Q2 2024 Kinetik Holdings Inc Earnings Call

Good morning. Thank you for attending today's kinetic second quarter 'twenty 'twenty four results call. My name is Jennifer and I'll be your moderator today, all lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end if you would like to ask a question press star.

One on your telephone keypad I would now like to pass the conference over to Matti Wagner director of Investor Relations Matti. Please proceed.

Matti Wagner: Thank you good morning, and welcome to kinetics second quarter 'twenty 'twenty four earnings conference call. Our speakers today are Jamie Welch, our President and Chief Executive Officer, and Trevor Howard Our Chief Financial Officer. Other members of our senior management team are also in attendance for this morning's call the press release.

Matti Wagner: We issued yesterday, the slide presentation and access to the webcast for today's call are available at Www Dot kinetic dotcom.

Speaker Change: Before we begin I would like to remind all listeners that our remarks, including the question and answer section will provide forward looking statements and actual results could differ from what is described in these statements. These statements are not guarantees of future performance and involve a number of risks and assumptions.

We may also provide certain performance measures that do not conform to U S. GAAP, we provided schedules that reconcile these non-GAAP measures as part of our earnings press release. After our prepared remarks, we will open the call to Q&A with that I will turn the call over to Jamie.

Jamie: Thank you Matti and good morning, everyone and thank you for joining our call today I'm pleased to share. This past quarters results with you. This morning as well as provide an update on integration activities. Following the Durango acquisition.

Jamie: First I would like to thank our team for their tremendous efforts over the past few months as we close at both the <unk> divestiture and Durango acquisition began integrating Durango personnel and assets.

Speaker Change: The summer heat in the Permian and recovered from hurricane barrel in Houston.

The team has done a fantastic job. So thank you.

Speaker Change: In May we announced several highly strategic transactions expanding our footprint into the northern Delaware basin, diversifying our geographic footprint and customer base strengthening our balance sheet and ultimately advancing kinetics long term strategic vision.

Jamie Welch: The team has done a fantastic job, so thank you. At the beginning of June, we closed the GCX divestiture. And at the end of June, we closed the Durango acquisition, representing the two largest transactions since our merger in 2022. As such, it would double the processing capacity at the King's Landing Processing Complex. We have also advanced our subsurface and permitting workstreams for an acid gas injection well that enables an important treating solution for natural gas containing high levels of H2S and CO2 at Kingsland.

At the beginning of June we closed the <unk> divestiture and at the end of June we closed the Durango acquisition, representing the two largest transactions since our merger in 2022.

Jamie Welch: At the beginning of June, we closed the GCX divestiture, and at the end of June, we closed the Durango acquisition, representing the two largest transactions since our merger in 2022. These announcements quickly followed the in-service of our organic gathering expansion into Lee County at the beginning of the first quarter. So for context, we had zero operations in New Mexico's Delaware Basin a year ago, and today, nearly 20% of our volumes are sourced from New Mexico.

Speaker Change: These announcements quickly followed the in service of our organic gathering expansion into Lea County at the beginning of the first quarter.

Speaker Change: For context, we had zero operations in New Mexico, Delaware Basin, a year ago and today nearly 20% of our volumes are sourced from new Mexico.

Jamie: Okay.

Jamie Welch: As I've mentioned over the past few months, since announcing these deals, producers are very excited that Kinetik has expanded north and is now investing the much needed capital to keep up with producers' demand for treating and processing. The commercial team has been highly active with both current and prospective customers in New Mexico, and the growth opportunities we see are plentiful. As such... We have sanctioned the pre-FID work scope and long-lead critical path items for King's Landing 2, which would double the processing capacity at the King's Landing Processing Complex.

Jamie Welch: As I've mentioned over the past few months since announcing these deals produces a very excited the kinetic has expanded north and is now investing the much needed capital to keep up with producers demand for treating and processing.

Jamie Welch: The commercial team has been highly active with both current and prospective customers in new Mexico, and the growth opportunities we see plentiful.

Jamie: As such we have sanctioned pre FID work scope and long lead critical path items, the king's landing too.

Jamie Welch: Which would double the processing capacity at the King's landing processing complex.

Jamie Welch: We have also advanced our subsurface and permitting workstreams for an acid gas injection well that enables an important treating solution for natural gas containing high levels of H2S and CO2 at King's Land. By undertaking these scopes of work today,

Jamie Welch: We have also advanced our subsurface and permitting work streams for an acid gas injection well that enables an important trading solution for natural gas containing high levels of <unk> and <unk> at King's landing.

Jamie Welch: By undertaking these scopes of work today.

Jamie Welch: We will accelerate the timeline from formal FID to in-service by nearly two quarters. This is a significant new development for our northern Delaware business and the customers that we serve in the region. Announced alongside Durango in May was our 15-year low pressure and high pressure gathering and processing agreement with a large existing customer with acreage in Eddy County that offsets the Durango system. More recently, Kinetik expanded gathering, treating, and processing services with one of our largest customers in Lee County. This amendment, which will go into effect in the fourth quarter of this year, increases the existing NBC and expands overall margin.

Jamie Welch: We will accelerate the timeline from formal <unk> to in service by nearly two quarters.

Jamie Welch: This is a significant new development for our northern Delaware business and the customers that we serve in the region. Announced alongside Durango in May was a 15-year low pressure and high pressure gathering and processing agreement with a large existing customer with acreage in Eddy County that offsets the Durango system. More recently, Kinetik expanded gathering, treating, and processing services with one of our largest customers in Lee County. This amendment, which will go into effect in the fourth quarter of this year, increases the existing NBC and expands overall margin.

Brian: This is a significant new development, Brian Northern Delaware business and the customers that we serve in the region.

Jamie Welch: Announced alongside Durango in May was a 15 year low pressure and high pressure gathering and processing agreement with a large existing customer with acreage in Eddy County that offset the Durango system.

Jamie Welch: More recently kinetic expanded gathering treating and processing services with one of our largest customers in Lea County, This amendment, which will go into effect in the fourth quarter of this year increases the existing NBC and expand overall margin.

Jamie Welch: The Durango Acquisition, the new Lee County Amendment, and the previously announced Long-Term Gas Gathering and Processing Agreement in Eddy County represent approximately a billion dollars of strategic investment at a low to mid-single-digit adjusted EBITDA multiple and significantly enhances our position across the entire Delaware Basin. In May, we developed a 100-day plan to close and integrate Durango's assets and personnel. I am very pleased to report that the transition has been seamless. We have already identified several process and system improvements that have begun generating value, and we have developed a robust integration plan that includes preventative maintenance, facility upgrades, and capacity expansions to existing infrastructure at the Dagger-Draw Processing Complex. Following closing, we immediately took over project management responsibilities for all growth and maintenance capital projects.

Jamie Welch: The Durango acquisition, then you Lea County Amendment, and the previously announced long term gas gathering and processing agreement in Eddy County represents approximately a $1 billion of strategic investments at a low to mid single digit adjusted EBITDA multiple.

Speaker Change: <unk> significantly enhances our position across the entire Delaware basin.

Jamie Welch: In May we developed a 100 day plan to close and integrate Durango as assets and personnel.

Speaker Change: I am very pleased to report that the transition has been.

Speaker Change: Been seamless.

Jamie Welch: We have already identified several process and system improvements that have begun generating value.

Jamie Welch: And we have developed a robust integration plan that includes preventative maintenance facility upgrades and capacity expansions to existing infrastructure at the dagger draw processing complex.

Jamie Welch: Following closing, we immediately took over project management responsibilities for all growth and maintenance capital projects. Construction is progressing well on the 200 million cubic feet per day King's Landing 1, and that remains on schedule with an expected in-service date in April of next year. We are also mid-construction on a 20-inch pipeline running across the Durango system that will provide connectivity to King's Landing when it is in service and greatly improve system hydraulics. With the successful completion of the Durango and GCX transactions, we are revising upwards our prior 2024 guidance to reflect the underlying strength of our business as well as the impacts of the transactions. I'm incredibly impressed by our team's focus and execution over the past few months.

Speaker Change: Following closing we immediately took over project management responsibilities for all growth and maintenance capital projects.

Jamie Welch: Construction is progressing well on the 200 million cubic feet per day King's Landing 1, and that remains on schedule with an expected in-service date in April of next year. We are also mid-construction on a 20-inch pipeline running across the Durango system that will provide connectivity to King's Landing upon its completion and greatly improve system hydraulics. Additionally, we began deferred maintenance projects to elevate the operation to Kinetik's Safety and Environmental Standards. We have also welcomed over 70 talented employees to the Kinetik team.

Jamie Welch: Instruction is progressing well and the 200 million cubic feet per day King's landing one and.

Jamie Welch: And that remains on schedule with an expected in service date in April of next year.

Jamie Welch: We are also mid construction on a 20 inch pipeline running across the Durango system that will provide connectivity to king's landing upon in service and greatly improve system hydraulics.

Jamie Welch: Additionally, we began deferred maintenance projects to elevate operations to kinetics safety and environmental standards.

Jamie Welch: We are also welcomed over 70 talented employees to the kinetic team.

Jamie Welch: The feedback we have received from new employees has been positive, and they are enjoying the function-based structure and management of our operations team. Turning to our results, in the second quarter, we processed gas volumes of 1.58 billion cubic feet per day, representing 7% growth year-over-year, despite wellhead volume curtailments in response to Wahaa Hub pricing, which averaged approximately 140 million cubic feet per day. Second quarter adjusted EBITDA was over $234 million, a 13% increase year-over-year, reflecting new volumes from the MVC-backed agreements in Lee County and improved commodity margins, as well as contributions from the expansion of PHP and Delaware Link. This was partially offset by price-related gas volume detainments and only two months of contribution from GCX. So, for context,

Speaker Change: The feedback we've received from new employees has been positive and theyre enjoying the function based structure and management of our operations team.

Jamie Welch: Turning to our results in the second quarter, we processed gas volumes at 158 billion cubic feet per day, representing 7% growth year over year. Despite wellhead volume curtailments in response to Wahhab pricing.

Jamie Welch: Which averaged approximately 140 million cubic feet per day.

Jamie Welch: Second quarter, adjusted EBITDA was over $234 million, a 13% increase year over year, reflecting new volumes from the MVC backed agreements in Lea County.

Jamie Welch: And improved commodity margins as well as contributions from the expansion of PHP.

Jamie Welch: And Delaware link.

Jamie Welch: This was partially offset by price related gas volume curtailments and only two months of contribution from Gtx.

Jamie Welch: So if a context, if we'd close Durango contemporaneously with the sale of Gtx kinetics second quarter, adjusted EBITDA would have increased to almost $238 million.

Trevor: If we closed Durango contemporaneously with the sale of GCX, Kinetik's second quarter adjusted EBITDA would have increased to almost $238 million. With the successful completion of the Durango and GCX transactions, we are revising upwards our prior 2024 guidance to reflect the underlying strength of our business as well as the impacts of the transaction. Trevor will discuss this in more detail momentarily. However, I'm incredibly impressed by our team's focus and execution over the past few months. Their dedication and attention to detail allowed for both transactions to close on time and has resulted in a swift integration process. Now, with that, I'd like to hand the call over to Trevor.

Trevor: With the successful completion of the <unk> and <unk> transactions, we are revising upwards. Our prior 2024 guidance to reflect the underlying strength of our business as well as the impacts of the transactions Trevor.

Trevor: Trevor will discuss this in more detail momentarily.

Jamie Welch: Incredibly impressed by our team's focus and execution over the past few months their dedication and attention to detail allowed for both transactions to close on time.

Jamie Welch: And has resulted in a swift integration process.

Jamie Welch: And now with that I'd like to hand, the call over to Trevor.

Trevor: Thanks, Jamie. In the second quarter, we reported an adjusted EBITDA of $234 million. For the quarter, we generated distributable cash flow of $163 million, and free cash flow was $105 million. Looking at our segment results, our midstream logistics segment generated an adjusted EBITDA of $148 million in the quarter, up 7% year over year, largely driven by improved commodity margins, increased process gas volume, and continued marketing benefits on our PHV capacity despite the wellhead volume curtailment that persisted throughout the quarter.

Unknown Executive: Thanks, Jamie. In the second quarter, we reported an adjusted EBITDA of $234 million. For the quarter, we generated distributable cash flow of $163 million, and free cash flow was $105 million. Specifically, within the midstream logistics segment, we now expect process gas volume growth in the high teens. Our new growth expectations are inclusive of six months of Durango's existing business, which includes approximately 200 million cubic feet of process gas volume from the Maljomar and Daggerdorf facilities.

Jamie Welch: Thanks, Jamie in the second quarter, we reported adjusted EBITDA of $234 million for the quarter, we generated distributable cash flow of $163 million and free cash flow was $105 million looking.

Unknown Executive: Looking at our segment results, our midstream logistics segment generated an adjusted EBITDA of $148 million in the quarter up 7% year over year, largely driven by improved commodity margin increased processed gas volumes and <unk>.

Speaker Change: <unk> marketing benefit on our Phd capacity, despite the wellhead volume curtailments that persisted throughout the quarter.

Unknown Executive: Shifting to our pipeline transportation segment, we generated an adjusted EBITDA of $94 million up 25% year over year.

Trevor: Shifting to our pipeline transportation segment, we generated an adjusted EBITDA of $94 million, up 25% year-over-year. This increase was driven by contributions from the THC expansion and Delaware Link, and with only two months of contributions from TCS. Total capital expenditures for the quarter were $38 million. Our leverage ratio for our credit agreement stands at 3.4 times below our leverage target of 3.5.

Jennifer: Good morning. Thank you for attending today's Kinetic Second Quarter 2024 results call. My name is Jennifer and I'll be your moderator today.

Unknown Executive: This increase was driven by contributions from the TASC expansion and Delaware link and with only two months of contribution from Tcs.

Jennifer: All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, press star one on your telephone keypad.

Unknown Executive: Total capital expenditures for the quarter was $38 million.

Unknown Executive: Our leverage ratio for our credit agreement stands at three four times below our leverage target of three five times.

Maddie Wagner: I would now like to pass the conference over to Maddie Wagner, Director of Investor Relations. Maddie, please proceed. Thank you.

Trevor: As Jamie mentioned earlier, we are revising upwards both our 2024 adjusted EBITDA and capital expenditures guidance to reflect earnings outperformance throughout the first half of the year and the successful completion of the Durango acquisition and GCX divestiture. We now estimate full year 2024 Adjusted EBITDA in the range of $940 million to $980 million, a 3% increase at the midpoint versus the previous guidance range midpoint and implies over 14% growth year-over-year at the midpoint.

Unknown Executive: As Jamie mentioned earlier, we are revising upwards, both our 2020 for adjusted EBITDA and capital expenditures guidance to reflect earnings outperformance throughout the first half of the year and the successful completion of the Durango acquisition in Gcs divestiture.

Maddie Wagner: Good morning and welcome to Kinetic Second Quarter 2024 earnings conference call. Our speakers today are Jamie Welch, our President and Chief Executive Officer and Trevor Howard, our Chief Financial Officer. Other members of our Senior Management Team are also in attendance for this morning's call. The press release issued yesterday, the slide presentation and access to the webcast for today's call are available at www.kinetic.com.

Unknown Executive: We now estimate full year 2024, adjusted EBITDA in the range of $940 million to $980 million, a 3% increase at the midpoint versus the previous guidance range midpoint and implies over 14% growth year over year at the midpoint.

Maddie Wagner: Before we begin, I would like to remind all listeners that our remarks, including the question and answer section, will provide forward-looking statements and actual results could differ from what is described in these statements. These statements are not guaranteed to use a future performance and involve a number of risks and assumptions. We may also provide certain performance measures that do not conform to US gap. We provided schedules that reconcile these non-gap measures as part of our earnings press release.

Unknown Executive: Specifically within the midstream logistics segment, we now expect processed gas volume growth in the high teens or new growth expectations are inclusive of six months of Durango is existing business, which includes approximately 200 million cubic feet per day of processed gas volumes from the knowledge tomorrow and data drawn facilities.

Trevor: Specifically, within the midstream logistics segment, we now expect process gas volume growth in the high teens. Our new growth expectations are inclusive of six months of Durango's existing business, which includes approximately 200 million cubic feet per day of process gas volume from the Maljomar and Daggerdorf facilities. We expect the existing Durango volume to nearly double with the in-service of the 200 million cubic feet per day King's Landing Cryo in April of next year. Additionally, the Lee County MVC increase in margin expansion for gathering, treating, and processing will contractually begin in November. Our pipeline transportation segment will no longer reflect contributions from DCX following the divestiture.

Unknown Executive: We expect the existing Durango volume to nearly double with the in service of the 200 million cubic feet per day <unk> Cryo in April of next year <unk>.

Maddie Wagner: After our prepared remarks, we will open the call to Q&A.

Jamie Welch: With that, I will turn the call over to Jamie. Thank you, Maddie. Good morning, everyone, and thank you for joining our call today. I am pleased to share this past quarter's results with you this morning as well as provide an update on integration activities following the Durango acquisition. First, I would like to thank our team for their tremendous efforts over the past few months, as we closed both the GCX divestiture and Durango acquisition, began integrating Durango personnel and assets, battled the summer heat in the Permian and recovered from Hurricane Battle in Houston.

Unknown Executive: Additionally, the Lee County, MVC increase and margin expansion for gathering treating and processing will contractually begin in November.

Unknown Executive: Our pipeline transportation segment will no longer reflect contributions from <unk>. Following the divestiture. However, we expect this segment will continue to experience strong year over year growth throughout the remainder of the year with the full year benefits from Delaware link and the PHP extension.

Trevor: However, we expect the segment will continue to experience strong year-over-year growth throughout the remainder of the year with the full year benefits from Delaware Link and the PHP expansion. We have modestly updated our commodity outlooks for the remainder of the year. Our revised guidance assumes approximately $77 per barrel for WTI, $2 per mmBtu for natural gas at the Houston Ship Channel Hub, and $0.60 per gallon for natural gas liquids. Today, approximately 13% of our remaining 2024 expected gross profit is directly influenced by commodity prices, which is primarily associated with kinetic equity volume. Currently, our direct commodity link exposure is sourced from the following components: approximately 30% natural gas or ethane, 30% propane and butane, and 40% crude.

Unknown Executive: We have modestly updated our commodity outlook for the remainder of the year.

Unknown Executive: Our revised guidance assumes approximately $77 per barrel for the Bcl two.

Jamie Welch: The team has done a fantastic job, so thank you. In May, we announced several highly strategic transactions, expanding our footprint into the northern Delaware Basin, diversifying our geographic footprint and customer base, strengthening our balance sheet, and ultimately advancing kinetics long-term strategic vision. At the beginning of June, we closed the GCX divestiture, and at the end of June, we closed the Durango acquisition, representing the two largest transactions since our merger in 2022.

Unknown Executive: $2 per MMVPU for natural gas at the Houston Ship Channel Hub, and $0.60 per gallon for natural gas liquids. Currently, our direct commodity link exposure is sourced from the following components: approximately 30% natural gas or ethane, 30% propane and butane, and 40% crude.

Speaker Change: $2 per annum Btu for natural gas at the Houston ship channel hub, and <unk> 60 per gallon for natural gas liquids.

Unknown Executive: Today, approximately 13% of our remaining 2020 for expected gross profit is directly influenced by commodity prices, which is primarily associated with kinetic equity volumes.

Unknown Executive: Currently our direct commodity linked exposure is sourced from the following components, approximately 30% natural gas or ethane, 30% propane and butane and 40% crude.

Jamie Welch: These announcements quickly followed the end service of our organic gathering expansion into Lee County at the beginning of the first quarter. So, for context, we had zero operations in New Mexico of Delaware Basin a year ago, and today nearly 20% of our volumes are sourced from New Mexico. As I've mentioned over the past few months since announcing these deals, producers are very excited that Connecticut has expanded north and is now investing the much-needed capital to keep up with producers' demand for treating and processing. The commercial team has been highly active with both current and prospective customers in New Mexico, and the growth opportunities we see are plenty.

Unknown Executive: As we mentioned during our Durango acquisition announcement call with certain provisions of some of it a ranga concepts, we retain ownership of the condensate.

Operator: As we mentioned during our Durango acquisition announcement call, with certain provisions of some of the Durango contracts, we retain ownership of the condom state. Therefore, WTI will represent a greater contribution to our direct commodity link gross profit going forward. Turning to our capital expenditures guidance, we now expect capital expenditures to be between $260 million and $300 million for the full year. This increase reflects capital for the construction of Kings Landing One.

Unknown Executive: Therefore that ACI will represent a greater contribution of our direct commodity linked gross profit going forward.

Unknown Executive: Turning to our capital expenditures guidance, we now expect capital expenditures to be between $260 million to.

Unknown Executive: The $300 million for the full year.

Unknown Executive: This increase reflects capital for the construction of King's landing, one pre <unk> lending to and an associated acid gas injection well.

Operator: Pre-FID work for King Landing II and associated asset gas injection well, the new and amended long-term gathering and processing agreements in Eddy and Lee counties, and capital for integration and growth and maintenance costs associated with the existing Durango business. For context, roughly $100 million of the guidance increase is capital associated with Durango. The remainder of the increase is driven by new projects in New Mexico that have been announced since issuing our full year 2024 CapEx guidance in February.

Unknown Executive: New and amended long term gathering and processing agreements in Eddy and Lea counties and capital for integration and growth and maintenance costs associated with the existing direct business.

Jamie Welch: Interform. As such, we have sanctioned pre-FID work scope and long lead critical path items for King's Landing 2, which would double the processing capacity at the King's Landing Processing Complex. We have also advanced our subsurface and permitting work streams for an acid gas injection well that enables an important treating solution for natural gas containing high levels of H2S and CO2 at King's Landing. By undertaking these scopes of work today, we will accelerate the timeline from formal FID to in service by nearly two quarters.

Unknown Executive: For context, roughly $100 million of the guidance increase is capital associated with Durango.

Unknown Executive: The remainder of the increase is driven by new projects in new Mexico that have been announced since issuing our full year 2020 for Capex guidance in February.

Operator: In fact, the projects included in our initial 2024 CapEx guidance are trending approximately 5% below budgeted costs. Our operations and commercial teams have done a tremendous job so far by optimizing scope and reducing construction costs where possible. We remain highly focused on our disciplined capital allocation approach. Our priorities are aligned with our strategy, which enables us to allocate capital to the highest return opportunities to maximize shareholder value. And with that, I would like to open up the line for Q&A.

Unknown Executive: In fact, the projects included in our initial 2020 for Capex guidance are trending approximately 5% below budgeted cost our operations and commercial teams have done a tremendous job so far by optimizing scope and reducing construction costs where possible.

Speaker Change: We remain highly focused on our disciplined capital allocation approach our priorities are aligned with our strategy, which enables us to allocate capital to the highest return opportunities to maximize shareholder value and with that I would like to open up the line for Q&A.

Jamie Welch: This is a significant new development for our Northern Delaware business and the customers that we serve in the region. Announced alongside Durango and May was our 15 year low pressure and high pressure gathering and processing agreement with a large existing customer with acreage in Eddie County that offset the Durango system. More recently, Kinetik expanded gathering, treating and processing services with one of our largest customers in Lee County. This amendment, which will go into effect in the fourth quarter of this year, increases the existing NBC and expands overall margin.

Speaker Change: Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star followed by one on your telephone keypad. If your question has been answered or you wish to remove your question. Please press star followed by two again to ask a question press Star one.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If your question has been answered or you wish to remove your question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please pick up your handset before asking your question. In the interest of time, questions will be limited to one question and one follow-up per person. We will pause here briefly as questions are registered. Our first question comes from the line of Michael Blum with Wells Fargo. Michael, your line is now open.

Speaker Change: As a reminder, if you were using a speakerphone. Please pick up your handset before asking your question and the interest of time questions will be limited to one question and one follow up per person. We will talk to you briefly ask questions are registered.

Jamie Welch: The Durango Acquisition, the New Lee County amendment and the previously announced long-term gas gathering and processing agreement in Eddie County, represents approximately a billion dollars of strategic investment at a low to mid-single digit adjusted EBITDA multiple and significantly enhances our position across the entire Delaware Basin. In May, we developed a hundred-day plan to close and integrate Durango's assets and personnel. I am very pleased to report that the transition has been seamless.

Speaker Change: Our first question comes from the line of Michael Blum with Wells Fargo. Michael Your line is now open.

Speaker Change: Thanks, Good morning, everyone.

Michael Blum: Thanks. Good morning, everyone. I wanted to talk, good morning, want to talk about the change in CapEx, specifically the 100 million related to Durango. I'm wanting to just provide a little more color.

Speaker Change: I wanted to talk good morning wanted to talk about the change in Capex, specifically, the $100 million related to Durango I Wonder if you just give a provide a little more.

Michael Blum: Should we think of that as growth capital that's earning a return? Is that maintenance? What is in that 100 million?

Speaker Change: Color should we think of that as growth capital, that's earning a return is that maintenance what isn't that $100 million.

Unknown Executive: So, good question, Michael. So, $100 million should be thought of in this context. It is growth capital, so it includes King's Landing 1. It is growth capital as it relates to the 20-inch backbone pipeline across the system, which will allow for obviously additional volumes to be connected that will then obviously be used to fill up King's Landing 1 and some of the pre-FID and long-lead critical path items that we've got sanctioned for King's Landing 2. So, that is the bucket; there is a If I was going to think about sort of remedial maintenance.

Unknown Executive: So, a good question, Michael.

Jamie Welch: We have already identified several process and system improvements that have begun generating value and we have developed a robust integration plan that includes preventative maintenance, facility upgrades and capacity expansions to existing infrastructure at the Durango draw process in complex. Following closing, we immediately took over project management responsibilities for all growth and maintenance capital projects. Construction is progressing well on the 200 million cubic feet per day Kings Landing 1 and that remains on schedule with an expected in service date in April of next year.

Unknown Executive: So.

Unknown Executive: Good question, Michael. So $100 million should be thought of in this context. It is growth capital, so it includes King's Landing 1. It is growth capital as it relates to the 20-inch backbone pipeline across the system, which will allow for obviously additional volumes to be connected that will then obviously be used to fill up King's Landing 1 and some of the pre-FID and long-lead critical path items that we've got sanctioned for King's Landing 2. So that is the bucket; there is a If I was going to think about sort of remedial maintenance.

Unknown Executive: Good question, Michael So $100 million should be thought of it in this context. It is growth capital. So it includes king's landing one it is growth capital as it relates to we talked about the 20 inch connect.

Unknown Executive: The backbone pipeline across the system, which will allow for ink, obviously additional volumes to be connected that will then obviously be used to fill up king's landing one.

Unknown Executive: And some of this pre EFI D and long lead critical path items.

Unknown Executive: That we've got.

Unknown Executive: <unk> for King's landing too so that is the bucket.

Jamie Welch: We are also mid-construction on a 20-inch pipeline running across the Durango system. That will provide connectivity to Kings Landing upon in service and greatly improve system hydraulics. Additionally, we began deferred maintenance projects to elevate operations to kinetics safety and environmental standards. We have also welcomed over 70 talented employees to the kinetic team. The feedback we have received from new employees has been positive and they are enjoying the function-based structure and management of our operations team.

Unknown Executive: There is a.

Unknown Executive: Okay.

Speaker Change: Yeah, if I was going to think about sort of remedial maintenance, it's probably $5 billion.

Unknown Executive: It's probably $5 million of that amount. And yeah, maintenance is probably an equivalent amount on top of that. So it's pretty, that's pretty small. And think of the increase, honestly, Michael, that's about, you know, relative to the 125-165, and I'm sure, you know, everyone would like sort of the, maybe the bridge. So 125-165 is where we started life.

Unknown Executive: Of that amount.

Unknown Executive: And maintenance is probably an equivalent amount on top of that.

Speaker Change: So it's pretty that's pretty small.

Michael: And think of the increased honestly, Michael that's about yes relative to the 125, $1 65, and I am sure.

Unknown Executive: And think of the increase, honestly, Michael, that's about, you know, relative to the 125-165, and I'm sure, you know, everyone would like sort of the, maybe the bridge. So 125-165 is where we started life. We said, as we've gone through the entire conference circuit, conference circuit over the course of the spring, we said, listen, with the Eddy County announcement, 200 million gross spend, think of it as 50-150. That's still, I think I would put Eddy County and the new Lee County Amendment, which has got a little bit of capital, that's a good number.

Unknown Executive: Everyone would like sort of the.

Unknown Executive: Maybe the bridge so $125 65 is where we started what we said and as we've gone through the entire conference circuits Conference circuit over the course of the spring, we said listen with the Eddy County announcement 200 million gross spend think of it as 50 to 150.

Unknown Executive: We said, as we've gone through the entire conference circuit, conference circuit over the course of the spring, we said, listen, with the Eddy County announcement, 200 million gross spend, think of it as 50-150. 50 for this year, 100 for next year, and 50 into 2020. That's still, I think I would put Eddy County and the new Lee County Amendment, which has got a little bit of capital, that's a good number

Jamie Welch: Turning to our results in the second quarter, we processed gas volumes of 1.5-8 billion cubic feet per day, representing 7% growth year over year, despite well-heared volume in response to our hub pricing. , which averaged approximately 140 million cubic feet per day. Second quarter of Justin Bieber was over $234 million, a 13% increase year over year, reflecting new volumes from the NBC back to Greenmond's in Lee County, and improved commodity margins, as well as contributions from the expansion of PHP and Delaware link.

Speaker Change: 50 for this year 100 for next year and 50 into 2026.

Unknown Executive: That still I think I would put the Eddy County, and the New Lea County Amendment, which got a little bit of capital. That's a good number so take your $1 45 to the being the midpoint of the original range and say just at 50.

Unknown Executive: So take your $145,000, being the midpoint of the original range, and say just add $15,000. And then there are all the Durango stuff that we've talked about. Kings Landing One, some growth capital, as well as the pre-FID spend. Think of that as $9,800 million, and that should get you right on the number you guys are looking for. As you know, we spend so much time agonizing over making sure we look at every invested dollar and make sure that it's earning a clear return for our overall business, and we were very mindful when we set up our guidance this year. We obviously have had the opportunity to grow the business, which is incredibly exciting, and we are very, very focused on making sure we are free cash flow positive.

Unknown Executive: So take your $145,000, being the midpoint of the original range, and say just add $50,000. Kings Landing One, some growth capital, as well as now the pre-FID spend. Think of that as $9,800 million. And that should get you right on the number you guys are looking for. As you know, we do spend so much time agonizing over making sure we look at every invested dollar.

Unknown Executive: And then for the.

Unknown Executive: All the Durango stuff that we've talked about.

Jamie Welch: This was partially offset by price-related gas volume contaminants, and only two months of contribution from GCX. So for context, if we close Durango contemporaneously with a sale of GCX, Kinetik's second quarter of Justin Bieber would increase to almost $238 million. With the successful completion of the Durango and GCX transactions, we are revising upwards our prior 2024 guidance to reflect the underlying strength of our business as well as the impacts of the transactions.

Unknown Executive: King's landing one some growth capital as well as now the <unk> spend think of that as not 800 million Bucks.

Unknown Executive: Got it. Thanks for all that. And then maybe a related question since you're spending on King's Landing to I know, I know you're calling it pre FID, but

Unknown Executive: And that should get you right on the number of your guys are looking for as you know we do we spend so much time agonizing over may.

Unknown Executive: Making sure we look at every invested dollar.

Speaker Change: Making sure that its earning I E.

Speaker Change: A clear return.

Speaker Change: For our overall business and we yes, we were very mindful when we set up our guidance this year.

Jamie Welch: Trevor will discuss this in more detail momentarily. I'm incredibly impressed by our team's focus and execution over the past few months. Their dedication and attention to detail allowed for both transactions to close on time and has resulted in a swift integration process.

Speaker Change: Obviously have had the opportunity for <unk>.

Speaker Change: Grow the business, which is incredibly exciting and we are very very focused on making sure we have free cash flow positive.

Unknown Executive: Okay.

Speaker Change: Got it thanks for all that and then maybe a related question. Since your you are spending on King's landing two I know I know youre, calling your predecessor.

Unknown Executive: Got it. Thanks for all that. And then maybe a related question, since you're spending on King's Landing too, I know, I know you're calling it pre-FID, but how should we think about timing for when that plan could be in service?

Trevor Howard: And now with that, I'd like to hand the cool love of the Trevor. Thanks Jamie. In the second quarter, we reported the justity that up $234 million. For the quarter, we generated distributable cash flow of $163 million, and free cash flow was $105 million. Looking at our segment results, our mid-stream logistics segment generated an adjusted EBITDA of $148 million in the quarter of 7% year-over-year. Largely driven by improved commodity margin, increased process gas volume and continued marketing benefits on our Ph.

Speaker Change: How should we think about timing for when that that plant could be in service.

Speaker Change: So there is a bunch of items I would say any.

Unknown Executive: There are a bunch of items, you know; I would say any decision on a new processing plan from inception to completion in service is probably a two-year undertaking. There are items, and it's not necessarily just ordering a cryo box from UOP Honeywell, but there is switchgear, there are transformers, there's a lot of associated kits that have very long lead times. So what we wanted to do was get ahead of that. If we were gonna sort of... Think out into the future of an in-service day; you would be looking at the beginning of the third quarter of 2020.

Speaker Change: Decision on a new processing plant from inception to completion in service is probably a two year undertaking.

Unknown Executive: Got it. Thank you so much.

Trevor Howard: P, capacity despite the well-head volume curtailment that persisted throughout the quarter. Shipping through our pipeline transportation segment, we generated an adjusted EBITDA of $94 million of 25% year-over-year. This increase was driven by contributions from the Ph. P, expansion and Delaware link, and was only two months of contributions from TCS. Total capital expenditures for the quarter were $38 million. Our leverage ratio for our credit agreement stands at 3.4 times below our leverage target of 3.5 times.

Speaker Change: There are items and it's not necessarily just ordering a cryo box from.

Speaker Change: Honeywell, but theres switchgear Transformers, there's a lot of associated kit.

Speaker Change: That have very long lead items so are we.

Speaker Change: What we wanted to do was get ahead of that if we were going to sort of.

Speaker Change: Think out into the future of a bit of a.

Unknown Executive: Think out into the future of an in-service day; you would be looking at the beginning of the third quarter of 2020.

Speaker Change: The in service date, you would be looking at beginning of third quarter of 2006.

Unknown Executive: Got it thank you so much.

Speaker Change: Thank you. Our next question comes from the line of Jeremy Tonet with Jpmorgan Jeremy Your line is now open.

Operator: Thank you. Our next question comes from the line of Jeremy Tonet with JP Morgan. Jeremy, your line is now open.

Trevor Howard: As Jamie mentioned earlier, we are revising upwards both our 2024 adjusted EBITDA and capital expenditures guidance to reflect earnings' performance throughout the first half of the year, and the successful completion of the Durango acquisition and GCX divestiture. We now estimate full-year 2024 adjusted EBITDA and the range of $940 million to $980 million. A 3% increase at the midpoint versus the previous guidance range midpoint and implies over 14% growth year-over-year at the midpoint.

Speaker Change: Hi, good morning.

Jeremy: Good morning, Jeremy.

Unknown Executive: Good morning, Jeremy.

Unknown Executive: Good morning, Jeremy.

Speaker Change: Thanks for all the detail today, just wanted to kind of go to new Mexico, a little bit more now that Durango has settled just wondering if you could provide a bit more color on what you see the landscape there we've seen.

Jeremy Tonet: Thanks for all the detail today. I just wanted to kind of go to New Mexico a little bit more. Now that Durango has settled, I was wondering if you could provide a bit more color on what you see in the landscape there. We've seen, I think, some private equity consolidation there. And just, if you could update us on the competitive landscape, the opportunities there, that would be very helpful. Sure. So, as we've talked before, and as we've talked with investors and your peers, we are incredibly excited by the opportunity set that we see in New Mexico.

Speaker Change: Think some private equity consolidation there and just if you could update us I guess on the competitive landscape the opportunity set there that'd be very helpful. Thanks.

Trevor Howard: Specifically, within the midstream and district segment, we now expect process gas volume growth in the ITs. Our new growth expectations are inclusive of six months of Durango's existing business, which includes approximately 200 million cubic feet per day of process gas volume from the Maljamar and Daggerdross facility. We expect the existing Varengo Boeing to nearly double with the in service of the 200 million cubic feet per day, King landing cry out in April of next year.

Unknown Executive: Sure so.

Unknown Executive: As we've talked before, and as we've talked with investors and your peers, ironically, it is not just the Northern Delaware, as you would think about the Northern Delaware Basin, but it's also the Shelf, and the Shelf is, I think, probably, somewhat of a forgotten area that, over time, just hasn't got any particular attention or focus on King's Landing 2 because we can now see in our forecast that King's As you also know, Jeremy, we were very clear when we announced Durango. You have 200 million cubic feet of actual inlet processing capacity. And that's how we run. It's pretty static.

Speaker Change: As we've talked before and whereas we've talked with investors and your peers.

Speaker Change: We are incredibly.

Speaker Change: Incredibly excited by the opportunity set that we see in new Mexico.

Jeremy Tonet: Ironically, it is not just the Northern Delaware, as you would think about the Northern Delaware Basin, but it's also the Shelf, and the Shelf is, I think, probably, somewhat of a forgotten area that, over time, just hasn't gotten any particular attention or focus. But there seems to be a lot of smaller producers that have positions that would like to see that the rock quality is very good, and they just need a processing outlet.

Unknown Executive: Ironically it is not just the northern Delaware as you would think about the northern Delaware basin, but its also the shelf and the shelf is I think probably a.

Unknown Executive: Somewhat of a forgotten the area that over time, just hasnt got.

Trevor Howard: Additionally, the Lee County MVC increase to margin expansion for gathering, treating and processing will contractually begin in November. Our pipeline transportation segment will no longer reflect contributions from DCX following the divestiture. However, we expect the segment will continue to experience strong year-to-year growth throughout the remainder of the year with the full year benefits from Delaware Link and the PHP expansion. We have modestly updated our commodity outlook for the remainder of the year.

Unknown Executive: Any particular attention or focus.

Jeremy: But there seems to be a lot of smaller producers that have positions that would like to see that the rock qualities very good and they just need a processing outlet.

Unknown Executive: So.

Unknown Executive: set in a different way. The opportunity set is more plentiful than we could have ever imagined. As such, that has accelerated our decision-making on wanting to do the pre-FID expenditures on King's Landing 2 because we can now see in our forecast that King's Landing 1 will be fully sold out sooner than we ever could have imagined. As you also know, Jeremy, we were very clear when we announced Durango. You have 200 million cubic feet of actual inlet processing capacity. And that's how we run it. It's pretty static.

Speaker Change: Set a different way the opportunity set is more plentiful than we could have ever imagined as such that has.

Jeremy: Accelerated decision, making on wanting to get to.

Trevor Howard: Our revised guidance assumes approximately $77 per barrel for WPI, $2 for MNBCU for National Gas at the Houston Ship Channel Hub, and $0.60 per gallon for National Gas Liquid. Today, approximately 13% of our remaining 2024 expected growth profit is directly influenced by commodity prices, which is primarily associated with kinetics equity volumes. Currently, our direct commodity link exposure is sourced from the following components, approximately 30% natural gas or ethane, 30% protein and mutane, and 40% crude.

Unknown Executive: The.

Unknown Executive: <unk>.

Unknown Executive: <unk>.

Unknown Executive: On King's landing too because we can now see in our forecast that King's landing two will be king signing one will be fully sold out sooner than we ever could have imagined and as you also know Jeremy Yes, we were very clear when we when we announced to Ranga you have 200 million cubic feet a day of actual process.

Unknown Executive: <unk>.

Jeremy: Inlet processing capacity.

Unknown Executive: 70, 75 million bucks of EBITDA, as we said on our call back when we announced this in May. Same store sales, if you will, relative to the 2023 numbers. We bring in King's Landing, April 2025, and you see that increase from that $70.75 to almost $150 million of EBITDA run rate from that point forward. And as we've also talked to people, we are going to expand Dagger Draw. We've got some expansion plans.

Unknown Executive: 70-75 million bucks of EBITDA, as we said on our call back when we announced this in May. Same store sales, if you will, relative to the 2023 numbers. We bring in King's Landing, April 2025, and you see that increase from that $70.75 to almost $150 million of EBITDA run rate from that point forward. And as we've also talked to people, we are going to expand Dagger Draw. We've got some expansion. We can expand a little bit King's Landing 1.

Unknown Executive: And that's how we run it's pretty static 70 to 75 million Bucks of EBITDA as we as we said on our call back when we announced this in my same store sales. If you will relative to the 2020 'twenty three numbers.

Trevor Howard: As we mentioned during our Durango acquisition announcement call, with certain provisions of some of the Durango contracts, we retain ownership of the condomsate. Therefore, WPI will represent a greater contribution of our direct commodity link growth profit going forward.

Unknown Executive: We bring on King's landing April 2025, and you see that increase from that 770 775 to almost $150 million of EBITDA run rate from that point forward and as you also.

Trevor Howard: Turning to our capital expenditures guidance, we now expect capital expenditures to be between $260 million to $300 million for the full year. This increased reflect capital for the construction of King's Landing 1, pre-FID works for King's Landing 2, and an associated asset gas injection wall. The new and amended long-term gathering and processing agreements in Eddie and Lee counties, and capital for integration, and growth and maintenance costs associated with the existing Durango business.

Unknown Executive: As we've also talked to people, we are going to expand.

Unknown Executive: Dagger draw we've got some expansion.

Unknown Executive: We can expand a little bit King's Landing 1. We will bring an idle crier that we have that we'll actually go and add. We've got to work through takeaway on the residue side. We'll obviously work out what we're doing on the NGL side, but I think we very quickly will get from a 200 baseline of inlet today to, probably, the latter part of next year; we'll have 500 million cubic feet of processing capacity.

Unknown Executive: We can expand a little bit King's landing, one we will bring.

Unknown Executive: We will bring an idle crier that we've got that we'll actually go and add. We've got to work through takeaway on the residue side. We'll obviously work out what we're doing on the NGL side, but I think we very quickly will get from a 200 baseline of inlet today to, probably, the latter part of next year; we'll have 500 million cubic feet of processing capacity daily. And then into 2026, and you think about that statement about the third quarter, you'd be at 700.

Unknown Executive: On idle crowd that we've got that will actually go and add.

Unknown Executive: We've got to work through takeaway on the residue side, where obviously worked out what we're doing on the NGL side, but I think we are very quickly we will get from a 200 baseline of inlet today to probably the latter part of next year, what 500 million cubic feet a day of processing capacity and then into 2026 and you think.

Trevor Howard: For context, roughly $100 million of the guidance increase is capital associated with Durango. The remainder of the increase is driven by new projects in New Mexico that have been announced since issuing our full year 2024 CapEx guidance in February. In fact, the projects included in our initial 2024 CapEx guidance are trending approximately 5% below budgeted costs. Our operations and commercial teams have done a tremendous job so far by optimizing scope and reducing construction costs were possible. We remain highly focused on our disciplined capital allocation approach. Our priorities are aligned with our strategy which enables us to allocate capital to the highest return opportunities to maximize shareholder value.

Unknown Executive: And then into 2026, and you think about that statement about the third quarter, you'd be at 700. And the overall margins we see are pretty consistent, even today, just given that the lack of infrastructure, there's a need for treating, you know, there's a lot of components, there's a lot of low-pressure connections for some of the smaller producers, less high-pressure connects up there than what we typically see, I would say on our base business. So I do think it's pretty, I think we've just found a phenomenal opportunity that we just couldn't be more excited about.

Unknown Executive: That statement on the third quarter you'd be at 700.

Unknown Executive: Got it. That's very helpful. Thank you.

Unknown Executive: And the overall margins we see are pretty consistent. Even today, just given that the lack of infrastructure, there's a need for treating, you know, there's a lot of components, there's a lot of low-pressure connections for some of the smaller producers, less high-pressure connects up there than what we typically see, I would say on our base business.

Unknown Executive: And the overall.

Unknown Executive: Margins, we see pretty consistent.

Unknown Executive: Got it. That's very helpful. Thank you.

Unknown Executive: Even today, just given the lack of infrastructure there is a need for treating.

Unknown Executive: There's a lot of components. There is a lot of low pressure connections for some of the smaller produces less high pressure connects up there than what we've typically see I would say on our base business. So I do think it's a pretty.

Maddie Wagner: And with that, I would like to open up the line for Q&A. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star followed by one on your telephone keypad. If your question has been answered or you wish to remove your question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speaker phone, please pick up your handset before asking your question. In the interest of time, questions will be limited to one question and one follow up per person. We won't pause you briefly as questions are registered.

Unknown Executive: <unk>.

Speaker Change: I think we've just found a phenomenal opportunity that we just couldnt be more excited about.

Speaker Change: Got it that's very helpful. Thank you.

Unknown Executive: And want to touch on one of the points you brought up there as it relates to Permian egress in general. Just wondering, updated thoughts on that, given recent announcements, and also I think having that capacity on Permian Highway was certainly a help in the quarter. And just wondering, I guess, how you think about that over the balance of the year? How much help would that provide having that capacity, and when do you think that kind of fades away?

Unknown Executive: And I want to touch on one of the points you brought up there as it relates to Permian egress in general. Just wondering, updated thoughts on that, given recent announcements, and also, I think having that capacity on Permian Highway was certainly a help in the quarter. And just wondering, I guess, how you think about that over the balance of the year? How much help would that provide having that capacity? And when do you think that kind of fades away?

Unknown Executive: Want to touch on one of the points you brought up there as it.

Unknown Executive: It relates to Permian egress in general.

Unknown Executive: Just wondering updated thoughts on that given recent announcements and also I think having that capacity in Permian Highway was certainly a help in the quarter and just wondering I guess how.

Unknown Executive: How you think about that over the balance of the year, how much help would that provide having that capacity and when do you think that kind of fades away.

Speaker Change: So I'll answer the last part first yes, obviously, we saw I think.

Unknown Executive: So I'll answer the last part first. You know, obviously, we saw one of the investors in Matterhorn talk about the potential for service in September, if I recall correctly, on yesterday's call. You guys would know better than I because I'm sure you were on that call.

Unknown Executive: So I'll answer the last part first. You know, obviously, we saw one of the investors in Matterhorn talk about the potential for service in September, if I recall correctly, on yesterday's call. You guys would know better than I because I'm sure you were on that call.

Michael Blum: Our first question comes from the line of Michael Blum with Will Spargo. Michael, your line is not open. Thanks.

Unknown Executive: One of the investors in Matterhorn and talk about the potential in service in September if I recall from on yesterday's call you guys would know better than I could show you were on that call.

Trevor Howard: Good morning, everyone. I wanted to talk about the change in CAPEX, specifically the 100 million related to Durango. I wanted to just provide a little more color. Should we think of that as growth capital that's earning a return? Is that maintenance? What is in that 100 million? Good question, Michael. So 100 million should be filled with it in this context. It is growth capital, so it includes King Flanning one. It is growth capital as it relates to, we talk about the 20 inch Kinet backbone pipeline across the system, which will allow for, obviously additional volumes to be connected that will then obviously be used to fill up King Flanning one.

Speaker Change: And that obviously is going to be a big help but it's I think.

Unknown Executive: And that obviously is going to be a big help. But it's, you know, I think it's not the panacea, but it's a step in the right direction. I think that will certainly help WAHA.

Unknown Executive: And that obviously is going to be a big help. But it's, you know, I think it's not the panacea, but it's a step in the right direction. I think that will certainly help WAHA.

Unknown Executive: It's not the panacea, but it's a step in the right direction.

Unknown Executive: I think that will certainly help wahaha.

Unknown Executive: I cannot recall a period over the last 9 years where we have seen this level of weakness from Washington consistently. I'm looking at, I'm looking around the table here, but I don't think I've ever seen, I mean... In September, we still have negative 4 cents today, Annie? Is that where we are? Negative 4 cents. Negative 4 cents. That's crazy. The PHP from our vantage point and from our customers, I mean, Kris Kendrick can talk about that. I was going to call him Crickets, which is his fan favorite, but our customers could not be happier because they have been able to get Gulf Coast pricing.

Unknown Executive: I cannot recall a period over the last, and so we see an opportunity to give that benefit up there, up the northern end of the Delaware, where they've really been starved and very much focused on a traditionally an EP Permian price. So I think we think that probably the net benefit fades to some extent with obviously Matterhorn. But as evidenced, you had the comment yesterday about the service of Matterhorn, and we're still negative.

Unknown Executive: I cannot recall a period.

Unknown Executive: Over the last <unk>.

Unknown Executive: Nine years.

Speaker Change: We have seen consistently this level of weakness from Wassa.

Speaker Change: I'm looking at I'm looking around the table here, but I don't think I've ever seen.

Unknown Executive: In September we still have we today negative <unk> that where we are.

Unknown Executive: Negative for next.

Unknown Executive: Negative <unk>.

Speaker Change: That's crazy.

Kris: The PHP from our vantage point and from our customers I mean cricket Kris.

Trevor Howard: And some of this pre-FID and long lead critical part items that we've got sanctioned for King Flanning two. So that is the bucket. There is a, if I was going to think about sort of remedial maintenance, it's probably $5 million of that amount. And, yeah, maintenance is probably an equivalent amount on top of that. So it's pretty, that's pretty small. And think of the increase, honestly, Michael, that's about, relative to the 125, 165, and I'm sure everyone would like sort of the, maybe the bridge.

Unknown Executive: Chris can talk about this I was going to call on cricket, which is his fan favorite.

Unknown Executive: But it's.

Speaker Change: Our customers could not be happier because they have been out to get Gulf coast pricing and even with the weakness in that Houston ship and Thats been a little bit I think followed a little bit of the volatility around the up and downs of Freeport.

Unknown Executive: And even with the weakness in that Houston ship, and that's been a little bit, I think it has followed a little bit of the volatility around the ups and downs of Freeport, amongst other reasons, but I think they have been very, very happy. I think it has been obviously one of the differentiators for us. It's the reason that we continue. The Durango customers are all one. Gulf Coast Press.

Unknown Executive: Amongst other reasons, but I think they have been they have been very very happy I think it has been obviously one of the.

Unknown Executive: One of the Differentiators for US is the reason that we continue.

Speaker Change: The Durango customers all want.

Unknown Executive: Gulf Coast pricing.

Unknown Executive: And so we see an opportunity to give that benefit up there, up the northern end of the Delaware, where they've really been starved and very much focused on a traditionally EP Permian price. So I think, we think that probably the net benefit fades to some extent with obviously Matterhorn. But as evidenced, you had the comment yesterday about the service of Matterhorn, and we're still negative. We were negative 23 or 24, and now we're negative four, but we're still negative.

Unknown Executive: And so we see an opportunity to give that benefit up there at the northern end of the Delaware.

Trevor Howard: So 125, 155 is where we started life. We said, as we've gone through the entire conference circuits, conference circuit over the course of the spring, we said, listen, with the Eddie County announcement, 200 million gross spend, think of it as 50, 150, 50 for this year, 100 for next year and 50 into 20, 26. That still, I think I would put the Eddie County and the newly County amendment, which got a little bit of capital, that's a good number.

Unknown Executive: They've really been starved and very much focused on a traditionally in <unk>.

Unknown Executive: Permian price so I think.

Unknown Executive: We think that that probably the net benefit fights to some extent with obviously matterhorn, but as evidenced you had the comment yesterday of in service at Matterhorn and were still negative.

Unknown Executive: We were negative 23 or 24, and now we're negative four, but we're still negative. So I would say it's certainly, you continue to have a lot more gas, and we continue to need a lot more egress solutions for the Permian. And our customers will remain very happy, and so will we with all the space that we have.

Unknown Executive: Were negative 23, or 'twenty, four and now with negative four but were still negative so I would say it's certainly.

Unknown Executive: So I would say, certainly, you continue to have a lot more gas, and we continue to need a lot more egress solutions for the Permian. And our customers will remain very happy, and so will we with all the space that we have.

Trevor Howard: So take your 145 to the, being the midpoint of the original range and say just add 50. And then for the, all the Durango stuff that we've talked about, King Flanning one, some growth capital, as well as now the pre-FID spend. Think of that as 90, 100 million bucks. And that should get you right on the number your guys are looking for. As you know, we do, we spend so much time agonizing over making sure we look at every invested dollar and making sure that it's earning a clear return for our overall business.

Unknown Executive: You continue to have a lot more gas and we continue to need a lot more egress solutions.

Unknown Executive: For the Permian and our customers will remain very happy and so where are we with all the space that we have.

Speaker Change: Got it that's helpful. Thank you.

Unknown Executive: Got it. That's helpful. Thank you.

Unknown Executive: Thank you. Our next question comes from the line of Tristan Richardson with Scotiabank Tristan Your line is now open.

Operator: Thank you. Our next question comes from the line of Tristan Richardson with Scotiabank. Tristan, your line is now open.

Speaker Change: Hi, Good morning, guys, Jamie noted the high teens growth across your footprint, which includes Durango and the Lea County, Nbc's can you talk about the better outlook Youre seeing in the base business is this all just higher growth in new Mexico is this efficiencies completion efficiencies CLR is just maybe kind of curious what you're seeing.

Tristan Richardson: Hi, good morning, guys. Jamie, you noted the high teens growth across your footprint, which includes Durango and the Lee County NBCs. Can you talk about the better outlook you're seeing in the base business? Is this all just higher growth in New Mexico? Is this efficiencies, completion efficiencies, GORs? Just maybe kind of curious what you're seeing in the base business across Delaware. So thank you.

Jamie Welch: Hi, good morning, guys. Jamie, you noted the high team growth across your footprint, which includes Durango and the Lee County NBCs. Can you talk about the better outlook you're seeing in the base business? Is this all just higher growth in New Mexico? Is this efficiencies, completion efficiencies, GORs? Just maybe kind of curious what you're seeing in the base business across Delaware.

Trevor Howard: And we, yeah, we were very mindful when we set up our guidance this year. We obviously have had the opportunity for, to, to grow the business, which is incredibly exciting. And we are very, very focused on making sure we are free cashflow pockets.

Michael Blum: Thanks for all that.

Speaker Change: The base business across the Delaware.

Jamie Welch: So, think of it this way. I think it should be telling in my earlier commentary. 20% of our gas now comes from New Mexico. When did that start? January of 2025.

Speaker Change: So think of it this way I think it should be tailing in my earlier commentary.

Speaker Change: 20% of our gas that comes from new Mexico when did that start.

Trevor Howard: And then maybe a related question, since you're spending on King's landing too, I know you're calling it pre-FID, but how should we think about timing for when that plan could be in service. So, there is a bunch of items, you know, I would say any decision on a new processing plan from inception to completion in service is probably a two year undertaking. There are items and it's not necessarily just ordering a cryo box from UOP Honeywell, but there is switch gear, there are transformers, there's a lot of associated kit that have very long lead items.

Jamie Welch: January of 2025.

Jamie Welch: Bingo it was like the lights went on and we had a massive infusion coming out of new Mexico, and obviously Durango adds to that because it's an existing business.

Jamie Welch: Bingo, it was like the lights went on, and we had a massive infusion coming out of New Mexico. And obviously, Durango adds to that because it's an existing. I think our base business, what's really... The proudest thing about what I can see for this company is that, you know, for so long, we engaged with you and with investors and talked about, you know, the promise and prospect of something like Alpine High.

Jamie Welch: I think our base business, what's really.

Speaker Change: The proudest thing about what I can see for this company.

Unknown Executive: I think that, you know, for so long, we would engage with you and with investors and talk about, you know, the promise and prospect of something like Alpine High. So I would say our base business has been pretty good.

Speaker Change: Is that for so long, we would engage with you and with investors and talk about the promising prospect of something like Alpine high.

Trevor Howard: So, what we wanted to do was get ahead of that. If we were going to sort of think out into the future of a service date, you would be looking at beginning of third quarter of 26. Thank you so much.

Jamie Welch: Alpine High, we had 140 million cubic feet of gas per day, and maybe some of the other questions that are going to follow. If you take that on top of our 1.58 BCF a day of processing capacity, we're over 1.7, right? Over 1.7 inlet against a.. for our business. That's pretty staggering. And remember, that is before you really take Durango, right? Durango doesn't show up, if you will, until the second half of this year.

Speaker Change: Alpine high we had 140 million cubic feet a day.

Speaker Change: And maybe some of the other questions that are going to follow it.

Speaker Change: If you go and just take that on top of a $1 five eight <unk>.

Speaker Change: Bcf a day of processing capacity, we will have a one seven.

Speaker Change: Brian over one seven inlet against it.

Unknown Executive: For our business, that's pretty staggering and remember that is before you really take to rank right Durango doesn't show up if you will until the second half of this year and we have two Bcf a day of total inlet capacity. So I would say our base business has been pretty.

Jamie Welch: And we have two BCF a day of total inlet capacity. So I would say our base business has been pretty good. Yeah, there's some growth, it's not spectacular, but it's nowhere near as game changing, uh, and landscape impacting as what we do.

Speaker Change: Yeah, it's kind of.

Speaker Change: There's some growth its not spectacular, but it's not it's nowhere near at we think is game changing.

Unknown Executive: And.

Speaker Change: Landscape impacting as what we see with new Mexico.

Unknown Executive: Okay.

Jamie Welch: of Helpful Context. And then you noticed in this, you noted in the first hundred days, some of these small expansion upgrade opportunities, whether it be a dagger draw or the 20-inch line. Should we think of these opportunities as part of that 5.5 billion by 2025 you talked about when you announced the deal? Or could these opportunities be incremental to that? And maybe, I think you can think about... So Tristan, I think you think about the magnitude, right? I do think... on the basis of the stair step that I laid out as far as inlet expansion at Durango is concerned.

Speaker Change: Helpful context, and then.

Speaker Change: Notice you noted in the first 100 days seen some of the small expansion upgrade opportunities that'd be a dagger dollar.

Speaker Change: The 20 inch line.

Speaker Change: Should we think of these opportunities as part of that.

Speaker Change: Five five times.

Speaker Change: 25, you talked about when you announced the deal.

Speaker Change: Or could these opportunities be incremental to that and maybe is it.

Speaker Change: I think you can think about these opportunities.

Speaker Change: So Tristan I think you're thinking about that about the magnitude right I do think on the basis of the stair step that I laid out as far as inlet expansion at Durango. If 200 represented 70 75 base in 400, which is the addition of King's landing one.

Unknown Executive: on the basis of the stair step that I laid out as far as inlet expansion at Durango. If 200 represents a 70-75 base and 400, which is the addition of King's Landing 1, gives you a base with stock and with cash and with capital deployed, you've got, you know, eight plus hundred million dollars of total consideration. And that's how you do that. Do the simple math. We're talking about things that drive returns.

Jamie Welch: If 200 represents a 70-75 base and 400, which is the addition of King's Landing 1, gives you a base that, when sold out, looks like $150, and then later the next year, because we have it in our numbers, and you have it as part of the Eddy County capital that we gave you, you go to $500, then that's obviously going to add another almost $40 million. And then you're thinking about King's Landing, too. That would add you a potential another $70 to $75 million on top. This is a list of...

Unknown Executive: It gives you a base.

Unknown Executive: When so that looks like 150 and venue later next year, because we have it.

Unknown Executive: In our numbers and you have it as part of the Eddy County capital that we gave you you go to.

Unknown Executive: 500.

Unknown Executive: Then that's obviously going to urge you another almost $40 million and then youre thinking about a king's landing two that would add a potential another $70 million to $75 million on top. This is a met five times is how we thought about it on the basis of that $1 50, 160 of EBITDA and you've got you you bought the you paid.

Jamie Welch: I mean, five times is how we thought about it on the basis of, hey, you have that $150, $160 of EBITDA, and you've got... You bought... You paid... With stock and with cash and with capital deployed, you've got, you know, eight plus hundred million dollars of total consideration. And that's how you do that. Do the simple math. We're talking about things that drive returns significantly greater than that set up basis that I just outlined.

Unknown Executive: <unk>.

Unknown Executive: With stock and with cash and with the capital deployed you've got $800 million of total consideration and Thats. How you do that do the simple math.

Unknown Executive: We're talking about things that drive the returns.

Unknown Executive: Significantly greater than that.

Unknown Executive: That setup basis that I just outlined.

Jamie Welch: Super helpful. I appreciate it. Thank you, guys.

Speaker Change: Super helpful. Appreciate it thank you guys.

Spiro <unk>: Thank you. Our next question comes from the line of Spiro <unk> with Citi. Your line is now open.

Operator: Thank you. Our next question comes from the line of Spiro Dounis with Citi. Spiro, your line is now open.

Jamie Welch: Brothers. We bring on Kings Landing April 2025, and you see that increase from, you know, that $775 to, you know, almost $150 million of EBITDA, run rate from that point forward. And as you also, as we've also talked to people, we are going to expand Dagger Drawer. We've got some expansion. We can expand a little bit, Kings Landing 1. We will bring an idle cryo that we've got, that we'll actually go and add.

Speaker Change: Thanks, operator, good morning team.

Spiro Dounis: Thanks, Operator. Morning, team. Maybe to start, my first question is just on the asset mix going forward, following Durango and some of these opportunities that are coming out now, it sounds like it's going to swing you really more towards a GMP asset base. And so just curious, is there an appetite on your part to have that pipeline transport exposure, maybe keep pace, so you can maintain that integrated profile?

Speaker Change: Maybe to start.

Speaker Change: Question is just on the asset mix going forward following Durango and some of these opportunities that are coming out now it sounds like it's going to swing us really more towards G&P asset base and so I'm. Just curious is there appetite on your part that that pipeline transport exposure, maybe keep pace that you can maintain that integrate profile.

Spiro: I think spiro it is but as we've mentioned you have an interesting decision to make right.

Jamie Welch: I think Spiro already is. But as we've mentioned, you have an interesting decision to make, right? We have more we have. As we look at our forecast, we could obviously join forces with a number of players that have projects for egress and think about taking an equity stake, much like, obviously, Target just did with Blackcomb. We could have played that role. Almost the same.

Jamie Welch: We've got to work through takeaway on the residue side. We obviously work out what we're doing on the NGL side. But I think we are very quickly we'll get from a 200 baseline of the inlet today to probably the latter part of next year. We have 500 million cubic feet a day of processing capacity. And then into 2026, and you think about that statement on the third quarter, you'd be at 700.

Unknown Executive: We have more we have as we look at our forecast we could obviously join forces with.

Speaker Change: With a number of players that have projects for egress and think about taking an equity stake much like obviously, yes.

Speaker Change: Tiger just did with obviously with Blackhawk, we could've played that role.

Unknown Executive: Almost the same.

Jamie Welch: I think what we have been having, and we've been consistently telling you is we're focused on shorter-dated conversion cycles on the deployment of capital. In other words, don't deploy capital and then wait two and a half years, or 30 months, or 26 months, or whatever the timeframe is before you start to see cash flow. Try to make it, obviously, the deployment and the cash flow receipt within a much shorter space of time, so that we can see on an intra-basin basis.

Speaker Change: I think what we have been we've been consistently telling you is we are focused on <unk>.

Jamie Welch: And the overall margins we see are pretty consistent. Even today, just given that the lack of infrastructure, there's a need for treating, you know, there's a lot of components. There's a lot of low pressure connections for some of the smaller producers. Less high pressure connects up there than what we've typically see, I would say, on our base business. So I do think it's a pretty, I think we've just found a phenomenal opportunity that we just couldn't be more excited about. Got it. That's very helpful. Thank you.

Unknown Executive: shorter dated conversion cycles on the deployment of capital. In other words, don't deploy capital and then wait two and a half years, or 30 months, or 26 months, or whatever the timeframe is before you start to see cash flow. Try to make it, obviously,

Speaker Change: Sure David conversion cycles on deployment of capital in other words don't deploy capital and then two five years or 30 months or 26 months or whatever the timeframe is before you start to see cash flow try to make it obviously.

Unknown Executive: <unk>.

Unknown Executive: Deployment and the cash flow receipts within a much shorter space of time.

Speaker Change: That we could see on an intra basin basis. So Delaware link continues to be something that we're really has been a really.

Unknown Executive: That we could see on an intra-basin basis. So Delaware Link continues to be something that has been a really strong contributor to our overall business. We see it in our Kinetik NGL business, and we're looking for other opportunities as to how we can do that. They are shorter builds, they're smaller in scale, shorter duration, and immediate cash flow, and obviously they help the base business. So we are mindful of keeping that mix, and we'd like to build it up again. So we're looking for opportunities that will continue to allow us.

Jamie Welch: So Delaware Link continues to be something that has been a really strong contributor to our overall business. We see it in our Kinetic NGL business. We're looking for other opportunities as to how we can do that. They are shorter builds, they're smaller in scale, shorter duration, and immediate cash flow. And obviously, they help the base business. So we are mindful of keeping that mix. You know, if it goes forward with obviously the GMP Uplift 6535, which is sort of where we first started life as a proforma merge company with Kinetik back in 2022, maybe for that, and we'd like to build it up again. So we're looking for opportunities that continue to allow us to keep that mix balanced.

Unknown Executive: Strong contributors to our overall business, we see it on our kinetic NGL business with looking for other opportunities as to how we can do that theyre short of builds from a.

Jamie Welch: And one to touch on one of the points we're up there as a release to Permian egress in general. Just wondering, updated thoughts on that given recent announcements. And also, I think having that capacity in Permian highway was certainly a help in the quarter. And just wondering, I guess, how do you think about that over the bounce of the year? How much help would that provide? Having that capacity in when do you think that kind of updates away?

Unknown Executive: Smaller in scale shorter duration and immediate cash flow and obviously that helped the base business. So we are mindful of keeping.

Unknown Executive: That.

Unknown Executive: That mix.

Jamie Welch: So, I'll answer the last part first. Obviously, we saw, I think, one of the investors in Matterhorn talk about the potential in service in September, if I recall, from yesterday's call, you guys would know better than I, because I'm sure you were on that call. And that obviously is going to be a big help. But it's, you know, I think it's not the panacea, but it's a step in the right direction.

Unknown Executive: Is it going forward with obviously, the G&P uplift $65 35, which is sort of I think where we first started life as a pro forma merged company with kinetic back in 2022, maybe for <unk>.

Unknown Executive: And we'd like to build it up again, so we were looking for opportunities to continue to allow us.

Unknown Executive: To keep that mix.

Unknown Executive: Balanced.

Speaker Change: Got it understood helpful. Color second question just wanted to quickly go back to free cash flow and how to think about the outlook. Jamie in response to an earlier question. I think you said you are highly focused on being free cash flow positive I think for 24, we can get there.

Jamie Welch: Got it, understood. Helpful caller. Second question, just wanted to quickly go back to free cash flow and how you think about the outlook. Jamie, in response to an earlier question, I think you said you're highly focused on being free cash flow positive. I think for 24, we can get there. That seems like a pretty easy lift. I guess as you think about the 25, with all these these projects coming, obviously a high class problem to have, but do you still think that's something sort of durable over a multi-year basis from here?

Jamie Welch: I think that will certainly help Waha. I cannot recall a period over the last nine years where we have seen consistently this level of weakness from Waha. I'm looking at, I'm looking around the table here, but I don't think I've ever seen, I mean, in September, we still have, we today, negative four cents, Andy. Is that where we are? Negative four cents. That's crazy. The PHP from our vantage point and from our customers, I mean, Chris, Chris Kendrick can talk about this.

Speaker Change: Seems like a pretty easy lift I guess as you think out the 25 with all these projects coming obviously, a high class problem to have but do you still think thats something sort of durable out over a multiyear basis from here.

Speaker Change: Yes, I think look.

Jamie Welch: Yeah, I think, look, we, when you think about what we've got going forward, right, I think Spiro, you and I have talked about this with Trevor and Maddie and Alex from time to time, you know, our overall base business, meaning the legacy business, is probably $100 million of capital for 25. And then you've got obviously the Eddy County expansion, which I said, you know, that 200 million split 50, 150. And then, obviously, you've got the balance of Durango.

Unknown Executive: When you think about.

Unknown Executive: What we've got going forward right.

Speaker Change: Thank you.

Speaker Change: You and I have talked about this with Trevor and Matti and Alex from time to time.

Jamie Welch: I was going to call him which is his fan favorite. But it's, you know, our customers could not be happier, because they have been able to get Gulf Coast pricing. And even with the weakness in that Houston ship, and that's been a little bit, I think, followed a little bit of volatility around the up and down to free port amongst other reasons. But I think they have been, they have been very, very happy.

Unknown Executive: Overall base business.

Unknown Executive: When we when.

Unknown Executive: When we think about 25 is our base business, meaning the legacy business is probably $100 million of capital and.

Speaker Change: 25, and then you've got obviously, the Eddy County expansion, which I said, yes that 200 million split 50 150.

Unknown Executive: And then obviously you have got is a balance of Durango.

Jamie Welch: I think it has been obviously one of the, one of the differentiators for us. It's the reason that we continue. The Durango customers are all one. Gold Coast pricing. And so we see an opportunity to give that benefit up there, up the northern end of the Delaware, where they've really been starved and very much focused on a traditionally an E.P. Permian price. So I think we think that probably the net benefit fades to some extent with obviously Matterhorn, but as evidenced, you had the comment yesterday of in service of Matterhorn and we're still negative four.

Unknown Executive: And I really do think we're going to try that to manage.

Jamie Welch: And I really do think we're gonna try to manage from a capital deployment standpoint how we think about managing it relative to obviously the EBITDA profile. We do see obviously really good top line growth, 14% year on year to the midpoint. Yeah, I think you've heard me say before, I would challenge you to find another company where I can look out the next several years and think about EBITDA growth. 25, 26 now, 27, at sort of a double digit, right? That is hard to do. You can't do it forever, but you can do it for a time.

Unknown Executive: From a capital deployment standpoint, how we think about.

Unknown Executive: Managing it relative to obviously the EBITDA profile, we do see obviously really good topline growth, 14% year on year to the midpoint I think it is.

Unknown Executive: I think you've heard me say before I would I would challenge you to find another company, where I can look at the next several years and think about an EBITDA growth.

Unknown Executive: 25, 26, now 27 at sort of a double digit rate.

Unknown Executive: That is hard to do.

Unknown Executive: You can't do it forever, but you can do it for a time.

Unknown Executive: You can't do it forever you can do it for time, but that's the strength that we see when you add in Durango, and you look at our base business and some of the changes such as the NGL contract changes that happened in 2006, and obviously your partial benefit 'twenty seven full benefit there's lots of things going on and so we were.

Jamie Welch: We were negative 23 or 24 and now we're negative four, but we're still negative. So I would say it's certainly you continue to have a lot more gas and we continue to need a lot more egress solutions for the Permian. And our customers will remain very happy. And so we're with all the space that we have got it.

Unknown Executive: But that's the strength that we see when you add in Durango and you look at our base business and some of the changes, such as the NGL contract changes that happened in 26, and obviously, you get partial benefit, 27 full benefit. There are lots of things going on. And so we will think about that top-line growth and how that allows us to, obviously, then think about our overall capital deployment. So I do think that at 25, you still see positive free cash flow.

Jamie Welch: But that's the strength that we see when you add in Durango and you look at our base business and some of the changes, such as the NGL contract changes that happened in 26 and, obviously, you get partial benefit, 27 full benefit. There are lots of things going on. And so we will think about that top line growth and how that allows us to, obviously, then think about our overall capital deployment. So I do think that at 25, you still see positive free cashflow.

Jamie Welch: That's helpful. Thank you.

Unknown Executive: Think about that top line growth and how that allows us to obviously then think about our overall capital deployment. So I do think 25, you still see.

Unknown Executive: The positive free cash flow as we made as we mentioned we put it in the press release I think pro forma the second half of this second half of 'twenty, five or 10% increase in free cash flow per share as a result of the Durango transaction. So I do think it.

Tristan Richardson: Our next question comes from the line of Tristan Richardson with Scotia Bank. Tristan, your line is now open. Hi, good morning, guys. Jamie, you noted the high teams growth across your footprint, which includes Durango and the Lee County and DCs. Can you talk about the better outlook you're seeing in the base business? Is this all just higher growth in New Mexico? Is this efficiency? Is completion efficiency? Is CLR is just maybe kind of curious what you're seeing in the base business across the lower?

Unknown Executive: As we mentioned, we put it in the press release, I think pro forma, the second half of 25, what, 10% increase in free cash flow per share as a result of the Durango transaction. So I do think it's very much the blueprint.

Jamie Welch: As we mentioned, we put it in the press release, I think pro forma, the second half of this, the second half of 25, what, 10% increase in free cashflow per share as a result of the Durango transaction. So I do think it's very much the blueprint.

Unknown Executive: It's very much the blueprint.

Unknown Executive: Great that's helpful color, Jamie I'll leave it there thanks.

Jamie Welch: Great. That's a helpful color, Jamie. I'll leave it there. Thanks.

Unknown Executive: Thanks.

Speaker Change: Thank you. Our next question comes from the line of Keith Stanley with Wolfe Research. Your line is now open.

Operator: Thank you. Our next question comes from the line of Keith Stanley with Wolf Research. Keith, your line is now open.

Jamie Welch: So think of it this way. I think it should be telling in my early commentary. 20% of our gas comes from New Mexico. When did that start? January of 2025? It was like the lights went on and we had a massive infusion coming out of New Mexico. And obviously Durango adds to that because it's an existing business.

Speaker Change: Hi, good morning, following up a little bit on the importance of positive free cash flow for for you. How are you thinking about when you could restart dividend growth for the company since your leverage target, but obviously, having a lot of growth opportunities accelerating.

Keith Stanley: Hi, good morning. Following up a little bit on the importance of positive free cash flow for you, how are you thinking about when you could restart dividend growth for the company since you're a leveraged target but obviously, have a lot of growth opportunities?

Jamie Welch: I think our base business, what's really the proudest thing about what I can see for this company is that, you know, for so long, we would engage with you and with investors and talk about, you know, the promise and prospect of something like Alpine High. Alpine High, we had 140 million cubic feet a day. Now, you know, and maybe some of the other questions that are going to follow. If you go and just take that on top of our 1.58 BCF a day approximate capacity, we're over 1.7, right?

Keith: Keith Good morning.

Speaker Change: You are.

Jamie Welch: You are... Nice to hear from you. You're very consistent with the dividend. You get the prize.

Speaker Change: Nice to hear from you your very very consistent on the dividend.

Speaker Change: You get the prize.

Speaker Change: Yeah, I think we have talked to you at length on the dividend.

Jamie Welch: I think we have talked to you at length on the dividend, and it is not lost on us that we have had a lot of support and patience from shareholders. Honestly, I look at the picture and believe that we can manage both from a growth standpoint within our capital growth so that everyone wins. So I think, as we've always said, you need to be thoughtful as to exactly the increase you would think about, but I think it is manageable. And so it is, I would say, nearer term, not longer term, as to an action.

Unknown Executive: It is not lost on us that we have had a lot of support and patience from shareholders. So I think, as we've always said, you need to be thoughtful as to exactly the increase you would think about, but I think it is manageable. And so it is, I would say, nearer term, not longer term.

Unknown Executive: And it is not lost on us that we have had a lot of support.

Jamie Welch: Over 1.7 inlet against it for our business. That's pretty staggering. And remember, that is before you really take Durango, right? Durango doesn't show up, if you will, until the second half of this year. And we have 2 BCF a day of total inlet capacity. So I would say our base business has been pretty, you know, it's kind of, there's some growth. It's not spectacular, but it's not, it's nowhere near. We think is game changing. And landscape impacting as what we see with New Mexico.

Unknown Executive: And patient shareholders.

Unknown Executive: Honestly I look at the picture and believe that we can manage both.

Tristan Richardson: That's helpful context.

Unknown Executive: From a growth standpoint within our capital.

Unknown Executive: So that everyone wins.

Unknown Executive: So I think as we've always said you need to be thoughtful as to exactly the the increase you would think about but I think it is manageable.

Unknown Executive: And so it is I would say nearer term not longer term.

Unknown Executive: As to as to an action.

Speaker Change: Great that's helpful color.

Jamie Welch: Great, that's helpful, Culler. Second question, can you just maybe give an update on the importance of eventually connecting the Legacy, Kinetik, and Durango footprints, what it would add for you, and how you're thinking about doing that, whether it's building or potentially through a transaction. Really good question.

Unknown Executive: Great. That's helpful, Culler. Second question, can you just maybe give an update on the importance of eventually connecting the legacy Kinetik and Durango footprints, and what it would add for you? Um, really good question.

Speaker Change: Second question can you just maybe give an update on the importance of eventually connecting the legacy kinetic in Durango footprints, what it would add for you and how youre thinking about doing that whether it's building or potentially through transactions.

Tristan Richardson: And then you noticed in this, you noted in the first underday, seeing some of these small expansion upgrade opportunities. So it'd be a dagger drawer. The 20th line. Should we think of these opportunities as part of that 5.5? at times, 2025, you talked about when you announced the deal, or could these opportunities be incremental to that, and maybe is it the way to think about these opportunities?

Jamie Welch: Really good question. So we've said every commercial opportunity has to stand on its own merit. And if we see opportunities, whether we are going into Eddy County and thinking about Lee County, that gives us an opportunity either to connect to the existing Pegasus Lateral, which is the one that goes up into Lee County, whether it ultimately connects to, ultimately, Durango, and then we think about how we should then think about Eddy County.

Unknown Executive: Really good question. So we've said every commercial opportunity has to stand on its own merit. And if we see opportunities, whether we are going into Eddy County and thinking about Lee County, that gives us an opportunity either to connect to the existing Pegasus Lateral, which is the one that goes up into Lee County, whether it ultimately connects ultimately to Durango, and then we think about how we should then think about Eddy County.

Speaker Change: Really good question. So we've said every commercial opportunity has to stand on.

Unknown Executive: Stand on its own merit.

Unknown Executive: And if we see opportunities.

Unknown Executive: Whether we are going into Eddy county, and thinking into Lea County that gives us an opportunity to connect to the existing Pegasus lateral which is the one that goes up into Lea County.

Jamie Welch: So Tristan, I think you think about the magnitude, right? I do think on the basis of the stair step that I laid out as far as inlet expansion at Durango. If 200 represents a 70-75 base and 400, which is the addition of Kingslating One, gives you a base that, when sold out, looks like 150. And then you're laid out the next year, because we have it in our numbers, and you have it as part of the Eddie County capital that we gave you.

Unknown Executive: Whether it ultimately how that connects to ultimately to Durango and then we think about how we then think about Eddy County.

Jamie Welch: We will engage in conversations with producers. We're not going to build just for the sake of building. We will only build to the extent that there is a compelling commercial underwritten proposition that justifies and warrants the connection. Thank you. Our next question comes from the line of Theresa Chen with Barclays. Theresa, your line is now open.

Unknown Executive: We will engage in conversations with producers. We're not going to build just for the sake of building. We will only build to the extent that there's a compelling commercial underwritten proposition that justifies and warrants the connection.

Unknown Executive: We will engage in conversations with producers were not going to bill just for the sake of building, we will only build to the extent that there is a compelling commercial underwritten proposition.

Unknown Executive: It justifies and warrants the connection.

Speaker Change: Thank you.

Jamie Welch: You go to 500, then that's obviously going to add you another almost $40 million. And then you're thinking about a Kingslating Two, that would add you a potential another 70-75 million on top. This is a, I mean, five times is how we thought about it on the basis of, hey, you have about 150, 160 of EBITDA, and you've got, you bought, you paid with stock and with cash and with capital deployed.

Unknown Executive: Thank you. Our next question comes from the line of Theresa Chen with Barclays. Teresa. Your line is now open.

Operator: Thank you. Our next question comes from the line of Teresa Chin with Barclays. Teresa, your line is now open.

Theresa Chen: Really good questions, Theresa. I would say we are seeing, obviously, a sight line for overall production growth up in northern Delaware and the shelf that would support a King's Landing 2 development. As I mentioned at the outset, what's fascinating about that particular area is that the drill bit is handicapped by processing capacity. Can't Flare, You really need a solution on the gas side, and so it makes for a very challenging, I think, proposition for producers.

Teresa Chin: Good morning.

Operator: Following.

Operator: Yeah.

Teresa Chin: And eventual in service of keen planning to how much runway does that keep you and given the growth outlook you have for the acreage and can you talk about additional opportunities beyond that and how that ties into your view of run rate Capex on an annual basis going forward.

Jamie Welch: You've got, you know, $8 plus $100 million of total consideration. And that's how you do the, do the simple math. We're talking about things that drive the returns and significantly greater than that, that setup basis that I just, that outlined.

Teresa: Really good questions Teresa.

Teresa Chin: I would say.

Speaker Change: We are seeing obviously.

Teresa Chin: A sight line.

Operator: Sure.

Tristan Richardson: Super helpful. Appreciate it. Thank you guys. Thank you.

Speaker Change: Overall production growth up in the northern Delaware and the shelf that would support a king's landing too.

Spiro Dounis: Our next question comes from the line of Spiro Donas with city. Spiro, your line is not open. Thanks, Alberta.

Operator: Development.

Speaker Change: As I mentioned at the outset, what's fascinating about that.

Spiro Dounis: Morning, team. Maybe to start. First question is on the asset mix going forward following Durango and some of these opportunities that are coming out now. Sounds like it's going to swing you really more towards a GMP asset base. And so just curious. Is the rapid set on your part that had that pipeline transport exposure and keep pace so you can maintain that integrated profile? I think Spiro is, but as we've mentioned, you know, you have an interesting decision to make, right?

Speaker Change: That particular area is that the drill bit.

Teresa Chin: It is.

Unknown Executive: Handicap. Um, over the last few years, and so it's not just processing capacity, right? Because, as I mentioned, one of the things that we're really focused on is we can build processing, but we need egress. There are challenges with each of those because of how full they are and how full they run. So I think there are a lot of things that have gone into this, some of the early decisions and some of the, I would say, early analysis on King's Landing 2.

Speaker Change: Handicapped by processing capacity.

Unknown Executive: Caught flat.

Unknown Executive: You really need a solution on the gas side and so it makes for a very challenging I think proposition for.

Unknown Executive: Produces.

Speaker Change: So a sideline certainly see us through.

Jamie Welch: So our sightline certainly sees us through, a.k.a. L2. Does it go on beyond that? I think it's too early to tell.

Spiro Dounis: We have more, we have, as we look at our forecast, we could obviously join forces with, with a number of players that have projects for egress. And think about taking an equity stake much like obviously, you know, Target just did with obviously with black tone. We could have played that role almost the same. I think what we have been, have we've been consistently telling you is we're focused on shorter dated conversion cycles on deployment of capital.

Speaker Change: <unk> two <unk>.

Speaker Change: Does it go on beyond that.

Speaker Change: I think it's too early to tell.

Jamie Welch: You know, we sit here now, and we are 40 days into owning Durango. Admittedly, we had six plus weeks as we went through the FTC process, and we engaged in some conversations with customers, but really, the engagement has started in earnest. Over the last sort of six plus weeks.

Speaker Change: We sit here now and we have 40 days into owning Durango.

Unknown Executive: Admittedly, we had six plus weeks as we went through the <unk>.

Unknown Executive: The FTC process and we engaged in some conversations with customers.

Unknown Executive: But really the engagement has started in earnest.

Unknown Executive: Over the last.

Unknown Executive: Over the last sort of six plus weeks and so and it's not just processing capacity right because as I mentioned one of the things that we're really focused on is we can build processing, but we need egress.

Spiro Dounis: In other words, don't deploy capital and then two and a half years or 30 months or 26 months or whatever the timeframe is before you start to see cash flow. Try to make it obviously the deployment and the cash flow receipt within a much shorter space of time. That we could see on an intrabasin basis. So Delaware link continues to be something that really has been a really strong contributor to our overall business.

Jamie Welch: And so, and this isn't just processing capacity, right? Because, as I mentioned, one of the things that we're really focused on is we can build processing, but we need egress, and E-Rest comes in the form of two flavors, residue, and NGL. And, you know, Andy Penzik would tell you, up there, you've got telescopic pipelines. They're pretty much all full. It's not really a great outcome. You've got some challenges. You really just have TW; you've got EPNG, you've got EE.

Speaker Change: And <unk> comes in the form of two flavors residue.

Unknown Executive: And NGL.

Speaker Change: And any <unk> would tell you up there you got telescopic pipelines that pretty much all full it's not really a great outcome <unk> got some challenges you really just have tw got P&G you've got <unk>.

Spiro Dounis: We see it on our kinetic NGO business. We're looking for other opportunities as to how we can do that. They are shorter builds from a smaller in scale, shorter duration and immediate cash flow and obviously they help the base business. So we are mindful of keeping, you know, that, that next, you know, is it going forward with obviously the GMP uplift 6535, which is sort of I think where we first started life as a, as a performer merge company with kinetic back in 2022.

Jamie Welch: There are challenges in each of those because of how full they are and how full they run. So I think there are a lot of things that have gone into this, some of the early decisions and some of the, I would say, early analysis on King's Landing 2. So line of sight, sort of TBD, sort of watch this space over time, and we can keep you apprised on how you're seeing.

Unknown Executive: There are challenges on each of those because of of how full they out how full they run so I think theres a lot of things that have gone into this.

Unknown Executive: Some of the early decisions in some of the I would say early analysis.

Speaker Change: On King's landing too so line of sight sort of TBD sort of watch this space over time, and we can keep you apprised on how youre seeing.

Unknown Executive: So line of sight, sort of TBD, sort of watch this space over time, and we can keep you apprised on how you're seeing. The thing that I probably didn't complete in my statement is, what makes me proudest about where we sit now is, I really feel like Alpine High and all the growth that we see. If it grows significantly because there's a call on gas with gas prices.

Jamie Welch: You know, the interesting thing when we go down south is, you know, I know everyone focuses on AI and gas growth and what this all means. The thing that I probably didn't complete in my statement is what makes me proudest about where we sit now. I really feel that Alpine High isn't even in the vernacular of this company anymore, and all the growth that we see, really there's nothing predicated on Alpine High.

Unknown Executive: Now the interesting thing when we go down South is.

Unknown Executive: I know everyone focuses on AI and gas growth and what this all means.

Unknown Executive: The thing that I, probably didn't complete in my statement is what makes me proud us about where we sit now I really feel like alpine high.

Spiro Dounis: Maybe for that. And we'd like to build it up again. So we're looking for opportunities to continue to allow us, to keep that mix balanced. Got it. Understood. Help a color. Second question. Just want to quickly go back to free cash flow and how to think about the outlook. Jamie, in a response to an earlier question, I think you said you're highly focused on being free cash flow positive. I think we're 24.

Unknown Executive: Isn't even in the vernacular of this company anymore.

Unknown Executive: And all of the growth that we see.

Jamie Welch: If Alpine High just stays as it is, it doesn't make a difference to us. But if it grows significantly because there's a demand for gas with gas prices, well, that's going to have an impact as well, because, as we know, it's in a highly gassy area. So I really do think that's a pretty interesting change, not subtle, pretty significant and profound for the company as a whole.

Speaker Change: Really isn't there's nothing predicated on alpine high if alpine high just stays as it is it doesn't make a difference to us.

Speaker Change: If it grows significantly because there's a coal on gas with gas prices well, that's going to have an impact as well because as we know it's an highly gassy area. So I really do think that's a pretty interesting change not subtle.

Spiro Dounis: We can get there. That seems like a pretty easy lift. I guess, as you think about the 25, with all these these projects coming, obviously, high class problem to have. But do you still think that's something sort of durable out of a multi-year basis from here? Yeah, I think, look, when you think about what we've got going forward, right? I think, Scuro, you and I have talked about this with Trevor and Maddie and Alex from time to time.

Unknown Executive: Pretty significant and profound for the company as a whole.

Unknown Executive: Thank you so much.

Speaker Change: Thank you. Our next question comes from the line of Neel Mitra with Bank of America. Your line is now open.

Operator: Thank you. Our next question comes from the line of Neil Mitra with Bank of America. Neil, your line is now open.

Spiro Dounis: Our overall base business, when we think about 25, is our base business, meaning the legacy business, is probably $100 million of capital and for 25. Then you've got, obviously, the Eddie County expansion, which I said, that 200 million split, 50, 150. Then, obviously, you've got the balance of Durango. I really do think we're going to try that to manage from a capital deployment standpoint, how we think about managing it relative to obviously the EBITDA profile.

Speaker Change: Alright, good morning.

Neil Mitra: Hi, good morning. I wanted to kind of understand the run rate capex or how we should be thinking about it now that the business has changed so much. Obviously, it's listed with the Durango acquisition, but we have, you know, possible King's Landing to other additions. When you think about the GMP spending going forward, is there some number that we should try to put in there as a good run rate, understanding that things are constantly changing?

Unknown Executive: Oh Wow.

Speaker Change: Kind of.

Speaker Change: Understand the run rate capex or how we should be thinking about it out of the business.

Unknown Executive: Has changed so much.

Unknown Executive: Obviously, if listed with the Durango acquisition, but we have.

Unknown Executive: Possible King's Landing to other additions. But just when you think about the GMP spending

Speaker Change: Possible King's landing too.

Unknown Executive: Other additions just when you think about the GNP spending.

Speaker Change: Going forward is there some number that we should try to put in there is a good run rate.

Spiro Dounis: We do see, obviously, really good top line growth, 14% year on year to the midpoint, I think it is. I think you've heard me say before, I would challenge you to find another company where I can look out the next several years and think about an EBITDA growth 25, 26 now, 27 at sort of a double digit, right? That is hard to do. You can't do it forever, you can do it for a time.

Unknown Executive: Understanding that things are constantly changing.

Unknown Executive: Ah.

Jamie Welch: I'd love to tell you that it was that easy, and obviously, it is more I think it has ebbs and flows, and obviously, you're not necessarily going to be as it is. We're building a crier now, so obviously, and we started some pre-FID work on a second cry that's probably That's not necessarily the norm that a company of our size would be considering to look at processing, So as it relates to this year at 280, I think you've heard from us with Trevor that look, I think if we were gonna, and you've got to be very careful as you sort of think about our overall percentages.

Unknown Executive: I'd love to tell you that it was that easy, and obviously, it is more I think it has ebbs and flows, and obviously, you're not necessarily going to be as it is. We're building a crier now, so obviously, and we've started some pre-FID work on a second cry that's probably That's not necessarily the norm that a company of our size would be considering to look at And you've got to be very careful as you sort of think about our overall percentages. My sense is, with Durango, So, you know, I think, you know, if base business is 100, maybe once you've got the processing capacity, maybe you're looking at, you know,

Speaker Change: I'd Love to tell you that it was that easy and obviously it is more I think it has ebbs and flows and obviously youre not necessarily going to be.

Unknown Executive: As it is we are building acquire now so obviously and we have started.

Unknown Executive: Work on a second crop.

Unknown Executive: That's probably.

Spiro Dounis: But that's the strength that we see when you add in Durango and you look at our base business and some of the changes, such as the NGL contract changes that happen in 26 and obviously you partial benefit, 27 full benefit, there's lots of things going on. And so we will think about that top line growth and how that allows us to, obviously, then think about our overall capital deployment. So I do think 25, you still see the positive free cash flow.

Unknown Executive: That's not necessarily the norm.

Unknown Executive: A company of our size would be considering.

Unknown Executive: Look at processing building processing capacity, so on a sequential basis.

Unknown Executive: And you might have more of a.

Trevor: Our peak and trough so as it relates to this year at $2 80, I think you've heard from us with Trevor that look I think if we were going to.

Unknown Executive: And you've got to be very careful as you sort of think about our overall percentages.

Jamie Welch: And how you think about it, but you've got something that's probably 200, 400 million dollars. I think that's a good amount, I know that's a really wide range and I apologize, but it's hard to give you any real precision because you don't really know. But that's the sort of amount that I think you would be, you know, peak would be one thing. 200 would be, you know, another one. I really do think that's pretty good.

Unknown Executive: And how you think about it but <unk> got something Thats probably.

Spiro Dounis: As we mentioned, we put it in the press release, I think, a pro form of the second half of this, second half of 25, what, 10% increase in free cash flow for share as a result of the Durango transaction. So I do think it's very much the blueprint.

Unknown Executive: 200 $400 million I think is a good that's I know, that's a really wide range and I apologize, but it's hard to give you any real precision because you don't really know.

Unknown Executive: But thats the sort of amount that I think you would be peak would be one thing 200 would be another I really do think thats pretty good as I said, our base business our base.

Spiro Dounis: Great. That's the helpful color, Jamie. I'll leave there. Thanks. Thank you.

Keith Stanley: Our next question comes from the line of Keith Stanley with Wolf Research. Keith, your line is now open. Hi, good morning.

Jamie Welch: As I said, our base business... Our base business next year, we thought about $100 million. And yeah, that's got WellConnects, and that's got maintenance capital in it. And that's got, you know, some looping, you've got some compression.

Unknown Executive: Base business next year, we thought about $100 million.

Unknown Executive: And yes, that's got well connects and Thats got maintenance capital in it and Thats got some looping got some compression so you've got growth in that number and that base business is a pretty big business, but it's more mature right, it's more mature and built out.

Keith Stanley: Following up a little bit on the importance of positive free cash flow for you, how are you thinking about when you could restart dividend growth for the companies since you're at the leverage target, but obviously having a lot of growth opportunities, accelerates. Keith, good morning. You are nice to hear from you. You are very consistent on the dividend. You get the prize. I think we have talked to you at length on the dividend and it is not lost on us that we have had a lot of support and patient in shareholders.

Jamie Welch: So you've got growth in that number. And that base business is a pretty big business, but it's more mature, right? It's more mature and built out. My sense is, with Durango, the 20 inch goes a long way. There's a lot more low pressure, which would be more, which would be, I'm looking at Kendrick, a higher capital burden, right, the smaller producers. So, you know, I think, you know, if base business is 100, maybe on a once you've got the processing capacity, maybe you're looking at, you know, 50 to 100 for just for like a Durango just given well connects looping other things.

Unknown Executive: My sense is with Durango.

Speaker Change: The 20 inch goes a long way.

Speaker Change: There is a lot more low pressure, which would be more which would be I am looking at kindred more higher capital burden the smaller producers.

Unknown Executive: So I think <unk> is a 100, maybe on a once you've got the processing capacity, maybe youre looking at.

Unknown Executive: 50 to 104.

Unknown Executive: For like Durango, just just given well connects looping other things.

Keith Stanley: Honestly, I look at the picture and believe that we can manage both from a growth standpoint within our capital growth so that everyone wins. So I think you, as we've always said, you need to be thoughtful as to exactly the the increase you would think about, but I think it is manageable.

Chris Kendrick: Neil, this is Chris. Just piggybacking on that, too. I don't want to be lost in the group that we're seeing much higher margins up in Durango, too, so the dollar capital invested up there is going to return, www.kinetikholdings.com

Chris: This is Chris.

Unknown Executive: This is piggybacking on that too I don't want to be lost in the group that we are seeing much higher margins up in Durango too so dollar capital.

Unknown Executive: Invested up there is going to return.

Unknown Executive: higher mount. So yeah, if we

Unknown Executive: Higher amount so yes.

Jamie Welch: Yeah, if we have an average of a dollar, like a buck and ten MCF, you're looking at a 50% increase in that margin, right? Up there in the north.

Speaker Change: We have an average on a dollar.

Unknown Executive: But 10 Mcf, you're looking at a 50% increase in that margin.

Keith Stanley: And so it is, I would say, nearer term, not longer term, as to an action. Great. That's helpful, Paul.

Unknown Executive: Up there in the north and Thats, obviously, because you're packaging everything compression treating gathering processing and so thats, obviously very very attractive.

Jamie Welch: And that's obviously because you're packaging everything, compression, treating, gathering, processing. And so that's obviously very, very attractive. And treating is, you know, I know we've spent a lot of time talking about treating. Treating is, I think, one of the real, real focuses for our producers just given the dispersion of gas quality that they face.

Keith Stanley: Second question, Keith, maybe given update on the importance of eventually connecting the legacy, Kinetik and Durango footprints, what it would add for you and how you're thinking about doing that, whether it's building or potentially through transactions. Really good question. So we've said every commercial opportunity has to stand on standards on merit. And if we see opportunities, whether we are going into Eddie County and thinking into Lee County, that give us an opportunity either to connect to the existing Pegasus lateral, which is the one that goes up into Lee County, whether it ultimately, how that connects to ultimately to Durango, and then we think about how we then think about Eddie County, we will engage in conversations with producers. We're not going to build just for the sake of building. We will only build to the extent that there's a compelling commercial underwritten proposition that justifies and warrants the connection.

Unknown Executive: And trading is why now we spend a lot of time talking about trading treating is I think one of the real.

Speaker Change: Ill and focuses for our producers just given the.

Speaker Change: Dispersion of gas quality bid that they find.

Keith Stanley: Thank you.

Speaker Change: Okay perfect appreciate the color.

Neil Mitra: Okay, perfect. I appreciate the color.

Speaker Change: My question.

Jamie Welch: My second question is around the base business in southern Delaware. Jamie, you were alluding to the fact that Waha is still negative and probably will be until Matterhorn comes online. Given that a lot of your producers have, you know, roughly 50-50 oil and gas splits. And Matt Basin. Have you seen any curtailments, any wells that are, you know, delayed being turned in line such that once Matterhorn comes in line, you see kind of a surge in growth for the last four months of the year?

Unknown Executive: That's why on the base business in the southern Delaware, Jamie you were alluding to the fact that while still negative.

Speaker Change: <unk>, probably will be implemented when it comes online given the a lot of your producers.

Unknown Executive: Roughly 50, 50 oil and gas.

Unknown Executive: and Matt Bateson. Have you seen any curtailments, any wells that are, you know, delayed being turned in line such that once Matterhorn comes in line, you see kind of a surge in growth for, you know, the last four months of the year?

Speaker Change: And that base and have you seen any curtailments any wells that are.

Unknown Executive: Delayed being turned in line such that one.

Unknown Executive: Matter when it comes in line that you see kind of a.

Unknown Executive: Surging growth for.

Unknown Executive: The last four months of the year.

Jamie Welch: As far as broad-based curtailment is concerned, I think Apache is really the whole story. And that's really Alpine High, both rich and lean.

Unknown Executive: As far as broad-based curtailments are concerned, I think Apache is really the whole story, and that's really Alpine High, both Rich and Lean.

Speaker Change: As far as broad base curtailments, I think Apache is really the whole story.

Unknown Executive: And Thats really alpine high both rich and lean.

Jamie Welch: I would say delayed completion would be the ones as far as... But they weren't delayed because of gas prices; they were delayed because of an acquisition. And I think just the typical pause that you have after you close a transaction and you sort of want to assess everything. I don't sense that there's been any impact on us. We continue to see good turn-in-line activity.

Unknown Executive: I would say delayed completion. Yeah, I think

Speaker Change: I would say delayed completions.

Teresa Chen: Our next question comes from the line of Teresa Chen with Barclays. Teresa, your line is now open. Morning. Following the FID and eventual inservice of Team landing too, how much runway does that give you, given the growth outlook you have for the acreage? And can you talk about, you know, additional opportunities beyond that and how that ties into your view of run rate cataclysm on an annual basis going forward? Really good questions, Teresa.

Speaker Change: <unk> would probably be the ones as far as they went to light because of gas prices that would delay because of an acquisition and I think just the.

Speaker Change: The typical pause that you have after you close the transaction and you sort of want to assess everything.

Speaker Change: I don't sense that there has been any impact on us we continue to see.

Speaker Change: Good turn in line activity and I think.

Jamie Welch: You know, as we indicated in our materials, we'll have a full return to service in the fourth quarter of obviously the Apache Alpine High Volumes. Yeah, I think that will obviously be a benefit because, you know, we weathered through that impact financially in the second quarter, and I look at it and say, It was pretty amazing how good the business is running on the basis that we reached consensus. We had a mismatch between our closing of Durango, which was the end of June, and the GCX deal, which was the beginning of June. We had one month missing out of the pipeline transportation segment as well, and yet we still hit the consensus estimate.

Speaker Change: Yes, as we indicated in our materials, we will have a full return to service in the fourth quarter of obviously the out of the Apache Alpine high volumes.

Teresa Chen: I would say we are seeing obviously a site line for overall production growth up in the northern Delaware and the shelf that would support a king's landing to development. As I mentioned at the outset, what's fascinating about that particular area is the drill bit, is handicapped by processing capacity. Can't flare, you really need a solution on the gas side and so it makes for a very challenging, I think, proposition for producers.

Speaker Change: Yes, I think.

Speaker Change: That will obviously be a benefit because we weathered through that that impact financially.

Unknown Executive: Through.

Speaker Change: In the second quarter.

Speaker Change: And we yeah.

Speaker Change: I look at it and say.

Speaker Change: It was pretty amazing how good the business is running on the basis that we made consensus and.

Unknown Executive: Yes.

Speaker Change: Had a mismatch between that closing of Durango, which was the end of June and the <unk> deal, which was the beginning of June. So yes kind of only had we had one month missing out of the pipeline transportation segment, as well and yet we still hit.

Speaker Change: The consensus estimates.

Chris Kendrick: Neil, this is Chris. It's worth noting, too, that a large percentage of our customers move their gas on PHE and are exposed to different gas markets, so they aren't as exposed to WAHA, which is another benefit that we provide our customers, so another reason why we're not seeing the impact on a large majority of our customers. Bye.

Unknown Executive: Neal This is Chris it's worth noting two a large percentage of our customers move their gas on page youre exposed to different gas market. So they aren't as exposed to Baja which is another benefit that we provide our customers. So another reason why we're not seeing the impact to a large majority of our customers.

Teresa Chen: So our sightline certainly sees us through a KL2. Does it go on beyond that? I think it's too early to tell, you know, we sit here now and we are 40 days into owning Durango. Admittedly, we had six plus weeks as we went through the FTC process and we engaged in some conversations with customers, but really the engagement has started in earnest over the last six plus weeks and so and it's not just processing capacity, right?

Speaker Change: Right right.

Unknown Executive: Bye.

Neil Mitra: Ah, great. I appreciate all the cards.

Speaker Change: Great I appreciate all the color.

Speaker Change: Thanks, Tim Thank you.

Operator: Before our next question, a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from the line of Jackie Koltes with Goldman Sachs. Jackie, your line is now open.

Speaker Change: Before our next question reminder, if you would like to ask a question press star one on your telephone keypad.

Speaker Change: Our next question comes from the line of Jackie Cortes with Goldman Sachs. Jackie Your line is now open.

Speaker Change: Hi, Good morning. Thank you for taking my question just wanted to ask another follow up on New Mexico. So you were able to realize an uplift on your system. There prior to Mdc's started in April and May.

Jacqueline Koletas: Hi, good morning. Thank you for taking my question. I just wanted to follow up on New Mexico. So you were able to realize an uplift on your system there prior to the MVCs that started in April and May. Just more broadly, where do you see New Mexico trending from here? And do you expect to see upside from that new amendment in Lee County prior to the fourth quarter?

Unknown Executive: Hi, good morning. Thank you for taking my question. Just wanted to have another follow-up on New Mexico. So you were able to realize an uplift on your system there prior to the MVCs that started in April and May. Just more broadly, where do you see New Mexico trending from here? And do you expect to see upside from that new amendment in Lee County prior to the fourth quarter?

Teresa Chen: Because as I mentioned, one of the things that we're really focused on is we can build processing but we need egress and egress comes in the form of of two flavors, residue and NGL. And, you know, Annie Pennsick would tell you, up there, you've got telescopic pipelines that are pretty much all full, it's not really a great outcome. You've got some challenges, you really just have TW, you've got EP and G, you've got W, there are challenges on each of those because of how full they are and how full they run.

Unknown Executive: Just more broadly where do you see new Mexico trending from here and do you expect to see upside from that New Amendment and Lea County prior to the fourth quarter.

Jamie Welch: So Jackie, the new amendment on the Lee County MVC will start, I think it's kind of November of this year, so you won't see a benefit before November. Great customer relationship, makes all the sense in the world. It's really a discussion driven around treating patients more so than just about anything else.

Jackie: So Jackie.

Speaker Change: The New amendment on the Lee County, MVC will start I think it's kind of November.

Speaker Change: Of this year, so you won't see a benefit before November.

Teresa Chen: So I think there's a lot of things that have gone into some of the early decisions and some of the, I would say early analysis on Kings Landing 2. So line of sort of TBD, sort of watch this space over time and we can keep you apprised on how you're seeing. You know, the interesting thing when we go down south is, you know, I know everyone focuses on AI and gas growth and what this all means.

Speaker Change: Great customer relationship makes all the sense in the world, It's really a discussion driven around treating more so than just about anything else and I think we've been probably a broken record on this point we've really.

Jamie Welch: And I think, you know, we've probably been a broken record at this point. You know, we've really, Matt Wall and the operations team have done a phenomenal job. And we've taken elevated levels of CO2, and we've seen, you know, nitrogen, and obviously H2S. So we've really, really had a really strong out of the gate showing on what we've been able to do on the blending and treating side. As far as New Mexico from here, honestly, I think it's the story for this company, right?

Unknown Executive: Matt Wall and the operations team have done a phenomenal job and we've taken the elevated levels of.

Speaker Change: C O two.

Speaker Change: And even.

Teresa Chen: The thing that I probably didn't complete in my statement is what makes me proudest about where we sit now is, I really feel like Alpine High isn't even in the vernacular of this company anymore. And all the growth that we see really isn't, there's nothing predicated on Alpine High. If Alpine High just stays as it is, it doesn't make a difference to us. If it grows significantly because there's a call on gas with gas prices, well that's going to have an impact as well because as we know it's in a highly gaffy area.

Speaker Change: We've seen nitrogen and obviously H to us. So we've really really had a had a I think really strong out of the gate.

Unknown Executive: Showing.

Speaker Change: On what we've been able to do on the blending and trading side as far as new Mexico from here.

Speaker Change: Honestly I think it's the story I think its the story for this company right. I mean, we've got a nice base don't get me wrong and that provides great blendstock given its suite.

Jamie Welch: I mean, we've got a nice base, don't get me wrong. And that provides great blend stock, given it's sweet. We've got some great customers.

Speaker Change: We've got some great customers.

Jamie Welch: But if you're looking for significant, stairstep changes in the context of the growth on our system with volumes and, obviously, financial margin that's created, New Mexico is the story. And so what that looks like going forward, as I said, we will see another 200 million cubic feet a day. That will be our inlet capacity when we finish King's Landing 1 and expect it to be in service April of next year. We expect it to be full pretty quickly.

Speaker Change: If youre looking for significant.

Speaker Change: Stair step changes in the context of the growth on our system with volumes and obviously.

Unknown Executive: Stairstep changes in the context of the growth on our system with volumes and, obviously, the financial margin that's created, New Mexico is the story.

Jamie Welch: So I really do think that's a pretty interesting change, not subtle, pretty significant and profound for the company as a whole. Thank you so much. Thank you.

Unknown Executive: Financial margin Thats created new Mexico is the story.

Speaker Change: And so what that looks like going forward as I said.

Speaker Change: We will see.

Neil Mitra: Our next question comes from the line of Neil Mitra with Bank of America. Neil, your line is now open. Hi, good morning.

Speaker Change: Another 200 million cubic feet, a day that will be our inlet capacity. When we finished king's landing one and expected in service April of next year, we expect it to be full pretty quickly we're already going to go from 400 to 500, we've talked about dagger draw. Some some additional recompression and moving 60 day crowd that we have that we're going to.

Jamie Welch: We're already going to go from 400 to 500. We've talked about dagger draw, some additional recompression, and moving a 60-day cryo that we have that we're going to move up there. So that's going to be, I think, another blessing for the producers up there. So you can see, just look at it, if you just measure it on nothing more than just the inlet capacity expansion. It's all about New Mexico right now, and that obviously is consistent with what we see with our producers and how they're deploying and allocating capital. You know, obviously, we will be right there with them to provide the needed services that they're looking for.

Jamie Welch: I wanted to kind of understand the wrong rate catbacks or how we should be thinking about it now that the business has changed so much. Obviously it's listed with the business, just when you think about the GNP spending going forward. Is there some number that we should try to put in there as a good run rate understanding that things are constantly changing? I'd like to tell you that it was that easy and obviously it is more I think it has edge implosed and obviously you're not necessarily going to be as it is we're building a crier now.

Speaker Change: Move up there so that's going to be I think another blessing for the producers up there. So you can see just look at just if you just measure on nothing more than just the inlet capacity expansions. The hope it's all about new Mexico, right now and that obviously is consistent with what we see with our producers.

Speaker Change: And how they're deploying in allocating capital.

Unknown Executive: And.

Speaker Change: Obviously, we will be right there with them to provide the needed services that they're looking for.

Speaker Change: Great appreciate it and just as a follow up so.

Jacqueline Koletas: Great, appreciate it. And just as a follow-up, so as you grow, as your processing grows, do you get to a critical mass where you think you'll have enough NGLs where you'd want to build your own NGL assets over time?

Speaker Change: As you grow your part as you are processing grows.

Jamie Welch: So obviously and we've started the FID work on a second crier that's probably that's not necessarily the norm that a company of our size would be considering to look at processing, building processing capacity on a sequential basis and you might have more of a peak and then a trough. So as it relates to this year at 280, I think you've heard from us with Trevor that look I think if we were going to and you've got to be very careful as you sort of think about our overall percentages and how you think about it but you know you've got something that's probably 200 to 400 kind of million dollars I think it's a good that's a I know that's a really right wide range and I apologize but it's hard to give you any real precision because you don't really know but that's the sort of amount that I think you would be you know peak would be one thing 200 would be you know another.

Speaker Change: You get to a critical mass, where you think youll have enough Ngls, where you'd want to build your own NGL assets overtime.

Jamie Welch: The short answer is look, we could all aspire to different things, but the reality is, when you're dealing with relative to what I'll call the The Enterprises, Targers, Transfers, One Oaks of the World, the size of their asset base between Bellevue and, obviously, their long haul pipelines into the basin are such that we could never compete, and we would never contemplate thinking about competing. We don't have an export capacity.

Speaker Change: The short answer is look we could all of spots of different things, but the reality is when youre dealing with.

Speaker Change: Relative to what I'll call the.

Speaker Change: The enterprise's tag as transfers one <unk> of the world.

Speaker Change: The size of the asset base between Bellevue, and obviously, the long haul pipeline into into the basin as such that.

Speaker Change: You'd never we never we could never compete and we would never contemplate.

Speaker Change: Thinking about competing.

Speaker Change: We don't have an exco export capacity.

Jamie Welch: We think we can do things contractually, which we've done, as far as we have a diversification of NGL service providers, which is obviously a net benefit. We've got great relationships. We own a portion of Chin Oak, so we think that we can participate and give that vertically integrated value chain and optionality to our customers. But no, we're not going to get into the NGO business. That's just beyond our, I think that's beyond our wallets.

Speaker Change: We think we can do things contractually, which we've done.

Speaker Change: As far as we have a diversification of NGL service providers, which is obviously a net benefit.

Speaker Change: We've got great relationships, we owned it.

Speaker Change: A portion of Shin oak.

Chris Kendrick: I really do think that's pretty good as I said our base business our base business next year we thought about a hundred million dollars and yeah that's got well connects and that's got maintenance capital in it and that's got you know some looping you've got some compression so you've got growth in that number and that base business is a pretty big business but it's more mature right it's more mature and built out my sense is with Durango the 20 inch goes a long way there's a lot more load pressure which would be more which would be I'm looking at Kendrick more higher capital burden right the smaller producers so you know I think you know if base business is a hundred maybe on a once you've got the processing capacity maybe you're looking at you know 50 to a hundred foot so just for like a Durango just just given well connect looping other things you know this is Chris piggybacking on that too I don't want to be lost in the group that we're seeing much higher margins up in Durango too so dollar capital of invested up there is going to return a higher amount so yeah it's like if we have an average on a dollar and like a buck ten NCF you're looking at a 50% increase in that margin right up up there on the north and that's obviously because you're packaging everything compression treating gathering processing and so that's obviously very very attractive and treating as you know we've spent a lot of time talking about treating treating is I think one of the real real and focuses for our dispersion of gas quality that they find okay perfect that appreciate the color a second question is around the the base business in the southern Delaware Jamie you're alluding to the fact that Waha is still negative and probably will will be until a matter when it comes online given that a lot of your producers have you know roughly 50 50 oil and gas glitz in that base and have you seen any procurements any wells that are you know delayed being turned in line such that once matter when it comes in line that you see kind of a surging growth for you know the last one month of the year As far as broad-based catamets, I think Apache is really the whole story, and that's really Alpine High, both rich and lean. I would say delayed completions, Calon, would probably be the ones as far as, but they weren't delayed because the gas prices, they were delayed because of an acquisition, and I think just the typical pause that you have after you close a transaction and you sort of want to assess everything.

Speaker Change: So we think that we can.

Unknown Executive: Participate.

Speaker Change: And could you give that.

Speaker Change: Vertically integrated value chain.

Speaker Change: And optionality to our customers, but we're not going to get into the NGL business and that's just beyond I think that's beyond.

Unknown Executive: Wallet.

Unknown Executive: Okay.

Speaker Change: Got it. Thank you so much appreciate the time.

Unknown Executive: Got it. Thank you so much. I appreciate the time.

Jacqueline Koletas: Thank you so much; I appreciate the time.

Jamie Welch: No problem. Thanks, Jackie.

Speaker Change: Thanks Jackie.

Operator: Thank you. There are no questions registered at this time, so I will pass the call back to Jamie Welch for any closing remarks.

Unknown Executive: Thank you there are no questions registered at this time, so I'll pass the call back to Jamie Welch for any closing remarks.

Speaker Change: Thank you everyone. We're really excited as you could probably tell.

Jamie Welch: Thank you, everyone. We're really excited. As you can probably tell, a really solid quarter, really excited about the outlook for the business, and, um... Enjoy the rest of your summer. No doubt we'll see some of you next week.

Speaker Change: A really solid quarter really excited about the outlook for the business.

Unknown Executive: <unk>.

Unknown Executive: Enjoy the rest of your summer; no doubt we'll see some of you next week, and then we'll start it back up in the fall straight after Labor Day. So reach out if there are any questions, and thank you for your time this morning.

Speaker Change: Enjoy the rest of your summer and no doubt we will see some of you next week and then we'll start it back up in the fall straight after labor day, so reach.

Unknown Executive: Our reach out if there are any questions and thank you for your time this morning.

Speaker Change: That concludes today's call. Thank you for your participation you may now disconnect your line.

Chris Kendrick: I don't sense that there's been any impact on us. We continue to see good turn-in line activity, and I think, as we indicated in our materials, we'll have a full return to service in the fourth quarter of obviously the Apache Alpine High volume. That will obviously be a benefit because we weathered through that impact financially in the second quarter. I look at it and say, it was pretty amazing how good the business is running on the basis that we made consensus, and we had a mismatch between our closing of Durango, which was the end of June and the GCX deal, which was the beginning of June.

Chris Kendrick: We had one month missing out of the pipeline transportation segment as well, and yet we still hit the consensus estimates. This is Chris, it's worth noting to a large percentage of our customers move their gas on PhDs and expose to different gas markets. They aren't exposed to Waha, which is another benefit that we provide our customers. Another reason why we're not seeing the impact to a large majority of our customers. Right?

Neil Mitra: Great. Appreciate all the cars. Thank you.

Maddie Wagner: Before our next question, reminder, if you would like to ask a question, press star one on your telephone keypad.

Jackie Coltis: Our next question comes from the line of Jackie Coltis with Goldman Sachs. Jackie, your line is now open. Hi, good morning. Thank you for taking my question. Just wanted to have another follow-up on New Mexico. So you were able to realize an uplift on your system there prior to MVCs that started in April and May. Just more broadly, where do you see New Mexico trending from here? And do you expect to see upside from that new amendment in Lee County prior to the fourth quarter? So Jackie, the new amendment on the Lee County MVC will start, I think it's kind of November, of this year.

Jamie Welch: So you won't see a benefit before November. Great customer relationship makes all the sense in the world. It's really a discussion driven around treating more than just about anything else. And I think we've been probably a broken record on this point. We've really, the Matt Wall and the operations team have done a phenomenal job. And we've taken elevated levels of CO2 and even we've seen Nitrogen and obviously H2S. So we've really, really had a, I think, really strong out of the gate showing on what we've been able to do on the blending and treating side.

Jamie Welch: As far as New Mexico from here, honestly, I think it's the story. I think it's the story for this company, right? I mean, we've got a nice base. Don't get me wrong. And that provides great blend stock given it sweet. We've got some great customers, but if you're looking for significant stair-step changes in the context of the growth on our system with volumes and obviously financial margin that's created, New Mexico is the story.

Jamie Welch: And so what that looks like going forward as I said, we will see another 200 million cubic feet a day that will be our inlet capacity when we finish King's Landing 1 in and expected in service April of next year. We expect it to be full pretty quickly. We're already going to go from 400 to 500. We've talked about dagger draw some additional recompression and moving 60-day cry that we have, that we're going to move up there.

Jamie Welch: So that's going to be I think another blessing for the producers up there. So you can see just look at it, if you just measure it on nothing more than just the inlet capacity expansions. It's all about New Mexico right now and that obviously is consistent with what we see with our producers and how they're deploying an allocated capital and obviously we will be right there with them to provide the needed services that they're looking for.

Jamie Welch: Great appreciate it and just as a follow up. So as you grow, as your processing grows, do you get to a critical mass where you think you'll have enough NGOs where you'd want to build your own NGO assets over time? The short answer is look, we could all aspire to different things but the reality is when you're dealing with relative to what I'll call the enterprises, targets, transfers, one-oaks of the world, the size of their asset base between Bellevue and obviously their long haul pipelines into the basin are such that we could never compete.

Jamie Welch: And we would never contemplate thinking about competing. We don't have an export capacity. We think we can do things contractually, which we've done. As far as we have a diversification of NGO service providers which is obviously in that benefit, we've got great relationships, we own a portion of Shinope. So we think that we can participate and give that vertically integrated value chain and optionality to our customers. But no, we're not going to get into the NGO business and that's just beyond, I think that's beyond our wallet.

Jackie Coltis: God, thank you so much. Appreciate the time. No problem. Thank you, Jackie. Thank you.

Jamie Welch: There are no questions registered at this time, so I will pass the call back to Jamie Welch for any closing remarks. Thank you, everyone. We're really excited as you can probably tell a really solid quarter really excited about the outlook for the business and enjoy the rest of your summer. I know that we'll see some of you next week and then we'll start it back up in the fall straight after Labor Day. So reach out if there are any questions and thank you for your time this morning.

Maddie Wagner: That concludes today's call. Thank you for your participation.

Unknown Executive: You may now disconnect your line.