Kinetik Holdings (KNTK) risk factors, FY2025 10-K

Business and Operational Risks

1. 01The majority of the Company’s operating assets are currently located in the Permian Basin, making it vulnerable to risks associated with operating in a single geographic area
2. 02Because of the natural decline in production from existing wells, the Company’s success depends, in part, on its ability to maintain or increase throughput volumes on its midstream systems, which depends on its customers’ levels of development and completion activity on its dedicated acreage
3. 03Index to Financial Statements34% rewritten
4. 04The acquisition or divestiture of businesses and assets is part of our strategy. We may experience difficulties completing acquisitions or divestitures or integrating new businesses and properties, and we may be unable to achieve the benefits we expect from the completed and any future acquisitions or divestitures
5. 05We also may not recognize the anticipated benefits of dispositions or other divestitures we may pursue in the future. If we do not realize the expected strategic, economic or other benefits of any divestiture transaction, it could materially and adversely affect our financial condition and results of operations
6. 06The third parties on whom the Company relies for transportation services from its processing facilities are subject to complex federal, state, and other laws that could adversely affect our financial condition and results of operations
7. 07The Company’s customers may suspend, reduce or terminate their obligations under the Company’s commercial agreements with them in certain circumstances, which could have a material adverse effect on the Company’s financial condition, results of operations and cash flows
8. 08Increased competition from other companies that provide midstream services, or from alternative fuel sources, could have a negative impact on the demand for the Company’s services, which could materially and adversely affect its financial results
9. 09Further, hydrocarbon fuels compete with other forms of energy available to end-users, including renewable electricity and coal. Increased demand for such other forms of energy at the expense of hydrocarbons could lead to a reduction in demand for the Company’s services
10. 10The Company’s exposure to commodity price risk may change over time and the Company cannot guarantee the terms of any existing or future agreements for its midstream services with its customers
11. 11The use of derivative financial instruments could result in material financial losses for the Company81% rewritten
12. 12The Company’s business involves many hazards and operational risks, some of which may not be fully covered by insurance. The occurrence of a significant accident or other event that is not fully insured could curtail its operations and materially and adversely affect its cash flows
13. 13A shortage of equipment and skilled labor could reduce equipment availability and labor productivity and increase labor and equipment costs, which could materially and adversely affect the Company’s business and results of operations
14. 14The Company operates in a highly regulated environment and its business and profitability could be adversely affected by actions by governmental entities, changes to current laws or regulations, or a failure to comply with laws or regulations
15. 15Our future tax liability may be greater than expected if we are unable to fully utilize our net operating loss (“NOL”) carryforwards due to existing or additional limitations, we do not generate expected deductions, or tax authorities successfully challenge certain of our tax positionsNew
16. 16Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could adversely affect our operating results and cash flows88% rewritten
17. 17Federal and state legislative and regulatory initiatives relating to pipeline safety, which are often subject to change, may result in more stringent regulations or enforcement and could subject the Company to increased operational costs, increased capital costs and potential operational delays
18. 18Increased regulation of hydraulic fracturing could result in reductions or delays in crude oil and natural gas production by the Company’s customers, which could reduce the throughput on its gathering and other midstream systems, which could adversely impact its revenues
19. 19Adoption of new or more stringent legal standards relating to induced seismic activity associated with produced-water disposal could affect the Company’s operations
20. 20The Company may incur significant liability under, or costs and expenditures to comply with, health, safety and environmental laws and regulations, which are complex and subject to frequent change
21. 21Increased attention to sustainability-related matters and conservation measures may adversely impact the Company’s business27% rewritten

Risks Related to Ownership of Our Common Stock

1. 22Entities controlled by Blackstone and I Squared Capital are parties to the amended and restated stockholders agreement granting certain director designation rights and owning a majority of the Company’s outstanding voting shares and thus strongly influence all of the Company’s corporate actions
2. 23Potential future sales pursuant to registration rights granted by the Company and under Rule 144 may depress the market price for our shares of Class A Common Stock
3. 24The Company’s ability to return capital to stockholders through dividends and stock repurchases depends on its ability to generate sufficient cash flows, which it may not be able to accomplish
4. 25If the performance of the Company does not meet the expectations of investors, stockholders or financial analysts, the market price of the Company’s securities may decline
5. 26We cannot guarantee that our stock repurchase program will enhance long-term stockholder value34% rewritten

General Risks

1. 27Continuing or worsening inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of the Company’s services and personnel, which in turn cause the Company’s capital expenditures and operating costs to rise90% rewritten
2. 28The Company’s operations could be disrupted by natural or human causes beyond its control81% rewritten
3. 29Cybersecurity breaches of our IT systems could result in information theft, data corruption, operational disruption and/or financial loss25% rewritten
4. 30Changes in management’s estimates and assumptions may have a material impact on the Company’s Consolidated Financial Statements and financial or operational performance in any given period20% rewritten