The Power of the Permian
Deep in the heart of the Permian Basin lies the prolific production region known as the Delaware. It is here that KNTK, a powerhouse in the energy sector, is making waves with its strategic operations and growth potential.
Dynamic Divisions
KNTK strategically divides its operations into two key segments. The Midstream Logistics arm focuses on essential services like water takeaway pipelines, natural gas processing, gathering, and storage within the Delaware Basin. On the other hand, Pipeline Transportation handles the crucial task of transporting natural gas, natural gas liquids (NGL), and crude oil out of the basin, facilitating the flow of energy commodities.
A Resilient Performer
In the fourth quarter of 2023, KNTK’s Midstream Logistics segment, which includes gathering water, gas, and oil from wells, contributed a significant 63% of the company’s EBITDA. Meanwhile, Pipeline Transportation played its part, accounting for the remaining 37%. Notably, the company processed 1.54 billion cubic feet per day (cfpd) of natural gas in Q4 2023, up from 1.2 billion in October 2022. With an EBITDA of $228 million in Q4, KNTK is poised for substantial growth.
Future-Focused Expansion
KNTK’s forward-looking approach is evident in its plans for expansion. Recognizing the potential of the Delaware Basin and the increasing demand for natural gas and NGL processing, the company is upgrading its in-basin processing facilities. The Diamond Cryo plant, currently processing 1.5 billion cfd, is undergoing enhancements to handle two billion cfd daily. Additionally, KNTK is expanding capacity on critical Basin-to-Gulf Coast pipelines, setting the stage for heightened operational efficiency and increased throughput.
Dividend Delight
Consistency is key for KNTK, as evidenced by its steady $0.75 per share dividend payout over the last eight quarters. With a favorable outlook for 2024, marked by decreased capital expenditures and rising EBITDA, investors may eagerly anticipate the possibility of KNTK announcing its first dividend increase in the coming year.
Looking Ahead
As the energy landscape continues to evolve, KNTK stands out as a reliable and innovative player in the midstream sector. With a stronghold in the Delaware Basin and a clear vision for growth, the company’s strategic investments and operational efficiency position it for sustained success in the dynamic energy market.