shareholders	$	11,550	$	—	$	(5,956)		$	5,594
Net income attributable to Class A Common Shareholders per share
Basic	$	0.12	$	—	$	(0.10)		$	0.02
Diluted	$	0.12	$	—	$	(0.10)		$	0.02
Weighted-average shares
Basic	57,869		—		—			57,869
Diluted	58,392		—		—			58,392

The accompanying notes are an integral part of the unaudited pro forma Condensed Consolidated Financial Statements.

3

KINETIK HOLDINGS INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

	Twelve Months Ended December 31, 2023
	Kinetik Historical		GCX Sale			Adjustments			Pro Forma
	(In thousands, except per share data)
Operating revenues:
Service revenue	$	417,751	$	—		$	—		$	417,751
Product revenue	822,410		—			—			822,410
Other revenue	16,251		—			—			16,251
Total operating revenues	1,256,412		—			—			1,256,412
Operating costs and expenses:
Costs of sales (exclusive of depreciation and amortization)	515,721		—			—			515,721
Operating expenses	161,520		—			—			161,520
Ad valorem taxes	21,622		—			—			21,622
General and administrative expenses	97,906		—			—			97,906
Depreciation and amortization expenses	280,986		—			—			280,986
(Gain) Loss on disposal of assets	19,402		—			—			19,402
Total operating costs and expenses	1,097,157		—			—			1,097,157
Operating income	159,255		—			—			159,255
Other income (expense):
Interest and other income	2,004		—			—			2,004
Loss on debt extinguishment	(1,876)		—			—			(1,876)
Gain on sale of equity method investment	—		39,157		(g)	—			39,157
Interest expense	(205,854)		—			—			(205,854)
Equity in earnings of unconsolidated affiliates	200,015		—			(37,484)		(d)	162,531
Total other expense, net	(5,711)		39,157			(37,484)			(4,038)
Income before income taxes	153,544		39,157			(37,484)			155,217
Income tax expense	(232,908)		(52)		(e)	—			(232,960)
Net income including noncontrolling interest	386,452		39,209			(37,484)			388,177
Net income attributable to Common Unit limited partners	97,010		26,448		(f)	(24,224)		(f)	99,234
Net income attributable to Class A Common Stock Shareholders	$	289,442	$	12,761		$	(13,260)		$	288,943
Net income attributable to Class A Common Shareholders per share
Basic	$	5.25	$	0.25		$	(0.26)		$	5.24
Diluted	$	2.52	$	0.27		$	(0.26)		$	2.54
Weighted-average shares
Basic	51,823		—			—			51,823
Diluted	146,197		—			—			146,197

The accompanying notes are an integral part of the unaudited pro forma Condensed Consolidated Financial Statements.

4

NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The unaudited pro forma condensed consolidated financial statements as of March 31, 2024 and for the three months ended March 31, 2024 and for the year ended December 31, 2023 have been derived from and should be read in conjunction with the historical audited consolidated financial statements of Kinetik as of and for the year ended December 31, 2023, included in Kinetik’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 5, 2024, and the historical unaudited condensed consolidated financial statements of Kinetik as of and for the three months ended March 31, 2024, included in Kinetik's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 9, 2024, and the assumptions outlined in Note 2 herein.

An unaudited pro forma condensed consolidated balance sheet as of March 31, 2024 and the unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2024 and for the year ended December 31, 2023, are presented herein in accordance with Rule 11-02(c)(2)(ii) of Regulation S-X.

The following unaudited pro forma adjustments have been prepared as if the GCX Sale occurred on March 31, 2024, for the unaudited pro forma condensed consolidated balance sheet, and as of January 1, 2023, for the unaudited pro forma condensed consolidated statements of operations. The pro forma adjustments are based on currently available information and certain estimates and assumptions, and therefore the actual effects of the transaction will differ from the pro forma adjustments.

2. UNAUDITED PRO FORMA ADJUSTMENTS

(a) Represents the sales proceeds, net of estimated closing costs and working capital adjustments. The cash proceeds were calculated based on management's current estimates and as defined in the GCX Purchase Agreement.

	Amount
	(In thousands)
Cash proceeds	$	510,000
Working capital adjustment	(15,610)
Transaction costs incurred	(3,750)
Net cash from GCX Sale	$	490,640

(b) Represents the disposition of the assets that are being transferred as part of the GCX Sale.

(c) Represents the proportionate increase of redeemable noncontrolling interest - Common Unit limited partners and accumulated deficit related to the GCX Sale and its associated tax effects based upon the relevant issued and outstanding Class A Common Stock of the Company and Class C Common Stock of the Company and related common units representing limited partnership interests in Kinetik LP ("Common Units") as of March 31, 2024.

(d) Represents the elimination of the equity in earnings of unconsolidated affiliates related to the Company's investment in GCX for the applicable period presented.

(e) Represents the income tax effects of the pro forma adjustments at the applicable estimated effective tax rates for the respective periods presented.

(f) Represents the proportionate increase or decrease in net income attributable to Common Unit limited partners based upon the relevant issued and outstanding Class A Common Stock of the Company and Class C Common Stock of the Company and related Common Units for the applicable periods presented.

5

(g) Represents the estimated pro forma gain on the GCX Sale assuming an effective date of January 1, 2023.

	Amount
	(In thousands)
Cash proceeds	$	510,000
Working capital adjustment	(15,610)
Transaction costs incurred	(3,750)
Net cash from GCX Sale	490,640
Less: Investment in GCX	(451,483)
Gain on sale of GCX	$	39,157

3. EARNING PER SHARE

The pro forma basic and diluted weighted average shares outstanding have been calculated as if the GCX Sale was completed on January 1, 2023. There was no effect on the basic and weighted average shares outstanding in relation to the transaction, however, the net income attributable to Class A Common Stock Shareholders would change given the effects of the transaction.

6

EX-99.2

Kinetik Completes Divestiture of Its Equity Interest in Gulf Coast Express Pipeline HOUSTON & MIDLAND, Texas--( )-- Kinetik Holdings Inc. (NYSE: KNTK) (“ ” or the “BUSINESS WIRE Kinetik ”) today announced the completion of its previously announced sale and direct transfer of its 16% equityCompany interest in the Gulf Coast Express pipeline to an affiliate of ArcLight Capital Partners LLC for $510 million in upfront cash and an additional $30 million deferred cash payment due upon a final investment decision on a capacity expansion project. The cash proceeds will be used for general corporate purposes including to fund Kinetik’s previously announced (i) acquisition of Durango Permian LLC and (ii) capital investment to support its new 15-year low-pressure and high-pressure gas gathering and processing agreement in Eddy County, New Mexico, significantly enhancing Kinetik’s position in New Mexico. About Kinetik Holdings Inc. Kinetik is a fully integrated, pure-play, Permian-to-Gulf Coast midstream C-corporation operating in the Delaware Basin. Kinetik is headquartered in Houston and Midland, Texas. Kinetik provides comprehensive gathering, transportation, compression, processing and treating services for companies that produce natural gas, natural gas liquids, crude oil and water. Kinetik posts announcements, operational updates, investor information and press releases on its website, .www.kinetik.com Forward-looking statements This news release includes certain statements that may constitute “forward-looking statements” for purposes of the federal securities laws. Forward-looking statements include, but are not limited to, statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “seeks,” “possible,” “potential,” “predict,” “project,” “prospects,” “guidance,” “outlook,” “should,” “would,” “will,” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These statements include, but are not limited to, statements about the Company’s future business strategy and other plans, expectations, and objectives for the Company’s operations, including statements about strategy, synergies, expansion projects and future operations, and financial guidance; return of capital to shareholders and the timing thereof; the Company’s leverage and financial profile; and the consummation of the Durango Acquisition and timing thereof, the funding for the Durango Acquisition and capital required under the New Eddy County Agreement, expected results of the transactions discussed herein, including reinvestment in new projects and the returns thereon. While forward-looking statements are based on assumptions and analyses made by us that we believe to be reasonable under the circumstances, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties which could cause our actual results, performance, and financial condition to differ materially from our expectations. See Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023. Any forward-looking statement made by us in this news release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement whether as a result of new information, future development, or otherwise, except as may be required by law. Contacts Kinetik Investors: (713) 487-4832 Maddie Wagner (713) 574-4743 Alex Durkee Website: www.kinetik.com Source: Kinetik Holdings Inc.

XML

Cover Page	Jun. 07, 2024	Jun. 04, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date		Jun. 04, 2024
Entity Registrant Name	Kinetik Holdings Inc.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-38048
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
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Class A Common Stock, par value $0.0001 per share
Trading Symbol	KNTK
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Amendment Flag	false
Entity Central Index Key	0001692787