UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form


FORM 10-Q

(Mark One)
☒
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

March 31, 2023

OR

☐
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to

_________

Commission File Number: 001-38048

KAYNE ANDERSON ACQUISITION CORP.

KINETIK HOLDINGS INC.
(Exact name of Registrantregistrant as specified in its charter)

Delaware81-4675947

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

811 Main Street

14th Floor

Houston, TX

77002
(Address of principal executive offices)(Zip Code)

2700 Post Oak Blvd, Suite 300
Houston, Texas, 77056
(Address of principal executive offices)
(Zip Code)

(713)493-2000

 621-7330

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, $0.0001 par valueKNTKNew York Stock Exchange
Indicate by check mark whether the registrant:registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

Large accelerated filer☐Accelerated filerAccelerated Filer☒
Non-accelerated filer☐Smaller reporting company☐
Non-accelerated filer☒  (do not check if a smaller reporting company)Emerging growth company☒
Smaller reporting company☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☒☐ No ☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the last practicable date: As of November 10, 2017, there were 37,732,112 Class A common stock, par value $0.0001 (“Class A Common Stock”) and 9,433,028 shares of the Company’s Class B common stock, par value $0.0001 (“Class B Common Stock”), issued and outstanding.

KAYNE ANDERSON ACQUISITION CORP.

TABLE OF CONTENTS

☒

PART I — FINANCIAL INFORMATION

Number of shares of registrant’s Class A Common Stock, par value $0.0001 per share issued and outstanding as of April 30, 2023		49,057,209 
Number of shares of registrant’s Class C Common Stock, par value $0.0001 per share issued and outstanding as of April 30, 202394,089,038 

Item 1.    Financial Statements

    Condensed Balance Sheets as of September  30, 2017 (unaudited) and December 31, 2016

1

     Condensed Statements of Operations for the three and nine months ended September 30, 2017 (unaudited)

2

     Condensed Statement of Changes in Stockholders’ Equity for the nine months ended September 30, 2017 (unaudited)

3

     Condensed Statement of Cash Flows for the nine months ended September 30, 2017 (unaudited)

4

    Notes to Condensed Financial Statements (unaudited)

5

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

12

Item 3.     Quantitative and Qualitative Disclosures About Market Risk

15

Item 4.    Controls and Procedures

15

PART II — OTHER INFORMATION

Item 1.    Legal Proceedings

15

Item 1A.    Risk Factors

15

Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds

15

Item 3.    Defaults Upon Senior Securities

15

Item 4.    Mine Safety Disclosures

15

Item 5.    Other Information

16

Item 6.    Exhibits

16



TABLE OF CONTENTS
ItemPage
PART I — FINANCIAL INFORMATION (UNAUDITED)
1.
1
1
2
3
4
5
1.DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
5
2.BUSINESS COMBINATIONS
6
3.REVENUE RECOGNITION
7
4.PROPERTY, PLANT AND EQUIPMENT
9
5.GOODWILL AND INTANGIBLE ASSETS, NET
9
6.EQUITY METHOD INVESTMENTS
10
7.DEBT AND FINANCING COSTS
11
8.ACCRUED EXPENSES
12
9.LEASE
12
10.EQUITY AND WARRANTS
13
11.FAIR VALUE MEASUREMENTS
14
12.DERIVATIVES AND HEDGING ACTIVITIES
15
13.SHARE-BASED COMPENSATION
17
14.INCOME TAXES
17
15.NET INCOME PER SHARE
18
16.COMMITMENTS AND CONTINGENCIES
18
17.SEGMENTS
19
18.SUBSEQUENT EVENTS
21
2.
22
3.
32
4.
32
PART II — OTHER INFORMATION
1.
33
1A.
33
2.
33
5.
33
6.
35
36
i

GLOSSARY OF TERMS
The following are abbreviations and definitions of certain terms used in this Quarterly Report on Form 10-Q and certain terms which are commonly used in the exploration, production and midstream sectors of the oil and natural gas industry:
•ASC. Accounting Standards Codification
•Bbl. One stock tank barrel of 42 United States (“U.S.”) gallons liquid volume used herein in reference to crude oil, condensate or natural gas liquids
•Bcf. One billion cubic feet
•Bcf/d. One Bcf per day
•Btu. One British thermal unit, which is the quantity of heat required to raise the temperature of a one-pound mass of water by one degree Fahrenheit
•CODM. Chief Operating Decision Maker
•Delaware Basin. Located on the western section of the Permian Basin. The Delaware Basin covers a 6.4M acre area
•Field. An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition. The field name refers to the surface area, although it may refer to both the surface and the underground productive formations
•GAAP. United States Generally Accepted Accounting Principles
•MBbl. One thousand barrels of crude oil, condensate or NGLs
•MBbl/d. One MBbl per day
•Mcf. One thousand cubic feet of natural gas
•Mcf/d. One Mcf per day
•MMBtu. One million British thermal units
•MMcf. One million cubic feet of natural gas
•MMcf/d. One MMcf per day
•MVC. Minimum volume commitments
•NGLs. Natural gas liquids. Hydrocarbons found in natural gas, which may be extracted as liquefied petroleum gas and natural gasoline
•Throughput. The volume of crude oil, natural gas, NGLs, water and refined petroleum products transported or passing through a pipeline, plant, terminal or other facility during a particular period
•SEC. United States Securities and Exchange Commission
•SOFR. Secured Overnight Financing Rate
•WTI. West Texas Intermediate crude oil

ii

FORWARD-LOOKING STATEMENTS AND RISK
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included or incorporated by reference in this Quarterly Report on Form 10-Q, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans, and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “could,” “expect,” “intend,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “continue,” “seek,” “guidance,” “might,” “outlook,” “possibly,” “potential,” “prospect,” “should,” “would,” or similar terminology, but the absence of these words does not mean that a statement is not forward looking. Although we believe that the expectations reflected in such forward-looking statements are reasonable under the circumstances, we can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to, assumptions about:
•the market prices of oil, natural gas, NGLs and other products or services;
•competition from other pipelines, terminals or other forms of transportation and competition from other service providers for gathering system capacity and availability;
•production rates, throughput volumes, reserve levels and development success of dedicated oil and gas fields;
•our future financial condition, results of operations, liquidity, compliance with debt covenants and competitive position;
•our future revenues, cash flows and expenses;
•our access to capital and our anticipated liquidity;
•our future business strategy and other plans and objectives for future operations;
•the amount, nature and timing of our future capital expenditures, including future development costs;
•the risks associated with potential acquisitions, divestitures, new joint ventures or other strategic opportunities;
•the recruitment and retention of our officers and personnel;
•the likelihood of success of and impact of litigation and other proceedings, including regulatory proceedings;
•our assessment of our counterparty risk and the ability of our counterparties to perform their future obligations;
•the impact of federal, state and local political, regulatory and environmental developments where we conduct our business operations;
•the occurrence of an extreme weather event, terrorist attack or other event that materially impacts project construction and our operations, including cyber or other attached on electronic systems;
•our ability to successfully implement and execute our environmental, social and governance goals and initiatives and achieve the anticipated results of such initiatives;
•our ability to successfully implement our share repurchase program;
•our ability to integrate operations or realize any anticipated benefits, savings or growth of the Transaction (as defined herein). See Note 2 – Business Combination in the Notes to our Condensed Consolidated Financial Statements set forth in this Form 10-Q;
•general economic and political conditions, including the armed conflict in Ukraine, epidemics or pandemics and the actions taken by third parties in response to such epidemics or pandemics, the impact of continued inflation, central bank policy actions, bank failures and associated liquidity risks and other factors; and other factors disclosed in “Part I, Item 1A. — Risk Factors” of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 7, 2023.
iii

Other factors or events that could cause the Company’s actual results to differ materially from the Company’s expectations may emerge from time to time, and it is not possible for the Company to predict all such factors or events. All subsequent written and oral forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by the cautionary statements. All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, the Company disclaims any obligation to update or revise its forward-looking statements, whether based on changes in internal estimates or expectations, new information, future developments or otherwise.
iv
Table of Contents
PART I — FINANCIAL INFORMATION

Item 1.Financial Statements

KAYNE ANDERSON ACQUISITION CORP.


ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

KINETIK HOLDINGS INC.
CONDENSED BALANCE SHEETS

   September 30,
2017		  December 31,
2016		 
   (unaudited)    

ASSETS

   

Current assets

   

Cash

  $555,254  $7,500 

Prepaid expenses and other current assets

   130,792   —   
  

 

 

  

 

 

 

Total Current Assets

   686,046   7,500 

Investment held in trust account

   378,284,003   —   

Deferred offering costs

   —     38,234 
  

 

 

  

 

 

 

Total Assets

  $378,970,049  $45,734 
  

 

 

  

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

   

Current liabilities

   

Accrued formation and offering costs

  $—    $3,110 

Accrued expenses

   685,175   —   

Accrued franchise taxes

   98,900  

Accrued income taxes

   35,694   —   

Sponsor note

   —     20,000 
  

 

 

  

 

 

 

Total Current Liabilities

   819,769   23,110 

Deferred underwriting compensation

   13,206,239   —   
  

 

 

  

 

 

 

Total Liabilities

   14,026,008   23,110 

Class A common stock subject to possible redemption; 35,994,404 and 0 shares, respectively, at September 30, 2017 and December 31, 2016 (at redemption value of approximately $10.00 per share)

   359,944,040   —   

Stockholders’ equity:

   

Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding

   —     —   

Class A common stock, $0.0001 par value; 200,000,000 shares authorized; 1,737,708 and 0 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively (excluding 35,994,404 shares subject to possible redemption as of September 30, 2017)

   174   —   

Class B convertible common stock, $0.0001 par value; 20,000,000 shares authorized; 9,433,028 and 10,062,500 shares issued and outstanding of September 30, 2017 and December 31, 2016, respectively

   943   1,006 

Additionalpaid-in capital

   5,513,873   23,994 

Accumulated deficit

   (514,989)   (2,376) 
  

 

 

  

 

 

 

Total Stockholders’ Equity

   5,000,001   22,624 
  

 

 

  

 

 

 

Total Liabilities and Stockholders’ Equity

  $378,970,049  $45,734 
  

 

 

  

 

 

 

See accompanying notes to condensed financial statements

KAYNE ANDERSON ACQUISITION CORP.

CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

   Three Months
Ended
September 30,
2017		  Nine months
Ended
September 30,
2017		 

Revenues

  $—    $—   

Expenses

   

General and administrative expenses

   276,956   1,340,902 

Franchise tax expense

   55,900   98,900 
  

 

 

  

 

 

 

Total expenses

   332,856   1,439,802 
  

 

 

  

 

 

 

Loss from operations

   (332,856)   (1,439,802) 

Other income — investment income on Trust Account

   809,858   1,353,883 
  

 

 

  

 

 

 

Income (loss) before income taxes

   477,002   (85,919) 

Current income tax expense

   (256,345)   (426,694) 
  

 

 

  

 

 

 

Net income (loss) attributable to common shares

  $220,657  $(512,613) 
  

 

 

  

 

 

 

Weighted average number of shares outstanding:

   

Basic (excluding shares subject to redemption)

   11,191,898   10,582,053 
  

 

 

  

 

 

 

Diluted

   47,165,140   10,582,053 
  

 

 

  

 

 

 

Net income (loss) per common share:

   

Basic

  $0.02  $(0.05) 
  

 

 

  

 

 

 

Diluted

  $0.00  $(0.05) 
  

 

 

  

 

 

 

See accompanying notes to condensed financial statements

KAYNE ANDERSON ACQUISITION CORP.

CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

For

(Unaudited)

Three Months Ended
March 31,
2023
2022(4)
(In thousands, except per share data)
Operating revenues:
Service revenue$103,425 $80,445 
Product revenue173,824 174,928 
Other revenue3,791 1,876 
Total operating revenues(1)
281,040 257,249 
Operating costs and expenses:
Costs of sales (exclusive of depreciation and amortization shown separately below)(2)
115,877 120,275 
Operating expenses35,973 29,871 
Ad valorem taxes5,458 4,153 
General and administrative expenses27,511 22,752 
Depreciation and amortization expenses68,854 61,023 
Loss on disposal of assets102 110 
Total operating costs and expenses253,775 238,184 
Operating income27,265 19,065 
Other income (expense):
Interest and other income294 250 
Gain on redemption of mandatorily redeemable Preferred Units— 4,493 
Loss on embedded derivative— (2,886)
Interest expense(69,308)(26,774)
Equity in earnings of unconsolidated affiliates46,464 27,917 
Total other (expense) income, net(22,550)3,000 
Income before income taxes4,715 22,065 
Income tax expense416 676 
Net income including noncontrolling interest4,299 21,389 
Net income attributable to Preferred Unit limited partners— 4,993 
Net income attributable to common shareholders4,299 16,396 
Net income attributable to Common Unit limited partners2,863 12,531 
Net income attributable to Class A Common Stock Shareholders$1,436 $3,865 
Net (loss) income attributable to Class A Common Shareholders per share
Basic$(0.06)$0.10 
Diluted$(0.06)$0.10 
Weighted-average shares(3)
Basic47,392 37,392 
Diluted47,605 37,426 
(1)Includes amounts of $25.3 million and $15.6 million associated with related parties for the ninethree months ended September 30, 2017

(unaudited)

   Class A Common
Stock		  Class B Common
Stock		  Additional
Paid-in
Capital		  Accumulated
Deficit		  Stockholders’
Equity		 
   Shares  Amount  Shares  Amount    

Balances, December 31, 2016

   —    $—     10,062,500  $1,006  $23,994  $(2,376)  $22,624 

Sale of Class A Common Stock to Public

   37,732,112   3,773   —     —     377,317,347   —     377,321,120 

Forfeiture of Class B Common Stock by Sponsor

   —     —     (629,472)   (63)   63   —     —   

Underwriters’ discount and offering expenses

   —     —     —     —     (21,433,512)   —     (21,433,512) 

Sale of 6,364,281 Private Placement Warrants at $1.50 per warrant

   —     —     —     —     9,546,422   —     9,546,422 

Shares subject to possible redemption

   (35,994,404)   (3,599)   —     —     (359,940,441)   —     (359,944,040) 

Net loss

   —     —     —     —     —     (512,613)   (512,613) 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balances, September 30, 2017

   1,737,708  $174   9,433,028  $943  $5,513,873  $(514,989)  $5,000,001 
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

See accompanying notes to condensed financial statements

KAYNE ANDERSON ACQUISITION CORP.

CONDENSED STATEMENT OF CASH FLOWS

ForMarch 31, 2023 and 2022, respectively.

(2)Includes amounts of $14.6 million and $3.6 million associated with related parties for the ninethree months ended September 30, 2017

(unaudited)

Cash flows from operating activities:

  

Net loss

  $(512,613) 

Adjustments to reconcile net loss to net cash used in operating activities:

  

Trust income retained in Trust Account (net of $391,000 for income taxes paid)

   (962,883) 

Changes in operating assets and liabilities:

  

Increase in prepaid expenses and other assets

   (130,792) 

Increase in accrued expenses and taxes, net

   816,659 
  

 

 

 

Net cash used in operating activities

   (789,629) 

Net cash used in investing activities,

  

Cash deposited into Trust Account

   (377,321,120) 

Cash flows from financing activities:

  

Proceeds from Public Offering

   377,321,120 

Proceeds from sale of Private Placement Warrants

   9,546,422 

Payment of underwriting costs

   (7,546,422) 

Payment of offering costs

   (642,617) 

Proceeds from Sponsor note

   245,000 

Payment of Sponsor note

   (265,000) 
  

 

 

 

Net cash provided by financing activities

   378,658,503 

Net increase in cash

   547,754 

Cash at beginning of period

   7,500 
  

 

 

 

Cash at end of period

  $555,254 
  

 

 

 

Supplemental disclosure of cash flow information:

  

Deferred underwriting compensation

  $13,206,239 
  

 

 

 

Income taxes paid

  $391,000 
  

 

 

 

See accompanying notesMarch 31, 2023 and 2022, respectively.

(3)Share and per share amounts have been retrospectively restated to condensed financial statements

KAYNE ANDERSON ACQUISITION CORP.

reflect the Company’s reverse stock split, which was effected June 8, 2022.

(4)The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the basis of presentation in NOTES TO FINANCIAL STATEMENTS

(unaudited)

Note 1—Description of the Organization and Business Operations

OrganizationSummary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.

The accompanying Notes are an integral part of the unaudited Condensed Consolidated Financial Statements
1
Table of Contents
KINETIK HOLDINGS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31,December 31,
20232022
(In thousands, except per share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$1,984 $6,394 
Accounts receivable, net of allowance for credit losses of $1,000 in 2023 and 2022(1)
199,028 204,036 
Derivative assets13,834 6,963 
Prepaid and other current assets31,366 24,474 
246,212 241,867 
NONCURRENT ASSETS:
Property, plant and equipment, net2,634,173 2,535,212 
Intangible assets, net676,516 695,389 
Derivative asset, non-current124 — 
Operating lease right-of-use assets64,097 28,551 
Deferred charges and other assets85,551 32,275 
Investment in unconsolidated affiliate2,412,905 2,381,340 
Goodwill5,077 5,077 
5,878,443 5,677,844 
Total assets$6,124,655 $5,919,711 
LIABILITIES, NONCONTROLLING INTEREST, AND EQUITY
CURRENT LIABILITIES:
Accounts payable$18,323 $17,899 
Accrued expenses176,307 173,914 
Derivative liabilities6,662 5,718 
Current portion of operating lease liabilities39,773 22,810 
Other current liabilities7,236 7,487 
248,301 227,828 
NONCURRENT LIABILITIES
Long term debt, net3,511,648 3,368,510 
Contract liabilities21,991 22,693 
Operating lease liabilities25,238 6,023 
Derivative liabilities27,123 8,328 
Other liabilities4,310 2,677 
Deferred tax liabilities11,381 11,018 
3,601,691 3,419,249 
Total liabilities3,849,992 3,647,077 
COMMITMENTS AND CONTINGENCIES (Note 16)
Redeemable noncontrolling interest — Common Unit limited partners2,910,861 3,112,409 
EQUITY:
Class A Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 49,054,411 and 45,679,447 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively5 5 
Class C Common Stock: $0.0001 par, 1,500,000,000 shares authorized, 94,089,038 and 94,270,000 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively(2)
9 9 
Additional paid-in capital229,672 118,840 
Accumulated deficit(863,452)(958,629)
Treasury stock, at cost (81,862 and nil shares as of March 31, 2023 and December 31, 2022, respectively)(2,432)— 
Total equity(636,198)(839,775)
Total liabilities, noncontrolling interest, and equity$6,124,655 $5,919,711 
(1)Includes amounts of $24.2 million and General

$17.6 million associated with related parties as of March 31, 2023 and December 31, 2022, respectively.

(2)Share amounts have been retrospectively restated to reflect the Company’s stock split, which was effected June 8, 2022.
The accompanying Notes are an integral part of the unaudited Condensed Consolidated Financial Statements
2
Table of Contents
KINETIK HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months Ended March 31,
20232022
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income including noncontrolling interests$4,299 $21,389 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense68,854 61,023 
Amortization of deferred financing costs1,521 3,389 
Amortization of contract costs1,655 448 
Distributions from unconsolidated affiliate67,764 48,073 
Derivatives settlement974 (884)
Derivative fair value adjustment11,770 (8,745)
Warrants fair value adjustment(44)— 
Gain on redemption of mandatorily redeemable Preferred Units— (4,493)
Loss on disposal of assets102 110 
Equity in earnings from unconsolidated affiliates(46,464)(27,917)
Loss on debt extinguishment— 129 
Share-based compensation17,540 6,132 
Deferred income taxes363 676 
Changes in operating assets and liabilities:
Accounts receivable5,008 (67,446)
Other assets(2,206)(456)
Accounts payable(3,175)(6,766)
Accrued liabilities(10,679)73,961 
Other non-current liabilities1,677 — 
Operating leases632 (230)
Net cash provided by operating activities119,591 98,393 
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment expenditures(58,862)(29,234)
Intangible assets expenditures(9,755)(3,559)
Investments in unconsolidated affiliate(58,658)— 
Distributions from unconsolidated affiliate5,793 — 
Cash proceeds from disposals14 — 
Net cash (paid for) acquired in acquisitions(125,000)13,401 
Net cash used in investing activities(246,468)(19,392)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on long-term debt— (26,382)
Proceeds from revolver267,000 7,000 
Payments on revolver(125,000)— 
Redemption of mandatorily redeemable Preferred Units— (60,702)
Cash dividends paid to Class A Common Stock shareholders(16,927)— 
Distribution paid to Class C Common Unit limited partners(174)— 
Repurchase of Class A Common Stock(2,432)— 
Net cash provided by (used in) financing activities122,467 (80,084)
Net change in cash(4,410)(1,083)
CASH, BEGINNING OF PERIOD6,394 18,729 
CASH, END OF PERIOD$1,984 $17,646 
SUPPLEMENTAL SCHEDULE OF INVESTING AND FINANCING ACTIVITIES
Cash paid for interest, net of amounts capitalized$36,745 $25,801 
Property and equipment and intangible accruals in accounts payable and accrued liabilities$32,715 $14,340 
Class A Common Stock issued through dividend and distribution reinvestment plan$87,658 $— 
Fair value of ALTM assets acquired$— $2,445,665 
Class A Common Stock issued in exchange— 1,013,745 
ALTM liabilities and mezzanine equity assumed$— $1,431,920 
The accompanying Notes are an integral part of the unaudited Condensed Consolidated Financial Statements
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KINETIK HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY AND NONCONTROLLING INTERESTS
(Unaudited)
Redeemable Noncontrolling Interest — Preferred Unit Limited Partners(2)
Redeemable Noncontrolling Interest — Common Unit Limited PartnersClass A Common StockClass C Common StockAdditional Paid-in CapitalAccumulated DeficitTreasury StockTotal Equity
 
Shares(1)
Amount
Shares(1)
Amount
(In thousands)(In thousands)
For the Three Months Ended March 31, 2022
Balance at December 31, 2021$— $1,006,843 — $— 50,000 $5 $— $— $— $5 
ALTM acquisition462,717 — 16,246 2 — — 1,013,743 — — 1,013,745 
Distributions payable to Preferred Unit limited partners(6,937)— — — — — — — — — 
Redemption of Common Units— (170,060)2,740 — (2,740)— 170,060 — — 170,060 
Share-based compensation— — — — — — 6,132 — — 6,132 
Remeasurement of contingent consideration— — — — — — 4,450 — — 4,450 
Net income4,993 12,531 — — — — — 3,865 — 3,865 
Change in redemption value of noncontrolling interests— 2,336,117 — — — — (1,194,385)(1,141,732)— (2,336,117)
Balance at March 31, 2022$460,773 $3,185,431 18,986 $2 47,260 $5 $— $(1,137,867)$— $(1,137,860)
For the Three Months Ended March 31, 2023
Balance at December 31, 2022$— $3,112,409 45,679 $5 94,270 $9 $118,840 $(958,629)$— $(839,775)
Redemption of Common Units— (5,634)181 — (181)— 5,634 — — 5,634 
Issuance of common stock through dividend and distribution reinvestment plan— — 3,071 — — — 87,658 — — 87,658 
Repurchase of Class A Common Stock— — (82)— — — — — (2,432)(2,432)
Share-based compensation— — 205 — — — 17,540 — — 17,540 
Net income— 2,863 — — — — — 1,436 — 1,436 
Change in redemption value of noncontrolling interests— (128,211)— — — — — 128,211 — 128,211 
Distribution paid to Common Units limited partners— (70,566)— — — — — — — — 
Cash dividends on Class A Common Stock ($0.75 per share)— — — — — — — (34,470)— (34,470)
Balance at March 31, 2023$— $2,910,861 49,054 $5 94,089 $9 $229,672 $(863,452)$(2,432)$(636,198)
(1)Share amounts have been retrospectively restated to reflect the Company’s Stock Split, which was effected on June 8, 2022. Refer to Note 10—Equity and Warrantsin the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.
(2)Certain redemption features embedded within the Preferred Units require bifurcation and measurement at fair value. For further detail, refer to Note 12—Series A Cumulative Redeemable Preferred Units in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Commission on March 7, 2023.

The accompanying Notes are an integral part of the unaudited condensed consolidated financial statements
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KINETIK HOLDINGS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
These condensed consolidated financial statements have been prepared by Kinetik Holdings Inc. (the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). They reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for interim periods, on a basis consistent with the annual audited financial statements, with the exception of recently adopted accounting pronouncements. All such adjustments are of a normal recurring nature. Certain information, accounting policies, and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. This Quarterly Report on Form 10-Q should be read along with Kinetik Holdings Inc.’s audited financial statements and related notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 7, 2023.
1. DESCRIPTION OF THE ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
BCP Raptor Holdco, LP (“BCP”), the Company’s predecessor for accounting purposes, was formed on April 25, 2017 as a Delaware limited partnership to acquire and develop midstream oil and gas assets. BCP’s primary operating subsidiaries are EagleClaw Midstream Ventures, LLC and CR Permian Holdings, LLC. Both subsidiaries were formed to design, engineer, install, own and operate facilities and provide services for produced natural gas gathering, compression, processing, treating and dehydration, and condensate separation, stabilization, and storage, crude oil gathering and storage, water gathering and disposal assets.
Altus Midstream Company (“ALTM”) was originally incorporated on December 12, 2016 in Delaware under the name Kayne Anderson Acquisition Corp. (the “Company”(“KAAC”) was incorporated in Delaware on December 12, 2016. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Initial Business Combination”). The Company’s focus is to search for a target business in the energy industry. The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the “Securities Act,” as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).

On April 4, 2017, the Company closedbusinesses. KAAC completed its initial public offering (“Public Offering”) (See Note 3 and Note 6). The Company will not generate any operating revenues until after completion of its Initial Business Combination, at the earliest. The Company will generatenon-operating income in the formsecond quarter of interest income on cash2017. On August 3, 2018, Altus Midstream LP was formed in Delaware as a limited partnership and cash equivalents fromwholly-owned subsidiary of KAAC and entered into a contribution agreement with certain affiliates of Apache Corporation (“Apache” and such affiliates the proceeds derived from“Altus Midstream Entities”), formed by Apache between May 2016 and January 2017, for the Public Offering. Thepurpose of acquiring, developing and operating midstream oil and gas assets in the Alpine High resource play and surrounding areas. On November 9, 2018, KAAC acquired all equity interests of the Altus Midstream Entities and changed its name to Altus Midstream Company.

On February 22, 2022 (the “Closing Date”), Kinetik Holdings Inc., a Delaware corporation (formerly known as Altus Midstream Company), consummated the previously announced business combination transactions contemplated by the Contribution Agreement, dated as of October 21, 2021 (the “Contribution Agreement”), by and among the Company, has selected December 31Altus Midstream LP (now known as its fiscal year end.

Sponsor

The Company’s sponsor is Kayne Anderson Sponsor,Kinetik Holdings LP), a Delaware limited partnership and subsidiary of Altus Midstream Company (the “Partnership”), New BCP Raptor Holdco, LLC, a Delaware limited liability company (the “Sponsor”(“Contributor”)., and BCP. The registration statement for the Company’s Public Offering (as described in Note 3) was declared effectivetransactions contemplated by the United States Securities and Exchange Commission (the “SEC”) on March 29, 2017.

The Trust Account

The proceeds held inContribution Agreement are referred to herein as the trust account with American Stock Transfer & Trust Company, LLC acting as trustee (the “Trust Account”) are invested in money market funds that meet certain conditions under Rule2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act”) and that invest only in direct U.S. government obligations. Funds will remain in the Trust Account until the earlier of (i) the consummation of the Initial Business Combination or (ii) the distribution of the Trust Account proceeds as described below. The remaining proceeds outside the Trust Account may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses.

The Company’s amended and restated certificate of incorporation provides that, other than the withdrawal of interest to pay taxes, if any, none of the funds held in the Trust Account will be released until the earlier of: (i) the completion of the Initial Business Combination; (ii) the redemption of any shares of Class A Common Stock included in the units (the “Public Shares”) sold in the Public Offering that have been properly tendered in“Transaction.” In connection with a stockholder vote to amend the Company’s certificate of incorporation to modify the substance or timing of its obligation to redeem 100% of such shares of Class A Common Stock if it does not complete the Initial Business Combination within 24 months from the closing of the Public Offering; and (iii) the redemption of 100% of the shares of Class A Common Stock included in the Units sold in the Public Offering ifTransaction (the “Closing”), the Company is unablechanged its name from “Altus Midstream Company” to complete an Initial Business Combination within 24 months from“Kinetik Holdings Inc.” Unless the closing of the Public Offering (subjectcontext otherwise requires, “ALTM” refers to the requirements of law). The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the Company’s public stockholders.

Initial Business Combination

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating an Initial Business Combination. The Initial Business Combination must occur with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into the Initial Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect an Initial Business Combination.

The Company, after signing a definitive agreement for an Initial Business Combination, will either (i) seek stockholder approval of the Initial Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Initial Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business daysregistrant prior to the consummation ofClosing and “we,” “us,” “our,” and the Initial Business Combination, including interest but less taxes payable, or (ii) provide stockholders with“Company” refer to Kinetik Holdings Inc., the opportunity to sell their Public Shares toregistrant and its subsidiaries following the Closing.

Through its consolidated subsidiaries, the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount in cash equalprovides comprehensive gathering, water disposal, transportation, compression, processing and treating services necessary to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days priorbring natural gas, NGLs and crude oil to the consummation of the Initial Business Combination, including interest but less taxes payable. The decision as to whethermarket. Additionally, the Company will seek stockholder approvalowns equity interests in four separate Permian Basin pipeline entities that have access to various markets along the Texas Gulf Coast.
Basis of the Initial Business Combination or will allow stockholders to sell their Public Shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval, unless a vote is required by law or under rules of Presentation
The Nasdaq Stock Market. If the Company seeks stockholder approval, it will complete its Initial Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Initial Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001 upon consummation of the Initial Business Combination. In such case, the Company would not proceed with the redemption of its Public Shares and the related Initial Business Combination, and instead may search for an alternate Initial Business Combination.

If the Company holds a stockholder vote or there is a tender offer for shares in connection with an Initial Business Combination, a public stockholder willaccompanying unaudited Condensed Consolidated Financial Statements have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, including interest but less taxes payable. As a result, such shares of Class A Common Stock will be recorded at redemption amount and classified as temporary equity upon the completion of the Public Offering,been prepared in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity.”

PursuantGAAP. Certain reclassifications of prior year balances have been made to the Company’s amended and restated certificate of incorporation, if the Company is unableconform such amounts to complete the Initial Business Combination within 24 months from the closing of the Public Offering, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, subject to lawfully available funds therefor, redeem the Public Shares, at aper-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to us to pay the Company’s franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. The Sponsor and the Company’s officers and directors have entered into letter agreements with the Company, pursuant to which they have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares (as defined below) held by them if the Company fails to complete the Initial Business Combination within 24 months of the closing of the Public Offering. However, if the Sponsor or any of the Company’s directors, officers or affiliates acquire shares of Class A Common Stock in or after the Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete the Initial Business Combination within the prescribed time period.

In the event of a liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s stockholderscurrent year presentation. These reclassifications have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, exceptimpact on net income. All adjustments that, the Company will provide its stockholders with the opportunity to redeem their Public Shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account, upon the completion of the Initial Business Combination, subject to the limitations described herein.

Note 2—Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”), and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, are necessary for a fair presentation of the financial position as of September 30, 2017 and the results of operations and cash flows for the period presented. Certain information and disclosures normally included in financial statements prepared in accordance with GAAPinterim periods have been omitted pursuant tomade and are of a recurring nature unless otherwise disclosed herein. The results of operations for such rules and regulations. Interim resultsinterim periods are not necessarily indicative of results of operations for a full year.

year; accordingly, you should read these consolidated financial statements in conjunction with our

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consolidated financial statements and related notes included in our 2022 Form 10-K.. All intercompany balances and transactions have been eliminated in consolidation.
Prior to the Closing, the Company’s financial statements that were filed with the SEC were derived from ALTM’s accounting records. As the Transaction was determined to be a reverse merger, BCP was considered as the accounting acquirer and ALTM was the legal acquirer. The accompanying Condensed Consolidated Financial Statements herein include (1) BCP’s net assets carried at historical value, (2) BCP’s historical results of operations prior to the Transaction, (3) the ALTM’s net assets carried at fair value as of the Closing Date and (4) the combined results of operations with the Company’s results presented within the Condensed Consolidated Financial Statements from February 22, 2022 going forward. Therefore, the results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to Note 2—Business Combinationto our Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion.
The Company completed a two-for-one Stock Split on June 8, 2022. All corresponding per-share and share amounts for periods prior to June 8, 2022 have been retroactively restated in this Form 10-Q to reflect the two-for-one Stock Split, except for the number of Common Units and shares of Class C Common Stock described above in relation to the Transaction, which are presented at pre-Stock-Split amounts. This presentation is consistent with our previous public filings and the terms of the Contribution Agreement.
Significant Accounting Policies
The accounting policies that we follow are set forth in Note 2 – Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements in our Annual Report. There were no significant updates or revisions to our accounting policies during the three months ended March 31, 2023.
Inventory
Other current assets include condensate, residue gas and NGLs inventories that are valued at the lower of cost or market. Inventory was valued at $4.2 million and $4.8 million as of March 31, 2023 and December 31, 2022, respectively.
Transactions with Affiliates
The accounts receivable from or payable to affiliates represent the net result of the Company’s monthly revenue, capital and operating expenditures, and other miscellaneous transactions to be settled with Apache and its subsidiaries, who controlled the Company prior to the Transaction. Accounts receivable from affiliates was $24.2 million and $17.6 million as of March 31, 2023 and December 31, 2022, respectively. Revenue from affiliates was $25.3 million and $15.6 million for the three months ended March 31, 2023 and 2022, respectively. Accrued expense due to affiliates was immaterial, and operating expenses were $0.3 million and nil for the three months ended March 31, 2023 and 2022, respectively.
In addition, the Company incurred cost of sales with two of its equity method investment (“EMI”) pipeline entities, Permian Highway Pipeline LLC (“PHP”) and Breviloba, LLC (“Breviloba”). The Company paid a demand fee to PHP and paid a capacity fee to Breviloba for certain volumes moving on the Shin Oak NGL Pipeline. For the three months ended March 31, 2023 and 2022, the Company recorded cost of sales of $14.6 million and $3.6 million, respectively, with these affiliates.

2.    BUSINESS COMBINATIONS
As of March 31, 2023, our allocation of purchase price for acquisitions made during 2023 and 2022 are detailed below:
Acquisition DateAcquisitionConsiderations TransferredCurrent AssetsProperty Plant & EquipmentIntangible AssetsOther Long Term AssetsGoodwillLiabilitiesNoncontrolling Interest
(In thousands)
(1)Q1 2023
Midstream Infrastructure Assets and Incentive and Acceleration Agreement(a)
$125,000 $4,736 $61,850 $3,150 $55,264 $— $— $— 
(2)Q1 2022Altus Midstream Company (“ALTM”)$1,013,745 $38,750 $634,923 $13,200 $1,752,500 $5,077 $(967,988)$(462,717)
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(a)Consideration includes $65 million paid for certain midstream assets and the $60 million paid related to the incentive and acceleration agreement.
Midstream Infrastructure Assets
The Partnership closed on a purchase and sale agreement for certain midstream assets for $65.0 million together with a new 20 year midstream service agreement. In addition, the Partnership entered into an incentive and acceleration agreement related to near term supplemental development activities on acreage dedicated for midstream services to affiliates of the Partnership. Such development activities will begin in 2023 and are subject to semi-annual performance milestones and subject to refund with consequential monetary penalty if not satisfied. Consideration for the incentive and acceleration agreement of $60 million was capitalized as a contract asset in accordance with ASC 606, of which $4.7 million is included in “Prepaid and Other Current Assets” and $55.3 million is included in “Deferred Charges and Other Assets” in the condensed consolidated balance sheet as of March 31, 2023. These transactions were accounted for as a business combination in accordance with ASC 805. Certain data necessary to complete the purchase price allocation is not yet available, including, but not limited to, the completion of the valuation of the underlying assets and liabilities assumed. The Company is continuing its review of these matters during the measurement period. Acquisition-related costs were immaterial for this transaction.
Altus Midstream Company
On February 22, 2022, the Company consummated the Transaction. Pursuant to the Contribution Agreement, in connection with the Company’s assessment of going concern considerations in accordance with ASU2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern”, as of September 30, 2017, the Company does not have sufficient liquidity to meet its current obligations. However, management has determined that the Company has access to funds from the Sponsor that are sufficient to fund the working capital needsClosing, (i) Contributor contributed all of the Companyequity interests of BCP and BCP Raptor Holdco GP, LLC, a Delaware limited liability company and the general partner of BCP (the “Contributed Entities”) to the Partnership; and (ii) in exchange for a minimum one year fromsuch contribution, the date of issuance of these financial statements.

The accompanying unaudited interim condensed financial statements should be read in conjunction with the audited financial statements and notes thereto includedPartnership transferred to Contributor 50,000,000 common units representing limited partner interests in the final prospectus filed by the Company with the SEC on March 30, 2017Partnership and with the audited balance sheet included in the Form8-K filed by the Company with the SEC on April 10, 2017 and the unaudited pro forma balance sheet included in the Form8-K filed by the Company with the SEC on April 26, 2017.

Emerging Growth Company

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities and Exchange Act of 1934, as amended, or the “Exchange Act”) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply tonon-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s financial statement with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Net Income (Loss) Per Common Share

Net income (loss) per common share is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding during the period, plus, to the extent dilutive, the incremental number of shares of common stock to settle warrants, as calculated using the treasury stock method. An aggregate of 35,994,404 shares of Class A common stock subject to possible redemption at September 30, 2017 have been excluded from the calculation of basic income per common share. The Company has not considered the effect of the warrants sold in the Public Offering (including the consummation of the over-allotment) and Private Placement Warrants to purchase 18,941,65150,000,000 shares of the Company’s Class A common stockC Common Stock, par value $0.0001 per share.

The Transaction was accounted as a reverse merger in accordance with ASC 805, which, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair value. During the calculation of diluted income per share, since12-month measurement period following the exerciseacquisition date, the Company made necessary adjustments as information became available to the purchase price allocation, including, but not limited to, working capital and valuation of the warrants and the conversionunderlying assets of the rights into sharesequity method investments. The Company recorded goodwill of common stock$5.1 million as of December 31, 2022 related to operational synergies. The Company incurred acquisition-related costs of nil and $5.7 million for the three months ended March 31, 2023 and 2022, respectively, related to the Transaction.
3.    REVENUE RECOGNITION
Disaggregation of Revenue
The following table presents a disaggregation of the Company’s revenue:
Three Months Ended March 31,
20232022
(In thousands)
Gathering and processing services$103,425 $80,445 
Natural gas, NGLs and condensate sales173,824 174,928 
Other revenue3,791 1,876 
   Total revenues and other$281,040 $257,249 
There have been no significant changes to the Company’s contracts with customers during the three months ended March 31, 2023. The Company recognized revenues from minimum volume commitment (“MVC”) deficiency payments of $1.1 million and nil for the three months ended March 31, 2023 and 2022, respectively.

Remaining Performance Obligations
The following table presents our estimated revenue from contracts with customers for remaining performance obligations that has not yet been recognized, representing our contractually committed revenues as of March 31, 2023:
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Amount
Fiscal Year(In thousands)
Remaining of 2023$27,703 
202438,970 
202544,498 
202634,631 
202735,405 
Thereafter155,888 
$337,095 
Our contractually committed revenue, for purposes of the tabular presentation above, is contingent upongenerally limited to customer contracts that have fixed pricing and fixed volume terms and conditions, generally including contracts with payment obligations associated with MVCs.
Contract Liabilities
The following table provides information about contract liabilities from contracts with customers as of March 31, 2023:
Amount
(In thousands)
Balance at December 31, 2022$29,300 
Reclassification of beginning contract liabilities to revenue as a result of performance obligations being satisfied(2,059)
Cash received in advance and not recognized as revenue669 
Balance at March 31, 202327,910 
Less: Current portion5,919 
Non-current portion$21,991 
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, of the occurrence of future events.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. Condensed Consolidated Balance Sheets.

Contract Cost Assets
The Company has capitalized certain costs incurred to obtain a contract that would not experienced losses on these accountshave been incurred if the contract had not been obtained. These costs are recovered through the net cash flows of the associated contract. As of March 31, 2023 and management believesDecember 31, 2022, the Company had contract acquisition cost assets of $76.2 million and $17.8 million, respectively. Current and noncurrent contract cost assets are included in “Prepaid and Other Current Assets” and “Deferred Charges and Other Assets,” respectively, of 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 and $0.4 million for the three months ended March 31, 2023 and 2022, respectively.

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4.    PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, at carrying value, is as follows:
March 31,December 31,
20232022
(In thousands)
Gathering, processing, and transmission systems and facilities$3,004,016 $2,904,084 
Vehicles10,3319,290
Computers and equipment5,504 4,289
Less: accumulated depreciation and accretion(512,451)(474,258)
Total depreciable assets, net2,507,400 2,443,405 
Construction in progress104,900 70,325
Land21,873 21,482 
Total property, plant, and equipment, net$2,634,173 $2,535,212 
The cost of property classified as “Construction in progress” is excluded from capitalized costs being depreciated. These amounts represent property that is not exposedyet available to be placed into productive service as of the respective reporting date. The Company recorded $38.4 million and $30.8 million of depreciation expense for the three months ended March 31, 2023 and 2022, respectively. There were no triggering events for property, plant and equipment during the three months ended March 31, 2023 and 2022.

5.    GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill
Goodwill totaled $5.1 million as of March 31, 2023 and December 31, 2022. The goodwill of $5.1 million is within the Midstream Logistics segment, and pertains to excess of the purchase price over net assets acquired in connection with the Transaction.
Goodwill is tested at least annually as of November 30 of each year, or more frequently as events occur or circumstances change that would more-likely-than-not reduce fair value of a reporting unit below its carrying value. Company’s management assesses whether there have been events or circumstances that trigger the fair value of the reporting unit to be lower than its net carrying value since consummation of the Transaction and concluded that goodwill was not impaired as of March 31, 2023.
Intangible Assets
Intangible assets, net, are comprised of the following:
March 31,December 31,
20232022
(In thousands)
Customer contracts$1,142,278 $1,137,831 
Right of way assets134,716 127,539 
Less accumulated amortization(600,478)(569,981)
Total amortizable intangible assets, net$676,516 $695,389 
The fair value of acquired customer contracts was capitalized as a result of acquiring favorable customer contracts as of the closing dates of certain past acquisitions and is being amortized using a straight-line method over the remaining term of the customer contracts, which range from one to twenty years. Right-of-way assets relate primarily to underground pipeline easements and have a useful life of ten years and are amortized using the straight-line method. The right of way agreements are generally for an initial term of ten years with an option to renew for an additional ten years at agreed upon renewal rates based on certain indices or up to 130% of the original consideration paid.
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On March 31, 2023, remaining weighted average amortization periods for customer contracts and right of way assets were approximately 7.36 years and 6.95 years, respectively. Overall remaining weighted average amortization period for the intangible assets as of March 31, 2023 was approximately 7.31 years.
The Company recorded $30.5 million and $30.2 million of amortization expense for the three months ended March 31, 2023 and 2022, respectively. There was no impairment recognized on intangible assets for the three months ended March 31, 2023 and 2022.

6.    EQUITY METHOD INVESTMENTS
As of March 31, 2023, 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 risksinfluence based on such accounts.

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,
Ownership20232022
(In thousands)
Permian Highway Pipeline LLC ("PHP")53.3%$1,519,825 $1,474,800 
Breviloba, LLC ("Breviloba")33.0%450,926 455,057 
Gulf Coast Express Pipeline LLC ("GCX")16.0%442,154 451,483 
$2,412,905 $2,381,340 
Additionally, as of March 31, 2023, the Company also owned 15.0% of Epic Crude Holdings, LP (“EPIC”). However, no dollar value was assigned through the Transaction’s purchase price allocation as an adjustment was made to eliminate equity in losses of EPIC. No additional contribution was made to EPIC and no distribution or equity income was received from EPIC during the three months ended March 31, 2023.
The unamortized basis differences included in the EMI pipeline balances were $359.8 million and $363.2 million as of March 31, 2023 and December 31, 2022, 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. There was capitalized interest of $14.7 million and $13.4 million as of March 31, 2023 and December 31, 2022, 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 three months ended March 31, 2023:
Permian Highway Pipeline LLCBreviloba, LLCGulf Coast Express Pipeline LLCTotal
(In thousands)
Balance at December 31, 2022$1,474,800 $455,057 $451,483 $2,381,340 
Acquisitions— — — 
Contributions57,218 — — 57,218 
Distributions(42,570)(11,869)(19,118)(73,557)
Capitalized interest1,440 — — 1,440 
Equity income, net(1)
28,937 7,738 9,789 46,464 
Balance at March 31, 2023$1,519,825 $450,926 $442,154 $2,412,905 
(1)For the three months ended March 31, 2023, net of amortization of basis differences and capitalized interests, which represents undistributed earnings, the amortization was $1.9 million from PHP, $0.2 million from Breviloba, LLC and $1.6 million from GCX.
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Summarized Financial Information
The following tables represent selected statement of operations data for the Company’s EMI pipelines (on a 100 percent basis) for the three months ended March 31, 2023 and 2022.
Three Months Ended March 31,
20232022
Permian Highway Pipeline LLCBreviloba, LLCGulf Coast Express Pipeline LLCPermian Highway Pipeline LLCBreviloba, LLCGulf Coast Express Pipeline LLC
(In thousands)
Revenues$92,840 $45,901 $89,748 $97,856 $48,521 $89,973 
Operating income56,80521,94965,216 59,47626,31463,443 
Net income59,69122,21171,091 59,21326,36663,529 

7.    DEBT AND FINANCING COSTS
The following table summarizes the Company’s debt obligations as of March 31, 2023 and December 31, 2022:
March 31,December 31,
20232022
(In thousands)
$2.0 billion unsecured term loan$2,000,000 $2,000,000 
$1.0 billion 2030 senior unsecured notes1,000,000 1,000,000 
$1.25 billion revolving line of credit537,000 395,000 
Total long-term debt3,537,000 3,395,000 
Less: Debt issuance costs, net(1)
(25,352)(26,490)
Total long-term debt, net$3,511,648 $3,368,510 
(1) Excluded unamortized debt issuance cost related to the revolving line of credit. Unamortized debt issuance cost associated with the revolving line of credit was $6.5 million and $6.9 million as of March 31, 2023 and December 31, 2022, respectively. The current and non-current portion of the unamortized debt issuance costs related to the revolving credit facilities were included in the “Prepaid and other current assets” and the “Deferred charges and other assets” of the Condensed Consolidated Balance Sheets.
The table below presents the components of the Company’s financing costs, net of capitalized interest:
Three Months Ended March 31,
20232022
(In thousands)
Capitalized interest$(2,233)$(104)
Debt issuance costs1,521 3,389 
Interest expense70,020 23,489 
Total financing costs, net of capitalized interest$69,308 $26,774 
As of March 31, 2023 and December 31, 2022, unamortized debt issuance costs associated with the senior unsecured notes and the term loan were $25.4 million and $26.5 million, respectively. The amortization of the debt issuance costs was charged to interest expense for the periods presented. The amount of debt issuance costs included in interest expense was $1.5 million and $3.4 million for the three months ended March 31, 2023 and 2022, respectively.

Compliance with our Covenants
Both the revolving credit agreement with Bank of America, N.A., as administrative agent and the term loan credit agreement with PNC Bank as administrative agent contain customary covenants and restrictive provisions which may, among other things, limit the Partnership’s ability to create liens, incur additional indebtedness, make restricted payments, or liquidate, dissolve, consolidate with, or merge into or with any other person. The 5.875% Senior Notes due 2030 also contain covenants and restrictive provisions.
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As of March 31, 2023, the Partnership was in compliance with all customary and financial covenants.
Fair Value of Financial Instruments

The fair value of the Company and its subsidiaries’ consolidated debt as of March 31, 2023 and December 31, 2022 was $3.52 billion and $3.34 billion, respectively. On March 31, 2023, the senior unsecured notes’ fair value was based on Level 1 inputs and the term loan and revolving line of credit’s fair value was based on Level 3 inputs.

8.    ACCRUED EXPENSES
The following table provides detail of the Company’s assetscurrent accrued expenses on March 31, 2023 and December 31, 2022:
March 31,December 31,
 20232022
(In thousands)
Accrued product purchases$95,922 $115,773 
Accrued taxes5,785 19,509 
Accrued salaries, vacation, and related benefits3,143 3,934 
Accrued capital expenditures15,830 3,892 
Accrued interest38,774 24,815 
Accrued other expenses16,853 5,991 
Total current accrued expenses$176,307 $173,914 
Accrued product purchases mainly accrue the liabilities which qualifyrelated to producer payments and any additional business-related miscellaneous fees we owe to third parties, such as financial instruments under the FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts representedtransport or capacity fees as of March 31, 2023.

9.    LEASE
Components of lease costs are included in the balance sheet.

UseCondensed Consolidated Statements of Estimates

The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Deferred Offering Costs

The Company complies with the requirements of the FASB ASC340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A—“Expenses of Offering.” The Company incurred approximately $681,000 of offering costs in connection with preparation for the Public Offering. These costs together with the underwriting discounts of $20,752,661 (including $13,206,239 of which payment is deferred), were charged to additional paid in capital upon completion of the Public Offering in April 2017.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefitsOperations as of September 30, 2017. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties at September 30, 2017. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

During the three and nine months ended September 30, 2017, the Company recorded income tax expense of $256,345 and $426,694, respectively. Until the Company completes an Initial Business Combination, its general and administrative expenses will be deferredexpense for tax purposes but any interest income on the Trust Account net of franchise taxes will result in taxable income. Duringreal-estate leases and operating expense for non-real estate leases. Total operating lease costs were $10.8 million and $9.1 million for the three months ended September 30, 2017, the Company made an estimated federal income tax payment of $391,000 resulting in an income tax liability of $35,694.

Current Tax Liability

  $(35,694) 

Deferred Tax Asset:

  

Deferred general and administrative expenses

  $455,906 

Valuation allowance

   (455,906) 
  

 

 

 

Deferred Tax Asset, net

  $—   

At September 30, 2017, the Company has $1,340,902 of deferred generalMarch 31, 2023 and administrative expenses resulting in a deferred tax asset of $455,906. Management has determined that a full valuation allowance on the deferred tax asset is appropriate at this time after consideration of all available positive2022, respectively. Short-term lease costs were $19 thousand and negative evidence related to the realization of the deferred tax asset.

The Company’s federal statutory income tax rate is 34% and the effective tax rate$2.6 million for the three and nine months ended September 30, 2017March 31, 2023 and 2022, respectively. Variable lease cost was 54%immaterial for the three months ended March 31, 2023 and -497% which is2022.


The following table presents other supplemental lease information:
Three Months Ended March 31,
20232022
(In thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$10,632 $9,154 
Right-of-use assets obtained in exchange for new operating lease liabilities$63 $4,490 
Weighted-average remaining lease term — operating leases (in years)1.941.82
Weighted-average discount rate — operating leases8.89 %7.58 %

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10. EQUITY AND WARRANTS
Redeemable Noncontrolling Interest — Common Unit Limited Partners
On February 22, 2022, the Company consummated a resultbusiness combination with Altus pursuant to the Contribution Agreement. In connection with the closing, (i) Contributor contributed all of the full valuation allowance against its deferred tax asset. The total income taxes were different fromequity interests of the amount computed by applying the federal statutory income tax rate of 34% to income before income taxes as follows:

   Three Months
Ended
September 30,
2017		  Nine Months
Ended
September 30,
2017		 

Computed federal income tax benefit (expense) at 34%

  $(162,181)  $29,212 

Deferred general and administrative (expenses)

   (94,164)   (455,906) 
  

 

 

  

 

 

 

Total income tax (expense)

  $(256,345)  $(426,694) 
  

 

 

  

 

 

 

Recent Accounting Pronouncements

The Company’s management does not believe any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.

Note 3—Public Offering

In April 2017, the Company closed its Public Offering of 37,732,112 units at a price of $10.00 per unit (the “Units”), with gross proceeds of $377,321,120 from the sale of Units. The closings occurred on April 4, 2017 with respect to 35,000,000 Units and on April 21, 2017 with respect to 2,732,112 Units relatedContributed Entities to the partial exercise ofPartnership; and (ii) in exchange for such contribution, the underwriters’ over-allotment option.

Each Unit consists of one sharePartnership transferred to Contributor 50,000,000 common units representing limited partner interests in the Partnership and 50,000,000 shares of the Company’s Class C Common Stock, par value $0.0001 per share. Please refer to the “Transaction” above.

The redemption option of the Common Unit is not legally detachable or separately exercisable from the instrument and is non-transferable, and the Common Unit is redeemable at the option of the holder. Therefore, the Common Unit is accounted for as redeemable noncontrolling interest and classified as temporary equity on the Company’s Condensed Consolidated Balance Sheets. During the first three months of 2023, 180,962 common units were redeemed on a one-for-one basis for shares of Class A Common Stock andone-third a corresponding number of one warrant (each, a “Warrant”shares of Class C Common Stock were cancelled. There were 94,089,038 Common Units and collectively, the “Warrants”an equal number of Class C Common Stock issued and outstanding as of March 31, 2023. The Common Units fair value was approximately $2.91 billion as of March 31, 2023.
Common Stock
As of March 31, 2023, there were 49,054,411 and 94,089,038 shares, respectively, of Class A Common Stock and Class C Common Stock issued and outstanding (collectively, “Common Stock”).
Public Warrants
As of March 31, 2023, there were 12,577,350 Public Warrants (as defined below) outstanding. Each whole Warrantpublic warrant entitles the holder to purchase one tenth of a share of Class A Common Stock at a price of $11.50$115.00 per share. Each Warrant will become exercisable on the later of 30 days after the completion of the Company’s Initial Business Combination or 12 months from the closing of theshare (the “Public Warrants”). The Public Offering, andWarrants will expire five years after the completion of the Company’s Initial Business Combinationon November 9, 2023 or earlier upon redemption or liquidation. Once the Warrants become exercisable, theThe Company may redeemcall the outstandingPublic Warrants for redemption, in whole and not in part, at a price of $0.01 per Warrant upon a minimum ofwarrant with not less than 30 days’ prior written notice ofprovided to the Public Warrant holders. However, this redemption if andright can only be exercised if the reported last sale price of the Company’s Class A Common Stock equals or exceeds $18.00$180.00 per share for any 20 trading20-trading days within a30-trading day period ending on the third trading daythree business days prior to the date on which the Company sentsending the notice of redemption to the Public Warrant holders.

Commencing on April 27, 2017, the holders

Private Placement Warrants
As of Units issued in its Public Offering may elect to separately trade sharesMarch 31, 2023, there were 6,364,281 Private Placement Warrants (as defined below) outstanding, of Class A Common Stock and Warrants included in the Units.which Apache holds 3,182,140. The Units not separated will continue to trade on The Nasdaq Capital Market under the symbol “KAACU.” Shares of Class A Common Stock and the Warrants are trading on The Nasdaq Capital Market under the symbols “KAAC” and “KAACW,” respectively. No fractionalprivate placement warrants will be issued upon separation of the Unitsexpire on November 9, 2023 and only whole Warrants will trade.

The Company paid an underwriting discount of 2.0% of the per Unit offering price (or $7,546,422) to the underwriters at the closing of the Public Offering, with an additional fee (the “Deferred Discount”) of 3.5% of the gross offering proceeds (or $13,206,239) payable upon the Company’s completion of an Initial Business Combination. The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its Initial Business Combination.

The Company granted the underwriters a45-day option to purchase up to 5,250,000 additional Units to cover over-allotments, if any (“Over-Allotment Units”) at the initial public offering price less the underwriting discounts and commissions. The 2,732,112 Units issued in connection with the over-allotment option are identical to the Units issued in the Public Offering.

Note 4—Related Party Transactions

Founder Shares

During December 2016, the Sponsor purchased 10,062,500 shares of Class B Common Stock (the “Founder Shares”) for an aggregate price of $25,000, or approximately $0.002 per share. During the nine months ended September 30, 2017, the Sponsor transferred 40,000 Founder Shares to each of the Company’s three independent directors (or an aggregate of 120,000 Founder Shares) at their original purchase price. As used herein, unless the context otherwise requires, Founder Shares shallWarrants discussed above, except (i) they will not be deemed to include the shares of Class A Common Stock issuable upon conversion thereof. The Founder Shares are identical to the Class A common stock included in the Units sold in the Public Offering except that the Founder Shares automatically convert into shares of Class A Common Stock at the time of the Company’s Initial Business Combination and are subject to certain transfer restrictions, as described in more detail below. Holders of Founder Shares may also elect to convert their shares of Class B Common Stock into an equal number of shares of Class A Common Stock, subject to adjustment as provided above, at any time. Prior to the Public Offering, the Sponsor agreed to forfeit up to 1,312,500 Founder Shares to the extent that the over-allotment option was not exercised in fullredeemable by the underwriters. The forfeiture was to be adjusted to the extent that the over-allotment option was not exercised in full by the underwriters so that the Founder Shares would represent 20.0% of the Company’s issued and outstanding shares after the Public Offering. On April 21, 2017, as a result of the partial exercise of the over-allotment option, the Sponsor forfeited 629,472 of its Founder Shares.

The Company’s initial stockholders agreed subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of the Initial Business Combination or (B) subsequent to the Initial Business Combination, (x) if the last sale price of the Company’s Class A Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any30-trading day period commencing at least 150 days after the Initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.

Private Placement Warrants

Upon the closing of the Public Offering on April 4, 2017 and April 21, 2017, the Sponsor purchased an aggregate of 6,364,281 warrants at a price of $1.50 per warrant in a private placement (the “Private Placement Warrants”) (includes 364,281 warrants related to the Over-Allotment Units exercised) at a price of $1.50 per whole warrant ($9,546,422 in the aggregate) in a private placement. Each whole Private Placement Warrant is exercisable for one whole share of the Company’s Class A Common Stock at a price of $11.50 per share. A portion of the purchase price of the Private Placement Warrants was added to the proceeds from the Public Offering to be held in the Trust Account. If the Initial Business Combination is not completed within 24 months from the closing of the Public Offering, the proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless. The Private Placement Warrants will benon-redeemable and exercisable on a cashless basis so long as they are held by the Sponsorinitial holders or itstheir respective permitted transferees.

transferees and (ii) they may be exercised by the holders on a cashless basis (the “Private Placement Warrants” and, together with the Public Warrants, the “Warrants”).

The SponsorCompany recorded a fair value of $25 thousand for the Public Warrants and a fair value of $19 thousand for the Private Warrants as of March 31, 2023 on the Condensed Consolidated Balance Sheet in other non-current liabilities. Refer to Note 11—Fair Value Measurementin the Notesto our Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion regarding valuation of the Warrants.
Stock Repurchase Program
In February 2023, the Board of Directors (the “Board”) approved a share repurchase program (“Repurchase Program”), authorizing discretionary purchases of the Company’s officersClass A Common Stock up to $100.0 million in the aggregate. Repurchases may be made at management’s discretion from time to time, in accordance with applicable securities laws, on the open market or through privately negotiated transactions and directors agreed,may be made pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act. Privately negotiated repurchases from affiliates are also authorized under the Repurchase Program, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the Initial Business Combination.

Registration Rights

such affiliates’ interest and other limitations. The holders of Founder Shares, Private Placement Warrantsrepurchases will depend on market conditions and Warrants that may be issued upon conversiondiscontinued at any time without prior notice. For the three months ended March 31, 2023, the Company repurchased 81,862 shares at a total cost of working capital loans, if any, are entitled$2.4 million.

Dividend
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During the three months ended March 31, 2023, the Company made cash dividend payments of $17.1 million to registration rights (in the case of the Founder Shares, only after conversion of such shares to sharesholders of Class A Common Stock) pursuant to a registration rights agreement. These holders will be entitled to certain demandStock and “piggyback” registration rights.

The holders of Founder Shares, Private Placement WarrantsClass C Common Units and Warrants that may be issued upon conversion of working capital loans will not be able to sell these securities until the termination of the applicablelock-up period for the securities to be registered. The Company will bear the expenses incurred$87.9 million was reinvested in connection with the filing of any such registration statements.

Related Party Loans

On December 23, 2016, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Public Offering pursuant to a promissory note (the “Note”). On April 4, 2017, upon completion of the Public Offering, the Company paid in full the aggregate $265,000 of borrowings under the Note.

Administrative Support Agreement

The Company has agreed to pay an affiliate of the Sponsor a total of $5,000 per month for office space, utilities and secretarial and administrative support. Upon completion of the Initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. The Company paid the affiliate of the Sponsor $15,000 and $30,000 for such services for the three and nine months ended September 30, 2017, respectively.

Note 5—Stockholders’ Equity

Common Stock

The authorized common stock of the Company includes up to 200,000,000 shares of Class A Common Stock by Reinvestment Holders.

See Note 18 - Subsequent Events for discussion of dividend declared on April 19, 2023.

11. FAIR VALUE MEASUREMENTS
The Company’s Condensed Consolidated Balance Sheets reflect a mixture of measurement methods for financial assets and 20,000,000 sharesliabilities. Public and private warrants, contingent liabilities and derivative financial instruments are reported at fair value. Other financial instruments are reported at historical cost or amortized cost on our Condensed Consolidated Balance Sheets. Long-term debt is primarily the other financial instrument for which carrying value could vary significantly from fair value. See Note 7—Debt and Financing Costs in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further information.
Topic 820 establishes a framework for measuring fair value in U.S. GAAP, clarifies the definition of Class B Common Stock. Iffair value within that framework and requires disclosures about the use of fair value measurements. Topic 820 defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Topic 820 provides a framework for measuring fair value, establishes a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and requires consideration of the counterparty’s creditworthiness when valuing certain assets.
Topic 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets (Level 1 inputs). The three levels of the fair value hierarchy under Topic 820 are described below:
Level 1 inputs: Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2 inputs: Inputs, other than quoted prices in active markets, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level 3 inputs: Prices or valuations that require unobservable inputs that are both significant to the fair value measurement and unobservable. Valuation under Level 3 generally involves a significant degree of judgment from management.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Where available, fair value is based on observable market prices or inventory parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instrument’s complexity.
The following tables present financial assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022:
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March 31, 2023
Level 1Level 2Level 3Total
(In thousands)
Commodity swap$— $10,545 $— $10,545 
Interest rate derivatives— 3,413 — 3,413 
Total assets$— $13,958 $— $13,958 
Commodity swaps$— $7,529 $— $7,529 
Interest rate derivatives— 26,256 — 26,256 
Public warrants25 — — 25 
Private warrants— — 19 19 
Total liabilities$25 $33,785 $19 $33,829 
December 31, 2022
Level 1Level 2Level 3Total
(In thousands)
Commodity swap$— $4,288 $— $4,288 
Interest rate derivatives— 2,675 — 2,675 
Total assets$— $6,963 $— $6,963 
Commodity swaps$— $5,718 $— $5,718 
Interest rate derivatives— 8,328 — 8,328 
Public warrants50 — — 50 
Private warrants— — 38 38 
Total liabilities$50 $14,046 $38 $14,134 
Our derivative contracts consist of interest rate swaps and commodity swaps. Valuation of these derivative contracts involved both observable publicly quoted prices and certain inputs to the credit valuation that may not be readily observable in the marketplace. As such our derivative contracts are classified as Level 2 in the hierarchy. Refer to Note 12—Derivatives and Hedging Activitiesin the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for further discussion related to commodity swaps and interest rate derivatives.
The carrying value of the Company’s Public Warrants are recorded at fair value based on quoted market prices, a Level 1 fair value measurement. The carrying value of the Company’s Private Placement Warrants are recorded at fair value determined using an option pricing model, a Level 3 fair value measurement, which is calculated based on key assumptions related to expected volatility of the Company’s common stock, an expected dividend yield, the remaining term of the warrants outstanding and the risk-free rate based on the U.S. Treasury yield curve in effect at the time of the valuation. These assumptions are estimated utilizing historical trends of the Company’s common stock, Public Warrants and other factors. Change in fair value of the warrants since closing of the Transaction through reporting date was recorded in “Interest and other income” of the Condensed Consolidated Statements of Operations.
The carrying amounts reported on the Condensed Consolidated Balance Sheets for the Company’s remaining financial assets and liabilities approximate fair value due to their short-term nature. There were no transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy during the three months ended March 31, 2023 and 2022.

12. DERIVATIVES AND HEDGING ACTIVITIES
The Company is exposed to certain risks arising from both its business operations and economic conditions, and it enters into certain derivative contracts to manage exposure to these risks. To minimize counterparty credit risk in derivative instruments, the Company enters into an Initial Business Combination, it may (dependingtransactions with high credit-rating counterparties. The Company did not elect to apply hedge accounting to these derivative contracts and recorded the fair value of the derivatives on the termsCondensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022.
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Interest Rate Risk
The Company manages market risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and by using derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates.
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty if interest rates rise above the strike rate on the contract.
During November 2022 and March 2023, the Company entered into three interest rate swaps with total notional amounts of $2.25 billion that are effective on May 1, 2023 and mature on May 31, 2025. Under these swaps, the Company pays a fixed rate ranging from 4.38% to 4.49% for the respective notional amounts.
The fair value or settlement value of the consolidated interest rate swaps outstanding are presented on a gross basis on the Condensed Consolidated Balance Sheets. Interest rate swap derivative assets were $3.4 million and $2.7 million as of March 31, 2023 and December 31, 2022, respectively. Interest rate swap derivative liabilities were $26.3 million and $8.3 million as of March 31, 2023 and December 31, 2022, respectively. The Company recorded cash settlements on interest rate swap derivatives of nil and $0.7 million for the three months ended March 31, 2023 and 2022, respectively, in “Interest expense” of the Condensed Consolidated Statements of Operations. In addition, the Company recorded fair value adjustments of $17.2 million and $11.6 million for the three months ended March 31, 2023 and 2022, respectively, in “Interest expense” of the Condensed Consolidated Statements of Operations.
Commodity Price Risk
The results of the Company’s operations may be affected by the market prices of oil, natural gas and NGLs. A portion of the Company’s revenue is directly tied to local natural gas, natural gas liquids and condensate prices in the Permian Basin and the U.S. Gulf Coast. Fluctuations in commodity prices also impact operating cost elements both directly and indirectly. Management regularly reviews the Company’s potential exposure to commodity price risk and manages exposure of such risk through commodity hedge contracts.
During the past two quarters, the Company has entered into numerous commodity swap contracts based on the OPIS NGL Mont Belvieu prices for ethane, propane and butane, the Waha Basis index and the NYMEX WTI index. These contracts are on various notional quantities of NGLs, natural gas and crude. Similarly, the Company has entered into various natural gas and crude basis spread swaps. These index swaps are effective over the next 1 to 15 months and are used to hedge against location price risk of the respective commodity resulting from supply and demand volatility and protect cash flows against price fluctuations. The table below presents detailed information of commodity swaps outstanding as of March 31, 2023 (in thousands, except volumes):
March 31, 2023
CommodityInstrumentsUnitVolumeNet Fair Value
Natural GasCommodity SwapMMBtus6,380,000 $(6,254)
NGLCommodity SwapGallons157,281,600 9,252 
CrudeCommodity SwapBbl137,500 258 
Natural Gas Basis Spread SwapsCommodity SwapMMBtus29,850,000 (574)
Crude Gas Basis Spread SwapsCommodity SwapBbl496,000 334 
$3,016 
The fair value or settlement value of the swaps outstanding are presented on a gross basis on the Condensed Consolidated Balance Sheets. Commodity swap derivative assets were $10.5 million and $4.3 million as of March 31, 2023 and December 31, 2022, respectively. Commodity swap derivative liabilities were $7.5 million and $5.7 million as of March 31, 2023 and December 31, 2022, respectively. The Company recorded cash settlements on commodity swap derivatives of $1.0 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively, in “Product revenue” of the Condensed Consolidated Statements of Operations. In addition, the Company recorded fair value adjustments of $5.4 million and nil for the
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change in fair value of commodity swap derivatives for the three months ended March 31, 2023 and 2022, respectively, in “Product revenue” of the Condensed Consolidated Statements of Operations.

13. SHARE-BASED COMPENSATION
Prior to the Closing, the Company issued incentive units, which included performance and service conditions, to certain employees and Board members. The units consisted of Class A-1, Class A-2 and Class A-3 units. These units derived value from the Company’s certain wholly owned subsidiaries. Class A-1 and A-2 units would have vested upon either (i) the date of consummation of a change in control or (ii) the date that is 1-year following the consummation of the initial public offering (“IPO”) of the Company (or its successor) (collectively “Exit Events”). Class A-3 units would have vested upon a change in control, if the participants were employed at the time of the event, or upon termination of the participant by the Company.
Immediately upon Closing, all outstanding Class A-1 and Class A-2 units were cancelled and exchanged for 5,300,000 shares (the “Class A Shares”), post-Stock Split, of the Company’s Class A Common Stock. These Class A Shares are issued and outstanding as they were distributed pro rata to all holders of Class A-1 and Class A-2 units by the Common Unit limited partners from the 50,000,000 common units, pre-Stock-Split, that such limited partners received upon the Closing. The Common Unit limited partners redeemed Common Units needed for the Class A Shares distribution upon the Closing. The Class A Shares are held in escrow and will vest over three to four years. Similarly, the Class A-3 units were exchanged for approximately 326,000, post Stock Split, Class C Common Stock and Common Units (the “Class C Shares”) and will vest over four years. The Company also issued approximately 76,000, post Stock Split, replacement restricted share awards (“Replacement Awards”) to new employees that transitioned from ALTM as part of the Transaction. These changes for all three share types established a new measurement date. The Class A Shares, Class C Shares and Replacement Awards were valued based on the Company’s publicly quoted stock price on the measurement date, which was the Closing Date of the Transaction.
During the first quarter of 2023, pursuant to the Company’s 2019 Omnibus Compensation Plan, as amended from time to time (the “Plan”), the Company granted approximately 370,000 restricted stock units (“RSUs”) to its employees with cliff vesting on January 1, 2026 and approximately 181,000 RSUs to employees that were vested immediately. The 181,000 RSUs with no vesting terms were granted to employees who received their bonus in Company stock in lieu of cash bonus awards.
With respect to the above shares, the Company recorded compensation expenses of $17.5 million and $6.1 million for the three months ended March 31, 2023 and 2022, respectively, based on a straight-line amortization of the associated awards’ fair value over the respective vesting life of the shares.

14. INCOME TAXES
The Company is subject to U.S. federal income tax and the Texas margin tax. Income tax expense included in the Condensed Consolidated Financial Statements in this Form 10-Q is as follows:
Three Months Ended
March 31,
20232022
(In thousands)
Income before income taxes$4,715 $22,065 
Income tax expense$416 $676 
Effective tax rate8.82 %3.06 %
The effective tax rate for the three months ended March 31, 2023 was lower than the statutory rate mainly due to the impact of tax attributable to noncontrolling interests related to the Common Units limited partners and valuation allowance.

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15.    NET INCOME PER SHARE
The computation of basic and diluted net income per share for the periods presented in the Condensed Consolidated Financial Statements is shown in the tables below.
Three Months Ended
March 31,
20232022
(In thousands, except per share amounts)
Net income attributable to Class A common shareholders$1,436 $3,865 
Less: Net income available to participating unvested restricted Class A common shareholders(1)
(4,156)— 
Total net income (loss) attributable to Class A common shareholders$(2,720)$3,865 
Weighted average shares outstanding - basic(2)
47,392 37,392 
Dilutive effect(3)(4) of unvested Class A common shares
213 34 
Weighted average shares outstanding - diluted47,605 37,426 
Net income (loss) available per common share - basic$(0.06)$0.10 
Net income (loss) available per common share - diluted$(0.06)$0.10 
(1)Represents dividends paid to unvested restricted Class A common shareholders.
(2)Share amounts have been retrospectively restated to reflect the Company’s two-for-one Stock Split. Refer to Note 10—Equity and Warrantsin the Notes to our Condensed Consolidated Financial Statements for further information.
(3)The effect of an Initial Business Combination) be required to increaseassumed exchange of the outstanding public and private warrants for shares of Class A Common Stock would have been anti-dilutive for all periods presented in which the public and private warrants were outstanding.
(4)The effect of an assumed exchange of outstanding Common Units (and the cancellation of a corresponding number of shares of outstanding Class C Common Stock) would have been anti-dilutive for all periods presented in which the Common Units were outstanding.

16.    COMMITMENTS AND CONTINGENCIES
Accruals for loss contingencies arising from claims, assessments, litigation environmental, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. As of March 31, 2023 and December 31, 2022, there were no accruals for loss contingencies.
Litigation
The Company is a party to various legal actions arising in the ordinary course of its businesses. In accordance with ASC 450, Contingencies, the Company accrues reserves for outstanding lawsuits, claims and proceedings when a loss contingency is probable and can be reasonably estimated. The Company estimates the amount of loss contingencies using current available information from legal proceedings, advice from legal counsel and available insurance coverage. Due to the inherent subjectivity of the assessments and unpredictability of the outcomes of the legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from the legal proceedings in question. Thus, the Company’s exposure and ultimate losses may be higher, and possibly significantly more, than the amounts accrued.
The Company has entered into litigation with two third parties to collect outstanding receivables totaling $19.6 million that remain outstanding from the Winter Storm Uri during February of 2021. Given the counterparties’ sufficient creditworthiness and the valid claims that we hold, no allowance has currently been established for these items as we have legally enforceable agreements with these parties.
Environmental Matters
As an owner of infrastructure assets with rights to surface lands, the Company is subject to various local and federal laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the Company for the cost of pollution clean-up resulting from operations and subject the Company to liability for pollution damages. The Company is not aware of any environmental claims existing as of March 31,
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2023, that have not been provided for or would otherwise have a material impact on its financial position, results of operations, or liquidity.
Contingent Liabilities
Permian Gas Acquisition
As part of the acquisition of Permian Gas on June 11, 2019, consideration included a contingent liability arrangement with PDC Permian, Inc. (“PDC”). The arrangement requires additional monies to be paid by the Company to PDC on a per Mcf basis if the actual annual Mcf volume amounts exceed forecasted annual Mcf volume amounts starting in 2020 and continuing through 2029. The total monies paid under this arrangement are capped at $60.5 million. Amounts are payable on an annual basis over the earn-out period. Based on current forecasts and discussions with PDC, management revalues this contingent liability with updated assumptions at each reporting period. PDC’s actual annual Mcf volume did not exceed the incentive rate during the past three years and the Company did not expect PDC’s actual annual Mcf volume amounts to exceed forecasted amounts as of March 31, 2023; therefore, the estimated fair value of the contingent consideration liability was nil as of March 31, 2023 and December 31, 2022.
Original Altus Transaction
As part of the Transaction, the Company assumed contingent liabilities of $4.5 million related to earn-out consideration of up to 2,500,000 shares of Class A Common Stock, which the Company is authorized to issue at the same time as the Company’s stockholders vote on the Initial Business Combination, to the extent the Company seeks stockholder approval in connection with the Initial Business Combination. Holderswas part of the Company’s common stock are entitled to one vote for eachoriginal Altus transaction, as follows:
•    1,250,000 shares if the per share closing price of common stock. At September 30, 2017, there were 37,732,112 shares ofthe Class A Common Stock issued and outstanding, including 35,994,404as reported by the New York Stock Exchange (“NYSE”) during any 30-trading-day period ending prior to November 9, 2023 is equal to or greater than $140.00 for any 20 trading days within such 30-trading-day period.
•    1,250,000 shares which are subject to redemption at that date. At September 30, 2017 and December 31, 2016, there were 9,433,028 and 10,062,500 sharesif the per share closing price of the Class BA Common Stock issuedas reported by the NYSE during any 30-trading-day period ending prior to November 9, 2023 is equal to or greater than $160.00 for any 20 trading days within such 30-trading-day period.
Pursuant to ASC 805, this earn-out consideration was a pre-existing contingency and outstanding, respectively.

Preferred Stock

accounted for as an assumed liability to the acquirer on the acquisition date. Immediately subsequent to the Closing, the Company evaluated the earn-out consideration classification in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).The Company is authorizeddetermined the earn-out consideration to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferencesbe classified as may be determined from time to time byequity based on the settlement provision.


17.    SEGMENTS
Our two operating segments represent the Company’s boardsegments for which discrete financial information is available and is utilized on a regular basis by our chief operating decision maker (“CODM”) to make key operating decisions, assess performance and allocate resources. Our Chief Executive Officer is the CODM. These segments are strategic business units with differing products and services. No operating segments have been aggregated to form the reportable segments. Therefore, our two operating segments represent our reportable segments. The activities of directors. At September 30, 2017each of our reportable segments from which the Company earns revenues and December 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) water gathering and disposal.
•Pipeline Transportation: The Pipeline Transportation segment consists of equity investment interests in four Permian Basin pipelines that access various points along the Texas Gulf Coast, Kinetik NGL Pipeline and Delaware Link Pipeline that is under development. The current operating pipelines transport crude oil, natural gas and NGLs.
The Midstream Logistics segment accounts for more than 99% of the Company’s operating revenues, cost of sales (excluding depreciation and amortization), operating expenses and ad valorem expenses. The Pipeline Transportation segment contains all of the Company’s equity method investments, which contribute more than 99% of the segment’s EBITDA. Corporate and Other contains the Company’s executive and administrative functions, including 85% 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 segment profit measure as of and for the three months ended March
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31, 2016, there were no shares2023 and 2022:
Midstream LogisticsPipeline Transportation
Corporate and Other(1)
Consolidated
(In thousands)
For the Three Months Ended March 31, 2023
Segment net income (loss) including noncontrolling interests$51,012 $46,432 $(93,145)$4,299 
Add back:
Interest expense (income)9 — 69,299 69,308 
Income tax expense (benefit)— — 416 416 
Depreciation and amortization68,393 455 6 68,854 
Contract assets amortization1,655 — — 1,655 
Unrealized hedging (gain) loss(4,987)— — (4,987)
Proportionate EMI EBITDA— 71,867 — 71,867 
Share-based compensation— — 17,540 17,540 
Loss (gain) on disposal of assets102 — — 102 
Integration costs7 — 918 925 
Acquisition transaction costs33 — 235 268 
Other one-time costs or amortization3,025 — 723 3,748 
Deduct:
Warrant valuation adjustment— — 44 44 
Equity income from unconsolidated affiliates— 46,464 — 46,464 
Segment adjusted EBITDA(3)
$119,249 $72,290 $(4,052)$187,487 
Midstream LogisticsPipeline Transportation
Corporate and Other(1)
Consolidated(2)
(In thousands)
For the Three Months Ended March 31, 2022
Segment net income (loss) including noncontrolling interests$9,185 $29,136 $(16,932)$21,389 
Add back:
Interest expense (income)26,642 (1,614)1,617 26,645 
Gain on redemption of mandatorily redeemable Preferred units— — (4,493)(4,493)
Income tax expense (benefit)457 (39)258 676 
Depreciation and amortization60,893 130 — 61,023 
Contract assets amortization448 — — 448 
Proportionate EMI EBITDA— 40,741 — 40,741 
Share-based compensation— — 6,132 6,132 
Loss on disposal of assets110 — — 110 
Loss on debt extinguishment129 — — 129 
Unrealized loss on embedded derivatives— — 2,886 2,886 
Integration costs4,104 — 2,047 6,151 
Acquisition transaction costs4 — 5,672 5,676 
Other one-time costs or amortization918 — 277 1,195 
Deduct:
Equity income from unconsolidated affiliates— 27,917 — 27,917 
Segment adjusted EBITDA(3)
$102,890 $40,437 $(2,536)$140,791 
(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 preferred stock issued or outstanding.

evaluating their performance, including certain general and administrative expense items.

(2)Results do not include legacy ALTM prior to February 22, 2022. Refer to Note 6—Fair Value Measurements

1 —Description of the Organization and Summary of Significant Accounting Policies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q, for further information on the Company’s basis of presentation.

(3)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” of this Form 10-Q, for a definition and reconciliation to the GAAP measure.
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The following tables present the revenue for individual operating segment for the three months ended March 31, 2023 and 2022:
Midstream LogisticsPipeline TransportationConsolidated
(In thousands)
For the Three Months Ended March 31, 2023
Revenue$276,555 $694 $277,249 
Other revenue3,789 2 3,791 
Total segment operating revenue$280,344 $696 $281,040 
Midstream LogisticsPipeline TransportationConsolidated
(In thousands)
For the Three Months Ended March 31, 2022
Revenue$255,373 $— $255,373 
Other revenue1,874 2 1,876 
Total segment operating revenue$257,247 $2 $257,249 
The following table presents information abouttotal assets for each operating segment as of March 31, 2023 and December 31, 2022:
March 31,December 31,
20232022
(In thousands)
Midstream Logistics$3,637,003 $3,486,948 
Pipeline Transportation(1)
2,463,333 2,414,829 
Segment total assets6,100,336 5,901,777 
Corporate and other24,319 17,934 
Total assets$6,124,655 $5,919,711 
(1)Includes investment in unconsolidated affiliates of $2.41 billion and $2.38 billion as of March 31, 2023 and December 31, 2022, respectively.

18.    SUBSEQUENT EVENTS
On April 19, 2023, the Board declared a cash dividend of $0.75 per share on the Company’s assets that are measured on a recurring basisClass A Common Stock which will be payable to stockholders of record as of September 30, 2017 and indicates the fair value hierarchyMay 5, 2023 on May 17, 2023. The Company, through its ownership of the valuation techniques thatgeneral partner of the Company utilizedPartnership, declared a distribution of $0.75 per Common Unit from the Partnership to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable, such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.

Description

  September 30, 2017   Quoted Prices in
Active Markets
(Level 1)		   Significant Other
Observable
Inputs (Level 2)		   Significant Other
Unobservable
Inputs (Level 3)		 

Investments held in Trust Account

  $378,284,003   $378,284,003   $—     $—   
  

 

 

   

 

 

   

 

 

   

 

 

 

holders of Common Units.


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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

References to the “Company,” “us” or “we” refer to Kayne Anderson Acquisition Corp.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis addresses the results of our operations for the three month periods ended March 31, 2023, as compared to our results of operations for the same periods in 2022. In addition, the discussion and analysis addresses our liquidity, financial condition and other matters for these periods. The business combination of ALTM and BCP and their respective consolidated subsidiaries closed on February 22, 2022. As the transaction was determined to be a reverse merger, BCP was considered the accounting acquirer and ALTM was considered the legal acquirer. Therefore, BCP’s net assets, carried at historical value, were presented as the predecessor to the Company’s historical financial conditionstatements and the comparable period presented herein reflects the results of operations of BCP for the three months ended March 31, 2022 and results of operations of ALTM from the Closing Date through March 31, 2022.
Unless otherwise noted or the context requires otherwise, references herein to Kinetik Holdings Inc. “the Company”, “us”, “our”, “we” or similar terms, with respect to time periods prior to February 22, 2022, include BCP and its consolidated subsidiaries and do not include ALTM and its consolidated subsidiaries, while references herein to Kinetik Holdings Inc. with respect to time periods from and after February 22, 2022, include ALTM and its consolidated subsidiaries.
Business Combination
On February 22, 2022 (the “Closing Date”), Kinetik Holdings Inc., a Delaware corporation (formerly known as Altus Midstream Company), consummated the previously announced business combination transactions contemplated by the Contribution Agreement, dated as of October 21, 2021 (the “Contribution Agreement”), by and among the Company, Altus Midstream LP (now known as Kinetik Holdings LP), a Delaware limited partnership and subsidiary of Altus Midstream Company (the “Partnership”), New BCP Raptor Holdco, LLC, a Delaware limited liability company (“Contributor”), and BCP. The transactions contemplated by the Contribution Agreement are referred to herein as the “Transaction.” In connection with the closing of the Transaction (the “Closing”), the Company changed its name from “Altus Midstream Company” to “Kinetik Holdings Inc.” Upon closing of the business combination, BCP and its subsidiaries became wholly owned subsidiaries of the Partnership. The Transaction was accounted for as a reverse merger pursuant to ASC 805 Business Combination (“ASC 805”).
Refer to Note 2—Business Combination in the Notes to our Condensed Consolidated Financial Statements for further information.
Overview
We are an integrated midstream energy company in the Permian Basin providing comprehensive gathering, transportation, compression, processing and treating services. Our core capabilities include a variety of service offerings including natural gas gathering, transportation, compression, treating and processing; NGLs stabilization and transportation; produced water gathering and disposal; and crude oil gathering, stabilization, storage and transportation. The Company’s corporate office is located in Houston, TX and our operations are strategically located in the heart of the Delaware Basin.
Our Operations and Segments
Upon Closing, the Company renamed its Gathering and Processing segment to Midstream Logistics and renamed its Transmission segment to Pipeline Transportation. These name changes were made to better align segment activities with the name of each respective segment. The Midstream Logistics segment operates under three service offerings, 1) gas gathering and processing, 2) crude oil gathering, stabilization and storage services and 3) water gathering and disposal. The Pipeline Transportation segment consists of four equity method investment (“EMI”) pipelines originating in the Permian Basin with various access points to the Texas Gulf Coast, Kinetik NGL Pipeline and Delaware Link Pipeline that is under development. The pipelines transport crude oil, natural gas and NGLs within the Permian Basin and to the Texas Gulf Coast.
Midstream Logistics
Gas Gathering and Processing. The Midstream Logistics segment provides gas gathering and processing services with over 1,500 miles of low and high-pressure steel pipeline located throughout the Delaware Basin. Gas processing assets are centralized at five processing complexes with total cryogenic processing capacity of approximately 2.0 Bcf/d.
Crude Oil Gathering, Stabilization and Storage Services. Crude gathering assets are centralized at the Caprock Stampede Terminal and the Pinnacle Sierra Grande Terminal. The system includes approximately 220 miles of gathering pipeline and 90,000 barrels of crude storage.
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Water Gathering and Disposal. The system includes over 360 miles of gathering pipeline and approximately 760,000 barrels per day of permitted disposal capacity.
Pipeline Transportation
EMI pipelines. The Company owns the following equity interests in four EMI pipelines in the Permian Basin with access to various points along the Texas Gulf Coast: 1) an approximate 53.3% equity interest in Permian Highway Pipeline LLC (“PHP”), which is also owned and operated by Kinder Morgan; 2) 16% equity interest in Gulf Coast Express Pipeline LLC (“GCX”), which is owned and operated by Kinder Morgan; 3) 33% equity interest in Shin Oak, which is owned by Breviloba, LLC, and operated by Enterprise Products Operating LLC; and 4) 15% equity interest in Epic Crude Holdings, LP (“EPIC”), which is operated by EPIC Consolidated Operations, LLC.
Kinetik NGL Pipeline. Approximately 30 miles of 20-inch NGL pipelines connected to our Diamond Cryogenic complex.
Delaware Link Pipeline. The Company is currently building the Delaware Link Pipeline, which will provide additional transportation capacity to Waha when it is put into service. The project is expected to be complete in the fourth quarter of 2023. Upon completion, this pipeline is estimated to be 40 miles and to have a capacity of approximately 1.0 Bcf/d.
Factors Affecting Our Business
Commodity Price Volatility
There has been, and we believe there will continue to be, volatility in commodity prices and in the relationships among NGLs, crude oil and natural gas prices. As a result of uncertainty around global commodity supply and demand, uncertainty in global economic recovery from the aftereffects of the COVID-19 pandemic and the armed conflict in Ukraine, and uncertainty from the recent banking turmoil and its effects on financial markets, global oil and natural gas commodity prices continue to remain volatile. The volatility and uncertainty of natural gas, crude oil and NGL prices impact drilling, completion and other investment decisions by producers and ultimately supply to our systems. Although the armed conflict in Ukraine generated commodity price upward pressure, and our operation could benefit in an environment of higher natural gas, NGLs and condensate prices, the instability of international political environment and human and economic hardship resulting from the conflict would have a highly uncertain impact on the U.S. economy, which in turn, might affect our business and operations adversely. Our product sales revenue is exposed to commodity price fluctuations. Therefore, commodity price decline and sustained periods of low natural gas and NGL prices could have an adverse effect on our product revenue stream. Also, after a rapid rise of oil and natural gas prices in first half of 2022, oil and natural gas prices have moderated from their peaks during the past six months. The Company continues to monitor commodity prices closely and may enter into commodity price hedges from time to time as necessary to mitigate the volatility risk. In addition, the Company, when economically appropriate, enters into fee-based arrangements that insulate the Company from commodity price volatility.
Inflation and Interest Rates
The annual rate of inflation in the United States dropped slightly to 5.0% in March 2023 compared to 8.5% in March 2022, as measured by the Consumer Price Index, which was the lowest since May 2021. However, the Federal Open Market Committee (“FOMC”) maintains its long run goals of maximum employment and inflation at the rate of 2.00%. In support of these goals, the FOMC decided to raise the target range for the federal funds rate to 4.75% and 5.00% during its meeting in March 2023. FOMC acknowledged the current stress on the banking system, stating that while the United States banking system is sound and resilient, recent developments are likely to result in tighter credit conditions for households and businesses and to affect economic activity, hiring, and inflation. The extent of these effects is uncertain. There is uncertainty regarding whether inflation will continue to be tamed by the FOMC’s effort or whether the FOMC will continue to tighten its monetary policy in the next 12 months. Increased interest rates will increase our operating costs and have a negative impact on the Company’s ability to meet its contractual debt obligations and to fund its operating expenses, capital expenditures, dividends and distributions. The Company will continue to actively evaluate and analyze whether any additional forms of interest rate hedging should be readimplemented to mitigate interest rate exposure.
Supply Chain Considerations
During 2022, challenging supply chain issues emerged that we expect will continue at least through the first half of 2023. Geopolitical events have further disrupted global supply chains and caused volatile commodity prices for natural gas, NGLs and crude oil. The United States has banned the import of Russian oil, NGLs and other energy commodities and the European Union has taken steps to reduce imports of Russian oil and natural gas. The principal supply issues facing our industry for the
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next twelve months include: raw materials availability, finished good inventory, rising freight costs, delays due to port congestion and overall labor shortages.
Recent Developments
Share Repurchase Program
In February 2023, the Board of Directors (the “Board”) approved a share repurchase program (“Repurchase Program”), authorizing discretionary purchases of the Company’s Class A Common Stock up to $100 million in conjunctionthe aggregate. Repurchases may be made at management’s discretion from time to time, in accordance with applicable securities laws, on the open market or through privately negotiated transactions and may be made pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act. Privately negotiated repurchases from affiliates are also authorized under the Repurchase Program, subject to such affiliates’ interest and other limitations. The repurchases will depend on market conditions and may be discontinued at any time without prior notice.
For the three months ended March 31, 2023, the Company repurchased 81,862 shares at a total cost of $2.4 million. For additional information, see “Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds” in this Quarterly Report on Form 10-Q.

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Results of Operations
The following table presents the Company’s results of operations for the periods presented:
Three Months Ended
March 31,
2023
2022*
% Change
(In thousands, except percentages)
Revenues:
Service revenue$103,425 $80,445 29 %
Product revenue173,824 174,928 (1 %)
Other revenue3,791 1,876 102 %
Total operating revenues281,040 257,249 9 %
Operating costs and expenses:
Cost of sales (exclusive of depreciation and amortization shown separately below)115,877 120,275 (4 %)
Operating expenses35,973 29,871 20 %
Ad valorem taxes5,458 4,153 31 %
General and administrative expenses27,511 22,752 21 %
Depreciation and amortization expenses68,854 61,023 13 %
Loss on disposal of assets102 110 (7 %)
Total operating costs and expenses253,775 238,184 7 %
Operating income27,265 19,065 43 %
Other income (expense):
Interest and other income294 250 18 %
Gain on redemption of mandatorily redeemable Preferred Units— 4,493 (100 %)
Gain on embedded derivatives— (2,886)(100 %)
Interest expense(69,308)(26,774)159 %
Equity in earnings of unconsolidated affiliates46,464 27,917 66 %
Total other income (expense), net(22,550)3,000 NM
Income before income taxes4,715 22,065 (79 %)
Income tax expense416 676 (38 %)
Net income including noncontrolling interests$4,299 $21,389 (80 %)
* The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to the Form 10-Q basis of presentation in Note 1—Description of the Organization and Summary of Significant Accounting Policiesin the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q, for further information.
NM - Not meaningful

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022
Revenues
For the three months ended March 31, 2023, revenue increased $23.8 million, or 9%, to $281.0 million, compared to $257.2 million for the same period in 2022. The increase was primarily driven by period-to-period higher service revenues related to increases in gathered and processed gas volumes.
Service revenue
Service revenue consists of service fees paid to us by our customers for providing comprehensive gathering, treating, processing and water disposal services necessary to bring natural gas, NGLs and crude oil to market. Service revenue for the three months ended March 31, 2023, increased by $23.0 million, or 29%, to $103.4 million, compared to $80.4 million for the same period in 2022. This increase was primarily due to a period-over-period increase in gathered and processed gas volumes of 169.3 Mcf per day and 164.2 Mcf per day, respectively. Over 99% of service revenues are included in the Midstream Logistics segment.
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Product revenue
Product revenue consists of commodity sales (including condensate, natural gas residue and NGLs). Product revenue for the three months ended March 31, 2023, decreased by $1.1 million, or 1%, to $173.8 million, compared to $174.9 million for the same period in 2022. Product revenues were flat due to period over period decreases in natural gas, NGL and condensate prices, offset by increased sales volumes of these commodities. NGL prices decreased $23.20 per barrel, or 49%, and condensate prices decreased $20.61 per barrel, or 22%. NGL and condensate sales volumes increased 3.8 million barrels, or 165%. Similarly, natural gas prices decreased period over period by $3.14 per MMBtu, or 70%, while natural gas residue sales volumes increased by 0.3 million MMBtu, or 3%. Product revenues are included entirely in the Midstream Logistics segment.
Operating Costs and Expenses
Costs of sales (exclusive of depreciation and amortization)
Cost of sales (exclusive of depreciation and amortization) primarily consists of purchases of NGLs and natural gas from our producers at contracted market prices to support product sales to other third parties. For the three months ended March 31, 2023, cost of sales decreased $4.4 million, or 4%, to $115.9 million, compared to $120.3 million for the same period in 2022. The decrease was primarily driven by lower transportation costs during the current quarter. Cost of sales (exclusive of depreciation and amortization) are included entirely in the Midstream Logistics segment.
Operating expenses
Operating expenses increased by $6.1 million, or 20%, to $36.0 million for the three months ended March 31, 2023, compared to $29.9 million for the same period in 2022. Of the total increase, $4.5 million was driven by the inclusion of Altus operations for the entire period, versus just over a month during the same period of 2022. The remaining increase is primarily the result of higher compression and electricity expenses from the increased gathered and processed volumes discussed above. Over 99% of operating expenses are included in the Midstream Logistics segment.
General and administrative
General and administrative expense increased by $4.8 million, or 21%, to $27.5 million for the three months ended March 31, 2023, compared to $22.8 million for the same period in 2022. The increase was driven by higher share-based compensation of $11.4 million related to a full quarter of stock compensation amortization during 2023 versus just over a month of amortization during the same period of 2022 and due to certain members of management opting to receive their bonuses in the form of stock compensation during March 2023. This increase was partially offset by a decrease of $5.7 million of costs related to the Transaction incurred during the first quarter of 2022.
Depreciation and amortization
Depreciation and amortization expense increased by $7.8 million, or 13%, to $68.9 million for the three months ended March 31, 2023, compared to $61.0 million for the same period in 2022. The increase was primarily driven by the new assets acquired through the Transaction, which closed on February 22, 2022.
Other Income (Expense)
Interest Expense
Interest expense increased by $42.5 million, or 159%, to $69.3 million for the three months ended March 31, 2023, compared to $26.8 million for the same period in 2022. The increase was primarily driven by higher interest rate swap valuation marks of $28.8 million when comparing the first quarter of 2023 to the same period in 2022. The remaining increase relates to higher debt obligations resulting from the comprehensive refinancing completed in June 2022, as well as an overall increase in interest rates associated with the condensedTerm Loan Credit Facility (as defined below) and Revolving Credit Facility (as defined below, which carried some variability. Refer to Note—12 Derivatives and Hedging Activities in the Notes to our Consolidated Financial Statements regarding the Company’s strategy in managing interest rate risk.
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Equity in earnings of unconsolidated affiliates
Income from EMI pipelines increased by $18.5 million, or 66%, to $46.5 million for the three months ended March 31, 2023, compared to $27.9 million for the same period in 2022. The increase was primarily due to the acquisition of new EMI pipelines and additional equity interests in the Company’s existing EMI pipeline, PHP, through the Transaction, which closed in February 2022. Equity in earnings of unconsolidated affiliates is included entirely in the Pipeline Transportation segment.

Key Performance Metrics
Adjusted EBITDA
Adjusted EBITDA is defined as net income including noncontrolling interests adjusted for interest, taxes, depreciation and amortization, impairment charges, asset write-offs, the proportionate EBITDA from our equity method investments, equity in earnings from investments recorded using the equity method, share-based compensation expense, extraordinary losses and unusual or non-recurring charges. Adjusted EBITDA provides a basis for comparison of our business operations between current, past and future periods by excluding items that we do not believe are indicative of our core operating performance.
We believe that Adjusted EBITDA provides a meaningful understanding of certain aspects of earnings before the impact of investing and financing charges and income taxes. Adjusted EBITDA is useful to an investor in evaluating our performance because this measure:
•is widely used by analysts, investors and competitors to measure a company’s operating performance;
•is a financial statementsmeasurement that is used by rating agencies, lenders, and other parties to evaluate our credit worthiness; and
•is used by our management for various purposes, including as a measure of performance and as a basis for strategic planning and forecasting.
Adjusted EBITDA is not defined in GAAP
The GAAP measure used by the Company that is most directly comparable to Adjusted EBITDA is net income including noncontrolling interests. Adjusted EBITDA should not be considered as an alternative to the GAAP measure of net income including noncontrolling interests or any other measure of financial performance presented in accordance with GAAP. Adjusted EBITDA has important limitations as an analytical tool because it excludes some, but not all, items that affect net income including noncontrolling interests. Adjusted EBITDA should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. The Company’s definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies in the industry, thereby diminishing its utility.
Reconciliation of non-GAAP financial measure
Company management compensates for the limitations of Adjusted EBITDA as an analytical tool by reviewing the comparable GAAP measure, understanding the differences between Adjusted EBITDA as compared to net income including noncontrolling interests, and incorporating this knowledge into its decision-making processes. Management believes that investors benefit from having access to the same financial measure that the Company uses in evaluating operating results.
The following table presents a reconciliation of the GAAP financial measure of net income including noncontrolling interests to the non-GAAP financial measure of Adjusted EBITDA.

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Three Months Ended March 31,
2023
2022*
% Change
(In thousands, except percentages)
Reconciliation of net income including noncontrolling interests to Adjusted EBITDA
Net income including noncontrolling interests$4,299 $21,389 (80)%
Add back:
Interest expense69,308 26,645 160 %
Income tax expense416 676 (38)%
Depreciation and amortization68,854 61,023 13 %
Amortization of contract costs1,655 448 NM
Proportionate EMI EBITDA71,867 40,741 76 %
Share-based compensation17,540 6,132 186 %
Loss on disposal of assets102 110 (7)%
Loss on debt extinguishment— 129 (100)%
Unrealized (gain) loss on commodity or embedded derivatives(4,987)2,886 NM
Integration Costs925 6,151 (85)%
Transaction Costs268 5,676 (95)%
Other one-time cost or amortization3,748 1,195 NM
Deduct:
Warrant valuation adjustment44 — 100 %
Gain on redemption of mandatorily redeemable Preferred Units— 4,493 (100)%
Equity income from EMI's46,464 27,917 66 %
Adjusted EBITDA$187,487 $140,791 33 %
* The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to Note 1—Description of the Organization and Summary of Significant Accounting Policies for further information on the Company’s basis of presentation.
NM - not meaningful
Adjusted EBITDA increased by $46.7 million, or 33%, to $187.5 million for the three months ended March 31, 2023, compared to $140.8 million for the same period in 2022. The increase was primarily driven by increases in add back related to the Company’s proportionate share of its EMI pipelines’ EBITDA of $31.1 million, or 76%, share-based compensation of $11.4 million, or 186%, and depreciation and amortization expense of $7.8 million. The increase in adjusted EBITDA was partially offset by EMI pipelines equity income of $18.5 million, a decrease in net income including noncontrolling interest of $17.1 million, or (80)%, and a decrease in integration costs of $5.2 million, or 85%.
Segment Adjusted EBITDA
Segment adjusted EBITDA 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 equity method investments and other non-recurring items. The following table presents segment adjusted EBITDA for the three months ended March 31, 2023 and 2022. Also refer to Note 16—Segments in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for a reconciliation of segment adjusted EBITDA to net income including noncontrolling interests.
Three Months Ended
March 31,
2023
2022*
% Change
(In thousands, except percentages)
Midstream Logistics$119,249 $102,890 16 %
Pipeline Transportation72,290 40,437 79 %
Corporate and Other**(4,052)(2,536)60 %
Total segment adjusted EBITDA$187,487 $140,791 33 %
* The results of the legacy ALTM business are not included in the Company’s consolidated financials prior to February 22, 2022. Refer to Note 1—Description of the Organization and Summary of Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements of this Form 10-Q for further information on the Company’s financial statement consolidation.
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** 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.
Midstream Logistics segment adjusted EBITDA increased by $16.4 million, or 16%, to $119.2 million for the three months ended March 31, 2023, compared to $102.9 million for the same period in 2022. The increase was primarily driven by an increase in segment net income including noncontrolling interests of $41.8 million and increases in the add back related to interest expense of $26.6 million due to increased balances on the Company’s credit facilities and depreciation and amortization expense of $7.5 million due to new operations acquired through the Transaction. The increase in adjusted EBITDA was partially offset by decreased in add back related to integration and acquisition costs of $4.1 million.
Pipeline Transportation segment adjusted EBITDA increased by $31.9 million, or 79%, to $72.3 million for the three months ended March 31, 2023, compared to $40.4 million for the same period in 2022. The increase was driven by investments in GCX, EPIC and Shin Oak as well as a 100% increase in the Company’s investment in PHP, which were all acquired through the Transaction closed in February 2022. During the three months ended March 31, 2022, the Company only held a 26.67% interest in PHP.

Capital Resources and Liquidity
The Company’s primary use of capital since inception has been for the initial construction of gathering and processing assets, as well as the acquisition of the EMI pipelines and associated subsequent construction costs. For 2023, the Company’s primary capital spending requirements are related to the PHP expansion project, the midstream infrastructure acquisition and other budgeted capital expenditures for construction of gathering and processing assets and the notes thereto contained elsewhereCompany’s contractual debt obligations. The Company will continue to have Apache, Blackstone, I Squared and management reinvest 100% of their 2023 distribution and dividends into shares of our Class A Common Stock. In addition, the Board has approved the Repurchase Program authorizing discretionary purchases of the Company’s Class A Common Stock up to $100 million in aggregate.
During the three months ended March 31, 2023, the Company’s primary sources of cash were distributions from the EMI pipelines, borrowings under the Revolving Credit Facility and cash generated from operations. Based on the Company’s current financial plan and related assumptions including the Reinvestment Agreement (as defined below), the Company believes that cash from operations and distributions from the EMI pipelines will generate cash flows in excess of capital expenditures and the amount required to fund the Company’s planned quarterly dividend over the next 12 months. Additionally, the Company has locked in the floating base rate on its Term Loan Credit Facility with interest rate swaps with a $2.25 billion notional that are effective through May 31, 2025 swapping floating SOFR for a fixed swap rate between 4.38% and 4.49%.
Comprehensive Refinancing
On June 8, 2022, the Partnership completed the private placement of $1.00 billion aggregate principal amount of 5.875% Senior Notes due 2030, which are fully and unconditionally guaranteed by the Company. The Notes are issued under our Sustainability-Linked Financing Framework and include sustainability-linked features. In addition, the Partnership entered into the revolving credit agreement with Bank of America, N.A., as administrative agent (the “Revolving Credit Agreement”), which provides for a $1.25 billion senior unsecured Revolving Credit Facility maturing on June 8, 2027 (the “Revolving Credit Facility”), and the term loan credit agreement with PNC Bank as administrative agent (the “TLA”), which provides for a $2.00 billion senior unsecured Term Loan Credit Facility maturing on June 8, 2025 (the “Term Loan Credit Facility”). Proceeds from the Notes and the Term Loan Credit Facility were used to repay all outstanding borrowings under our existing credit facilities and to pay fees and expenses related to the offering.Note 8—Debt and Financing Costs in the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for further information.
Capital Requirements and Expenditures
Our operations can be capital intensive, requiring investments to expand, upgrade, maintain or enhance existing operations and to meet environmental and operational regulations. During the three months ended March 31, 2023 and 2022, capital spending for property, plant and equipment totaled $56.7 million and $29.2 million, respectively and intangible asset purchases of $9.8 million and $3.6 million, respectively. The first quarter of 2023 also included capital spend of $65 million for certain midstream infrastructure assets, as discussed in Note 2 - Business Combinations. Management believes its existing gathering, processing and transmission infrastructure capacity is capable of fulfilling its midstream contracts to service its customers. During the three months ended March 31, 2023, the Company contributed $58.7 million to PHP, for the Capacity Expansion Project, which started in June 2022.
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The Company anticipates its existing capital resources will be sufficient to fund the future capital expenditures for EMI pipelines and the Company’s existing infrastructure assets over the next 12 months. For further information on EMIs, refer to Note 6—Equity Method Investmentsin the Notes to our Condensed Consolidated Financial Statements in this report.

Cautionary Note Regarding Forward-Looking Statements

All statementsForm 10-Q.

Cash Flow
The following tables present cash flows from operating, investing, and financing activities during the periods presented:
Three Months Ended March 31,
20232022
(In thousands)
Cash provided by operating activities$119,591 $98,393 
Cash used in investing activities$(246,468)$(19,392)
Cash provided by (used in) financing activities$122,467 $(80,084)
Operating Activities. Net cash provided by operating activities increased by $21.2 million for the three months ended March 31, 2023 compared with the same period in 2022. The change in the operating cash flows reflected increases in adjustments related to non-cash items of $46.1 million, offset by decreases in working capital of $7.8 million and decreases in net income including noncontrolling interests of $17.1 million.
Investing Activities. Net cash used in investing activities increased by $227.1 million for the three months ended March 31, 2023 compared with the same period in 2022. The increase was primarily driven by an increase in net cash (paid for) acquired in acquisition of $138.4 million, an increase in property, plant and equipment expenditures of $29.6 million, an increase in contributions made to unconsolidated affiliates of $58.7 million related to the PHP expansion project and an increase in intangible assets expenditure of $6.2 million.
Financing Activities. Net cash provided by financing activities was $122.5 million for the three months ended March 31, 2023, which was comprised of net borrowings from the Company’s Revolving Credit Facility of $142.0 million, offset by cash dividends of $17.1 million and repurchase of Class A common stock of $2.4 million. Net cash used in financing activities was $80.1 million for the three months ended March 31, 2022, which was comprised of redemption of mandatorily redeemable Preferred Units of $60.7 million and net payments on the Company’s long-term debt and Revolving Credit Facility of $19.4 million.
Dividend and Distribution Reinvestment Agreement
On February 22, 2022, the Company entered into a Dividend and Distribution Reinvestment Agreement (the “Reinvestment Agreement”) with certain stockholders including BCP Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC, APA Corporation Apache Midstream LLC, and certain individuals (each, a “Reinvestment Holder”). Under the Reinvestment Agreement, each Reinvestment Holder is obligated to reinvest at least 20% of all distributions on Common Units or dividends on shares of Class A Common Stock in the Company’s Class A Common Stock. The Audit Committee resolved that for the calendar year 2023, 100% of all distributions or dividends received by each Reinvestment Holder would be reinvested in shares of Class A Common Stock.
During the first three months of 2023, the Company made cash dividend payments of $17.1 million to holders of Class A Common Stock and Class C Common Units and $87.9 million was reinvested in shares of Class A Common Stock by the Reinvestment Holders.
Stock Split
On May 19, 2022, the Company announced the Stock Split with respect to its Class A Common Stock and Class C Common Stock in the form of a stock dividend. The Stock Split was accomplished by distributing one additional share of Class A Common Stock for each share of Class A Common Stock outstanding and one additional share of Class C Common Stock for each share of Class C Common Stock outstanding. The additional shares of Common Stock were issued on June 8, 2022 to holders of record at the close of business on May 31, 2022.
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Dividend
On April 19, 2023, the Board declared a cash dividend of $0.75 per share on the Company’s Class A Common Stock which will be payable to stockholders on May 17, 2023. The Company, through its ownership of the general partner of the Partnership, declared a distribution of $0.75 per Common Unit from the Partnership to the holders of Common Units, which will be payable on May 17, 2023.
Stock Repurchase Program
In February 2023, the Board approved the Repurchase Program, authorizing discretionary purchases of the Company’s Class A Common Stock up to $100.0 million in the aggregate. Repurchases may be made at management’s discretion from time to time, in accordance with applicable securities laws, on the open market or through privately negotiated transactions and may be made pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act. Privately negotiated repurchases from affiliates are also authorized under the Repurchase Program, subject to such affiliates’ interest and other than statementslimitations. The repurchases will depend on market conditions and may be discontinued at any time without prior notice. For the three months ended March 31, 2023, the Company repurchased 81,862 shares at a total cost of historical fact$2.4 million. For additional information regarding the Repurchase Program, see “Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds” in this Quarterly Report on Form 10-Q. For more information regarding the 1% U.S. federal excise tax imposed on certain repurchases of stock by publicly traded U.S. corporations, please refer to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Business—Share Repurchase Program,” included in this Quarterly Report on Form10-Q including, without limitation, statements under “Management’s 10-Q.
Liquidity
The following table presents a summary of the Company’s key liquidity indicators at the dates presented:
March 31,December 31,
20232022
 (In thousands)
Cash and cash equivalents$1,984 $6,394 
Total debt, net of unamortized deferred financing cost$3,511,648 $3,368,510 
Available committed borrowing capacity$713,000 $855,000 
Cash and cash equivalents
As of March 31, 2023 and December 31, 2022, the Company had $2.0 million and $6.4 million, respectively, in cash and cash equivalents.
Total Debt and Available credit facilities
There is no assurance that the financial condition of banks with lending commitments to the Company will not deteriorate. The Company closely monitors the ratings of the banks in the Company’s bank group. Having a large bank group allows the Company to mitigate the potential impact of any bank’s failure to honor its lending commitment.

Contractual Obligations
We have contractual obligations for principal and interest payments on our Term Loan Credit Facility. See Note 7—Debt and Financing Costsin the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.
Under certain of our transportation services agreements with third party pipelines to transport natural gas and NGLs, if we fail to ship a minimum throughput volume during any year, then we will pay a deficiency payment for transportation based on the volume shortfall up to the MVC amount. The Company has made no historical shortfall payments through March 31, 2023.

Off-Balance Sheet Arrangements
As of March 31, 2023, there were no off-balance sheet arrangements.

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Critical Accounting Policies and Estimates
There have been no significant changes to our critical accounting policies and estimates from those disclosed on our Annual Report Form 10-K for the year ended December 31, 2022. Please refer to information regarding our critical accounting policies and estimates included in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” regardingof our Annual Report on Form 10-K for the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Form10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filingsyear ended December 31, 2022 filed with the SEC.

Overview

We are a blank check company incorporatedCommission on December 12, 2016 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Initial Business Combination”). We intend to focus our search for a target business in the energy industry. For our purposes, we define the energy industry as companies that own and operate assets that are used in or provided services to the energy sector, including, but not limited to, assets used in exploring, developing, producing, transporting, storing, gathering, processing, fractionating, refining, distributing or marketing of natural gas, natural gas liquids, crude oil or refined products. We intend to effectuate our Initial Business Combination using cash from the proceeds of our public offering (the “Public Offering”) and the sale of warrants in a private placement that occurred simultaneously with the Public Offering (the “Private Placement Warrants”), our capital stock, debt or a combination of cash, stock and debt.

The issuance of additional shares of our stock in a business combination:

March 7, 2023.
may significantly dilute the equity interest of investors, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of shares of Class A common stock on a greater thanone-to-one basis upon conversion of the Class B common stock;

may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock;

could cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;

may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and

may adversely affect prevailing market prices for our Class A common stock and/or warrants.

Similarly, if we issue debt securities, it could result in:

default and foreclosure on our assets if our operating revenues after an Initial Business Combination are insufficient to repay our debt obligations;

acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;

our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;

our inability to pay dividends on our common stock;

using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;

limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and

other purposes and other disadvantages compared to our competitors who have less debt.

We expect to incur significant costs in the pursuit of our business combination plans. We cannot assure you that our plans to raise capital or to complete our Initial Business Combination will be successful.

Results of Operations and Known Trends or Future Events

We have neither engaged in any operations nor generated any operating revenue to date. Our only activities since inception relate to our formation, the Public Offering which was consummated on April 4, 2017 and efforts directed toward locating a suitable Initial Business Combination. We will not generate any operating revenue until after completion of an Initial Business Combination, at the earliest. Prior to such time, we will generatenon-operating income in form of interest income on cash and cash equivalents. We incur increased expenses as a result of being a public company (for legal, financial reporting and auditing compliance), as well as expenses as we conduct due diligence on prospective business combination candidates.

For the three months ended September 30, 2017, we had a net income of $220,657, which consisted primarily of interest income from the Trust Account of $809,858. This income was partially offset by general and administrative expenses of $276,956 (including $15,000 administrative fees paid to related party and $153,000 of due diligence costs), franchise tax expense of $55,900 and income tax expense of $256,345.

For the nine months ended September 30, 2017, we had a net loss of $512,613, which consisted primarily of general and administrative expenses of $1,340,902 (including $30,000 administrative fees paid to related party and $1,045,000 of due diligence costs), franchise tax expense of $98,900 and income tax expense of $426,694. These expenses were partially offset by interest received from the Trust Account of $1,353,883. During the period, we incurred significant costs conducting due diligence around potential acquisitions that we are no longer pursuing.

Liquidity and Capital Resources

In April 2017, upon the completing the Public Offering (including the sale of Over-Allotment Units) and the Private Placement Warrants, $377,321,120 was deposited in a trust account with American Stock Transfer & Trust Company acting as trustee (the “Trust Account”). Other than the withdrawal of interest to pay taxes, the proceeds held in the Trust Account will remain in the Trust Account until the earlier (i) the completion of the Initial Business Combination; (ii) the redemption of any shares of Class A Common Stock included in the Units sold in the Public Offering that have been properly tendered in connection with a stockholder vote to amend the Company’s certificate of incorporation to modify the substance or timing of our obligation to redeem 100% of such shares of Class A Common Stock if we do not complete the Initial Business Combination within 24 months from the closing of the Public Offering; and (iii) the redemption of 100% of the shares of Class A Common Stock included in the Units sold in the Public Offering if the Company is unable to complete an Initial Business Combination within 24 months from the closing of the Public Offering (subject to the requirements of law).

Until the consummation of the Public Offering, our liquidity needs were satisfied through loans from our Sponsor of $265,000 under an unsecured promissory note. The loans werenon-interest bearing and were paid in full on April 4, 2017 upon completion of the Public Offering. As of September 30, 2017, we had $555,254 in cash held outside the Trust Account which may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. In addition, interest income on the funds held in the Trust Account may be released to pay our franchise and income taxes. During September, we paid $391,000 of estimated federal income tax with funds held in the Trust Account. At September 30, 2017, $962,883 is available to pay any additional taxes.

To the extent that we require additional funds to operate our business prior to the consummation of an Initial Business Combination, we expect our Sponsor or an affiliate of our Sponsor or certain of our officers and directors to loan us funds as may be required. If we complete our Initial Business Combination, we would repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that our Initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.50 per warrant, at the option of the lender. The warrants would be identical to the Private Placement Warrants, including as to the exercise price, exercisability and exercise period.

Off-Balance Sheet Arrangements; Commitments and Contractual Obligations

As of September 30, 2017, we did not have anyoff-balance sheet arrangements as defined in Item 303(a)(4)(ii) of RegulationS-K and did not have any commitments or contractual obligations. In connection with our Public Offering, we entered into an Administrative Services Agreement, by and between us and KA Fund Advisors, LLC an affiliate of our Sponsor. We have agreed to pay KA Fund Advisors, LLC a total of $5,000 per month for office space, utilities and secretarial and administrative support. Upon completion of our Initial Business Combination or our liquidation, we will cease paying these monthly fees.

The underwriters are entitled to underwriting discounts and commissions of 5.5%, of which 2.0% ($7,546,422) were paid at the closing of the Public Offering and 3.5% ($13,206,239) was deferred and placed in the Trust Account. The deferred discount will become payable to the underwriters only on completion of the Initial Business Combination, subject to the terms of the underwriting agreement.

JOBS Act

On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” and under the JOBS Act are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required fornon-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Critical Accounting Policies and Estimates

This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instrument and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Item 3.Quantitative and Qualitative Disclosures About Market Risk.

During April 2017, $377,321,120

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Quantitative and Qualitative Disclosure About Market Risk
The Company is exposed to various market risks, including the effects of adverse changes in commodity prices and credit risk as described below. The Company continually monitors its market risk exposure, including the impact and developments related to the armed conflict in Ukraine, increase in interest rate and inflation trend, which continued to have significant impact on volatility and uncertainties in the financial markets during the first quarter of 2023.
Commodity Price Risk
The results of the net proceedsCompany’s operations may be affected by the market prices of oil and natural gas. A portion of the Public OfferingCompany’s revenue is directly tied to local crude, natural gas, NGLs and condensate prices in the Permian Basin. Fluctuations in commodity prices also impact operating cost elements both directly and indirectly. For example, commodity prices directly impact costs such as power and fuel, which are expenses that increase or decrease in line with changes in commodity prices. Commodity prices also affect industry activity and demand, thus indirectly impacting the cost of items such as labor and equipment rentals. Management regularly reviews the Company’s potential exposure to commodity price risk, and may periodically enter into financial or physical arrangements intended to mitigate potential volatility. Refer to Note 12—Derivatives and Hedging Activitiesin the Notes to our Condensed Consolidated Financial Statements in this Form 10-Qfor additional discussion regarding our hedging strategies and objectives.
Interest Rate Risk
The market risk inherent in our financial instruments and our financial position represents the potential loss arising from adverse changes in interest rates. As of March 31, 2023, the Company had interest bearing debt, net of deferred financing costs, with principal amount of $3.51 billion. The interest rates for the Revolving Credit Facility and the sale of Private Placement Warrants were deposited into a trust account that is invested solely in a money market funds meeting certain conditions under Rule2a-7 underTerm Loan Credit Facility are variable, which exposes the Investment Company Act of 1940, as amended, which invest only in direct U.S. government treasury obligations. Due to the risk of increased interest expense in the event of increases to short-term natureinterest rates. Accordingly, results of these investments, we believe there willoperations, cash flows, financial condition, and the ability to make cash distributions could be no associated materialadversely affected by significant increases in interest rates. If interest rates increase by 10.0%, the Company’s consolidated interest expense would have increased by approximately $60.8 million for the quarter ended March 31, 2023. The Company may periodically enter into interest rate derivatives to add stability to interest expense and to manage its exposure to interest rate risk.

movements. Refer to Note 12—Derivatives and Hedging Activitiesin the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q for additional discussion regarding our hedging strategies and objectives. The Company also expects to realize 0.05% reductions to the effective interest rates of both the Revolving Credit Facility and the Term Loan Credit Facility during 2023 in relation to sustainability adjustment features embedded in these facilities. The rate reductions are dependent upon the Company meeting certain sustainability targets after 2022, which are currently subject to the completion of certain attestation procedures.
Credit Risk
The Company is subject to credit risk resulting from nonpayment or nonperformance by, or the insolvency or liquidation of, third-party customers. Any increase in the nonpayment and nonperformance by, or the insolvency or liquidation of, the Company’s customers could adversely affect the Company’s results of operations.

Item 4.Controls and Procedures.

Evaluation of

ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures

Disclosure

As of March 31, 2023, pursuant to Rule 13a-15(b) of the Exchange Act, the Company conducted an evaluation, under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief
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Accounting and Administrative Operating Officer, who serves as the principal accounting officer, of the effectiveness of the Company’s disclosure controls and procedures are(as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Accounting and Administrative Operating Officer, concluded that the Company’s disclosure controls and other procedures thatwere effective as of March 31, 2023.
The Company’s disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company in ourthe reports filedthat the Company files or submittedsubmits under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosureforms of the SEC. The Company’s disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in companythe reports filed or submittedthat the Company files under the Exchange Act is accumulated and communicated to the Company’s management, including ourthe Chief Executive Officer and Chief FinancialAccounting and Administrative Operating Officer, as appropriate, to allow timely decisions regarding required disclosure.

As required by Rules13a-15 and15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2017. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules13a-15 (e) and15d-15 (e) under the Exchange Act) were effective.

Changes

Change in Internal Control over Financial Reporting

During

There were no changes in the three months ended September 30, 2017, there has been no change in ourCompany’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) during the quarter ended March 31, 2023, that hashave materially affected or isare reasonably likely to materially affect ourthe Company’s internal control over financial reporting.


PART II — OTHER INFORMATION

Item 1.Legal Proceedings.

None.

ITEM 1. LEGAL PROCEEDINGS
For further information regarding legal proceedings, refer to Note 16—Commitments and Contingencies in the Notes to our Condensed Consolidated Financial Statements in this Form 10-Q.

Item 1A.Risk Factors.

As of

ITEM 1A. RISK FACTORS
Please refer to “Part II, Item 1A — Risk Factors” in the date of thisCompany’s Annual Report there have been no material changes toForm 10-K for the risk factors disclosed in our prospectus datedyear ended December 31, 2022 filed on March 29, 2017 except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

7, 2023.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3.Defaults Upon Senior Securities.

None

Item 4.Mine Safety Disclosures.

Not Applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Repurchase of Class A Common Stock
Period
Total Number of Shares Purchased(1)
Average Price per Share(2)
Total Number of Shares Purchased as Part of Publicly Announced Plan(1)
Maximum number (or approximate dollar value) of Shares that May Yet be Purchased under the Plans
January 1 to January 31, 2023— $— — $100,000,000 
February 1 to February 28, 2023— — — 100,000,000 
March 1 to March 31, 202381,862 29.71 81,862 97,567,798 
    Total81,862 $29.71 81,862 $97,567,798 
(1)On February 28, 2023, the Company announced that the Board had approved a share repurchase program (“Repurchase Program”), authorizing discretionary purchases of the Company’s Class A Common Stock up to $100 million in the aggregate.
(2)Average price paid per share included commission to repurchase shares.

Item 5.Other Information.

None

Item 6.Exhibits.

ITEM 5. OTHER INFORMATION
Disclosure pursuant to Section 13(r) of the Securities Exchange Act of 1934
Pursuant to Section 13(r) of the Exchange Act, we may be required to disclose in our annual and quarterly reports to the SEC whether we or any of our “affiliates” knowingly engaged in certain activities, transactions or dealings relating to Iran or with certain individuals or entities targeted by US economic sanctions. Disclosure is generally required even where the
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activities, transactions or dealings were conducted in compliance with applicable law. Because the SEC defines the term “affiliate” broadly, it includes any entity under common “control” with us (and the term “control” is also construed broadly by the SEC).
The description of the activities below has been provided to us by Blackstone Inc. (“BX”), affiliates of which: (i) beneficially own more than 10% of our outstanding common stock and are members of our board of directors, and (ii) hold a minority non-controlling interest in Atlantia S.p.A. Atlantia S.p.A. may therefore be deemed to be under common “control” with us; however, this statement is not meant to be an admission that common control exists.
The disclosure below relates solely to activities conducted by Atlantia S.p.A. The disclosure does not relate to any activities conducted by us or by BX and does not involve our or BX’s management. Neither we nor BX has had any involvement in or control over the disclosed activities, and neither we nor BX has independently verified or participated in the preparation of the disclosure. Neither we nor BX is representing as to the accuracy or completeness of the disclosure nor do we or BX undertake any obligation to correct or update it.
We understand that BX disclosed the following in their most recent annual report on Form 10-K, and as of May 4, 2023, the company is unaware of any changes to the relationship status between BX and Atlantia S.p.A, therefore, the Company included BX’s disclosure of certain activities, transactions or dealings between BX and Iran.
Disclosure pursuant to Section 13(r) of the Securities Exchange Act of 1934. Funds affiliated with BX first invested in Atlantia S.p.A. on November 18, 2022 in connection with the voluntary public tender offer by Schema Alfa S.p.A. for all of the shares of Atlantia S.p.A., pursuant to which such funds obtained a minority non-controlling interest in Atlantia S.p.A. Atlantia S.p.A. owns and controls Aeroporti di Roma S.p.A. (“ADR”), an operator of airports in Italy including Leonardo da Vinci-Fiumicino Airport. Iran Air has historically operated periodic flights to and from Leonardo da Vinci-Fiumicino Airport as authorized, from time to time, by an aviation-related bilateral agreement between Italy and Iran, scheduled in compliance with European Regulation 95/93, and approved by the Italian Civil Aviation Authority. ADR, as airport operator, is under a mandatory obligation to provide airport services to all air carriers (including Iran Air) authorized by the applicable Italian authority. The relevant turnover attributable to these activities (whose consideration is calculated on the basis of general tariffs determined by such independent Italian authority) in the quarter ended March 31, 2023 was less than €30,000. Atlantia S.p.A. does not track profits specifically attributable to these activities.
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ITEM 6. EXHIBITS
EXHIBIT NO.DESCRIPTION
2.1***–
Contribution Agreement, dated October 21, 2021, by and among Altus Midstream Company, Altus Midstream LP, New BCP Raptor Holdco, LLC, and BCP Raptor Holdco, LP (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on October 21, 2021).
3.1–
Third Amended and Restated Certificate of Incorporation of Kinetik Holdings Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on February 22, 2022).
3.2–
Amended and Restated Bylaws of Kinetik Holdings Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on February 22, 2022).
4.1–
Amended and Restated Stockholders Agreement, dated October 21, 2021, by and among APA Corporation, Apache Midstream LLC, Altus Midstream Company, New BCP Raptor Holdco, LLC, Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC, and BCP Raptor Holdco, LP. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on February 22, 2022).
4.2–
Second Amended and Restated Registration Rights Agreement, dated February 22, 2022, by and among Altus Midstream Company, Apache Midstream LLC, Raptor Aggregator, LP, BX Permian Pipeline Aggregator, LP, Buzzard Midstream LLC and the other holders party thereto. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on February 22, 2022).
4.3–
Indenture, dated June 8, 2022, by and among Kinetik Holdings Inc., Kinetik Holdings LP, and U.S. Bank Trust Company, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on June 14, 2022).
4.4–
10.1–
Third Amended and Restated Agreement of Limited Partnership of Altus Midstream LP, dated as of October 22, 2021 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on February 22, 2022)..
10.2*–
KNTK - 2019 Omnibus Compensation Plan - Form RSU Agreement (2023 Form)
10.3*–
KNTK - 2019 Omnibus Compensation Plan - Form RSU Agreement (Director Form)
31.1*–
Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a)
31.2*–
Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a)
32.1**–
Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(b) and 18 U.S.C. 1350
32.2**–
Certification of the Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(b) and 18 U.S.C. 1350
101*–The following financial statements from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, formatted in Inline XBRL: (i) Condensed Consolidated Statements of Operations, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows, (iv) Condensed Consolidated Statements of Changes in Equity and Noncontrolling Interests and (v) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
101.SCH*–Inline XBRL Taxonomy Schema Document.
101.CAL*–Inline XBRL Calculation Linkbase Document.
101.DEF*–Inline XBRL Definition Linkbase Document.
101.LAB*–Inline XBRL Label Linkbase Document.
101.PRE*–Inline XBRL Presentation Linkbase Document.
104*–Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Exhibit

Number

Description

* Filed herewith.
** Furnished herewith.
31.1Certification of the Principal Executive Officer Pursuant*** Schedules and exhibits to Rules13a-14(a) and15d-14(a) under the Securities Exchange Act of 1934, as adoptedthis Exhibit have been omitted pursuant to Section 302Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to the Sarbanes-Oxley Act of 2002.
31.2Certification of the Principal Financial Officer Pursuant to Rules13a-14(a) and15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*Certification of the Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*Certification of the Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentSEC upon request.

*Furnished herewith

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SIGNATURES

In accordance

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereuntohereunto duly authorized.

KAYNE ANDERSON ACQUISITION CORP.KINETIK HOLDINGS INC.
Date: November 13, 2017Dated:May 4, 2023/s/ ROBERT S. PURGASONJamie Welch
Robert S. PurgasonJamie Welch

Chief Executive Officer,

President, Chief Financial Officer and Director

(Principal Executive Officer)

Date: November 13, 2017Dated:May 4, 2023/s/ TERRY A. HARTSteven Stellato
Terry A. HartSteven Stellato
Executive Vice President, Chief Accounting and Chief Administrative Officer

Chief Financial Officer)

(Principal Financial and Accounting Officer)

17


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