Kinetik Enters Into Series Of Agreements Under Which It Will Acquire Durango For An Aggregate $765M Of Cash And Equity With Up To $75M Of Contingent Consideration Tied To The Capital Cost For The Kings Landing Complex; Provide Natural Gas Gathering And Processing Services Under A Newly Executed, 15-Year Agreement With Existing Customer In Eddy County, New Mexico, An ~$200M Capital Investment Through 2026; Divest Its 16% Equity Interest In GCX For 100% Cash For A Total Of $540M
Portfolio Pulse from Benzinga Newsdesk
Kinetik Holdings Inc. (KNTK) has announced a series of strategic transactions including the acquisition of Durango Permian LLC for $765 million in cash and equity, a new 15-year service agreement in Eddy County, New Mexico, and the sale of its 16% stake in the Gulf Coast Express pipeline (GCX) for $540 million. These moves aim to expand Kinetik's operations in the Permian Basin, doubling its pipeline mileage and processing capacity, and adding over 60 new customers. The transactions are expected to be over 10% accretive to Kinetik's free cash flow per share starting in the second half of 2025.
May 09, 2024 | 9:22 pm
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POSITIVE IMPACT
Kinetik Holdings Inc. announces strategic acquisitions and agreements expected to significantly enhance its operational footprint in the Permian Basin and improve its financial metrics, including a notable increase in free cash flow per share starting in H2 2025.
The acquisition of Durango and the new service agreement in Eddy County are expected to double Kinetik's pipeline mileage and processing capacity, adding significant value. The sale of its GCX stake for $540M provides capital for these expansions. These strategic moves are likely to enhance Kinetik's market position and financial performance, making it an attractive investment. The expected accretion to free cash flow per share starting in 2025 suggests a positive outlook for the stock.
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