Altus Midstream Boston Consulting Group Matrix

Altus Midstream, now operating as Kinetik, has secured significant new 15-year gas gathering and processing agreements. These contracts are with major customers in the high-demand Eddy and Lea Counties, areas known for substantial growth in the energy sector.

These long-term agreements are vital for Kinetik, ensuring a steady flow of future volumes and solidifying its market position. This provides a dependable base for the company's ongoing expansion and development strategies.

The commitment from producers to Kinetik's growing infrastructure network is clearly demonstrated by these new, extended contracts. This indicates strong confidence in Kinetik's ability to meet their evolving needs.

Kings Landing Complex is a prime example of a Star within Altus Midstream's (now Kinetik) portfolio, representing high growth and market share. Its projected operation in early Q3 2025 signifies a major expansion in the Delaware Basin, a region experiencing significant energy demand. This project is designed to double processing capacity, directly addressing customer needs and fostering further development.

Kinetik's strategic acquisitions and new long-term contracts, particularly in Eddy and Lea Counties, have solidified its position. In 2024, Kinetik boosted its Delaware Basin processing capacity to over 1.5 billion cubic feet per day, demonstrating substantial growth. The company's ability to secure these agreements highlights producer confidence and provides a stable foundation for continued expansion.

The company's processed gas volumes saw significant year-over-year increases in 2024, driven by robust Permian Basin activity, with further growth anticipated for 2025. This operational resilience and capacity expansion underscore Kinetik's strategic market positioning and effective management.

Kinetik's increased equity interest in EPIC Crude Holdings, LP to 27.5% solidifies its position in a mature, high-market-share asset. This strategic move is designed to generate a reliable stream of growing income and bolster net profit margins.

The investment in this key pipeline asset offers consistent distributions, which directly contribute to strengthening Kinetik's overall financial profile. This mature asset is a significant driver of the company's cash flow, underscoring its value as a cash cow.

Altus Midstream's established infrastructure, particularly its Delaware Basin operations, functions as a significant cash cow. These assets benefit from high utilization rates and long-term contracts, ensuring a steady and predictable income stream. The company's strategic focus on these mature, high-market-share assets allows for consistent cash generation, which is vital for funding other business initiatives and reducing debt.

In 2024, Altus Midstream demonstrated strong performance from these core assets. The company reported robust cash flow, a direct result of its efficient operations and stable customer base. This consistent cash generation provides financial flexibility, enabling strategic investments and reinforcing its position in the market.

Altus's commitment to operational optimization, including the integration of assets like Barilla Draw and the adoption of technologies such as electric compression, further enhances the profitability of its cash cow segment. These efforts are designed to maximize returns from mature assets, ensuring they continue to be reliable sources of substantial cash flow.

The company's financial results for 2024 highlight the strength of its cash cow assets, contributing significantly to record Adjusted EBITDA and Free Cash Flow. This performance underscores the stability and reliability of its core infrastructure in generating consistent financial returns.

Underperforming legacy infrastructure within Altus Midstream, now part of Kinetik, would likely fall into the 'dog' category of the BCG matrix. These are assets that may require significant capital for upkeep but generate minimal returns or have limited growth potential. For instance, if a pipeline segment built decades ago is experiencing increasing operational costs and has low utilization due to shifting market demands, it would fit this description.

While Kinetik aims for streamlined operations, some older, less efficient components of the merged entity might represent these 'dogs.' These could be older processing facilities or pipeline networks that were not fully integrated or optimized post-merger. Their contribution to overall throughput or strategic value might be disproportionately low compared to the maintenance expenses they incur.

Assets that fall into the 'dog' category within Kinetik's portfolio, particularly those inherited from Altus Midstream, are characterized by low growth prospects and a limited market share. These are often older, less efficient infrastructure components that may require ongoing maintenance but generate minimal returns. For example, a legacy processing facility with declining throughput due to reduced upstream activity in its service area would fit this description.

The divestiture of non-strategic or underperforming assets is a key strategy to manage these 'dogs.' Kinetik's sale of its GCX stake for approximately $540 million in late 2023 demonstrates this, allowing capital reallocation to core Delaware Basin operations. This focus on high-growth areas is crucial for shedding assets that do not align with the company's strategic objectives.

Furthermore, assets tied to stagnant or declining upstream production areas, evidenced by reduced drilling permits in 2024, can also be classified as 'dogs.' These segments face limited organic growth, as they are constrained by existing acreage dedications and producer activity. For instance, a pipeline segment serving an area where producer drilling permits dropped by 20% in 2024 would likely see reduced volumes.

The presence of 'dogs' necessitates a strategic approach to either divestment or optimization. Kinetik's strategy of concentrating on its Delaware Basin operations, as highlighted by the GCX divestiture, aims to streamline the business and improve overall profitability by shedding these lower-performing assets.

The Barilla Draw acquisition, a bolt-on natural gas and crude oil gathering system in Reeves County, Texas, closed in January 2025. This strategic move, adjacent to existing Kinetik infrastructure, is classified as a question mark in the BCG matrix due to its early integration phase and developing market share potential.

While representing a high-growth opportunity, the Barilla Draw asset requires continued investment and successful integration to fully unlock its value. Its ultimate contribution to Kinetik's market position is still being determined as operational optimization progresses.

Question Marks represent ventures with high growth potential but uncertain futures, requiring significant investment. Altus Midstream's early-stage projects, like the pre-FID Kings Landing II, fit this category, demanding capital without current returns. Kinetik's foray into electrofuels and its recent Barilla Draw acquisition also exemplify Question Marks, as they are in nascent stages with developing market share.

These initiatives are characterized by substantial capital outlays and dependence on market acceptance and technological advancement. For example, the 15-year gas gathering and processing agreement in Eddy County, New Mexico, which began services in late 2024 and processing in Q2 2025, is a prime example of a Question Mark needing infrastructure investment to capture future growth.

The company's exploration of adjacent services such as CCUS, hydrogen, and RNG infrastructure further highlights its Question Mark portfolio. These represent high-potential but high-risk areas requiring extensive market research and investment to establish market share.

Altus Midstream's (Kinetik's) strategic investments in new, high-growth potential areas with currently low market share are classified as Question Marks. These include projects like Kings Landing II (pre-FID), the Barilla Draw acquisition (early integration phase), and new gathering agreements in Eddy County, New Mexico. Kinetik's potential expansion into CCUS, hydrogen, and RNG also falls into this category, all requiring significant capital and facing market uncertainties.