Kinetik Holdings Announces Sale of 27.5% Equity Interest in EPIC Crude Holdings, LP to Plains All American for $500 Million with Potential Additional Payments
Kinetik Holdings Inc. (“Kinetik” or the “Company”) has officially announced a major strategic divestiture that marks another significant step in its evolving corporate journey. The Company has entered into a definitive agreement to sell its 27.5% equity interest in EPIC Crude Holdings, LP (“EPIC Crude”), a large-scale crude oil transportation and infrastructure platform. The buyer is a wholly owned subsidiary of Plains All American Pipeline, L.P., and Plains GP Holdings (together referred to as “Plains”).
Under the terms of the agreement, Kinetik will receive approximately $500 million in upfront net cash consideration at closing, along with the possibility of an additional $96 million in contingent cash payments if a capacity expansion of EPIC Crude is formally sanctioned in the future. These transaction terms imply a total upfront enterprise valuation for 100% of EPIC Crude at roughly $2.85 billion, with the Contingent Consideration valued at an additional $350 million.
The deal, which is expected to close by early 2026 pending customary regulatory approvals and closing conditions—including clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976—represents not only a significant financial transaction but also a strategic repositioning for Kinetik as it focuses its portfolio on core growth areas.
Background on Kinetik Holdings and EPIC Crude
Kinetik Holdings is a leading player in the midstream energy sector, providing critical infrastructure and services for the transportation, storage, and processing of energy commodities. Headquartered in Houston, Texas, the Company operates across the Permian Basin, one of the most prolific oil and gas producing regions in the world.
EPIC Crude Holdings, in which Kinetik held a minority stake, is a vital crude oil pipeline and transportation system. It spans several hundred miles and is designed to move large volumes of crude oil from production areas in the Permian Basin to markets along the Gulf Coast. This infrastructure not only connects upstream producers to refiners and export markets but also plays a crucial role in stabilizing U.S. crude supply chains.
The 27.5% stake owned by Kinetik has been a non-core asset in its portfolio, with the Company increasingly signaling its intent to concentrate on assets where it has more operational influence and strategic alignment. The decision to divest the EPIC Crude interest is in line with that broader vision.
Strategic Rationale Behind the Transaction
According to Kinetik’s President and Chief Executive Officer, Jamie Welch, the deal aligns with the Company’s long-term strategy of enhancing shareholder value through disciplined capital allocation. Welch stated:
“The transaction represents a compelling opportunity to advance our commitment to maximize long-term shareholder value by recycling proceeds from non-core asset sales to attractive growth projects and potential acceleration of shareholder returns.”
This statement highlights several key elements of Kinetik’s corporate strategy:
- Recycling of Capital: By selling its minority stake in EPIC Crude, Kinetik gains immediate liquidity that can be redeployed into projects with higher return potential and greater strategic relevance.
- Focus on Core Assets: The Company is increasingly focused on its core Permian Basin operations, where it controls infrastructure and can directly drive efficiency, growth, and profitability.
- Flexibility for Growth: The $500 million in cash proceeds provides Kinetik with greater balance sheet flexibility to invest in new midstream infrastructure, expand capacity in key areas, or pursue strategic partnerships.
- Potential for Additional Returns: The contingent consideration of $96 million provides an upside opportunity should EPIC Crude pursue and approve a major capacity expansion, signaling Kinetik’s confidence in the asset’s long-term value despite the divestiture.
Use of Proceeds
Kinetik has clarified that the upfront proceeds will be used for general corporate purposes, a term that typically includes debt reduction, funding new capital expenditures, and potential returns of capital to shareholders through dividends or share repurchases.
By bolstering its financial flexibility, the Company is positioning itself to both strengthen its balance sheet and invest in future growth opportunities. In an industry where capital allocation discipline has become paramount, especially amid fluctuating energy prices, this approach underscores management’s commitment to sustainable value creation.
Valuation Implications
The transaction values EPIC Crude at a total enterprise value of $2.85 billion before the contingent consideration, which is a strong reflection of the asset’s market importance and cash flow potential. For Kinetik, its 27.5% stake translates into the $500 million cash payment, which aligns with prevailing midstream valuation multiples.
The potential $96 million contingent payment, tied to the approval of a capacity expansion, also reflects the growing importance of infrastructure to handle rising U.S. oil production and exports. Should global energy demand and U.S. crude exports continue to grow, the expansion of EPIC Crude could become a necessity, unlocking additional upside for Kinetik even after the sale.
Plains’ Perspective
For Plains All American, the acquisition of Kinetik’s stake consolidates its ownership of EPIC Crude and strengthens its already significant role in the U.S. midstream landscape. Plains operates one of the largest networks of crude oil pipelines and terminals across North America. The transaction will allow Plains to have greater control over EPIC Crude, streamline decision-making, and capture synergies with its existing operations.
Plains has long emphasized its strategy of expanding its infrastructure footprint to better serve producers and refiners. By acquiring the additional interest in EPIC Crude, Plains is reinforcing its commitment to long-term growth in crude oil transportation, even as the energy transition accelerates.
Regulatory Approval Process
The transaction is subject to customary closing conditions, most notably clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. This federal review ensures that the deal does not result in anti-competitive outcomes in the crude oil transportation market. Given the competitive nature of U.S. midstream infrastructure, analysts expect the transaction to pass regulatory scrutiny without major hurdles.
If approved as expected, the deal should close by early 2026, providing Kinetik ample time to plan for the redeployment of capital and enabling Plains to integrate the acquired stake into its long-term planning.
Broader Industry Context
The sale comes at a time when the energy industry is navigating a delicate balance between traditional oil and gas investments and the transition to cleaner energy sources. For midstream operators like Kinetik and Plains, crude oil infrastructure remains highly relevant due to continued global demand for U.S. oil, particularly from the Permian Basin.
At the same time, companies are under pressure to optimize their portfolios, maintain financial discipline, and return capital to shareholders. Divestitures of non-core assets—like this one by Kinetik—are increasingly common across the industry as firms refine their strategies in response to changing market dynamics.
