This Pipeline Operator Blips Up On Takeover Reports As AI Could Make 'Electricity The New Oil'

Kinetik (KNTK) shares jumped briefly in stock market action on Thursday following a Financial Times report that the Texas-pipeline operator is considering takeover offers after receiving feelers from Occidental Petroleum (OXY)-backed Western Midstream (WES).

Kinetik, which operates gas pipelines in the Delaware Basin straddling New Mexico and West Texas, began considering a sale after it was approached by Western Midstream, the Financial Times reports. However, the talks are preliminary and Western Midstream has not yet made a formal offer, according to the Financial Times.

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The reported move by Western Midstream comes as natural gas is widely viewed as the top energy source to power the U.S.’ AI ambitions. This means that pipeline operators will be critical to delivering natural gas to data centers.

Tortoise Capital analyst Rob Thummel recently told IBD that the U.S. is desperate to win the AI race against China. One of the reasons the U.S. could come out on top is because of its “low cost energy supply” from shale natural gas, according to Thummel.

“We think electricity is going to become the ‘new oil’ with AI,” Thummel said in a recent interview.

“You’re going to need a lot more natural gas, you’re going to need a lot more nuclear energy going forward. And so that is something the U.S., in general, is looking at and positioning themselves for not just the next couple of years, but for the next couple decades,” he added.

Investors already appear to be taking notice. The 46 stocks in the IBD-tracked Oil & Gas-Transport/Pipeline industry group have collectively advanced 15.4% in the 2026 stock market.

That gives the group a No. 46 ranking out of the 197 industries tracked by IBD.

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Natural Gas, Kinetik, Pipelines And AI

Kinetik stock initially jumped around 3% at the stock market open on Thursday, before reversing to trade flat. The stock entered Thursday’s stock market up more than 20% on the year. Fellow pipeline operators Kinder Morgan (KMI) and Energy Transfer (ET) are up more than 18% and 16.4%, respectively in 2026.

Meanwhile, Western Midstream Partners stock declined about 5.7% after missing fourth-quarter earnings estimates early Thursday. Occidental Petroleum-backed Western Midstream saw adjusted EBITDA come in below expectations, primarily due to a $30 million noncash revenue decrease related to revenue recognition under the cost-of-service agreements for the DJ Basin Oil and Springfield systems.

Adjusted gross margin was down 4% sequentially for its natural gas segment and down 11% quarter-over-quarter for crude oil.

For 2026, Western Midstream expects adjusted EBITDA of $2.5 to $2.7 billion, about 6% below the consensus view at the midpoint. The outfit also lowered its total capital expenditures forecast to $850 million to $1 billion, down from its previous more than $1.1 billion view.

Occidental Petroleum stock surged more than 7% early Thursday following a big Q4 earnings beat and as the company closed the sale of OxyChem in early January. OXY also increased its quarterly dividend by more than 8% to 26-cents per share. Mizuho analysts also raised their price target on OXY shares early Thursday.

Kinetik stock has a 43 Composite Rating out of a best-possible 99. The stock also has a 66 Relative Strength Rating and a 13 EPS Rating.

Please follow Kit Norton on X @KitNorton for more coverage.

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