Oil and gas pipeline company Kinetik Holdings (KNTK +0.46%) stock jumped 10.5% through 11:15 a.m. ET Thursday after reporting very mixed results in its financial report last night.
Analysts forecast Kinetik would earn only $0.33 per share on sales of $476.8 million for the quarter. Kinetik actually earned $2.16 per share, despite sales falling short at only $430.4 million.
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Kinetik Q4 earnings
How did Kinetik surprise the analysts? Most of Kinetik's earnings in the quarter came not from operations, but from profit on asset sales, specifically, the company's equity interest in EPIC Crude Holdings, LP. Operating profit for the quarter was only $48.4 million (still more than double the $23.7 million earned in last year's Q4). "Gain on sale of equity method investment" from the EPIC deal, however, provided the bulk of the quarter's profits: $415.4 million.
(That's not something investors should expect to recur in future quarters, however, so make sure to view this quarter's earnings as an anomaly.)
(And I'll give the same advice for the full-year results; Kinetik reported total profit of $2.63 per share for all of 2025, more than double last year's earnings -- but that won't repeat.)
Free cash flow was negative in the quarter, but positive $497.1 million for the year.
What does it all mean for Kinetik stock?
Going forward, Kinetik tells investors to anticipate "high single-digit percentage growth year-over-year in gas processed volumes across the system," which sounds propitious. Additionally, Kinetik is forecasting capital spending between $450 million and $510 million in 2026, which, at the midpoint, implies less capital spending this year than the $497.1 million Kinetik spent last year.
Long story short, Kinetik's probably going to generate even more free cash flow this year.
