Kinetik Holdings: Asset Shuffling Results in Deleveraging and Strategic Progress

No-moat Kinetik announced three separate transactions, amounting to the sale of the long-marketed 16% stake in the Gulf Coast Express (GCX) pipeline for $540 million and the acquisition of Durango Permian LLC that operates exclusively in the New Mexico side of the Permian basin. Notably, Kinetik is selling GCX and issuing equity at a 10 times EBITDA multiple while acquiring Durango at 5 times. These transactions will result in a net increase of 100 million cubic feet equivalent per day (mmcfe/d), but most importantly it will be wholly owned and operated giving the combined entity greater leverage in directing volumes to collect additional fees. Additionally, the operations are near but do not overlap with the existing footprint, which is set to triple the number of customers serviced from 30 to 90.