Kinetik Holdings Inc

3. REVENUE RECOGNITION

Disaggregation of Revenue

The following table presents a disaggregation of the Company’s revenue:

There have been no significant changes to the Company’s contracts with customers during the three and nine months ended September 30, 2024 aside from the addition of certain gas gathering and processing agreements associated with the Durango acquisition. The Company didnot recognize revenues from MVC deficiency payments for the three and nine months ended September 30, 2024 and recognized $0.4 million and $1.6 million of revenues from MVC deficiency payments for the three and nine months ended September 30, 2023, respectively.

Remaining Performance Obligations

The following table presents our estimated revenue from contracts with customers for remaining performance obligations that have not yet been recognized, representing our contractually committed revenues as of September 30, 2024:

Our contractually committed revenue, for the purposes of the tabular presentation above, is limited to customer contracts that have fixed pricing and fixed volume terms and conditions, including contracts with payment obligations associated with MVCs.

Contract Liabilities

The following table provides information about contract liabilities from contracts with customers as of September 30, 2024:

Contract liabilities relate to payments received in advance of satisfying performance obligations under a contract, which result from contribution in aid of construction payments. Current and noncurrent contract liabilities are included in “Other Current Liabilities” and “Contract Liabilities,” respectively, in the Condensed Consolidated Balance Sheets.

Contract Cost Assets

The Company has capitalized certain costs incurred to obtain a contract or additional contract dedicated acreage or volumes that would not have been incurred if the contract or associated acreage and volumes had not been obtained. As of September 30, 2024 and December 31, 2023, the Company had contract acquisition cost assets of $66.2 million and $71.2 million, respectively. Current and noncurrent contract cost assets are included in “Prepaid and Other Current Assets” and “Deferred Charges and Other Assets,” respectively, in the Condensed Consolidated Balance Sheets. The Company amortizes these assets as cost of sales on a straight-line basis over the life of the associated long-term customer contracts. The Company recognized cost of sales associated with these assets of $1.7 million for the three months ended September 30, 2024 and 2023, respectively, and $5.0 million for the nine months ended September 30, 2024 and 2023, respectively.