DENVER, Oct. 28, 2020 /PRNewswire/ -- Antero
Midstream Corporation (NYSE: AM) ("Antero Midstream" or
the "Company") today released its third quarter 2020 financial and
operating results. In addition, Antero Midstream announced an
increase in its Free Cash Flow Guidance. The relevant consolidated
financial statements are included in Antero Midstream's quarterly
report on Form 10-Q for the three months ended September 30, 2020.
Third Quarter 2020 Highlights:
- Net income was $106 million,
or $0.22 per share, compared to a
$(0.57) per share net loss in the
prior year quarter
- Adjusted Net Income was $120
million, or $0.25 per share, a
65% per share increase compared to the prior year quarter (non-GAAP
measure)
- Adjusted EBITDA was $229
million, a 5% increase compared to the prior year quarter
(non-GAAP measure)
- Capital expenditures were $37
million, a 77% decrease compared to the prior year
quarter
- Free Cash Flow before return of capital and changes in
working capital was $158 million
compared to $23 million in the prior
year quarter (non-GAAP measure)
- Net debt at quarter end was $3.1
billion and Net Debt to last twelve months Adjusted EBITDA
was 3.7x, both unchanged from June 30,
2020 (non-GAAP measure)
- Published annual Corporate Sustainability Report citing
industry low greenhouse gas intensity and methane leak loss rates
and environmental reduction goals by 2025
Updated 2020 Guidance Highlights:
- Increased net income guidance to a net loss of $(115) to $(125)
million and Adjusted Net Income guidance to a range of
$425 million to $435 million from a previous range of
$385 to $415
million
- Increased Adjusted EBITDA guidance to a range of
$835 to $845
million from the previous range of $800 million to $830
million
- Further decreased capital budget to a range of $200 to $210
million from the previous range of $200 to $215
million
- Increased Free Cash Flow guidance (before return of capital
and changes in working capital) to $485
million to $495 million from
the previous range of $445 to
$475 million
Paul Rady, Chairman and CEO said,
"Antero Midstream delivered company record volumes during the third
quarter, resulting in a 13% and 43% year-over-year increase in
gathering and processing volumes, respectively. This was a direct
result of Antero Resources' record production, which benefited from
its firm transportation portfolio that enabled delivery to premium
priced markets outside of Appalachia."
Mr. Rady further added, "In addition, Antero Midstream continues
to focus on capital and operating cost reductions across our
gathering and processing and water handling segments. The 77%
year-over-year reduction in capital expenditures resulted in the
lowest quarterly capital expenditures since Antero Midstream's IPO
in 2014 and is expected to continue to decline into the fourth
quarter of 2020."
Glen Warren, President of Antero
Midstream commented, "Earlier this month we published our Corporate
Sustainability Report, which highlights our outstanding ESG
performance and commitment to being an industry leader in
environmental, social, and governance metrics. We believe
natural gas will be key to the energy transition in the coming
decades as it complements renewable energy growth. As one of
the largest natural gas gathering and processing midstream
companies in the U.S., we believe we are well positioned to
maintain our peer leading ESG position, while striving to improve
our metrics even further through our 2025 environmental
targets."
For a discussion of the non-GAAP financial measures including
Adjusted EBITDA, Adjusted Net Income, Distributable Cash Flow, Free
Cash Flow and Net Debt, please see "Non-GAAP Financial
Measures."
Updated 2020 Guidance
Antero Midstream increased its Adjusted EBITDA guidance to a
range of $835 to $845 million from the previous range of
$800 to $830
million. The increase in Adjusted EBITDA is driven by higher
volumetric throughput than previously budgeted, as well as
operating and general and administrative cost reductions achieved
throughout 2020. In addition, Antero Midstream is modestly
decreasing its capital budget to a range of $200 to $210
million from the previous range of $200 to $215
million. The increase in Adjusted EBITDA guidance and
decrease in capital budget results in an increase in Free Cash Flow
guidance (before return of capital and changes in working capital)
to $485 to $495 million. This updated Free Cash Flow
guidance range is a $90 million, or
23%, increase from the original guidance provided in January of
2020 and a $30 million, or 7%,
increase from the revised Free Cash Flow guidance provided in
August of 2020 at the midpoint of the range.
The following is a summary of Antero Midstream's updated 2020
guidance ($ in millions):
|
2020
|
|
Low
|
|
High
|
|
Capital
Expenditures
|
$
|
200
|
—
|
$
|
210
|
|
Net Loss
|
|
(115)
|
—
|
|
(125)
|
|
Adjusted Net
Income
|
|
425
|
—
|
|
435
|
|
Adjusted
EBITDA
|
|
835
|
—
|
|
845
|
|
Distributable Cash
Flow
|
|
640
|
—
|
|
650
|
|
Free Cash Flow (before
return of capital and changes in working capital)
|
|
485
|
—
|
|
495
|
|
|
|
|
|
|
|
|
|
Corporate Sustainability Report
During the third quarter of 2020, Antero Midstream published its
first-ever Corporate Sustainability Report ("CSR"). The CSR details
Antero Midstream's ongoing commitment to environmental excellence,
strong governance, and safe operations in the communities in which
it operates. Antero Midstream's greenhouse gas ("GHG")
intensity is among the lowest in the industry and had a methane
leak loss rate of 0.017% in 2019, significantly below the ONE
Future industry and sector targets of 1.00% and 0.280%,
respectively. In addition, Antero Midstream established an
Environmental, Sustainability, and Social Governance ("ESG")
Committee of the Board of Directors. Lastly, the Company is
targeting a 100% reduction in pipeline pigging emissions by
2025.
Natural gas will be key to the energy transition and the ability
to address the risks associated with climate change. As the
lightest and least greenhouse gas intensive hydrocarbon, natural
gas is as important as wind and solar in the energy mix that allows
the U.S. and the globe to transition to a lower carbon
future. The full CSR report and Founders' Message is
available at
https://www.anteromidstream.com/community-sustainability.
Information on the Company's website does not constitute a portion
of, and is not incorporated by reference into, this press
release.
COVID-19 Pandemic Developments
As a midstream energy company, Antero Midstream is recognized as
an essential business under various federal, state and local
regulations related to the COVID-19 pandemic. Antero
Midstream has continued to operate as permitted under these
regulations while taking steps to protect the health and safety of
its workers. Antero Midstream has implemented protocols to
reduce the risk of an outbreak within its field operations, and
these protocols have not reduced Antero Resources' production or
Antero Midstream's throughput in a significant manner. A
substantial portion of the Company's non-field level employees
continue to operate in remote work from home arrangements, and
Antero Midstream has been able to maintain a consistent level of
effectiveness through these arrangements, including maintaining
day-to-day operations, its financial reporting systems and its
internal control over financial reporting. For more information,
please see Antero Midstream's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2020.
Third Quarter 2020 Financial Results
Low pressure gathering volumes for the third quarter of 2020
averaged 3,051 MMcf/d, a 13% increase as compared to the prior year
quarter. Low pressure gathering volumes were in excess of the
third quarter 2020 growth incentive fee threshold of 2,800 MMcf/d,
resulting in a $12 million rebate to
Antero Resources. Compression volumes for the third quarter of 2020
averaged 2,821 MMcf/d, a 16% increase as compared to the third
quarter of 2019. High pressure gathering volumes for the
third quarter of 2020 averaged 3,008 MMcf/d, a 13% increase
compared to the third quarter of 2019. Fresh water delivery volumes
averaged 111 MBbl/d during the quarter, a 21% decrease compared to
the third quarter of 2019, due to 30% fewer completions.
Gross processing volumes from the 50/50 processing and
fractionation joint venture with MarkWest (a wholly owned
subsidiary of MPLX) (the "Joint Venture") averaged 1,484 MMcf/d for
the third quarter of 2020, a 43% increase compared to the prior
year quarter. Joint Venture processing capacity was 106%
utilized during the quarter based on nameplate processing capacity
of 1.4 Bcf/d. Gross Joint Venture fractionation volumes
averaged 39 MBbl/d, a 22% increase compared to the prior year
quarter.
|
|
Three Months
Ended
September
30,
|
|
|
|
|
Average Daily
Volumes:
|
|
2019
|
|
2020
|
|
%
Change
|
|
|
Low Pressure Gathering
(MMcf/d)
|
|
2,698
|
|
3,051
|
|
13%
|
|
|
Compression
(MMcf/d)
|
|
2,434
|
|
2,821
|
|
16%
|
|
|
High Pressure
Gathering (MMcf/d)
|
|
2,662
|
|
3,008
|
|
13%
|
|
|
Fresh Water Delivery
(MBbl/d)
|
|
141
|
|
111
|
|
(21)%
|
|
|
Gross Joint Venture
Processing (MMcf/d)
|
|
1,036
|
|
1,484
|
|
43%
|
|
|
Gross Joint Venture
Fractionation (MBbl/d)
|
|
32
|
|
39
|
|
22%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended September 30,
2020, revenues were $233
million comprised of $190
million from the Gathering and Processing segment and
$61 million from the Water Handling
segment, net of $18 million of
amortization of customer relationships. Water Handling
revenues include $21 million from
wastewater handling and high rate water transfer services.
Direct operating expenses for the Gathering and Processing and
Water Handling segments were $16
million and $22 million,
respectively, for a total of $38
million, compared to $62
million in total direct operating expenses in the prior year
quarter. Water Handling operating expenses include $19 million from wastewater handling and high
rate water transfer services. The decrease in direct operating
expenses was driven by lower per unit gathering and fresh water
delivery operating expenses as well as lower costs associated with
flowback and produced water due to Antero Midstream's blending
operations. General and administrative expenses excluding
equity-based compensation were $10
million during the third quarter of 2020. Total
operating expenses during the third quarter of 2020 included
$4 million of equity compensation
expense, and $27 million of
depreciation.
Net income was $106 million, or
$0.22 per share. Net income
adjusted for amortization of customer relationships, or Adjusted
Net Income, was $120 million.
Adjusted Net Income per share was $0.25 per share, representing a 65% increase
compared to the prior year quarter, driven primarily by an increase
in throughput. Adjusted EBITDA was $229 million, a 5% increase compared to the prior
year quarter. Cash interest paid was $61
million. The decrease in cash reserved for bond interest
during the quarter was $27 million.
Maintenance capital expenditures during the quarter totaled
$6 million and Distributable Cash
Flow was $189 million. Based on the
previously declared dividend of $0.3075 per share, Antero Midstream's
Distributable Cash Flow coverage ratio was approximately 1.3x. Free
Cash Flow before return of capital and changes in working capital
was $158 million during the
quarter.
The following table reconciles net income (loss) to Adjusted Net
Income, Adjusted EBITDA, Distributable Cash Flow and Free Cash Flow
as used in this release (in thousands):
|
|
|
|
|
|
|
|
|
Three Months
Ended September
30,
|
|
|
|
2019
|
|
|
2020
|
Net Income
(loss)
|
|
$
|
(289,477)
|
|
|
105,507
|
Amortization of
customer relationships
|
|
|
28,863
|
|
|
17,800
|
Impairment
expense
|
|
|
457,478
|
|
|
947
|
Tax effect of
reconciling items(1)
|
|
|
(120,126)
|
|
|
(4,631)
|
Adjusted Net
Income
|
|
|
76,738
|
|
|
119,623
|
|
|
|
|
|
|
|
Net Income
(loss)
|
|
$
|
(289,477)
|
|
|
105,507
|
Interest
expense
|
|
|
36,134
|
|
|
34,501
|
Provision for income
tax expense (benefit)
|
|
|
(62,268)
|
|
|
34,982
|
Amortization of
customer relationships
|
|
|
28,863
|
|
|
17,800
|
Depreciation
expense
|
|
|
24,460
|
|
|
26,801
|
Impairment
expense
|
|
|
457,478
|
|
|
947
|
Accretion and change in
fair value of contingent acquisition consideration
|
|
|
2,031
|
|
|
39
|
Equity-based
compensation
|
|
|
20,129
|
|
|
3,678
|
Equity in earnings of
unconsolidated affiliates
|
|
|
(18,478)
|
|
|
(23,173)
|
Distributions from
unconsolidated affiliates
|
|
|
18,710
|
|
|
27,485
|
Adjusted
EBITDA
|
|
|
217,582
|
|
|
228,567
|
Interest
paid
|
|
|
(43,925)
|
|
|
(60,761)
|
Decrease in cash
reserved for bond interest (2)
|
|
|
9,150
|
|
|
27,422
|
Maintenance capital
expenditures (3)
|
|
|
(12,915)
|
|
|
(5,695)
|
Employee tax
withholding for settlement of equity compensation awards
|
|
|
(180)
|
|
|
(74)
|
Distributable Cash
Flow
|
|
$
|
169,712
|
|
|
189,459
|
|
|
|
|
|
|
|
Total Aggregate
Dividends Declared
|
|
$
|
153,023
|
|
|
146,566
|
|
|
|
|
|
|
|
Distributable Cash
Flow Coverage Ratio
|
|
|
1.1x
|
|
|
1.3x
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
217,582
|
|
|
228,567
|
Interest
paid
|
|
|
(43,925)
|
|
|
(60,761)
|
Decrease in cash
reserved for bond interest (3)
|
|
|
9,150
|
|
|
27,422
|
Total capital
expenditures
|
|
|
(160,026)
|
|
|
(36,808)
|
Free Cash Flow
(before return of capital and changes in working
capital)
|
|
$
|
22,781
|
|
|
158,420
|
|
|
|
|
|
|
|
|
|
|
1)
|
Statutory tax rate
was approximately 24.7% for 2019 and 2020.
|
2)
|
Cash reserved for
bond interest expense on Antero Midstream's senior notes
outstanding during the period that is paid on a semi-annual
basis.
|
3)
|
Maintenance capital
expenditures represent the portion of our estimated capital
expenditures associated with (i) the connection of new wells to our
gathering and processing systems that we believe will be necessary
to offset the natural production declines Antero Resources will
experience on all of its wells over time, and (ii) water delivery
to new wells necessary to maintain the average throughput volume on
our systems.
|
Third Quarter 2020 Operating Update
Gathering and Processing — During the third
quarter of 2020, Antero Midstream connected 27 wells to its
gathering system. The Company's 3.2 Bcf/d of compression capacity
was approximately 90% utilized during the quarter. Antero Midstream
placed on line a 120 MMcf/d compressor station in the liquids-rich
regime in the Marcellus Shale during the quarter. Joint
Venture processing capacity of 1.4 Bcf/d was 106% utilized during
the quarter. Joint Venture fractionation capacity was 98% utilized
during the quarter.
Water Handling— Antero Midstream's
Marcellus water delivery systems serviced 21 well completions
during the third quarter of 2020, a 30% decrease from the prior
year quarter, driven by a reduction in completion activity by
Antero Resources.
Balance Sheet and Liquidity
As of September 30, 2020, Antero
Midstream had approximately $1.19
billion drawn on its $2.13
billion bank credit facility, resulting in approximately
$944 million of liquidity. Antero
Midstream's Net Debt to trailing twelve months Adjusted EBITDA
("Leverage") was 3.7x as of September 30,
2020.
Capital Investments
Total accrued capital expenditures including investments in the
Joint Venture were $37 million during
the third quarter of 2020. Gathering, compression, and water
infrastructure capital investments totaled $34 million and investments in unconsolidated
affiliates for the Joint Venture were $3
million. Of the $34 million
invested in gathering, compression, and water infrastructure,
$22 million was in gathering and
compression assets and $12 million
was in water handling assets.
Michael Kennedy, CFO of Antero
Midstream, said, "Antero Midstream's total debt and leverage
remained unchanged quarter-over-quarter at $3.1 billion and 3.7x, respectively. This is a
direct result of declining capital investments throughout the year
and ability to quickly adapt to the changes in Antero Resources
development plan. This just-in-time capital investment and
coordinated effort between Antero Resources and Antero Midstream
allowed us to maintain high asset utilization rates during the
quarter with compression and processing capacity 90% and 106%
utilized, respectively."
Conference Call
A conference call for Antero Midstream is scheduled on
Thursday, October 29, 2020 at
10:00 am MT to discuss the financial
and operational results. A brief Q&A session for security
analysts will immediately follow the discussion of the results for
the quarter. To participate in the call, dial in at
877-407-9126 (U.S.), or 201-493-6751 (International) and reference
"Antero Midstream". A telephone replay of the call will be
available until Thursday, November 5,
2020 at 10:00 am MT at
877-660-6853 (U.S.) or 201-612-7415 (International) using the
conference ID: 13703920. To access the live webcast and view the
related earnings conference call presentation, visit Antero
Midstream's website at www.anteromidstream.com. The webcast
will be archived for replay until Thursday,
November 5, 2020 at 10:00 am
MT.
Non-GAAP Financial Measures and Definitions
Antero Midstream uses certain non-GAAP financial measures.
Antero Midstream defines Adjusted Net Income as net income (loss)
plus amortization of customer contracts and impairment expenses,
net of tax effect of reconciling items. Antero Midstream uses
Adjusted Net Income to assess the operating performance of its
assets. Antero Midstream defines Adjusted EBITDA as net income
(loss) before amortization of customer relationships, impairment
expense, interest expense, provision for income tax expense
(benefit), loss on asset sale, depreciation expense, accretion,
equity-based compensation expense, excluding equity in earnings of
unconsolidated affiliates, and including cash distributions from
unconsolidated affiliates.
Antero Midstream uses Adjusted EBITDA to assess:
- the financial performance of Antero Midstream's assets, without
regard to financing methods, capital structure or historical cost
basis;
- its operating performance and return on capital as compared to
other publicly traded companies in the midstream energy
sector, without regard to financing or capital structure; and
- the viability of acquisitions and other capital expenditure
projects.
Antero Midstream defines Free Cash Flow as Adjusted EBITDA less
interest paid, increase or decrease in cash reserved for bond
interest and capital expenditures. Free Cash Flow is before
dividend payments, share repurchases and changes in working
capital. Antero Midstream uses Free Cash Flow as a performance
metric to compare the cash generating performance of Antero
Midstream from period to period.
Antero Midstream's defines Distributable Cash Flow as Adjusted
EBITDA less interest paid, increase or decrease in cash reserved
for bond interest, income tax withholding upon vesting of
equity-based compensation awards, and ongoing maintenance capital
expenditures paid. Antero Midstream uses Distributable Cash Flow as
a performance metric to compare the cash generating performance of
Antero Midstream from period to period and to compare the cash
generating performance for specific periods to the cash dividends
(if any) that are expected to be paid to shareholders.
Distributable Cash Flow does not reflect changes in working capital
balances.
Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, and
Distributable Cash Flow are non-GAAP financial measures. The
GAAP measure most directly comparable to such measures is Net
Income. Such non-GAAP financial measures should not be
considered as alternatives to the GAAP measure of Net Income.
The presentations of such measures are not made in accordance with
GAAP and have important limitations as analytical tools because
they include some, but not all, items that affect Net Income.
You should not consider any or all such measures in isolation or as
a substitute for analyses of results as reported under GAAP.
Antero Midstream's definitions of such measures may not be
comparable to similarly titled measures of other companies.
Antero Midstream defines Net Debt as consolidated total debt
less cash and cash equivalents. Antero Midstream views Net
Debt as an important indicator in evaluating Antero Midstream's
financial leverage.
Antero Midstream has not included a reconciliation of Free Cash
Flow to the nearest GAAP financial measure for 2020 because it
cannot do so without unreasonable effort and any attempt to do so
would be inherently imprecise. Antero Midstream is able to forecast
the following reconciling items between such measures and Net
Income (in thousands):
|
Twelve Months
Ending
December 31, 2020
|
|
Low
|
|
High
|
|
Depreciation
expense
|
$
|
105
|
—
|
$
|
115
|
|
Equity-based
compensation expense
|
|
10
|
—
|
|
15
|
|
Interest
expense
|
|
140
|
—
|
|
150
|
|
Amortization of
customer relationships
|
|
70
|
—
|
|
75
|
|
Distributions from
unconsolidated affiliates
|
|
95
|
—
|
|
105
|
|
The following table reconciles cash paid for capital
expenditures and accrued capital expenditures during the period (in
thousands):
|
|
Three Months
Ended September
30,
|
|
|
|
2019
|
|
|
2020
|
Capital
expenditures (as reported on a cash basis)
|
|
$
|
134,805
|
|
|
44,665
|
Change in accrued
capital costs
|
|
|
25,221
|
|
|
(7,857)
|
Capital
expenditures (accrual basis)
|
|
|
160,026
|
|
|
36,808
|
The following table reconciles consolidated total debt to
consolidated net debt ("Net Debt") as used in this release (in
thousands):
|
|
June 30,
2020
|
|
September 30,
2020
|
|
Bank credit
facility
|
|
$
|
1,155,000
|
|
1,187,500
|
|
5.375% senior notes
due 2024
|
|
|
650,000
|
|
650,000
|
|
5.75% senior notes due
2027
|
|
|
650,000
|
|
650,000
|
|
5.75% senior notes due
2028
|
|
|
650,000
|
|
650,000
|
|
Net unamortized debt
issuance costs and premiums
|
|
|
(16,215)
|
|
(15,683)
|
|
Consolidated total
debt
|
|
|
3,088,785
|
|
$3,121,817
|
|
Cash and cash
equivalents
|
|
|
(2,997)
|
|
(2,393)
|
|
Consolidated net
debt
|
|
$
|
3,085,788
|
|
3,119,424
|
|
The following table reconciles net loss to Adjusted EBITDA for
the last twelve months as used in this release (in thousands):
|
|
12 months
ended June 30,
2020
|
|
12 months
ended September 30,
2020
|
|
Net
Loss
|
|
$
|
(738,528)
|
|
(343,544)
|
|
Amortization of
customer relationships
|
|
|
81,906
|
|
70,843
|
|
Impairment
expense
|
|
|
1,425,910
|
|
969,379
|
|
Interest
expense
|
|
|
145,606
|
|
143,973
|
|
Provision for income
tax benefit
|
|
|
(243,372)
|
|
(146,122)
|
|
Depreciation
expense
|
|
|
106,517
|
|
108,858
|
|
Accretion and change in
fair value of contingent acquisition consideration
|
|
|
4,941
|
|
2,949
|
|
Equity-based
compensation
|
|
|
46,586
|
|
30,135
|
|
Loss on asset
sale
|
|
|
240
|
|
240
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
(74,836)
|
|
(79,531)
|
|
Distributions from
unconsolidated affiliates
|
|
|
82,288
|
|
91,063
|
|
Conflicts committee
legal & advisory fees
|
|
|
2,278
|
|
2,278
|
|
Adjusted
EBITDA
|
|
$
|
839,536
|
|
850,521
|
|
Antero Midstream Corporation is a Delaware corporation that owns, operates and
develops midstream gathering, compression, processing and
fractionation assets located in West
Virginia and Ohio, as well
as integrated water assets that primarily service Antero Resources
Corporation's properties. The Company's website is located at
www.anteromidstream.com.
This release includes "forward-looking statements."
Such forward-looking statements are subject to a number of risks
and uncertainties, many of which are not under Antero Midstream's
control. All statements, except for statements of historical
fact, made in this release regarding activities, events or
developments Antero Midstream expects, believes or anticipates will
or may occur in the future, such as Antero Midstream's ability to
execute its business plan and return capital to its shareholders,
information regarding potential incremental flowback and produced
water services, information regarding long-term financial and
operating outlooks for Antero Midstream and Antero Resources and
information regarding Antero Resources' expected future growth and
its ability to meet its drilling and development plan and Antero
Midstream's environmental goals are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. All
forward-looking statements speak only as of the date of this
release. Although Antero Midstream believes that the plans,
intentions and expectations reflected in or suggested by the
forward-looking statements are reasonable, there is no assurance
that these plans, intentions or expectations will be
achieved. Therefore, actual outcomes and results could
materially differ from what is expressed, implied or forecast in
such statements. Except as required by law, Antero Midstream
expressly disclaims any obligation to and does not intend to
publicly update or revise any forward-looking statements.
Antero Midstream cautions you that these forward-looking
statements are subject to all of the risks and uncertainties
incident to our business, most of which are difficult to predict
and many of which are beyond Antero Midstream's control.
These risks include, but are not limited to, commodity price
volatility, inflation, environmental risks, Antero Resources'
drilling and completion and other operating risks, regulatory
changes, the uncertainty inherent in projecting Antero Resources'
future rates of production, cash flows and access to capital, the
timing of development expenditures, impacts of world events,
including the COVID-19 pandemic, potential shut-ins of production
by producers due to lack of downstream demand or storage
capacity, and the other risks described under the heading
"Item 1A. Risk Factors" in Antero Midstream's Annual Report on Form
10-K for the year ended December 31,
2019 and its subsequently filed Quarterly Reports on Form
10-Q.
ANTERO MIDSTREAM
CORPORATION
|
Condensed
Consolidated Balance Sheets
|
December
31, 2019 and September 30, 2020
|
(In
thousands)
|
|
|
|
|
|
(Unaudited)
|
|
|
|
December 31,
|
|
September 30,
|
|
|
|
2019
|
|
2020
|
|
Assets
|
Cash and cash
equivalents
|
|
$
|
1,235
|
|
|
2,393
|
|
Accounts
receivable–Antero Resources
|
|
|
101,029
|
|
|
83,948
|
|
Accounts
receivable–third party
|
|
|
4,574
|
|
|
3,599
|
|
Income tax
receivable
|
|
|
—
|
|
|
17,547
|
|
Other current
assets
|
|
|
1,720
|
|
|
521
|
|
Total current
assets
|
|
|
108,558
|
|
|
108,008
|
|
Property and
equipment, net
|
|
|
3,273,410
|
|
|
3,255,889
|
|
Investments in
unconsolidated affiliates
|
|
|
709,639
|
|
|
728,325
|
|
Deferred tax
asset
|
|
|
103,231
|
|
|
125,596
|
|
Customer
relationships
|
|
|
1,498,119
|
|
|
1,445,108
|
|
Goodwill
|
|
|
575,461
|
|
|
—
|
|
Other assets,
net
|
|
|
14,460
|
|
|
10,578
|
|
Total
assets
|
|
$
|
6,282,878
|
|
|
5,673,504
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable–Antero Resources
|
|
$
|
3,146
|
|
|
2,429
|
|
Accounts payable–third
party
|
|
|
6,645
|
|
|
19,920
|
|
Accrued
liabilities
|
|
|
104,188
|
|
|
36,535
|
|
Contingent acquisition
consideration
|
|
|
125,000
|
|
|
—
|
|
Other current
liabilities
|
|
|
3,105
|
|
|
2,375
|
|
Total current
liabilities
|
|
|
242,084
|
|
|
61,259
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
2,892,249
|
|
|
3,121,817
|
|
Other
|
|
|
5,131
|
|
|
4,937
|
|
Total
liabilities
|
|
|
3,139,464
|
|
|
3,188,013
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
Preferred stock, $0.01
par value: 100,000 authorized at December 31, 2019 and September
30, 2020, respectively
|
|
|
|
|
|
|
|
Series A non-voting
perpetual preferred stock; 12 designated and 10 issued and
outstanding at both December 31, 2019 and September 30,
2020
|
|
|
—
|
|
|
—
|
|
Common stock, $0.01 par
value; 2,000,000 authorized; 484,042 and 476,597 issued and
outstanding at December 31, 2019 and September 30, 2020,
respectively
|
|
|
4,840
|
|
|
4,766
|
|
Additional paid-in
capital
|
|
|
3,480,139
|
|
|
3,021,275
|
|
Accumulated
deficit
|
|
|
(341,565)
|
|
|
(540,550)
|
|
Total stockholders'
equity
|
|
|
3,143,414
|
|
|
2,485,491
|
|
Total liabilities and
stockholders' equity
|
|
$
|
6,282,878
|
|
|
5,673,504
|
|
ANTERO MIDSTREAM
CORPORATION
|
Condensed
Consolidated Statements of Operations and Comprehensive Income
(Loss)
|
Three Months Ended
September 30, 2019 and 2020
|
(In thousands,
except per share amounts)
|
(Unaudited)
|
|
|
|
Three Months Ended
September 30,
|
|
|
|
2019
|
|
2020
|
|
Revenue:
|
|
|
|
|
|
|
|
Gathering and
compression–Antero Resources
|
|
$
|
175,719
|
|
|
190,214
|
|
Water handling–Antero
Resources
|
|
|
96,939
|
|
|
61,001
|
|
Amortization of
customer relationships
|
|
|
(28,863)
|
|
|
(17,800)
|
|
Total
revenue
|
|
|
243,795
|
|
|
233,415
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
61,808
|
|
|
38,052
|
|
General and
administrative (including $20,129 and $3,678 of equity-based
compensation in 2019 and 2020, respectively)
|
|
|
30,595
|
|
|
13,232
|
|
Facility
idling
|
|
|
1,512
|
|
|
2,527
|
|
Impairment of
goodwill
|
|
|
43,759
|
|
|
—
|
|
Impairment of property
and equipment
|
|
|
407,848
|
|
|
947
|
|
Impairment of customer
relationships
|
|
|
5,871
|
|
|
—
|
|
Depreciation
|
|
|
24,460
|
|
|
26,801
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
1,977
|
|
|
—
|
|
Accretion of asset
retirement obligations
|
|
|
54
|
|
|
39
|
|
Total operating
expenses
|
|
|
577,884
|
|
|
81,598
|
|
Operating income
(loss)
|
|
|
(334,089)
|
|
|
151,817
|
|
Interest expense,
net
|
|
|
(36,134)
|
|
|
(34,501)
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
18,478
|
|
|
23,173
|
|
Income (loss) before
income taxes
|
|
|
(351,745)
|
|
|
140,489
|
|
Provision for income
tax benefit (expense)
|
|
|
62,268
|
|
|
(34,982)
|
|
Net income (loss) and
comprehensive income (loss)
|
|
$
|
(289,477)
|
|
|
105,507
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share–basic
|
|
$
|
(0.57)
|
|
|
0.22
|
|
Net income (loss) per
share–diluted
|
|
$
|
(0.57)
|
|
|
0.22
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
506,419
|
|
|
476,578
|
|
Diluted
|
|
|
506,419
|
|
|
478,694
|
|
ANTERO MIDSTREAM
CORPORATION
|
Selected Operating
Data
|
Three Months Ended
September 30, 2019 and 2020
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Amount
of
|
|
|
|
|
|
|
September 30,
|
|
Increase
|
|
Percentage
|
|
|
2019
|
|
2020
|
|
or
Decrease
|
|
Change
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering—low pressure
(MMcf)
|
|
|
248,208
|
|
|
280,688
|
|
|
32,480
|
|
|
13
|
%
|
Gathering—high
pressure (MMcf)
|
|
|
244,937
|
|
|
276,699
|
|
|
31,762
|
|
|
13
|
%
|
Compression
(MMcf)
|
|
|
223,904
|
|
|
259,523
|
|
|
35,619
|
|
|
16
|
%
|
Fresh water delivery
(MBbl)
|
|
|
12,945
|
|
|
10,202
|
|
|
(2,743)
|
|
|
(21)
|
%
|
Treated water
(MBbl)
|
|
|
2,332
|
|
|
—
|
|
|
(2,332)
|
|
|
*
|
|
Other fluid handling
(MBbl)
|
|
|
5,114
|
|
|
5,151
|
|
|
37
|
|
|
1
|
%
|
Wells serviced by
fresh water delivery
|
|
|
30
|
|
|
21
|
|
|
(9)
|
|
|
(30)
|
%
|
Gathering—low pressure
(MMcf/d)
|
|
|
2,698
|
|
|
3,051
|
|
|
353
|
|
|
13
|
%
|
Gathering—high
pressure (MMcf/d)
|
|
|
2,662
|
|
|
3,008
|
|
|
346
|
|
|
13
|
%
|
Compression
(MMcf/d)
|
|
|
2,434
|
|
|
2,821
|
|
|
387
|
|
|
16
|
%
|
Fresh water delivery
(MBbl/d)
|
|
|
141
|
|
|
111
|
|
|
(30)
|
|
|
(21)
|
%
|
Treated water
(MBbl/d)
|
|
|
25
|
|
|
—
|
|
|
(25)
|
|
|
*
|
|
Other fluid handling
(MBbl/d)
|
|
|
56
|
|
|
56
|
|
|
—
|
|
|
*
|
|
Average realized
fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average gathering—low
pressure fee ($/Mcf)
|
|
$
|
0.33
|
|
|
0.33
|
|
|
—
|
|
|
*
|
|
Average gathering—high
pressure fee ($/Mcf)
|
|
$
|
0.21
|
|
|
0.21
|
|
|
—
|
|
|
*
|
|
Average compression
fee ($/Mcf)
|
|
$
|
0.19
|
|
|
0.20
|
|
|
0.01
|
|
|
5
|
%
|
Average fresh water
delivery fee ($/Bbl)
|
|
$
|
3.90
|
|
|
3.96
|
|
|
0.06
|
|
|
2
|
%
|
Average treatment fee
($/Bbl)
|
|
$
|
4.55
|
|
|
—
|
|
|
(4.55)
|
|
|
*
|
|
Joint Venture
Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Processing—Joint
Venture (MMcf)
|
|
|
95,333
|
|
|
136,555
|
|
|
41,222
|
|
|
43
|
%
|
Fractionation—Joint
Venture (MBbl)
|
|
|
2,964
|
|
|
3,552
|
|
|
588
|
|
|
20
|
%
|
Processing—Joint
Venture (MMcf/d)
|
|
|
1,036
|
|
|
1,484
|
|
|
448
|
|
|
43
|
%
|
Fractionation—Joint
Venture (MBbl/d)
|
|
|
32
|
|
|
39
|
|
|
7
|
|
|
22
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Not meaningful or
applicable.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ANTERO MIDSTREAM
CORPORATION
|
Condensed
Consolidated Results of Segment Operations
|
Three Months Ended
September 30, 2020
|
(Unaudited)
|
|
|
|
Gathering and
|
|
Water
|
|
|
|
Consolidated
|
|
(in
thousands)
|
|
Processing
|
|
Handling
|
|
Unallocated
|
|
Total
|
|
Three months ended
September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue–Antero
Resources
|
|
$
|
190,214
|
|
|
61,001
|
|
|
—
|
|
|
251,215
|
|
Amortization of
customer relationships
|
|
|
(9,342)
|
|
|
(8,458)
|
|
|
—
|
|
|
(17,800)
|
|
Total
revenues
|
|
|
180,872
|
|
|
52,543
|
|
|
—
|
|
|
233,415
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
16,078
|
|
|
21,974
|
|
|
—
|
|
|
38,052
|
|
General and
administrative (excluding equity-based
compensation)
|
|
|
5,405
|
|
|
2,579
|
|
|
1,570
|
|
|
9,554
|
|
Facility
idling
|
|
|
—
|
|
|
2,527
|
|
|
—
|
|
|
2,527
|
|
Equity-based
compensation
|
|
|
2,732
|
|
|
521
|
|
|
425
|
|
|
3,678
|
|
Impairment of property
and equipment
|
|
|
947
|
|
|
—
|
|
|
—
|
|
|
947
|
|
Depreciation
|
|
|
14,900
|
|
|
11,901
|
|
|
—
|
|
|
26,801
|
|
Accretion of asset
retirement obligations
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
Total
expenses
|
|
|
40,062
|
|
|
39,541
|
|
|
1,995
|
|
|
81,598
|
|
Operating
income
|
|
$
|
140,810
|
|
|
13,002
|
|
|
(1,995)
|
|
|
151,817
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated affiliates
|
|
$
|
23,173
|
|
|
—
|
|
|
—
|
|
|
23,173
|
|
Total
assets
|
|
$
|
4,383,313
|
|
|
1,146,687
|
|
|
143,504
|
|
|
5,673,504
|
|
Additions to property
and equipment
|
|
$
|
34,041
|
|
|
7,810
|
|
|
—
|
|
|
41,851
|
|
ANTERO
MIDSTREAM CORPORATION
|
Condensed
Consolidated Statements of Cash Flows
|
Nine Months Ended
September 30, 2019 and 2020
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2019
|
|
2020
|
|
Cash flows provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(210,555)
|
|
|
(198,985)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Distributions from
Antero Midstream Partners LP, prior to the Transactions
|
|
|
43,492
|
|
|
—
|
|
Depreciation
|
|
|
68,557
|
|
|
81,889
|
|
Payment of contingent
consideration in excess of acquisition date fair value
|
|
|
—
|
|
|
(8,076)
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
5,456
|
|
|
142
|
|
Impairment
|
|
|
458,072
|
|
|
665,491
|
|
Deferred income
taxes
|
|
|
(34,226)
|
|
|
(21,425)
|
|
Equity-based
compensation
|
|
|
53,095
|
|
|
9,713
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
(34,981)
|
|
|
(63,197)
|
|
Distributions from
unconsolidated affiliates
|
|
|
42,570
|
|
|
69,313
|
|
Amortization of
customer relationships
|
|
|
39,178
|
|
|
53,011
|
|
Amortization of
deferred financing costs
|
|
|
2,123
|
|
|
3,299
|
|
Settlement of asset
retirement obligations
|
|
|
—
|
|
|
(1,517)
|
|
Loss on asset
sale
|
|
|
—
|
|
|
240
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable–Antero Resources
|
|
|
38,331
|
|
|
17,081
|
|
Accounts
receivable–third party
|
|
|
12
|
|
|
1,139
|
|
Income tax
receivable
|
|
|
—
|
|
|
(17,547)
|
|
Other current
assets
|
|
|
(1,788)
|
|
|
1,036
|
|
Accounts
payable–Antero Resources
|
|
|
(503)
|
|
|
(717)
|
|
Accounts payable–third
party
|
|
|
(3,635)
|
|
|
6,239
|
|
Income taxes
payable
|
|
|
(15,678)
|
|
|
—
|
|
Accrued
liabilities
|
|
|
(19,648)
|
|
|
(50,240)
|
|
Net cash provided by
operating activities
|
|
|
429,872
|
|
|
546,889
|
|
Cash flows provided
by (used in) investing activities:
|
|
|
|
|
|
|
|
Additions to gathering
systems and facilities
|
|
|
(170,921)
|
|
|
(137,978)
|
|
Additions to water
handling systems
|
|
|
(91,144)
|
|
|
(27,287)
|
|
Investments in
unconsolidated affiliates
|
|
|
(117,339)
|
|
|
(24,802)
|
|
Cash received on
acquisition of Antero Midstream Partners LP
|
|
|
619,532
|
|
|
—
|
|
Cash consideration
paid to Antero Midstream Partners LP unitholders
|
|
|
(598,709)
|
|
|
—
|
|
Cash received in asset
sale
|
|
|
—
|
|
|
123
|
|
Change in other
assets
|
|
|
3,338
|
|
|
1,938
|
|
Change in other
liabilities
|
|
|
(1,050)
|
|
|
—
|
|
Net cash used in
investing activities
|
|
|
(356,293)
|
|
|
(188,006)
|
|
Cash flows provided
by (used in) financing activities:
|
|
|
|
|
|
|
|
Distributions to
unitholders and dividends to stockholders
|
|
|
(336,772)
|
|
|
(443,059)
|
|
Distributions to
Series B unitholders
|
|
|
(3,720)
|
|
|
—
|
|
Distributions to
preferred stockholders
|
|
|
(235)
|
|
|
(413)
|
|
Repurchases of common
stock
|
|
|
(25,519)
|
|
|
(24,713)
|
|
Issuance of senior
notes
|
|
|
650,000
|
|
|
—
|
|
Payments of deferred
financing costs
|
|
|
(8,523)
|
|
|
—
|
|
Borrowings
(repayments) on bank credit facilities, net
|
|
|
(349,500)
|
|
|
228,000
|
|
Payment for contingent
acquisition consideration
|
|
|
—
|
|
|
(116,924)
|
|
Employee tax
withholding for settlement of equity compensation awards
|
|
|
(2,008)
|
|
|
(466)
|
|
Other
|
|
|
(124)
|
|
|
(150)
|
|
Net cash used in
financing activities
|
|
|
(76,401)
|
|
|
(357,725)
|
|
Net increase
(decrease) in cash and cash equivalents
|
|
|
(2,822)
|
|
|
1,158
|
|
Cash and cash
equivalents, beginning of period
|
|
|
2,822
|
|
|
1,235
|
|
Cash and cash
equivalents, end of period
|
|
$
|
—
|
|
|
2,393
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
|
$
|
75,071
|
|
|
135,426
|
|
Cash received (paid)
during the period for income taxes
|
|
$
|
(16,001)
|
|
|
38,910
|
|
Increase (decrease) in
accrued capital expenditures and accounts payable for property and
equipment
|
|
$
|
34,667
|
|
|
(11,318)
|
|
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SOURCE Antero Midstream Corporation