Kinetik Holdings Inc. (NASDAQ:KNTK) Q4 2022 Earnings Call Transcript

Jamie Welch: So you will see that obviously, the Alpine High activity, which was contractually committed to as far as the development as a result of the proceeds from the sell-down last year, we’ve got a couple of wells for this first quarter, and most of the rest of the activity is at the end of the year. So it’s really a 2024 phenomenon for Alpine High gas growth than it is 2023. We are seeing, obviously, a pickup in the context of overall gas as you look out towards the end of this year into next year. And obviously, we’ve been — we’ve seen, obviously, gas prices being pretty burdened in this first part of the year. And as you saw in our overall commodity assumptions, we’ve got $2.07 our as far as gas price expectation. So we’re — more to come, I think, on the Apache side. Sorry, a long way of saying it, but I think a lot more to come end of the year, we’ll start to really see what this outline high development looks like going forward.

Operator: And the next question goes to Spiro Dounis of Citi.

Spiro Dounis: I wanted to go to the new agreement in Lea County, if we could. You guys mentioned, obviously, you’re new entrant to the basin there. And so I’m just curious, as you think about the commercial strategy and winning business against the incumbents, how do you guys think you’re going to be able to do that? And you also mentioned high levels of activity there as you look out to 2024 and you continue on this path, how much of any of that activity is sort of considered in that of CapEx you highlighted.

Jamie Welch: So let me start with the end and then I’ll have Chris Kendrick who is our VP of Commercial, one of our VPs of Commercial talk about sort of the overall opportunities we see up there. But as far as — so it is a portion of obviously the overall capital that we’ve got $115 million, I think it is, which is allocated this year in gross on the pipeline side. And the portion of that — a significant portion of that is related to the high-pressure connection going up into New Mexico. But New Mexico by itself as far as a straw is one element, but you have to take it, Spiro, with treating. Once you have the straw and you have the capabilities to actually both blend so we see New Mexico some high H2S, higher CO2, some nitrogen.

We’ve got — we look and we have the ability in our system to actually blend that and obviously process that, which we have not, to this point, been able to do because we’ve been historically a system, but all that changes with the front-end amine treating at all of our processing complexes, which will have in place by the end of this year into next year across the footprint. So I think it’s both working in tandem together. And as far as the opportunities that we see out there, Chris?

Chris Kendrick: Spiro, this is Chris. Look, as Jamie mentioned before, this has been a strategic goal for Kinetik for a long time even when we’ve gone back to when we were at EagleClaw. And I think it’s pretty exciting to what we’ve done over the last couple of years with the North and a lot of this is due to Matt’s team and running a great operation and run time because that’s #1 for the customer. As we think about New Mexico, for us, it’s pretty exciting to be able to offer in New Mexico customer a solution for processing in Texas, effectively moving those residue gas molecules through our pipe to delink and ultimately to the Gulf Coast. That’s a pretty compelling solution for some of these customers in New Mexico who are constrained. So we’re excited to have these discussions and hope to be able to talk about some more growth here in the future.