DENVER, Sept. 12,
2022 /PRNewswire/ -- Antero Midstream Corporation
(NYSE: AM) ("Antero Midstream" or the "Company") today
announced that it has entered into a definitive agreement to
acquire Marcellus Shale gas gathering and compression assets from
Crestwood Equity Partners LP (NYSE: CEQP) for $205 million in cash, subject to customary
adjustments. The transaction is expected to close in the fourth
quarter of 2022 and is subject to customary regulatory
approvals.
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Paul Rady, Chairman and CEO said,
"Today's bolt-on acquisition provides significant synergies that
drive attractive economics and immediate Free Cash Flow accretion
to Antero Midstream. The acquisition is consistent with Antero
Midstream's strategy of investing in infrastructure in the
Marcellus, the lowest cost shale play, for high visibility
customers, particularly Antero Resources. Importantly, the assets
include underutilized gathering and compression capacity for
capital efficient development from both Antero Resources and other
third parties."
Mr. Rady further added, "I would like to personally thank
Bob Phillips and Crestwood for their
investment in the midstream infrastructure in the Marcellus during
Antero's infancy. Their high quality assets, safety and
environmental record, and loyalty over the last 10 years
demonstrate Crestwood's dedication to providing quality midstream
services."
Transaction Highlights and Rationale:
- Estimated to be more than 10% accretive to Free Cash Flow
after Dividends through 2026
- Adds approximately 425 undeveloped drilling locations and
120,000 gross dedicated acres from Antero Resources primarily in
Harrison County, West
Virginia
- Increases Antero Midstream's compression capacity by 20% and
gathering pipeline mileage by 15%
- Transaction multiple of approximately 6x next twelve months
estimated Adjusted EBITDA, excluding synergies
- Identified over $50 million of
discounted future capital avoidance, integration and operational
synergies, resulting in an adjusted transaction multiple of
4.5x next twelve months estimated Adjusted EBITDA
Under the terms of agreement, Antero Midstream will acquire the
gas gathering and compression system and associated agreements for
$205 million in cash. The transaction
will be financed with borrowings under Antero Midstream's revolving
credit facility. The assets to be acquired include 72 miles of dry
gas gathering pipelines and nine compressor stations with
approximately 700 MMcf/d of compression capacity. Current
throughput on the system is approximately 200 MMcf/d, resulting in
significant available capacity for growth without significant
capital investment. Throughput will be gathered and compressed
under the existing agreement, which is substantially similar to
Antero Midstream's gathering and compression agreement with Antero
Resources, but not considered in the low pressure gathering rebate
volumes with Antero Resources.
Brendan Krueger, CFO of Antero
Midstream, said, "We expect greater than 10% accretion to Free Cash
Flow after dividends through 2026. This results in our ability to
fund the transaction on a leverage neutral basis and continue to
target 3.0x or lower leverage in 2024 and beyond."
Non-GAAP Financial Measures and
Definitions
Antero Midstream uses certain non-GAAP financial measures.
Antero Midstream defines Adjusted EBITDA as Net Income plus
interest expense, income tax expense, amortization of customer
relationships, depreciation expense, impairment expense, loss
(gain) on asset sale, loss on settlement of asset retirement
obligation, accretion of asset retirement obligations, and
equity-based compensation expense, and loss on early extinguishment
of debt, excluding equity in earnings of unconsolidated affiliates,
plus 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 before dividends as
Adjusted EBITDA less interest expense and accrual-based capital
expenditures. Free Cash Flow after dividends is defined as Free
Cash Flow before dividends less accrual-based dividends declared
for the quarter. Antero Midstream uses Free Cash Flow before and
after dividends as a performance metric to compare the cash
generating performance of Antero Midstream from period to
period.
Adjusted EBITDA and Free Cash Flow before and after dividends
are non-GAAP financial measures. The GAAP measure most
directly comparable to these measures is Net Income. Such non-GAAP
financial measures should not be considered as alternatives to the
GAAP measures of Net Income and cash flows provided by (used in)
operating activities. 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 and cash flows provided by (used in) operating
activities. 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 leverage as Net Debt divided by
Adjusted EBITDA for the last twelve months. The GAAP measure most
directly comparable to Net Debt is total debt, excluding
unamortized debt premiums and debt issuance costs. Antero Midstream
defines Net Debt as consolidated total debt, excluding unamortized
debt premiums and debt issuance costs, less cash and cash
equivalents.
Antero Midstream Corporation is a Delaware corporation that owns, operates and
develops midstream gathering, compression, processing and
fractionation assets located in the Appalachian Basin, as well as
integrated water assets that primarily service Antero Resources
Corporation's properties.
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 statements regarding Antero Midstream's
ability to consummate the Marcellus Shale asset acquisition on a
timely basis or at all, achieve the anticipated financial and
operating results or realize the anticipated capital savings, 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, the risk that the conditions
to the acquisition, including obtaining certain regulatory
approvals, are not satisfied on a timely basis or at all and the
risk that Antero Midstream may not be able to successfully
integrate the acquired assets, achieve the anticipated capital
avoidance or realize the expected synergies relating to the
acquisition, as well as risks relating 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 geopolitical events
and world health events, including the COVID-19 pandemic,
cybersecurity risk, our ability to achieve our greenhouse gas
reduction targets and the costs associated therewith, the state of
markets for and availability of verified quality carbon offsets 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, 2021 and Quarterly
Report on Form 10-Q for the quarter ended June 30, 2022.
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SOURCE Antero Midstream Corporation