Kinetik Holdings Inc

6. EQUITY METHOD INVESTMENTS

As of June 30, 2024, the Company owned investments in the following long-haul pipeline entities in the Permian Basin. These investments were accounted for using the equity method of accounting. For each EMI pipeline entity, the Company has the ability to exercise significant influence based on certain governance provisions and its participation in the significant activities and decisions that impact the management and economic performance of the EMI pipeline. The table below presents the ownership percentages and investment balances held by the Company for each entity:

(1)As of June 30, 2024 the Company also owned 15% of Epic Crude Holdings, LP (“EPIC”).

(2)The Company owned 16% of GCX as of December 31, 2023 and divested entire ownership in June 2024.

On June 4, 2024, the Company consummated the previously announced transaction contemplated by the Purchase and Sale Agreement dated as of May 9, 2024 (the "GCX Purchase Agreement"), to sell its 16% equity interest in GCX to GCX Pipeline, LLC (the "GCX Buyer") for an adjusted price of $524.4 million (the "GCX Sale"), consisting of cash, including working capital adjustments at closing and an additional $30.0 million earn out in cash upon the approval by the GCX Board of Directors of one or more capital projects that achieve certain capacity expansion criteria. Net cash proceeds of $494.4 million were received from the GCX Buyer on June 4, 2024. The Company recognized a gain of $59.9 million upon closing of the GCX Sale andno gain contingency related to the earn out was recognized.

The unamortized basis differences included in the EMI pipeline balances were $205.1 million and $349.3 million as of June 30, 2024 and December 31, 2023, respectively. These amounts represent differences in the Company’s contributions to date and the Company’s underlying equity in the separate net assets within the financial statements of the respective entities. Unamortized basis differences will be amortized into equity income over the useful lives of the underlying pipeline assets. Due to the GCX Sale, its unamortized basis difference of $137.8 million was written off upon closing of the transaction. There was capitalized interest of $24.3 million and $24.7 million as of June 30, 2024 and December 31, 2023, respectively. Capitalized interest is amortized on a straight-line basis into equity income.

The following table presents the activity in the Company’s EMIs for the six months ended June 30, 2024:

(1)Distributions consisted of distributions from a return on investment of $152.6 million, which was included in cash flows from operating activities and distributions from a return of investment of $1.2 million, which was included in cash flows from investing activities.

(2)For the six months ended June 30, 2024, net of amortization of basis differences and capitalized interests, which represents undistributed earnings, the amortization was $3.9 million from PHP, $0.3 million from Breviloba, LLC and $2.7 million from GCX.

Summarized Financial Information

The following table represents selected data for the Company’s ongoing EMI pipelines (on a 100 percent basis) for the three and six months ended June 30, 2024 and 2023.