Negative Waha hub prices prompted some Permian producers to shut-in wells earlier this year, a factor that has weighed on Kinetik’s (KNTK) G&P operations in the Delaware. New pipeline expansions have resolved the gas bottleneck for now and are likely to pay big dividends for KNTK as delayed volumes hit its systems.
Kinetik reported 2Q26 processing volumes of 1,740 MMcf/d, 3% below East Daley Analytics’ forecast in the KNTK Financial Blueprint. The company estimated that 250 MMcf/d of production was curtailed for the quarter as a result of poor Waha hub prices. Nevertheless, management raised its 2026 EBITDA forecast and guided to 4Q26 volumes of 2,200 MMcf/d, a massive 460 MMcf/d rebound from 2Q. The start of the Gulf Coast Express compression expansion and Hugh Brinson Pipeline have opened takeaway and loosened gas flows in the Permian.
East Daley sees Kinetik’s updated guidance as a high case, not a base case. We estimate a -0.867 correlation between Waha prices and KNTK’s curtailments, suggesting ~75% (-0.867^2) of the variation is explained by Waha volatility. The other 25% likely comes from weather, maintenance and other market factors.
Based on the Waha forward curve, we expect curtailments will ease to just 5-10 MMcf/d, resulting in 235 MMcf/d of immediate benefit for KNTK’s assets. This takes us to 1,975 MMcf/d in estimated processing throughput, which still leaves a gap of 225 MMcf/d to meet management’s 4Q26 guidance.
Who Will Supply Growth?
According to the ‘Gathering & Processing’ dashboard in Energy Data Studio, nine producers account for 83% of the volumes on KNTK’s Durango Midstream system, shown in the figure above. Activity is led by Mewbourne Oil (19% share), ExxonMobil (XOM; 19%) and Matador Resources (MTDR; 13%). KNTK’s Alpine High system is predominantly supplied by eight producers, including Permian Resources (PR; 21% share), Devon Energy (DVN; 15%) and Chevron (CVX; 12%).
To bridge the difference between our model and management’s 4Q26 guidance, these operators will need to contribute organic growth. The 225 MMcf/d gap is equivalent to ~11.4% growth from the post-curtailment baseline. If the growth were distributed proportionately across KNTK’s customer base, each producer would need to increase their delivered Delaware volumes by ~11%.
However, guidance from the public operators mostly falls short of the 11% growth target. XOM, the largest contributor to Permian gains in 2026, is the only producer planning to expand at such a pace this year. In 2Q26 updates, Permian Resources guided to 5.7% growth while MTDR expects 6% organic growth. On the other hand, East Daley estimates the private companies as a group will grow 12%. Considering that KNTK processes roughly a 75%/25% split between the publics and privates, we estimate the company will grow gas processing volumes by 9.3%.
Investor Takeaway: Curtailments deprived Kinetik of some growth in 1H26, but new pipelines provide a shot in the arm for the balance of the year. East Daley estimates 235 MMcf/d of added processing throughput due to improved Waha pricing, plus 168 MMcf/d of incremental production growth. Our estimate of ~2,142 MMcf/d of processing volumes in 4Q26 represents significant growth, though falls short of KNTK’s latest guidance. – Chris Henry Tickers: CVX, DVN, KNTK, MTDR, PR, XOM.
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