$5.50
$29.40
bear $5.50
base $14.30
bull $29.40
margin of safety $8.50
market price* $55.30
Kinetik Holdings owns natural gas gathering and processing systems, crude oil gathering and storage, and minority stakes in long-haul pipelines, all centered on the Delaware Basin of the Permian Basin. Its gathering network includes over 4,200 miles of pipeline and over 825,000 horsepower of compression. It also owns 55.5% of the Permian Highway Pipeline (operated with Kinder Morgan) and 33% of Breviloba. Revenue was $1.76 billion in 2025, of which $1.31 billion was sales of gas, NGLs and condensate and $445 million was gathering and processing fees. How we measured earnings. We start with operating cash flow, then subtract the swing in working capital, stock compensation and maintenance spending on plants and pipelines. Growth spending is treated as an investment rather than a cost, using the company's own average spending relative to revenue, which leaves a large share of recent capex counted as maintenance. Per-share figures use Class A shares plus Class C units, which convert into Class A one-for-one (about 162.1 million as of February 2026). On that basis owner earnings were about $3.22 per share in 2022, $1.52 in 2023, $2.47 in 2024 and $0.79 in 2025. We leave out 2022 because the company was formed by the Altus acquisition on February 22, 2022, so that year's growth is not comparable. The 2025 figure is depressed because spending on property, plant and equipment rose 87% to $492 million (we exclude a further $37 million of intangible asset purchases), and 2025 operating cash flow was $604 million versus $637 million in 2024. We use the 2023-2025 median of $1.52 per share (about $245 million a year) as the normal level. The first half of 2026 supports it: operating cash flow of $341.5 million, less $29.7 million of stock compensation and $192.3 million of capex, is about $119.5 million before working capital, or roughly $1.47 per share annualized. Operating cash flow includes $246 million of cash distributions from the pipeline stakes in 2025. The company sold its GCX stake in 2024 and its EPIC stake in October 2025, which removes only a small part of those distributions: GCX paid about $16 million in 2024, while the Permian Highway and Breviloba stakes that remain paid about $243 million in 2025. Growth. Owner earnings fell about 68% in 2025 as capex rose. We assume 0% growth in year 1 from the normal level rather than a rebound, and no growth after that. The company's contractually committed fixed-price, fixed-volume revenue totals only $449.5 million across all future years, of which about $53 million falls in 2026, and the 2026 capex plan of $450 to $510 million, nearly 70% of it for New Mexico (the ECCC pipeline due in service in the second quarter of 2026 and Phase 1 of the Kings Landing AGI project), is spending not yet earning, so we credit no growth from it. The company's own filings say volumes depend on customers' drilling activity on their dedicated acreage and that natural production decline can cut revenue, so we do not assume expansion is proven and repeatable. Base case ($14.30 per share). Earnings hold at $1.52 per share for 10 years, then fade steadily to zero over the following 10 years, discounted at 6%. Operating cash flow stayed between $584 million and $637 million from 2023 through 2025, but nothing in the filings shows the earning power lasting beyond about 20 years. Bear case ($5.50 per share). Earnings stay at the 2025 level of $0.79 per share, because capex remains high without matching cash flow, for 5 years and then fade to zero over 10 years. The company depends on three customers that made up about 62% of 2025 revenue ($468.7 million, $329.1 million and $292.6 million), and it carries $3.8 billion of debt, including $2.2 billion maturing in 2028. Bull case ($29.40 per share). Earnings return to the 2024 level of $2.47 per share, a level the business has already reached, and hold for 15 years, then fade to zero over 15 years. This requires the New Mexico expansion to lift cash flow while capex falls; first-half 2026 operating cash flow was 12% above the first half of 2025 and 2026 capex is guided slightly below 2025. Margin-of-safety price ($8.50). The margin-of-safety price sits about 40% below the base case and about 1.5 times the bear case, because the business is capital-hungry, carries $3.8 billion of debt and relies on three customers for most of its revenue. At $8.50 the normal owner earnings of $1.52 per share would be a yield of about 18%. What we left out. We give no value to the possible $96 million earnout from the EPIC sale and $30 million earnout from the GCX sale, because they depend on future board approvals of projects. We did not subtract debt separately, since interest is already paid out of the cash flow we measure; leverage is reflected in the bear case instead. What could make this wrong. Loss of one of the three large customers or a slowdown in drilling on their acreage would lower earnings; conversely, capex declining faster than we assume would raise owner earnings above our normal level. We could not identify from the filing how much of the capex is strictly maintenance, so we relied on a formula for that split.