Kinetik Holdings Inc

16. SEGMENTS

Ourtwo operating segments represent the Company’s segments for which discrete financial information is available and is utilized on a regular basis by our CODM to make key operating decisions, assess performance and allocate resources. These segments represent strategic business units with differing products and services. No operating segments have been aggregated to form the reportable segments. Therefore, ourtwo operating segments represent our reportable segments. The activities of each of our reportable segments from which the Company earns revenues and incurs expenses are described below:

•Midstream Logistics: The Midstream Logistics segment operates under three streams, 1) gas gathering and processing, 2) crude oil gathering, stabilization and storage services and 3) produced water gathering and disposal.

•Pipeline Transportation: The Pipeline Transportation segment consists of equity investment interests infour Permian Basin pipelines that access various points along the U.S. Gulf Coast, as well as Kinetik NGL and Delaware Link Pipelines. The current operating pipelines transport crude oil, natural gas and NGLs.

Our Chief Executive Officer, who is the CODM, uses Segment Adjusted EBITDA, a non-GAAP measure, to measure profitability and allocate resources among segments. Segment Adjusted EBITDA, a non-GAAP measure, is defined as segment net earnings adjusted to exclude interest expense, income tax expense, depreciation and amortization, the proportionate effect of these same items for our EMI pipelines and other non-recurring items. The CODM considers budget-to-actual and forecast-to-actual variances on a monthly basis when making decisions about allocating capital and personnel to the segments.

The Midstream Logistics segment accounts for more than 99% of the Company’s operating revenues, cost of sales (excluding depreciation and amortization), and operating expenses and more than 93% of the ad valorem expenses. The Pipeline Transportation segment contains all of the Company’s equity method investments, which contribute approximate 92% of the segment’s Adjusted EBITDA. Corporate and Other contains the Company’s executive and administrative functions, including 86% of the Company’s General and Administrative Expenses and all of the Company’s debt service costs.

The following tables present the reconciliation of the non-GAAP measure Segment Adjusted EBITDA to the GAAP measure segment income (loss) before income taxes as of and for the three months period ended March 31, 2024 and 2023:

(1)Corporate and Other represents those results that: (i) are not specifically attributable to a reportable segment; (ii) are not individually reportable or (iii) have not been allocated to a reportable segment for the purpose of evaluating their performance, including certain General and Administrative Expense items. Items included here to reconcile operating segments profit and loss with the Company’s consolidated profit and loss.

(2)Segment adjusted EBITDA is a non-GAAP measure; please see Key Performance Metrics in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report on Form 10-Q, for a definition of segment adjusted EBITDA.

The following tables present the revenue for the individual operating segments for the three month periods ended March 31, 2024 and 2023:

(1)The Company accounts for intersegment sales at market prices, while it accounts for asset transfers at book value. Intersegment revenue is eliminated at consolidation.

The following table presents total assets for each operating segment as of March 31, 2024 and December 31, 2023:

(1)Includes investment in unconsolidated affiliates of $2.53 billion and $2.54 billion as of March 31, 2024 and December 31, 2023, respectively.