Welcome to the Kinetic Investor Update and 2022 Guidance. My name is Juan, and I will be coordinating your call today. [Operator Instructions] I will now hand over to your host, Maddie Wagner, Head of Investor Relations, to begin with. Please, Maddie. Please go ahead.

Thank you, Juan. Good morning, everyone, and welcome to the Kinetic Investor Update and 2022 guidance conference call. Here with me is our President and CEO, Jamie Welch; as well as Trevor Howard, our VP of Finance; and members of management. The press release we issued yesterday and the presentation we posted this morning can be found on our website at www.kinetik.com. As a reminder, during the course of this conference call, including the question-and-answer section, we will provide forward-looking statements. These statements are not guarantees of future performance and involve a number of risks and assumptions. Please review our SEC filings and website for a discussion of some of the factors that could cause actual results to differ materially. Today's call is being webcast, and a recording of this conference call will be available on the Kinetik website. With that, I will turn the call over to Jamie.

Thank you, Maddie, and good morning, everybody. This is, obviously for us, an incredibly auspicious day. One obviously tinged with sadness, given the world affairs going on around us right now, which candidly are going to have a fairly profound impact on not just the subject manner that we're going to talk about this morning, but I think longer term in the context of energy and energy policy for this country going forward. And what obviously -- changes will, in fact, be held because of the unfortunate actions going on in front of us. If you want to go to the slide, just to make it easy, we're going to basically use this our reference point for my remarks this morning. And look, we are very excited at the prospects for this company going forward. It's been a long time coming, and we're glad that we now get to kick this into full swing. So if we start with this first page, which is Slide 3, for those of you on the webcast, we are a company that I think Kinetic symbolizes everything about this company. We embrace change. We are moving towards a new future. That future, we're not exactly clear how it, in fact, plays out in front of us. However, what we do know is that we are both nimble and adaptive, and we will adapt to whatever conditions we find in front of us. But we really think that we've got a tremendous bedrock of cash flow, contracts and a system capacity that really sets us up very nicely as we think about the future. There are 4 pillars that we think about in the context of our overall future. Financial strength and stability, over 30 customers, stable cash flows, long-term contracts. That diverse customer base…

[Operator Instructions] And the first question comes from Spiro Dounis from Credit Suisse.

Congrats on closing the deal. Jamie, first one for you, just in terms of sequencing the next few milestones for the company. You've obviously laid out a lot of targets you want to hit. You talked about refinancing the debt. You talked about expanding stock liquidity, talked about redeeming the preferred, talked about even acquiring some assets like Grand Prix. So as you think about checking off these boxes over the next year, how to think about that sequencing? And any sort of practical limitations on you to grow until some of these boxes do get checked.

Spiro, thanks. Look, I think the order priority, the refinancing is to us incredibly important. It allows us, then, we think, to sort of really get well underway in wanting to achieve our ultimate ambitions. At the same time, Apache obviously, has the ability to sell down their stock. I think, look, the 2 could obviously -- they'll make decisions about what they want to do about the timing. As we already now know, the world now knows that the overall development of Alpine High is already in their capital budget, so it's already approved. So it's not that they actually need to go and do this. But they realize it's important, we believe, for the stock liquidity to get that incremental up to 4 million shares out there. So I think our first inning first, refinancing. -- very closely followed by the stock liquidity. Once we have that, the -- that obviously then lends itself -- the accelerated redemption of the preferred, yes, it's part and parcel with the refinancing because we're doing a little incremental $200 million to accelerate that paydown. But the balance of it is coming from free cash flow, the savings from the dividend reinvestment -- and then we'll see where we go to in the context of how we think about growth and what the timing is. I think we want to make sure that we do the right things as we execute on our plans.

Got it. That's helpful. Second question, just wondering if you can give us a sense for how you're thinking about the organic growth rate of the business over the next few years, depending on what Permian producer you talk to, the answer can range anywhere between flat to 25%. You obviously laid out the case for the Permian and your upside from an EBITDA perspective on that 20% to 30% just on your current footprint. So just curious as you think about your customer base, the rate of growth that they're growing -- how does that translate to Kinetik going forward over the next few years?

So we have -- in the context of our business, I think I said on the EagleClaw based business, we have 13% growth in our business on the EagleClaw side, and we had declined, obviously, this year from Apache on Alpine High, simply because that drilling activity, that will come in the first quarter 2023. So I think going forward, honestly, I think our overall expectation is probably in a 5% to 10% growth as far as volume is concerned. I don't think you can -- I think people get carried away. There are practical limitations on doing any -- on something that's much beyond that level, if you really ask me. It's also obviously going to be -- will be predicated on things such as egress capacity out of the basin for natural gas. The timing that any expansion, any expansions, not just one, because obviously, Whistler, obviously, we now also mentioned the potential for expansion. -- what expansions can get done, when could they come online? And if there's going to be a new pipeline, new residue gas pipeline, when does it FID and how long does it take to get built? So I think all of these things have sort of practical limitations on just overall growth.

Our next question comes from Neel Mitra from Bank of America.

First question is on the Permian pipeline expansions since you have an interest in both GCX and PHP, -- we've been hearing that even with compression there's a long lead time with the supply chain issues to be able to expand maybe 0.5 Bcf a day on each line. If you were to get the customer support, how long do you think it would take maybe from just a range standpoint to expand those pipelines?

Look, I think, Neel, thanks for the question. I think it's -- I can't speak for, obviously, Kinder Morgan in particular, would obviously know better than I. But I'll tell you on the basis of yes, talking about that compression, right? So we, obviously, ourselves, know a fair amount about compression and compression availability. I think at an earliest, depending upon how you need to commercialize the potential expansion, that itself will take some time frame. The lead time as it relates to sourcing and delivery of the incremental compression, whether it's midline compression, or what have you. My -- I would say, I would believe, that you'd be looking at 12 to 15 months. Ideally, these expansions, Whistler -- GCX, if it happens to PHP, they'd all be thinking about trying to come on in that back end of 2023. But forward -- I don't want to say screening because they can't screen, but there is a -- you see a noticeable expansion of the differential between Waha residue pricing going into that second quarter of '23 onwards. So that -- the market is telling us, there's a real belief, that there will be this critical need. I would hope that the expansions would, in fact, marry to meet that need at the time of that need.

Right. Okay. Great. And then second question. If you were to have Grand Prix drop down to you and take that option, would you look at additional downstream options? And -- how are you looking at that asset and specifically maybe looking more as an integrated player versus where you are right now?

Look, I think, first, let me say, Grand Prix is a great asset, Shin Oak is obviously a great asset. I think we would be privileged and humbled to actually be able to own both an interest in the quality of those 2 pipelines and their operators. Look at the growth, obviously, the target guide I saw their earnings this morning. It's great. Enterprises, obviously, with the most recent acquisition of Navitas creates an incremental customer profile on the Shin Oak line. So yes, we would think about ourselves being more integrated. I think that's how we think about it. That's what we need to do, not just from a relevance standpoint, but also in providing the customer flexibility and the customer optionality that many of the customers that we deal with are looking for. So you drop it down. Obviously, we know what the cash flow profile is as we think about the expansion and the ability to move more volumes, whether it's on Grand Prix, whether it's on Shin Oak, that's obviously that will be key drivers for us going forward.

Our next question comes from Elliott Miller, who is a private investor.

First of all, congratulations to all of us, me too as an investor. I have 2 questions. The first deals with what you can about inflation protection in the contract -- in your contracts. I'm talking not only about the JV pipes contracts, but also your 100% owned operational facilities. Are there escalation clauses in there? Is there any inflation protection?

So most of our G&P contracts have, in fact, inflation protection. We have caps that range between 3% to 5%. And we obviously will see a lag effect in the context of the inflation of the actual inflation because everything is obviously in areas in the context of prior periods. But we have a lot of contractual protection, Elliot. So as it relates to on the operating expense side, I would say 80% of our OpEx is locked in, equipment rentals, salaries, contract labor, electric and utility, it's all fixed price, fixed block. So I think we've got some lubes in cans, which is a component of our ops where we, in fact, have some inflation exposure. The offset to that is we have a lot of condensate on our system, condensate that becomes equity barrels. So therefore, we have an embedded natural hedge as it relates to -- on the lubes and chems that we used on the processing -- with our processing complexes. On the capital side, we've procured more than 50-plus percent of all of our purchase orders as far as all our materials are concerned. So I would say, look, we're pretty protected. We've got the gross up on the revenue side, and we've already taken positive and significant actions on the expense side, whether it's OpEx or CapEx, to make sure that we're minimizing future inflationary impacts.

That's helpful. My second question again deals with the discussion of stock liquidity. Obviously, that has an impact on the stock price. And so I'm curious, I noticed on Page 14 of the investor presentation referenced to Blackstone and I Squared Capital's reduction of their interest. And I know there's a 1-year lockup. But is there anything contemplated beyond that 1-year lockup as to when and how there's going to be reduction by Blackstone and I Squared?

There is not. I would say the following. I think the -- I look at this and say there are various means and ways for us to increase stock liquidity. Obviously, we touched on one before in the context of the [ annual ] drop-down of Grand Prix. We obviously may have other opportunities that are presented in front of us that we think are particularly compelling and that more than meet or exceed our overall capital allocation targets and our return on investment thresholds. So that may lead to incremental equity issuance. And I think what we trying to be mindful of is we know that we've got to increase it. I -- we know that we have one potential selling shareholder, which is Apache. But in the context of Blackstone and I Squared, we can't speak for them in the context of what they think. I think they're going to be pretty patient sort of capital. But could you see them do very -- a small amount if they thought that it would further help their liquidity, stock liquidity? Sure. I mean, they've obviously got relatively sizable stock holdings, so they could do a couple of million shares without actually having much of an impact, but making a meaningful impact nonetheless, on the actual public float.

[Operator Instructions] We currently have no further questions, so I will hand over back to the management team for any final remarks.

Thank you very much this morning, everybody. Look, we're very excited. And so this is our opportunity to continue to engage in a dialogue and discussion with all of you. And stay tuned, hopefully, for more exciting things to come.

This concludes today's conference call. Thank you so much for joining. You may now disconnect your lines.