Business Context and Reporting Period
This Form 8-K is filed by Altus Midstream Company (not Kinetik Holdings Inc.) for the reporting period ending July 31, 2019. The filing reports the completion of a significant asset acquisition by the Company's subsidiary, Altus Midstream Processing LP.
Key Financial Metrics and Transaction Details
- Transaction Type: Exercise of an option to acquire a 33% equity interest in Breviloba, LLC.
- Asset Acquired: Ownership stake in the Shin Oak NGL pipeline (24-inch mainline and 20-inch lateral).
- Transaction Value: Approximately $440.7 million (net to Altus Midstream Processing's ownership interest).
- Cost Components: Includes proportional share of capital spent on construction, commissioning, start-up, and capitalized interest.
- Ownership Structure: Post-closing, Altus Midstream Processing owns 33% and Enterprise Products Operating LLC owns 67%.
- Operational Capacity: Initial capacity of approximately 250,000 barrels per day (bbl/d); expected ultimate capacity of 550,000 bbl/d.
Note: This filing does not provide consolidated revenue, profit, cash flow, margins, debt, or liquidity metrics for Altus Midstream Company.
Material Changes and Operational Outlook
The primary material change is the addition of the Shin Oak Pipeline to the Company's asset base. The pipeline provides takeaway capacity for natural gas liquids from multiple basins, including the Permian. The asset is supported by long-term customer commitments. The full capacity of 550,000 bbl/d is expected to be available in the fourth quarter of 2019.
Guidance, Risks, and Contingencies
- Forward-Looking Statements: The filing contains projections regarding future financial performance, business strategies, and capacity availability. Actual results may differ materially due to risks and uncertainties.
- Risk Factors: Investors are directed to the "Risk Factors" section of the Company's 2018 Form 10-K and the Q2 2019 Form 10-Q for detailed discussions on risks affecting the business.
- Financial Statements: Financial statements of the acquired business (Breviloba) and pro forma financial information are not included in this filing. They are expected to be filed in an amendment within 71 calendar days.
Key Facts for Investor Verification
- Verify the final purchase price and capitalization details in the upcoming amendment containing Breviloba's financial statements.
- Confirm the timeline for the expansion from 250,000 bbl/d to 550,000 bbl/d capacity in Q4 2019.
- Review the long-term customer commitments supporting the Shin Oak Pipeline to assess revenue stability.
- Check the Company's 2018 Form 10-K and Q2 2019 Form 10-Q for specific risk factors related to midstream operations and the Permian basin.