Kinetik Holdings Explores Sale Amidst Natural Gas Pipeline Demand

One of the largest gas pipeline operators in the Delaware Basin, Kinetik Holdings, is considering a sale following interest from Occidental Petroleum-backed Western Midstream Partners, according to people familiar with the matter. This potential transaction comes during a surge in U.S. Natural gas production and demand, driving increased merger and acquisition activity in the midstream sector.

Kinetik Holdings Overview

Kinetik Holdings, valued at $7.2 billion as of February 19, 2026, operates approximately 4,600 miles of pipeline across the Delaware portion of the Permian Basin, spanning western Texas and New Mexico. The company was formed in 2022 through the merger of Altus Midstream and EagleClaw Midstream, with Blackstone holding an 18% stake.

Western Midstream’s Interest and Occidental’s Role

Western Midstream Partners has expressed interest in acquiring Kinetik, initiating discussions that are currently in the early stages. No formal bid has been made as of February 19, 2026. Occidental Petroleum holds approximately one-third of the stock in Western Midstream, a legacy of its $57 billion acquisition of Anadarko in 2019, and would likely be involved in any potential auction.

Industry Trends Driving the Potential Sale

The potential sale process is occurring against a backdrop of significant growth in the U.S. Natural gas market. Increased liquefied natural gas (LNG) exports and the rising energy demands of data centers are fueling record-high production. This has led to a wave of consolidation within the midstream sector as companies seek to expand capacity and secure gas reserves. Energy companies are investing nearly $50 billion in new and planned pipelines over the next five years, with approximately 8,800 miles of pipeline construction planned or underway across the country [1].

Recent Deals in the Permian Basin

The energy sector has seen a resurgence in dealmaking recently. Coterra Energy and Devon Energy recently combined to form a $58 billion shale drilling giant in the Permian Basin, capable of producing 1.6 million barrels of oil equivalent per day. SM Energy also agreed to sell natural gas assets in South Texas to Caturus Energy for $950 million in cash. Mitsubishi Corporation’s acquisition of Aethon, the largest privately held U.S. Shale gas producer, for $7.5 billion (including debt) represents the largest acquisition in the history of the Warren Buffett-backed trading house.

Kinetik’s Performance

Kinetik’s stock has risen 22% since the beginning of the year, and jumped 11.1% in after-hours trading following reports of the potential sale. The company declined to comment on the matter, and Western Midstream did not immediately respond to requests for comment.

Delaware Basin Growth

Andrew Gillick, managing director and strategist at Enverus, noted that Kinetik has benefited from the Delaware Basin’s position as “one of the few remaining growth areas” and the “growing thirst for natural gas in the Gulf Coast” [1].