Kinetik Holdings Inc.
For the period ended Mar 31, 2025. Filed May 8, 2025.
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Mar 31, 2025 · Filed May 8, 2025
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EQUITY METHOD INVESTMENTS
- EQUITY METHOD INVESTMENTS
As of March 31, 2025, 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:
| March 31, · December 31, | |||
|---|---|---|---|
| Ownership | 2025 | 2024 | |
| (In thousands) | |||
| PHP | 55.5% | $1,594,801 | $1,607,323 |
| Breviloba | 33.0% | 432,019 | 428,383 |
| Epic Crude Holdings, LP (“EPIC”) | 27.5% | 85,527 | 82,172 |
| $2,112,347 | $2,117,878 | ||
The unamortized net basis differences included in the EMI pipeline balances were $40.0 million and $40.3 million as of March 31, 2025 and December 31, 2024, 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 or accreted into equity income of unconsolidated affiliates over the useful lives of the underlying pipeline assets. There was capitalized interest of $23.7 million and $23.9 million as of March 31, 2025 and December 31, 2024, respectively. Capitalized interest is amortized on a straight-line basis into equity income of unconsolidated affiliates.
The following table presents the activity in the Company’s EMIs for the three months ended March 31, 2025:
| Permian Highway Pipeline LLC | Breviloba, LLC | EPIC Crude Holdings, LP | Total | |
|---|---|---|---|---|
| (In thousands) | ||||
| Balance at December 31, 2024 | $1,607,323 | $428,383 | $82,172 | $2,117,878 |
| Contributions and acquisitions | 888 | — | — | 888 |
| Distributions(1) | (55,837) | (8,060) | — | (63,897) |
| Equity income, net(2) | 42,427 | 11,696 | 3,355 | 57,478 |
| Balance at March 31, 2025 | $1,594,801 | $432,019 | $85,527 | $2,112,347 |
(1)Distributions consisted a return on investment of $63.3 million, which was included in cash flows from operating activities and a return of investment of $0.6 million, which was included in cash flows from investing activities.
(2)For the three months ended March 31, 2025, net of amortization and accretion of basis differences and capitalized interests, which represents undistributed earnings, the amortization was $2.0 million from PHP, $0.2 million from Breviloba, LLC, and accretion of $1.6 million from EPIC.
Summarized Financial Information
The following table represents selected data for the Company’s ongoing EMI pipelines (on a 100 percent basis) for the three months ended March 31, 2025 and 2024.
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2025 | 2024 | |||||
| Permian Highway Pipeline LLC | Breviloba, LLC | EPIC Crude Holdings, LP | Permian Highway Pipeline LLC | Breviloba, LLC | EPIC Crude Holdings, LP | |
| (In thousands) | ||||||
| Revenues | $128,306 | $59,492 | $102,427 | $126,215 | $50,958 | $84,122 |
| Operating income | 82,572 | 31,976 | 28,555 | 80,567 | 25,420 | 17,535 |
| Net income (loss) | 82,649 | 31,991 | 6,545 | 80,159 | 25,552 | (16,535) |
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