Market Movers:
A Kinetik buyout by WES or another investor could jumpstart M&A activity in the Permian Basin, the focus of most midstream spending.
Estimated Quarterly Volumes:
3Q25 to 4Q25: The Bakken (-3.6%), Haynesville (-2.6%) and Delaware (-0.7%) are down while the Northeast (1.1%) and Rockies (1.1%) are up Q-o-Q.
4Q25 to 1Q26: The Bakken (-4.3%), Haynesville (-3.0%) and Northeast (-2.0%) are trending down while the Rockies (0.3%) is trending up Q-o-Q.
Calendar: EDA will be in Los Angeles Mar. 17-19 and Tulsa Mar. 23-26. The next financial model updates will occur Mar. 13. An earnings review for SOBO will be released by Mar. 6.
Market Movers:
Western Midstream (WES) has approached Kinetik Holdings (KNTK) about a potential merger, prompting KNTK to begin preparing for a sale, the Financial Times reports. A Kinetik buyout by WES or another investor could jumpstart M&A activity in the Permian Basin, the focus of most midstream spending.
On WES’ 4Q25 earnings call Wednesday (Feb. 18), executives refused to comment on the rumored tie-up with Kinetik.
East Daley has written before about the attractiveness of KNTK as a takeout candidate in the Delaware Basin. KNTK operates a solid footprint in the gas- and NGL-rich Delaware, as well as interests in both gas and NGL egress to the Gulf Coast via Permian Highway Pipeline and Shin Oak.
Despite these advantages, Kinetik faces some headwinds. A large component of KNTK’s Midstream Logistics segment comes from its marketing arm, which earns substantial gross margin each quarter by taking advantage of the wide Waha–Houston Ship Channel spread. As Permian gas pipelines come online and spreads tighten between Waha and Gulf Coast hubs, we expect KNTK will see gross margin begin to shrink.
Conversely, on its 4Q25 earnings call, WES management made the case that tighter Waha spreads will benefit its business. The company reported a 4% Q-o-Q decline in gas volumes from the Delaware, citing curtailments by certain customers exposed to depressed Waha prices. A stronger Waha, along with more gas takeaway from the Permian, would encourage producers to ramp up drilling on its Delaware systems. WES expects volumes to increase on its various G&P systems in 2027 as producers return.
In this sense, a merger between the two companies would take KNTK, looking down the barrel of tighter gas spreads, and pair it with WES, which sees opportunity from those same market dynamics.
A WES-KNTK combination would have gas processing capacity of 5.1 Bcf/d in the Delaware, with backing from a diverse set of leading E&Ps. According to East Daley Analytics’ Energy Data Studio, the top producers include Occidental (OXY), Mewbourne Oil, APA Corp., EOG Resources (EOG) and ConocoPhillips (COP).
While strengthening their position in the Permian, a KNTK-WES merger would fall short of the wellhead-to-water integration strategy favored by many in the midstream space. Neither WES nor KNTK has an ability to export NGLs produced on their respective systems. In East Daley’s view, Kinetik’s main value as a takeout candidate is as a supplier of NGLs that can be exported to meet global demand. This factor could bring other suitors to the table who are better situated to capitalize on this opportunity.
One obvious candidate is ONEOK (OKE). The company is among the most active in M&A, acquiring Magellan Midstream for $18.8B in 2023 and EnLink Midstream for $4.3B in 2025. OKE is also investing heavily in the Permian and targeting the NGL export market via its joint venture with MPLX. The companies are joining forces to build an LPG export dock in Texas City, expected online in early 2028.
A KNTK acquisition would provide more NGLs to OKE to move on its West Texas NGL pipeline (as well as incremental capacity on Shin Oak) into Mont Belvieu, where volumes can move to Texas City via the planned MBTC pipeline. From there, barrels can be fractionated and then exported. An OKE-KNTK combination would greatly expand OKE’s footprint in the Delaware and create a more competitive midstream company.
Other major players in the Permian could be interested in buying KNTK, though most of these names are already well established in the basin and don’t require KNTK’s assets to fill their docks. Targa Resources (TRGP) is following a disciplined capital plan of building new plants and expanding NGL pipelines in tandem with each other to fill the Galena Park export terminal. Energy Transfer (ET) also has a large existing footprint in the Permian, but is already constrained at its terminal in Nederland, so it is focused on deploying capital to strengthen and expand its existing value chain.
By contrast, ONEOK is late to the game in the Permian and has been forced to buy its way into the basin. Along with the EnLink and Magellan acquisitions, OKE purchased Medallion Midstream for $2.6B in 2024 and doubled its stake in BridgeTex Pipeline in 2025. Looking at the industry as a whole, EDA views OKE as the biggest potential beneficiary from a Kinetik acquisition.
Investor takeaway: A merger between KNTK and WES makes sense on paper and would benefit both businesses. However, wellhead-to-water integration is still the goal of the largest midstream players, and a KNTK-WES combo won’t meet that target. Moreover, by forming a much larger company, the merger would ultimately make it harder for an integrated name like OKE to acquire it in the future.
Estimated Quarterly Volumes
The total sample represents the flow sample and plant data accessible to EDA. The latest Q-o-Q percentage change is estimated by comparing either flow sample data Q-o-Q or plants within a basin that have continuously reported inlet volumes from the prior quarter to the current quarter. 4Q25 is expressed as Q-o-Q growth from 3Q25 and 1Q26 is expressed as Q-o-Q growth from 4Q25.
Rockies represents the aggregate of Big Horn, DJ, Green River, Piceance, Powder River, San Juan, Uinta and Wind River basins.
Bakken: The Bakken flow sample is down 4.3% from 4Q25 to 1Q26. Targa’s Badlands system is flat Q-o-Q while Energy Transfer’s CEQP Wild Basin system is down 14.1% Q-o-Q. Top producers on Wild Basin include Chord Energy (44 MMcf/d), Devon Energy ( 33 MMcf/d) and ConocoPhillips ( 21 MMcf/d).
Rockies: The Rockies flow sample is up 0.3% from 4Q25 to 1Q26. ConocoPhillips’ Lost Cabin system is up 43.2% Q-o-Q while Hilcorp’s Ignacio Processing is up 2.1% Q-o-Q. Top Producers on Ignacio Processing include Hilcorp (111 MMcf/d), IKAV Energy (58 MMcf/d) and Logos Resources II (26 MMcf/d).
Calendar:
