SCHEDULE 13G/A: Morgan Stanley Amends Kinetik Holdings Ownership Filing, Clarifies Beneficial Stake

Morgan Stanley and its affiliates have filed an amendment to their Schedule 13G for Kinetik Holdings Inc., clarifying that certain 'Paired Interests' do not confer beneficial ownership of Class A Common Stock.

Summary

• Morgan Stanley and its affiliated reporting persons (MS Capital Partners Adviser Inc., MS Energy Partners GP LP, Durango Investment Holdings LLC, and Durango Midstream LLC) have filed an Amendment No. 1 to their Schedule 13G for Kinetik Holdings Inc.
• The amendment clarifies that while Durango Midstream LLC holds 3,840,246 'Paired Interests' (consisting of Class C Common Stock and an equal number of Common Units of Kinetik Holdings, LP), these interests do not currently translate into beneficial ownership of Kinetik's Class A Common Stock.
• This is due to Kinetik Holdings, LP retaining the right to settle redemptions of these Common Units in cash, rather than Class A shares, until the Partnership elects share settlement upon a redemption request.
• As a result, the reporting persons state they beneficially own 0 shares of Class A Common Stock specifically underlying these Paired Interests and are not subject to Section 13(d) of the Securities Exchange Act of 1934 for these particular holdings.
• Morgan Stanley, as the ultimate parent, continues to report beneficial ownership of 253,506 shares of Class A Common Stock, representing 0.4% of the class, as of the original event date of June 24, 2024; these shares are separate from the Paired Interests addressed by this amendment.

Sentiment

Score: 5

Explanation: The document is neutral in sentiment, serving as a technical clarification of beneficial ownership rather than providing positive or negative operational or financial news for Kinetik Holdings Inc.

Positives

• The amendment provides increased clarity and accuracy regarding the beneficial ownership structure of Kinetik Holdings Inc.'s Class A Common Stock by Morgan Stanley and its affiliates.
• It corrects a potential misinterpretation from the original filing regarding the conversion rights of 'Paired Interests', ensuring more precise disclosure.

Negatives

• The initial Schedule 13G filing on July 5, 2024, may have led to a temporary misunderstanding of the beneficial ownership of Class A shares related to the 'Paired Interests', necessitating this corrective amendment.
• The complexity of the 'Paired Interests' and their redemption mechanism highlights potential ambiguities in certain financial instruments.

Risks

• The document itself does not introduce new risks to Kinetik Holdings Inc.'s operations or financial health; rather, it clarifies an ownership disclosure.

Future Outlook

The document does not contain any forward-looking statements or guidance regarding Kinetik Holdings Inc.'s future performance or operations.

Industry Context

This filing is a technical amendment related to beneficial ownership disclosure and does not provide insights into broader industry trends or competitive dynamics within the energy or midstream sectors.

Stakeholder Impact

• Shareholders: Provides clearer and more accurate information regarding the beneficial ownership of Class A Common Stock by a significant institutional investor group, reducing potential ambiguity.

Key Dates

Keywords

Kinetik Holdings Inc., Morgan Stanley, SEC filing, Schedule 13G, beneficial ownership, Class A Common Stock, Class C Common Stock, Common Units, Paired Interests, ownership amendment, financial reporting, investment disclosure