Kinetik’s (KNTK) recent acquisition of Durango Midstream is paying dividends for the company. Rig counts have more than doubled on the G&P system in the northern Delaware Basin, according to East Daley Analytics’ rig allocations, likely in anticipation of the new Kings Landing processing plant. We expect more upside ahead for the Durango system.
KNTK acquired Durango Midstream in May ’24 for $765MM -- see our coverage of the deal. At the time, EDA assigned 4 rigs to the Durango system in Energy Data Studio. We now allocate 9 rigs to the G&P footprint in Leah and Eddy counties, NM. Durango was building the Kings Landing plant at the time of the acquisition, and KNTK plans to complete the expansion in April ’25.
Kinetik has capitalized on renewed operator interest in developing the northern Delaware, supported by targeted investments in gathering and transmission infrastructure. In 2024, KNTK secured a 15-year dedicated G&P agreement in Eddy County with one of its top customers, likely Permian Resources (PR), and announced a gas transmission line linking the Durango system in New Mexico to its legacy Raptor system in West Texas. EDA in Nov ’24 flagged the growing rig counts on Durango and the potential for KNTK to unlock supply.
Users can profile the Durango system in Energy Data Studio, including historical rig counts, system volumes, and the top producers. Since 2023, inlet volumes at the Maljamar plant have neared its 200 MMcf/d capacity limit. KNTK has highlighted in quarterly investor calls that operators have been deliberately curbing production in anticipation of the upcoming processing expansion.
East Daley projects rig counts to remain near current levels until mid-2026, when we anticipate the Kings Landing II plant comes online. KNTK has not reached a final decision yet on the expansion, but could provide an update on its 4Q24 earnings call Thursday (February 27).
We expect the new infrastructure will drive an increase to 11 rigs through our forecast to 2029 (see figure above). EDA models gas inlet volumes to grow at an annual rate of 26%, while EBITDA for the Durango asset rises by 22% over the same period in the KNTK Financial Blueprint. – James Taylor Tickers: KNTK, PR.
Data Center Demand Monitor - Available Now!
Introducing Data Center Demand Monitor by East Daley Analytics. This is your go-to source for tracking data center projects and demand. We monitor and visualize nearly 300 US data center projects. Use Data Center Demand Monitor to forecast demand, identify pipeline corridors and track data center projects. — Request your demo now of the Data Center Demand Monitor!
Energy Path - Powered by Energy Data Studio
Introducing Energy Path by East Daley Analytics — a revolutionary tool designed to transform how you view the energy market. With Energy Path, you can seamlessly track the molecule from wellhead to demand, gaining a complete view of the entire oil and gas value chain. From upstream to midstream to downstream, this multi-commodity product offers unparalleled insights across natural gas, NGLs and crude oil. Monitor volumes and fees at every stage, empowering your decision-making with a holistic market perspective.
See energy differently — Request your Energy Path demo now!
The Dirty Little Secrets 2025 Report is Live!
The 2025 Dirty Little Secrets written report is available now. This report goes beyond the webinar discussions to provide a deeper analysis of the topics covered. Learn how commodities are intertwined and identify opportunities for profit from market dislocations. Request a copy of the Dirty Little Secrets report.
The Daley Note
Subscribe to The Daley Note (TDN) for midstream insights delivered daily to your inbox. The Daley Note covers news, commodity prices, security prices and EDA research likely to affect markets in the short term.