ET - Kinetik Holdings: A High Yield Permian Basin Play

2024-01-25 09:06:06 ET

Summary

• Today, we revisit Kinetik Holdings Inc. whose stock yields just over nine percent.
• The company expects to cut capex spending by $390 million in FY24, covering a significant amount of the annual disbursement.
• Recent insider buying and the company's strong financials merited another deep dive.
• An updated analysis around Kinetik Holdings follows in the paragraphs below.

No one builds a legacy by standing still . - Oscar Auliq-Ice.

Shares of Permian midstream play Kinetik Holdings Inc. ( KNTK ) yield 9.0%, but concerns exist that with its dividend reinvestment program nearing a close, a true cash dividend could be in jeopardy. The de facto PIPE arrangement will end in February 2024, but the company expects to cut capex spending by ~$390 million in FY24, covering a significant amount of the annual disbursement. With two projects coming online in Q4'23, excess processing capacity, no-floating rate debt, and 90% of gross profit sourced from fixed fees, the recent insider buying merited a deeper dive. An analysis follows below....

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