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Kinetik Holdings (NYSE:KNTK) +0.5% in Wednesday’s trading as Barclays initiates coverage with an Equal Weight rating and $443 price target, saying it sees “a clear pathway of incremental growth as acquisitions and projects contribute further” in H2 2024 and beyond.
Barclays analyst Theresa Chen thinks Kinetik’s (KNTK) G&P assets in the Delaware Basin are “well situated against the backdrop of resilient production growth and elevated gas-to-oil ratios, and cash stability is anchored by majority fee-based G&P contracts as well as fee-based, MVC-backed equity interests in long-haul pipelines,” but she believes the company’s positives are well reflected in the stock valuation.
Chen says she is looking for Q2 adjusted EBITDA of $234M, roughly in line with consensus, largely reflecting resilient volumes from its oil-directed producer customers; looking beyond the quarter, the Durango acquisition brings 220M cf/day of processing capacity and 2,400 miles of gathering pipelines, which are estimated to generate an additional $75M in annualized 2024 EBITDA.