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

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Robert Mosca: Got it. That’s helpful color, Jamie. And also wondering if you could expand a little bit on the outlook for GCX expansion. We’ve seen some contracts we signed with these other greenfield pipeline offerings. I’m just wondering, does that expansion look better now that gas prices are lower and presumably fuel prices are lower. Just wondering what’s keeping a lid on that expansion from happening?

Jamie Welch: I would say, Robert, it’s very interesting. I think there is — and look, Chris Kendrick, in particular, who sits on the Board with me at PHP, we talk about this a lot. We really think there is an overwhelming emphasis by producers on new steel in the ground. They want new egress. Increasing percentage fuel on our existing pipeline, yes, if you are really in a pinch and you could do it quickly, that may make sense. But I think honestly, with what happened with GCX, I take my hat off to Whistler, I think they did a really good job. They were quick. They got that done. They obviously built the lateral into the Midland, so they were able to access incremental volumes. So I think they did a really good job. I think — I just don’t know where GCX fits.

And I think it is more likely we’ll probably — you’ll be hearing about the Warriors of the world, Warrior pipelines or other pipelines potentially getting done in the next 18 months and FID-ing at that point, then I do think GCX, I still don’t think GCX is — I mean you’d have to ask Kinder is, obviously, they’ve been mostly engaged and for us, it’s a small percentage. But I’m just not sure GCX expansion is in the cards in the near term. Chris, do you agree?

Chris Kendrick: Rob, this is Chris. And I agree with what Jamie said. Producers overwhelmingly want new steel in the ground versus these pipeline expansions. And also, since we did PHP expansion, the market softened a little bit in the fourth as well. You have Matterhorn coming on later in 2024. So it’s just going to take more time to get a project done. With that being said, the Kinder team is still looking at it, and we’ll see what happens.

Robert Mosca: Great. Great. And maybe just 1 quick last one. I just wanted to kind of confirm what I thought I heard in your prepared remarks. Just the function of that $100 million buyback program, absolutely just you could be more opportunistic when it comes to, I guess, the share price of these PIK shares are offered at and that’s why you didn’t just take down that 100% to 75%. Just you have some more, I guess, autonomy over the share price you’re purchasing at.

Jamie Welch: Robert, exactly. I mean, we look at the price right now, and we think it is significantly undervalued. If we have the opportunity to, in fact, capitalize on something that the market doesn’t seem to be fully appreciating, then we will do so, and that’s what the Board has given us. That if that also means that we’ve got a — as it relates to our ability to capitalize on a lower buyback price than our ultimate issuance price under the DRIP given the following quarters then that’s great. So I think we just thought of it as a great self-help mechanism for us.

Operator: Thank you. We have no further questions. I’ll hand back to Jamie Welch for any closing remarks.

Jamie Welch: Thank you, everyone, for your time this morning. We’re excited for our 2023 execution year and year of transition, and we look forward to catching up with you all relatively shortly on the conference circuit. So thank you very much, and have a great day.

Operator: Thank you. This now concludes today’s call. Thank you so much for joining. You may now disconnect your lines.

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