DENVER, Feb. 15,
2023 /PRNewswire/ -- Antero Midstream Corporation
(NYSE: AM) ("Antero Midstream" or the "Company") today
announced its fourth quarter 2022 financial and operational results
and 2023 capital budget and guidance. The relevant consolidated
financial statements are included in Antero Midstream's Annual
Report on Form 10-K for the year ended December 31, 2022.
Fourth Quarter 2022 Highlights:
- Net Income was $83 million, or
$0.17 per diluted share, a 6% per
share increase compared to the prior year quarter
- Adjusted Net Income was $96
million, or $0.20 per share
(non-GAAP measure)
- Adjusted EBITDA was $231
million, a 9% increase compared to the prior year quarter
(non-GAAP measure)
- Capital expenditures were $63
million, a 22% decrease compared to the prior year
quarter
- Free Cash Flow after dividends was $8
million compared to a $19
million deficit in the prior year quarter (non-GAAP
measure)
- Acquired bolt-on compression assets for $10 million in the Utica Shale
Full Year 2022 Highlights:
- Net Income was $326 million,
or $0.68 per diluted share
- Adjusted EBITDA was $884
million, at the high end of the guidance range of
$850 to $890
million (non-GAAP measure)
- Capital expenditures were $265
million, below the guidance range of $275 to $300
million
- Generated a Return on Invested Capital of 17% (non-GAAP
measure)
2023 Capital Budget and Guidance Highlights:
- Forecasting mid-to-high single digit annual throughput
growth in 2023 compared to 2022
- Servicing 75 to 80 wells with Antero Midstream's fresh water
delivery systems
- Net Income of $340 to
$380 million, representing GAAP
earnings of $0.73 to $0.81 per share
- Adjusted EBITDA of $930 to
$970 million, a 7% increase compared
to 2022 at the midpoint (non-GAAP measure)
- Capital budget of $195 to
$215 million, a 23% decrease compared
to 2022 at the midpoint
- Free Cash Flow after dividends of $90 to $120 million
assuming an annualized dividend of $0.90 per share (non-GAAP
measures)
Paul Rady, Chairman and CEO said,
"Antero Midstream delivered an exceptional year in 2022 both
financially and operationally. Despite the inflationary
environment, we were able to deliver capital expenditures below the
guidance range and Adjusted EBITDA at the high end of the guidance
range. On the operational front, we delivered asset uptime
availability of over 99%, which allowed us to deliver a return on
invested capital of 17% in 2022."
Mr. Rady added, "In addition, we expanded our asset base in 2022
through attractive bolt-on acquisitions. This further solidified
our position as the critical first link to the global export
markets for LNG and LPG, extended our underlying dedicated
inventory to over 20 years, and enhanced Antero Midstream's Free
Cash Flow profile. This strategy positions us well to deliver on
our 2023 budget and long-term outlook."
Brendan Krueger, CFO of Antero
Midstream, said "Antero Midstream is uniquely positioned in the
midstream sector with an expanding Free Cash Flow profile expected
in 2023, driven by a combination of mid-to-high single digit EBITDA
growth and more than a 20% reduction in capital investments
year-over-year. In 2023, we expect to allocate the significant Free
Cash Flow after dividends to reduce absolute debt and leverage to
below 3.5x by year-end. This will further de-risk Antero
Midstream's business model and maintain our trajectory towards our
3.0x target or less in 2024."
For a discussion of the non-GAAP financial measures,
including Adjusted EBITDA, Adjusted Net Income, Leverage, Free Cash
Flow after dividends, and Return on Invested Capital
please see "Non-GAAP Financial Measures."
Veolia Lawsuit Update
In the first quarter of 2023, Antero Midstream received a
favorable judgement for approximately $309
million in damages, which includes pre-judgment interest.
The judgment remains subject to appeal and applicable
post-judgment proceedings. Antero Midstream's 2023 guidance
detailed below does not include any impact from the $309 million in awarded damages.
2023 Capital Budget and Guidance
Antero Midstream is forecasting Net Income of $340 to
$380 million and Adjusted Net Income (adjusted for
amortization of customer relationships and effective tax rate
impact) of $395 to $435 million. The Company is
forecasting Adjusted EBITDA of $930 to $970 million and a
capital budget of $195 to $215 million. Antero
Midstream is forecasting mid-to-high single digit low pressure
gathering growth in 2023 compared to 2022. This growth is driven by
organic production growth on Antero Midstream's legacy assets and
full year contribution from the bolt-on acquisitions completed in
2022. The Company's guidance includes four quarterly low
pressure gathering rebates expected to be earned by Antero
Resources totaling $48 million, which
conclude at the end of 2023. Antero Midstream's 2023 guidance
includes approximately $125 to $135 million of combined
distributions from its interests in the processing and
fractionation joint venture with MPLX, LP (the "Joint Venture") and
in Stonewall Gathering LLC. This results in Free Cash Flow before
dividends of $515 to $555 million and Free Cash Flow
after dividends of $90 to $120 million for 2023, assuming
an annualized dividend of $0.90 per
share.
During 2022, Antero Midstream completed the core infrastructure
buildout in the liquids-rich fairway in the Marcellus Shale
supporting the growth from Antero Resources drilling partnership
with QL Capital Partners. With the completion of these trunklines
and additional compression, Antero Midstream's budget is expected
to decline by $60 million year-over-year at the midpoint of
the guidance range, or 23%. The midpoint of the 2023 capital
budget includes approximately $130 million of investment in
gathering and compression infrastructure for low pressure gathering
connections, expansion of a compressor station, and the
construction of an additional compressor station that will be
placed in service in 2024 in the liquids-rich midstream corridor.
Antero Midstream has budgeted an investment of
$75 million for fresh water delivery and wastewater blending
and pipeline infrastructure in 2023. The Company is
forecasting an immaterial capital investment in the Joint Venture
in 2023.
Antero Midstream expects to invest approximately 55% to 60% of
its full year capital budget in the second and third quarter during
the summer months that are more favorable for infrastructure
buildout. Over 90% of Antero Midstream's 2023 capital budget is
focused in the Marcellus Shale and the remaining capital is focused
in the Utica Shale.
The following is a summary of Antero Midstream's 2023 guidance
($ in millions):
|
|
Twelve Months
Ended
December 31, 2023
|
|
|
Low
|
|
High
|
|
|
Net Income
|
|
$340
|
|
$380
|
|
|
Adjusted Net
Income
|
|
395
|
|
435
|
|
|
Adjusted
EBITDA
|
|
930
|
|
970
|
|
|
Capital
Expenditures
|
|
195
|
|
215
|
|
|
Interest
Expense
|
|
205
|
|
215
|
|
|
Free Cash Flow Before
Dividends
|
|
515
|
|
555
|
|
|
Total
Dividends
|
|
430
|
|
430
|
|
|
Free Cash Flow After
Dividends
|
|
90
|
|
120
|
|
|
|
|
|
|
|
|
|
|
Acquisition of Utica Shale Compression Assets
In December of 2022, Antero Midstream acquired four compressor
stations from EnLink Midstream LLC (NYSE: ENLC) with approximately
380 MMcf/d of total capacity in the Utica Shale for $10 million. The compressor stations are
interconnected with Antero Midstream's low pressure and high
pressure gathering systems and service Antero Resources'
production. Current throughput is approximately 100 MMcf/d,
resulting in 280 MMcf/d of excess capacity for future
growth.
Fourth Quarter 2022 Financial Results
Low pressure gathering volumes for the fourth quarter of 2022
averaged 3,070 MMcf/d, a 4% increase as compared to the prior
year quarter. Low pressure gathering volumes subject to the
growth incentive fee were in excess of the threshold of 2,900
MMcf/d, resulting in a $12 million
rebate to Antero Resources. Compression volumes for the fourth
quarter of 2022 averaged 2,945 MMcf/d, a 4% increase compared
to the prior year quarter. High pressure gathering volumes
averaged 2,762 MMcf/d, a 5% decrease compared to the prior year
quarter. Fresh water delivery volumes averaged 111 MBbl/d
during the quarter, a 39% increase compared to the fourth quarter
of 2021.
Gross processing volumes from the Joint Venture averaged 1,473
MMcf/d for the fourth quarter of 2022, a 4% decrease compared to
the prior year quarter. Joint Venture processing capacity was
92% utilized during the quarter based on nameplate processing
capacity of 1.6 Bcf/d. Gross Joint Venture fractionation
volumes averaged 36 MBbl/d, a 3% decrease compared to the
prior year quarter. Joint Venture fractionation capacity was 90%
utilized during the quarter based on nameplate fractionation
capacity of 40 MBbl/d.
|
|
Three Months
Ended
December
31,
|
|
|
|
|
Average Daily
Volumes:
|
|
2021
|
|
2022
|
|
%
Change
|
|
|
Low Pressure Gathering
(MMcf/d)
|
|
2,961
|
|
3,070
|
|
4 %
|
|
|
Compression
(MMcf/d)
|
|
2,843
|
|
2,945
|
|
4 %
|
|
|
High Pressure
Gathering (MMcf/d)
|
|
2,915
|
|
2,762
|
|
(5) %
|
|
|
Fresh Water Delivery
(MBbl/d)
|
|
80
|
|
111
|
|
39 %
|
|
|
Gross Joint Venture
Processing (MMcf/d)
|
|
1,539
|
|
1,473
|
|
(4) %
|
|
|
Gross Joint Venture
Fractionation (MBbl/d)
|
|
37
|
|
36
|
|
(3) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months ended December 31,
2022, revenues were $242 million, comprised of
$182 million from the Gathering and Processing segment and
$60 million from the Water Handling segment, net of
$18 million of amortization of customer relationships.
Water Handling revenues include $26 million from wastewater
handling and high rate water transfer services.
Direct operating expenses for the Gathering and Processing and
Water Handling segments were $19 million and $29 million,
respectively, for a total of $48 million. Water Handling
operating expenses include $24 million from wastewater
handling and high rate water transfer services. General and
administrative expenses excluding equity-based compensation were
$9 million during the fourth quarter of 2022. Total
operating expenses during the fourth quarter of 2022 included
$6 million of equity-based compensation expense and
$34 million of depreciation.
Net Income was $83 million, or
$0.17 per diluted share.
Net Income adjusted for amortization of customer relationships,
impairment expense, loss on early extinguishment of debt and gain
on asset sale, net of tax effects of reconciling items, or Adjusted
Net Income, was $96 million. Adjusted Net Income was
$0.20 per share.
The following table reconciles Net Income to Adjusted Net Income
(in thousands):
|
|
|
|
|
|
|
|
|
Three Months
Ended
December
31,
|
|
|
|
2021
|
|
|
2022
|
|
Net
Income
|
|
$
|
78,626
|
|
|
82,793
|
|
Amortization of
customer relationships
|
|
|
17,668
|
|
|
17,668
|
|
Impairment
expense
|
|
|
3,460
|
|
|
―
|
|
Loss on early
extinguishment of debt
|
|
|
1,056
|
|
|
―
|
|
(Gain) on asset
sale
|
|
|
―
|
|
|
(9)
|
|
Tax effect of
reconciling items(1)
|
|
|
(5,715)
|
|
|
(4,540)
|
|
Adjusted Net
Income
|
|
$
|
95,095
|
|
|
95,912
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Statutory tax rate was approximately 25.8% for 2021 and 25.7%
for 2022.
|
Adjusted EBITDA was $231 million, a 9% increase compared to
the prior year quarter. Interest expense was $52 million, an
18% increase compared to the prior year quarter. Capital
expenditures were $63 million, a 22% decrease compared to the
prior year quarter. Free Cash Flow before dividends was
$116 million, a 31% increase compared to the prior year
quarter. Free Cash Flow after dividends was $8 million
compared to a $19 million deficit in the prior year quarter.
This represented the second consecutive quarter of Free Cash Flow
generation after dividends.
The following table reconciles Net Income to Adjusted EBITDA and
Free Cash Flow before and after dividends (in thousands):
|
|
|
|
|
|
|
|
|
Three Months
Ended
December
31,
|
|
|
|
2021
|
|
|
2022
|
Net
Income
|
|
$
|
78,626
|
|
|
82,793
|
Interest expense,
net
|
|
|
44,366
|
|
|
52,408
|
Income tax
expense
|
|
|
28,576
|
|
|
32,696
|
Amortization of
customer relationships
|
|
|
17,668
|
|
|
17,668
|
Depreciation
expense
|
|
|
27,834
|
|
|
33,581
|
Impairment
expense
|
|
|
3,460
|
|
|
―
|
Loss on early
extinguishment of debt
|
|
|
1,056
|
|
|
―
|
(Gain) on asset
sale
|
|
|
―
|
|
|
(9)
|
Accretion of asset
retirement obligations
|
|
|
113
|
|
|
44
|
Equity-based
compensation
|
|
|
3,203
|
|
|
5,628
|
Equity in earnings of
unconsolidated affiliates
|
|
|
(24,104)
|
|
|
(23,751)
|
Distributions from
unconsolidated affiliates
|
|
|
31,875
|
|
|
29,990
|
Adjusted
EBITDA
|
|
$
|
212,673
|
|
|
231,048
|
Interest expense,
net
|
|
|
(44,366)
|
|
|
(52,408)
|
Capital expenditures
(accrual-based)
|
|
|
(80,197)
|
|
|
(62,896)
|
Free Cash Flow
before dividends
|
|
$
|
88,110
|
|
|
115,744
|
Dividends declared
(accrual-based)
|
|
|
(107,479)
|
|
|
(107,688)
|
Free Cash Flow after
dividends
|
|
$
|
(19,369)
|
|
|
8,056
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles net cash provided by operating
activities to Free Cash Flow before and after dividends (in
thousands):
|
|
|
|
|
|
|
|
|
Three Months
Ended
December
31,
|
|
|
|
2021
|
|
|
2022
|
Net cash provided by
operating activities
|
|
$
|
164,262
|
|
|
168,628
|
Amortization of
deferred financing costs
|
|
|
(1,397)
|
|
|
(1,448)
|
Settlement of asset
retirement obligations
|
|
|
571
|
|
|
4,059
|
Changes in working
capital
|
|
|
4,871
|
|
|
7,401
|
Capital expenditures
(accrual-based)
|
|
|
(80,197)
|
|
|
(62,896)
|
Free Cash Flow
before dividends
|
|
$
|
88,110
|
|
|
115,744
|
Dividends declared
(accrual-based)
|
|
|
(107,479)
|
|
|
(107,688)
|
Free Cash Flow after
dividends
|
|
$
|
(19,369)
|
|
|
8,056
|
|
|
|
|
|
|
|
|
|
|
Fourth Quarter 2022 Operating Update
Gathering and Processing — During the
fourth quarter of 2022, Antero Midstream connected 271 wells
to its gathering system, including 253 wells from acquisitions and
18 wells on its legacy assets.
Water Handling— Antero Midstream's water
delivery systems serviced 22 well completions during the
fourth quarter of 2022. For the full year, the Company's water
delivery systems serviced 76 well completions.
Capital Investments
Accrued capital expenditures were $63
million during the fourth quarter of 2022. The company
invested $37 million in gathering and compression and
$26 million in water infrastructure
primarily in the liquids-rich midstream corridor of the Marcellus
Shale.
Conference Call
A conference call is scheduled on Thursday, February 16, 2023 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. 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, February 23, 2023 at
10:00 am MT at 877-660-6853 (U.S.) or
201-612-7415 (International) using the conference ID: 13734440. 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, February 23,
2023 at 10:00 am MT.
Presentation
An updated presentation will be posted to the Company's website
before the conference call. The presentation can be found at
www.anteromidstream.com on the homepage. Information on the
Company's website does not constitute a portion of, and is not
incorporated by reference into this press release.
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 relationships, impairment expense, and
loss on early extinguishment of debt, excluding (gain) on asset
sale, 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 plus
interest expense, net, income tax expense, amortization of customer
relationships, depreciation expense, impairment expense, loss on
early extinguishment of debt, (gain) on asset sale, accretion of
asset retirement obligations, loss on settlement of asset
retirement obligations and loss on early extinguishment of debt and
equity-based compensation expense, 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, net and accrual-based
capital expenditures. Capital expenditures include additions to
gathering systems and facilities, additions to water handling
systems, and investments in unconsolidated affiliates. Capital
expenditures exclude acquisitions. 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, Adjusted Net Income, 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.
The following table reconciles cash paid for capital
expenditures and accrued capital expenditures during the period (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December
31,
|
|
|
|
|
2021
|
|
|
2022
|
|
Capital expenditures
(as reported on a cash basis)
|
|
$
|
75,877
|
|
|
62,770
|
|
Change in accrued
capital costs
|
|
|
4,320
|
|
|
126
|
|
Capital expenditures
(accrual basis)
|
|
$
|
80,197
|
|
|
62,896
|
|
|
|
|
|
|
|
|
|
|
|
|
Antero Midstream defines Net Debt as consolidated total debt,
excluding unamortized debt premiums and debt issuance costs, less
cash and cash equivalents. Antero Midstream views Net Debt as an
important indicator in evaluating Antero Midstream's financial
leverage. 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.
The following table reconciles consolidated total debt to
consolidated net debt, excluding debt premiums and issuance costs,
("Net Debt") as used in this release (in thousands):
|
|
|
|
|
|
|
|
|
|
December 31,
2022
|
|
Bank credit
facility
|
|
$
|
782,000
|
|
7.875% senior notes due
2026
|
|
|
550,000
|
|
5.75% senior notes due
2027
|
|
|
650,000
|
|
5.75% senior notes due
2028
|
|
|
650,000
|
|
5.375% senior notes due
2029
|
|
|
750,000
|
|
Consolidated total
debt
|
|
$
|
3,382,000
|
|
Cash and cash
equivalents
|
|
|
—
|
|
Consolidated net
debt
|
|
$
|
3,382,000
|
|
Antero Midstream defines Return on Invested Capital as earnings
before interest and income taxes excluding amortization of customer
relationships, impairment expense, (gain) on asset sale, loss on
settlement of asset retirement obligations, and the tax-effects of
such amounts, divided by average total liabilities and
stockholders' equity, excluding current liabilities, intangible
assets and impairment of property and equipment in order to derive
an operating asset driven Return on Invested Capital
calculation.
The following table reconciles Return on Invested Capital for
the last twelve months as used in this release (in thousands):
|
|
|
|
|
|
|
|
|
|
Twelve Months
Ended
December 31,
2022
|
|
Net
Income
|
|
$
|
326,242
|
|
Amortization of
customer relationships
|
|
|
70,672
|
|
Impairment
expense
|
|
|
3,702
|
|
(Gain) on asset
sale
|
|
|
(2,251)
|
|
Loss on settlement of
asset retirement obligations
|
|
|
539
|
|
Tax effect of
reconciling items
|
|
|
(18,681)
|
|
Adjusted Net
Income
|
|
$
|
380,223
|
|
Interest expense,
net
|
|
|
189,948
|
|
Income tax
expense
|
|
|
117,494
|
|
Tax effect of
reconciling items
|
|
|
18,681
|
|
Adjusted
EBIT
|
|
|
706,346
|
|
Average invested
capital
|
|
|
4,242,551
|
|
Return on Invested
Capital
|
|
$
|
17 %
|
|
Antero Midstream has not included a reconciliation of Adjusted
Net Income, Adjusted EBITDA and Free Cash Flow before and after
dividends to the nearest GAAP financial measures for 2023 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 millions):
|
|
Twelve Months
Ended
December 31, 2023
|
|
|
Low
|
|
High
|
Depreciation
expense
|
|
$135
|
|
$145
|
Equity based
compensation expense
|
|
20
|
|
30
|
Amortization of
customer relationships
|
|
70
|
|
75
|
Distributions from
unconsolidated affiliates
|
|
120
|
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130
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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 realize the benefits of the Marcellus bolt-on
acquisition, including the anticipated capital avoidance and
synergies, Antero Midstream's ability to execute its business plan
and return capital to its stockholders, information regarding
Antero Midstream's return of capital policy, information regarding
long-term financial and operating outlooks for Antero Midstream and
Antero Resources, information regarding Antero Resources' expected
future growth and its ability to meet its drilling and development
plan and the participation level of Antero Resources'
drilling partner, the impact on demand for Antero Midstream's
services as a result of incremental production by Antero Resources,
and expectations regarding the amount and timing of litigation
awards 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, supply chain disruptions, 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, 2022.
ANTERO MIDSTREAM CORPORATION Consolidated Balance Sheets
(In thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2021
|
|
2022
|
|
Assets
|
Current
assets:
|
|
|
|
|
|
|
|
Accounts
receivable–Antero Resources
|
|
$
|
81,197
|
|
|
86,152
|
|
Accounts
receivable–third party
|
|
|
747
|
|
|
575
|
|
Income tax
receivable
|
|
|
940
|
|
|
940
|
|
Other current
assets
|
|
|
920
|
|
|
1,326
|
|
Total current
assets
|
|
|
83,804
|
|
|
88,993
|
|
|
|
|
|
|
|
|
|
Property and equipment,
net
|
|
|
3,394,746
|
|
|
3,751,431
|
|
Investments in
unconsolidated affiliates
|
|
|
696,009
|
|
|
652,767
|
|
Customer
relationships
|
|
|
1,356,775
|
|
|
1,286,103
|
|
Other assets,
net
|
|
|
12,667
|
|
|
12,026
|
|
Total
assets
|
|
$
|
5,544,001
|
|
|
5,791,320
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable–Antero Resources
|
|
$
|
4,956
|
|
|
5,436
|
|
Accounts payable–third
party
|
|
|
23,592
|
|
|
22,865
|
|
Accrued
liabilities
|
|
|
80,838
|
|
|
72,715
|
|
Other current
liabilities
|
|
|
4,623
|
|
|
1,061
|
|
Total current
liabilities
|
|
|
114,009
|
|
|
102,077
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
3,122,910
|
|
|
3,361,282
|
|
Deferred income tax
liability
|
|
|
13,721
|
|
|
131,215
|
|
Other
|
|
|
6,663
|
|
|
4,428
|
|
Total
liabilities
|
|
|
3,257,303
|
|
|
3,599,002
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
Preferred stock, $0.01
par value: 100,000 authorized as of December 31, 2021 and
2022
|
|
|
|
|
|
|
|
Series A non-voting
perpetual preferred stock; 12 designated and 10 issued and
outstanding as of December 31, 2021 and 2022
|
|
|
—
|
|
|
—
|
|
Common stock, $0.01
par value; 2,000,000 authorized; 477,495 and 478,497 issued and
outstanding as of December 31, 2021 and 2022,
respectively
|
|
|
4,775
|
|
|
4,785
|
|
Additional paid-in
capital
|
|
|
2,414,398
|
|
|
2,104,740
|
|
Retained earnings
(accumulated deficit)
|
|
|
(132,475)
|
|
|
82,793
|
|
Total stockholders'
equity
|
|
|
2,286,698
|
|
|
2,192,318
|
|
Total liabilities and
stockholders' equity
|
|
$
|
5,544,001
|
|
|
5,791,320
|
|
ANTERO MIDSTREAM CORPORATION Consolidated Statements
of Operations and Comprehensive Income
(In thousands, except per share amounts)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
|
|
2021
|
|
2022
|
|
Revenue:
|
|
|
|
|
|
|
|
Gathering and
compression–Antero Resources
|
|
$
|
183,193
|
|
|
191,111
|
|
Water handling–Antero
Resources
|
|
|
50,789
|
|
|
67,776
|
|
Water handling–third
party
|
|
|
176
|
|
|
334
|
|
Amortization of
customer relationships
|
|
|
(17,668)
|
|
|
(17,668)
|
|
Total
revenue
|
|
|
216,490
|
|
|
241,553
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
38,752
|
|
|
48,295
|
|
General and
administrative (including $3,203 and $5,628 of equity-based
compensation
in 2021 and 2022, respectively)
|
|
|
16,847
|
|
|
14,528
|
|
Facility
idling
|
|
|
964
|
|
|
968
|
|
Depreciation
|
|
|
27,834
|
|
|
33,581
|
|
Impairment of property
and equipment
|
|
|
3,460
|
|
|
—
|
|
Accretion of asset
retirement obligations
|
|
|
113
|
|
|
44
|
|
Gain on asset
sale
|
|
|
—
|
|
|
(9)
|
|
Total operating
expenses
|
|
|
87,970
|
|
|
97,407
|
|
Operating
income
|
|
|
128,520
|
|
|
144,146
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(44,366)
|
|
|
(52,408)
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
24,104
|
|
|
23,751
|
|
Loss on early
extinguishment of debt
|
|
|
(1,056)
|
|
|
—
|
|
Total other
expense
|
|
|
(21,318)
|
|
|
(28,657)
|
|
Income before income
taxes
|
|
|
107,202
|
|
|
115,489
|
|
Income tax
expense
|
|
|
(28,576)
|
|
|
(32,696)
|
|
Net income and
comprehensive income
|
|
$
|
78,626
|
|
|
82,793
|
|
|
|
|
|
|
|
|
|
Net income per
share–basic
|
|
$
|
0.16
|
|
|
0.17
|
|
Net income per
share–diluted
|
|
$
|
0.16
|
|
|
0.17
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
477,491
|
|
|
478,493
|
|
Diluted
|
|
|
480,150
|
|
|
480,966
|
|
ANTERO MIDSTREAM CORPORATION Selected Operating
Data
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Amount
of
|
|
|
|
|
|
|
December 31,
|
|
Increase
|
|
Percentage
|
|
|
2021
|
|
2022
|
|
or
Decrease
|
|
Change
|
Operating
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering—low pressure
(MMcf)
|
|
|
272,451
|
|
|
282,438
|
|
|
9,987
|
|
|
4
|
%
|
Compression
(MMcf)
|
|
|
261,568
|
|
|
270,909
|
|
|
9,341
|
|
|
4
|
%
|
Gathering—high
pressure (MMcf)
|
|
|
268,225
|
|
|
254,123
|
|
|
(14,102)
|
|
|
(5)
|
%
|
Fresh water delivery
(MBbl)
|
|
|
7,338
|
|
|
10,248
|
|
|
2,910
|
|
|
40
|
%
|
Other fluid handling
(MBbl)
|
|
|
4,273
|
|
|
4,877
|
|
|
604
|
|
|
14
|
%
|
Wells serviced by
fresh water delivery
|
|
|
16
|
|
|
22
|
|
|
6
|
|
|
38
|
%
|
Gathering—low pressure
(MMcf/d)
|
|
|
2,961
|
|
|
3,070
|
|
|
109
|
|
|
4
|
%
|
Compression
(MMcf/d)
|
|
|
2,843
|
|
|
2,945
|
|
|
102
|
|
|
4
|
%
|
Gathering—high
pressure (MMcf/d)
|
|
|
2,915
|
|
|
2,762
|
|
|
(153)
|
|
|
(5)
|
%
|
Fresh water delivery
(MBbl/d)
|
|
|
80
|
|
|
111
|
|
|
31
|
|
|
39
|
%
|
Other fluid handling
(MBbl/d)
|
|
|
46
|
|
|
53
|
|
|
7
|
|
|
15
|
%
|
Average Realized
Fees:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average gathering—low
pressure fee ($/Mcf)
|
|
$
|
0.33
|
|
|
0.34
|
|
|
0.01
|
|
|
3
|
%
|
Average compression
fee ($/Mcf)
|
|
$
|
0.20
|
|
|
0.21
|
|
|
0.01
|
|
|
3
|
%
|
Average gathering—high
pressure fee ($/Mcf)
|
|
$
|
0.20
|
|
|
0.21
|
|
|
0.01
|
|
|
3
|
%
|
Average fresh water
delivery fee ($/Bbl)
|
|
$
|
3.97
|
|
|
4.09
|
|
|
0.12
|
|
|
3
|
%
|
Joint Venture
Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Processing—Joint
Venture (MMcf)
|
|
|
141,619
|
|
|
135,535
|
|
|
(6,084)
|
|
|
(4)
|
%
|
Fractionation—Joint
Venture (MBbl)
|
|
|
3,388
|
|
|
3,290
|
|
|
(98)
|
|
|
(3)
|
%
|
Processing—Joint
Venture (MMcf/d)
|
|
|
1,539
|
|
|
1,473
|
|
|
(66)
|
|
|
(4)
|
%
|
Fractionation—Joint
Venture (MBbl/d)
|
|
|
37
|
|
|
36
|
|
|
(1)
|
|
|
(3)
|
%
|
ANTERO MIDSTREAM
CORPORATION Consolidated Results of Segment Operations
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31, 2022
|
|
|
|
Gathering and
|
|
Water
|
|
|
|
Consolidated
|
|
(in
thousands)
|
|
Processing
|
|
Handling
|
|
Unallocated
|
|
Total
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue–Antero
Resources
|
|
$
|
203,111
|
|
|
67,776
|
|
|
|
|
|
270,887
|
|
Revenue–third-party
|
|
|
—
|
|
|
334
|
|
|
|
|
|
334
|
|
Gathering—low pressure
fee rebate
|
|
|
(12,000)
|
|
|
—
|
|
|
|
|
|
(12,000)
|
|
Amortization of
customer relationships
|
|
|
(9,272)
|
|
|
(8,396)
|
|
|
|
|
|
(17,668)
|
|
Total
revenues
|
|
|
181,839
|
|
|
59,714
|
|
|
|
|
|
241,553
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
operating
|
|
|
19,551
|
|
|
28,744
|
|
|
—
|
|
|
48,295
|
|
General and
administrative (excluding equity-based compensation)
|
|
|
5,088
|
|
|
2,850
|
|
|
962
|
|
|
8,900
|
|
Equity-based
compensation
|
|
|
3,803
|
|
|
1,630
|
|
|
195
|
|
|
5,628
|
|
Facility
idling
|
|
|
—
|
|
|
968
|
|
|
—
|
|
|
968
|
|
Depreciation
|
|
|
21,552
|
|
|
12,029
|
|
|
—
|
|
|
33,581
|
|
(Gain) on asset
sale
|
|
|
(1)
|
|
|
(8)
|
|
|
—
|
|
|
(9)
|
|
Accretion of asset
retirement obligations
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|
44
|
|
Total operating
expenses
|
|
|
49,993
|
|
|
46,257
|
|
|
1,157
|
|
|
97,407
|
|
Operating
income
|
|
|
131,846
|
|
|
13,457
|
|
|
(1,157)
|
|
|
144,146
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
—
|
|
|
—
|
|
|
(52,408)
|
|
|
(52,408)
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
23,751
|
|
|
—
|
|
|
—
|
|
|
23,751
|
|
Total other income
(expense)
|
|
|
23,751
|
|
|
—
|
|
|
(52,408)
|
|
|
(28,657)
|
|
Income before income
taxes
|
|
|
155,597
|
|
|
13,457
|
|
|
(53,565)
|
|
|
115,489
|
|
Income tax
expense
|
|
|
—
|
|
|
—
|
|
|
(32,696)
|
|
|
(32,696)
|
|
Net income and
comprehensive income
|
|
$
|
155,597
|
|
|
13,457
|
|
|
(86,261)
|
|
|
82,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
|
|
|
|
|
|
|
|
|
$
|
231,048
|
|
ANTERO MIDSTREAM CORPORATION Consolidated Statements
of Cash Flows
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
|
|
2020
|
|
2021
|
|
2022
|
|
Cash flows provided by
(used in) operating activities:
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
(122,527)
|
|
|
331,617
|
|
|
326,242
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
108,790
|
|
|
108,790
|
|
|
131,762
|
|
Accretion of asset
retirement obligations
|
|
|
180
|
|
|
460
|
|
|
222
|
|
Payment of contingent
consideration in excess of acquisition date fair value
|
|
|
(8,076)
|
|
|
—
|
|
|
—
|
|
Impairment
|
|
|
673,640
|
|
|
5,042
|
|
|
3,702
|
|
Deferred income tax
expense (benefit)
|
|
|
(171)
|
|
|
117,123
|
|
|
117,494
|
|
Equity-based
compensation
|
|
|
12,778
|
|
|
13,529
|
|
|
19,654
|
|
Equity in earnings of
unconsolidated affiliates
|
|
|
(86,430)
|
|
|
(90,451)
|
|
|
(94,218)
|
|
Distributions from
unconsolidated affiliates
|
|
|
98,858
|
|
|
118,990
|
|
|
120,460
|
|
Amortization of
customer relationships
|
|
|
70,672
|
|
|
70,672
|
|
|
70,672
|
|
Amortization of
deferred financing costs
|
|
|
4,503
|
|
|
5,549
|
|
|
5,716
|
|
Settlement of asset
retirement obligations
|
|
|
(2,183)
|
|
|
(1,385)
|
|
|
(5,454)
|
|
Loss on settlement of
asset retirement obligations
|
|
|
—
|
|
|
—
|
|
|
539
|
|
Loss (gain) on asset
sale
|
|
|
2,929
|
|
|
3,628
|
|
|
(2,251)
|
|
Loss on early
extinguishment of debt
|
|
|
—
|
|
|
21,757
|
|
|
—
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable–Antero Resources
|
|
|
27,306
|
|
|
(7,475)
|
|
|
(3,354)
|
|
Accounts
receivable–third party
|
|
|
1,434
|
|
|
904
|
|
|
723
|
|
Income tax
receivable
|
|
|
(17,251)
|
|
|
16,311
|
|
|
—
|
|
Other current
assets
|
|
|
155
|
|
|
550
|
|
|
(313)
|
|
Accounts
payable–Antero Resources
|
|
|
716
|
|
|
792
|
|
|
782
|
|
Accounts payable–third
party
|
|
|
1,201
|
|
|
695
|
|
|
7,973
|
|
Accrued
liabilities
|
|
|
(13,142)
|
|
|
(7,346)
|
|
|
(747)
|
|
Net cash provided by
operating activities
|
|
|
753,382
|
|
|
709,752
|
|
|
699,604
|
|
Cash flows provided by
(used in) investing activities:
|
|
|
|
|
|
|
|
|
|
|
Additions to gathering
systems and facilities
|
|
|
(157,931)
|
|
|
(186,588)
|
|
|
(227,561)
|
|
Additions to water
handling systems
|
|
|
(38,793)
|
|
|
(46,237)
|
|
|
(71,363)
|
|
Investments in
unconsolidated affiliates
|
|
|
(25,267)
|
|
|
(2,070)
|
|
|
—
|
|
Return of investment
in unconsolidated affiliate
|
|
|
—
|
|
|
—
|
|
|
17,000
|
|
Acquisition of
gathering systems and facilities
|
|
|
—
|
|
|
—
|
|
|
(216,726)
|
|
Cash received in asset
sale
|
|
|
822
|
|
|
1,653
|
|
|
5,726
|
|
Change in other
assets
|
|
|
1,938
|
|
|
—
|
|
|
(98)
|
|
Change in other
liabilities
|
|
|
—
|
|
|
—
|
|
|
(804)
|
|
Net cash used in
investing activities
|
|
|
(219,231)
|
|
|
(233,242)
|
|
|
(493,826)
|
|
Cash flows provided by
(used in) financing activities:
|
|
|
|
|
|
|
|
|
|
|
Dividends to
stockholders
|
|
|
(589,640)
|
|
|
(471,171)
|
|
|
(432,825)
|
|
Dividends to preferred
stockholders
|
|
|
(550)
|
|
|
(550)
|
|
|
(550)
|
|
Repurchases of common
stock
|
|
|
(24,713)
|
|
|
—
|
|
|
—
|
|
Issuance of senior
notes
|
|
|
550,000
|
|
|
750,000
|
|
|
—
|
|
Redemption of senior
notes
|
|
|
—
|
|
|
(667,472)
|
|
|
—
|
|
Payments of deferred
financing costs
|
|
|
(6,283)
|
|
|
(16,603)
|
|
|
(302)
|
|
Borrowings
(repayments) on bank credit facilities, net
|
|
|
(346,000)
|
|
|
(66,300)
|
|
|
234,800
|
|
Payment of contingent
acquisition consideration
|
|
|
(116,924)
|
|
|
—
|
|
|
—
|
|
Employee tax
withholding for settlement of equity compensation awards
|
|
|
(476)
|
|
|
(5,013)
|
|
|
(6,901)
|
|
Other
|
|
|
(160)
|
|
|
(41)
|
|
|
—
|
|
Net cash used in
financing activities
|
|
|
(534,746)
|
|
|
(477,150)
|
|
|
(205,778)
|
|
Net decrease in cash
and cash equivalents
|
|
|
(595)
|
|
|
(640)
|
|
|
—
|
|
Cash and cash
equivalents, beginning of period
|
|
|
1,235
|
|
|
640
|
|
|
—
|
|
Cash and cash
equivalents, end of period
|
|
$
|
640
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure
of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the
period for interest
|
|
$
|
140,732
|
|
|
179,748
|
|
|
183,079
|
|
Cash received during
the period for income taxes
|
|
$
|
39,205
|
|
|
16,311
|
|
|
—
|
|
Increase (decrease) in
accrued capital expenditures and accounts payable for property and
equipment
|
|
$
|
(14,472)
|
|
|
26,995
|
|
|
(17,003)
|
|
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SOURCE Antero Midstream Corporation