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INVESTOR PRESENTATION January 2025
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/ Disclaimer JANUARY 2025 2 Cautionary Note Regarding Forward-Looking Statements. This presentation contains, and our officers and representatives may from time to time make, “forward -looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward -looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Forward - looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding: (i) ex pected operating results, such as revenue growth and earnings, including changes due to the acquisition of CSI Compressco LP (the “CSI Acquisition”), and our ability to service our indebtedness; (ii) anticipated levels of capital expenditures and uses of capital; (iii) current or future volatility in the credit markets and future market conditions; (iv) potential and pending acquisition transactions or other strategic transacti ons, the timing thereof, the receipt of necessary approvals to close those transactions, our ability to finance such transactions and our ability to achieve the intended operational, financial and strategic benefits fr om any such transactions; (v) expected synergies and efficiencies to be achieved as a result of the CSI Acquisition; (vi) expectations regarding leverage and dividend profile as a result of the CSI Acquisition, includi ng the amount and timing of future dividend payments; (vii) expectations of the effect on our financial condition of claims, litigation, environmental costs, contingent liabilities and governmental and regulatory in vestigations and proceedings; (viii) production and capacity forecasts for the natural gas and oil industry; (ix) strategy for customer retention, growth, fleet maintenance, market position, and financial results; (x) in terest rate hedges; and (xi) strategy for risk management. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circum stances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward -looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in th e forward-looking statements include, among others, the following: (i) a reduction in the demand for natural gas and oil; (ii) the loss of, or the deterioration of the financial condition of, any of our key customer s; (iii) nonpayment and nonperformance by our customers, suppliers or vendors; (iv) competitive pressures that may cause us to lose market share; (v) the structure of our Contract Services contracts and the fa ilure of our customers to continue to contract for services after expiration of the primary term; (vi) our ability to successfully integrate any acquired business, including CSI Compressco LP, and realize the expected benefits thereof; (vii) our ability to fund purchases of additional compression equipment; (viii) a deterioration in general economic, business, geopolitical or industry conditions, including as a result of the confl ict between Russia and Ukraine, inflation, and slow economic growth in the United States; (ix) tax legislation and administrative initiatives or challenges to our tax positions; (x) the loss of key management, operationa l personnel or qualified technical personnel; (xi) our dependence on a limited number of suppliers; (xii) the cost of compliance with existing and proposed governmental regulations, including climate change legisla tion; (xiii) the cost of compliance with regulatory initiatives and stakeholder pressures, including environmental, social and governance scrutiny; (xiv) the inherent risks associated with our operations, such as equ ipment defects and malfunctions; (xv) our reliance on third-party components for use in our information technology systems; (xvi) legal and reputational risks and expenses relating to the privacy, use and security of employee and client information; (xvii) threats of cyber-attacks or terrorism; (xviii) agreements that govern our debt contain features that may limit our ability to operate our business and fund future growth and a lso increase our exposure to risk during adverse economic conditions; (xix) volatility in interest rates; (xx) our ability to access the capital and credit markets or borrow on affordable terms to obtain addition al capital that we may require; (xxi) the effectiveness of our disclosure controls and procedures; and (xxii) such other factors as discussed throughout the "Risk Factors" and "Management's Discussion and Analysi s of Financial Condition and Results of Operations" sections of our Annual Report on Form 10-K for the year ended December 31, 2023, and our Quarterly Report on Form 10 -Q for the quarter ended September 30, 2024, each as filed with the SEC. Any forward-looking statement made by us in this presentation is based only on information currently available to us and speaks only as of the date on which it is made. Except as may be required by applicable law, we undertake no obligation to publicly update any forward-looking statement whether as a result of new information, future developments or otherwise. Non-GAAP Financial Measures. This presentation contains certain financial measures not presented in accordance with generally accepted accounting principl es (“GAAP”), including Adjusted Gross Margin, Adjusted Gross Margin Percentage, Adjusted EBITDA, Adjusted EBITDA Percentage, Discretionary Cash Flow and Free Cash Flow. Such non-GAAP measures should not be considered an alternative to, or more meaningful than, the most directly comparable measure of financial performance presented in accord ance with GAAP. Moreover, such non-GAAP measures may not be comparable to similarly titled measures of other companies. However, we believe these non -GAAP financial measures provide useful information to investors because, when viewed with our GAAP results and the accompanying reconciliation, they provide a more complete understanding of our performance than GAAP results alone. See the Supplemental S lides for reconciliation of non-GAAP measures. Industry & Market Data. The market data and certain other statistical information used throughout this presentation are based on independent industry publications, government publications or other published independent sources. Although we believe these third-party sources are reliable as of their respective dates, we have not independently verified the accuracy or completeness of this information. Some data is also based on our good faith estimates and our management’s understanding of industry conditio ns. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors. These and other factors could cause results to differ materially from those expressed in th ese publications. Intellectual Property. This presentation contains trademarks, trade names and service marks of other companies, which are the property of their resp ective owners. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relat ionship with, or endorsement or sponsorship of us by, these other parties.
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/ AT-A-GLANCE 1, 2 Market Cap $3.6 billion Enterprise Value $6.3 billion Dividend Yield 4.0% Overview JANUARY 2025 3 We Move Energy. Reliably. Safely. Responsibly. A leading provider of domestic energy infrastructure, enabling the reliable and secure flow of natural gas and oil to feed growing global demand 1 Based on KGS stock price as of December 31, 2024, dividend yield based on third quarter 2024 dividend of $0.41 per share annualized 2 Market capitalization and enterprise value are calculated as of December 31, 2024 and debt outstanding as of September 30, 2024 3 Fleet horsepower as of September 30, 2024 68% Permian 8% Northern Rockies 14% Eagle Ford 6% Mid-Continent % of revenue-generating horsepower as of September 30, 2024 2% Northeast Industry-Leading 3 4.4 million Fleet Horsepower 2% Other
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/ Investment Thesis Leading Market Position ► Purpose-built fleet of 4.4 million HP1 ► Market leader with 2.9 million HP of compression in the Permian1 Industry Leader in Both Growth & Utilization ► 0 to 4.4 million horsepower in 13 years ► 99% utilization rate on >1,000 HP units1 Attractive Industry Fundamentals ► Highly visible, multi-year natural gas demand growth from LNG exports ► Evolving buildout of AI data centers driving significant natural gas-fired power demand ► Tight equipment market with industrywide capital discipline Strong and Stable Cash Returns ► Fixed-revenue contracts ► High-margin, predictable cash returns 4 1 As of September 30, 2024 JANUARY 2025
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/ Q3 2024 Financial & Operational Highlights 5 Quarterly Adjusted EBITDA1 ($M) Total Revenues $325 million +5% vs Q2 2024 Contract Services Adjusted Gross Margin 1 66% +2% vs Q2 2024 Free Cash Flow1 $53 million >100% vs Q2 2024 96% Fleet utilization - increased 2.1% QoQ 50K HP Increase in fleet horsepower during the third quarter Operational Statistics JANUARY 2025 1 Adjusted Gross Margin, Free Cash Flow and Adjusted EBITDA are non-GAAP financial measures, see Supplemental Slides for reconciliations $102 $103 $106 $108 $110 $114 $118 $154 $168 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024
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/ Delivering Profitable Growth JANUARY 2025 6 64% 66% 1% 1% Q2 2024 Q3 2024 Driving Margin Expansion Contract Services Adjusted Gross Margin1 Revenue per HP Growth Cost Rationalization Redeployed 38K horsepower of formerly idle units Added 50K new horsepower at market rates Transaction synergy realization and continued cost management Increased Margins Revenue per HP Growth Cost Rationalization 1 Adjusted Gross Margin is a non-GAAP financial measure, see Supplemental Slides for reconciliation
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/ The Kodiak Difference JANUARY 2025 7 Every aspect of the business is geared towards providing superior service as defined by industry-leading mechanical availability Purpose-Built Fleet Large HP fleet engineered for liquids-rich basins Industry Leading Training Program1 Strategic Inventory Management ~300 in-field parts and inventory support locations Focused Operations Decades of experience in contract compression ~19,000 Hours of Technical Training ~1,800 Hours of Compliance Training ~1,000 Hours of Professional Training ~13,500 Hours of Safety Training 1 For the twelve-month period ending December 31, 2023
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/ Increased Shareholder Diversity & Liquidity JANUARY 2025 8 1 Based on KGS share count as of September 30, 2024, pro forma for 0.4 million share buyback on November 18, 2024. KGS ownership is as of December 31, 2024 2 Repurchased from EQT in private transactions on September 11, 2024 and November 18, 2024 84% 56% January 2024 December 2024 57% 43% $11.4 $43.2 Jan. 24 Dec. 24 $40 million Stock repurchased in second half of 20242 Average Daily Trading Liquidity ($M) Improved Shareholder Liquidity ► Reduced Top 5 ownership position by 20% ► Increased trading liquidity by >270% Top 5 Shareholders Remaining Shareholders Public / Management / Preferred Stock EQT Holdings Top 5 Shareholders (% of fully diluted shares outstanding)1 Equity Ownership (% of fully diluted shares outstanding)1
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/ 168% 39% 41% 44% 22% Kodiak Alerian MLP S&P 500 Nasdaq Russell 2000 Industry Leading Shareholder Returns at an Attractive Valuation JANUARY 2025 9 Creating Value for Shareholders ► Valuation provides the potential for further upside ► Shareholder return program provides attractive cash return 1 Based on enterprise value and consensus estimates as of December 31, 2024; Midstream Peers consists of EPD, KMI, MPLX, OKE, TRGP, and WMB; Adjusted EBITDA is a non-GAAP financial measure, see Supplemental Slides for reconciliation 2 Total return based on share price change with reinvested dividends for period from June 29, 2023 to December 31, 2024 3 KGS yield based on 3rd quarter dividend annualized and stock price as of December 31, 2024 >160% Total Shareholder Return Since KGS IPO2 Dividend Yield3 4.0% 7.7% 1.2% 0.7% 1.4% 8.3x 8.9x 8.7x 10.4x 13.0x KGS AROC USAC Midstream Peers S&P 500 EV/2026 Adj. EBITDA1
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/ Industry Leading Compression Capacity JANUARY 2025 10 ~99% Average Permian horsepower per unit ~1,150 Large horsepower utilization rate1 1 Large horsepower defined as units >1,000 HP 2 North America only, excludes other international horsepower, Source: company websites, investor presentations, Kodiak Management, public filings 3 Spears & Associates Report: The Upstream Gas Compression Market as of October 2024 2.9 million Permian horsepower United States Compression Market3 HP (in millions) % Outsourced (contract compression) 15 ~24% Insourced (customer-owned) 47 ~76% Total 62 100% Top 3 North America Contract Compression Providers = ~75% of the outsourced market2 4.4 4.4 3.9 0.9 0.6 0.5 0.4 0.3 0.3 1.6 KGS AROC + TOPS USAC JW NGSG AXIP Enerflex Park Nova Other HP in millions Other
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/ North American LNG Demand2 Bcf per day 5.5 2.7 0.6 1.1 19.0 28.9 LNG Driving U.S. Natural Gas Demand Outlook JANUARY 2025 11 1 As of September 30, 2024 2 EIA historical data and East Daley: 2024 Annual Natural Gas Outlook Terminal Status In Service Under Construction Eagle Ford Brownsville Plaquemines Freeport Corpus Christi CameronSabine Pass Calcasieu Pass ► Associated natural gas from the Permian and the Eagle Ford are expected to be one of the primary supply sources for Gulf Coast LNG projects ► Kodiak is a leader in the Permian and Eagle Ford with ~3.5 million horsepower - ~80% of revenue generating horsepower1 Permian Golden Pass Port Arthur 2020 2021 2022 2023 ‘24 – ‘30 Total
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/ Data Centers & AI Expected to Drive A Surge in Power Demand JANUARY 2025 12 728 2,109 3,078 2019 2020 2021 2022 2023 2030E Construction of Data Centers2 in Megawatts (MW) RAPID ACCELERATION OF DATA CENTERS AND ARTIFICIAL INTELLIGENCE PROJECTED TO DRIVE SURGE IN POWER DEMAND 15% Per year 3-10 Bcf/d ~60% Forecasted growth in data center demand from 2023-20301 Range of incremental data center- driven natural gas demand by 20301 % of incremental of electricity expected to be natural gas-sourced 1 U.S. Gas Demand Outlook Bcf per day 1 Goldman Sachs Research: “AI, data centers and the coming US power demand surge” (28-Apr-2024) & Raymond James Research: “Can the U.S. Generate Enough Electricity for the AI Boom” (24-Apr-2024) 2 CBRE Research: North America Data Center Trends H2 2023 – Incorporates primary market data centers: Virginia, Dallas-Ft. Worth, Chicago, Silicon Valley, Phoenix, Atlanta, Hillsboro, & New York 104 19 2 ~128-135~ 3 - 10 2023 LNG Mexico Power/ Other 2030
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/ Compression Demand Outlook ► Based on midpoint of power demand forecast range - U.S. gas demand expected to increase by 28 Bcf/d by 2030 ► An increase of ~2.4 million horsepower per year through 2030 would be required to meet this demand ► Demand forecast greatly exceeds capacity additions by contract compression providers in recent years JANUARY 2025 13 U.S. Compression Intensity × = U.S. Gas Demand Outlook Compression Demand Outlook U.S. Compression Intensity1 74 73 75 84 93 92 95 100 104 103 46 62 20 30 40 50 60 70 20 40 60 80 100 120 140 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024E million hpBcf/d 1.6 million Average per year increase U.S. Dry Gas Production Horsepower 1 EIA Short Term Energy Outlook August 2024, Spears & Associates: The Upstream Gas Compression Market: July 2024 and October 2024 62 million HP / 103 Bcf/d = ~600K HP per Bcf/d 28 Bcf/d = ~17 M Represents a ~27% increase in total domestic horsepower Growth by 2030 Incremental HP
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/ ~$800 ~$1,200 2017 2024E $682 $1,181 $1,347 $560 $388 $687 $817 75 104 40 50 60 70 80 90 100 110 120 130 140 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 0 0 0 0 0 0 0 0 Compression CapEx Dry Gas Production Industry Utilization Rate3 Compression Industry Has Displayed Capital Discipline JANUARY 2025 14 1 Source: Company reports; Included in the capital spending dataset are AROC, CCLP, KGS and USAC; 2024E represents the midpoint of company guidance 2 Management estimates 3 Calculated as the weighted average utilization rate as of period end for AROC, KGS and USAC …while costs to add HP have risen significantly2 $ Capex per HP millions Bcf/d $1,070 M 3-year avg $771 M 3-year avg Capital Discipline Higher $/HP New Unit Cost Tight Compression Market High Utilization 2017 2018 2019 2020 2021 2022 2023 2024E Compression industry capital spending remains below historical levels 1… 86% 95% Q4 2020 Q3 2024
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/ Multiple Compression Touch Points JANUARY 2025 15 Centralized Gas Lift Permian Basin Haynesville Shale 3x – 4x Compression Required in the Permian Basin vs Haynesville Gathering Systems Gas Processing 1 EIA Short-Term Energy Outlook Residue Compression NATURAL GAS GROWTH 2020-2024E1 Bcf/d 8.8 3.2 Permian Basin Haynesville
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/ Premier Customer Base Drives Growth & Stability JANUARY 2025 16 1 Reflects end-of-period revenue-generating HP 2 Based on September 2024 contract compression revenues; pro forma for EPD’s acquisition of Pinon Midstream 3 Based on revenue-generating HP as of September 30, 2024 Upstream Midstream 34% 66% Investment Grade Non-Investment Grade 40% 60% 2019 2020 2021 2022 2023 Sept. '24 Customers by Type3Customers by Credit Rating2Continuous HP Growth¹ 2019 – 2023 CAGR 6%
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/ Contract Structure Supports Cash Flow Visibility JANUARY 2025 17 Fixed monthly revenue with multi-year terms Annual inflation index adjustments Advance billing improves working capital cycle 98% mechanical availability guarantee Customer bears mobilization and demobilization costs Percent of Month-to-Month Contracts1 HP with Remaining Contract Term HP on Month-to-Month Contract Term 11% 89% Weighted Average Contract Term1 36–60 Months 1 As of September 30, 2024 (domestic only) Legacy Contract Term 2024 Typical Contract Term 32 Months 1 2 3 4 5
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/ Steady Business in Any Commodity Price Environment JANUARY 2025 18 Source: Company filings; FactSet; 1 Adjusted Gross Margin is a non-GAAP financial measure; see Supplemental Slides for reconciliation Kodiak Contract Services Adj. Gross Margin ($M) Average WTI Crude Oil Price ($/bbl) Average Henry Hub Price ($/MMBtu) Quarterly Contract Services Adjusted Gross Margin1 ($M) $86 $84 $88 $89 $94 $95 $97 $104 $105 $104 $108 $112 $115 $117 $121 $126 $128 $177 $188 $46.01 $28.30 $40.82 $42.52 $57.68 $65.97 $70.75 $77.29 $94.53 $108.87 $93.75 $82.62 $76.14 $86.49 $82.25 $78.53 $76.91 $81.81 $76.43 $1.91 $1.70 $1.97 $2.51 $3.39 $2.93 $4.33 $4.76 $4.64 $7.42 $7.98 $5.60 $2.68 $2.84 $2.59 $2.92 $2.14 $2.06 $2.11 0 2 4 6 8 10 12 14 16 18 20 - 20 40 60 80 100 120 140 160 180 200 Q1 '20 Q2 '20 Q3 '20 Q4 '20 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Q2 '22 Q3 '22 Q4 '22 Q1 '23 Q2 '23 Q3 '23 Q4 '23 Q1 '24 Q2 '24 Q3 '24
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/ 2024 Capital Plan JANUARY 2025 19 48 42 50 Q1 2024 Q2 2024 Q3 2024 Q4 2024E 18 – 22 New Unit Horsepower2 (in thousands) $270 - $300 Million 2024e CapEx New Unit CapEx 140K Organic increase horsepower in the first nine months of 2024 Full Year Capital Spending1 2024 New Units >95% Permian focused >2,000 HP Average horsepower per unit Other 1 Growth capital expenditures guidance excludes (i) approximately $30 million in one-time capital expenditures related to the CSI Acquisition, (ii) a $20 million Q2 ’24 non-cash accrual for sales taxes on compression units purchased in prior years and (iii) proceeds from the pending sale of small horsepower compression units. 2 Based on a board approved capex budget Maintenance CapEx
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/ Full-year 2024 Guidance 20 Low High Adjusted EBITDA (1) $ 600,000 $ 610,000 Discretionary Cash Flow (1)(2) $ 365,000 $ 385,000 Segment Information Contract Services revenues $ 1,020,000 $ 1,040,000 Contract Services Adjusted Gross Margin Percentage 64% 66% Other Services revenues $ 125,000 $ 135,000 Other Services Adjusted Gross Margin Percentage 14% 17% Capital Expenditures Growth capital expenditures (3) $ 210,000 $ 230,000 Maintenance capital expenditures $ 60,000 $ 70,000 (All amounts below are in thousands except per share amounts and percentages) 1 The Company is unable to reconcile projected Adjusted EBITDA to projected net income (loss) and Discretionary Cash Flow to projected net cash provided by operating activities, the most comparable financial measures calculated in accordance with GAAP, respectively, without unreasonable efforts because components of the calculations are inherently unpredictable, such as changes to current assets and liabilities, unknown future events, and estimating certain future GAAP measures. The inability to project certain components of the calculation would significantly affect the accuracy of the reconciliations. 2 Discretionary Cash Flow assumes no change to Secured Overnight Financing Rate futures. 3 Growth capital expenditures guidance excludes (i) approximately $30 million in one-time capital expenditures related to the CSI Acquisition, (ii) a $20 million Q2 ’24 non-cash accrual for sales taxes on compression units purchased in prior years and (iii) proceeds from the pending sale of small horsepower compression units. JANUARY 2025
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/ No Near-Term Debt Maturities JANUARY 2025 21 $1,892 $750 0 400 800 1,200 1,600 2,000 2024 2025 2026 2027 2028 2029 ($M) ABL Facility Senior Unsecured Notes >3 years Until First Debt Maturity in March 2028 Kodiak’s Debt Maturity Profile3 1 Weighted average borrowing cost as of September 30, 2024; includes the effect of interest rate swaps 2 CSI Compressco weighted average yield to maturity as of December 18, 2023 vs. Kodiak yield to worst as of December 31, 2024 3 As of September 30, 2024 9.9% 6.5% 0% 2% 4% 6% 8% 10% 12% Reduced High Yield Borrowing Costs2 6.5% Weighted average borrowing cost1 <3.5x Target leverage ratio by year-end 2025
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/ Capital Allocation Priorities JANUARY 2025 22 Returning capital to shareholders through an attractive dividend Investing in increasing fleet capacity that exceeds internal hurdle rate Reducing leverage and further balance sheet improvements Dividends Organic Growth Improving Balance Sheet ~7-9% growth Targeting upper-single digit annual growth in Adj. EBITDA¹ ≤3.5x Focused on achieving leverage ratio of < 3.5x or below by year-end 2025 $0.41 per share Quarterly dividend with strong cash flow coverage 1 Adjusted EBITDA is a non-GAAP financial measure, see Supplemental Slides for reconciliation
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/ Disciplined Approach to Safety 0.43 TRIR for 12 months ended December 2023 Prioritize Diverse Workplace 44% Workforce diversity Board Diversity 56% Gender, race and ethnic diversity Board Objectivity in Long-Term Strategy 8 of 9 Board members independent Renewable Sourced Electricity3 100% of offices powered by electricity produced from renewable sources backed by Energy Attribute Certificates Low Emissions Fleet >95% of fleet is lower emissions capable Industry Leader in Sustainability Initiatives JANUARY 2025 23 Established formal ESG Committee Published inaugural sustainability report Hart Energy recognizes Kodiak as first-ever ESG Top Performer Award winner1 Recognized as a best place to work ► Houston Business Journal ► Oklahoman ► Houston Chronicle Received Top Workplaces USA Award2 Established ‘Bears Academy’, a training center focused on workforce development GovernanceSocialEnvironmental 1 Kodiak was considered in the Private Midstream Category 2 Kodiak placed 91st nationally among mid-size companies with 500 to 999 employees 3 100% renewable sourced electricity for 2023
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/ Reconciliation of Non-GAAP Financial Measures JANUARY 2025 25 (in thousands) 3Q 2023 2Q 2024 3Q 2024 Total revenues $230,983 $309,653 $324,647 Cost of operations (exclusive of D&A and SG&A) (104,290) (127,269) (129,291) Depreciation and amortization (46,087) (69,463) (73,452) Gross margin $80,606 $112,921 $121,904 Depreciation and amortization 46,087 69,463 73,452 Adjusted Gross Margin $126,693 $182,384 $195,356 (in thousands) 3Q 2023 2Q 2024 3Q 2024 Net income (loss) $21,766 $6,713 $(6,211) Interest expense, net 39,710 52,133 53,991 Income tax (benefit) expense 7,904 2,336 (2,184) Depreciation and amortization 46,087 69,463 73,452 Long-lived asset impairment - - 9,921 Loss on extinguishment of debt 6,757 - - (Gain) loss on derivatives (15,141) (6,797) 20,327 Equity compensation expense¹ 2,544 5,311 3,905 Severance expense² - 8,969 2,243 Transaction expenses3 440 17,387 2,554 (Gain) loss on sale of capital assets - (1,173) 10,376 Adjusted EBITDA $110,067 $154,342 $168,374 Net Income to Adjusted EBITDA Net Income to DCF and FCF Gross Margin to Adjusted Gross Margin Net Cash Provided by Operating Activities to DCF and FCF (in thousands) 3Q 2023 2Q 2024 3Q 2024 Net cash provided by operating activities $85,731 $121,082 $36,878 Maintenance capital expenditures (12,312) (19,147) (21,553) Loss on extinguishment of debt 2,398 - - Severance expense2 - 8,969 2,243 Transaction expenses3 440 17,387 2,554 (Gain) loss on sale of capital assets - (1,173) 10,376 Change in operating assets and liabilities (9,697) (32,372) 84,479 Other4 (3,516) (4,129) (11,928) Discretionary Cash Flow $63,044 $90,617 $103,049 Growth capital expenditures5,6,7 (55,671) (90,390) (65,115) Proceeds from sale of capital assets - 411 14,566 Free Cash Flow $7,373 $638 $52,500 (in thousands) 3Q 2023 2Q 2024 3Q 2024 Net income (loss) $21,766 $6,713 $(6,211) Depreciation and amortization 46,087 69,463 73,452 Long-lived asset impairment - - 9,921 Change in fair value of derivatives (7,978) (52) 27,512 Loss on extinguishment of debt 6,757 - - Deferred tax provision 5,551 843 (2,283) Amortization of debt issuance costs 189 2,303 3,133 Equity compensation expense1 2,544 5,311 3,905 Severance expense2 - 8,969 2,243 Transaction expenses3 440 17,387 2,554 (Gain) Loss on sale of capital assets - (1,173) 10,376 Maintenance capital expenditures (12,312) (19,147) (21,553) Discretionary Cash Flow $63,044 $90,617 $103,049 Growth capital expenditures4,5,6 (55,671) (90,390) (65,115) Proceeds from sale of capital assets - 411 14,566 Free Cash Flow $7,373 $638 $52,500 Source: Company filings; ¹For the three months ended September 30, 2024 and 2023, there were $3.9 million and $2.5 million of non-cash adjustments for equity compensation expense. ²For the three months ended September 30, 2024 there was $2.2 million of severance expenses related to the CSI Acquisition. ³Represents certain costs associated with non-recurring professional services, primarily related to the CSI Acquisition for the three months ended September 30, 2024, and other costs. 4 Includes non-cash lease expense, provision for credit losses and inventory reserve.5 For the three months ended September 30, 2024 and 2023, growth capital expenditures include a $0.3 million decrease and a $16.4 million increase in accrued capital expenditures. 6 For the three months ended September 30, 2024 and 2023, there were $51.7 million and $52.0 million of new unit growth capital expenditures. 7For the three months ended September 30, 2024 and 2023, growth capital expenditures include a $1.7 million and $0.3 million, respectively. These accruals amounts are estimated based on the best known information as it relates to open audit periods with the state of Texas.
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/ (in thousands) 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 Net income (loss) $8,901 $45,900 $1,909 $(12,343) $17,517 $21,766 $(6,874) $30,232 $6,713 $(6,211) Interest expense, net 33,713 49,859 61,251 68,662 73,658 39,710 40,484 39,740 52,133 53,991 Income Tax (benefit) expense 2,781 14,337 596 (3,990) 5,851 7,904 5,305 9,875 2,336 (2,184) Depreciation and amortization 43,397 44,111 44,550 44,897 45,430 46,087 46,455 46,944 69,463 73,452 Long-lived asset impairment - - - - - - - - - 9,921 (Gain) loss on extinguishment of debt - - - - - 6,757 - - - - (Gain) loss on derivatives 6,502 (51,862) (6,144) 7,995 (34,934) (15,141) 21,814 (19,757) (6,797) 20,327 Equity compensation expense 1 - - 352 879 29 2,544 2,462 2,848 5,311 3,905 Severance expense 2 - - - - - - - - 8,969 2,243 Transaction expenses 3 1,600 - 770 201 1,072 440 4,288 7,880 17,387 2,554 (Gain) loss on sale of capital assets - (818) (49) 17 (738) - (56) - (1,173) 10,376 Adjusted EBITDA $96,894 $101,527 $103,235 $106,318 $107,885 $110,067 $113,878 $117,762 $154,342 168,374 Reconciliation of Non-GAAP Financial Measures (cont’d) JANUARY 2025 26 (in thousands) 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 Total Revenues $131,616 $123,499 $128,355 $132,259 $137,445 $142,622 $148,595 $154,408 $157,495 $162,808 $163,662 $170,992 $177,697 $181,619 $186,673 $189,616 $193,399 $276,250 $284,313 Cost of Operations (excluding D&A) (45,899) (39,045) (39,897) (43,110) (43,269) (47,929) (51,124) (50,491) (52,937) (58,336) (55,872) (58,570) (62,770) (65,017) (65,470) (63,835) (65,882) (99,333) (96,617) Depreciation and Amortization (32,751) (38,147) (37,567) (37,167) (38,049) (39,126) (40,789) (42,081) (42,405) (43,397) (44,111) (44,550) (44,897) (45,430) (46,087) (46,455) (46,944) (69,463) (73,452) Gross Margin $52,966 $46,307 $50,891 $51,982 $56,127 $55,567 $56,682 $61,836 $62,153 $61,075 $63,679 $67,872 $70,030 $71,172 $75,116 $79,326 $80,573 $107,454 $114,244 Depreciation and Amortization 32,751 38,147 37,567 37,167 38,049 39,126 40,789 42,081 42,405 43,397 44,111 44,550 44,897 45,430 46,087 46,455 46,944 69,463 73,452 Adjusted Gross Margin $85,717 $84,454 $88,458 $89,149 $94,176 $94,693 $97,471 $103,917 $104,558 $104,472 $107,790 $112,422 $114,927 $116,602 $121,203 $125,781 $127,517 $176,917 $187,696 Adjusted Gross Margin % 65.1% 68.4% 68.9% 67.4% 68.5% 66.4% 65.6% 67.3% 66.4% 64.2% 65.9% 65.7% 64.7% 64.2% 64.9% 66.3% 65.9% 64.0% 66.0% Gross Margin to Adjusted Gross Margin for Contract Services Net income to Adjusted EBITDA Source: Company filings; ¹For the three months ended September 30, 2024, there were $3.9 million of non-cash adjustments for equity compensation expense. ²For the three months ended September 30, 2024 there was $2.2 million of severance expenses related to the CSI Acquisition. ³Represents certain costs associated with non-recurring professional services, primarily related to the CSI Acquisition for the three months ended September 30, 2024, and other costs.