EQUITY METHOD INTERESTS

6 Months Ended

Jun. 30, 2022

Equity Method Investments and Joint Ventures [Abstract]

The Kinetik Class A Common Stock held by the Company is treated as an interest in equity securities measured at fair value. The Company elected the fair value option for measuring its equity method interest in Kinetik based on practical expedience, variances in reporting timelines, and cost-benefit considerations. The fair value of the Company’s interest in Kinetik is determined using observable share prices on a major exchange, a Level 1 fair value measurement. Fair value adjustments and dividends received are recorded as a component of “Other, net” under “Revenues and other” in the Company’s statement of consolidated operations.

The initial interest in Kinetik was measured at fair value based on the Company’s ownership of approximately 12.9 million shares of Kinetik Class A Common stock as of February 22, 2022. In March 2022, the Company sold four million of its shares of Kinetik Class A Common Stock for a loss, including underwriters fees, of $25 million, which was recorded as a component of “Gain on divestitures, net” under “Revenues and other” in the Company’s statement of consolidated operations. Refer to Note 3 —Acquisitions and Divestitures for further detail. A fair value adjustment gain of $24 million was recorded during the first quarter of 2022 based on the Company’s remaining 8.9 million shares of Kinetik Class A Common Stock as of March 31, 2022.

During the second quarter of 2022, Kinetik issued a two-for-one split of its Common Stock. Also during the second quarter, the Company received approximately 0.4 million shares of Kinetik’s Class A Common Stock as a paid-in-kind dividend. A fair value adjustment gain of $29 million was recorded during the second quarter based on the Company’s ownership of 18.1 million shares of Kinetik Class A Common Stock on June 30, 2022.

The Company’s ownership represented approximately 13 percent of Kinetik’s outstanding Class A Common Stock, as of March 31, 2022 and June 30, 2022.

The following table presents the activity in the Company’s equity method interest in Kinetik for the six months ended June 30, 2022:


		Kinetik Holdings Inc

	(In millions)
Balance at December 31, 2021		$	—
Initial interest upon closing the BCP Business Combination		802
Sale of Class A shares		(250)
Paid-in-kind dividend		13
Fair value adjustments		53
Balance at June 30, 2022		$	618

During the three and six months ending June 30, 2022, the Company recorded GPT costs for midstream services provided by Kinetik subsequent to the close of the transaction totaling $26 million and $36 million, respectively. As of June 30, 2022, the Company has recorded accrued GPT costs payable to Kinetik of approximately $8 million.

Prior to the deconsolidation of Altus on February 22, 2022, the Company, through its ownership of Altus, had the following equity method interests in four Permian Basin long-haul pipeline entities, which were accounted for under the equity method of accounting at December 31, 2021. For each of the equity method interests, Altus had the ability to exercise significant influence based on certain governance provisions and its participation in activities and decisions that impact the management and economic performance of the equity method interests. The table below presents the ownership percentages held by the Company and associated carrying values for each entity:


	Interest	December 31, 2021
		(In millions)
Gulf Coast Express Pipeline, LLC	16.0%	$	274
EPIC Crude Holdings, LP	15.0%	—
Permian Highway Pipeline, LLC	26.7%	630
Shin Oak Pipeline (Breviloba, LLC)	33.0%	461
Total Altus equity method interests		$	1,365

The following table presents the activity in Altus’ equity method interests for the six months ended June 30, 2022:


	Gulf Coast Express Pipeline LLC		EPIC Crude Holdings, LP		Permian Highway Pipeline LLC		Breviloba, LLC		Total

	(In millions)






Balance at December 31, 2021	$	274	$	—	$	630	$	461	$	1,365
Capital contributions	—		2		—		—		2
Distributions	(5)		—		(9)		(7)		(21)

Equity income (loss), net	8		(2)		10		5		21

Deconsolidation of Altus	(277)		—		(631)		(459)		(1,367)
Balance at June 30, 2022	$	—	$	—	$	—	$	—	$	—