What is Brief History of Altus Midstream Company?

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What is the history of Altus Midstream?

Altus Midstream Company emerged in 2016 from Houston, Texas, with a clear objective: to establish a publicly traded midstream C-corporation specializing in the Permian Basin. Its initial focus was to support the substantial output from Apache Corporation's Alpine High play.

This strategic establishment provided essential infrastructure for natural gas gathering, processing, and transportation within a highly active oil and gas region. The company offered a distinct pure-play Permian midstream investment, quickly securing a notable market position. Following its merger with EagleClaw Midstream in February 2022, the consolidated entity now operates as Kinetik Holdings Inc., a prominent integrated midstream company in the Delaware Basin.

The journey of Altus Midstream is a compelling narrative of strategic growth and transformation within the energy sector. Understanding its development provides valuable insights into the dynamics of midstream infrastructure. For a deeper dive into its strategic positioning, consider exploring the Altus Midstream BCG Matrix.

The Altus Midstream company history began in 2016, though its formal establishment as a publicly traded entity occurred in 2018 through a strategic combination. This move aimed to create a dedicated midstream infrastructure provider to support significant resource development in the Delaware Basin.

The Founding Story of Altus Midstream

Altus Midstream Company was formally established in 2016, with its public debut in 2018 following a strategic business combination. This partnership involved Apache Corporation and Kayne Anderson Acquisition Corporation (KAAC), a special purpose acquisition company (SPAC).

• The agreement, announced on August 8, 2018, saw Apache contribute its midstream assets at Alpine High to Altus Midstream LP.
• KAAC was subsequently renamed Altus Midstream Company, commencing trading on Nasdaq under the symbols ALTM and ALTMW on November 12, 2018.
• The core opportunity identified was the need for a robust, well-capitalized midstream entity to service Apache's extensive Alpine High play in the Delaware Basin.
• The initial business model focused on gathering, processing, and transporting natural gas, NGLs, and crude oil, primarily within the Permian Basin.
• Altus Midstream secured options for equity in five major Permian Basin pipeline projects, enhancing its connectivity to the Texas Gulf Coast.
• Brian Freed, formerly Apache's Senior Vice President, Midstream and Marketing, assumed the role of Chief Executive Officer.
• The company launched with a strong financial foundation, including no debt and substantial cash reserves, facilitating growth and strategic opportunities.
• In November 2018, Altus Midstream secured an $800 million unsecured five-year revolving credit facility, with an initial capacity of $450 million.

The initial problem or opportunity identified by the founders centered on the need for a dedicated, well-capitalized midstream entity to support Apache's rapidly developing Alpine High play in the Delaware Basin, which encompasses over 340,000 contiguous net acres with more than 5,000 feet of vertical hydrocarbon-bearing formations. The original business model focused on providing comprehensive gathering, processing, and transportation services for natural gas, NGLs, and crude oil producers, primarily in the Permian Basin. Altus Midstream also secured options for equity participation in five significant Permian Basin pipeline projects, connecting production to various points along the Texas Gulf Coast. Brian Freed, who was Apache's Senior Vice President, Midstream and Marketing, became the Chief Executive Officer of the newly formed Altus Midstream. The company launched with no debt and a substantial cash position, providing financial strength and access to low-cost capital to fund organic growth and pursue other opportunities, including third-party gathering and processing, and mergers and acquisitions. In November 2018, Altus Midstream secured an $800 million unsecured five-year revolving credit facility, with an initial capacity of $450 million and the potential to upsize to $1.5 billion. This strategic positioning allowed the company to pursue its Growth Strategy of Altus Midstream effectively.

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In its nascent stages, the company concentrated on building out its infrastructure to support the increasing output from the Alpine High play. This foundational period saw the establishment of critical processing and transportation assets.

Initial Infrastructure Development

The company's early assets included rich-gas processing plants with an inlet capacity of 380 MMcf/d and lean-gas treating and compression plants with an inlet capacity of 400 MMcf/d. This was complemented by 123 miles of gathering pipelines and 55 miles of processed gas pipelines, featuring three market connections.

Strategic Pipeline Connectivity Options

A pivotal strategy involved securing options for equity participation in key Permian-to-Gulf Coast pipeline projects. These included potential stakes in the Gulf Coast Express (GCX) natural gas pipeline and the EPIC Crude pipeline, alongside a 50% interest in the Salt Creek NGL Line, ensuring future market access.

Capacity Expansion and Sponsorship

By the close of 2020, plans were in motion to boost cryogenic, rich-gas processing capacity by an additional 1 Bcf/d. This expansion was significantly supported by Apache Corporation, which held approximately 79% of the company, providing a robust base for growth.

Market Positioning and Financial Strategy

The company was recognized as a pure-play Permian midstream C-corporation, offering investors direct exposure to the entire midstream value chain. Its business model emphasized self-financing with modest leverage, reinvesting cash flow rather than issuing dividends through 2020 to fuel expansion, aligning with the Target Market of Altus Midstream.

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The Altus Midstream company history is a narrative of strategic growth and integration, culminating in its transformation into a larger entity. Initially established as a pure-play Permian Basin midstream C-corporation, its journey involved significant asset development and key mergers, shaping its presence in the energy infrastructure sector.

Altus Midstream's early infrastructure development focused on expanding its gathering, processing, and transportation capabilities within the Permian Basin. The company's strategic vision included leveraging its initial asset base and securing interests in major pipeline projects to enhance its service offerings.

Asset Anchoring

The formation of Altus Midstream was directly tied to the substantial gas gathering, processing, and transportation assets associated with Apache Corporation's Alpine High development.

Strategic Integration

The merger with EagleClaw Midstream created Kinetik Holdings Inc., a fully integrated midstream entity, significantly broadening its operational scope and market reach.

Growth Through Acquisition

Subsequent acquisitions, such as the Barilla Draw assets in January 2025 and Durango Permian LLC in June 2024, demonstrate a continued strategy of expanding footprint and processing capacity.

Infrastructure Expansion

Investments in new infrastructure, like the Kings Landing Complex, highlight a commitment to enhancing operational efficiency and meeting growing producer demand.

Market Reach Enhancement

The company's initial infrastructure included options for equity interests in five major Permian-to-Gulf Coast pipeline projects, signaling an early focus on market access.

Operational Synergy

The formation of Kinetik aimed to create synergies by combining complementary assets and services, offering a more comprehensive midstream solution to producers.

Challenges for the company have included navigating macroeconomic uncertainties and commodity price volatility, as evidenced by negative gas prices at the Waha Hub in late 2024. This led to the curtailment of approximately 170 MMcf/d of wellhead gas volume, impacting operations. Despite these headwinds, the company has demonstrated resilience and continued growth, as seen in its financial performance and strategic acquisitions, which you can explore further in the Competitors Landscape of Altus Midstream.

Commodity Price Volatility

The energy sector is inherently subject to fluctuating commodity prices, which can directly impact producer activity and midstream volumes. Persistent negative gas prices at the Waha Hub in late 2024 illustrate this challenge.

Macroeconomic Uncertainties

Broader economic conditions and geopolitical events can create an unpredictable operating environment for energy infrastructure companies. Managing these uncertainties is crucial for long-term stability.

Operational Curtailments

Market conditions can necessitate the curtailment of production, directly affecting the volumes transported and processed by midstream operators. The curtailment of 170 MMcf/d of wellhead gas volume in late 2024 is a prime example.

Integration Risks

Mergers and acquisitions, while strategic, can present integration challenges. Successfully combining operations, systems, and cultures is vital for realizing the intended benefits.

Regulatory Environment

Changes in environmental regulations or permitting processes can impact the development and operation of midstream infrastructure. Adapting to evolving regulatory landscapes is a continuous challenge.

Capital Allocation

Balancing investment in growth projects with shareholder returns requires careful capital allocation decisions. Optimizing the use of capital is essential for sustained financial health.

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The Altus Midstream company history showcases a dynamic evolution, from its founding to its current standing as Kinetik Holdings Inc. This journey is marked by strategic acquisitions and infrastructure development, solidifying its position in the energy sector.

Projected 2025 Financial Performance

Kinetik Holdings Inc. anticipates its 2025 Adjusted EBITDA to range between $1.09 billion and $1.15 billion, representing a 15% year-over-year increase. Capital expenditures for 2025 are projected between $450 million and $540 million.

Operational Growth and Expansion

The company expects approximately 20% growth in gas processed volumes in 2025, exceeding broader Permian growth rates. This expansion is driven by increasing natural gas demand from LNG exports and industrial sectors.

Strategic Focus and Market Position

Kinetik's strategy centers on capitalizing on both supply-push from oil drilling and demand-pull fundamentals in the Permian Basin. The company is focused on further expansion in New Mexico and Texas, optimizing processing capacity, and enhancing sustainability efforts.

Future Outlook and Infrastructure Advantage

With over 2.4 Bcf/d processing capacity in the Delaware Basin, Kinetik is well-positioned to benefit from ongoing basin growth. The company's leadership emphasizes maximizing shareholder value through strategic capital allocation and infrastructure development, aligning with the Mission, Vision & Core Values of Altus Midstream.

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