In an impactful move set to strengthen its foothold in the Delaware Basin, Kinetik Holdings Inc. (NYSE: KNTK) has announced a $180 million acquisition of natural gas and crude oil gathering systems from Permian Resources Corporation (NYSE: PR). The assets, primarily located in Reeves County, Texas, mark a strategic expansion for Kinetik’s operations and are expected to deliver substantial long-term value.
The acquisition encompasses natural gas gathering, compression, and processing systems, as well as crude oil gathering infrastructure. According to the terms of the agreement, Kinetik will take ownership of assets tied to approximately 60,000 gross operated acres dedicated under long-term, fixed-fee agreements with Permian Resources. This dedication is expected to provide steady revenue streams and strengthen Kinetik’s existing portfolio in the region.
Jamie Welch, President and CEO of Kinetik, emphasized the strategic nature of the acquisition. “This investment opportunity reinforces our strategic partnership with Permian Resources, which is one of the most active and lowest-cost operators in the Delaware Basin,” Welch said. “We are excited to further expand our Delaware gas and crude systems with this natural fit, bolt-on acquisition.”
The acquisition is projected to yield significant operational benefits for Kinetik. Permian Resources has committed approximately 60,000 acres for gas gathering, compression, and crude oil gathering under fixed-fee agreements. This ensures a predictable and sustained revenue model for Kinetik. The deal includes over 250 million cubic feet per day (Mmcf/d) of primarily electric compression capacity, supported by a private electric distribution system. This infrastructure positions Kinetik to handle substantial gas volumes efficiently. By 2025, the acquired assets are expected to process more than 150 Mmcf/d of natural gas and gather 25,000 barrels per day (Mb/d) of crude oil. This growth aligns with Kinetik’s strategic objectives. The assets are located adjacent to Kinetik’s existing Delaware South system, allowing for seamless integration and optimization. The company also plans to leverage control of residue gas and natural gas liquids from the rich gas dedicated to the system.
Welch highlighted the quality of the acquired assets, noting their proximity to Kinetik’s existing operations and the economic inventory they bring. With shallow production declines and long-term development support from Permian Resources, Kinetik anticipates attractive volume growth in the coming years.
The Delaware Basin, a prolific area within the larger Permian Basin, is a hotbed of activity for natural gas and crude oil production. By strengthening its position in Reeves County, Kinetik solidifies its role as a key midstream player in the region. The acquisition aligns with the company’s strict investment criteria, prioritizing high-quality assets with strong economic potential.
Moreover, this deal underscores the ongoing trend of consolidation and strategic partnerships in the energy sector. For Permian Resources, the transaction allows for the monetization of midstream assets while maintaining operational synergies through long-term agreements.
The transaction is expected to close in the first quarter of 2025, pending customary closing conditions, including antitrust reviews under the Hart-Scott-Rodino Act. Once finalized, the deal will mark another milestone in Kinetik’s growth trajectory.
“The dedicated acreage includes highly economic inventory and shallow PDP declines,” Welch said. “With Permian Resources’ long-term development support, we expect attractive volume growth and long-term value creation for our stakeholders.”
As the energy industry evolves, this acquisition positions Kinetik to capitalize on the growing demand for efficient, reliable midstream services in one of the country’s most dynamic oil and gas regions. Stakeholders will watch closely as Kinetik integrates these assets and leverages their full potential.
