DENVER, April 29, 2020 /PRNewswire/ -- Antero
Midstream Corporation (NYSE: AM) ("Antero Midstream" or
the "Company") today released its first quarter 2020 financial and
operating results. In addition, Antero Midstream announced a
revised 2020 capital budget and guidance. The relevant consolidated
financial statements are included in Antero Midstream's quarterly
report on Form 10-Q for the three months ended March 31, 2020.
First Quarter 2020 Highlights:
- Net loss was $(393) million,
or $(0.81) per share, driven
primarily by a non-cash goodwill impairment, compared to net income
of $79 million for the prior year pro
forma quarter
- Adjusted net income increased by 11% to $109 million compared to the pro forma prior year
quarter, or $0.23 per share (non-GAAP
measure)
- Adjusted EBITDA increased by 7% to $217 million compared to the pro forma prior year
quarter (non-GAAP measure)
- Distributable cash flow was $164
million, resulting in 1.1x DCF coverage on the previously
declared dividend of $0.3075 per
share (non-GAAP measure)
- Capital expenditures were $80
million, a 56% decrease compared to the pro forma prior year
quarter
- Free cash flow before return of capital and changes in
working capital was $99 million
(non-GAAP measure)
- Repurchased 4.7 million shares at an average price of
$3.36 per share for approximately
$15.8 million
- Expect to receive a $55
million federal income tax refund in 2020 related to net
operating losses in prior tax years under the CARES Act
Updated 2020 Capital Budget and Guidance:
- Further decreased capital budget to a range of $215 to $240
million from the original budget of $300 to $325
million and previously revised budget of $250 to $275
million
-
- A 65% decrease compared to 2019 capital
expenditures
- Decreased net income guidance to a net loss of $(140) to $(170)
million from $345 to
$385 million, driven primarily by the
non-cash goodwill impairment recognized in the first
quarter
- Decreased Adjusted EBITDA guidance by 7% to $800 to $830
million from $850 to
$900 million, primarily driven by a
deferral of 20 well completions by Antero Resources into
2021
- Increased free cash flow guidance (before return of capital
and changes in working capital) by 9% from a range of $375 to $425
million to $420 to
$450 million, driven by capital
budget reductions
Paul Rady, Chairman and CEO,
said, "Antero Midstream announced further reductions to its capital
budget that result in a 65% decrease year-over-year in capital
expenditures. This significant reduction in capital investment
highlights the visibility Antero Midstream has into Antero
Resource's development plan and the flexibility to make
just-in-time changes and efficiently deploy capital. This approach
is expected to result in a mid-teens return on invested capital
("ROIC") target in 2020, a steady increase compared to the 2019
ROIC of 13%. This peer-leading ROIC is driven by Antero Midstream's
high asset utilization rates, which averaged 89% and 95% for
compression and processing capacity in the first quarter of 2020,
respectively."
Mr. Rady further added, "Antero Resources announced an
improvement in its financial and liquidity position through debt
reduction during the first quarter of 2020 and a reduction in its
full year 2020 capital budget that is expected to result in
$175 million of free cash flow
assuming current strip prices. These actions and the
continued focus on operational savings result in over $1.0 billion of liquidity and further strengthens
the financial profile of Antero Resources, which ultimately
benefits Antero Midstream."
For a discussion of the non-GAAP financial measures including
Adjusted EBITDA, Adjusted Net Income, Distributable Cash Flow and
Free Cash Flow presented on an actual and pro forma basis, as well
as Net Debt, please see "Non-GAAP Financial Measures."
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 and the communities in
which it operates. 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 throughput
in a significant manner. A substantial portion of the
Company's non-field level employees have transitioned to remote
work from home arrangements, and have been able to maintain a
consistent level of effectiveness, including maintaining day-to-day
operations and decision making, financial reporting systems and
internal control over financial reporting. To date, the
Company has had no confirmed cases of COVID-19 within its employee
base at any of its locations.
Antero Resources Recent Developments
In a separate press release, Antero Resources announced several
initiatives to improve its financial profile and liquidity
position. The discussion in this section reflects statements made
by Antero Resources. First, Antero Resources announced that as a
result of the recent spring borrowing base redetermination, the
borrowing base under its revolving credit facility was approved at
$2.85 billion. Lender
commitments under the credit facility were unchanged at
$2.64 billion. In addition, Antero
Resources reduced its 2020 drilling and completion budget by 33%
from an initial budget of $1.1
billion to $750 million. The
reduction reflects continued drilling and completion efficiency
improvements, service cost deflation and a deferral of 20 well
completions into 2021. Lastly, Antero Resources continued its
consistent hedging program during the quarter by adding
approximately 688 MMbtu/d of natural gas hedges in 2022 at a
weighted average price of $2.48/MMBtu
since December 31, 2019. Antero
Resources' release can be found at www.anteroresources.com.
Information in Antero Resources' release does not constitute a
portion of, and is not incorporated by reference into, this press
release.
First Quarter 2020 Financial Results
The previously announced Simplification Transaction between
Antero Midstream GP LP ("AMGP") and Antero Midstream Partners LP
("Antero Midstream Partners") closed on March 12, 2019. GAAP financial results for
periods prior to the closing of the Simplification Transaction
reflect the financial results of AMGP. The financial and operating
results and comparisons for periods prior to the closing of the
Simplification Transaction that are discussed in this release are
based on the pro forma results of Antero Midstream Corporation as
if the transaction had occurred on January
1, 2019.
Low pressure gathering volumes for the first quarter of 2020
averaged 2,717 MMcf/d, a 6% increase as compared to the prior year
quarter. Low pressure gathering volumes were in excess of the
first quarter 2020 growth incentive fee threshold of 2,700 MMcf/d,
resulting in a $12 million rebate to
Antero Resources. Compression volumes for the first quarter of 2020
averaged 2,516 MMcf/d, a 12% increase as compared to the first
quarter of 2019. High pressure gathering volumes for the
first quarter of 2020 averaged 2,697 MMcf/d, an 8% increase
compared to the first quarter of 2019. Fresh water delivery volumes
averaged 183 MBbl/d during the quarter, a 20% increase compared to
the first quarter of 2019.
Gross processing volumes from the 50/50 processing and
fractionation joint venture with MarkWest (a wholly owned
subsidiary of MPLX) (the "Joint Venture") averaged 1,324 MMcf/d for
the first quarter of 2020, an increase of 33% compared to the prior
year quarter. Joint Venture processing capacity was 95%
utilized during the quarter. Gross Joint Venture
fractionation volumes averaged 33 MBbl/d, a 50% increase compared
to the prior year quarter.
|
|
Three Months
Ended
March
31,
|
|
|
Average Daily
Volumes:
|
|
2019(1)
|
|
2020
|
|
%
Change
|
Low Pressure Gathering
(MMcf/d)
|
|
2,562
|
|
2,717
|
|
6%
|
Compression
(MMcf/d)
|
|
2,255
|
|
2,516
|
|
12%
|
High Pressure
Gathering (MMcf/d)
|
|
2,498
|
|
2,697
|
|
8%
|
Fresh Water Delivery
(MBbl/d)
|
|
153
|
|
183
|
|
20%
|
Gross Joint Venture
Processing (MMcf/d)
|
|
996
|
|
1,324
|
|
33%
|
Gross Joint Venture
Fractionation (MBbl/d)
|
|
22
|
|
33
|
|
50%
|
|
|
|
|
|
|
|
1.
|
Pro forma Antero
Midstream Corporation.
|
For the three months ended March 31,
2020, revenues were $244
million, comprised of $164
million from the Gathering and Processing segment and
$98 million from the Water Handling
segment, net of $18 million of
amortization of customer relationships. Water Handling revenues
include $31 million from wastewater
handling and high rate water transfer services.
Direct operating expenses for the Gathering and Processing and
Water Handling segments were $13
million and $36 million,
respectively, for a total of $49
million, compared to $80
million in total direct operating expenses in the prior year
quarter. Water Handling operating expenses include $30 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. General and administrative expenses
excluding equity-based compensation were $10
million during the first quarter of 2020. Total
operating expenses included $3
million of equity compensation expense, and $27 million of depreciation. Antero
Midstream recorded a $575 million
impairment expense attributable to the goodwill from the
Simplification Transaction completed in March of 2019. In addition,
the Company recorded an $89 million
impairment of its fresh water delivery assets as a result of lower
completion activity associated with Antero Resources' revised
drilling and completion budget.
Antero Midstream recorded an income tax benefit of $145 million during the first quarter of 2020.
The income tax benefit includes a favorable effective tax rate
impact of $11 million related to the
carryback of net operating losses to prior tax years. This
carryback generated a federal income tax refund receivable of
$55 million. These refunds are a
direct result of the legislation passed as part of the Coronavirus
Aid, Relief, and Economic Security Act ("CARES Act"). These refunds
are included in the income tax receivable account at March 31, 2020 and are expected to be received in
2020.
Net loss was $(393) million, or
$(0.81) per share, compared to net
income of $79 million in the prior
year quarter. Adjusted net income was $109 million, or $0.23 per share, representing an 11% increase
compared to the prior year quarter. Adjusted EBITDA was
$217 million, a 7% increase compared
to the prior year quarter. Adjusted EBITDA included
$9 million of Antero Clearwater
Facility idling costs during the first quarter. Cash interest
paid was $68 million. The decrease in
cash reserved for bond interest during the quarter was $29 million. Maintenance capital expenditures
during the quarter totaled $15
million and distributable cash flow was $164 million. Based on the previously declared
dividend of $0.3075 per share, Antero
Midstream's Distributable Cash Flow coverage ratio was
approximately 1.1x.
The following table reconciles net income to Adjusted Net
Income, Adjusted EBITDA and Distributable Cash Flow as used in this
release (in thousands):
|
|
Three Months
Ended March
31,
|
|
|
|
2019
(1)
|
|
|
2020
|
Net
income
|
|
$
|
79,478
|
|
|
(392,933)
|
Amortization of
customer relationships
|
|
|
17,770
|
|
|
17,605
|
Impairment
expense
|
|
|
6,982
|
|
|
664,544
|
Tax effect of
reconciling items(2)
|
|
|
(6,114)
|
|
|
(168,695)
|
Effective tax rate
impact from net operating loss carryforward under CARES
Act
|
|
|
—
|
|
|
(11,268)
|
Adjusted Net
Income
|
|
|
98,116
|
|
|
109,253
|
|
|
|
|
|
|
|
Net
Income
|
|
|
79,478
|
|
|
(392,933)
|
Interest
expense
|
|
|
26,333
|
|
|
37,631
|
Provision for income
tax expense (benefit)
|
|
|
20,899
|
|
|
(144,785)
|
Amortization of
customer relationships
|
|
|
17,770
|
|
|
17,605
|
Depreciation
expense
|
|
|
30,836
|
|
|
27,343
|
Impairment
expense
|
|
|
6,982
|
|
|
664,544
|
Accretion and change in
fair value of contingent acquisition consideration
|
|
|
3,050
|
|
|
42
|
Equity-based
compensation
|
|
|
13,900
|
|
|
3,338
|
Equity in earnings of
unconsolidated affiliates
|
|
|
(14,155)
|
|
|
(19,077)
|
Distributions from
unconsolidated affiliates
|
|
|
17,380
|
|
|
23,628
|
Adjusted
EBITDA
|
|
|
202,473
|
|
|
217,336
|
Interest
paid
|
|
|
(26,059)
|
|
|
(67,609)
|
Decrease in cash
reserved for bond interest (3)
|
|
|
5,205
|
|
|
29,291
|
Maintenance capital
expenditures(4)
|
|
|
(15,514)
|
|
|
(14,780)
|
Income tax withholding
upon vesting of Antero Midstream Corporation equity-based
compensation awards
|
|
|
—
|
|
|
(26)
|
Distributable Cash
Flow
|
|
$
|
166,105
|
|
|
164,212
|
|
|
|
|
|
|
|
Total Aggregate
Dividends
|
|
$
|
151,572
|
|
|
146,522
|
|
|
|
|
|
|
|
Distributable Cash
Flow Coverage Ratio
|
|
|
1.1x
|
|
|
1.1x
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
$
|
202,473
|
|
|
217,336
|
Interest
paid
|
|
|
(26,059)
|
|
|
(67,609)
|
Decrease in cash
reserved for bond interest (3)
|
|
|
5,205
|
|
|
29,291
|
Total capital
expenditures
|
|
|
(183,512)
|
|
|
(79,673)
|
Free Cash Flow
(before return of capital and changes in working
capital)
|
|
$
|
(1,893)
|
|
|
99,345
|
|
|
|
|
|
|
|
1)
|
Three months ended
March 31, 2019 presented on a pro forma basis except for dividends
declared.
|
2)
|
Statutory tax rate
was approximately 24.7% for 2019 and 2020.
|
3)
|
Cash reserved for
bond interest expense on Antero Midstream's senior notes
outstanding during the period that is paid on a semi-annual
basis.
|
4)
|
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.
|
Gathering and Processing — During the first
quarter of 2020, Antero Midstream connected 25 wells to its
gathering system and compression capacity was approximately 89%
utilized throughout the quarter. Antero Resources has stated that
it plans to reduce its rig count from four rigs in early 2020 to
one rig for the remainder of 2020 and reduce its completion crew
count from three crews to one crew for the remainder of 2020.
Water Handling— Antero Midstream's
Marcellus water delivery systems serviced 43 well completions
during the first quarter of 2020, a 39% increase from the prior
year quarter.
Balance Sheet and Liquidity
As of March 31, 2020, Antero
Midstream had approximately $1.17
billion drawn on its $2.13
billion bank credit facility, resulting in approximately
$960 million of liquidity.
During the first quarter of 2020, Antero Midstream paid Antero
Resources the $125 million earn-out
payment associated with the 2015 water drop-down transaction.
Antero Midstream's Net Debt to trailing twelve months pro forma
Adjusted EBITDA ("Leverage") was 3.7x as of March 31, 2020.
Capital Investments
Total capital expenditures including investments in the Joint
Venture were $80 million during the
first quarter of 2020. Gathering, compression, and water
infrastructure capital investments totaled $68 million and investments in unconsolidated
affiliates for the Joint Venture were $12. Of the $68
million invested in gathering, compression, and water
infrastructure, $55 million was in
gathering and compression assets and $13
million was in water the handling assets.
2020 Updated Guidance and Capital Budget
Today in a separate news release, Antero Resources announced
that in response to lower commodity prices it has lowered its 2020
drilling and completion capital budget from $1.0 billion to $750
million. The reduction in Antero Midstream's Adjusted
EBITDA guidance is primarily driven by a reduction in fresh water
delivery volumes in the second half of 2020 as a result of the
deferral of 20 well completions into 2021. Antero Resources has
stated that it is 94% hedged on its expected natural gas production
in 2020 at a price of $2.87/MMbtu, or
approximately 22% above current NYMEX strip pricing. In addition,
Antero Resources has stated that it is 100% hedged on its expected
crude oil and pentane-equivalent production at a price of
$55.63/barrel, or 155% above current
NYMEX strip pricing.
Based on Antero Resources' net production growth forecast,
Antero Midstream expects to pay three quarterly low pressure
gathering rebates, including the first quarter of 2020, under the
recently announced growth incentive fee program in 2020, which
would result in $36 million of
midstream fee reductions that are included in Antero Midstream's
updated financial guidance.
The following is a summary of Antero Midstream's updated 2020
guidance ($ in millions):
|
2020
|
Low
|
|
High
|
Capital
Expenditures
|
$
|
215
|
—
|
$
|
240
|
Net Loss
|
|
(170)
|
—
|
|
(140)
|
Adjusted Net
Income
|
|
385
|
—
|
|
415
|
Adjusted
EBITDA
|
|
800
|
—
|
|
830
|
Distributable Cash
Flow
|
|
590
|
—
|
|
620
|
Free Cash Flow (before
return of capital and changes in working capital)
|
|
420
|
—
|
|
450
|
Antero Resources has stated that prior to the COVID-19 pandemic
it developed a diverse set of buyers and destinations as well as in
field and off-site storage capacity for its condensate
volumes. Since the outbreak of the pandemic, Antero Resources
has also disclosed that it has expanded its customer base and
doubled its condensate storage capacity within the basin. To
date, Antero Resources has not had to shut in or curtail any
production. Antero Midstream's guidance does not assume any
material curtailments to Antero Resources' production as a result
of basin-wide condensate storage constraints or any other
unforeseen events arising from the global COVID-19 pandemic. A
curtailment could result in a temporary reduction in throughput
volumes and revenues for Antero Midstream. Antero Resources
and Antero Midstream continue to work together to find solutions to
mitigate the potential impacts of the decline in demand for oil and
NGLs including additional storage capacity in the Northeast. In
light of the uncertain market conditions impacting the energy
industry, Antero Midstream will continue to evaluate its capital
budget as well as the appropriate amount of capital that is
returned to shareholders through dividends and share repurchases in
order to maintain its financial profile.
Michael Kennedy, CFO of Antero
Midstream, said, "Antero Midstream's updated guidance highlights
the flexibility of Antero Midstream's capital budget and our
dedication to capital discipline. The 65% year-over-year reduction
in capital expenditures for 2020 more than offsets the reduction in
adjusted EBITDA guidance, resulting in an improved free cash flow
position of $420 to $450 million before return of capital to
shareholders. In addition, the momentum in capital reduction
supports Antero Midstream's balance sheet with almost $1.0 billion of liquidity and below peer average
leverage of 3.7x."
Conference Call
A conference call for Antero Midstream is scheduled on
Thursday, April 30, 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, May 7, 2020
at 10:00 am MT at 877-660-6853 (U.S.)
or 201-612-7415 (International) using the conference ID:
13701249.
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, May 7, 2020 at
10:00 am MT.
Pro Forma Information
The pro forma information presented herein is for illustrative
purposes only. If this Simplification Transaction had occurred in
the past, operating results might have been materially different
from those presented in the pro forma financial information. The
pro forma financial information should not be relied upon as an
indication of operating results that Antero Midstream would have
achieved if the Simplification Transaction had taken place on
January 1, 2019. In addition, future
results may vary significantly from the pro forma results reflected
in this release and should not be relied upon as an indication of
Antero Midstream's future results. For more information, please see
Antero Midstream's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2020.
Non-GAAP Financial Measures and Definitions
Antero Midstream uses certain non-GAAP financial measures.
Antero Midstream defines Adjusted Net Income as net income plus
amortization of customer contracts and impairment expenses minus
effective tax rate impacts from net operating loss carryforwards
under CARES Act and 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 before amortization of customer relationships,
impairment expense, interest expense, provision for income taxes
(benefit), 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, 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. Free Cash Flow does not reflect changes in working
capital balances.
Antero Midstream's defines Distributable Cash Flow as Adjusted
EBITDA less interest paid, decrease in cash reserved for bond
interest, income tax withholding upon vesting of equity-based
compensation awards, AMGP general and administrative expenses, 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.
Antero Midstream defines Return on Invested Capital ("ROIC") as
earnings before interest and taxes excluding amortization of
customer relationships divided by average total liabilities and
stockholders equity, excluding goodwill and intangible assets in
order to derive an operating asset driven ROIC calculation.
Adjusted EBITDA, Adjusted Net Income, Free Cash Flow,
Distributable Cash Flow and ROIC are non-GAAP financial
measures. The GAAP measure most directly comparable to such
measures (other than ROIC) 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, Adjusted EBITDA. 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 Adjusted
EBITDA, Adjusted Net Income, Free Cash Flow or Distributable 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
|
$
|
110
|
—
|
$
|
120
|
Equity based
compensation expense
|
|
10
|
—
|
|
15
|
Interest
expense
|
|
150
|
—
|
|
160
|
Amortization of
customer relationships
|
|
70
|
—
|
|
75
|
Distributions from
unconsolidated affiliates
|
|
90
|
—
|
|
100
|
The following table reconciles consolidated total debt to
consolidated net debt ("Net Debt") as used in this release (in
thousands):
|
|
|
March 31,
2020
|
Bank credit
facility
|
|
$1,170,500
|
5.375% senior notes
due 2024
|
|
652,600
|
5.75% senior notes
due 2027
|
|
653,250
|
5.75% senior notes
due 2028
|
|
650,000
|
Net unamortized debt
issuance costs
|
|
(22,588)
|
Consolidated total
debt
|
|
$3,103,762
|
Cash and cash
equivalents
|
|
—
|
Consolidated net
debt
|
|
$3,103,762
|
The following table reconciles net income to Adjusted EBITDA for
the last twelve months as used in this release on a pro forma basis
(in thousands):
|
|
|
12 months ended
March 31, 2020
|
Net Income
(Loss)
|
$
|
|
(757,487)
|
Amortization of
customer relationships
|
|
|
70,709
|
Impairment
expense
|
|
|
1,426,504
|
Interest
expense
|
|
|
141,816
|
Provision for income
tax expense (benefit)
|
|
|
(244,804)
|
Depreciation
expense
|
|
|
116,870
|
Accretion and change in
fair value of contingent acquisition consideration
|
|
|
7,246
|
Equity-based
compensation
|
|
|
65,432
|
Equity in earnings of
unconsolidated affiliates
|
|
|
(67,316)
|
Distributions from
unconsolidated affiliates
|
|
|
83,173
|
Conflicts committee
legal & advisory fees
|
|
|
2,278
|
Adjusted
EBITDA
|
$
|
|
844,421
|
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 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 Quarterly Report on Form 10-Q for the quarter
ended March 31, 2020.
For more information, contact Michael
Kennedy – CFO of Antero Midstream at (303) 357-6782 or
mkennedy@anteroresources.com.
ANTERO MIDSTREAM
CORPORATION
|
Condensed
Consolidated Balance Sheets
|
December
31, 2019 and March 31, 2020
|
(In
thousands)
|
|
|
|
|
|
(Unaudited)
|
|
|
|
December 31,
|
|
March 31,
|
|
|
|
2019
|
|
2020
|
|
Assets
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,235
|
|
|
—
|
|
Accounts
receivable–Antero Resources
|
|
|
101,029
|
|
|
90,569
|
|
Accounts
receivable–third party
|
|
|
4,574
|
|
|
3,095
|
|
Income tax
receivable
|
|
|
—
|
|
|
56,457
|
|
Other current
assets
|
|
|
1,720
|
|
|
1,251
|
|
Total current
assets
|
|
|
108,558
|
|
|
151,372
|
|
Property and
equipment, net
|
|
|
3,273,410
|
|
|
3,228,265
|
|
Investments in
unconsolidated affiliates
|
|
|
709,639
|
|
|
716,778
|
|
Deferred tax
asset
|
|
|
103,231
|
|
|
192,499
|
|
Customer
relationships
|
|
|
1,498,119
|
|
|
1,480,514
|
|
Goodwill
|
|
|
575,461
|
|
|
—
|
|
Other assets,
net
|
|
|
14,460
|
|
|
11,931
|
|
Total
assets
|
|
$
|
6,282,878
|
|
|
5,781,359
|
|
|
|
|
|
|
|
|
|
Liabilities and
Equity
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable–Antero Resources
|
|
$
|
3,146
|
|
|
1,675
|
|
Accounts payable–third
party
|
|
|
6,645
|
|
|
21,662
|
|
Accrued
liabilities
|
|
|
104,188
|
|
|
57,139
|
|
Contingent acquisition
consideration
|
|
|
125,000
|
|
|
—
|
|
Other current
liabilities
|
|
|
3,105
|
|
|
3,084
|
|
Total current
liabilities
|
|
|
242,084
|
|
|
83,560
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
2,892,249
|
|
|
3,103,762
|
|
Other
|
|
|
5,131
|
|
|
5,082
|
|
Total
liabilities
|
|
|
3,139,464
|
|
|
3,192,404
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
Preferred stock, $0.01
par value: 100,000 authorized at December 31, 2019 and March 31,
2020, respectively
|
|
|
|
|
|
|
|
Series A non-voting
perpetual preferred stock; 12 designated and 10 issued and
outstanding at December 31, 2019 and March 31, 2020,
respectively
|
|
|
—
|
|
|
—
|
|
Common stock, $0.01
par value; 2,000,000 authorized; 484,042 and 479,385 issued and
outstanding at December 31, 2019 and March 31, 2020,
respectively
|
|
|
4,840
|
|
|
4,794
|
|
Additional paid-in
capital
|
|
|
3,480,139
|
|
|
3,318,659
|
|
Accumulated
loss
|
|
|
(341,565)
|
|
|
(734,498)
|
|
Total stockholders'
equity
|
|
|
3,143,414
|
|
|
2,588,955
|
|
Total liabilities and
stockholders' equity
|
|
$
|
6,282,878
|
|
|
5,781,359
|
|
ANTERO MIDSTREAM
CORPORATION
|
Condensed
Consolidated Statements of Operations and Comprehensive Income
(Loss)
|
Three Months Ended
March 31, 2019 and 2020
|
(In thousands, except
per share amounts)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
2020
|
|
Revenue:
|
|
|
|
|
|
|
|
Gathering and
compression–Antero Resources
|
|
$
|
33,534
|
|
|
163,129
|
|
Water handling–Antero
Resources
|
|
|
22,351
|
|
|
98,184
|
|
Water handling–third
party
|
|
|
4
|
|
|
—
|
|
Amortization of
customer relationships
|
|
|
(1,781)
|
|
|
(17,605)
|
|
Total
revenue
|
|
|
54,108
|
|
|
243,708
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
14,982
|
|
|
48,728
|
|
General and
administrative (including $11,423 and $3,338 of equity-based
compensation in 2019 and 2020, respectively)
|
|
|
19,809
|
|
|
13,537
|
|
Facility
idling
|
|
|
—
|
|
|
8,678
|
|
Impairment of
goodwill
|
|
|
—
|
|
|
575,461
|
|
Impairment of property
and equipment
|
|
|
—
|
|
|
89,083
|
|
Depreciation
|
|
|
7,650
|
|
|
27,343
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
1,049
|
|
|
—
|
|
Accretion of asset
retirement obligations
|
|
|
10
|
|
|
42
|
|
Total operating
expenses
|
|
|
43,500
|
|
|
762,872
|
|
Operating income
(loss)
|
|
|
10,608
|
|
|
(519,164)
|
|
Interest expense,
net
|
|
|
(6,217)
|
|
|
(37,631)
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
2,880
|
|
|
19,077
|
|
Income (loss) before
income taxes
|
|
|
7,271
|
|
|
(537,718)
|
|
Provision for income
tax benefit
|
|
|
2,377
|
|
|
144,785
|
|
Net income (loss) and
comprehensive income (loss)
|
|
$
|
9,648
|
|
|
(392,933)
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share–basic and diluted
|
|
$
|
0.04
|
|
|
(0.81)
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
253,877
|
|
|
483,103
|
|
Diluted
|
|
|
254,903
|
|
|
483,103
|
|
ANTERO MIDSTREAM
CORPORATION
|
Selected Operating
Data
|
Three Months Ended
March 31, 2019 and 2020
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Amount
of
|
|
|
|
|
|
|
March
31,
|
|
Increase
|
|
Percentage
|
|
|
2019(1)
|
|
2020
|
|
or
Decrease
|
|
Change
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering—low pressure
(MMcf)
|
|
|
230,540
|
|
|
247,223
|
|
|
16,683
|
|
|
7
|
%
|
Gathering—high
pressure (MMcf)
|
|
|
224,786
|
|
|
245,446
|
|
|
20,660
|
|
|
9
|
%
|
Compression
(MMcf)
|
|
|
202,938
|
|
|
228,967
|
|
|
26,029
|
|
|
13
|
%
|
Fresh water delivery
(MBbl)
|
|
|
13,732
|
|
|
16,620
|
|
|
2,888
|
|
|
21
|
%
|
Treated water
(MBbl)
|
|
|
2,147
|
|
|
—
|
|
|
(2,147)
|
|
|
*
|
|
Other fluid handling
(MBbl)
|
|
|
5,066
|
|
|
5,600
|
|
|
534
|
|
|
11
|
%
|
Wells serviced by
fresh water delivery
|
|
|
31
|
|
|
43
|
|
|
12
|
|
|
39
|
%
|
Gathering—low pressure
(MMcf/d)
|
|
|
2,562
|
|
|
2,717
|
|
|
155
|
|
|
6
|
%
|
Gathering—high
pressure (MMcf/d)
|
|
|
2,498
|
|
|
2,697
|
|
|
199
|
|
|
8
|
%
|
Compression
(MMcf/d)
|
|
|
2,255
|
|
|
2,516
|
|
|
261
|
|
|
12
|
%
|
Fresh water delivery
(MBbl/d)
|
|
|
153
|
|
|
183
|
|
|
30
|
|
|
20
|
%
|
Treated water
(MBbl/d)
|
|
|
24
|
|
|
—
|
|
|
(24)
|
|
|
*
|
|
Other fluid handling
(MBbl/d)
|
|
|
56
|
|
|
61
|
|
|
5
|
|
|
9
|
%
|
Average realized
fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average gathering—low
pressure fee ($/Mcf)
|
|
$
|
0.33
|
|
|
0.33
|
|
|
—
|
|
|
*
|
|
Average gathering—high
pressure fee ($/Mcf)
|
|
$
|
0.20
|
|
|
0.20
|
|
|
—
|
|
|
*
|
|
Average compression
fee ($/Mcf)
|
|
$
|
0.19
|
|
|
0.20
|
|
|
0.01
|
|
|
5
|
%
|
Average fresh water
delivery fee ($/Bbl)
|
|
$
|
3.89
|
|
|
3.96
|
|
|
0.07
|
|
|
2
|
%
|
Average treatment fee
($/Bbl)
|
|
$
|
4.48
|
|
|
—
|
|
|
(4.48)
|
|
|
*
|
|
Joint Venture
Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Processing—Joint
Venture (MMcf)
|
|
|
89,652
|
|
|
120,514
|
|
|
30,862
|
|
|
34
|
%
|
Fractionation—Joint
Venture (MBbl)
|
|
|
1,981
|
|
|
2,984
|
|
|
1,003
|
|
|
51
|
%
|
Processing—Joint
Venture (MMcf/d)
|
|
|
996
|
|
|
1,324
|
|
|
328
|
|
|
33
|
%
|
Fractionation—Joint
Venture (MBbl/d)
|
|
|
22
|
|
|
33
|
|
|
11
|
|
|
50
|
%
|
|
|
1)
|
Three months ended
March 31, 2019 are presented on a pro forma basis
|
|
|
*
|
Not meaningful or
applicable.
|
ANTERO MIDSTREAM
CORPORATION
|
Condensed
Consolidated Results of Segment Operations
|
Three Months Ended
March 31, 2020
|
(Unaudited)
|
(In
thousands)
|
|
|
|
Gathering and
|
|
Water
|
|
|
|
Consolidated
|
|
|
|
Processing
|
|
Handling
|
|
Unallocated
|
|
Total
|
|
Three months ended
March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue–Antero
Resources
|
|
$
|
163,129
|
|
|
98,184
|
|
|
—
|
|
|
261,313
|
|
Amortization of
customer relationships
|
|
|
(9,238)
|
|
|
(8,367)
|
|
|
—
|
|
|
(17,605)
|
|
Total
revenues
|
|
|
153,891
|
|
|
89,817
|
|
|
—
|
|
|
243,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
13,391
|
|
|
35,337
|
|
|
—
|
|
|
48,728
|
|
General and
administrative (excluding equity-based compensation)
|
|
|
5,044
|
|
|
2,905
|
|
|
2,250
|
|
|
10,199
|
|
Facility
idling
|
|
|
—
|
|
|
8,678
|
|
|
—
|
|
|
8,678
|
|
Impairment of
goodwill
|
|
|
575,461
|
|
|
—
|
|
|
—
|
|
|
575,461
|
|
Impairment of property
and equipment
|
|
|
—
|
|
|
89,083
|
|
|
—
|
|
|
89,083
|
|
Equity-based
compensation
|
|
|
2,533
|
|
|
555
|
|
|
250
|
|
|
3,338
|
|
Depreciation
|
|
|
13,050
|
|
|
14,293
|
|
|
—
|
|
|
27,343
|
|
Accretion of asset
retirement obligations
|
|
|
—
|
|
|
42
|
|
|
—
|
|
|
42
|
|
Total operating
expenses
|
|
|
609,479
|
|
|
150,893
|
|
|
2,500
|
|
|
762,872
|
|
Operating
loss
|
|
$
|
(455,588)
|
|
|
(61,076)
|
|
|
(2,500)
|
|
|
(519,164)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in earnings of
unconsolidated affiliates
|
|
$
|
19,077
|
|
|
—
|
|
|
—
|
|
|
19,077
|
|
Total
assets
|
|
$
|
4,347,932
|
|
|
1,184,095
|
|
|
249,332
|
|
|
5,781,359
|
|
Additions to property
and equipment, net
|
|
$
|
54,659
|
|
|
13,324
|
|
|
—
|
|
|
67,983
|
|
ANTERO MIDSTREAM
CORPORATION
|
Condensed
Consolidated Statements of Cash Flows
|
Three Months Ended
March 31, 2019 and 2020
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2019
|
|
2020
|
|
Cash flows provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
9,648
|
|
|
(392,933)
|
|
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
|
|
|
7,650
|
|
|
27,343
|
|
Payment of contingent
consideration in excess of acquisition date fair value
|
|
|
—
|
|
|
(34,342)
|
|
Accretion and change
in fair value of contingent acquisition consideration
|
|
|
1,059
|
|
|
42
|
|
Impairment
|
|
|
—
|
|
|
664,544
|
|
Deferred income tax
benefit
|
|
|
(2,377)
|
|
|
(88,328)
|
|
Equity-based
compensation
|
|
|
11,423
|
|
|
3,338
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
(2,880)
|
|
|
(19,077)
|
|
Distributions from
unconsolidated affiliates
|
|
|
4,775
|
|
|
23,628
|
|
Amortization of
customer relationships
|
|
|
1,781
|
|
|
17,605
|
|
Amortization of
deferred financing costs
|
|
|
251
|
|
|
1,090
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable–Antero Resources
|
|
|
31,331
|
|
|
10,460
|
|
Accounts
receivable–third party
|
|
|
(18)
|
|
|
998
|
|
Income tax
receivable
|
|
|
—
|
|
|
(56,457)
|
|
Other current
assets
|
|
|
(2,361)
|
|
|
517
|
|
Accounts
payable–Antero Resources
|
|
|
(444)
|
|
|
(1,470)
|
|
Accounts payable–third
party
|
|
|
(1,454)
|
|
|
6,614
|
|
Accrued
liabilities
|
|
|
(32,289)
|
|
|
(42,852)
|
|
Net cash provided by
operating activities
|
|
|
69,587
|
|
|
120,720
|
|
Cash flows provided
by (used in) investing activities:
|
|
|
|
|
|
|
|
Additions to gathering
systems and facilities
|
|
|
(7,677)
|
|
|
(54,659)
|
|
Additions to water
handling systems
|
|
|
(8,328)
|
|
|
(13,324)
|
|
Investments in
unconsolidated affiliates
|
|
|
(65,729)
|
|
|
(11,690)
|
|
Cash received on
acquisition of Antero Midstream Partners LP
|
|
|
619,532
|
|
|
—
|
|
Cash consideration
paid to Antero Midstream Partners LP unitholders
|
|
|
(598,709)
|
|
|
—
|
|
Change in other
assets
|
|
|
(267)
|
|
|
2,296
|
|
Net cash used in
investing activities
|
|
|
(61,178)
|
|
|
(77,377)
|
|
Cash flows provided
by (used in) financing activities:
|
|
|
|
|
|
|
|
Distributions to
unitholders and dividends to stockholders
|
|
|
(30,543)
|
|
|
(148,876)
|
|
Distributions to
Series B unitholders
|
|
|
(3,720)
|
|
|
—
|
|
Distributions to
preferred stockholders
|
|
|
—
|
|
|
(138)
|
|
Repurchases of common
stock
|
|
|
—
|
|
|
(15,824)
|
|
Borrowings on bank
credit facilities, net
|
|
|
25,000
|
|
|
211,000
|
|
Payment for contingent
acquisition consideration
|
|
|
—
|
|
|
(90,658)
|
|
Employee tax
withholding for settlement of equity compensation awards
|
|
|
—
|
|
|
(26)
|
|
Other
|
|
|
—
|
|
|
(56)
|
|
Net cash used in
financing activities
|
|
|
(9,263)
|
|
|
(44,578)
|
|
Net decrease in cash
and cash equivalents
|
|
|
(854)
|
|
|
(1,235)
|
|
Cash and cash
equivalents, beginning of period
|
|
|
2,822
|
|
|
1,235
|
|
Cash and cash
equivalents, end of period
|
|
$
|
1,968
|
|
|
—
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
|
$
|
19,250
|
|
|
67,609
|
|
Increase in accrued
capital expenditures and accounts payable for property and
equipment
|
|
$
|
11,933
|
|
|
3,266
|
|
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SOURCE Antero Midstream Corporation